2013 Comprehensive Annual Financial Report Pima County, Arizona For the Fiscal Year Ended June 30, 2013 PIMA COUNTY, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2013 BOARD OF SUPERVISORS Ramón Valadez Chairman District #2 Sharon Bronson Vice Chair District #3 Ally Miller 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 Linda Baldazo Susan Brown, CPA Leticia Brumbaugh Sabrena Corwin Brenda DeBoo-Nicely Valentin Dominguez, CPA Pamela Endrihs Ted Garza Linda House Jean Lee, CPA Janet Mabon Lorraine Nuñez Janet Peete Blanca Rossetti Phil Schroeck Jennifer Serrano Phillip Summersett PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2013 TABLE OF CONTENTS Exhibit I. INTRODUCTORY SECTION Letter of Transmittal Certificate of Achievement for Excellence in Financial Reporting Organizational Chart 1-7 8 9 II. FINANCIAL SECTION Independent Auditors' Report A. B. Page 11 - 13 MANAGEMENT'S DISCUSSION AND ANALYSIS (required supplementary information) 15 - 33 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Position Statement of Activities A-1 A-2 35 36 - 37 A-3 38 A-4 39 A-5 40 A-6 41 A-7 42 A-8 A-9 43 44 - 45 Fiduciary Fund Financial Statements Statement of Fiduciary Net Position - Fiduciary Funds Statement of Changes in Fiduciary Net Position - Fiduciary Funds A-10 A-11 46 47 Component Unit Financial Statements Combining Statement of Net Position Combining Statement of Activities A-12 A-13 48 49 Governmental Fund Financial Statements (Major and Other) Balance Sheet - Governmental Funds Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 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 Proprietary Fund Financial Statements (Major and Other) Statement of Net Position - Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds Statement of Cash Flows - Proprietary Funds PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2013 Table of Contents (continued) Exhibit Notes to Financial Statements Note 1: Summary of significant accounting policies Note 2: Fund balance classifications of the governmental funds 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: Pension and other post employment benefits Note 10: Interfund transactions Note 11: Construction and other significant commitments Note 12: Net position beginning balance restated Note 13: Deficit fund balances C. 50 - 56 57 58 - 61 62 62 - 64 64 - 65 66 - 75 75 - 76 76 - 80 81 82 82 - 83 83 REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT'S DISCUSSION AND ANALYSIS Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - General Fund B-1 Notes to Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund Schedule of Agent Retirement Plans' Funding Progress D. Page 85 86 B-2 87 C-1 90 - 91 C-2 92 - 93 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 95 96 97 98 99 100 101 102 103 104 105 106 107 108 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 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 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 Street Lighting Dostricts PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2013 Table of Contents (continued) Other (Nonmajor) Enterprise Funds Combining Statement of Position - Nonmajor Enterprise Funds Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Nonmajor Enterprise Funds Combining Statement of Cash Flows - Nonmajor Enterprise Funds Internal Service Funds Combining Statement of Net Position - Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Internal Service Funds Combining Statement of Cash Flows - Internal Service Funds Fiduciary Funds Combining Statement of Fiduciary Net Position - Investment Trust Funds Combining Statement of Changes in Fiduciary Net Position Investment Trust Funds Combining Statement of Fiduciary Net Position - Agency Funds Combining Statement of Changes in Fiduciary Net Position - Agency Funds III. STATISTICAL SECTION Financial Trends Information Net position by component Changes in net position 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-17 109 C-18 C-19 110 111 - 112 C-20 113 C-21 C-22 114 115 - 116 C-23 117 C-24 C-25 118 119 C-26 120 D-1 through 4 121 - 125 D-5 through 12 127 - 138 PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2013 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 installment notes payable and purchase agreements Ratio of annual debt service expenditures for general bonded debt to total general expenditures D-13 through 19 139 - 148 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 26 149 - 156 Operating Information Employees by function Operating indicators by program Capital assets and infrastructure by program D-27 through 29 157 - 159 Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2013 INTRODUCTORY SECTION Letter of Transmittal Certificate of Achievement for Excellence in Financial Reporting Organizational Chart FINANCIAL SECTION STATISTICAL SECTION INTRODUCTION PIMA COUNTY INTRODUCTORY SECTION The purpose of the Introductory Section in a comprehensive annual financial report (CAFR) is to familiarize readers with the organizational structure of the government, the nature and scope of the services it provides, and the specifics of its legal operating environment. COUNTY ADMINISTRATOR’ ’S OFFICE PIMA COUNTY GOVERNMENTAL CENTER 130 W. CONGRESS, FLOOR 10, TUCSON, AZ 85701-1317 (520) 724-8661 FAX (520) 724-8171 C.H. HUCKEL’’BERRY County Administrator December 12, 2013 To the Honorable Board of Supervisors and Citizens of Pima County, Arizona: We are pleased to submit the Comprehensive Annual Financial Report (CAFR) of Pima County for the fiscal year ended June 30, 2013. This report presents comprehensive financial and operating information about the County’s activities for the fiscal year. We believe that the financial information, as presented, is accurate in all material aspects; that it is presented in a manner designed to openly disclose the financial position and results of operations of the County as measured by the financial activity of its various funds; and that all disclosures necessary to enable the reader to gain the maximum understanding of the County’s financial affairs have been included. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. The State of Arizona Office of the Auditor General is required to audit financial transactions and accounts kept by counties. The Auditor General has issued an unmodified (“clean”) opinion on the Pima County financial statements for the year ended June 30, 2013. The Auditor General’s report is located at the front of the financial section of this report. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. The CAFR consists of three sections: • The INTRODUCTORY section familiarizes the reader with the organizational structure of the County, the nature and scope of its services, and the specifics of its legal operating environment. • The FINANCIAL section includes the Auditor General’s report, the MD&A, the audited basic financial statements, the notes to the statements, and required supplementary information necessary to fairly present the financial position and results of operations of the County in conformity with generally accepted accounting principles. This section also includes supporting statements and schedules necessary to produce a CAFR. • The STATISTICAL section contains comprehensive statistical data on the County’s financial, physical, economic, and demographic characteristics. Pima County Profile Covering an area of approximately 9,200 square miles, Pima County is one of the oldest continuously inhabited areas of the United States. It is situated in the southern part of Arizona with a portion of its southern boundary bordering Mexico. Created in 1864, Pima County includes a large portion of southern Arizona acquired from Mexico by the Gadsden Purchase of 1854. From a population of 395 in 1820, Pima County had an estimated population of slightly more than 992,000 in 2012, according to the U.S. Census Bureau. The population is projected to reach 1.4 million by 2041. The County has a vibrant multicultural diversity. A major commercial and academic hub, Pima County is home to Tucson, the second largest city in Arizona. Although the County has five incorporated cities and towns, more than a third of the population lives outside of any incorporated cities or towns. Pima County has purchased thousands of acres of open space and ranches to preserve and protect the stunning landscapes and historic and cultural sites. 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 chairman is selected by the Board from among its members. The Board is responsible for establishing the policies of the County, which provide guidance to the various County constitutional officers and departments. The Board has the legal authority and responsibility to establish spending limits and approve the budgets of all County departments, and also sets the amount of taxes to be levied. The Board appoints a County Administrator who is responsible for the general administrative and overall operations of the various departments of the County. The County has several other elected officials including the Assessor, County Attorney, Recorder, Sheriff, Clerk of the Superior Court, the Constables, Superintendent of Schools, Treasurer, and Judges for the Superior Courts, Juvenile Courts, and Justice Courts. 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 County may be financially accountable if an organization is fiscally dependent on the County. Pima County offers a wide variety of governmental services that are organized into the following functional areas: • General Government Services primarily provides internal administrative and support services to County departments directly serving the public. The departments comprising this function include the Assessor; Board of Supervisors; Clerk of the Board; Communications Office; County Administrator; Elections; Facilities Management; Finance and Risk Management; Fleet Services; Human Resources; Information Technology; Office of Sustainability and Conservation; Procurement; Recorder; and Treasurer. • Community Resources provides educational, cultural, social, economic development and recreational programs to the public. The departments in this functional area are Community and Economic Development Administration; Community Development and Neighborhood Conservation; Community Services, Employment and Training; County Free Library; Economic Development and Tourism; Kino Sports Complex; Natural Resources, Parks and Recreation; School Superintendent; and the Stadium District. • Justice and Law provides public safety, felony and misdemeanor investigation, prosecution, and services for victims, witnesses and those needing fiduciary assistance. Services are also provided in the areas of indigent defense, civil representation, correctional housing, and juvenile detention. The departments within this area are the Clerk of the Superior Court; Constables; County Attorney; Forensic Science Center; Justice Courts; Juvenile Courts; Legal Defender; Office of Court Appointed Counsel; Public Defender; Public Fiduciary; Sheriff; and Superior Court. • Health Services provides various public health, sanitation, and animal control services, as well as medical assistance to indigents. The component departments are Environmental Quality; Health Department; Office of Medical Services; Pima Animal Care Center; and Solid Waste Management. • Public Works provides construction, operations, and maintenance services related to the County infrastructure and related planning and environmental issues. The departments within this area are Capital 2 Projects; Development Services; Public Works Administration; Regional Flood Control District; Regional Wastewater Reclamation; and Transportation. 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: • Activities for the Pima County Stadium District, the Regional Flood Control District, the Library District, and the Street Lighting Districts are reported as blended component units in special revenue funds in the accompanying financial statements. • Activities for Pima County Sports and Tourism Authority and the Southwestern Fair Commission are reported as discrete component units of the County and are reported in the accompanying financial statements. Additional information on the legally separate entities and the blended component units can be found in the notes to the financial statements (see Note 1). The County also has various independently governed school districts, irrigation districts, fire districts, and a health district (Ajo-Lukeville) 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. Following receipt from the County Administrator and public discussion of the Recommended Budget, the Board of Supervisors, on or before the third Monday in July, adopts a Tentative Budget which sets a ceiling on expenditures that may be incurred for the County as a whole. This annual budget serves as the foundation for Pima County’s financial planning and control. Pima County has implemented a program-oriented presentation of its budget. All departments are budgeted on a cost unit/object line item basis. Departments may modify line item amounts within their own budgets provided the total program budgeted amount remains unchanged. Changes to the adopted budget that require a transfer between funds are evaluated by the County Administrator prior to recommendation of approval to the Board of Supervisors. Should the County Administrator recommend the change to the Board of Supervisors, the recommendation will be considered at a regularly scheduled, open meeting of the Board. On an annual basis, the County Administrator’s office prepares a five-year Capital Improvement Plan and a one-year Capital Improvement Budget. Economic Outlook Pima County’s major employers are the University of Arizona, Raytheon Missile Systems, Davis-Monthan Air Force Base, and the State of Arizona. Major manufacturers include IBM, Ventana Medical Systems and several aerospace and aircraft companies including Raytheon, Bombardier Aerospace, B/E Aerospace Inc., and Honeywell Aerospace. Employment by industry is led by government; trade, transportation and utilities; educational and health services; professional and business services; and leisure and hospitality. The Pima County unemployment rate has decreased from a five year high in 2010 of 9.4% to 7.3% in 2012. This is a greater decrease than the national unemployment rate which was 9.6% in 2010 and had fallen to 8.1% in 2012. Like all governments in Arizona, Pima County has necessarily adjusted to reduced revenues and increased service demands during this economic recession. More than five years ago, at the beginning of the current recession, Pima County began taking actions in response to declining resources and an increasingly uncertain operating environment. Numerous initiatives were developed and implemented to address redundancy and waste. Internal services were centralized to increase efficiency and reduce cost. The workforce was reduced, primarily through natural attrition. 3 Priorities were re-evaluated and departmental budgets have been incrementally reduced over time pursuant to a managed, thoughtful process. The fiscal year 2011-2012 primary property tax rate of $3.4178 was increased 24.87 cents to $3.6665 for fiscal year 2013-2014. The primary net assessed value of the County for fiscal year 2013-2014 decreased $515 million or 6.38 percent from the current year. Because of the on-going reduction in the value of the County’s property tax base, the primary levy has been reduced more than $39 million over four years. A slight contraction of the property tax base is expected to continue into fiscal year 2014-2015 with the Net Assessed Value projected to decline by half of one percent. In the local residential market, sales of existing homes are climbing, foreclosure notices are stabilizing, and new home starts are the highest since 2010. The national median home price showed the strongest annual growth in nearly eight years. In line with the national trend, the Tucson metropolitan area median sales price in June 2013 was $160,000, a 14.3% increase over June 2012. At the same time, there were 1,399 unit sales, an increase of 10.2% over the prior year. The Tucson area experienced a one year appreciation of 18.3%, compared with 11.2% for the U.S. A sunny, dry climate with an average temperature of 71°F and a unique desert location help promote travel and tourism as a major industry in Pima County. Spending by visitors generates sales in lodging, food services, recreation, transportation, and retail businesses. These sales support jobs for Pima County residents and contribute tax revenues to local and state governments. According to recent research data released by the Arizona Office of Tourism, in the combined counties of Cochise, Pima and Santa Cruz, direct travel spending generated $3.3 billion (17.1% of Arizona direct travel spending) in 2012. This direct travel spending generated 28,000 direct jobs, $700 million in direct earnings and $190 million in local and state tax revenues. Unlike other industries, taxes generated by travel industry spending are paid by visitors rather than residents. These visitors bring new money into Pima County’s economy and generate revenue in the County. Some of the best world-class attractions in Arizona are found in Pima County, such as the Arizona-Sonora Desert Museum and the Pima Air and Space Museum. There are several signature events which draw many tourists to the area and have a significant economic impact on the County, including the following: • The area’s largest annual event is the two-week Tucson Gem, Mineral and Fossil Showcase, the largest event of its kind in the world, which generates $76.5 million for the metropolitan Tucson area and almost $6 million in state and local tax revenue. • The annual El Tour de Tucson generally draws between 8,000 to 9,000 cyclists, with registration for the 2013 Tour estimated to be 8,600. A 2009 post-event survey for El Tour showed an average of $706 spent per rider. El Tour’s annual economic impact is estimated at almost $80 million. Please refer to the MD&A beginning on page 15 for additional information regarding the County’s economic outlook. Capital Improvement Plan The Adopted Budget for fiscal year 2013-2014 includes $311 million for its Capital Improvement Plan (CIP). Under this plan, four departments comprise 84% of the total CIP budget as follows: • • • • Regional Wastewater Reclamation, with a budget of $113 million Transportation, with a budget of $80 million Facilities Management, with a budget of $47 million Sheriff’s Department, with a budget of $20.5 million Regional Wastewater Reclamation - The Regional Optimization Master Plan (ROMP) is a master plan to allow the Pima County’s Regional Wastewater Reclamation Department (RWRD) to meet current environmental regulatory requirements mandated by the Arizona Department of Environmental Quality (ADEQ). ADEQ regulates activities and the way the community’s sewage is conveyed and treated. ROMP projects are primarily funded with obligations paid for with revenues generated mostly by user fees. One of these projects is nearing completion while the other projects have been completed and are in operation: 4 • Agua Nueva Water Reclamation Facility The Agua Nueva Water Reclamation Facility (WRF) will replace the existing Roger Road WRF. The Agua Nueva WRF was scheduled to be fully operational in January 2015 but is ahead of schedule and will likely begin treating wastewater in February 2014. The project cost was originally budgeted at $275 million, but it is anticipated the project will be completed for less than $180 million. The capacity of the new facility is 32 million gallons a day (MGD), down from the Roger Road capacity of 41 MGD. • Tres Rios Water Reclamation Facility The Tres Rios WRF (formerly known as the Ina Road WRF) has been upgraded and expanded from 37.5 MGD to 50 MGD. Tres Rios WRF was substantially complete in October 2013, has met timeline requirements and has not exceeded the original budget. • Plant Interconnect In March 2011, RWRD received approval from the ADEQ to operate the plant interconnect, a five mile long gravity sanitary sewer that is to divert flows from the existing Roger Road WRF service area to the Tres Rios WRF. The plant interconnect was completed $7 million under budget at $34.1 million. Transportation - The Department of Transportation projects are funded by the highway user revenues, the vehicle license tax revenues and from funding received from the Pima County Regional Transportation Authority, a taxing entity distinct from Pima County. Transportation has four major projects included in the fiscal year 2013-2014 budget: • Valencia Road: Alvernon Way to Wilmot project is budgeted for $13.1 million. • Magee Road: La Canada Drive to Oracle Road project is budgeted for $12.9 million. • La Canada Drive: Ina Road to River Road project is budgeted for $9.4 million. • La Cholla Boulevard: Magee Road to Overton Road project is budgeted for $9.0 million. Facilities Management - A major budgeted project for fiscal year 2013-2014 includes $34 million for construction of a new Public Service Center that will house the Pima County Justice Courts, the Recorder, the Assessor and the Treasurer. The project is funded with $27.7 million from Certificates of Participation, and $6.3 million from the General Fund. The new County building will open in early 2015. Sheriff’s Department - Another major budgeted project for fiscal year 2013-2014 includes $20.6 million for the Regional Public Safety Communications System, funded with 2004 General Obligation Bonds. Debt Management The State Auditor General’s Office completed a review in early 2013 of the 1997, 2004 and 2006 Pima County General Obligation Bond Programs and determined the bonds have been effectively managed and administered without bias. Pima County has an AA bond rating and maintains a sound financial profile, with healthy operating reserves. The County’s debt burden is manageable and debt repayment is rapid. Pima County continues to utilize debt authorized by Pima County voters in elections from 1997, 2004 and 2006. At June 30, 2013, $4.8 million from the May 20, 1997, $23.2 million from the May 18, 2004, and $0.7 million from the May 16, 2006 bond elections remained unissued at June 30, 2013. The County issues Certificates of Participation for building construction and Sewer Revenue Obligations to fund the construction and improvement of the County’s wastewater conveyance systems and treatment facilities. Bond sales anticipated for fiscal year 2013-2014 include $10 million of general obligation debt, $16 million of transportation bonds, $55 million is sewer obligation bonds, and $58 million of Certificate of Participation proceeds to fund the completion of the downtown court complex. 5 For several years, Pima County has been planning another bond election; however, the date has not yet been determined due to economic conditions. The County’s conservative debt management principles play a critical role in the decision regarding when to issue new debt. The County has set an aggressive debt repayment schedule, retiring 90 percent of its debt within 11 years. The state constitution sets a cap on general obligation debt at 15 percent of the County’s net secondary assessed valuation. In fiscal year 2012-2013 the constitutional debt limit was $1.2 billion. The actual bonded indebtedness was $457 million, far below the constitutional debt limit. Please refer to the MD&A beginning on page 15 and Note 7 beginning on page 66 for specific details on debt issuances, defeasances, and refundings. Expenditure Limitation Pima County, like all counties and cities in Arizona, is subject to numerous budgetary and related legal requirements. Article 9, Section 20, of the Arizona Constitution sets limits on the County’s legal budget capacity. In general, the Board of Supervisors, as the governing body of the County, cannot authorize expenditures from local revenues in excess of the expenditure limitation determined annually for Pima County by the Arizona Economic Estimates Commission. The expenditure limitation is determined each year by adjusting the amount of actual payments of local revenues received by the County during fiscal year 1979-1980 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 2012-2013 are expected to be under the limit of $516.4 million. Single Audit As a recipient of federal and state financial assistance, the County is required to ensure adequate internal controls are in place to comply with applicable laws and regulations related to administration of these programs. This internal control structure is subject to periodic evaluation by management of Pima County. As a part of the County’s Single Audit, tests are made to determine the adequacy of the internal control structure, including that portion related to federal financial assistance programs and whether the County has complied with applicable laws and regulations. A complete Single Audit report for fiscal year 2011-2012 can be found at: http://www.pima.gov/finance/reports.shtml The Single Audit for Pima County for the fiscal year ended June 30, 2013 was not complete at the time of publication of this CAFR. As demonstrated by the statements and schedules included in the financial section of this report, Pima County continues to meet its responsibility for sound financial management. 6 Awards The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Pima County, Arizona, for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2012. Pima County has received this prestigious award for twentyfive years from fiscal years ended June 30, 1984 through 2012, except for fiscal years ended June 30, 1990 and June 30, 1999, due to missing the filing deadline. In order to be awarded a Certificate of Achievement, the County had to publish an easily readable and efficiently organized CAFR that satisfied both generally accepted accounting principles and applicable program requirements. A Certificate of Achievement for Excellence in Financial Reporting is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement for Excellence in Financial Reporting Program’s requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. Pima County also received the GFOA’s Distinguished Budget Presentation Award for its fiscal year 2012-2013 budget document. This was the fifteenth consecutive year that Pima County has achieved this award. To qualify for the Distinguished Budget Presentation Award, Pima County’s budget had to be judged proficient as a policy document, a financial plan, an operations guide, and a communications device. Acknowledgments The preparation of this report could not have been possible without the skill, effort, and dedication of the entire staff of the County’s Finance and Risk Management Department. We wish to thank all government departments for their assistance in providing the data necessary to prepare this report. Credit is also due to the Board of Supervisors for its unfailing support for maintaining the highest standards of professionalism in the management of Pima County’s finances. Respectfully submitted, C. H. Huckelberry County Administrator Tom Burke Director, Finance and Risk Management 7 ASSESSOR CLERK OF THE SUPERIOR COURT RECORDER SCHOOL SUPERINTENDENT TREASURER __ __ __ __ __ ADMINISTRATION COMMUNITY & ECONOMIC DEVELOPMENT _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ 9 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 _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ (This page is intentionally blank) 10 PIMA COUNTY Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2013 INTRODUCTORY SECTION FINANCIAL SECTION Independent Auditors' Report Basic Financial Statements Required Supplementary Information Other than Management’s Discussion and Analysis Combining Statements and Other Schedules STATISTICAL SECTION FINANCIAL Management’s Discussion and Analysis FINANCIAL SECTION The Financial Section contains government-wide, combined, combining, and individual fund financial statements and schedules, which present a financial “overview” of Pima County. Independent Auditors’ Report Members of the Arizona State Legislature The Board of Supervisors of Pima County, Arizona Report on the Financial Statements 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, 2013, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of certain departments, one major fund, and one component unit, which account for the following percentages of the assets and deferred outflows, liabilities and deferred inflows, 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 Aggregate Discretely Presented Component Unit: Southwestern Fair Commission 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 and Deferred Outflows Liabilities and Deferred Inflows Revenues Expenses/ Expenditures 1.29% 0.09% 2.73% 1.68% 0.01% 4.09% 0.95% 0.35% 2.13% 1.15% 0.39% 1.97% 99.06% 0.24% 99.87% 0.09% 94.81% 4.45% 92.25% 4.48% 100.00% 98.11% 99.85% 99.54% 100.00% 100.00% 100.00% 100.00% 0.11% 0.37% 0.66% 12.85% 0.92% 0.06% 0.51% 27.62% 0.28% 0.10% 0.28% 0.63% 0.37% 0.11% 0.28% 0.56% 2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051 Those financial statements were audited by other auditors whose reports 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the County’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 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, 2013, 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. Emphasis of Matter As described in Note 1, the County implemented the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities, for the year ended June 30, 2013, which represents a change in accounting principle. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information U.S. generally accepted accounting principles require that the Management’s Discussion and Analysis on pages 15 through 33, the Budgetary Comparison Schedule on pages 85 and 86, and the Schedule of Agent Retirement Plans’ Funding Progress on page 87 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with U.S. generally accepted auditing standards, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquires, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County’s basic financial statements. The combining and individual fund statements and schedules and the introductory and statistical sections 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 are the responsibility of management and were derived from and related directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with U.S. generally accepted auditing standards. In our opinion, based on our audit, the procedures performed as described above, and the reports of the other auditors, the combining and individual fund statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements 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 do not express an opinion or provide any assurance on them. Compliance Over the Use of Highway User Revenue Fund and Other Dedicated State Transportation Revenue Monies In connection with our audit, nothing came to our attention that caused us to believe that the County failed to use highway user revenue fund monies received by the County pursuant to Arizona Revised Statutes Title 28, Chapter 18, Article 2, and any other dedicated state transportation revenues received by the County solely for the authorized transportation purposes, insofar as they relate to accounting matters. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the County’s noncompliance with the use of highway user revenue fund monies and other dedicated state transportation revenues, insofar as they relate to accounting matters. The communication related to compliance over the use of highway user revenue fund and other dedicated state transportation revenue monies in the preceding paragraph is intended solely for the information and use of the members of the Arizona State Legislature, the Board of Supervisors, management, and other responsible parties within the County and is not intended to be and should not be used by anyone other than these specified parties. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we will 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 in considering the County’s internal control over financial reporting and compliance. Debbie Davenport Auditor General December 12, 2013 Management’s Discussion and Analysis Pima County, Arizona Management’s Discussion and Analysis For the Year Ended June 30, 2013 Our discussion and analysis of the County’s financial performance provides an overview of the County’s financial activities for the year ended June 30, 2013. Please read it in conjunction with the transmittal letter which begins on page 1 and the County’s basic financial statements, which begin on page 35. All dollar amounts are expressed in thousands (000’s) unless otherwise noted. Financial Highlights • The County’s total net position increased $46,972 in fiscal year 2012-13. This represents a 62.4% decrease when compared to the prior year’s change in net position of $124,793. • The County’s primary sources of revenue come from taxes, grants and contributions, and charges for services, as displayed below: Revenue Sources (in millions) State-shared taxes $119.7 (12.5%) Other $43.7 (4.6%) Charges for services $231.6 (24.2%) Operating grants & contributions $116.1 (12.1%) Capital grants & contributions $63.2 (6.6%) Property taxes $383.5 (40.0%) • The assets of the County exceeded its liabilities (net position) by $ 2,315,577, an increase of 2.1% from the prior year. Of this amount, $1,840,002 represents the net investment in capital assets, $228,198 is restricted for specific purposes (restricted net position), and $247,377 is available for general government expenditures (unrestricted net position). Composition of Net Position Net investment in capital assets $1,840,002 (79.4%) Unrestricted net position $247,377 (10.7%) Restricted net position $228,198 (9.9%) 15 • Unrestricted net position for the County increased $23,592 (or 10.5%), from $223,785 to $247,377 this fiscal year, while restricted net position decreased $11,967 (or 5.0%). The chart below presents the composition of restricted and unrestricted net position for the current and prior years: Comparative Composition of Pima County Net Position 6/30/2013 $240,165 $300,000 6/30/2012 $247,377 $228,198 $223,785 $250,000 $200,000 $150,000 $100,000 $50,000 $Restricted net position Unrestricted net position • County revenues decreased 8.3% (or $86,334), from $1,044,265 last year to $957,931 in fiscal year 201213. This is primarily due to a decrease in property tax revenues affected by a decline in assessed property valuations, and a primary property tax rate that remained unchanged. • The General Fund unassigned fund balance decreased to $56,526 from $77,596 in the prior year. The unassigned fund balance comprises 93.4% of the total fund balance of $60,532. 2013 General Fund - Unassigned Fund Balance 2012 $56,526 $77,596 $- • $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 The County continues to use debt to finance the construction of roads, streets, and buildings. Total capital assets for the year increased $215,973 and long-term liabilities increased $180,995. 16 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 position presents information on all County assets, deferred outflows of resources, liabilities and deferred inflows of resources with the difference between the two reported as net position. Over time, increases or decreases in net position 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 position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will 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) in contrast to 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: Regional Wastewater Reclamation, Development Services, and the County’s downtown parking garages. 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 Pima County Sports and Tourism Authority (S&TA) is also reported 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 35-37. 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. 17 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 38-41. The combining statements for non-major governmental funds can be found on pages 90-93. 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 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 information technology network infrastructure. Because these services predominantly benefit governmental rather than business-type functions, most of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources of these services have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The Regional Wastewater Reclamation Enterprise Fund is considered to be a major fund 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 42-45. The combining statements for other enterprise and internal service funds can be found on pages 109-116. 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 46-47. 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 50-83. 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 85-87. 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 90120. 18 Government-Wide Financial Analysis As noted earlier, net position may serve as a useful indicator of a government’s financial position over time. An analysis of the results of operations is also useful. The schedule below identifies variances in the results of operations. Schedule of Results of Operations and Net Position For the Years Ended June 30, 2013 and 2012 2013 $ 231,625 116,121 2012 $ 288,383 144,663 63,212 410,958 50,204 483,250 Variance $ (56,758) (28,542) 13,008 (72,292) Total general revenues and transfers 546,973 561,015 (14,042) Total program and general revenues 957,931 1,044,265 (86,334) Total expenses 910,959 919,472 (8,513) 46,972 $ 124,793 Charges for services Operating grants and contributions Capital grants and contributions Total program revenues Change in net position $ $ (77,821) As indicated above, the County experienced significant decreases in charges for services ($56,758) as well as in operating grants and contributions ($28,542). The only revenue source that increased was capital grants and contributions ($13,008). In total, program revenues decreased $72,292. In addition, general revenues and transfers decreased ($14,042). However, expenses also decreased $8,513 resulting in a decrease in the change in net position of $77,821. The detail of each of these changes is discussed in the governmental and business-type activities sections below. The graph and schedule presented below illustrate at a summary level and detail level the changes in the elements of the Statement of Net Position. The following graph presents a summary overview and comparison of the assets, deferred outflows of resources, liabilities, and components of net position for the County at June 30, 2013 and June 30, 2012. 19 Pima County Summary of Assets, Deferred Outflows of Resources, Liabilities and Components of Net Position $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $3,946,664 $3,745,745 Total Assets Deferred Outflows of Resources* $5,000,000 $4,133 See Note FY13 $1,635,220 $1,472,007 Total Liabilities FY12 $1,840,002 $1,809,788 Net Investment in Capital Assets Restricted Net Position $228,198 $240,165 Unrestricted Net Position $247,377 $223,785 * Note: The County implemented GASB 65 in fiscal year 2012-13, therefore, Deferred outflows of resources was not a required presentation in fiscal year 2011-12. The amount not presented is considered immaterial since it is less than 0.2% of total assets. A general discussion of significant variances between fiscal years follows. For a more detailed discussion, please see the governmental activities and business-type activities sections immediately following this section. Total assets for the County were $3,946,664, an increase of 5.4% ($200,919) from the prior year and total liabilities were $1,635,220, an increase of 11.1% ($163,213) from the prior year. The largest portion of the County’s net position reflects its net 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, 2013, net investment in capital assets totaled $1,840,002, comprising approximately 79.4% of total net position. This represents an increase of $30,214 from the prior year. 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. Although the County’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Restricted net position represents resources that are subject to external restrictions on how they may be used. As of June 30, 2013, restricted net position totaled $228,198 and comprised approximately 9.9% of total net position. This represents an $11,967 decrease from the prior fiscal year. The remaining balance of the County’s net position represents unrestricted net position, which may be used to meet the County’s ongoing obligations to citizens and creditors. As of June 30, 2013, unrestricted net position totaled $247,377 and comprised approximately 10.7% of total net position. This represents a $23,592 increase from the prior year. 20 The schedule below presents, on a comparative basis, both governmental activities and business-type activities within the Statement of Net Position. Schedule of Assets, Deferred Outflows of Resources, Liabilities and Net Position At June 30, 2013 and 2012 Governmental Activities 2013 2012 Current and other assets Capital assets (net): Land, buildings, equipment, infrastructure & other assets Total assets $579,558 $248,658 $246,415 $828,216 2012 $843,270 1,908,895 1,809,998 1,209,553 1,092,477 3,118,448 2,902,475 2,406,853 1,458,211 1,338,892 3,946,664 3,745,745 4,133 (See Note) 4,133 (See Note) 110,838 789,601 120,443 716,370 34,478 700,303 42,655 592,539 145,316 1,489,904 163,098 1,308,909 900,439 836,813 734,781 635,194 1,635,220 1,472,007 1,308,057 1,245,227 531,945 564,561 1,840,002 1,809,788 138,472 145,618 167,498 157,315 89,726 101,759 72,667 66,470 228,198 247,377 240,165 223,785 $1,592,147 $1,570,040 $723,430 $703,698 $2,315,577 $2,273,738 Current and other liabilities Long-term liabilities Total liabilities Restricted Unrestricted Total net position $596,855 Total 2013 $2,488,453 Deferred outflows of resources* Deferred charges on refunding Net position: Net investment in capital assets Business-type Activities 2013 2012 (See Note) * Note: The County implemented GASB 65 in fiscal year 2012-13, therefore, Deferred outflows of resources was not a required presentation in fiscal year 2011-12. The amount not presented is considered immaterial since it is less than 0.2% of total assets. Analysis of Governmental activities Assets Current and other assets decreased by $17,297 between fiscal years. The primary reason for the change was a decrease of $12,193 in amounts due from the federal government. Several major programs ended during the year, specifically: the American Recovery Reinvestment Act (ARRA) ($6,405) and the Neighborhood Stabilization Program (NSP2) ARRA ($3,511). Also, amounts due from the State of Arizona for Highway User Revenue Fees (HURF) and Vehicle License Tax (VLT) decreased by $2,643 and $389, respectively. Capital assets increased $98,897 primarily due to a $48,949 increase in construction in progress and a $37,916 increase in buildings and improvements. The Justice Court / Municipal Court Complex ($33,400) and the Regional Public Safety Communication System ($13,509) represented the largest increases within construction in progress activity. Several building and improvement projects were completed during the year, most notably the Pima Emergency Communications and Operations Center (PECOC) building improvements ($19,038), the Superior Courts Building ($10,484), and the Canyon Del Oro (CDO) Wash Linear Park: Thornydale to Magee Rd. ($3,844). 21 Liabilities Long-term debt increased $73,231 during the fiscal year. The County issued several forms of long-term debt during the year, specifically $92,880 in certificates of participation (COPS) consisting of $80,175 of Series 2013A Certificates of Participation and $12,705 Series 2013B Refunding Certificates of Participation. These increases in long-term debt were offset primarily by a $16,335 decrease from refunding of Jail capital leases payable and principal payments reductions of $12,055 for Transportation revenue bonds. Net position Net investment in capital assets increased 5.0% or $62,830 primarily due to an increase in construction in progress of $48,949 and an increase in buildings and improvements of $37,916. Major construction in progress projects include the Justice Court Building and the Regional Public Safety Communication System (RPSCS) totaling $46,909. The Pima Emergency Communications and Operations Center (PECOC) building for $19,038 comprised the most significant increase in buildings and improvements. Overall, restricted net position decreased 17.3% or $29,026. Of this amount, the restriction for capital projects decreased $20,371 due to the liquidation of cash restricted for capital projects. Restrictions related to Highways and streets decreased $5,289 due to spending the cash from Transportation bonds during the year. In summary, change in net position and unrestricted net position decreased by $85,487 and $11,697 respectively. This was primarily due to a decrease in total revenues of $28,676, increases in expenses of $23,793, and a decrease in transfers of $33,018, as explained in previous paragraphs. Analysis of Business-type activities Assets Capital assets increased $117,076 primarily due to a $158,853 increase in construction in progress. The majority of these costs were generated from the Regional Optimization Master Plan (ROMP) projects for approximately $130 million. (Please see the transmittal letter, page 5 for further information on ROMP.) Liabilities Long-term liabilities increased $107,764 primarily due to the issuance of Sewer Revenue Obligation Series 2012A for $128,795 in December 2012. Net position Net investment in capital assets for business-type activities decreased 5.8% or $32,616 primarily due to the conveyance by court order of the Marana Wastewater Reclamation Facility (MWRF) to the Town of Marana resulting in an $18,975 loss on disposal. Business-type activities restricted net position increased 23.5% or $17,059 primarily due to increases in restricted cash specifically for Regional Wastewater Reclamation capital projects. Unrestricted net position increased 53.1% or $35,289. The primary impact on unrestricted net position for businesstype activities was the sale of the Marana Wastewater Reclamation Facility which decreased net investment in capital assets for business-type activities by $19,279 and provided $16,142 of unrestricted cash. Governmental activities The following table shows details of the changes in net position for governmental activities: 22 Governmental Activities Schedule of Revenues, Expenses, and Changes in Net Position For the Years Ended June 30, 2013 and 2012 2013 Program revenues:     Charges for services Operating grants and contributions Capital grants and contributions Total program revenues General revenues:    Property taxes State-shared taxes Investment earnings Other general revenues       Total general revenues $ 66,460 116,121 59,298 241,879 Variance Amount Percent 2012 $ 66,904 143,388 47,528 257,820 $ (444) (27,267) 11,770 (15,941) -0.7% -19.0% 24.8% -6.2% 383,508 119,728 2,627 39,513 545,376 394,963 116,660 3,416 43,072 558,111 (11,455) 3,068 (789) (3,559) (12,735) -2.9% 2.6% -23.1% -8.3% -2.3% Total revenues 787,255 815,931 (28,676) -3.5% 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 233,984 166,476 80,087 6,409 36,540 95,428 65,341 49,924 (286) 23,915 757,818 223,005 150,349 69,183 7,224 47,248 94,409 61,900 55,126 805 24,776 734,025 10,979 16,127 10,904 (815) (10,708) 1,019 3,441 (5,202) (1,091) (861) 23,793 4.9% 10.7% 15.8% -11.3% -22.7% 1.1% 5.6% -9.4% -135.5% -3.5% 3.2% Excess before contributions and transfers 29,437 81,906 (52,469) -64.1% Transfers in (out) Change in net position (7,330) 22,107 25,688 107,594 (33,018) (85,487) -128.5% -79.5% Beginning net position 1,570,040 1,462,446 107,594 7.4% 22,107 1.4% Ending net position $ 1,592,147 $ 1,570,040 $ Revenues Overall, governmental activities total revenues decreased $28,676 or 3.5% from fiscal year 2011-12 due to decreases in both program revenues and general revenues. The 6.2% decrease ($15,941) in program revenues is primarily due to a 19.0% decrease ($27,267) in operating grants and contributions offset by a 24.8% increase ($11,770) in capital grants and contributions. The decrease in operating grants and contributions resulted primarily from decreases in revenues in the following functions: 23 • Health – The $16,112 decrease is mainly due to $13,246 related to the ending of an American Recovery & Reinvestment Act (ARRA) program, more specifically the Communities Putting Prevention to Work – Obesity, Nutrition, and Physical Activity grant. • Public safety – The $3,165 decrease is primarily due to decreases in the following operating grants in the Sheriff’s Department: High Intensity Drug Trafficking Areas grant ($985), the Border Crimes grant ($549), the Operation Stonegarden 2010 grant ($509), and the Pima Community College (PCC) Reciprocal Agreement grant ($449). The $11,770 increase in capital grants and contributions is primarily due to increases and decreases in the following functions: • Highways and streets – The $14,091 increase is primarily due to a $6,408 increase in HURF/ VLT revenues for the Transportation department. Also contributing to the increase were $3,062 in capital contributions from various land donations. • Culture and recreation – The $4,914 increase includes increases in capital projects of $1,890 in State funding for the Town of Oro Valley Tortolita Mountain Park Expansion and $2,604 from capital land contributions. • Public safety – The $3,348 decrease is primarily due to the ending of two Arizona Department of Homeland Security - Pima County Wireless Integrated Network (PCWIN) grants: PCWIN Project grant ($3,323) and PCWIN: Interoperable Communications grant ($1,720). • General government – The $2,915 decrease in General government was primarily due to significant decreases in the following grants: Energy Efficiency Conservation Block grant ($988), the Victim Compensation grant ($479), Edward Byrne Memorial Justice Assistance grant ($409), Drug/Border Prosecution grant ($369), and the Drug Treatment Alternative Program – Substance Abuse and Mental Health Services Administration / Center for Substance Abuse Treatment grant ($147). General revenues decreased $12,735 mainly due to an $11,455 decrease in property taxes which includes a $7,394 decrease in primary property taxes and a $2,219 decrease in secondary property taxes levied for debt service. These decreases are a result of decreasing property valuations, while the primary property tax rate remained unchanged. 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 78.7% of the County’s revenues. 24 General and Program Revenues - Governmental Activites Property Taxes 48.7% State-shared taxes 15.2% Capital grants & contributions 7.5% Investment Earnings 0.3% Operating grants 14.8% Charges for Services 8.5% Other general revenue 5.0% Expenses Expenses for governmental activities increased $23,793 primarily due to increases and decreases in the following functions: • General government – The $10,979 increase was primarily due to an increase in non-capitalizable expenses in various general government capital projects. Many projects had increases, the most significant being: Replace Motors – Downtown Government Complex ($905) and Jail Tower Kitchen and Freezer Replacement ($637). Also contributing to the increase were increases in Pima Health Systems transition fund expenses primarily related to graduate medical education ($4,171) and an increase in County Attorney expenses mainly for software maintenance and support, repairs and maintenance machinery and equipment services, and payments to agencies ($1,140). • Public safety – The $16,127 increase in expenses is primarily due to increases in personnel ($4,191) and increases in motor pool rates ($2,339). Non-capitalizable expenses for public safety capital projects increased primarily due to increases in the following projects: Thomas O. Price Service Center Communications Center Expansion ($3,322), Communications Emergency Operations Center ($1,886), and Paseo de Las Iglesias Restoration ($1,315). • Highways and streets – The $10,904 increase in non-capitalizable expenses for capital projects was primarily due to significant expense increases in the following projects: La Cholla Blvd Magee Rd to Overton Rd ($4,670), Pavement Preservation Program ($2,998), and ARRA Intersection Control & Crosswalk Renewal ($1,236). • Health – The primary reason for the $10,708 decrease was the ending in December 2012 of the ARRA program Communities Putting Prevention to Work – Obesity, Nutrition, and Physical Activity grant ($12,350). • Education and economic opportunity – The $5,202 decrease in expenses was primarily due to a decrease in two grants ($2,484): the Neighborhood Stabilization Program 2 ARRA grant and the Housing and Urban Development (HUD) Community Development Block grant. Noncapitalizable expenses for several capital projects decreased, the most significant decreases being S. Tucson Youth Mission View & Ochoa ($398), W. University Neighborhood Association ($385), Barrio Centro Project ($340), Dunbar Spring Project ($305), and Barrio San Antonio ($293). 25 Transfers in were significantly higher last fiscal year due to the transfer of final cash ($26,436) from the closure of Pima Health Systems (PHS) Enterprise Fund. Current year transfers out were for Regional Wastewater Reclamation Fund’s receipt of certificates of participation funding used for sewer system improvements ($8,521). The chart below presents expenses by function as a percentage to total expenses. The amount of each expense by function as a percentage to total expenses 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. Expenses by Function - Governmental Activites General Government 30.9% Health 4.8% Education & Economic Opportunity 6.6% Interest on long-term Culture & debt Recreation 3.1% 8.6% Public Safety 22.0% Sanitation 0.9% Welfare 12.6% Highways and Streets 10.5% The resulting change in net position was $22,107 for fiscal year 2013 compared with a change in net position of $107,594 for fiscal year 2012. In summary, and as explained above, ending net position for governmental activities increased $22,107 (1.4%). This year’s change in net position decreased $85,487 from last year, primarily due to a decrease in overall revenues of $28,676 and an increase in expenses of $23,793. 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. The following schedule shows changes in the net position for business-type activities. 26 Business-type Activities Schedule of Revenues, Expenses, and Changes in Net Position For the Years Ended June 30, 2013 and 2012 2012 Variance Amount Percent 3,914 169,079 221,479 1,275 2,676 225,430 $ (56,314) (1,275) 1,238 (56,351) -25.4% -100.0% 46.3% -25.0% 1,017 580 1,597 1,001 1,903 2,904 16 (1,323) (1,307) 1.6% -69.5% -45.0% 170,676 228,334 (57,658) -25.3% 144,085 7,231 1,825 153,141 117,774 58,773 6,912 1,988 185,447 26,311 (58,773) 319 (163) (32,306) 22.3% -100.0% 4.6% -8.2% -17.4% Excess before transfers 17,535 42,887 (25,352) -59.1% Transfers in (out) 7,330 (25,688) 33,018 Change in net position 24,865 17,199 7,666 -128.5% 44.6% 698,565 686,499 12,066 1.8% 19,732 2.8% 2013 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 $ Total revenues Expenses: Regional Wastewater Reclamation Pima Health System & Services Development Services Parking Garages       Total expenses Beginning net position, as restated Ending net position $ 165,165 723,430 $ $ 703,698 $ Revenues Revenues for business-type activities decreased $57,658 primarily due to a decrease in charges for services ($56,314). This decrease in charges for services is primarily due to the closure of Pima Health Systems and the loss of those revenues, which were $58,722 in fiscal year 2012. Expenses Expenses for business-type activities decreased $32,306 primarily due the closure of Pima Health Systems (which were $58,773 in 2012) offset by a $26,311 increase in expenses for the Regional Wastewater Reclamation Fund. The increase in the Regional Wastewater Reclamation Fund’s expenses is primarily due to the loss of $18,975 related to the conveyance by court order of the Marana Wastewater Reclamation Facility (MWRF) to the Town of Marana. A significant change in transfers occurred due to fiscal year 2012 including a $26,436 transfer out related to Pima Health Systems. Additionally, fiscal year 2013 included an $8,645 transfers in from proceeds from certificates of participation. The resulting excess before transfers of $17,535 in fiscal year 2012-13 was primarily supplemented by $8,521 of transfers in from proceeds from certificates of participation to yield a $24,865 change in net position. The resulting net position at the end of the fiscal year was $723,430. 27 Financial Analysis of the County’s Funds As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds The County’s general government functions are accounted for in the General, Capital Projects, Debt Service, and Special Revenue 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. Revenues for the General Fund decreased $14,147 primarily from a decrease of $10,630 in property taxes as a result of lower property valuations due to economic conditions in fiscal year 2013 with the primary property tax rate remaining unchanged. General Fund expenditures increased $6,060 primarily due to $7,851 of increases in the Sheriff’s Department (Public safety) expenditures mainly from increased personnel costs ($4,190) and an increase in motor pool rates ($2,339). The Natural Resources – Parks and Recreation department also had a $1,273 increase in expenditures as follows: additional costs for personnel, primarily for benefits; increased water and sewer, and motor pool rates; and an increase in motor vehicles. The increases in expenditures were partially offset by $4,093 less in expenditures for general government due to fiscal year 2012 including a one-time $6,776 payment to the State of Arizona for a transfer to the State General Fund. The $14,147 decrease in revenues and $6,060 increase in expenditures is the primary basis for the $20,235 decrease in the fund balance, which ended the year at $60,532. Capital Projects Fund Revenues for the Capital Projects Fund decreased $7,010 mainly due to a $10,782 decrease in Intergovernmental revenues. Significant changes in Intergovernmental revenues were primarily due to a $14,413 decrease in Regional Transportation Authority (RTA) – Sales tax revenues with an offsetting increase in State revenues of $6,175. The largest decreases in RTA revenues were primarily within the following reimbursed projects: Magee Rd. Cortaro Farms Rd Mona Lisa to La Canada ($7,829), La Canada Ina Rd to Calle Concordia ($3,013), and Alvernon Way – Valencia Rd Intersection Improvements ($2,448). The increase in State revenues is primarily due to funding for the following projects: Magee Rd Cortaro Farms Rd Thornydale Rd to Mona Lisa $3,302, Town of Oro Valley Tortolia Mountain Park Expansion $1,890, and Camino de Oeste Los Reales Valencia Rd $1,323. Expenditures (capital outlays) increased $25,364. Increases in significant capital expenditures, by project, were: the Downtown Court Complex $19,557, Pavement Preservation Program $11,601, and La Cholla Blvd to Magee Rd to Overton Rd $9,519. The largest decreases in capital projects that were either completed or nearly completed include the Communications Emergency Operations Center ($8,639), Project Pimacore ($6,626), and Raytheon Buffer Zone Acquisition ($5,995). 28 The face amount of long-term debt was $130,175, increasing $51,750 in 2012-13. Proceeds received in fiscal year 2012-13 were $50,000 from the issuance of general obligation bonds and $80,175 from the issuance of certificates of participation. In contrast, proceeds received in fiscal year 2011-12 were $60,000 for the issuance of general obligation bonds and $18,425 from HURF. Transfers in have decreased to $47,849 primarily due to the prior year reporting of a $22,470 transfer in from the Other Special Revenue Fund related to the construction of the new Justice Court building. The main reasons for the increase in transfers out are: an $8,521 transfer of proceeds from the General Fund certificates of participation to the Regional Wastewater Reclamation Fund and a $1,768 transfer to the Fleet Services Fund for the new Fleet Services building. The net result of all the activities was an increase in the net position of $33,361, resulting in a fund balance at yearend of $194,730. Debt Service Fund This major fund accounts for the accumulation of resources for the payment of principal and interest of long-term debt. Revenues for the Debt Service Fund decreased $2,711 primarily due to a $2,831 decrease in property tax revenues as a result of decreasing secondary net assessed values and taxes levied. Expenditures for the Debt Service Fund decreased $10,882 mainly from a decrease in principal payments of $10,505. This decrease is primarily due to changes in payment schedules as follows: a $7,925 decrease in general obligation bond payments and a $6,630 decrease in certificates of participation payments. Please see Note 7 beginning on page 66 for more information on bond and certificate of participation details. . Proceeds from refunding debt were $51,280, an increase of $20,535. Fiscal year 2012-13 proceeds from refunding consisted of $38,575 for General Obligation 2013 bond proceeds and $12,705 COPS 2013 proceeds. These proceeds were used to refund part of the remaining debt of the 2004 and 2005 General Obligation bond series and part of the remaining debt of the 1999 and 2003 Certificate of Participation series. Payments to escrow agents increased $22,410 in fiscal year 2012-13 as a result of Certificates of Participation 2013 and General Obligation 2013 refundings and issuance costs being higher than HURF 2012 and General Obligation 2012 issuing costs. Another significant factor in the total decrease from other financing sources (a $3,224 decrease) was transfers out to the Capital Projects Fund of $5,700 related to the 2013A Certificates of Participation and 2012 HURF premium adjustments. The resulting fund balance of $25,640 reflects a $2,658 decrease from fiscal year end 2012. Budget to Actual Comparison for the General Fund Overall, actual revenues were more than budgeted revenues by $10,932 and actual expenditures were less than budgeted expenditures by $39,379. Actual revenues for the General Fund were higher than budgeted primarily due to state shared sales tax being $3,550 higher than budgeted and miscellaneous revenue being $4,726 higher than budgeted. The higher amount of actual state shared sales tax reflects a recovery in consumer confidence and stronger corresponding retail activity than was anticipated last fiscal year. Actual miscellaneous revenue included unanticipated recovery funds from NCFE (National Century Financial Enterprises, Inc.) and Lehman Brothers for $1,835 and $937 for the NCFE bankruptcy. Actual expenditures for the General Fund were less than budgeted primarily due to the County Administrator’s maintenance of the unreserved contingency being $30,252 less than budgeted. (The General Contingency is the Board of Supervisors’ unreserved contingency that the board uses throughout the year to respond to changing needs or unforeseen circumstances.) 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. 29 Capital Assets and Debt Administration Capital Assets 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: Governmental and Business-type Activities Capital Assets As of June 30, 2013 and 2012 Business-type Activities 2013 2012 Governmental Activities 2013 2012 Land Construction in progress Buildings and improvements Infrastructure Sewage conveyance systems Equipment Total $ 487,902 297,266 460,795 590,961 71,971 $ 1,908,895 $ 467,661 248,317 422,879 607,049 $ 12,554 500,964 204,944 423,280 67,811 $ 1,209,553 64,092 $ 1,809,998 $ 15,409 342,111 212,446 442,803 79,708 $ 1,092,477 Total 2013 $ 500,456 798,230 665,739 590,961 423,280 139,782 $ 3,118,448 2012 $ 483,070 590,428 635,325 607,049 442,803 143,800 $ 2,902,475 The County’s total capital assets increased $215,973 (7.4%). The most significant changes were: construction in progress increased $207,802 (35.2%), buildings and improvements increased $30,414 (4.8%), and sewage conveyance systems decreased $19,523 (4.4%). Major capital asset events during the current fiscal year are described below. Governmental activities The current fiscal year also had several important changes to the capital assets for governmental activities. Construction in progress experienced a 19.7% ($48,949) increase over the prior year. The largest increases in construction in progress projects related to the Justice Court / Municipal Court Complex ($33,400) and the Regional Public Safety Communication System ($13,509). Buildings and improvements also had a substantial increase of 9.0% ($37,916) over the prior year. This increase was primarily due to increases in the following projects: PECOC Building Improvements Superior Courts Building CDO Wash Linear Park: Thornydale to Magee Rd. First floor improvements Abrams Building Retrofit Downtown Central Plant Chilled Water System Demolition, Asbestos Abatement & Refireproofing Floors 1-3 1680 E Benson Highway, 1505 E Apache Park Place Laguna Elementary: Sidewalks, Curbs, Landscaping PCWIN – 12 workstations $19,038 $10,484 $ 3,844 $ 2,436 $ 1,445 $ 1,374 $ 1,120 $ 1,146 $ 1,024 Overall, governmental activities capital assets increased $98,897 (5.5%) over the prior year. Business-type activities Construction in progress increased $158,853 (a 46.4% increase) over the prior year primarily due to approximately $130 million spent in Regional Optimization Master Planning (ROMP) projects. The $117,076 increase in capital assets for business-type activities was partially offset by a $35,117 decrease related to the conveyance by court order of the Marana Wastewater Reclamation Facility (MWRF) to the Town of Marana. The net effect of these and other changes was a 10.7% ($117,076) increase in capital assets for business-type activities. 30 The County’s infrastructure assets are recorded at historical cost and estimated historical cost in the governmentwide financial statements. Additional information regarding the County’s capital assets can be found in Note 5 of the financial statements on pages 62-64. Long-term Debt Significant, comparative long-term debt entered into during the last two fiscal years is presented below: Long-Term Debt For the Years Ended June 30, 2013 and 2012 2013 2012 Bonds issued (at face value): General Obligation Street and Highway Revenue $88,575 $76,225 32,945 Sewer System Revenue Obligations Certificates of Participation (COPs) 128,795 92,880 189,160 310,250 $ 298,330 Total $ During the year, $88,575 of general obligation bonds were issued consisting of $50,000 of Series 2013A and $38,575 of Series 2013B. The $50,000 of new debt issued in Series 2013A was for the purpose of funding various capital projects in the County. The $38,575 for Series 2013B was issued to refund the 2004 Series (maturities 7/1/2015 through 7/1/2019) and the 2005 Series (maturities 7/1/2017, 7/1/2018, and 7/1/2020). In addition, the County issued $80,175 in Certificates of Participation Series 2013A and received a premium of $4,908. The County intends to use $60,000 of the proceeds for: sewer system projects reported within the Regional Wastewater Reclamation Enterprise Fund, $21,300 for the new Fleet Services building, and $3,000 for various Facilities Management department capital projects. The County also issued $12,705 in Certificates of Participation Series 2013B for the purpose of refunding Certificates of Participation Series 1999 (maturity date 1/1/2014) and Series 2003 (maturities 1/1/2014 through 1/1/2018). Regarding business-type activities, $128,795 of sewer system revenue obligations were issued to finance additions and improvements to the sewer conveyance systems. The most recent ratings for Pima County’s bonds and COPs are: Credit Ratings Standard & Poor's Rating Date Certificates of Participation (COPs) General Obligation Street and Highway Revenue Sewer Revenue Bonds* Sewer Revenue Obligations A+ AAAA AAA+ Apr-2013 Apr-2013 Apr-2012 Nov-2012 Nov-2012 Fitch Ratings Rating Date AAAA AA AA AA- Apr-2013 Apr-2013 Apr-2012 Nov-2012 Nov-2012 * This excludes the Sewer Revenue Refunding Bonds Series 2011A which have ratings equal to the Sewer Revenue Obligations. The State of Arizona Constitution limits the amount of general obligation debt a governmental entity may issue to 6.0% of its net assessed valuation without voter approval. However, Pima County has voter approval for general obligation debt up to 15.0%. The current debt limitation for Pima County is $1,225,682, which is significantly in excess of Pima County’s outstanding general obligation debt. 31 Additional information regarding the County’s debt can be found in Note 7 of the financial statements on Pages 6675. Economic Factors and Next Year’s Budget As presented at the Economic Outlook 2013-14 at The University of Arizona’s 32nd Annual Forecast Luncheon, various factors suggest an improving economy in Tucson and Pima County. Housing permits and home prices are gradually increasing along with retail sales and restaurant and bar sales. The labor market is also improving but at a slow pace. The following discussions identify significant activities expected to occur in fiscal year 2013-14. Primary property taxes The recession continues to impact the local economy, primarily evident by decreasing market values of existing property. The primary Net Assessed Value of the County for fiscal year 2013-14 decreased $515 million or 6.38 percent from the current year. The contraction of the property tax base is expected to continue into fiscal year 2014-15 but only with the Net Assessed Value projected to decline by half a percent. State shared revenues An indication of increased consumer confidence and a gradual recovery in the local economy is evident by positive projections of state shared sales tax revenue. Current projections indicate a $5.7 million increase in fiscal year 2013-14. University of Arizona Medical Center – South Campus The previous agreement with the Arizona Board of Regents (ABOR) on behalf of the University of Arizona College of Medicine to provide funding for the University of Arizona Medical Center – South Campus was extended. In May 2012 the Board of Supervisors approved another two year contract with ABOR with an annual funding of $15 million for fiscal years 2013-14 and 2014-15. Road Repair In fiscal year 2012-13 the County appropriated County General Fund resources for the purpose of road repair and preservation. This program will continue in fiscal year 2013-14 when a $5 million appropriation from the General Fund is budgeted to accelerate preservation and rehabilitation of 100 miles or 5.7% of paved County roads. Medical Insurance Due to employee medical insurance premiums increasing an average of 15 to 20 percent yearly over the last five years while using an independent provider, the County has moved to a self-insured medical plan run by a third party administrator, Aetna. Insurance costs for fiscal year 2013-14 are forecasted to increase by less than 7.0% from the fiscal year 2012-13 cost. Solid Waste Beginning June 1, 2013 a private contractor began providing solid waste services to the public instead of the direct service model Pima County had been using. This change is forecast to reduce costs by nearly $4 million in fiscal year 2013-14. 32 Stadium District The Stadium District has taken several steps since 2008 to diversify the use of the Kino Veterans Memorial Stadium in order to increase revenues and decrease costs after the departure of spring training for the Chicago White Sox and Arizona Diamondbacks. Steps undertaken include: • • • • • • Activating the Pima County Sports and Tourism Authority in order to potentially attract new major league baseball spring training teams and additional sports activities Re-negotiating gem show agreements to add services and increase rental rates Transferring operation of Kino Community Recreation Center to the YMCA of Southern Arizona to reduce costs and expand services Developing staff expertise for Stadium conversion to and from baseball events to other sporting events such as football, rugby, and soccer Collaborating with FC Tucson Soccer to attract Major League Soccer teams for training and tournaments Allocating a portion of the White Sox termination payment to begin repurposing the stadium complex for such other sporting events Through these actions and others, the District’s operating revenues have exceeded budgeted revenue by $1,050 in fiscal year 2011-12 and $245 in fiscal year 2012-13. However, since revenues are still less than revenue realized during the major league spring training period, a General Fund subsidy of $1,500 which began in 2012-13 is also planned for 2013-2014. Requests 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. 33 (This page is intentionally blank) 34 Basic Financial Statements PIMA COUNTY, ARIZONA Statement of Net Position June 30, 2013 Exhibit A - 1 (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 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 $ Primary Government Business-type Activities 506,110 $ 13,262 139 (8,524) 50,269 6,038 2,123 5,462 1,018 136,786 3,229 432 81,985 85,214 432 487,902 297,266 12,554 500,964 500,456 798,230 460,795 204,944 423,280 67,811 665,739 423,280 139,782 590,961 2,635 1,458,211 3,946,664 6,193 71,971 590,961 2,488,453 Total assets Deferred outflows of resources Deferred charge on refunding Total deferred outflows of resources Liabilities Accounts payable Interest payable Contract retentions Employee compensation Due to other governments Deposits and rebates Unearned revenue Noncurrent liabilities: Due within one year Due in more than one year Total liabilities Net Position Net investment in capital assets Restricted for: Facilities, justice, library, tax stabilization, and community development Highways and streets Debt service Capital projects Regional wastewater Healthcare Unrestricted Total net position $ 68 8,524 8 18,164 3,097 26 642,896 13,262 207 $ 50,277 24,202 5,220 5,488 1,018 4,133 4,133 4,133 4,133 1,085 8 36 81 1,848 500 49,883 2 2,752 48,370 17 3,400 6,414 26,483 322 2,827 76,366 324 2,752 53,208 25 3,400 9,241 110,779 678,822 900,439 36,979 663,324 734,781 147,758 1,342,146 1,635,220 370 1,308,057 531,945 1,840,002 3,135 4,838 8 100,423 27,033 29,100 42,841 17,785 9,853 $ Component Units Total 1,163 145,618 1,592,147 $ 101,759 723,430 $ 100,423 27,033 29,100 52,694 17,785 1,163 247,377 2,315,577 See accompanying notes to financial statements 35 240 43 87 $ 2,688 5,823 PIMA COUNTY, ARIZONA Statement of Activities For the Year Ended June 30, 2013 (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 Development Services Parking Garages Total business-type activities Total primary government Expenses $ $ Component units: Sports & Tourism Authority Southwestern Fair Commission Total component units $ $ 233,984 $ 166,476 80,087 6,409 36,540 95,428 65,341 49,924 (286) 23,915 757,818 144,085 7,231 1,825 153,141 910,959 25 5,399 5,424 Operating Grants and Contributions Charges for Services $ $ $ 28,910 10,238 6,511 3,577 12,495 320 2,865 1,544 $ 66,460 156,573 6,519 2,073 165,165 231,625 5 5,665 5,670 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 position Net position at beginning of year, as restated Net position at end of year See accompanying notes to financial statements 36 26,042 6,138 45,750 1,146 8,718 263 652 27,412 Capital Grants and Contributions $ 1,215 2,213 49,342 985 5,175 368 116,121 59,298 3,914 $ 116,121 $ 4 120 124 $ $ 3,914 63,212 Exhibit A - 2 Net (Expense) Revenue and Changes in Net Position Governmental Activities $ Primary Government Business-type Activities (177,817) (147,887) 21,516 (1,686) (14,342) (94,845) (56,649) (20,600) 286 (23,915) (515,939) $ $ (515,939) Component Units Total 16,402 (712) 248 15,938 15,938 (177,817) (147,887) 21,516 (1,686) (14,342) (94,845) (56,649) (20,600) 286 (23,915) (515,939) 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 16,402 (712) 248 15,938 (500,001) Business-type activities: Regional Wastewater Reclamation Development Services Parking Garages Total business-type activities Total primary government $ $ $ 273,191 19,050 28,114 63,153 6,076 1,524 97,685 22,043 3,207 7,439 2,627 21,267 (7,330) 538,046 22,107 1,570,040 1,592,147 $ 1,017 580 7,330 8,927 24,865 698,565 723,430 $ (16) 386 370 273,191 19,050 28,114 63,153 6,076 1,524 97,685 22,043 3,207 7,439 3,644 21,847 56 546,973 46,972 2,268,605 2,315,577 56 426 5,397 5,823 $ 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 position Net position at beginning of year, as restated Net position at end of year See accompanying notes to financial statements 37 PIMA COUNTY, ARIZONA Balance Sheet - Governmental Funds June 30, 2013 Exhibit A - 3 (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 Loan receivable Other assets Restricted cash equivalents Total assets $ 67,006 9,421 33 2,959 21,973 1,158 16 3,433 399 Capital Projects $ 221,836 Debt Service $ 23 1,542 8,098 2,006 25,430 2,179 35 Other Governmental Funds Total Governmental Funds $ 105,550 1,662 41 276 20,089 2,498 1,422 439 33 1,018 45 $ 419,822 13,262 132 4,777 50,166 5,662 1,438 3,872 432 1,018 3,229 6 3,184 $ 106,398 $ 236,689 $ 27,650 $ 133,073 $ 503,810 $ 12,538 $ 21,126 $ 17 $ 11,999 2 $ 4,491 4,001 14 6 4,110 45,680 2 2,752 17,289 13,208 17 3,400 6,414 17 24,623 88,762 1,993 4,661 1,523 612 19,802 12,078 612 Liabilities, deferred inflows of resources and fund balances Liabilities: Accounts payable Interest payable Contract retentions Employee compensation Due to other funds Due to other governments Deposits and rebates Unearned revenue 2,752 23 8,627 12,775 580 3 210 2,295 Total liabilities 3,184 9 28,401 35,721 8,903 8,562 6,238 Total deferred inflows of resources 17,465 6,238 1,993 6,796 32,492 Total liabilities and deferred inflows of resources 45,866 41,959 2,010 31,419 121,254 1,939 76,570 7,746 23,784 (8,385) 5,787 264,425 14,704 49,582 48,058 Deferred inflows of resources: Unavailable revenue - intergovernmental Unavailable revenue - property taxes Unavailable revenue - other Fund balances Nonspendable Restricted Committed Assigned Unassigned 158 56,526 Total fund balances 60,532 Total liabilities, deferred inflows of resources and fund balances 3,848 $ 106,398 187,855 6,958 25,640 (83) 194,730 $ 236,689 25,640 $ 27,650 See accompanying notes to financial statements 38 101,654 $ 133,073 382,556 $ 503,810 PIMA COUNTY, ARIZONA Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2013 Exhibit A - 4 (in thousands) Fund balances - total governmental funds $ 382,556 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds Governmental capital assets Less accumulated depreciation Some liabilities and their associated costs are not due and payable in the current period and therefore are not reported in the governmental funds Unamortized deferred outflow for bond refunding Bonds payable Certificates of participation payable Leases and notes payable $ 2,771,695 (890,568) 4,133 (595,972) (134,494) (903) Some compensated absences are not due and payable shortly after June 30, 2013, and therefore are not reported in the governmental funds Employee compensation Some liabilities are not due and payable shortly after June 30, 2013, and are therefore not reported in the governmental funds Landfill liability Pollution remediation liability 1,881,127 (727,236) (30,208) (21,730) (734) (22,464) Some receivables are not available to pay for current period expenditues and, therefore, are reported as unavailable revenue in the governmental funds 32,492 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 Position 75,880 Net position of governmental activities $ 1,592,147 See accompanying notes to financial statements 39 PIMA COUNTY, ARIZONA Statement of Revenues, Expenditures and Changes in Fund Balance Governmental Funds For the Year Ended June 30, 2013 Exhibit A - 5 (in thousands) Revenues: Property taxes Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous General $ Total revenues 281,017 2,816 131,984 32,721 4,799 591 10,907 Capital Projects $ $ 464,835 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 63,317 Other Governmental Funds Total Governmental Funds $ $ 33,359 4,770 23 533 2,811 334 16 47,296 5,555 135,857 16,030 5,105 824 8,448 41,473 63,690 219,115 789,113 45,485 21,286 35,866 5,328 32,261 263 39,223 31,649 238,582 152,373 35,866 5,328 35,581 95,339 55,691 44,299 174,976 68,342 23,904 1,654 193,097 131,087 3,320 95,076 16,468 12,650 174,976 159 1 Total expenditures Excess (deficiency) of revenues over (under) expenditures 67,885 23,903 1,654 298 211,659 451,858 174,976 93,442 12,977 (133,503) (29,752) 391,630 8,371 301,223 53,521 9,904 2,282 22,182 931,935 7,456 (142,822) Other financing sources (uses): Installment note Premium on bonds Proceeds from refunding debt Payments to escrow agent Face amount of long-term debt issued Proceeds from sale of capital assets Transfers in Transfers (out) 5,792 (39,768) 47,849 (11,160) 24,978 (5,700) 31 34,608 (65,616) 764 11,959 51,280 (55,423) 130,175 31 113,227 (122,244) Total other financing sources (uses) (33,212) 166,864 27,094 (30,977) 129,769 Net change in fund balances (20,235) 33,361 (2,658) (23,521) (13,053) 80,767 161,369 28,298 124,951 395,385 224 224 764 11,959 51,280 (55,423) 130,175 Fund balances at beginning of year Changes in nonspendable fund balance: Change in inventory Fund balances at end of year $ 60,532 $ 194,730 $ 25,640 See accompanying notes to financial statements 40 $ 101,654 $ 382,556 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, 2013 Exhibit A - 6 (in thousands) Net change in fund balances - total governmental funds $ (13,053) 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 $ 145,456 (58,163) 87,293 (130,175) (11,959) (51,280) 68,342 55,423 (764) 286 (70,127) 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 Position. 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 Position. Also, governmental funds report the effect of deferred outflows of resources, 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 issued Premium on bonds Proceeds from refunding bonds Debt service - principal payments Payments to escrow agent Installment note Amortization expense 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 6,387 684 1,287 8,358 (1,070) (858) 71 (636) 224 (2,269) 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 Other Internal service funds are used by management to charge the costs of certain activities to individual funds. The incorporation of the external activities of these funds and the elimination of profit/loss generated by primary government customers results in net revenue (expense) for governmental gctivities Change in net position of governmental activities See accompanying notes to financial statements 41 11,905 $ 22,107 PIMA COUNTY, ARIZONA Statement of Net Position - Proprietary Funds June 30 , 2013 Exhibit A - 7 (in thousands) Business-type Activities Enterprise Funds Regional Wastewater Reclamation Assets Current assets: Cash and cash equivalents Restricted cash and cash equivalents Interest receivable Due from other funds Due from other governments Accounts receivable (net) Inventory Prepaid expense Total current assets Noncurrent assets: Restricted cash and cash equivalents Capital assets: Land and other improvements Buildings and improvements Sewage conveyance system Equipment Less accumulated depreciation Construction in progress Total capital assets (net of accumulated depreciation) Total noncurrent assets $ $ Total Enterprise Funds 8,051 $ 3 6 151 9 8,220 46,794 Total assets Liabilities Current liabilities: Accounts payable Employee compensation Interest payable Due to other funds Due to other governments Unearned revenue Current sewer revenue bonds and obligations payable Current portion of wastewater loans payable Current portion reported but unpaid losses Current portion incurred but not reported losses Total current liabilities Noncurrent liabilities: Contracts and notes Sewer revenue bonds and obligations payable Wastewater loans payable Reported but unpaid losses Incurred but not reported losses Total noncurrent liabilities Total liabilities Net position Net investment in capital assets Restricted for: Debt service Capital projects Regional wastewater reclamation Unrestricted Total net position 128,735 35,191 65 8,597 2 18,013 3,097 17 193,717 Other Enterprise Funds $ 86,288 7 67 103 376 685 1,590 89,116 46,794 10,786 382,320 693,048 105,890 (489,030) 500,964 1,203,978 1,250,772 1,768 12,927 5,575 5,575 12,554 395,247 693,048 107,036 (499,296) 500,964 1,209,553 1,256,347 1,146 (10,266) 43,000 (20,089) 3,298 27,768 27,768 1,444,489 13,795 1,458,284 116,884 26,132 4,172 322 73 8 2,826 35,490 1,489 351 666 26,483 4,838 322 73 8 2,827 35,490 1,489 4,203 873 70,512 1,018 1 592 967 160 4,195 2,719 12,150 71,530 12,645 630,999 19,680 12,645 630,999 19,680 663,324 663,324 17,411 11,443 28,854 733,836 1,018 734,854 41,004 526,370 5,575 531,945 27,768 7,202 29,100 42,841 17,785 101,759 48,112 29,100 42,841 17,785 94,557 $ 136,786 35,191 68 8,597 8 18,164 3,097 26 201,937 Governmental ActivitiesInternal Service Funds 710,653 $ 12,777 See accompanying notes to financial statements 42 $ 723,430 $ 75,880 PIMA COUNTY, ARIZONA Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds For the Year Ended June 30, 2013 Exhibit A - 8 (in thousands) Business-type Activities Enterprise Funds Operating revenues: Charges for services Other Regional Wastewater Reclamation $ Total net operating revenues Operating expenses: Employee compensation Operating supplies and services 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 revenues Investment earnings Sewer connection fees Interest expense Debt issuance cost Gain/(loss) on disposal of capital assets Claim and judgment contingency losses 145,190 387 Other Enterprise Funds $ 8,751 59 $ 153,941 446 $ 45,575 451 145,577 8,810 154,387 46,026 34,964 9,298 1,592 5,397 5,385 159 7,519 9,066 71 40,349 9,457 1,592 5,468 14,544 6,093 44,718 116,606 2,496 328 218 8,657 17,040 6,421 44,936 125,263 2,154 7,676 4,565 3,044 1,708 3,775 39,507 28,971 153 29,124 6,519 350 972 11,358 (3,467) (1,189) (19,596) (419) Total nonoperating revenues Governmental ActivitiesInternal Service Funds Total Enterprise Funds 350 1,017 11,358 (3,467) (1,189) (19,596) (419) 45 291 38 (11,991) 45 (11,946) Income (loss) before contributions and transfers 16,980 198 17,178 6,848 Capital contributions Transfers in Transfers (out) 3,564 8,645 (1,300) 3,564 9,645 (2,315) 165 2,091 (404) Change in net position 27,889 183 28,072 8,700 682,764 12,594 695,358 67,180 Net position at beginning of year, as restated Net position at end of year $ 710,653 1,000 (1,015) $ 12,777 See accompanying notes to financial statements 43 $ 723,430 329 $ 75,880 PIMA COUNTY, ARIZONA Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2013 Exhibit A - 9 (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 Regional Wastewater Reclamation $ 142,374 387 (26,903) (10,266) (3,000) (34,939) Net cash provided by operating activities Other Enterprise Funds $ 8,799 (4,793) 356 7,451 (8,602) 350 Net cash provided by (used for) noncapital financing activities Governmental ActivitiesInternal Service Funds $ 8,451 (1,015) (8,599) 350 (12) (813) 45,628 459 (16,195) (3,448) (7,305) (6,763) 68,009 1,000 (1,015) 3 (801) 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 Issuance cost of new debt Proceeds from premium Sewer connection fees Proceeds from sale of capital assets Purchase of capital assets 151,173 387 (28,528) (12,291) (3,000) (39,732) (1,625) (2,025) 67,653 Cash flows from noncapital financing activities: Cash transfers in from other funds Cash transfers out to other funds Loans with other funds Intergovernmental revenues Total Enterprise Funds 12,376 1,986 (404) 59 1,641 128,795 (30,821) (10,333) (1,189) 22,413 11,553 16,142 (205,423) 128,795 (30,821) (10,333) (1,189) 22,413 11,553 16,142 (205,423) 410 (9,732) (68,863) (68,863) (9,322) Net cash (used for) capital and related financing activities Cash flows from investing activities: Interest received on cash and investments 998 46 1,044 302 Net cash provided by investing activities 998 46 1,044 302 Net increase/ (decrease) in cash and cash equivalents (1,013) Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 390 211,733 $ 210,720 (623) 7,661 $ 8,051 (continued) See accompanying notes to financial statements 44 4,997 219,394 $ 218,771 81,291 $ 86,288 PIMA COUNTY, ARIZONA Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2013 Exhibit A - 9.1 (in thousands) Reconciliation of operating income (loss) to net cash provided by (used for) operating activities Operating income Regional Wastewater Reclamation $ 28,971 Other Enterprise Funds $ 153 Total Enterprise Funds $ 29,124 Governmental ActivitiesInternal Service Funds $ 6,519 44,718 218 44,936 3,775 Adjustments to reconcile operating income (loss) 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 and other assets Prepaid expense Increase (decrease) in liabilities: Accounts payable Due to other governments Reported but unpaid losses Incurred but not reported losses Other current liabilities Net cash provided by operating activities (2,815) (2) 209 (11) (6) (6) (4) (451) 8 28 (3,000) 26 $ 67,653 (2,821) (8) 209 (15) (423) 8 356 $ 68,009 Noncash investing, capital, and noncapital financing activities during the year ended June 30, 2013: Regional Wastewater Reclamation Enterprise Fund received developer-built conveyance systems with an estimated fair value of $3,564. This contribution was recorded as an increase in capital assets and capital contributions. Regional Wastewater Reclamation Enterprise Fund retired capital assets with a net book value of $35,733. Regional Wastewater Reclamation Enterprise Fund transferred out assets with a value of $105 to the County's Internal Service Fund. Development Services Enterprise Fund retired fully depreciated assets with an original cost of $63. Internal Service Funds received a transfer in of capital assets from Regional Wastewater Reclamation Enterprise Fund with a net book value of $105. Internal Service Funds received capital contributions with a net book value of $165 from the County's general government and sold capital assets with a net book value of $372. See accompanying notes to financial statements 45 1,514 (1,849) 2,220 (82) (3,000) (1) (27) $ 52 9 350 (132) $ 12,376 PIMA COUNTY, ARIZONA Statement of Fiduciary Net Position - Fiduciary Funds June 30, 2013 Exhibit A - 10 (in thousands) Investment Trust Funds Assets Cash and cash equivalents Interest receivable Due from other governments $ $ Total assets 206,437 52 $ 206,489 $ 59,952 $ 1,081 35,755 23,116 $ 59,952 Liabilities Employee compensation Due to other governments Deposits and rebates Total liabilities Net position Held in trust for pool participants $ Agency Funds 206,489 See accompanying notes to financial statements 46 58,561 1,391 PIMA COUNTY, ARIZONA Statement of Changes in Fiduciary Net Position Fiduciary Funds For the Year Ended June 30, 2013 Exhibit A - 11 (in thousands) Investment Trust Funds Additions Contributions from participants Total contributions $ Investment earnings Total investment earnings 1,623 1,623 2,356,540 Total additions Deductions Distributions to participants 2,447,871 2,447,871 Total deductions (91,331) Change in net position 297,820 Net position held in trust July 1, 2012 Net position held in trust June 30, 2013 See accompanying notes to financial statements 47 2,354,917 2,354,917 $ 206,489 PIMA COUNTY, ARIZONA Combining Statement of Net Position Component Units June 30, 2013 Exhibit A - 12 (in thousands) Sports & Tourism Authority Southwestern Fair Commission Assets Cash and cash equivalents Accounts receivable (net) Inventories Prepaids Restricted assets: Cash and cash equivalents Capital assets (net): Buildings and improvements Machinery and equipment Total assets Liabilities Accounts payable Deposits and rebates Unearned revenue Total liabilities Net Position Net investment in capital assets Unrestricted Total net position $ $ 7 7 $ (7) (7) $ 1,085 8 36 81 Total $ 1,085 8 36 81 1,848 1,848 2,635 500 6,193 2,635 500 6,193 233 43 87 363 240 43 87 370 3,135 2,695 5,830 3,135 2,688 5,823 $ See accompanying notes to financial statements 48 See accompanying notes to financial statements 49 Total component units Southwestern Fair Commission (SFC) Operations Total SFC Sports & Tourism Authority (S&TA) Operations Total S&TA 5,424 5,399 5,399 25 25 $ $ 5 5 5,670 5,665 5,665 General revenues: Miscellaneous Total general revenues Change in net position Net position at beginning of year Net position at end of year $ $ Expenses Charges for Services $ $ 124 120 120 4 4 Operating Grants and Contributions Program Revenues (in thousands) $ $ S&TA $ (16) 9 (7) $ (16) (16) (16) SFC 56 56 442 5,388 5,830 386 386 386 $ $ Net (Expense) Revenue PIMA COUNTY, ARIZONA Combining Statement of Activities Component Units For the Year Ended June 30, 2013 56 56 426 5,397 5,823 370 386 386 (16) (16) Total Exhibit A - 13 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 1: Summary of Significant Accounting Policies Pima County’s accounting policies conform to generally accepted accounting principles applicable to governmental units adopted by the Governmental Accounting Standards Board (GASB). For the year ended June 30, 2013, the County implemented the provisions of GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. GASB Statement No. 62 incorporates certain accounting and financial reporting guidance in FASB Statements and Interpretations issued on or before November 30, 1989, Accounting Principles Board Opinions, and Accounting Research Bulletins into GASB’s authoritative literature. GASB Statement No. 65 reclassifies certain items that were previously reported as assets and liabilities as deferred inflows of resources or deferred outflows of resources. 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 to be financially accountable. Blended component units, although legally separate entities, are so intertwined with the County that they are in substance part of the County’s operations. Therefore, data from these units are combined with data of the County. 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 following describes the County’s component units: The Pima County Stadium District, a legally separate entity, was originally created to provide regional leadership and fiscal resources to ensure the presence of major league baseball in Pima County. However, in 2008 and 2010, the Chicago White Sox and the Arizona Diamondbacks Major League Baseball teams terminated their agreements with the District and moved to newer, larger facilities in Maricopa County. Since their departure, the District has taken steps to repurpose and diversify the use of the Stadium and to decrease costs and increase revenue. Pima County plans on capitalizing on professional soccer as an emerging area of potential growth in the tourism market by converting five fields at Kino Sports Complex into six soccer fields and adding a 2,000-seat grandstand. The facility also hosts youth athletics, amateur and professional sports, concerts and community events on its fields. The County Board of Supervisors serves as 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 Library District provides and maintains library services for the County’s residents. 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. 50 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) 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 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 Pima County Street Lighting Districts (SLDs) operate and maintain street lighting for specific regions in areas outside local city jurisdictions. The Pima County Board of Supervisors serves as the Board of Directors. SLDs are reported as a special revenue fund in these financial statements and meet substantively the same criteria as blended component units. Separate financial statements for the SLDs 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 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. 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 Supervisors. 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 Presentation The basic financial statements include both government-wide statements and fund financial statements. The government-wide statements focus on the County as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the usefulness of the information. Government-wide statements - Provide information about the primary government (the County) and its component units. The statements include a statement of net position and a statement of activities. These statements report the overall government’s financial activities except for fiduciary activities. The statements also distinguish between the governmental and business-type activities of the County and between the County and its discretely presented component units. Governmental activities generally are financed through taxes and 51 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) 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:    charges to customers or applicants for goods, services, or privileges provided; operating grants and contributions; and capital grants and contributions, including special assessments. Revenues that are not classified as program revenues, including internally dedicated resources and all taxes levied or imposed by the County, are reported as general revenues. Generally, the effect of interfund activity has been eliminated from the government-wide financial statements to minimize the double-counting of internal activities. However, charges for interfund services provided and used are not eliminated if the prices approximate their external exchange values. Fund 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 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 nonmajor funds. Fiduciary funds are aggregated and reported by fund type. Proprietary fund revenues and expenses are classified as either operating or nonoperating. Operating revenues and expenses generally result from transactions associated with the fund’s principal activity. Accordingly, revenues, such as user charges, in which each party receives and gives up essentially equal values, are operating revenues. Other revenues result from transactions in which the parties do not exchange equal values and are considered nonoperating revenues such as connection fees, intergovernmental revenues, along with investment earnings and revenues generated by ancillary activities. Operating expenses include the cost of services, administrative expenses, and depreciation on capital assets. Other expenses, such as interest expense, are considered to be nonoperating 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 those required to be accounted for in another fund. The General Fund revenues are primarily from property taxes and intergovernmental revenues. 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. Capital Projects Fund revenues are from intergovernmental, face amount of long-term debt and transfers in. The Debt Service Fund accounts for the accumulation of resources for, and the payment of, general long-term debt principal and interest. Revenues are from property taxes, proceeds from refunding debt, and transfers in. The County reports the following major enterprise fund: Regional Wastewater Reclamation (RWR) accounts for the management and operation of wastewater treatment and water pollution control programs. Revenues are from charges for services and connection fees. 52 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) The County reports the following fund types: Internal Service Funds account for fleet maintenance and operation, insurance, printing services, and telecommunications services provided to the County’s departments or to other governments on a costreimbursement basis. Investment Trust Funds account for pooled assets and individual investment accounts the County Treasurer holds and invests on behalf of other governmental entities. Agency Funds account for assets and liabilities the County holds as an agent for the State, cities, towns, and other parties. C. Basis of Accounting The government-wide, proprietary fund, and fiduciary fund financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. The agency funds are custodial in nature and do not have a measurement focus but utilize the accrual basis of accounting for reporting its assets and liabilities. 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 the provider imposed have been met. Under the terms of grant agreements, the County funds certain programs by a combination of grants and general revenues. Therefore, when program expenses are incurred, there are both restricted and unrestricted net position resources available to finance the program. The County applies grant resources to such programs before using general revenues. Governmental funds in the fund 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 they become both measurable and available. Major revenue sources of governmental funds are taxes, intergovernmental, and charges for services. The County accrues property taxes as revenue if collected within 30 days after year end. In addition, other taxes that are reported as intergovernmental revenues, i.e. state shared sales tax, highway user revenues and vehicle license tax, recreational vehicle taxes, car rental surcharges, and hotel excise taxes are also recognized if collected within 30 days. Grant funded intergovernmental revenues and charges for services are accrued and considered available if collected within 60 days after fiscal year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, compensated absences, landfill closure and postclosure care costs, and pollution remediation obligations, which are recognized as expenditures to the extent they are due and payable. General capital asset acquisitions are reported as expenditures in governmental funds. Issuances of general long-term debt and acquisitions under capital lease agreements are reported as other financing sources. D. Cash and Investments For purposes of its statements of cash flows, the County considers cash on hand, demand deposits, cash on deposit with the County Treasurer, and only those highly liquid investments with a maturity period of 3 months or less when purchased to be cash equivalents. Nonparticipating interest-earning investment contracts are stated at cost. Money market investments and participating interest-earning investment contracts with a remaining maturity of 1 year or less at the time of purchase are stated at amortized cost. All other investments are stated at fair value. 53 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) E. Inventories Inventories in the government-wide and proprietary funds’ financial statements are recorded as assets when purchased and expensed when consumed. The County accounts for its inventories in the Health Fund using the purchase method. Inventories of the Health Department 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 as 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 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. 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 (the dollar values above which asset acquisitions are added to the capital asset accounts), 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 improvements) All Straight Line 20 - 30 Years $100 Straight Line 10 - 50 Years $5 Straight Line 4 - 25 Years Infrastructure/Sewer conveyance systems $100 Straight Line 10 - 50 Years Intangible (Reported in land, equipment, and infrastructure) $100 Straight Line Varies Buildings and improvements Equipment 54 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) Discretely presented component unit: The Southwestern Fair Commission, Inc. 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. H. Fund Balance Classifications 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. 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. The unrestricted fund balance category is composed of committed, assigned, and unassigned resources. Committed fund balances are self-imposed limitations approved by the County’s Board of Supervisors, which is the highest level of decision-making authority within the County. Constraints placed on committed fund balances 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 resources constrained by the County’s intent to be used for specific purposes, but are neither restricted nor committed. The Board of Supervisors has authorized the County Administrator to make assignments of resources for a 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. When an expenditure is incurred that can be paid from either restricted or unrestricted fund balances, the County will use restricted fund balance first. For the disbursement of unrestricted fund balances, the County will use committed amounts first, followed by assigned amounts, and lastly unassigned amounts. I. Investment Earnings Investment earnings are composed of interest, dividends, and net changes in the fair value of applicable investments. J. Compensated Absences Compensated absences payable consists 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 on years of service, but any vacation hours in excess of the maximum amount that are unused at fiscal year-end are forfeited. Upon terminating employment, all unused and unforfeited vacation benefits are paid to employees. Accordingly, vacation benefits are accrued as a liability in the government-wide and proprietary funds’ financial statements. A liability for 55 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) these amounts is reported in the governmental funds’ financial statements only if they have matured, for example, as a result of employee resignations and retirements by fiscal year-end. 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 terminating employment. Because sick leave benefits do not vest with employees, a liability for sick leave benefits is not accrued in the financial statements. However, employees who have accumulated greater than 240 hours of sick leave and are eligible to retire will receive some benefits. An estimate of those retirement payouts is accrued as a liability in government-wide and proprietary funds’ financial statements in Employee Compensation. Compensated absences for the governmental funds is accrued based on vacation and sick leave paid within the first two pay periods after fiscal year-end. 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. 56 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 2: Fund Balance Classifications of the Governmental Funds The table below details the fund balance categories and classifications: General Fund Capital Projects Fund Debt Service Fund Other Governmental Funds CAFR Total Fund Balance: Non spendable: Inventory Prepaid expenses Loan receivable Permanent fund principal Total nonspendable $ 16 3,433 399 $ 3,848 Restricted for: Capital Projects Streets and highways Other Justice Court Complex 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 $ 32,480 137,922 4,677 12,776 187,855 Committed to: Judicial activities Law enforcement Parks and recreation School reserve Sports promotion (Stadium) Other purposes Total committed Assigned to: Debt service reserve Health Landfill Law enforcement Parks and recreation School reserve Other purposes Total assigned Unassigned: Total unassigned Total Fund Balance 259 6,699 6,958 $ 25,640 $ 56,526 60,532 (83) 194,730 57 $ 25,640 $ 1,438 3,872 432 45 5,787 25,014 8,191 4,845 2,207 9,761 26 515 1,584 21,577 1,224 1,626 76,570 32,480 137,922 4,677 25,014 20,967 4,845 2,207 9,761 26 515 1,584 21,577 1,224 1,626 264,425 123 458 1,475 315 2,016 3,359 7,746 123 458 1,734 315 2,016 10,058 14,704 25,640 970 1,874 154 4 1,039 19,901 49,582 1,039 19,901 23,784 25,640 $ $ 970 1,874 154 4 158 1,422 439 33 45 1,939 (8,385) 101,654 $ 48,058 382,556 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (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; 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; bonds of any county municipal district, municipal utility, or special taxing district of any state that are payable from revenues, earnings, or a special tax pledged for all payments on the obligations; and certain open-end and close-end mutual funds, including exchange traded funds. 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, as of the date of purchase. 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, 2013, the carrying amount of the County’s deposits was $51,125 and the bank balance was $59,560. 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, 2013, $2,704 of the County’s bank balance was exposed to custodial credit risk because it was uninsured and uncollateralized. 58 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 3: Cash and Investments (continued) Investments—At June 30, 2013, the County’s investments consisted of $370,227 invested in marketable securities and $571,708 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, 2013, credit risk for the County’s investments was as follows: Investment Type Commercial paper Corporate bonds Municipal bonds Federal Farm Credit Bank Federal Home Loan Bank Money market mutual fund State Treasurer Investment Pool 5 State Treasurer Investment Pool 500 State Treasurer Investment Pool 7 Total Rating Rating Agency A1+/P1 BBB/Baa1 Unrated AA+/Aaa AA+/Aaa S&P / Moody's S&P / Moody's Amount $ S&P / Moody's S&P / Moody's 2,301 285,202 10,715 5,005 14,904 AAAm/Aaa-mf S&P / Moody's Marketable securities 26,642 344,769 AAAf/S1+ S&P Unrated Unrated State Treasurer's Investment Pool 364,864 99,979 106,865 571,708 $ 916,477 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 $941,935 of investments, $343,585, consisting of the commercial paper, corporate bonds, municipal bonds, Federal Farm Credit Bank, Federal Home Loan Bank 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, 2013 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. 59 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 3: Cash and Investments (continued) As of June 30, 2013, the County had the following investments: Amount Investment Type State Treasurer Investment Pool 5 State Treasurer Investment Pool 500 State Treasurer Investment Pool 7 Commercial paper Corporate bonds Municipal bonds Federal Farm Credit Bank Federal Home Loan Bank U.S. Treasury Notes Money market mutual fund Total $ 364,864 99,979 106,865 2,301 285,202 10,715 5,005 14,904 25,458 26,642 $ 941,935 Weighted Average Maturity (Years) 0.06 7.14 0.05 0.00 1.47 2.88 3.19 2.48 0.82 0.14 A reconciliation of cash, deposits, and investments to amounts shown on the Statements of Net Position follows: Cash on Hand Cash, deposits and investments: $ 48 $ Governmental Activities Statement of Net Position: Cash and cash equivalents Restricted cash and cash equivalents Total $ $ Amount of Amount of Investments Deposits 51,125 $ 941,935 $ Business-type Activities 506,110 $ 3,229 509,339 $ Investment Trust Funds 136,786 $ 81,985 218,771 $ Total 993,108 Agency Funds 206,437 $ 58,561 $ 206,437 $ 58,561 $ Totals 907,894 85,214 993,108 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. Substantially, all deposits and investments of the County’s primary government are included in the County Treasurer’s investment pool. Therefore, the deposit and investment risks of the Treasurer’s investment pool are substantially the same as the County’s deposit and investment risks disclosed above. 60 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 3: Cash and Investments (continued) The Pool’s assets consist of the following: Principal Commercial paper Corporate bonds Municipal bonds Federal Farm Credit Bank Federal Home Loan Bank U.S. Treasury Notes State Treasurer Investment Pool 5 Deposits Interest receivable Total assets $ Interest Rates Maturities 2,300 0.14% 07/13 284,812 0.45-7.13% 07/13-09/17 10,600 0.95-1.5% 07/13-07/17 5,000 0.83% 08/16 15,000 0.5-3.13% 12/13-12/16 24,800 1.88-2.75% 10/13-07/14 198,056 N/A N/A 27,698 N/A N/A 52 N/A N/A A condensed statement of the investment pool’s net position and changes in net position follows: Statement of Net Position Assets held in trust for: Internal participants External participants Total assets Total liabilities Total net position held in trust Statement of Changes in Net Position Total additions Total deductions Net decrease Net position held in trust: July 1, 2012 June 30, 2013 $ 469,767 99,624 569,391 $ 569,391 $ 6,415,571 (6,483,565) (67,994) $ 61 637,385 569,391 Fair Value $ $ 2,301 285,202 10,715 5,005 14,904 25,458 198,056 27,698 52 569,391 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 4: Due from Other Governments Governmental activities: Capital Projects Fund General Fund Federal government: Grants and contributions State of Arizona: Taxes and shared revenues Grants and contributions Cities: Reimbursement for services Other governments: Reimbursement for services Total due from other governments fund based statements $ 119 18,410 $ Debt Service Fund $ 6 $ 4,141 Internal Service Funds $ Total Governmental Activities 1 $ 4,267 2,240 5,137 8,655 2 25,787 8,657 3,211 131 1,916 82 5,340 233 5,727 240 18 6,218 21,973 $ Other Governmental Funds $ 8,098 $ 6 $ 20,089 $ 103 $ 50,269 Note 5: Capital Assets Capital asset activity for the year ended June 30, 2013, was as follows: Balance July 1, 2012 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 467,661 248,317 715,978 $ 603,725 1,203,067 146,995 1,953,787 Less accumulated depreciation for: Buildings and improvements Infrastructure Equipment Total accumulated depreciation 1,809,998 62 $ 173,480 $ (196,366) (630,676) (83,615) (910,657) 10,915 11,048 (829) $ (74,583) 487,902 297,266 785,168 657,161 1,221,637 155,586 2,034,384 133 30,536 $ (179) (73,575) (73,754) (469) (11,408) (11,877) (15,653) (34,658) (11,627) (61,938) 1,094,020 $ 20,420 122,524 142,944 Balance June 30, 2013 Decreases 53,905 18,570 19,999 92,474 (180,846) (596,018) (82,903) (859,767) Total capital assets being depreciated, net Governmental activities capital assets, net Increases 1,123,727 $ 1,908,895 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 5: Capital Assets (continued) Balance July 1, 2012 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 systems Equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings and improvements Sewage conveyance systems Equipment Total accumulated depreciation Total capital assets being depreciated, net Business-type activities capital assets, net $ 15,409 342,111 357,520 Increases $ Balance June 30, 2013 Decreases 193,088 193,088 $ (2,855) (34,235) (37,090) $ 12,554 500,964 513,518 386,674 702,236 113,508 1,202,418 23,532 11,136 4,334 39,002 (14,959) (20,324) (10,806) (46,089) 395,247 693,048 107,036 1,195,331 (174,228) (259,433) (33,800) (467,461) (22,492) (13,537) (8,907) (44,936) 6,417 3,202 3,482 13,101 (190,303) (269,768) (39,225) (499,296) 734,957 1,092,477 (5,934) 187,154 $ $ 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 $ Business-type activities: Parking Garages Regional Wastewater Reclamation Department Total business-type activities depreciation expense 63 $ 10,195 9,646 30,482 416 633 99 5,887 805 3,775 61,938 $ 218 44,718 44,936 (32,988) (70,078) $ 696,035 1,209,553 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 5: Capital Assets (continued) Balance July 1, 2012 Increases Balance June 30, 2013 Decreases Discretely presented component units: Southwestern Fair Commission (SFC): Capital assets being depreciated: Buildings and improvements Equipment Total capital assets being depreciated $ 5,383 2,543 7,926 Less accumulated depreciation for: Buildings and improvements Equipment Total accumulated depreciation Total capital assets being depreciated, net SFC capital assets, net $ $ 591 22 613 (3,077) (1,877) (4,954) (262) (188) (450) 2,972 163 2,972 $ 163 $ (44) (44) $ (3,339) (2,021) (5,360) 44 44 3,135 $ 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 $2,500, per occurrence; workers’ compensation claim up to $1,000, per occurrence; or any medical malpractice claims in aggregate up to $5,000, 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 currentyear claims. Charges for environmental losses are based on historical experience. Charges for dental and unemployment losses are based on actual claims paid. 64 5,974 2,521 8,495 3,135 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 6: Claims, Judgments and Risk Management (continued) The claims liability of $35,768 reported in the Fund at June 30, 2013, 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 $ 2013 35,397 7,676 (7,305) 35,768 $ $ 2012 40,795 2,209 (7,607) 35,397 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. Marana Wastewater Reclamation Facility (MWRF) The litigation over ownership of the MWRF with the Town of Marana (Town) was settled in fiscal year 201213. In the settlement agreement¸ the County agreed to voluntarily convey to the Town the disputed facility and the conveyance assets discharging to the facility in exchange for a $16.1 million payment sufficient to cover debt service on all outstanding debt related to the facility. The Town also agreed to sponsor legislation repealing the challenged statute upon which its claim for ownership was based. The transition of ownership of the MWRF and the conveyance assets to the Town is reported in this fiscal year with net book value of $35.1 million ($18.1 million for the MWRF and $17 million for the conveyance assets) for assets transferred to the Town, resulting in a loss of disposal of $19 million. Pollution Remediation The County has estimated and reported an environmental liability of $734 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. 65 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (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, 2013. Balance July 1, 2012 Additions $ $ Balance Due within Reductions June 30, 2013 1 year Governmental activities: General obligation bonds Unamortized premium/discount Total general obligation bonds Transportation revenue bonds Unamortized premium/discount Total transportation revenue bonds 456,145 5,412 461,557 88,575 5,791 94,366 138,070 3,466 141,536 Certificates of participation Unamortized premium/discount Total certificates of participation 38,730 1,042 39,772 Capital leases payable: Jail capital lease Unamortized premium/discount Other capital leases Total capital leases 16,335 (500) 596 16,431 40,995 1,966 42,961 16,335 (500) 298 16,133 298 298 298 298 764 764 159 159 605 605 146 146 7,305 21,606 14,162 4,195 2,719 20,872 858 805 21,730 71 $ 202,712 66 44,785 2,446 47,231 127,735 6,759 134,494 Landfill closure and post-closure care costs (Note 8) 716,370 $ 3,875 451 4,326 5,456 2,220 $ 456,690 10,678 467,368 12,425 804 13,229 23,455 11,942 Total governmental activities long-term liabilities $ 126,015 2,589 128,604 Reported but unpaid losses (Note 6) Incurred but not reported losses (Note 6) Pollution remediation (Note 6) 88,030 525 88,555 12,055 877 12,932 92,880 6,168 99,048 Installment note payable Total installment note payable $ $ 129,481 734 $ 789,601 $ 110,779 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 7: Long-Term Liabilities (continued) Balance July 1, 2012 Additions Balance Due within Reductions June 30, 2013 1 year Business-type activities: Sewer revenue bonds Unamortized premium/discount Total revenue bonds payable $ 169,310 1,712 171,022 Sewer revenue obligations Unamortized premium/discount Total revenue obligations payable 348,935 30,418 379,353 Regional Wastewater Reclamation Loans payable Total loans payable 23,719 23,719 Contracts and notes 15,365 Incurred but not reported losses Total business-type activities long-term liabilities $ $ 128,795 22,413 151,208 16,539 3,080 $ 592,539 14,895 613 15,508 $ 154,415 1,099 155,514 $ 16,765 16,765 13,375 6,211 19,586 464,355 46,620 510,975 18,725 2,550 2,550 21,169 21,169 1,489 1,489 19,259 12,645 18,725 3,080 $ 167,747 $ 59,983 $ 700,303 $ 36,979 The County’s debt consists of various issues of general obligation, HURF revenue, certificates of participation, sewer revenue bonds, loans, and obligations bonds that are generally callable with interest payable semiannually. Bond proceeds primarily pay for acquiring or constructing capital facilities. Bonds have also been issued to advance-refund previously issued bonds. The County repays general obligation bonds from voter-approved property taxes. HURF revenue bonds are repaid from charges for services in the Transportation fund. Certificates of participation are repaid from General fund and other various funds revenues. Sewer revenue bonds, loans, and obligations are repaid from the charges for services in the Regional Wastewater Reclamation fund. GENERAL OBLIGATION BONDS OUTSTANDING Governmental Activities (Payments made from property tax revenues of the Debt Service Fund) General obligation bonds payable at June 30, 2013, consisted of the outstanding general obligation bonds presented below. Of the total amounts originally authorized, $4,773 from the May 20, 1997 and $23,167 from the May 18, 2004 and $741 from the May 16, 2006 bond elections remain unissued. 67 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 7: Long-Term Liabilities (continued) Issue Amount Issue 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 Series of 2012A 60,000 Series of 2012B Refunding 16,225 Series of 2013A 50,000 Series of 2013B Refunding 38,575 G.O. bonds outstanding Plus unamortized deferred amount: Interest Rates 5.00% 3.50 - 5.00% 3.00 - 4.50% 4.00% 3.00 - 4.13% 3.00 - 4.00% 3.00 - 3.50% 2.25 - 5.00% 2.00 - 4.00% 2.00 - 3.00% 1.00 - 4.00% 2.00 - 4.00% Maturities 2014 2014-19 2014-21 2014-22 2014-23 2014-24 2014-16 2014-26 2014-27 2014-17 2014-28 2014-20 Total G.O. bonds outstanding Call Date July 1, 2015 July 1, 2017 July 1, 2018 July 1, 2019 July 1, 2019 July 1, 2021 July 1, 2022 July 1, 2023 Outstanding June 30, 2013 4,215 17,400 56,175 67,250 36,975 68,405 4,545 47,075 50,000 16,075 50,000 38,575 456,690 10,678 $ 467,368 The following schedule details general obligation bond debt service requirements to maturity at June 30, 2013. Year Ending June 30, 2014 2015 2016 2017 2018 2019 - 2023 2024 - 2028 Total Interest 16,694 15,000 13,679 12,337 10,932 32,289 5,451 $ 106,382 Principal 44,785 39,965 40,990 42,645 40,270 192,295 55,740 $ 456,690 $ $ REFUNDED GENERAL OBLIGATION BONDS In 2013, the County defeased $24,420 of General Obligation Bonds, Series 2004 and $14,435 of General Obligation Bonds, Series 2005 by issuing $38,575 of General Obligation Bonds that have an average life of 4.64 years and an average interest rate of 3.183%. This refunding transaction resulted in an economic gain of $1,762 and a reduction in debt service payments of $1,839. The proceeds of the new bonds were placed in an irrevocable trust to provide for future debt service payments of the refunded debt. Accordingly, the trust account assets and liability for the defeased bonds are not included in the County’s financial statements. The Series 2004 Bonds and Series 2005 Bonds remain legally defeased in substance at the amount disclosed below. 68 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 7: Long-Term Liabilities (continued) Principal Outstanding June 30, 2013 Issue 2004 General Obligation Refunded Bonds $ 24,420 2005 General Obligation Refunded Bonds 14,435 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, $89,375 from the November 4, 1997 bond election remains unissued. Issue Amount 51,200 21,000 25,000 15,000 8,420 18,425 14,520 Interest Rates 3.50 - 5.00% 3.25 - 4.75% 3.25 - 4.50% 3.00 - 4.00% 3.00 - 4.00% 3.00 - 5.00% 4.00 - 5.00% Maturities Issue Series of 2005 2014-20 Series of 2007 2014-22 Series of 2008 2014-22 Series of 2009 2014-24 Series of 2009 Refunding 2014-24 Series of 2012 2014-27 Series of 2012 Refunding 2014-18 Transportation bonds outstanding Plus unamortized deferred amount: Total transportation bonds outstanding Call Date July 1, 2015 July 1, 2017 July 1, 2018 July 1, 2019 July 1, 2019 July 1, 2022 The following schedule details transportation bond debt service requirements to maturity at June 30, 2013. Year Ending June 30, 2014 2015 2016 2017 2018 2019 - 2023 2024 - 2027 Total Principal 12,425 12,910 13,430 14,050 14,640 49,595 8,965 $ 126,015 69 Interest 4,969 4,488 3,983 3,372 2,797 6,444 618 $ 26,671 Outstanding June 30, 2013 32,920 16,355 22,460 14,300 7,920 17,540 14,520 126,015 2,589 $ 128,604 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 7: Long-Term Liabilities (continued) Pima County has pledged future highway user revenues, net of specified operating expenses, to repay $126,015 in transportation revenue bonds issued between 2005 and 2012. 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 2027. Annual principal and interest payments on the bonds are expected to require approximately 109 percent of net revenues. Total principal and interest remaining to be paid on the bonds is $152,686. Principal and interest paid for bonds in the current year and total net highway user revenues were $17,592 and $14,833, 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 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. On May 22, 2013, the County issued Certificates of Participation Series 2013A for $80,175. The County intends to use $60,000 of the proceeds from that issue for projects related to its sewer system. Although no sewer revenues are pledged for the repayment of the Certificates, the County intends to transfer available cash from the Regional Wastewater Reclamation Fund to repay that portion of the proceeds actually used for sewer projects. On May 22, 2013, the County issued $12,705 of Refunding Certificates of Participation, Series 2013B. The Certificates were issued with a premium of $1,260 and the proceeds were used to refund and redeem $1,220 of Certificates of Participation, Series 1999, and $12,335 of Certificates of Participation, Series 2003, previously reported by the County as a jail capital lease. The 2013B Certificates have an average life of 2.62 years and an average interest rate of 4.649%. This refunding transaction resulted in an economic gain of $999 and a reduction in debt service payments of $1,037. The following schedule details outstanding Certificates of Participation payable at June 30, 2013. Issue Interest Amount Rates Maturities Call Date Issue Series of 2007A $ 28,765 4.25 - 5.00% 2014-22 July 1, 2017 Series of 2010 20,000 3.50 - 5.25% 2014-19 Series of 2013A 80,175 1.50 - 5.00% 2014-23 Series of 2013B Refunding 12,705 1.50 - 5.00% 2014-18 Certificates of participation outstanding Plus unamortized deferred amount: Total certificates of participation outstanding 70 Outstanding June 30, 2013 $ 20,695 14,160 80,175 12,705 127,735 6,759 $ 134,494 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 7: Long-Term Liabilities (continued) The following schedule details debt service requirements to maturity for the County’s Certificates of Participation payable at June 30, 2013. Year Ending June 30, 2014 2015 2016 2017 2018 2019 - 2023 Total Principal 40,995 27,925 13,655 9,265 9,800 26,095 $ 127,735 $ Interest 4,078 3,329 2,671 2,098 1,622 3,065 $ 16,863 $ CAPITAL LEASES Governmental Activities The County has entered into capital leases for heavy equipment for use at its landfill sites. The outstanding balance as of June 30, 2013, for these leases totaled $298. The net book value of assets acquired through capital leases consists of $15,212 of buildings and $801 of equipment. The following schedule details capital lease debt service requirements to maturity at June 30, 2013. Governmental Activities: Year Ending June 30, 2014 Equipment Principal Interest $ 298 $ 298 INSTALLMENT NOTE PAYABLE Governmental Activities In 2013, the County has acquired Tasers under contract agreements at a total purchase price of $764. The following schedule details debt service requirements to maturity for the County’s installment note payable at June 30, 2013. Year Ending June 30, 2014 2015 2016 2017 Equipment Interest Principal $ 146 $ 14 149 12 154 8 156 4 $ 605 $ 38 71 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 7: Long-Term Liabilities (continued) SEWER REVENUE BONDS AND LOANS Business-type Activities (Payments made from user charges received in the RWR) Pima County sewer revenue bonds, as presented below, were issued to provide monies to construct improvements to the County’s Regional Wastewater Reclamation system and for the defeasance of prior sewer revenue bonds. As of June 30, 2013, the County has issued the total amounts originally authorized from the May 20, 1997 and May 18, 2004 bond elections. Issue Interest Rates Maturities Amount Issue Series of 2004 Refunding 25,770 4.60 - 5.00% 2014-15 Series of 2007 50,000 4.00 - 5.00% 2014-26 Series of 2008 75,000 4.00 - 5.00% 2014-23 Series of 2009 18,940 3.25 - 4.25% 2014-24 Series of 2011 Refunding 43,625 3.00 - 5.00% 2014-16 Sewer revenue bonds outstanding Plus unamortized deferred amount: Total sewer revenue bonds outstanding Call Date July 1, 2014 July 1, 2017 July 1, 2018 July 1, 2019 Outstanding June 30, 2013 $ 7,430 36,790 72,130 15,650 22,415 154,415 1,099 $ 155,514 The following schedule details sewer revenue bond debt service requirements to maturity at June 30, 2013. Year Ending June 30, 2014 2015 2016 2017 2018 2019 - 2023 2024 - 2026 Total Principal 16,765 17,555 15,950 11,250 11,810 68,595 12,490 $ 154,415 $ Interest 6,661 5,882 5,057 4,354 3,886 11,516 944 $ 38,300 $ 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 county-wide sewer system, including the Ina Road and Roger Road Wastewater Reclamation Facilities. In December 2011, the County issued Sewer Revenue Obligations Series 2011B for $189,160 to provide additional funding for the construction and improvements of the County’s wastewater conveyance systems and treatment facilities. In December 2012, the County issued Sewer Revenue Obligations Series 2012A for $128,795. The net proceeds of the issuance were used primarily to pay a portion of the costs of the construction, expansion and improvement of sewer treatment facilities and conveyance systems for the System, including the Ina Road and Roger Road Wastewater Reclamation Facilities. 72 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 7: Long-Term Liabilities (continued) Issue Interest Call Date Rates Maturities Amount Issue Series of 2010 $ 165,000 2.50 - 5.00% 2014-25 July 1, 2020 Series of 2011B 189,160 4.00 - 5.00% 2014-26 July 1, 2021 Series of 2012A 128,795 1.75 - 5.00% 2014-27 July 1, 2022 Sewer revenue obligations outstanding Plus unamortized deferred amount: Total sewer revenue obligations outstanding Outstanding June 30, 2013 $ 165,000 174,385 124,970 464,355 46,620 $ 510,975 The following schedule details sewer revenue obligation debt service requirements to maturity at June 30, 2013. Year Ending June 30, 2014 2015 2016 2017 2018 2019 - 2023 2024 - 2027 Total Principal 18,725 19,325 20,125 33,450 34,935 201,835 135,960 $ 464,355 $ Interest 22,230 21,549 20,697 19,823 18,336 64,526 13,895 $ 181,056 $ In prior years, the Regional Wastewater Reclamation Enterprise Fund entered into a loan agreement (2004 which was 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 2004 Loans payable 2009 Loans payable Issue Amount 19,967 8,002 73 Interest Rate Maturities 1.81% 2014-24 0.96% 2014-24 Total loans payable Outstanding June 30, 2013 14,542 6,627 $ 21,169 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 7: Long-Term Liabilities (continued) The following schedule details loans payable debt service requirements to maturity at June 30, 2013. Year Ending June 30, 2014 2015 2016 2017 2018 2019 - 2023 2024 Total Principal 1,489 1,535 1,581 1,629 1,679 9,194 4,062 $ 21,169 $ Interest 622 576 529 480 430 1,337 124 $ 4,098 $ Pima County has pledged future user charges, net of specified operating expenses, to repay $154,415 in sewer revenue bonds issued between 2004 and 2011, $21,169 in sewer revenue loans issued between 2004 and 2009, and $464,355 in sewer revenue obligations issued between 2010 and 2012. 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 2027. Annual principal and interest payments on the bonds and obligations are expected to require approximately 58 percent of net revenues. The annual principal and interest payments on the loans are expected to require approximately 4 percent of net revenues. Total principal and interest remaining to be paid on the bonds is $192,715. Total principal and interest remaining to be paid on the loans is $25,267. Total principal and interest remaining to be paid on the obligations is $645,411. Principal and interest paid for bonds, obligations and loans in the current year and total customer net revenues were $55,869, $3,237, and $85,240, respectively. All sewer revenue bonds were issued and the loan agreements were executed with a first lien on the pledge of the RWR net revenues and have restrictive covenants, primarily related to minimum utility rates and limitations on future bond issues. The bond covenants also require the RWR to either maintain a surety bond guaranteeing the payment of annual debt service or to maintain in the Bond Reserve Account monies equal to the average annual debt service payment. At June 30, 2013, the RWR had a surety bond to meet the requirements of the debt covenants. The County is also authorized to issue for the RWR additional parity bonds if certain conditions are met, primarily that net revenues for the fiscal year immediately preceding issuance of the parity bonds exceed 120 percent of the maximum annual debt service requirements immediately after such issuance. CONTRACTS AND NOTES Business-type Activities (Payments made from restricted assets in the RWR) 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. 74 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 7: Long-Term Liabilities (continued) 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, 2013, is as follows: Net assessed valuation $ 8,171,212 Debt limit (15% of net assessed valuation): 1,225,682 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 456,690 (22,900) Legal debt margin available 433,790 $ 791,892 Note 8: Landfill Liabilities Solid Waste Landfill Closure and Post-Closure Care Costs: State and Federal laws and regulations require the County to place a final cover on its solid waste landfill sites when these sites stop accepting waste and to perform certain maintenance and monitoring functions at the sites for thirty years after their closure. Although closure and post-closure care costs will not be paid until near or after the date the landfills stop accepting waste, the County records a portion of these closure and post-closure care costs as a long-term liability in each period, based on landfill capacity used as of each balance sheet date. The $21,730 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 $5,224 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, 2013; actual costs may change due to inflation, changes in technology, or changes in regulations. Landfill Site Capacity Used June 30, 2013 Ajo Sahuarita *Tangerine 72% 52% 97% Estimated Remaining Service Life 37 Years 30 Years 4 Years *The Tangerine Landfill will stop accepting waste from the public in November 2013 but will remain open for limited waste disposal until its remaining capacity is fully used. 75 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 8: Landfill Liabilities (continued) The County plans to fund the estimated closure and post-closure care costs with proceeds of general obligation bonds and with solid waste tipping fees. According to State and Federal laws and regulations, the County must comply with the local government financial test requirements that 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 $10,785 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. On June 1, 2013 Tucson Recycling and Waste Services was contracted to operate the Landfill and Transfer Station operations on behalf of Pima County in an agency capacity. The closure and post closure costs remain the liability of Pima County. Note 9: Pension and Other Post Employment Benefits 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), all component units of the State of Arizona. The EORP and the PSPRS Pima County - County Attorney Investigators are not described due to their relative insignificance to the County’s financial statements. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. The retirement benefits are generally paid at a percentage, based on years of service, of the retiree’s 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 long-term 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. 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 state, county, and local correction officers; dispatchers; and probation, surveillance, and juvenile detention officers. 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. 76 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 9: Pension and Other Post Employment Benefits (continued) Each plan issues a publicly available financial report that includes its financial statements and required supplementary information. A report is available on their web site or may be obtained by writing or calling the applicable plan. ASRS PSPRS and CORP 3300 N. Central Ave P.O. Box 33910 Phoenix, AZ 85067-3910 (602) 240-2000 or (800) 621-3778 www.azasrs.gov 3010 East Camelback Road Suite 200 Phoenix, AZ 85016-4416 (602) 255-5575 www.psprs.com 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, 2013, active ASRS members were required by statute to contribute at the actuarially determined rate of 11.14 percent (10.9 percent for retirement and 0.24 percent for long-term disability) of the members’ annual covered payroll. The County was required by statute to contribute at an actuarially determined rate. For the year ended June 30, 2013 the County contributed 11.14 percent (10.25 percent for retirement, 0.65 percent for health insurance premium benefit, and 0.24 percent for long-term disability) of the members’ annual covered payroll. For the year ended June 30, 2012 the County contributed 10.74 percent (9.87 percent for retirement, .63 percent for health insurance premium, and 0.24 percent for long-term disability) of the members’ annual covered payroll. 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. The County’s contributions for the current and 2 preceding years, all of which were equal to the required contributions, were as follows: ASRS Retirement Fund Health Benefit Supplement Fund Long-term Disability Fund Year ended June 30, 2013 2012 2011 $ $ $ 22,902 21,290 21,774 77 $ $ $ 1,452 1,359 1,426 $ $ $ 536 518 604 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 9: Pension and Other Post Employment Benefits (continued) Agent plans For the year ended June 30, 2013, active PSPRS members were required by statute to contribute 9.55 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 5.90 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, 2013 were established by the June 30, 2011 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 both plans and related benefits (unless noted), and the actuarial methods and assumptions used to establish the fiscal year 2013 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 CORP June 30, 2011 Entry Age Normal June 30, 2011 Entry Age Normal 8.25% 5.00% - 8.00% 5.00% Level percent-of-pay closed 8.25% 5.00% - 8.00% 5.00% Level percent-of-pay closed 25 Years for underfunded, 25 Years for underfunded, 20 Years for overfunded 20 Years for overfunded 7-year smoothed market 7-year smoothed market 78 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 9: Pension and Other Post Employment Benefits (continued) Annual Pension and OPEB Cost The County’s pension/OPEB cost for the PSPRS and CORP agent plans for the year ended June 30, 2013, and related information follows: PSPRS Pension CORP OPEB Pension OPEB Annual pension/OPEB cost $ 9,903 $ 591 $ 2,722 $ 264 Contributions made $ 10,118 $ 376 $ 2,843 $ 143 Trend Information Annual pension and OPEB cost information for the current and 2 preceding years follows for the PSPRS and CORP agent plans: Plan Year Ended June 30 Annual Pension/ OPEB Cost Percentage of Annual Cost Contributed Net Pension/ OPEB Obligation PSPRS Pension 2013 $ 9,903 102% Health insurance premium benefit 2013 $ 591 64% Pension 2012 $ 8,445 103% Health insurance premium benefit 2012 $ 638 60% Pension 2011 $ 8,303 103% Health insurance premium benefit 2011 $ 624 63% Pension 2013 $ 2,722 104% Health insurance premium benefit 2013 $ 264 54% Pension 2012 $ 2,076 107% Health insurance premium benefit 2012 $ 288 51% Pension 2011 $ 1,824 108% Health insurance premium benefit 2011 $ 282 50% $ 215 $ 254 $ 232 $ 121 $ 142 $ 140 CORP 79 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 9: Pension and Other Post Employment Benefits (continued) Funded Status The funded status of the plans, as of the most recent valuation date June 30, 2013, 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 Health Insurance Pension Premium Benefit Actuarial accrued liability $ 274,019 Actuarial value of assets $ 148,871 Unfunded actuarial accrued liability (funding excess) $ 125,148 Funded ratio $ 30,768 Unfunded actuarial accrued liability (funding excess) as a percentage of covered payroll Remaining amortization period Asset valuation method $ 54.3 % Covered payroll Actuarial valuation date Actuarial cost method Actuarial Assumptions: Investment rate of return Projected salary increases includes inflation at Amortization method $ 406.8 % Pension 7,460 $ 86,429 0 $ 52,537 7,460 $ 33,892 0 % $ 30,768 19,665 172.4 % PSPRS June 30, 2013 Entry Age Normal CORP June 30, 2013 Entry Age Normal 7.85% 4.5% - 8.5% 4.50% Level percent-of-pay closed 7.85% 4.5% -7.75% 4.50% Level percent-of-pay closed 23 Years for underfunded , 20 years for overfunded 7-year smoothed market 80%/120% market 23 Years for underfunded , 20 years for overfunded 7-year smoothed market 80%/120% market 80 $ 3,195 0 $ 60.8 % $ 24.2 % CORP Health Insurance Premium Benefit 3,195 0 % $ 19,665 16.2 % PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (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. $ Capital Projects $ Other Governmental 19 $ 368 1,080 48 185 90 $ $ al To t In te r 113 $ 2,959 46 1,542 1 276 8,597 27 Total er vi ce s 2,827 $ RWR Internal Services RW R O General na lS ov er nm th er G tal Pr o G Ca pi en er a l Amounts recorded as due from: je ct s en ta l Amounts recorded as due to: 580 $ 8,597 30 4 8,627 $ 4,001 $ 6 67 73 $ 160 $ 13,441 B. Transfers Transfers are used to record transactions between individual funds to subsidize their operations and fund debt service payments and capital construction projects. General Capital Projects Debt Service 3,171 7,692 Other Governmental $ $ 27,905 RWR Other Enterprise 5,700 es Se rv ic rp r is e nt e 37,240 To ta In te r l na l er E O th 5,792 $ $ 447 68 16,624 503 585 5,836 245 8,521 124 $ 1,000 $ 15 47,849 76 24,978 37 34,608 8,645 1,000 1,986 $ 39,768 5,792 291 1,000 Internal Service Total O th $ $ er G ov er nm en R ta W l R tS er vi c C D eb ap i ta l er al G en Amounts recorded as transfers in: Pr oj e ec t s Amounts recorded as transfers out: $ 11,160 105 $ 5,700 81 $ 65,616 $ 1,300 2,091 $ 1,015 $ 404 $ 124,963 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 11: Construction and Other Significant Commitments At June 30, 2013, Pima County had the following major contractual commitments related to Facilities Management, General Government, Natural Resources, Parks and Recreation, Regional Flood Control, Regional Wastewater Reclamation and Transportation. Facilities Management At June 30, 2013, the Pima County Facilities Management Department had construction contractual commitments of $28,081 and other contractual commitments related to service contracts of $10,759. Funding for these expenditures will be provided from general fund revenues and general obligation bonds. General Government At June 30, 2013, Pima County had contractual commitments related to service contracts for Public Works Administration of $2,883 and construction contractual commitments of $5,237. Institutional Health had contractual commitments related to service contracts of $36,562. Procurement had construction contractual commitments of $20,516 and other contractual commitments related to service contracts of $3,795. Sheriff Department had contractual commitments related to construction contracts of $144 and other related contractual commitments related to service contracts of $6,334. Funding for these expenditures will be provided from general fund revenues and general obligation bonds. Natural Resources, Parks and Recreation At June 30, 2013, Pima County had contractual commitments related to service contracts for Natural Resources, Parks and Recreation of $15,688. Funding for these expenditures will be provided from general fund revenues. Regional Flood Control At June 30, 2013, the Regional Flood Control fund had construction contractual commitments of $430 and other contractual commitments related to service contracts of $7,975. Funding for these expenditures will be primarily from Flood Control secondary tax levy revenues. Regional Wastewater Reclamation At June 30, 2013, the Regional Wastewater Reclamation Enterprise fund had construction contractual commitments of $29,135 and other contractual commitments related to service contracts of $28,678. Funding for these expenses will be primarily from Sewer Revenue Bonds and sewer user fees. Transportation At June 30, 2013, the Pima County Transportation Department had construction contractual commitments of $30,355 and other contractual commitments related to service contracts of $17,048. 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: Net Position Beginning Balance Restated The beginning net position balance for the Regional Wastewater Reclamation Enterprise Fund and the Business-type Activities was restated due to the implementation of GASB No.65 requiring debt issuance costs, except any portion related to prepaid insurance costs, to be recognized as an expense in the period incurred. The following summarizes the restatement of net position. 82 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2013 (in thousands) Note 12: Net Position Beginning Balance Restated (continued) Net position - June 30, 2012, as previously reported Regional Wastewater Reclamation Businesstype activities $ $ 703,698 Adjustment 687,897 (5,133) Net position - June 30, 2012, as restated $ 682,764 (5,133) $ 698,565 Due to the implementation of GASB No. 65, the County will expense $2,188 of prior year unamortized issuance costs in the government – wide Statement of Activities. This amount is immaterial to the financial statements and restatement of net position was not necessary. Note 13: Deficit Fund Balances The Stadium District and Other Grants – Special Revenue Fund had deficit fund balances at June 30, 2013 of $618 and $34 respectively. The deficits can be eliminated in the future through normal operations. 83 (This page is intentionally blank) 84 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, 2013 Exhibit B -1 (in thousands) Budgeted Amounts Original Final Revenues: Property taxes Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues Expenditures: General government Assessor Board of Supervisors Clerk of Superior Court Constables County Administration County Attorney Justice Courts Juvenile Courts Justice & Law Enforcement Public Works (Facilities Management) Recorder Superior Court Superior Court Mandated Services Treasurer Public safety Sheriff Health Forensic Science Center Welfare Institutional Health Culture and recreation Public Works (Parks and Recreation) Education and economic opportunity Community & Economic Development School Superintendent Debt Service - principal - interest Total expenditures $ 280,911 2,515 126,333 32,000 5,779 184 6,181 453,903 $ 280,911 2,515 126,333 32,000 5,779 184 6,181 453,903 Actual Amounts $ 281,017 2,816 131,984 32,721 4,799 591 10,907 464,835 Variance with Final Budget $ 106 301 5,651 721 (980) 407 4,726 10,932 8,635 1,971 10,412 1,113 77,944 20,215 10,687 22,280 27,296 16,996 3,519 30,211 225 2,492 8,635 1,971 10,412 1,113 77,944 20,215 10,687 22,280 27,296 16,996 3,519 30,211 225 2,492 7,914 1,800 10,429 1,123 38,404 20,178 7,683 22,281 31,464 16,029 3,551 30,206 14 2,021 721 171 (17) (10) 39,540 37 3,004 (1) (4,168) 967 (32) 5 211 471 125,516 125,516 131,087 (5,571) 2,994 2,994 3,320 (326) 100,601 100,601 95,076 5,525 15,056 15,056 16,468 (1,412) 12,097 1,632 12,097 1,632 491,892 491,892 11,320 1,330 159 1 451,858 777 302 (159) (1) 40,034 Excess (deficiency) of revenues over (under) expenditures (37,989) (37,989) 12,977 50,966 Other financing sources (uses): Capital leases Transfers in Transfers (out) Total other financing (uses) 5,398 (33,939) (28,541) 5,398 (33,939) (28,541) 764 5,792 (39,768) (33,212) 764 394 (5,829) (4,671) Net change in fund balances (66,530) (66,530) (20,235) 46,295 66,530 66,530 Fund balances at beginning of the year Fund balances at end of year $ 85 80,767 60,532 $ 14,237 60,532 PIMA COUNTY, ARIZONA Notes to Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund June 30,213 (in thousands) Note 1- Budgeting and Budgetary Control Arizona Revised Statutes (A.R.S.) requires the County to prepare and adopt a balanced budget annually for each governmental fund. The Board of Supervisors must approve such operating budgets on or before the third Monday in July to allow sufficient time for the legal announcements and hearings required for the adoption of the property tax levy on the third Monday in August. A.R.S. prohibits expenditures or liabilities in excess of the amounts budgeted. Expenditures may not legally exceed appropriations at the department level. In certain instances, transfers of appropriations between departments or from the contingency account to a department may be made upon the Board of Supervisors’ approval. With the exception of the General Fund, Other Special Revenue, and Other Special Revenue – Grants, each fund includes only one department. Note 2 – Expenditures in Excess of Appropriations For the year ended June 30, 2013, expenditures for the following departments in the General Fund exceeded final budget amounts at the department level (the legal level of budgetary control) as follows: Function/Department General government: Clerk of Superior Court Constables Juvenile Courts Justice & Law Enforcement Recorder Total general government Excess $ Public safety: Sheriff Total public safety 17 10 1 4,168 32 4,228 5,571 5,571 Health: Forensic Science Center Total Health 326 326 Culture and recreation: Public Works (Parks and Recreation) Total culture and recreation 414 414 Debt Service - principal - interest Total debt service 159 1 160 $ These expenditures were funded by greater than anticipated revenues and unspent appropriations. 86 PIMA COUNTY, ARIZONA Schedule of Agent Retirement Plans' Funding Progress June 30, 2013 Exhibit B - 2 (in thousands) Plan Actuarial Value of Plan Assets Year Ended June 30 PSPRS Pension 2013 Health Insurance 2013 Pension 2012 Health Insurance 2012 Pension 2011 Health Insurance 2011 CORP Pension 2013 Health Insurance 2013 Pension 2012 Health Insurance 2012 Pension 2011 Health Insurance 2011 $ 148,871 Actuarial Accrued Liability $ 274,019 Funding (Liability) Excess $ 7,460 $ 149,085 $ 268,903 $ 7,325 $ 149,088 $ 242,778 $ 7,353 $ 52,537 $ 86,429 $ 3,195 $ 51,797 $ 83,526 $ 3,161 $ 51,477 $ 75,051 $ 3,261 87 Funded Ratio (125,148) 54.3% (7,460) 0.0% (119,818) 55.4% (7,325) 0.0% (93,690) 61.4% (7,353) 0.0% (33,892) 60.8% (3,195) 0.0% (31,729) 62.0% (3,161) 0.0% (23,574) 68.6% (3,261) 0.0% $ $ $ $ $ $ Annual Covered Payroll Unfunded Liability as Percentage of Covered Payroll 30,768 406.8% 30,768 24.3% 31,920 375.4% 31,920 22.9% 30,805 304.1% 30,805 23.9% 19,665 172.4% 19,662 16.3% 21,743 145.9% 21,743 14.5% 20,441 115.3% 20,441 16.0% (This page is intentionally blank) 88 Combining Statements and Other Schedules Other (Nonmajor) Governmental Funds OTHER GOVERNMENTAL FUNDS (Nonmajor) Transportation Fund - to account for administrative and operating costs, as well as resources transferred to the Capital Projects Fund for construction of highways and streets. Financing is provided primarily from the County share of gasoline and vehicle license taxes collected by the State. Health Fund - to account for resources used to finance activities involved in the conservation and improvement of public health, animal care, and emergency management. 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. 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 for roads and streets. 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. Street Lighting District (SLDs) Fund – to account for financial activity related to street lighting in unincorporated Pima County. The SLDs are a blended component unit of Pima County. (This page is intentionally blank) 89 PIMA COUNTY, ARIZONA Combining Balance Sheet - Nonmajor Governmental Funds June 30, 2013 (in thousands) Transportation Assets Cash and cash equivalents Property taxes receivable (net of allowances for uncollectables) Interest receivable Due from other funds Due from other governments Accounts receivable Inventory Prepaid expenditures Loan receivable Other assets Restricted cash and cash equivalents Total assets $ 21,043 Special Revenue Funds Regional Flood Control District Other Health $ 8 30 4,029 133 1,134 51 2,581 $ 9,066 $ 699 4 3 12 12 68 782 133 288 5 Other Grants 53,836 23 76 1,120 1,186 15 School Reserve $ $ 16 33 11 13,246 476 1,545 367 41 70 1,018 $ 27,446 $ 3,857 $ 9,811 $ 56,290 $ 13,803 $ 1,953 $ 2,659 $ 738 $ 650 $ 2,381 $ 3,735 1 995 3,151 14 $ 61 Liabilities, deferred inflows of resources and fund balances Liabilities: Accounts payable Interest payable Employee compensation Due to other funds Due to other governments Deposits and rebates Unearned revenue 872 17 574 3 1,020 Total liabilities 4,571 1,312 286 1 754 177 2 2 1 1,345 1,584 9 941 4,658 9,480 84 22 4,092 Deferred inflows of resources: Unavailable revenue - intergovernmental Unavailable revenue - property taxes Unavailable revenue - other 113 66 642 22 Total deferred inflows of resources 113 505 664 22 4,357 4,684 1,817 1,605 4,680 13,837 1,185 21,577 293 1,747 15 8,191 49 26,245 5,415 19,901 70 5,647 439 Total liabilities and deferred inflows of resources Fund balances Nonspendable Restricted Committed Assigned Unassigned 265 84 515 315 1,039 (5,751) Total fund balances Total liabilities,deferred inflows of resources and fund balances 14 22,762 $ 27,446 2,040 $ 8,206 3,857 $ 90 9,811 51,610 $ 56,290 (34) $ 13,803 1,869 $ 1,953 Exhibit C - 1 Special Revenue Funds Environmental Quality $ 2,478 Special Districts Solid Waste $ Library District 3,183 $ 11,584 963 5 1 4 182 1 281 19 46 Stadium District $ 87 248 270 Street Lighting Districts Total Other Governmental Funds $ $ 234 105,550 1,662 41 276 20,089 2,498 1,422 439 33 1,018 45 282 45 $ 2,524 $ 3,484 $ 13,066 $ 605 $ 234 $ 133,073 $ 14 $ 369 $ 1,141 $ $ 10 $ 813 4 241 1 79 651 139 7 11,999 2 4,491 4,001 14 6 4,110 2,097 979 90 14 4 108 383 10 24,623 108 136 4,661 1,523 612 881 244 6,796 386 2,978 1,223 1,439 1,224 327 9,761 970 1,874 881 7 3 7 3 115 10 31,419 1,939 76,570 7,746 23,784 (8,385) 224 2,016 (2,634) 2,409 $ 2,524 3,098 $ 3,484 10,088 $ (618) 13,066 $ 91 605 224 $ 234 101,654 $ 133,073 PIMA COUNTY, ARIZONA Combining Statement of Revenues. Expenditures and Changes in Fund Balance - Nonmajor Governmental Funds For the Year Ended June 30, 2013 (in thousands) Transportation Revenues: Property taxes Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Special Revenue Funds Regional Flood Control District Other Health $ $ Total revenues Expenditures: Current: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Debt service - principal 1,050 48,129 329 $ 140 226 2,226 3,730 2,627 161 8 523 49,874 9,275 19,111 1 11 165 $ Other Grants $ School Reserve 126 86 20,883 8,400 4,344 382 6,247 19,500 40,256 57,888 11,093 39,349 2,711 6,000 7,482 825 182 336 1,758 10,530 263 41 26,937 2,954 2,954 Total expenditures 35,041 18,978 11,093 44,336 52,078 Excess (deficiency) of revenues over (under) expenditures 14,833 (9,703) 8,407 (4,080) 5,810 Other financing sources (uses): Proceeds from sale of capital assets Transfers in Transfers (out) 20 10,121 (26,399) 13,893 (2,376) (9,923) 1,250 (7,035) 2,974 (13,214) Total other financing sources (uses) (16,258) 11,517 (9,923) (5,785) (10,240) Net change in fund balances (1,425) 1,814 (1,516) (9,865) (4,430) Fund balance at beginning of year 24,187 9,722 61,475 4,396 2 Change in inventory Fund balance at end of year $ 2,771 10 677 35,041 18,978 57,201 2,771 (183) (183) 2,052 224 $ 22,762 $ 2,040 $ 92 8,206 $ 51,610 $ (34) $ 1,869 Exhibit C - 2 Special Revenue Funds Environmental Quality Special Districts Solid Waste Library District $ $ Stadium District Street Lighting Districts 28,078 $ 107 Total Other Governmental Funds $ 2,278 $ 1 2 15 22 2,318 1,147 3,577 450 $ 1,535 931 19 29 598 99 634 23 4 2 4,772 29,859 2,493 109 219,115 136 45,485 21,286 35,866 5,328 32,261 263 39,223 31,649 298 211,659 5,328 2,571 34,164 4,682 34,164 4,682 136 (4,305) (2,189) (27) 1 (870) 4,885 (5,579) 31 34,608 (65,616) (869) (694) (30,977) (5,174) (2,883) (27) (23,521) 15,262 2,265 251 124,951 298 2,571 5,626 (253) 647 (147) (854) 11 837 $ (73) 500 (73) 247 (73) 2,162 848 (6) 73 47,296 5,555 135,857 16,030 5,105 824 8,448 3,104 7,456 224 $ 2,409 $ 3,098 $ 10,088 93 $ (618) $ 224 $ 101,654 (This page is intentionally blank) 94 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, 2013 Exhibit C - 3 (in thousands) Budget Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ 1,639 47,954 Expenditures: Capital outlay 224,127 174,976 49,151 Total expenditures 224,127 174,976 49,151 (176,173) (133,503) 42,670 Other financing sources (uses): Face amount of long-term debt Proceeds from sale of capital assets Transfers in Transfers (out) Total other financing sources 86,000 103 70,646 (60,000) 96,749 130,175 47,849 (11,160) 166,864 44,175 (103) (22,797) 48,840 70,115 Net change in fund balance (79,424) 33,361 112,785 Fund balance at beginning of year Fund balance at end of year $ 155,226 75,802 95 $ Variance 33,359 4,770 533 2,811 41,473 Deficiency of revenues under expenditures 43,773 2,542 Actual $ 161,369 194,730 $ $ (10,414) 2,228 533 1,172 (6,481) 6,143 118,928 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Debt Service Fund For the Year Ended June 30, 2013 Budget Revenues: Property taxes Intergovernmental Investment earnings Miscellaneous Total revenues $ Exhibit C - 4 Actual 63,090 63,317 23 334 16 63,690 Expenditures: Debt service - principal - interest - miscellaneous Total expenditures 86,933 25,993 40 112,966 67,885 23,903 1,654 93,442 19,048 2,090 (1,614) 19,524 Deficiency of revenues under expenditures (49,876) (29,752) 20,124 58,038 11,959 51,280 (55,423) 24,978 (5,700) 27,094 11,959 51,280 (55,423) (33,060) (5,700) (30,944) 8,162 (2,658) (10,820) Other financing sources (uses): Premium on bonds Proceeds from refunding debt Payments to escrow agent Transfers in Transfers (out) Total other financing sources $ 58,038 Net change in fund balance Fund balance at beginning of year Fund balance at end of year 63,090 Variance $ 22,851 31,013 96 $ 28,298 25,640 $ $ 227 23 334 16 600 5,447 (5,373) 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, 2013 Exhibit C - 5 (in thousands) Budget Revenues: Licenses and permits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Actual 1,093 46,964 90 120 265 48,532 $ Variance 1,050 48,129 329 140 226 49,874 $ (43) 1,165 239 20 (39) 1,342 Expenditures: Highways and streets Total expenditures 38,035 38,035 35,041 35,041 2,994 2,994 Excess of revenues over expenditures 10,497 14,833 4,336 Other financing sources (uses): Proceeds from sale of capital assets Transfers in Transfers (out) Total other financing (uses) 10,121 (27,571) (17,450) 20 10,121 (26,399) (16,258) 1,172 1,192 (6,953) (1,425) 5,528 Net change in fund balance Fund balance at beginning of year Fund balance at end of year $ 20,792 13,839 97 $ 24,187 22,762 20 $ 3,395 8,923 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, 2013 Exhibit C - 6 (in thousands) Budget Revenues: Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues $ Actual 2,050 3,096 2,422 126 283 7,977 2,226 3,730 2,627 161 8 523 9,275 Expenditures: Health 17,794 18,978 (1,184) Total expenditures 17,794 18,978 (1,184) Deficiency of revenues under expenditures (9,817) (9,703) 8,559 (121) 8,438 13,893 (2,376) 11,517 5,334 (2,255) 3,079 (1,379) 1,814 3,193 Other financing sources (uses): Transfers in Transfers (out) Total other financing sources Net change in fund balance Fund balance at beginning of year Change in inventory Fund balance at end of year $ Variance 2,446 $ 1,067 98 $ 114 2 224 $ 2,040 176 634 205 35 8 240 1,298 (2,444) 224 $ 973 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, 2013 Exhibit C - 7 (in thousands) Budget Revenues: Property taxes Licenses and permits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Actual 25 35 106 19,076 19,111 1 11 165 126 86 19,500 11,457 11,457 11,093 11,093 364 364 7,619 8,407 788 Other financing sources (uses): Transfers (out) Total other financing (uses) (9,894) (9,894) (9,923) (9,923) (29) (29) Net change in fund balance (2,275) (1,516) 759 Expenditures: Flood control Total expenditures 18,910 Excess of revenues over expenditures Fund balance at beginning of year Fund balance at end of year 8,222 5,947 $ 99 $ Variance $ 9,722 8,206 $ $ 201 1 11 140 91 (20) 424 1,500 2,259 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, 2013 Exhibit C - 8 (in thousands) Budget Revenues: Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues $ 22,088 7,338 429 271 8,272 38,398 Actual $ Variance 20,883 8,400 4,344 382 6,247 40,256 $ (1,205) 1,062 3,915 111 (2,025) 1,858 Expenditures: General government Public safety Health Culture and recreation Education and economic opportunity Total expenditures 40,548 4,965 1,000 175 1,667 48,355 39,349 2,711 182 336 1,758 44,336 1,199 2,254 818 (161) (91) 4,019 Deficiency of revenues under expenditures (9,957) (4,080) 5,877 Other financing sources (uses): Transfers in Transfers (out) Total other financing (uses) 1,458 (3,578) (2,120) 1,250 (7,035) (5,785) (208) (3,457) (3,665) (12,077) (9,865) 2,212 22,810 61,475 38,665 Net change in fund balance Fund balance at beginning of year Fund balance at end of year $ 10,733 $ 100 51,610 $ 40,877 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, 2013 Exhibit C - 9 (in thousands) Budget Revenues: Intergovernmental Investment earnings Miscellaneous Total revenues $ Expenditures: Community Development Community Services County Attorney Elections Environmental Quality Flood Control Institutional Health Justice Court Juvenile Court Health Office of Emergency Management Finance Parks and Recreation Recorder Sheriff Superior Court Transportation Forensic Science Center Office of Sustainability and Conservation Total expenditures 82,435 19 848 83,302 $ 12,615 19,115 6,278 1,166 758 Other financing sources (uses): Transfers in Transfers (out) Total other financing sources (uses) Net change in fund balance $ Variance 57,201 10 677 57,888 $ 12,205 14,731 3,777 (25,234) (9) (171) (25,414) 85 192 10,337 1,064 884 287 5 63,743 786 133 263 133 1,225 8,669 815 27 41 23 7,349 805 825 260 11 52,078 410 4,384 2,501 1,166 (28) (133) 138 1 (35) 147 (399) (27) 44 169 2,988 259 59 27 (6) 11,665 19,559 5,810 (13,749) 279 (15,925) (15,646) 2,974 (13,214) (10,240) 2,695 2,711 5,406 3,913 (4,430) (8,343) 401 134 1,190 8,816 416 Excess (deficiency) of revenues over (under) expenditures Fund balance at beginning of year, as restated Fund balance at end of year Actual 2,348 6,261 101 $ 4,396 (34) $ 2,048 (6,295) 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, 2013 Exhibit C - 10 (in thousands) Budget Revenues: Intergovernmental Total revenues $ Expenditures: School Reserve grants Total expenditures 2,462 2,462 Actual $ 2,462 2,462 2,771 2,771 Variance $ 2,954 2,954 309 309 (492) (492) Deficiency of revenues under expenditures (183) (183) Net change in fund balance (183) (183) Fund balance at beginning of year Fund balance at end of year 2,052 $ 102 2,052 2,052 $ 1,869 $ (183) PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Environmental Quality - Special Revenue Fund For the Year Ended June 30, 2013 Exhibit C- 11 (in thousands) Budget Revenues: Licenses and permits Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues $ Actual 1,893 $ Variance 15 257 2,165 2,278 1 2 15 22 2,318 $ 385 1 2 Expenditures: Environmental Quality 2,880 2,571 309 Total expenditures 2,880 2,571 309 (235) 153 Deficiency of revenues under expenditures (715) (253) 462 Other financing sources (uses): Transfers in Transfers (out) Total other financing sources 402 (147) 255 647 (147) 500 245 Net change in fund balance (460) 247 707 Fund balance at beginning of year Fund balance at end of year 3,688 3,228 $ 103 $ 2,162 2,409 245 $ (1,526) (819) 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, 2013 Exhibit C - 12 (in thousands) Budget Variance Over/Under Actual Revenues: Special assessments Investment earnings Total revenues Expenditures: Highways and streets Debt Service - principal - interest Total expenditures Excess of revenues over expenditures Other financing uses Transfers (out) $ (73) $ (73) Total other financing uses (73) (73) Net change in fund balance (73) (73) 73 (350) Fund balance at beginning of year $ 423 Fund balance at end of year $ 423 104 $ (423) 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, 2013 Exhibit C - 13 (in thousands) Budget Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Expenditures: Sanitation Debt service - principal Total expenditures Actual 1,050 3,278 12 51 4,391 6,850 (2,459) Other financing sources: Proceeds from sale of capital assets Transfers in Total other financing sources 1,528 (131) 105 1,605 11 37 48 (6) $ 3,104 3,098 97 299 7 (22) 381 1,522 (298) 1,224 11 837 848 (1,659) $ $ (854) 800 800 Net change in fund balance 1,147 3,577 19 29 4,772 5,328 298 5,626 6,850 Deficiency of revenues under expenditures Fund balance at beginning of year Fund balance at end of year $ Variance 1,653 $ 1,576 3,229 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, 2013 Exhibit C - 14 (in thousands) Budget Revenues: Property taxes Intergovernmental Fines and forfeits Investment earnings Miscellaneous Total revenues $ Actual 28,005 235 650 50 302 29,242 $ Variance 28,078 450 598 99 634 29,859 $ 73 215 (52) 49 332 617 Expenditures: Current: Culture and recreation Total expenditures 34,150 34,150 34,164 34,164 (14) (14) Deficiency of revenues under expenditures (4,908) (4,305) 603 (584) (584) 1 (870) (869) Net change in fund balance (5,492) (5,174) Fund balance at beginning of year Fund balance at end of year 14,519 9,027 15,262 10,088 Other financing sources (uses): Transfers in Transfers (out) Total other financing (uses) $ 106 $ 1 (286) (285) 318 $ 743 1,061 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, 2013 Exhibit C - 15 (in thousands) Budget Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues Actual $ 1,628 153 12 455 2,248 Expenditures: Culture and recreation Total expenditures $ Variance 1,535 931 23 4 2,493 $ (93) 778 11 (451) 245 4,623 4,623 4,682 4,682 (59) (59) Deficiency of revenues under expenditures (2,375) (2,189) 186 Other financing sources (uses): Transfers in Transfers (out) Total other financing (uses) 3,410 (3,443) (33) 4,885 (5,579) (694) 1,475 (2,136) (661) Net change in fund balance (2,408) (2,883) (475) Fund balance at beginning of year Fund balance at end of year 603 $ (1,805) 107 2,265 $ (618) 1,662 $ 1,187 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Street Lighting Districts For the Year Ended June 30, 2013 Exhibit C - 16 (in thousands) Budget Revenues: Property taxes Investment earnings Total revenues 108 108 Expenditures: General government Total expenditures 149 149 136 136 13 13 Deficiency of revenues under expenditures (41) (27) 14 Net change in fund balance (41) (27) 14 Fund balance at beginning of year 251 251 $ 210 108 $ Variance 107 2 109 Fund balance at end of year $ Actual $ 224 $ $ (1) 2 1 14 Combining Statements and Other Schedules Other (Nonmajor) Enterprise Funds Other (Nonmajor) Enterprise Funds Development Services – to account for the operations of providing zoning permits, enforcing ordinances in compliance with state statutes, and administering uniform building codes. Parking Garages – to account for the management and operation of six public parking garages located in downtown Tucson. PIMA COUNTY, ARIZONA Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2013 Exhibit C - 17 (in thousands) Development Services Assets Current assets: Cash and cash equivalents Interest receivable 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 Total assets $ 3,427 1 Total Nonmajor Enterprise Funds Parking Garages $ 90 5 3,523 902 (902) 3,523 4,624 2 6 61 4 4,697 $ 8,051 3 6 151 9 8,220 1,768 12,927 244 (9,364) 1,768 12,927 1,146 (10,266) 5,575 5,575 10,272 5,575 5,575 13,795 351 666 1 1,018 Liabilities Current liabilities: Accounts payable Employee compensation Unearned revenue Total current liabilities 36 648 684 315 18 1 334 Total liabilities 684 334 1,018 2,839 5,575 4,363 5,575 7,202 Net position Net investment in capital assets Unrestricted Total net position $ 2,839 109 $ 9,938 $ 12,777 PIMA COUNTY, ARIZONA Combining Statement of Revenues, Expenses and Changes in Fund Net Position Nonmajor Enterprise Funds For the Year Ended June 30, 2013 Exhibit C - 18 (in thousands) Development Services Operating revenues: Charges for services Other $ 6,519 59 Total net operating revenues Operating expenses: Employee compensation Operating supplies and services Repair and maintenance General and administrative Consultants and professional services Depreciation Total operating expenses Total Nonmajor Enterprise Funds Parking Garages $ 2,232 $ 8,751 59 6,578 2,232 8,810 5,043 113 6 1,374 328 342 46 65 1,122 218 1,793 5,385 159 71 2,496 328 218 8,657 6,864 Operating revenue (loss) (286) 439 153 Nonoperating revenues: Investment earnings 18 27 45 18 27 45 (268) 466 198 Total nonoperating revenues: Income (loss) before transfers Transfers in Transfers (out) 1,000 (1,015) Change in net position (283) Net position at beginning of year Net position at end of year 1,000 (1,015) 3,122 $ 2,839 110 $ 466 183 9,472 12,594 9,938 $ 12,777 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2013 Exhibit C - 19 (in thousands) Development Services Cash flows from operating activities: Cash received from customers for goods and services provided Cash payments to suppliers for goods and services Cash payments to other funds for goods and services Cash payments to employees for services $ Net cash provided by (used for) operating activities 6,586 (449) (2,010) (4,450) Parking Garages $ (323) Cash flows from noncapital financing activities: Cash transfers in from other funds Cash transfers out to other funds Loans with other funds Net cash (used for) noncapital financing activities Total Nonmajor Enterprise Funds 2,213 (1,176) (15) (343) $ 679 8,799 (1,625) (2,025) (4,793) 356 1,000 (1,015) 3 1,000 (1,015) 3 (12) (12) Cash flows from investing activities: Interest on cash and investments 19 27 46 Net cash provided by investing activities 19 27 46 (316) 706 390 3,918 7,661 Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year 3,743 Cash and cash equivalents at end of year $ (continued) 111 3,427 $ 4,624 $ 8,051 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Nonmajor Enterprise Fund For the Year Ended June 30, 2013 Exhibit C - 19.1 (in thousands) (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 $ (286) 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 Other current liabilities Net cash provided by (used for) operating activities $ Parking Garages $ 439 Total Nonmajor Enterprise Funds $ 153 218 218 8 (14) (6) (4) (6) (6) (4) (20) (25) 48 (2) 28 (27) (323) $ 679 $ Noncash investing capital, and financing activities during the year ended June 30, 2013: Development Services Enterprise Fund retired fully depreciated capital assets with an original cost of $63. 112 356 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. Fleet Services – to account for the acquisition, operation, and maintenance of fleet services equipment provided to County departments. Other Internal Service – to account for the provision of printing, infrastructure, and telecommunication services to County departments. PIMA COUNTY, ARIZONA Combining Statement of Net Position Internal Service Funds June 30, 2013 Exhibit C - 20 (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 Self Insurance Trust $ 66,307 4 30 Fleet Services Other Internal Service Total Internal Service Funds $ $ $ 18,335 679 3,254 86,288 7 67 103 376 685 1,590 89,116 168 (160) 743 35,014 (14,681) 1,371 224 7,818 (5,248) 1,927 592 967 43,000 (20,089) 3,298 600 600 22,447 22,447 4,721 4,721 27,768 27,768 68,127 40,782 7,975 116,884 943 126 1,788 492 114 1,472 255 46 2,394 1,773 4,203 873 160 4,195 2,719 12,150 275 911 67,527 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 17,449 2 10 102 87 685 2,532 1 27 1 14 592 Total assets 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 17,411 11,443 28,854 Total liabilities 36,837 2,394 1,773 41,004 600 30,690 22,447 15,941 4,721 1,481 27,768 48,112 4,195 2,719 7,983 17,411 11,443 28,854 Net position Net investment in capital assets Unrestricted Total net position $ 31,290 113 $ 38,388 $ 6,202 $ 75,880 PIMA COUNTY, ARIZONA Combining Statement of Revenues, Expenses and Changes in Fund Net Position Internal Service Funds For the Year Ended June 30, 2013 Exhibit C - 21 (in thousands) Self Insurance Trust Operating revenues: Charges for services Other $ Fleet Services 16,412 145 $ Total Internal Service Funds Other Internal Service 22,872 218 $ 6,291 88 $ 45,575 451 Total operating revenues 16,557 23,090 6,379 46,026 Operating expenses: Employee compensation Operating supplies and services Incurred losses Insurance premiums General and administrative Repair and maintenance Consultants and professional services Depreciation Total operating expenses 2,011 276 7,676 3,661 517 46 897 20 15,104 3,361 8,411 2,147 379 866 1,042 2,035 31 3,366 19,112 38 1,485 73 780 389 5,291 7,519 9,066 7,676 4,565 3,044 2,154 1,708 3,775 39,507 1,453 3,978 1,088 6,519 Nonoperating revenues: Investment earnings Gain on disposal of capital assets 249 22 38 20 291 38 Total nonoperating revenues 249 60 20 329 1,702 4,038 1,108 6,848 Operating income Income before transfers Capital contributions Transfers in Transfers (out) (306) Change in net position Net position at beginning of year Net position at end of year 165 1,873 (85) $ 165 2,091 (404) 218 (13) 1,396 5,991 1,313 8,700 29,894 32,397 4,889 67,180 31,290 114 $ 38,388 $ 6,202 $ 75,880 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2013 Exhibit C - 22 (in thousands) Self Insurance Trust 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 Net cash provided by operating activities 16,465 145 (4,761) (1,358) (7,305) (1,202) Fleet Services $ 1,984 22,872 238 (10,218) (1,690) Total Other Internal Service Internal Service Funds $ 6,291 76 (1,216) (400) $ (3,332) (2,229) 45,628 459 (16,195) (3,448) (7,305) (6,763) 7,870 2,522 12,376 Cash flows from noncapital financing activities: Cash transfers in from other funds Cash transfers out to other funds Loans with other funds (306) (30) 1,768 (85) 89 218 (13) 1,986 (404) 59 Net cash provided by (used for) noncapital financing activities (336) 1,772 205 1,641 Cash flows from capital and related financing activities: Proceeds from sale of equipment Purchase of capital assets (9) 410 (5,899) (3,824) 410 (9,732) Net cash used for capital and related financing activities (9) (5,489) (3,824) (9,322) Cash flows from investing activities: Interest on cash and investments 259 22 21 302 Net cash provided by investing activities 259 22 21 302 1,898 4,175 (1,076) 4,997 64,409 13,274 3,608 81,291 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) 115 66,307 $ 17,449 $ 2,532 $ 86,288 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2013 Exhibit C -22.1 (in thousands) (continued) Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) Total Self Insurance Other Internal Internal Service Trust Fleet Services Service Funds $ 1,453 $ 3,978 $ 1,088 $ 6,519 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 Net cash provided by operating activities 20 3,366 53 11 9 350 389 (12) (356) 1,984 $ 127 915 29 (82) 7,870 $ 2,522 Noncash investing, capital, and financing activities during the year ended June 30, 2013: Fleet Services fund received a transfer in of capital assets from Regional Wastewater Reclamation with a net book value of $105. akjdj;adj;lkjdaksjdfaskkjdkj;a kj;j;lkj;kj;kj;wljklkwjr;wkljr;kwjr;wkjre;elkrjerj;j Fleet Services fund received capital contributions with a value of $165 from General Government and sold capital assets with a value of $372. 116 52 9 350 (132) 224 472 (1,849) 2,220 (29) $ 3,775 1,514 (1,849) 2,220 (82) $ 12,376 Combining Statements and Other Schedules Fiduciary Funds PIMA COUNTY, ARIZONA Combining Statement of Fiduciary Net Position Investment Trust Funds June 30, 2013 Exhibit C - 23 (in thousands) Treasurer's Investment Pool Assets Cash and cash equivalents Interest receivable $ 99,572 52 Total assets Total Investment Trust Funds Individual Investment Accounts $ 99,624 106,865 $ 106,865 206,437 52 206,489 Liabilities Total liabilities Net Position Held in trust for pool participants $ 99,624 117 $ 106,865 $ 206,489 PIMA COUNTY, ARIZONA Combining Statement of Changes in Fiduciary Net Position Investment Trust Funds For the Year Ended June 30, 2013 Exhibit C - 24 (in thousands) Treasurer's Investment Pool Total Investment Trust Funds Individual Investment Accounts Additions Contributions from participants Total contributions $ Investment earnings Total investment earnings 2,224,813 2,224,813 $ 130,104 130,104 $ 2,354,917 2,354,917 1,458 1,458 165 165 1,623 1,623 2,226,271 130,269 2,356,540 Deductions Distributions to participants 2,260,196 187,675 2,447,871 Total deductions 2,260,196 187,675 2,447,871 Total additions Net decrease Net position held in trust July 1, 2012 Net position held in trust June 30, 2013 $ 118 (33,925) (57,406) (91,331) 133,549 164,271 297,820 99,624 $ 106,865 $ 206,489 PIMA COUNTY, ARIZONA Combining Statement of Fiduciary Net Position Agency Funds June 30, 2013 Exhibit C - 25 (in thousands) Treasurer's Clearing Payroll Assets Cash and cash equivalents Due from other governments $ Total assets $ $ 1,081 Liabilities Employee compensation Due to other governments Deposits and rebates Total liabilities 1,081 464 1,391 Other $ 1,855 57,016 Total $ 57,016 59,952 35,755 21,261 1,081 35,755 23,116 1,081 1,855 $ 1,081 119 $ 1,855 $ 58,561 1,391 57,016 $ 59,952 PIMA COUNTY, ARIZONA Combining Statement of Changes in Fiduciary Net Position Agency Funds For the Year Ended June 30, 2013 Exhibit C - 26 (in thousands) Payroll Clearing Assets Cash and cash equivalents Total assets Balance 06/30/12 $ Liabilities Employee compensation Total liabilities Additions 496 496 $ 496 496 1,302,532 1,302,532 Balance 06/30/13 Deductions $ 1,301,947 1,301,947 $ 1,081 1,081 1,302,532 1,302,532 1,301,947 1,301,947 1,081 1,081 1,703,827 464 1,391 1,855 Treasurer's Clearing Assets Cash and cash equivalents Due from other governments Total assets 3,704 3,704 1,703,827 1,703,363 2,313 1,705,676 Liabilities Due to other governments Deposits and rebates Total liabilities 1,549 2,155 3,704 1,129,135 572,379 1,701,514 1,130,684 572,679 1,703,363 1,855 1,855 Other Assets Cash and cash equivalents Total assets 56,954 56,954 219,770 219,770 219,708 219,708 57,016 57,016 Liabilities Due to other governments Deposits and rebates Total liabilities 37,151 19,803 56,954 165,953 53,817 219,770 167,349 52,359 219,708 35,755 21,261 57,016 Totals - All Agency Funds Assets Cash and cash equivalents Due from other governments Total assets 57,450 3,704 61,154 3,226,129 3,226,129 3,225,018 2,313 3,227,331 58,561 1,391 59,952 Liabilities Employee compensation Due to other governments Deposits and rebates Total liabilities 496 38,700 21,958 61,154 1,302,532 1,295,088 626,196 3,223,816 1,301,947 1,298,033 625,038 3,225,018 1,081 35,755 23,116 59,952 $ 120 $ $ $ PIMA COUNTY Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2013 INTRODUCTORY SECTION FINANCIAL SECTION STATISTICAL SECTION Financial Trends Information Revenue Capacity Information Debt Capacity Information Demographic and Economic Information Operating Information STATISTICAL STATISTICAL SECTION FINANCIAL TRENDS: The financial trends schedules are intended to provide users with information to assist them in understanding and assessing how a government’s financial position has changed over time. Financial trends information is considered to be a primary source of the historical perspective that helps users comprehend the direction in which a government’s economic condition is heading. It also serves the purpose of giving users a form of information that is among their most highly valued, comparative information over time. 121 $ $ $ 468 499 88 3,696 4,011 (4,766) 454,690 59,789 11,907 27,027 9,042 3,511 6,319 54,302 1,370,950 52,363 6,185 17,456 3,696 4,011 36,254 962,641 1,199,053 842,676 3,511 6,319 20,851 488,749 457,600 $ 48,379 5,464 53,748 1,495,175 53,384 21,353 8,372 77,088 1,227,387 48,379 5,464 15,284 535,822 438 466,257 9,042 33,451 882,201 41,020 507,951 451,162 38,464 959,353 11,439 27,027 761,130 5,686 17,368 $ 53,384 21,353 7,934 77,088 741,453 59,789 $ 2006 52,363 391,514 2005 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 (1) Beginning in fiscal year 2005-06 and in 2008-09, all special revenue funds were reclassified and reported from a functional perspective. Primary government Net investment in capital assets Restricted for: (1) Facilities, justice, library, tax stabilization and community development (1) Special revenue (1) Highways and streets Debt service Capital projects Workers' compensation Regional Wastewater Reclamation Healthcare Unrestricted Total primary government net position Business-type activities Net investment in capital assets Restricted for: Debt service Capital projects Regional Wastewater Reclamation Healthcare Unrestricted (deficit) Total business-type activities net position Governmental activities Net investment in capital assets Restricted for: Special revenue Highways and streets Debt service Capital projects Healthcare Workers' compensation Unrestricted Total governmental activities net position 2004 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 $ Fiscal Year 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 (in thousands) (accrual basis of accounting) PIMA COUNTY, ARIZONA Net Position by Component Last Ten Fiscal Years 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 $ $ 18,449 1,360 223,785 2,273,738 32,322 22,538 61,904 103,592 1,809,788 17,785 1,163 247,377 2,315,577 27,033 29,100 52,694 100,423 1,840,002 101,759 723,430 66,470 703,698 531,945 145,618 1,592,147 9,853 1,163 100,423 27,033 1,308,057 29,100 42,841 17,785 $ $ 2013 22,538 31,680 18,449 564,561 157,315 1,570,040 30,224 1,360 103,592 32,322 1,245,227 2012 Exhibit D - 1 122 $ 1,797 314 133,113 12,188 217,422 9,526 1,643 298 125,121 23,663 210,666 8,772 918 1,709 101 135,119 17,413 207,471 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 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 2006 21,422 10,289 11,728 $ $ 2005 $ $ 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 Fiscal Year 2009 * 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 71,804 268,869 9,617 1,377 351,667 876,150 Business-type activities: Regional Wastewater Reclamation Pima Health System & Services Development Services Parking Garages Total business-type activities expenses Total primary government expenses 140,827 151,860 42,133 30,165 76,894 32,727 33,093 805 967 15,012 524,483 $ 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 2004 (in thousands) (accrual basis of accounting) PIMA COUNTY, ARIZONA Changes in Net Position Last Ten Fiscal Years $ $ 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 $ $ 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 (2,625) 26,078 718,932 218,843 146,395 73,348 6,208 36,475 90,521 67,063 56,626 2011 $ $ 2,254 1,008 143,388 47,528 257,820 30,444 12,047 5,059 3,487 12,605 117,774 58,773 6,912 1,988 185,447 919,472 805 24,776 734,025 223,005 150,349 69,183 7,224 47,248 94,409 61,900 55,126 2012 $ $ (continued) 28,910 10,238 6,511 3,577 12,495 320 2,865 1,544 116,121 59,298 241,879 7,231 1,825 153,141 910,959 144,085 (286) 23,915 757,818 233,984 166,476 80,087 6,409 36,540 95,428 65,341 49,924 2013 Exhibit D - 2 123 1,935 453,280 (13,196) 402,508 1,146 747 2,750 22,214 13,196 40,053 442,561 85,496 13,705 99,201 Business-type activities: State shared tax Investment earnings Miscellaneous Capital contributions Transfers Total business-type activities Total primary government Change in net position: Governmental activities Business-type activities Total primary government 70,711 43,971 114,682 477,704 1,163 1,609 2,865 20,722 (1,935) 24,424 294,643 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 4,238 272,507 2,745 1,709 83,202 23,413 3,201 6,321 3,102 14,063 5,441 $ $ 2005 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 Transfers Total governmental activities $ (317,012) (26,348) (343,360) Net (expense) revenue Governmental activities Business-type activities Total governmental activities net expense 82,432 224,820 11,830 1,460 4,777 325,319 532,790 $ 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 2004 $ $ 63,863 47,073 110,936 513,688 3,849 1,348 14,607 134 19,938 316,170 6,856 1,808 103,158 25,894 7,975 5,683 12,942 12,828 247 323 (134) 493,750 (429,887) 27,135 (402,752) 104,501 253,748 17,140 1,485 4,997 449 382,320 599,742 2006 $ $ 39,804 11,423 51,227 547,524 43,711 25,868 69,579 572,137 (113) 7,894 (721) 6,311 113 564,243 377,810 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 $ $ Fiscal Year 6,721 1,286 $ $ 2008 5,510 1,522 721 541,213 343,525 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 (in thousands) (accrual basis of accounting) PIMA COUNTY, ARIZONA Changes in Net Position Last Ten Fiscal Years 91,392 6,770 98,162 561,047 (4,005) 414 2,025 2,394 139,734 33,191 172,925 570,659 (538) 3,582 1,236 2,884 538 567,077 1,140 4,005 560,633 (427,343) 29,609 (397,734) 127,889 205,176 5,886 1,985 4,421 9,319 354,676 627,583 416,500 5,688 1,515 84,767 24,203 4,081 7,940 5,266 16,579 $ $ 2010 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 $ $ 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 $ $ 107,594 17,199 124,793 561,015 (25,688) (22,784) 1,001 1,903 25,688 583,799 394,963 6,285 1,608 93,123 23,537 4,268 8,235 3,416 22,676 (476,205) 39,983 (436,222) 154,601 58,722 6,073 2,083 1,275 2,676 225,430 483,250 2012 $ $ 22,107 24,865 46,972 546,973 7,330 8,927 1,017 580 (7,330) 538,046 383,508 6,076 1,524 97,685 22,043 3,207 7,439 2,627 21,267 (515,939) 15,938 (500,001) 3,914 169,079 410,958 6,519 2,073 156,573 2013 Exhibit D - 2 124 $ $ 150,198 214,780 147,650 97,270 12,746 37,227 4,056 33,171 54,384 $ $ 45,325 7,603 32,696 7,068 25,628 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 $ $ 252,081 126,821 86,121 39,139 40,166 4,363 35,803 Fiscal Year 2009 $ $ 157,688 7,234 (3,553) 28,298 314,618 (791) 35,903 284,175 1,550 105,468 10,264 16,682 (9,013) 2,720 333 118 77,596 80,767 12 112,668 6,639 $ $ 18 124,830 1,487 52 (227) 40,868 264,729 3,315 336 357 73,547 77,555 2012 2,011 94,567 37,978 4,368 (9,180) $ $ 2011 2,011 82,957 15,305 3,221 (5,793) 4,089 522 3,093 73,837 81,541 2010 * Due to implementation of GASB 54 in FY 2010 catagories regarding fund balances have been redefined. See Note 1 page 52 for details. See Note 2 page 57 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 Assigned Unassigned Total general fund 2004 (amounts in thousands) (modified accrual basis of accounting) PIMA COUNTY, ARIZONA Fund Balance - Governmental Funds Last Ten Fiscal Years $ $ (83) 25,640 322,024 187,855 6,958 1,939 76,570 7,746 23,784 (8,385) 158 56,526 60,532 3,848 2013 Echibit D - 3 125 Debt service as a percentage of noncapital expenditures Net change in fund balances Change in reserves - net Total other financing sources (uses) Proceeds-refunding bonds Premium on bonds Payments to refund escrow agents Capital leases/installment note 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 $ 11.53% 17,499 (366) $ 9.87% 69,113 385 119,523 27 116,200 50,008 (46,962) 406 65,000 68,583 (89,916) 44,255 250 (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 6,880 148 (6,846) (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 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 $ 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 $ 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 2009 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 Fiscal Year $ 381,862 556 7,710 312,634 58,890 6,480 14,218 21,752 2008 (in thousands) (modified accrual basis of accounting) PIMA COUNTY, ARIZONA Changes in Fund Balances - Governmental Funds Last Ten Fiscal Years $ 15.31% 54,478 128,066 1,118 125,000 98,800 (98,355) 31,955 1,909 (32,361) (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 $ 13.50% 33,710 (27) 112,348 30,745 7,349 (33,013) 894 1,938 78,425 141,924 (115,914) (78,611) 916,873 236,020 145,711 33,651 6,317 46,672 94,360 52,103 47,798 149,612 78,688 24,762 1,179 838,262 $ 407,711 245 8,155 327,939 56,881 10,249 2,286 24,796 2012 11.67% $ (13,053) 129,769 51,280 11,959 (55,423) 764 31 130,175 113,227 (122,244) (142,822) 931,935 238,582 152,373 35,866 5,328 35,581 95,339 55,691 44,299 174,976 68,342 23,904 1,654 789,113 8,371 301,223 53,521 9,904 2,282 22,182 $ 391,630 2013 Exhibit D - 4 (This page is intentionally blank) 126 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. 127 $ 1,823,592 1,882,879 2,001,137 2,204,072 2,358,259 2,568,203 2,473,320 2,436,692 2,514,310 2,375,969 $ 3,265,040 3,615,603 4,076,600 4,689,972 5,352,916 5,853,947 5,889,572 5,332,608 5,036,810 4,701,881 Residential Property $ 302,323 323,147 359,662 428,486 493,055 525,779 536,958 500,836 472,558 429,967 Vacant Land $ 21,595 27,920 29,803 30,802 35,442 37,783 39,797 39,984 50,260 51,312 Other $ 5,412,550 5,849,549 6,467,202 7,353,331 8,239,672 8,985,712 8,939,647 8,310,120 8,073,938 7,559,129 Taxable Assessed Value 5.4967 5.4611 5.3406 5.0674 4.6702 4.5917 4.6798 4.8491 4.8520 5.1309 Total Direct Tax Rate $ 46,754,009 50,631,267 56,437,790 64,347,659 73,122,499 80,593,121 82,348,215 78,036,208 76,085,641 73,262,703 Estimated Limited Value Source: Pima County Assessor's Office. Notes: Property in Pima County is assessed annually with values being set by either the County Assessor or the Arizona Department of Revenue. The values are the basis for Primary Taxes and annual changes therein are restricted by the State Constitution. Assessment ratios are set by the legislature for individual property types. The taxable assessed value is arrived at by multiplying an assessment ratio that has varied from ten percent for residential property to twenty-five percent for commercial property. Tax rates are per $100 of assessed value. 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Tax Year Commercial Property (amounts in thousands) PIMA COUNTY, ARIZONA Taxable Assessed Value and Estimated Actual Value of Property Last Ten Tax Years 11.58% 11.55% 11.46% 11.43% 11.27% 11.15% 10.86% 10.65% 10.61% 10.32% Assessed Value as a Percentage of Limited Value Exhibit D - 5 128 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 Tax Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0.4560 0.4358 0.0000 0.0000 0.0000 0.3306 0.3564 0.4259 0.4717 0.5123 Education Assistance 1.3428 1.3114 1.2515 1.1845 1.1355 1.0770 1.0848 1.1094 1.1741 1.2933 Community College District 1.1847 1.2364 1.2257 1.1321 0.9601 0.9344 0.9550 1.1621 1.2639 1.4304 City of Tucson 0.2383 0.2383 0.2383 0.2258 0.2143 0.2035 0.1999 2.6603 2.7640 2.9776 City of South Tucson 9.6038 10.1900 Street Lighting District 12.9000 12.9000 12.9000 12.9000 19.3500 19.3500 19.3500 19.3500 19.3500 19.3500 Flowing Wells Irrigation District (2) Central AZ Water Conserv District 0.1200 0.1200 0.1200 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1400 0.8150 0.7150 0.7150 0.6850 0.6050 0.7100 0.7500 0.7800 0.7800 0.7800 County Secondary 4.0720 4.0720 3.8420 3.6020 3.3913 3.3133 3.3133 3.4178 3.4178 3.6665 County Primary 0.2124 0.2575 0.3675 0.3975 0.3393 0.2643 0.3100 0.3460 0.3460 0.3753 County Library District 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 Silverbell Irrigation District (2) 60.0000 60.0000 60.0000 65.0000 66.0000 66.0000 66.0000 66.0000 66.0000 69.0000 CortaroMarana Irrigation District (2) Overlapping Rates 0.3546 0.3746 0.3746 0.3446 0.2935 0.2635 0.2635 0.2635 0.2635 0.2635 Flood Control District (1) 0.5000 0.5000 0.5000 Mobile Home Relocation District (3) 0.0427 0.0420 0.0415 0.0383 0.0411 0.0406 0.0430 0.0418 0.0447 0.0456 Fire District Assistance (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. 5.4967 5.4611 5.3406 5.0674 4.6702 4.5917 4.6798 4.8491 4.8520 5.1309 Total 2.8000 2.8000 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 0.3000 0.3000 Gladden Farms Vanderbilt Farms Community Community Facilities Facilities District District 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. The Towns of Marana, Oro Valley and Sahuarita do not currently levy a property tax. The Tucson Business Improvement District levy (on a per-business basis) is not shown. State of Arizona 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Tax Year County Direct Rates (per $100 of assessed value) PIMA COUNTY, ARIZONA Direct and Overlapping Property Tax Rates 3.3000 3.3000 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 Phase II Community Facilities District 0.3000 0.3000 0.3000 0.3000 Saguaro Springs Community Facilities District Exhibit D - 6 129 1.8931 Unorganized* 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 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 * County Education District; applies only to those geographical areas within Pima County not part of formal school districting. 1.8090 6.2607 4.8856 2.1532 6.2759 8.1495 Altar Valley Elementary (#51) 8.3095 Sahuarita Unified (#30) 6.7510 3.9915 7.0008 Vail Elementary (#20) 6.8422 Redington Elementary (#44) 6.6459 Catalina Foothills Unified (#16) 4.4994 2.2216 4.4316 Ajo Unified (#15) 5.7985 Continental Elementary (#39) 5.6661 Tanque Verde Unified (#13) 8.6482 8.0930 8.4846 Sunnyside Unified (#12) 6.4258 6.1171 6.3375 Amphitheater Unified (#10) 7.1232 Empire Elementary (#37) 6.5883 Flowing Wells Unified (#8) 6.0991 3.7121 6.5034 Marana Unified (#6) 7.8829 2005 San Fernando Elementary (#35) 8.3286 2004 Tucson Unified (#1) School District (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 1.7682 6.5675 6.2500 1.4797 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 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 PIMA COUNTY, ARIZONA Direct and Overlapping Property Tax Rates - School Districts Last Ten Tax Years 1.9585 6.4355 5.9198 1.5729 1.2484 4.0331 5.5183 5.9120 4.7472 3.5338 4.1538 6.3154 5.5539 5.9778 5.5863 7.3187 2012 2.1265 6.2676 4.8200 1.7027 1.1287 5.7831 6.6341 7.1703 4.8264 3.8882 5.0012 5.0003 5.9226 6.7146 6.0085 7.4319 2013 Exhibit D - 6a 130 0 Wal-Mart Stores Incorporated 0 Starr Pass Resort Developments LLC 14,655 El Conquistador Hotel $ 403,397 8 6 9 4 5 10 2 3 7 1 Rank (1) Secondary Assessed Valuation for tax year $5,620,156 7.2% 0.0% 0.3% 0.3% 0.2% 0.0% 0.4% 0.0% 0.0% 0.0% 0.3% 0.0% 0.0% 0.2% 1.9% 1.1% 0.0% 0.3% 2.2% Percent of Total Assessed Value Source: Arizona Department of Revenue, Pima County Assessor's Office. Total Top Ten 0 15,943 Westin La Paloma HDP Northwest 13,895 0 Raytheon ASARCO Mining 21,296 0 Target Corporation Arizona Portland Cement 0 Verizon Wireless 19,364 0 Northwest Hospital LLC DND Neffson Co. (Tucson Mall) 12,925 104,944 59,528 0 15,250 $ 125,597 Trico Electric Co-Op Inc. QWEST Corporation Southwest Gas Corporation ASARCO LLC Phelps Dodge Corporation Unisource/Tucson Electric Power Co. Taxpayer Estimated Assessed Value (1) 2004 $ 440,208 14,708 13,653 16,358 16,069 0 22,459 0 0 0 22,377 0 0 0 104,468 62,970 0 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% $ 459,465 0 0 15,504 0.3% 0.2% 21,665 0 22,858 17,068 0 0 19,087 0 0 14,806 87,093 62,846 0 55,176 $ 143,362 Estimated Assessed Value (1) 0.3% 0.0% 0.4% 0.0% 0.0% 0.0% 0.4% 0.0% 0.0% 0.0% 1.7% 1.0% 0.0% 0.4% 2.4% Percent of Total Assessed Value (amounts in thousands) 9 6 5 8 7 10 2 3 4 1 Rank 2006 PIMA COUNTY, ARIZONA Principal Property Taxpayers Last Ten Tax Years $6,869,955 6.7% 0.0% 0.0% 0.2% 0.3% 0.0% 0.3% 0.2% 0.0% 0.0% 0.3% 0.0% 0.0% 0.2% 1.3% 0.9% 0.0% 0.8% 2.1% Percent of Total Assessed Value $ 553,281 0 0 15,959 58,987 0 23,468 15,280 0 0 19,897 0 0 18,044 94,300 62,919 0 93,656 $ 150,771 Estimated Assessed Value (1) 9 5 6 10 7 8 2 4 3 1 Rank 2007 $8,220,396 6.7% 0.0% 0.0% 0.2% 0.7% 0.0% 0.3% 0.2% 0.0% 0.0% 0.2% 0.0% 0.0% 0.2% 1.1% 0.8% 0.0% 1.1% 1.8% Percent of Total Assessed Value $ 618,100 0 0 0 33,833 44,047 23,593 15,889 0 0 21,013 0 0 18,816 87,000 63,698 0 156,780 $ 153,431 Estimated Assessed Value (1) 6 5 7 10 8 9 3 4 1 2 Rank 2008 (continued) $9,594,862 6.4% 0.0% 0.0% 0.0% 0.4% 0.5% 0.2% 0.2% 0.0% 0.0% 0.2% 0.0% 0.0% 0.2% 0.9% 0.7% 0.0% 1.6% 1.6% Percent of Total Assessed Value Exhibit D - 7 131 Taxpayer 21,029 0 Trico Electric Co-Op Inc. Northwest Hospital LLC 0 HDP Northwest 5 6 9 10 7 3 4 8 1 2 Rank 2009 6.8% 0.0% 0.0% 0.0% 0.0% 0.6% 0.3% 0.2% 0.0% 0.0% 0.2% 0.0% 0.0% 0.2% 0.8% 0.7% 0.2% 2.0% 1.6% Percent of Total Assessed Value (1) Secondary Assessed Valuation for Tax Year $9,860,981 Source: Arizona Department of Revenue, Pima County Assessor's Office. 667,355 0 El Conquistador Hotel Total Top Ten 0 Westin La Paloma 63,572 ASARCO Mining 0 27,561 Arizona Portland Cement Raytheon 19,384 0 Target Corporation Starr Pass Resort Developments LLC 0 18,888 Verizon Wireless DND Neffson Co. (Tucson Mall) 0 74,646 QWEST Corporation Wal-Mart Stores Incorporated 64,775 Southwest Gas Corporation 198,694 158,764 20,042 $ $ Estimated Assessed Value (1) ASARCO LLC Phelps Dodge Corporation Unisource/Tucson Electric Power Co. (continued) $ 492,722 0 0 0 0 0 16,635 16,582 0 0 17,715 0 17,097 21,208 55,076 65,879 28,878 89,289 $ 164,363 Estimated Assessed Value (1) 9 10 7 8 6 4 3 5 2 1 Rank 2010 $9,342,561 5.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.2% 0.0% 0.0% 0.2% 0.0% 0.2% 0.2% 0.6% 0.7% 0.3% 1.0% 1.8% Percent of Total Assessed Value $ 532,828 0 0 0 0 0 0 16,153 17,519 0 17,931 0 17,390 21,217 51,942 64,533 58,585 99,048 $ 168,510 Estimated Assessed Value (1) (amounts in thousands) 10 8 7 9 6 5 3 4 2 1 Rank 2011 PIMA COUNTY, ARIZONA Principal Property Taxpayers Last Ten Tax Years $8,448,282 6.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.2% 0.0% 0.2% 0.0% 0.2% 0.3% 0.6% 0.8% 0.7% 1.2% 2.0% Percent of Total Assessed Value $ 608,128 0 0 0 0 0 0 0 0 14,291 17,998 15,581 17,723 22,133 53,225 61,718 83,778 142,419 $ 179,262 Estimated Assessed Value (1) 10 7 9 8 6 5 4 3 2 1 Rank 2012 $8,171,212 7.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.2% 0.2% 0.2% 0.3% 0.7% 0.8% 1.0% 1.7% 2.2% Percent of Total Assessed Value $ 598,339 0 0 0 0 0 0 0 0 12,884 16,030 16,923 16,980 21,713 40,386 61,669 74,101 136,947 $ 200,706 Estimated Assessed Value (1) 10 9 8 7 6 5 4 3 2 1 Rank 2013 $7,623,691 7.8% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.2% 0.2% 0.2% 0.3% 0.5% 0.8% 1.0% 1.8% 2.6% Percent of Total Assessed Value Exhibit D - 7 132 Tax Roll Corrections $ (987) (494) (291) (322) (622) (360) (101) (384) Real Property Tax Levy (Adjusted) $ 259,583 280,678 301,836 329,918 361,913 379,314 401,961 402,148 383,709 370,922 $ Amount 250,929 271,841 292,019 318,520 348,741 363,624 384,983 383,978 369,100 357,556 Percent of Original Levy 96.30% 96.68% 96.65% 96.45% 96.20% 95.77% 95.75% 95.39% 96.19% 96.40% Collections in Subsequent Years $ 8,635 8,667 9,756 11,298 12,946 15,416 16,679 16,249 13,711 Note: (1) Represents the difference between the adjusted levy and collected to June 30, 2013. (2) Amounts collected are on a cash basis rather than the modified accrual basis used in the financial statements. Fiscal Year 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Original Real Property Tax Levy $ 260,570 281,172 302,127 330,240 362,535 379,674 402,062 402,532 383,709 370,922 Collected to June 30, End of Tax Fiscal Year (2) (in thousands) PIMA COUNTY, ARIZONA Real Property Tax Levies and Collections Last Ten Fiscal Years $ Amount 259,564 280,508 301,775 329,818 361,687 379,040 401,662 400,227 382,811 357,556 Percent of Adjusted Levy 99.99% 99.94% 99.98% 99.97% 99.94% 99.93% 99.93% 99.52% 99.77% 96.40% Collected to June 30, 2013 (2) Delinquent Taxes Receivable (1) $ 19 170 61 100 226 274 299 1,921 898 13,366 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 2003-04 Primary 2003-04 Secondary Limited and Full Cash Values (1) Net Assessed Value $ 5,022,474 5,221,271 $ Ratio of Net Assessed to Full Cash Value 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% 2011-12 Primary 2011-12 Secondary 8,310,120 8,448,282 78,036,208 80,152,473 10.65% 10.54% 2012-13 Primary 2012-13 Secondary 8,073,938 8,171,212 76,085,641 77,731,086 10.61% 10.51% Notes: (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. 133 PIMA COUNTY, ARIZONA Comparative Net Valuations and Tax Rates Exhibit D - 10 (per $100 assessed value) (valuation $ amounts in thousands) Jurisdiction State of Arizona FY 2012-13 (Tax Year 2012) Valuation Rate $ 8,073,938 $0.0000 Pima County General Fund - Primary Debt Service - Secondary Free Library - Secondary FY 2013-14 (Tax Year 2013) Valuation Rate $ 7,559,129 $0.0000 8,073,938 8,171,212 8,116,015 3.4178 0.7800 0.3460 7,559,129 7,623,691 7,590,546 3.6665 0.7800 0.3753 8,073,938 3.4178 1.1260 4.5438 7,559,129 3.6665 1.1600 4.8265 Education Assistance 8,073,938 0.4717 7,559,129 0.5123 Flood Control District - Secondary 7,244,629 0.2635 6,768,457 0.2635 Fire District Assistance - Secondary 8,171,212 0.0447 7,623,691 0.0456 1.1484 0.0257 1.1741 7,559,129 7,623,691 1.2746 0.0187 1.2933 8,116,015 0.1000 7,590,546 0.1400 3,313,879 3,377,401 0.4125 0.8514 1.2639 3,114,079 3,151,042 0.5245 0.9059 1.4304 23,256 23,716 0.2305 2.5335 2.7640 21,690 22,126 0.2528 2.7248 2.9776 17,996 1.9585 18,101 2.1265 3,215,914 3,264,317 6.0804 1.2383 7.3187 3,002,397 3,029,356 6.0056 1.4263 7.4319 Total County - Primary Total County - Secondary Grand Total Pima Community College District Primar Secondary Total Central Arizona Water Conservation District Secondary Cities & Towns City of Tucson Primary Secondary Total City of South Tucson Primary Secondary Total School Districts Unorganized - Primary Tucson Unified (District #1) Primary Secondary Total 8,073,938 8,171,212 (continued) 134 PIMA COUNTY, ARIZONA Comparative Net Valuations and Tax Rates Exhibit D - 10 (per $100 assessed value) (valuation $ amounts in thousands) (continued) Jurisdiction Marana Unified (District #6) Primary Secondary Total FY 2012-13 (Tax Year 2012) Valuation Rate $ 755,872 766,418 $ 3.9419 1.6444 5.5863 FY 2013-14 (Tax Year 2013) Valuation Rate $ 709,376 714,419 $ 4.1868 1.8217 6.0085 Flowing Wells Unified (District #8) Primary Secondary Total 203,705 208,198 3.3742 2.6036 5.9778 187,075 188,811 4.4304 2.2842 6.7146 Amphitheater Unified (District #10) Primary Secondary Total 1,465,994 1,482,678 4.0830 1.4709 5.5539 1,381,231 1,394,361 4.3876 1.5350 5.9226 Sunnyside Unified (District #12) Primary Secondary Total 435,018 447,031 3.7819 2.5335 6.3154 412,538 420,920 3.5420 1.4583 5.0003 Tanque Verde Unified (District #13) Primary Secondary Total 184,135 184,878 3.0083 1.1455 4.1538 170,152 170,710 3.8031 1.1981 5.0012 19,744 20,066 3.5338 0.0000 3.5338 19,958 20,190 3.8882 0.0000 3.8882 Catalina Foothills Unified (District #16) Primary Secondary Total 583,516 585,344 3.8770 0.8702 4.7472 548,805 550,355 3.6625 1.1639 4.8264 Vail Elementary (District #20) Primary Secondary Total 443,206 452,491 4.0849 1.8271 5.9120 411,951 414,482 4.8308 2.3395 7.1703 Ajo Unified (District #15) Primary Secondary Total (continued) 135 PIMA COUNTY, ARIZONA Comparative Net Valuations and Tax Rates Exhibit D - 10 (per $100 assessed value) (valuation $ amounts in thousands) (continued) Jurisdiction Sahuarita Unified (District #30) Primary Secondary Total FY 2012-13 (Tax Year 2012) Valuation Rate $ 371,039 372,867 $ 3.2630 2.2553 5.5183 FY 2013-14 (Tax Year 2013) Valuation Rate $ 351,925 353,344 $ 4.1743 2.4598 6.6341 San Fernando Elementary (District #35) Primary Secondary Total 1,233 1,521 4.0331 0.0000 4.0331 1,245 1,265 5.7831 0.0000 5.7831 Empire Elementary (District #37) Primary Secondary Total 7,861 8,050 1.2484 0.0000 1.2484 7,756 7,860 1.1287 0.0000 1.1287 318,391 320,208 1.3547 0.2182 1.5729 303,007 305,321 1.1939 0.5088 1.7027 1,168 1,168 0.0000 0.0000 0.0000 1,056 1,056 0.0000 0.0000 0.0000 1,389 1,398 5.9198 0.0000 5.9198 1,385 1,450 4.8200 0.0000 4.8200 34,926 35,281 5.1783 1.2572 6.4355 31,278 31,402 4.8580 1.4096 6.2676 Continental Elementary (District #39) Primary Secondary Total Baboquivari Unified School (District #40) Primary Secondary Total Redington Elementary (District #44) Primary Secondary Total Altar Valley Elementary (District #51)* Primary Secondary Total Notes: * Formerly known as the Mary E. Dill School District 136 PIMA COUNTY, ARIZONA Historical Collections - Hotel Excise Tax Car Rental Surcharge and Recreational Vehicle Tax Last Ten Fiscal Years Exhibit D - 11 (amounts in thousands) Fiscal Year 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Car Rental Surcharges (2) Hotel Excise Tax (1) $ 2,717 2,885 5,212 7,796 6,901 5,628 5,637 5,887 6,626 6,286 $ 1,277 1,595 1,589 1,357 1,732 1,389 1,521 1,538 1,464 1,399 Recreational Vehicle Tax (3) $ Notes: (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 athletic activities. Source: Pima County Finance and Risk Management Department 137 209 200 214 210 222 159 181 165 146 136 PIMA COUNTY, ARIZONA Streets and Highways Revenue Last Ten Fiscal Years Exhibit D - 12 (amounts in thousands) Fiscal Year 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Highway User Revenue Amount $ 51,334 53,878 56,937 58,638 57,847 53,907 50,535 50,460 44,890 47,449 $ 41,756 43,292 44,607 44,060 41,210 38,739 38,974 33,665 36,860 Vehicle License Tax $ 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 138 12,122 13,645 14,031 13,787 12,697 11,796 11,486 11,225 10,589 STATISTICAL SECTION DEBT CAPACITY: The debt capacity information is intended to assist users to understand and assess a government’s debt burden and ability to issue debt. Debt capacity information is cited as being very useful for assessing economic condition as frequently as revenue or tax capacity. Five of the schedules presented provide ten-year comparisons. Certain schedules, for example; leases, lease-purchase installment notes payable, and purchase agreements, are provided to comply with debt disclosure requirements. 139 232,553 267,927 231,918 290,150 349,542 388,032 420,261 455,856 461,557 467,368 Fiscal Year 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 $ 3,805 3,010 2,230 1,470 725 725 Flood Control Bonds $ 95,461 137,736 127,000 136,541 149,801 139,683 142,226 131,375 141,536 128,604 Transportation Revenue Bonds $ 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Fiscal Year 1,736 1,093 911 Special Assessment Bonds 31,731 81,612 74,554 72,638 48,235 39,772 134,494 $ 515,686 584,227 530,644 664,089 845,872 878,680 1,058,962 1,046,919 1,248,820 1,431,672 Total Primary Government $ 3,020 1,943 5,739 3,714 1,000 $ 25,801,213 26,302,000 28,421,000 30,899,000 33,009,000 32,898,000 34,974,000 36,263,000 37,000,000 36,648,980 Personal Income (a)(b) $ Certificates of Transportation Participation Loans 29,323 27,879 26,426 24,736 23,223 21,327 19,387 17,775 16,431 298 2.00% 2.22% 1.87% 2.15% 2.56% 2.67% 3.03% 2.89% 3.38% 3.91% Percentage of Personal Income $ Capital Leases 605 914,011 940,004 959,474 977,258 984,032 984,274 981,168 986,081 990,380 996,670 Population at July 1 (a)(b) $ Installment Note Payable $ 564 622 553 681 860 893 1,079 1,062 1,261 1,436 Debt per Capita $ 60,064 55,809 51,710 94,356 163,701 183,389 166,935 184,782 171,022 155,514 Sewer Revenue Bonds (a) Personal income and population are based on calendar year. Prior year data updated to reflect the new source data. (b) Population and personal income data are obtained from projections supplied by the U of A Business Research Program, Eller College of Business and Public Administration. Note: Details regarding outstanding debt can be found in Note 7 page 66 in Notes to the Financial Statements. $ General Obligation Bonds Governmental Activities ($ amounts in thousands) $ Regional Wastewater Loans Payable 165,000 176,849 379,418 510,975 $ 83,941 83,978 80,148 76,111 70,426 64,489 66,210 27,390 23,719 21,169 $ 5,783 4,852 4,562 5,280 5,842 6,481 6,305 4,657 15,365 12,645 Contracts and Notes $ 515,686 584,227 530,644 664,089 845,872 878,680 1,058,962 1,046,919 1,248,820 1,431,672 Total Primary Government Exhibit D - 13 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 140 $ 232,553 267,927 231,918 290,150 349,542 388,032 420,261 455,856 461,557 467,368 $ 3,805 3,010 2,230 1,470 725 725 $ 2,648 8,899 5,571 7,431 10,241 10,523 11,396 27,904 22,602 22,900 Debt Service Funds Available for Principal $ 233,710 262,038 228,577 284,189 340,026 378,234 408,865 427,952 438,955 444,468 Net General Bond Debt $ 5,221,271 5,620,156 6,050,950 6,869,955 8,220,396 9,594,862 9,860,981 9,342,561 8,448,282 8,171,212 Secondary Net Assessed Value 4.48% 4.66% 3.78% 4.14% 4.14% 3.94% 4.15% 4.58% 5.20% 5.44% Percent Net General Bond Debt to Assessed Value (a) Population is based on calendar year. Prior year data updated to reflect the new source data. (b) Population data is obtained from projections supplied by the U of A Business Research Program, Eller College of Business and Public Administration. (c) The Debt per Capita is shown in actual dollars and not in thousands. Note: Details regarding outstanding debt can be found in Note 7 on pages 67-68 in Notes to the Financial Statements. 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Fiscal Year General Obligation Bond Debt Flood Control General Obligation Bond Debt ($ amounts in thousands) PIMA COUNTY, ARIZONA Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt per Capita Last Ten Fiscal Years 914,011 940,004 959,474 977,258 984,032 984,274 981,168 986,081 990,380 996,670 (a)(b) Population $ 256 279 238 291 346 384 417 434 443 447 Net General Bond Debt per Capita (c) Exhibit D - 14 141 1,091,892 1,185,435 1,146,388 1,107,662 1,137,114 1,213,050 1,302,802 1,335,431 1,284,219 1,311,417 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 $ 5,221,271 5,620,156 6,050,950 6,869,955 8,220,396 9,594,862 9,860,981 9,342,561 8,448,282 8,171,212 Secondary Net Assessed Value 20.91% 21.09% 18.95% 16.12% 13.83% 12.64% 13.21% 14.29% 15.20% 16.05% Percentage of Assessed Value 914,011 940,004 959,474 977,258 984,032 984,274 981,168 986,081 990,380 996,670 Population (a)(b) $ 1,195 1,261 1,195 1,133 1,156 1,232 1,328 1,354 1,297 1,316 Debt per Capita (c) (a) Population is based on calendar year. Prior year data updated to reflect the new source data. (b) Population data is obtained from projections supplied by the U of A Business Research Program, Eller College of Business and Public Administration. (c) The Debt per Capita is shown in actual dollars and not in thousands. Note: 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. $ Total Overlapping Debt Fiscal Year ($ amounts in thousands) PIMA COUNTY, ARIZONA Ratio of Direct and Overlapping Debt to Property Values and Per Capita Last Ten Fiscal Years Exhibit D - 14a PIMA COUNTY, ARIZONA Computation of Direct and Overlapping Governmental Activities Debt Outstanding At June 30, 2013 Exhibit D - 15 ($ amounts in thousands) Debt Outstanding Governmental Unit Debt repaid with property tax School Districts $ 613,325 Pima Community College City of Tucson $ $ 613,325 1,355 1,355 229,071 229,071 Total overlapping Debt repaid with property tax Direct: Pima County * Amount Overlapping 467,368 Total direct $ 843,751 $ 467,368 $ 467,368 $ 134,494 Other Debt: Certificates of participation $ 134,494 Other capital leases 298 298 Installment note payable 605 605 128,604 128,604 Transportation bonds Total other debt $ 264,001 Total direct and overlapping debt $ 1,575,120 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. * Excludes improvement districts. 142 143 29.30% 30.65% 584,652 $ $ 24.87% 681,904 225,739 (5,571) 231,310 907,643 6,050,950 2006 $ $ 27.38% 748,334 282,159 (7,431) 289,590 1,030,493 6,869,955 2007 See Notes to the Financial Statements (Note 7 page 75) for calculation of the legal debt margin for the current year. Total net debt applicable to the limit as a percentage of debt limit. 553,734 Legal debt margin 258,371 (8,899) (2,648) 843,023 5,620,156 267,270 $ $ 2005 232,105 783,191 5,221,271 229,457 $ $ 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 2004 $ 27.42% 894,965 338,094 (10,241) 348,335 1,233,059 $ 8,220,396 2008 ($ amounts in thousands) $ $ PIMA COUNTY, ARIZONA Legal Debt Margin Last Ten Fiscal Years 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 $ 34.21% 833,699 433,543 (22,602) 456,145 1,267,242 $ 8,448,282 2012 $ 35.39% 791,892 433,790 (22,900) 456,690 1,225,682 $ 8,171,212 2013 Exhibit D - 16 144 $ 105,827 103,959 109,264 105,987 128,067 151,212 158,397 163,512 Sewer User Revenues (1) $ 57,371 69,597 78,521 73,186 69,904 74,638 73,241 73,577 Less: Operating Expense (2) $ 48,456 34,362 30,743 32,801 58,163 76,574 85,156 89,935 Available Net Revenue $ 20,163 11,260 32,806 99,491 $ 78,326 87,834 117,962 189,426 Pledged Revenues (3) $ 10,053 13,957 13,325 14,187 16,952 17,110 20,895 29,759 Principal $ 5,619 6,340 7,221 9,469 9,838 17,047 21,658 28,243 Interest Debt Service (6) $ 15,672 20,297 20,546 23,656 26,790 34,157 42,553 58,002 Total (1) (2) (3) (4) (5) (6) Includes sewer connection fees. Excludes grants, depreciation, interest expense and amortization. Pledged revenues defined by BOS 2010-50. Sewer revenue debt rate covenants require minimum coverage of 1.20. For fiscal year 2009-2010, a new Debt Coverage calculation was implemented. Debt service requirements include principal and interest payable during the Bond Fiscal Year. Per the bond resolution, the Bond Fiscal Year is defined as 7/2/20XX to 7/1/20XX. Note: Sewer revenue debt coverage is presented with 5 years of data beginning with fiscal year 2009-10. Data for each successive year will be added until 10 years are presented. 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Fiscal Year Plus: Ending cash Balances of Prior Fiscal Year (unrestricted) (amounts in thousands) PIMA COUNTY, ARIZONA Regional Wastewater Reclamation Pledged Sewer Revenue Debt Coverage Last Eight Fiscal Years 3.09 1.69 1.50 1.39 2.92 (5) 2.57 2.77 3.27 Coverage Ratio (4) Exhibit D - 17a 145 $ 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 $ 36,865 38,349 39,336 42,639 43,490 38,082 34,214 34,552 33,335 35,041 Less: Operating Expense $ 18,912 19,470 22,608 22,142 21,519 20,809 20,683 18,159 13,499 14,833 Available Net Revenue $ 8,905 10,710 11,435 11,745 12,365 15,145 10,530 11,015 12,055 12,425 $ * Debt Service Requirements include principal and interest payable in the 12 months following each fiscal year. 3,965 6,058 5,257 5,659 6,147 6,203 5,709 5,244 5,537 4,969 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. 55,777 57,819 61,944 64,781 65,009 58,891 54,897 52,711 46,834 49,874 Transportation Revenue Fiscal Year (amounts in thousands) PIMA COUNTY, ARIZONA Transportation Revenue Bonds - Pledged Revenue Bond Coverage Last Ten Fiscal Years 1.47 1.16 1.35 1.27 1.16 0.98 1.27 1.12 0.77 0.85 Coverage Ratio Exhibit D - 17b 146 * * * * * * * * * Lease Revenue $ 27 Less: Operating Expense * This debt was satisfied in full during FY 2003-04. 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Fiscal Year $ (27) Available Net Revenue $ (amounts in thousands) 460 $ Debt Service Principal Interest PIMA COUNTY, ARIZONA Pledged Revenue Bond Coverage - Lease Revenue Bonds Last Ten Fiscal Years 99 (0.05) Coverage Ratio Exhibit D - 17c 147 $ $ 2,953 42 147 2,764 FY 04-05 $ $ 3,115 42 31 3,042 FY 05-06 $ $ 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 $ $ 3,118 111 3,007 FY 09-10 $ $ 3,041 37 3,004 FY 10-11 $ $ Source: Pima County Finance and Risk Management Department 18,565 18,565 FY 11-12 * 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 Sheriff Environmental Quality - Equipment Function/Department (amounts in thousands) PIMA COUNTY, ARIZONA Leases, Lease-Purchase, Installment Note Payable and Purchase Agreements Scheduled Payments $ $ 16,931 596 16,335 FY 12-13 $ 903 605 298 FY 13-14 Exhibit D - 18 PIMA COUNTY, ARIZONA Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures Last Ten Fiscal Years Exhibit D - 19 (amounts in thousands) Fiscal Year 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Principal $ 46,998 41,255 48,672 50,940 56,459 96,751 83,565 72,525 78,390 67,885 Total Debt Service Interest $ 13,702 14,794 18,147 17,672 19,757 24,322 24,097 23,945 24,762 23,903 $ 60,700 56,049 66,819 68,612 76,216 121,073 107,662 96,470 103,152 91,788 Total General Expenditures * $ Ratio of Debt Service To General Expenditures 546,136 589,708 640,336 689,968 755,413 780,044 730,379 730,278 767,261 756,959 * Includes General, Special Revenue and Debt Service Funds, while excluding Capital Projects Fund. 148 11.1% 9.5% 10.4% 9.9% 10.1% 15.5% 14.7% 13.2% 13.4% 12.1% 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 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Population (a) 914,011 940,004 959,474 977,258 984,032 984,274 981,168 986,081 990,380 996,670 Per Capita Personal Income ($) Personal Income (a) $ 25,801,213 28,573,761 31,297,982 33,069,716 35,067,808 32,977,680 33,277,952 34,596,360 35,813,670 36,648,980 $ Exhibit D - 20 Unemployment Rate (a) 28,229 30,397 32,620 33,839 35,637 33,505 33,917 35,085 36,162 36,771 Note: a) Population, personal income and unemployment data are obtained from projections supplied by the U of A Business Research Program, Eller College of Business and Public Administration b) Prior year data updated to reflect the new source data 149 3.5% 4.1% 4.4% 3.3% 4.7% 7.9% 8.6% 9.1% 7.6% 7.6% 150 4,420 7,690 Wal-Mart Stores, Inc. Tucson Unified School District 77,740 3,515 10 431,400 18.1% 0.8% 1.3% 81,678 4,500 6,757 Sources: University of Arizona, "Arizona's Economy" U of A Business Research Program (EBR), College of Business & Public Administration Data is obtained from www.azstarnet.com/star200, a website of the Arizona Daily Star. Total Work Force Total Carondelet Health Network Tohono O'odam Nation Phelps Dodge 8 10 8 1 443,100 18.3% 1.0% 1.5% 2.8% 80,908 4,123 5,306 13,098 10 8 1 7 6 9 4 5 2 3 443,300 18.2% 0.9% 1.2% 3.0% 1.5% 1.7% 1.1% 2.2% 1.9% 2.4% 2.3% 79,899 4,900 5,848 9,119 7,290 7,419 5,625 9,927 8,233 11,184 10,354 10 8 4 7 6 9 3 5 1 2 Rank 453,500 17.6% 1.1% 1.3% 2.0% 1.6% 1.6% 1.2% 2.2% 1.8% 2.5% 2.3% Percent of Total County Employment 6,954 8,018 5,805 10,754 7,701 12,515 10,535 Employees 80,671 5,848 5,495 12,250 6,765 7,623 4,980 9,742 8,233 10,756 10,282 Employees 2007 City of Tucson 2.8% 1.5% 1.7% 1.0% 2.2% 2.0% 2.3% 2.3% Rank Percent of Total County Employment 6,701 1 7 6 9 4 5 3 2 Employees 2006 11,939 6,767 7,684 4,595 9,750 8,727 10,300 10,348 Rank Percent of Total County Employment Fort Huachuca 1.6% 1.8% 1.0% 2.3% 1.8% 2.4% 2.3% Employees 2005 5,840 7 6 9 4 5 2 3 Rank Percent of Total County Employment Freeport-McMoran Copper Pima County Government UA Healthcare 6,987 9,753 State of Arizona US Border Patrol 7,692 10,171 Raytheon Davis Monthan AFB 10,078 University of Arizona Employer Employees 2004 PIMA COUNTY, ARIZONA Principal Employers Current Year and Nine Years Ago 8 7 9 6 4 10 2 5 1 3 Rank 2008 (continued) 459,200 17.6% 1.3% 1.5% 1.3% 1.5% 1.7% 1.3% 2.3% 1.7% 2.7% 2.3% Percent of Total County Employment Exhibit D - 21 151 9,329 6,715 7,227 State of Arizona Wal-Mart Stores, Inc. Tucson Unified School District 75,866 15.6% 1.0% 76,744 16.8% 0.0% 4,585 6,198 486,400 Sources: University of Arizona, "Arizona's Economy" U of A Business Research Program (EBR), College of Business & Public Administration Data is obtained from www.azstarnet.com/star200, a website of the Arizona Daily Star. Total Work Force 488,500 15.5% 485,800 455,900 96,232 75,882 10 1.4% 5,463 6,076 6,099 6,500 6,790 7,450 8,807 9,100 10,300 10,846 Total 15.9% 4,930 7 1.4% 1.2% 1.3% 1.5% 1.6% 2.0% 1.9% 2.3% 2.3% Employees 3,668 0.9% 1.1% 6,198 8 10 9 6 5 3 4 2 1 Rank Percent of Total County Employment 4,566 10 9 1.3% 6,170 5,594 6,000 6,674 7,300 9,061 8,566 10,500 10,681 Employees 2012 Carondelet Health Network 5,399 8 1.3% 1.2% 1.4% 1.5% 1.8% 1.7% 2.2% 2.2% Percent of Total County Employment 4,350 77,214 1.2% 6,225 7 9 6 5 3 4 1 2 Rank 2011 Tohono O'odam Nation Phelps Dodge 10 1.3% 5,635 1.3% 8 City of Tucson 7 6,236 6,463 1.2% Fort Huachuca 9 5,987 6,709 7,308 8,866 8,462 10,500 10,481 Freeport-McMoran Copper 1.3% 1.4% 1.5% 1.8% 1.6% 2.5% 2.1% Employees 6,403 7 6 5 3 4 1 2 Rank Percent of Total County Employment 6,235 6,511 7,012 7,192 8,708 7,755 12,140 10,363 Employees 2010 Pima County Government 1.3% 1.5% 1.4% 1.9% 1.5% 2.4% 2.2% Percent of Total County Employment 5,982 8 5 6 3 4 1 2 Rank 2009 UA Healthcare US Border Patrol 7,509 11,539 Raytheon Davis Monthan AFB 10,575 Employer Employees University of Arizona (continued) PIMA COUNTY, ARIZONA Principal Employers Current Year and Nine Years Ago 10 9 8 7 6 5 4 3 2 1 Rank 2013 453,200 21.1% 0.8% 1.0% 1.0% 1.4% 1.2% 1.3% 1.3% 1.4% 1.5% 1.6% 1.9% 2.0% 2.3% 2.4% Percent of Total County Employment Exhibit D - 21 152 914,011 940,004 959,474 977,258 984,032 984,274 981,168 986,081 990,380 996,670 Population (a)(1) 431,400 443,100 443,300 453,500 459,200 486,400 488,500 485,800 455,900 453,200 3.5% 4.1% 4.4% 3.3% 4.7% 7.9% 8.6% 9.1% 7.6% 7.6% Total Unemployment Rate (1) 1,200 1,500 1,700 1,900 2,100 1,300 1,800 1,820 1,900 2,200 Mining (1) 24,000 26,600 28,500 28,100 23,600 16,500 14,300 14,456 16,900 14,700 Construction (1) 28,500 28,600 29,300 29,000 26,900 25,900 24,500 24,767 23,100 23,300 Manufacturing (1) EMPLOYMENT Sources: 1.) U of A Business Research Program (EBR), College of Business & Public Administration 2.) Bureau of Labor Statistics Note b: Beginning with the October 2012 issue, "Arizona's Economy" changed what Trade and Services were reported. This resulted in an increase of 40,000 jobs being reported. Note a: Beginning with fiscal year 2012-13 the County restated prior year population to reflect new source data 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Calendar Year Civilian Labor Force (2) PIMA COUNTY, ARIZONA Population and Employment Last Ten Calendar Years 185,000 199,300 219,200 228,600 221,600 215,900 216,800 219,159 250,900 209,500 Trades and Services (b)(1) 15,600 18,200 17,500 17,800 16,300 16,700 17,400 17,589 17,600 19,500 Finance, Insurance, and Real Estate (1) Exhibit D - 22 153 239,966 261,037 289,440 263,910 240,329 190,445 169,780 164,152 145,967 170,875 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 3,611,696 3,928,773 4,251,710 4,284,880 4,474,352 3,777,057 3,696,875 3,721,785 3,663,982 3,308,620 15,393,817 15,847,429 17,179,275 17,857,865 19,491,376 21,648,350 20,483,709 19,746,774 19,971,230 20,352,101 Transportation No. of Air Bus Passengers Ridership 1.96 2.00 2.18 2.21 2.27 2.46 2.22 2.18 2.15 2.16 Riders Per Mile 10,432 12,103 11,903 6,265 4,171 2,364 2,340 2,400 2,062 3,713 Residential Bldg. Permits Sources: 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. Aircraft Movements Fiscal Year PIMA COUNTY, ARIZONA Transportation and Real Estate Last Ten Fiscal Years 15,054 17,039 16,630 13,821 10,718 10,472 12,471 11,545 13,436 14,570 Real Estate Multiple Listings $ 2,899,012 3,908,054 4,462,020 3,757,536 2,810,383 2,245,644 2,457,147 2,033,702 2,211,369 2,699,113 Sales Volume In $ 000's Exhibit D - 23 PIMA COUNTY, ARIZONA Economic Indicators by Calendar Year Last Ten Calendar Years Exhibit D - 24 ($ amounts in thousands) Aggregate Retail Sales (1) Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 $ 9,550,501 10,366,181 11,478,781 11,829,081 11,922,231 10,799,849 10,614,927 11,144,720 11,834,329 12,196,175 No. of Dwelling Units Awarded (1) 9,281 12,640 10,313 6,110 3,728 1,986 2,221 2,288 * 2,218 3,681 Change in Real Estate Sales Volume (2) 22% 26% 12% -19% -34% -25% 9% -21% 8% 18% Commercial Bank Deposits (3) $ 7,895,000 9,013,000 10,134,000 10,497,000 10,765,000 10,855,000 11,134,000 11,265,000 11,501,822 12,173,345 Notes: * Beginning with calendar year 2011, the number of dwelling units awarded includes both single family and multiple family unit structures combined. Sources: 1.) U of A Business Research Program (EBR), College of Business & Public Administration. 2.) Tucson Association of Realtors, Multiple Listing Service, Inc. 154 PIMA COUNTY, ARIZONA Population Statistics June 30, 2013 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+ 61,840 62,303 62,947 70,585 77,922 187,405 183,942 65,815 61,094 53,144 39,867 73,072 Total 999,936 POPULATION PROJECTIONS Year Projected Population 2014 2015 2020 2025 2035 2045 1,011,977 1,028,592 1,125,861 1,218,280 1,406,032 1,605,249 Source: Arizona Department of Administration 155 Exhibit D - 25 PIMA COUNTY, ARIZONA Average Annual Jail Population Last Ten CalendarYears Calendar Year Average Jail Population 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1,739 2,009 2,028 2,008 1,913 1,826 1,636 1,640 1,802 2,000 Source: Pima County Sheriff's Department 156 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. 157 6,527 Total 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 2006 6,855 1,187 472 0 0 559 153 3 5,668 7,093 1,202 508 0 0 563 128 3 5,891 2,860 1,560 330 40 404 26 485 186 * Previously known as Wastewater Management - Liquid Waste. ** Pima Health Systems & Services was sold and the department closed In FY 2005-2006 Wastewater Management-Solid Waste was classified as a governmental fund. It now appears under the category "Sanitation". Variances can 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. 6,644 1,034 507 0 0 451 73 3 5,610 2,684 1,491 311 34 397 29 480 184 6,728 978 488 0 0 422 66 2 5,750 2,870 1,488 264 33 422 32 467 174 Full-time employees (FTEs) as of 6/30: 2008 2009 2010 2,776 1,442 334 41 408 22 466 179 2007 Variances can be noted in the Governmental Activities categories due to a change in classification criteria in FY 2004 - 2005. Note: Internal service fund's FTEs were added to the General Government function in FY 2004-2005. 1,385 Total business-type activities 481 42 548 162 149 3 5,142 Total governmental activities Business-type activities Regional Wastewater Reclamation* Wastewater Management- Solid Waste Kino Hospital Pima Health System & Services** Development Services Parking Garages 2,040 1,902 288 0 413 185 197 117 Governmental activities General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Function/Program 2004 PIMA COUNTY, ARIZONA Employees by Function Last Ten Fiscal Years 6,704 970 481 0 0 421 66 2 5,734 2,850 1,529 262 23 412 27 461 170 2011 6,470 593 531 0 0 0 59 3 5,877 2,473 1,540 274 24 404 377 652 133 2012 5,571 468 413 0 0 0 52 3 5,103 2,321 1,468 265 3 174 397 331 144 2013 Exhibit D - 27 158 Cultural and Recreational Spring training attendance (2) Sidewinders attendance Soccer attendance $ $ 98,220,398 $ 112,791,318 $ 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 27,846 31,016 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 30,204 34,131 3,927 33,929 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 $ 42,755,555 42,916,920 5,071,608 7,476,315 20,698,771 18,609,343 5,592,348 67,890,856 Capital Projects Completed Land Buildings Improvements Infrastructure 1,430,690 6,249,123 474,045 129 388,092 23,785 1,338,000 6,063,771 486,402 107 344,470 22,465 146,739 165,441 Library Volumes in collection Total volumes borrowed Number of cardholders Parks & Recreation Athletic field permits issued Community center admissions Volunteer hours (3) 147,117 165,387 65.0 9,718 Wastewater Avg. daily sewage treated (MGD) New connections 65.5 11,245 37,868 42,016 36,823 40,636 (1) 4,148 32,501 3,813 33,815 2005 Traffic violations/citations Criminal Total Civil Total Total violations/citations Sheriff Physical arrests Program: 2004 $ 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 41,542 47,509 5,967 32,796 1,425,235 7,409,820 516,780 149 403,887 25,756 103,407 58,879 67.8 1,477 49,817 56,239 6,422 33,571 2009 $ 106,021,120 $ 59,922,798 14,336,536 9,028,251 22,733,535 Fiscal Year 2008 PIMA COUNTY, ARIZONA Operating Indicators by Program Last Ten Fiscal Years $ 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 41,800 48,217 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 32,270 36,574 4,304 24,108 2011 $ 68,834,665 $ 13,075,719 5,008,707 4,287,186 46,463,053 1,326,375 7,557,865 434,841 $ $ 59,450,396 6,947 33,313,996 12,837,873 13,291,580 1,257,821 6,098,216 405,419 263 306,841 8,213 21,942 36,001 228 347,379 10,787 21,944 60.9 1,856 33,837 38,128 4,291 25,451 2013 20,850 62.3 1,355 32,445 36,650 4,205 24,841 2012 Exhibit D - 28  7 10,334 17,771 25 12 12 $ 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 2007 Notes (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 *** No soil cement bank protection projects in 2012 and 2013 **** Jan. 3, 2012 Capacity was reduced when the Town of Marana obtained ownership. Open Space Acquisitions Properties added Acres Cumulative acreage Total properties Libraries County (2) City 3,177 74.76 Wastewater Sanitary sewers (miles) Treatment capacity (MGD) 138 10,313 1,773 672,427 2,411 32 67 12 9 8 $ 6 5 280 Parks & Recreation Urban parks (acres) Playgrounds (1) Baseball/softball diamonds Soccer/football fields Community centers Swimming pools Flood Control Bank protection (miles) Flood plain / drainageway (acres) Transportation (streets and highways) Streets (miles) Pothole repair ** Sheriff Stations Zone offices Patrol units Program: 2004 $ 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 7 4 324 $ Fiscal Year 2008 7 4 323 2009 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 PIMA COUNTY, ARIZONA Capital Assets and Infrastructure by Program Last Ten Fiscal Years 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 6 595 58,386 100 26 3,440 97.06 3,012 40 86 18 11 10 *** 13,210 1,897 $ 1,493,531 7 4 358 2012 1 1,416 59,802 101 26 3,448 97.04 **** 3,143 40 87 18 11 10 *** 13,645 1,905 $1,462,810 7 2 305 2013 Exhibit D - 29 (This page is intentionally blank) 160