2014 Comprehensive Annual Financial Report Pima County, Arizona For the Fiscal Year Ended June 30, 2014 PIMA COUNTY, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2014 BOARD OF SUPERVISORS Sharon Bronson Chair District #3 Richard Elias Vice Chair District #5 Ally Miller District #1 Ramón Valadez District #2 Ray Carroll District #4 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 J. Guerrero, CPA, Division Manager Financial Control & Reporting Supervisors Emilia Eveningred Blanca Rossetti Pete Rodriguez Accountants Linda Baldazo Susan A. Brown, CPA Kayci Cagle Brenda DeBoo-Nicely Valentin R. Dominguez, CPA Linda House Chih-Yu Lee, CPA Janet Mabon Ryan J. Maese Lorraine Nuñez Janet Peete Alex C. Ramires Phil Schroeck Jennifer Serrano Phillip Summersett James D. Weingart, CMA PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2014 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 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 Fiduciary Fund Financial Statements Statement of Fiduciary Net Position - Fiduciary Funds Statement of Changes in Fiduciary Net Position - Fiduciary Funds 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 A-10 A-11 46 47 PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2014 Table of Contents (continued) Exhibit Notes to Financial Statements Note 1: Summary of significant accounting policies 48 - 54 Note 2: Fund balance classifications of the governmental funds Note 3: Note 4: Cash and investments 56 - 59 Due from other governments Capital assets 60 61 - 62 Claims, judgments and risk management Long-term liabilities Landfill liabilities 63 - 64 65 - 74 75 Pension and other post employment benefits Interfund transactions 76 - 80 81 Note 5: Note 6: Note 7: Note 8: Note 9: Note 10: Note 11: Note 12: C. 55 Construction and other significant commitments 82 Deficit fund balances 82 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 83 84 B-2 85 COMBINING STATEMENTS AND OTHER SCHEDULES Other (Nonmajor) Governmental Funds Combining Balance Sheet - Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds C-2 90 - 91 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 Office of Emergency Management’s Radio System – Special Revenue Fund School Reserve - Special Revenue Fund Environmental Quality - Special Revenue Fund Solid Waste - Special Revenue Fund Library District - Special Revenue Fund Stadium District - Special Revenue Fund Street Lighting Districts 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 93 94 95 96 97 98 99 100 101 102 103 104 105 106 C-1 88 - 89 PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2014 Table of Contents (continued) Exhibit Page C-17 107 C-18 C-19 108 109- 110 C-20 111 C-21 C-22 112 113 - 114 C-23 115 C-24 C-25 116 117 C-26 118 Financial Trends Information Net position by component Changes in net position Fund balance - governmental funds Changes in fund balances - governmental funds D-1 through 4 119 - 123 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 surcharge and recreational vehicle tax Streets and highways revenue D-5 through 12 125 - 136 Other (Nonmajor) Enterprise Funds Combining Statement of Net 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 PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2014 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 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 19 137 - 145 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 26 147 - 154 Operating Information Employees by function Operating indicators by program Capital assets and infrastructure by program D-27 through 29 155 - 157 Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2014 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 5, 2014 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, 2014. 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, 2014. 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 Comprehensive Annual Financial Report consists of three sections:  The INTRODUCTORY section describes 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.  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. Pima County has purchased thousands of acres of open space and ranches to preserve and protect the stunning landscapes and historic and cultural sites. The County’s population has grown from 395 in 1820 to an estimated population of slightly more than one million in 2014, according to the Arizona Department of Administration, Office of Employment and Population Statistics. 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. 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; Human Resources; Information Technology; Office of Emergency Management and Homeland Security; 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 and 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 Court; Legal Defender; Office of Court Appointed Counsel; Public Defender; Public Fiduciary; Sheriff; and Superior Court. 2  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; and Office of Medical Services.  Public Works provides construction, operations, and maintenance services related to the County’s infrastructure and related planning and environmental issues. The departments within this area are Capital 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. The County’s component units include the following:  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.  The Southwestern Fair Commission is reported as a separate component unit (discrete presentation) 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’s Recommended Budget and public discussion of the Recommended Budget, the Board of Supervisors historically adopts a budget in June, and must adopt a budget on or before the first Monday in August. The Adopted Budget 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, State of Arizona, and Davis-Monthan Air Force Base. Major manufacturers include IBM, Ventana Medical Systems and several aerospace and aircraft companies including Raytheon Missile Systems, Bombardier Aerospace, and Honeywell Aerospace. Employment by industry is led by government; educational and health services; trade, transportation and utilities; 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 7.0% in 2013. This is a greater decrease than the national 3 unemployment rate which was 9.6% in 2010 and had fallen to 7.4% in 2013. Over half of Pima County’s population is in the prime working age range of 18 to 54. A sunny, mild, 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, Pima County direct travel spending generated approximately $2.67 million (13.5% of Arizona direct travel spending) in 2013. This direct travel spending generated over 22,000 direct jobs, $577 million in direct earnings and over $207 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 attracts an estimated 55,000 people to Tucson and has an estimated economic impact of $120 million.  The annual El Tour de Tucson is Southern Arizona’s largest bicycling event, attracting more than 9,000 cyclists and 30,000 spectators. El Tour’s annual economic impact is estimated to be $13 - $20 million on ride weekend alone and $50 - $70 million year-round. A 2014 Forbes magazine article highlighted Tucson and its 2009 Regional Plan for Bicycling with its identification of 170 miles of potential “Bicycle Boulevards”. Bicycle commuting has recently increased 58 percent and the city now boasts an excellent network of bike lanes stretching 610 miles. The County has completed about 75% of the 131 miles of the Loop, shared-use paths for residents and visitors on foot, bikes, skates, and horses connecting various parts of the Tucson area. 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 2014-2015 includes $232 million for its Capital Improvement Plan (CIP). Under this plan, four departments comprise 80% of the total CIP budget as follows:  Regional Wastewater Reclamation, with a budget of $84 million  Transportation, with a budget of $62 million  Facilities Management, with a budget of $34 million  Regional Flood Control District, with a budget of $15 million Regional Wastewater Reclamation – After nearly a decade of planning and implementation, the Regional Wastewater Reclamation Department (RWRD) has completed all the mandated projects in the regulatory-driven Regional Optimization Master Plan (ROMP). ROMP is a master plan designed and constructed to expand and upgrade infrastructure to meet new and current environmental regulatory requirements mandated by the Arizona Department of Environmental Quality (ADEQ) as well as potential future requirements. It also provides for the wastewater capacity needs of the community for the next several decades. With the entire regulatory-required infrastructure now in operation, work on other ROMP-related projects is well underway. 4 Regional Wastewater Reclamation major projects for fiscal year 2014-2015 include the following:  Minor Rehabilitation Projects are budgeted for $9.9 million.  South Rillito West Central Interceptor Rehabilitation Project is budgeted for $8.7 million.  North Rillito Interceptor Rehabilitation Project is budgeted for $7.9 million  Conveyance Rehabilitation Program is budgeted for $6.9 million. Transportation - The Department of Transportation projects are funded by highway user revenues, 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 2014-2015 budget:  Valencia Road: Alvernon Way to Wilmot Road project is budgeted for $14.7 million.  Valencia Road: Mark Road to Wade Road project is budgeted for $10.9 million.  Hughes Access Road Relocation project is budgeted for $6.9 million.  Magee Road: La Canada Drive to Oracle Road project is budgeted for $6.1 million. Facilities Management - A major budgeted project for fiscal year 2014-2015 includes $30 million for the new Public Service Center at 240 North Stone Avenue, set to open and begin serving the public in fiscal year 2014-2015, that will house the Pima County Justice Courts, the Recorder, the Assessor and the Treasurer. The total cost for the Public Service Center is $104.5 million. Regional Flood Control District – The Regional Flood Control District has active projects with a total budget of $15 million. Major projects include:  Santa Cruz River Flood Control Erosion Control and Linear Park: Ajo to 29th Street project is budgeted for $4.0 million.  Canyon Del Oro Pathway: La Cholla to La Canada project is budgeted for $2.4 million.  Urban Drainage project is budgeted for $2.0 million.  El Corazon de los Tres Rios Del Norte project is budgeted for $2.0 million. Debt Management Bond ratings for Pima County range from A+ to AA. Pima County maintains a sound financial profile, with healthy operating reserves while its 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, 2014, $4.7 million from the May 20, 1997, $13.3 million from the May 18, 2004, and $0.7 million from the May 16, 2006 bond elections remained unissued. 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 2014-2015 include $18.6 million of general obligation debt, $20 million is anticipated for sewer obligation bonds, and $60 million of Certificates of Participation debt service to fund additional sewer projects that will be repaid with sewer revenues. 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 80 percent of its debt within 11 years with 100 percent retired at or before 15 years. In November 2014 voters approved a bond proposal to use $22 million to build a new animal shelter. Pima County is in the process of planning for a November 2015 bond election with several categories of bond project proposals being considered. 5 The state constitution sets a cap on general obligation debt at 15 percent of the County’s net secondary assessed valuation. In fiscal year 2013-2014 the constitutional debt limit was $1.1 billion. The actual bonded indebtedness was $407 million, far below the constitutional debt limit. Please refer to the MD&A beginning on page 15 and Note 7 beginning on page 65 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 2013-2014 are expected to be under the limit of $527.4 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 2012-2013 can be found at: http://www.pima.gov/finance/reports.shtml The Single Audit for Pima County for the fiscal year ended June 30, 2014 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. 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, 2013. Pima County has received this prestigious award for twentyeight years from fiscal years ended June 30, 1984 through 2013, 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. 6 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 2013-2014 budget document. This was the sixteenth 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, Tom Burke Director, Finance and Risk Management C. H. Huckelberry County Administrator 7 7 8 9 JUVENILE COURT ADMINISTRATION JUSTICE COURTS COUNTY ATTORNEY CONSTABLES CLERK OF THE SUPERIOR COURT ASSESSOR Elected Officials COMMUNITY RESOURCES JUSTICE & LAW ENFORCEMENT COUNTY ADMINISTRATOR BOARD OF SUPERVISORS RESIDENTS OF PIMA COUNTY HEALTH SERVICES CLERK OF THE BOARD TREASURER SUPERIOR COURT SHERIFF SCHOOL SUPERINTENDENT RECORDER PUBLIC WORKS Elected Officials PIMA COUNTY ORGANIZATIONAL CHART (This page is intentionally blank) 10 PIMA COUNTY Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2014 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, discretely presented component unit, each major fund, and aggregate remaining fund information of Pima County as of and for the year ended June 30, 2014, 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 the component unit, which account for the following percentages of the assets and deferred outflows, liabilities and deferred inflows, revenues, expenses or expenditures of the opinion units affected. Opinion Unit/Department Government-Wide Statements Governmental Activities: Stadium District School Reserve Fund Self-Insurance Trust Health Benefits Trust Business-Type Activities: Regional Wastewater Reclamation Department Development Services Discretely Presented Component Unit: Southwestern Fair Commission Assets and Deferred Outflows Liabilities and Deferred Inflows Revenues Expenses/ Expenditures 1.40% 0.08% 2.80% 0.99% 1.49% 0.02% 3.92% 1.91% 0.92% 0.24% 2.03% 8.34% 0.72% 0.27% 1.63% 7.28% 98.83% 0.27% 99.84% 0.11% 94.07% 3.67% 94.36% 4.66% 100.00% 100.00% 100.00% 100.00% 2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051 Opinion Unit/Department Fund Statements Major Fund: Regional Wastewater Reclamation Department Enterprise Fund Aggregate Remaining Fund Information: Stadium District School Reserve Fund Development Services Self-Insurance Trust Health Benefits Trust Assets and Deferred Outflows Liabilities and Deferred Inflows Revenues Expenses/ Expenditures 100.00% 100.00% 100.00% 100.00% 0.07% 0.36% 0.83% 13.79% 4.89% 1.05% 0.07% 0.50% 20.95% 10.21% 0.27% 0.07% 0.27% 0.58% 2.40% 0.29% 0.07% 0.25% 0.47% 2.09% Those 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 from 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, discretely presented component unit, each major fund, and aggregate remaining fund information of Pima County as of June 30, 2014, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with U.S. generally accepted accounting principles. 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 Schedules on pages 83 and 84, and the Schedule of Agent Retirement Plans’ Funding Progress on page 85, 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 inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 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 relate 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, 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 5, 2014 Management’s Discussion and Analysis Pima County, Arizona Management’s Discussion and Analysis For the Year Ended June 30, 2014 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, 2014. 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 $44,241 in fiscal year 2013-14. This represents a 5.8% decrease when compared to the prior year’s change in net position of $46,972.  The County’s primary sources of revenue come from taxes, grants and contributions, and charges for services, and state shared taxes as displayed below:  The assets of the County exceeded its liabilities (net position) by $2,359,818, an increase of 1.9% from the prior year. Of this amount, $1,941,324 represents the net investment in capital assets, $216,555 is restricted for specific purposes (restricted net position), and $201,939 is available for general government expenditures (unrestricted net position). 15  Unrestricted net position for the County decreased $45,438 (or 18.4%), from $247,377 to $201,939 this fiscal year, restricted net position decreased $11,643 (or 5.1%) from $228,198 to $216,555. The chart below presents the composition of restricted and unrestricted net position for the current and prior years:  The General Fund unassigned fund balance decreased to $42,731 from $56,526 in the prior year. The unassigned fund balance comprises 88.7% of the total fund balance of $48,190.  The County continues to use debt to finance the construction of roads, streets, and buildings. Total capital assets for the year increased $103,630; long-term liabilities increased $14,155. 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 (RWR), Development Services, and the County’s downtown parking garages. A discretely presented component unit is included in the basic financial statements. It consists of one legally separate entity for which the County is financially accountable. The County reports the Southwestern Fair Commission, which operates the County Fairgrounds and the annual Pima County Fair, as a discretely presented component unit. The government-wide financial statements can be found on pages 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. 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 17 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 88-91. 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 employee health and health related benefits, 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, all 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 RWR 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 107-114. 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 48-82. 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 83-85. 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 88118. 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, 2014 and 2013 2014 2013 Charges for services $ 246,421 $ 231,625 Operating grants and contributions 113,129 116,121 Capital grants and contributions 61,390 63,212 Total program revenues 420,940 410,958 Variance $ 14,796 (2,992) (1,822) 9,982 Total general revenues and transfers 545,804 546,973 (1,169) Total program and general revenues 966,744 957,931 8,813 Total expenses 922,503 910,959 11,544 $ 44,241 $ 46,972 Change in net position $ (2,731) As indicated above, total program and general revenues increased $8,813 primarily due to a $14,796 increase in charges for services. However, expenses also increased $11,544 resulting in a decrease in the change in net position of $2,731. An explanation of each of these changes is discussed further in the following governmental and business-type activities sections. 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 for the County at June 30, 2014 and June 30, 2013. 19 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 $3,976,297, an increase of $29,633 (0.8%) from the prior year and total liabilities were $1,619,999, a decrease of $15,221 (0.9%) 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, 2014, net investment in capital assets totaled $1,941,324, comprising approximately 82.3% of total net position. This represents an increase of $101,322 (5.5%) 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, 2014, restricted net position totaled $216,555 and comprised approximately 9.2% of total net position. This represents an $11,643 (5.1%) 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, 2014, unrestricted net position totaled $201,939 and comprised approximately 8.5% of total net position. This represents a $45,438 (18.4%) decrease from the prior year. The following schedule presents, on a comparative basis, both governmental activities and business-type activities within the Statement of Net Position. 20 Schedule of Assets, Deferred Outflows of Resources, Liabilities and Net Position At June 30, 2014 and 2013 Governmental Activities Current and other assets Capital assets (net): Land, buildings, equipment, infrastructure & other assets Total assets Deferred outflows of resources Deferred charges on refunding Current and other liabilities Long-term liabilities Total liabilities Net position: Net investment in capital assets Restricted Unrestricted Total net position Business-type Activities 2013 Variance 499,542 $ 579,558 $(80,016) 1,965,669 2,465,211 1,908,895 2,488,453 56,774 (23,242) 3,520 4,133 (613) 91,818 794,543 886,361 110,838 789,601 900,439 (19,020) 4,942 (14,078) 24,122 709,516 733,638 34,478 700,303 734,781 1,354,456 1,308,057 46,399 586,868 531,945 143,400 84,514 $ 1,582,370 138,472 145,618 $1,592,14 7 4,928 (61,104) $ (9,777) 73,155 117,425 777,448 89,726 101,759 $ 723,430 2014 $ 2014 $ $ 2013 Total Variance 2014 2013 Variance 254,677 $ 248,658 $ 6,019 $ 754,219 $ 828,216 $(73,997) 1,256,409 1,511,086 1,209,5 53 1,458,2 11 46,856 52,875 3,222,078 3,976,297 3,118,448 3,946,664 103,630 29,633 3,520 4,133 (613) (10,356) 9,213 (1,143) 115,940 1,504,059 1,619,999 145,316 1,489,904 1,635,220 (29,376) 14,155 (15,221) 54,923 1,941,324 1,840,002 101,322 (16,571) 15,666 $54,018 216,555 201,939 $2,359,8 18 228,198 247,377 $2,315,577 (11,643) (45,438) $ 44,241 Analysis of Governmental activities Assets Current and other assets decreased by $80,016 (13.8%) between fiscal years. Most of this variance is attributable to several significant transactions decreasing cash: a cash defeasance of general obligation bonds (series 2005 for $14,815 and series 2007 for $1,200) for $16,015 and a cash transfer of $51,400 from Capital Projects to RWR due to increases in building and other improvements from the 2013 Certificates of Participation (COPs) loan proceeds received in fiscal year 2012-13. Capital assets increased $56,774 (3.0%) primarily due to an increase of $34,676 in equipment and machinery mainly due to the capitalization of the Regional Public Safety Communications Systems assets, and an increase of $17,387 in buildings and other improvements including: Regional Flood Control assets increased $2,106 for the Santa Cruz Pathway and drainage structures, Facilities Management assets increased $1,464 for improvements to the Abrams building 4th floor, $2,018 for the Administration building tenant improvements, and $4,338 for the Sporting Chance Center assets. The Kino Sports Complex increased $3,212 for facilities modifications and other improvements to the north fields, and an increase of $1,498 in assets for the Library District included the renovation and expansion of Eckstrom Columbus Library. Liabilities Current and other liabilities decreased $19,020 (17.2%) during the fiscal year. This is mostly due to both a $10,356 increase in accounts payable and a $28,604 decrease in employee compensation. Accounts payable increased $4,419 as part of outstanding payables from an intergovernmental agreement with Regional Transportation Authority (for the regionalization of public transit and special needs service) and a contract with Motorola Solutions for the purchase of communication equipment for the Regional Public Safety Communications Systems for $6,016. Employee compensation decreased primarily due to the change in reporting the non-current portion of long-term employee compensation under long-term liabilities of $30,807. Net position In summary, total net position decreased by $9,777 (0.6%) primarily due to a decrease in total revenues of $11,604, increases in expenses of $10,895, and a net increase in transfers out of $9,385, as explained in previous paragraphs. 21 Analysis of Business-type activities Assets Capital assets increased $46,856 (3.9%) primarily due to $20,842 increase in RWR equipment assets and $16,474 increase in the sewage conveyance system. Equipment increased $22,691 primarily from the Regional Optimization Master Planning (ROMP) projects. Sewage conveyance system assets increased $9,543 due to system-wide conveyance rehabilitation program, $4,429 for the sewer modification project for Prince Road and I10, and $2,977 from developer contributed capital. Liabilities Long-term liabilities increased $9,213 (1.3%) during the fiscal year. This is mostly due to an increase of sewer revenue obligations of $48,500 offset by a decrease in sewer revenue bonds of $16,765 and a decrease in sewer revenue obligations of $18,725. Net position In summary, total net position for business-type activities increased $54,018 (7.5%) primarily due to an increase in the net position of capital assets from the RWR Enterprise fund. 22 Governmental activities The following table shows details of the changes in net position for governmental activities: Governmental Activities Schedule of Revenues, Expenses, and Changes in Net Position For the Years Ended June 30, 2014 and 2013 2014 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 $ 64,856 113,129 54,583 232,568 Variance Amount Percent 2013 $ 66,460 116,121 59,298 241,879 $ (1,604) (2,992) (4,715) (9,311) -2.4% -2.6% -8.0% -3.8% 378,032 125,504 2,955 36,592 543,083 383,508 119,728 2,627 39,513 545,376 (5,476) 5,776 328 (2,921) (2,293) -1.4% 4.8% 12.5% -7.4% -0.4% Total revenues 775,651 787,255 (11,604) -1.5% 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 230,742 188,782 93,675 4,252 36,085 93,224 63,961 35,756 (5,758) 27,994 768,713 233,984 166,476 80,087 6,409 36,540 95,428 65,341 49,924 (286) 23,915 757,818 (3,242) 22,306 13,588 (2,157) (455) (2,204) (1,380) (14,168) (5,472) 4,079 10,895 -1.4% 13.4% 17.0% -33.7% -1.2% -2.3% -2.1% -28.4% 1913.3% 17.1% 1.4% 6,938 29,437 (22,499) -76.4% (16,715) (9,777) (7,330) 22,107 (9,385) (31,884) 128.0% -144.2% 22,107 1.4% (9,777) -0.6% Excess before contributions and transfers Transfers in (out) Change in net position Beginning net position Ending net position 1,592,147 $ 1,582,370 1,570,040 $ 1,592,147 $ Revenues Overall, governmental activities total revenues decreased $11,604 or 1.5% from fiscal year 2012-13 due to decreases in both program and general revenues. Program revenues decreased $9,311 (3.8%) primarily due to a $2,992 decrease in operating grants and a decrease of $4,715 in capital grants and contributions. The decrease in operating grants is primarily due to a $6,707 decrease related to the ending of the American Recovery and Reinvestment Act (ARRA) Program. The $4,715 decrease in capital grants and contributions is due to decreasing construction activity and related funding for projects nearing completion, primarily a decrease of $6,930 for the Magee Road project. 23 General revenues decreased $2,293 (0.4%) primarily due to a $5,476 decrease in property tax revenues as a result of decreasing secondary net assessed values. Conversely, State shared sales tax increased $5,776 due to increasing sales from an anticipated gradual recovery in the local economy. 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 79.5% of the County’s revenues. Expenses Expenses for governmental activities increased $10,895 (1.4%) primarily due to increases and decreases in the following functions:  Public safety – a $22,306 increase in expenses is primarily due from $22,592 of expenses incurred in the Pima County Wireless Integrated Network (PCWIN) capital project.  Highways and streets – a $13,588 increase is primarily due to expenses incurred in the I-19 Frontage Road from Continental Road to Canoa project ($19,737).  Education and economic opportunity – a $14,168 decrease in expenses was primarily due to a decrease in federal funding under the U.S Department of Housing and Urban Development for the Neighborhood Stabilization Program ARRA ($6,200), Community Development Block Grants ($660), Home investment Partnership Program ($690), Housing Opportunities for persons with AIDS ($185), and the decrease in funding from the U.S. Department of Labor for WIA adult, youth and dislocated worker formula grants ($1,862). 24 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. The resulting change in net position was a decrease of $9,777 (0.6%) for fiscal year 2014 compared to an increase in net position of $22,107 in fiscal year 2012-2013. In summary, and as explained above, ending net position for governmental activities decreased $9,777 (0.6%). This year’s change in net position decreased $31,884 from last year, primarily due to a decrease in revenues of $11,604, an increase in expenses of $10,895 and a net increase of $9,385 in transfers out to business-type activities to fund capital projects. 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. 25 Business-type Activities Schedule of Revenues, Expenses, and Changes in Net Position For the Years Ended June 30, 2014 and 2013 Variance Amount Percent 2014 2013 $ 181,565 6,807 188,372 $ 165,165 3,914 169,079 $ 16,400 2,893 19,293 9.9% 73.9% 11.4% 1,237 1,484 2,721 1,017 580 1,597 220 904 1,124 21.6% 155.9% 70.4% Total revenues 191,093 170,676 20,417 12.0% Expenses: Regional Wastewater Reclamation Development Services Parking Garages Total expenses 145,117 6,796 1,877 153,790 144,085 7,231 1,825 153,141 Excess before transfers 37,303 17,535 19,768 112.7% Transfers in (out) 16,715 7,330 9,385 Change in net position 54,018 24,865 29,153 128.0% 117.2% 723,430 698,565 24,865 3.6% $ 777,448 $ 723,430 $ 54,018 7.5% Program revenues: Charges for services Capital grants and contributions Total program revenues General revenues: Investment earnings Other general revenues Total general revenues Beginning net position, as restated Ending net position 1,032 (435) 52 649 0.7% -6.0% 2.8% 0.4% Revenues Total revenues for business-type activities increased $20,417 (12.0%) mainly due to an increase in charges for services of $16,400, and an increase in capital grants and contributions of $2,893. The increase in charges for services is primarily due to a RWR rate increase (from $3.203 to $3.523 per CCF), resulting in a $14,995 increase. The capital grants increase is due to approximately $3,000 increase in capital contributions for RWR, which is consistent with the increase in construction activities. Expenses Total expenses for business-type activities increased $649 (0.4%) mainly due to the increase of $1,032 (0.7%) in RWR expenses. The RWR expense increase was primarily due to the increase in interest expense from debt service payments of $12,062 offset by $15,691 decrease in reporting a loss on disposals of equipment. Transfers-in increased $9,385 (128%) due to transfers from governmental activities, including an increase of $7,072 from certificates of participation to fund ROMP projects, and an increase of $2,663 to the Parking Garages Fund mainly for construction projects at the Public Service Center. 26 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) acting as the Board of Directors for each district. 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. Intergovernmental revenues for the General Fund increased $3,969 primarily due to increases in the state-shared sales tax associated with an anticipated gradual recovery in the local economy. Charges for services increased $2,950 mostly from administrative overhead contributions. These increases were partially offset by decreases in miscellaneous revenue of $3,585. Miscellaneous revenues received in the previous fiscal year included bankruptcy distributions from the National Century Financial Enterprises and Lehman Brothers of $2,773 and a state refund from the Arizona Long Term Care System of $824. Overall, revenues for the General Fund increased $2,502. General fund expenditures increased $18,126 primarily due to a $13,259 increase in general government for salary increases, higher medical insurance, and retirement benefits for the following departments: Administration $2,260; County Attorney $1,670; Juvenile, Justice and Law enforcement $1,754. The expenditure increases also included $3,325 for the intergovernmental agreement with the Arizona Health Care Cost Containment System (AHCCCS) for supplemental payments to disproportionate share hospitals (DSH payments). Public safety expenditures (Sheriff Department) increased $5,738 due to $3,853 salary increases, higher medical insurance and retirement benefit costs and $2,100 increases in motor pool rates. The $2,502 increase in revenues and $18,126 increase in expenditures is the primary basis for the $12,342 decrease in the fund balance, which ended the year at $48,190. Budget to Actual Comparison for the General Fund Overall, actual revenues were lower than budgeted revenues by $84 and actual expenditures were less than budgeted expenditures by $33,541. Actual revenues for the General Fund were lower than budgeted primarily due to both, an under budget variance in property taxes of $4,535 and an over budget variance for intergovernmental revenue of $4,181. Actual intergovernmental revenues were higher than budgeted due to higher fiscal year 2014 Payments in Lieu of Taxes (PILT) from the department of interior of $1,215 and higher State shared sales tax revenues of $2,366. Actual property taxes were $4,535 less than budgeted primarily due to lower collections of delinquent taxes and interest payments of property taxes. Actual expenditures for the General Fund were less than budgeted primarily due to the County Administrator’s maintenance of the unreserved contingency being $21,684 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.) 27 No variances between the budget to actual amounts at the departmental level were significant enough to affect the County’s ability to provide future services. Capital Projects Fund Revenues for the Capital Projects Fund decreased $8,880, mainly due to a decrease of $8,322 in intergovernmental revenues. The intergovernmental revenue variance is primarily associated with a decrease of $8,923 in State revenue, related to reductions in funding for road projects winding down, primarily the Magee Road project decrease of $6,930 and the Camino de Oeste project decrease of $1,764. Expenditures (capital outlays) decreased $39,230. This variance results from increases in capital expenditures in new or continuing programs, and greater decreases in expenditures of programs at or near completion. Significant decreases in capital expenditure projects include: Sunset Road-Santa Cruz River property acquisition $3,963; the Public Service Center $7,301; Tortolita Mountain Park Expansion $3,913; Communications Center $6,781; Magee Rd/Thornydale Rd $11,363; 2013 Pavement Preservation program $7,163; La Cholla Boulevard $4,582; Magee Rd/La Canada Rd $9,414. Some of the programs with larger increases in expenditures include: Flood ControlPaseo de las Iglesias project $6,409; Orange Grove Road $4,244; 2014 Pavement Preservation program $5,208; Valencia Road-Alvernon Way-Wilmot Road project $5,774. The $78,160 face amount of long-term debt issued represents a decrease of $52,015 from fiscal year 2012-13. Proceeds received included $52,160 from certificates of participation, $10,000 from general obligation bonds, and $16,000 from Highway-User Revenue Fund (HURF). In fiscal year 2012-13, proceeds received were $130,175, including $50,000 from general obligation bonds and $80,175 from certificates of participation. Transfers out increased by $56,175 primarily due to a $42,883 transfer from the 2013 COPs to RWR, a $3,667 transfer of the 2014 COPs to Parking Garages for construction at the new Public Service Center, and a $9,749 transfer to Fleet Services for the new services facility construction in progress. The $8,880 decrease in revenues, the $39,230 decrease in expenses, and a total decrease of $109,429 in other financing sources yield a decrease of $79,079 in net change in fund balance, which ended the year at $149,012. 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 $4,630 primarily due to a decrease in property tax revenues as a result of decreasing secondary net assessed values. Expenditures for the Debt Service Fund increased $47,181 mainly from an increase in principal payments of $44,950. This expected increase is primarily associated with a $34,645 first principal payment of COPs 2013A, which was paid on December 2013 and a $16,000 GO series 2005, 2007 in cash defeasance. Please see Note 7 beginning on page 65 for more information on bond and certificate of participation details. Proceeds from refunding debt were $8,805, a decrease of $42,475, as the only refunding consisted of $8,805 for 2014 HURF bonds. Payments to escrow agents decreased to $10,131, a decrease of $45,292 from $55,423 in the prior year. The increase of transfers-in of $36,511 was primarily transfers from RWR to fund the first $34,645 principal payment of the 2013A COPs. 28 Major Proprietary Fund The County’s Regional Wastewater Reclamation Enterprise (RWR) Fund is a major enterprise fund. The significant changes contributing to the fund’s change in net position was an increase in total assets of $48,977, primarily from an increase of $28,467 in sewage conveyance system assets from the Regional Optimization Master Plan (ROMP) projects, and a $25,696 increase in equipment primarily from $23,865 ROMP projects. Building and improvements assets increased $456,540, resulting from the capitalization of completed projects. Operating revenues of $161,676 represents an increase of $16,099 (11.1%) over the previous year, primarily due to an increase of $15,039 charges for services, resulting from a 10% fee increase (from $3.203 to $3.523 per ccf) effective in fiscal year 2013-14. Operating expenses total of $125,160 represents an increase of $8,554 (7.3%) over the prior year, mainly due to an increase of $3,874 in depreciation expense following capitalization of approximately $446,905 in ROMP projects, and an increase of $3,093 in administrative expenses including, among other factors, an increase of $916 in administrative overhead, and an increase of $649 in motor pool expenses resulting from a rate increase. The deficit in total nonoperating revenues decreased $4,628 primarily due to the decrease in loss on disposal of capital assets of $15,691 offset by an increase in debt interest cost of $12,062. Transfers-in increased by $42,759, mainly due to a cash transfer from 2013 COPs. Transfers out increased by $35,686, to fund a debt service payment of $34,645 representing the first principal payment of the 2013A COPs. The fiscal year 2013-14 activity yields a change in net position of $50,378, an increase of $22,489 (80.6%) over the previous year’s change in net position, resulting in a total net position of $761,031 at fiscal year-end. Capital Assets and Debt Administration Capital Assets The County’s investment in capital assets consists of land, buildings and improvements, 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, 2014 and 2013 Governmental Activities Land Construction in progress Buildings and improvements Infrastructure Sewage conveyance systems Equipment Total 2014 $ 499,163 212,314 478,182 667,302 2013 $ 487,902 297,266 460,795 590,961 Variance $ 11,261 (84,952) 17,387 76,341 108,708 $ 1,965,669 71,971 $ 1,908,895 36,737 $ 56,774 Business-type Activities 2014 $ 12,630 63,730 651,642 2013 $ 12,554 500,964 204,944 439,754 88,653 $ 1,256,409 423,280 67,811 $ 1,209,553 Variance $ 76 (437,234) 446,698 16,474 20,842 $ 46,856 Total 2014 $ 511,793 276,044 1,129,824 667,302 439,754 197,361 $ 3,222,078 2013 $ 500,456 798,230 665,739 590,961 423,280 139,782 $ 3,118,44 8 Variance $ 11,337 (522,186) 464,085 76,341 16,474 57,579 $ 103,630 The County’s total capital assets increased $103,630 (3.3%). Overall for the County, the most significant changes were: buildings and improvements increased $464,085 (69.7%), equipment increased $57,579 (41.2%), infrastructure increased $76,341 (12.9%); conversely, construction in progress decreased $522,186 (65.4%) . Major capital asset events during the current fiscal year are described below. 29 Governmental activities Capital assets of Governmental activities increased $56,774 (3%) over the previous year. Infrastructure increased $76,341 (12.9%), primarily from major road projects: La Cholla Blvd-Magee Road-Overton Road $24,357, Magee Road-Cortaro Farms Rd.-Mona Lisa- Thornydale Road $45,865. Equipment increased $36,737 (51%), primarily due to the equipment from Regional Public Safety Communication System $34,676. Building and improvements increased $17,387 (3.8%), with significant projects comprising the increase included the following: Contributions, Sporting Chance Center Kino Sports Complex stadium and field improvements Regional Flood Control District, Santa Cruz project Administration 4th Floor Tenant Improvements Eckstrom Columbus Branch Library Expansion $4,338 $3,212 $2,106 $2,018 $1,498 Construction in progress in Governmental activities decreased $84,952 (28.6%), primarily due to the following completed projects: a decrease of $41,710 in the Pima County Wireless Integrated Network (PCWIN) project, a $23,500 decrease in the Interstate 19 Frontage Road- Continental Road-Canoa Road project, and a decrease of $22,612 in the Magee Road-Cortaro Farms Road project. Business-type activities Total assets increased $46,856 (3.9%). Equipment assets increased $20,842 (30.7%) mainly due to the Regional Optimization Master Planning (ROMP) project for $22,691. Sewage conveyance systems increased $16,474 (3.9%) primarily due to System-wide Conveyance Rehabilitation Program for $9,543, Prince Road and I-10 Sewer Modification project for $4,429, and a $2,977 increase from contributed capital from developers. Building improvements increased $446,698 (218%), while construction in progress decreased $437,234 (87.3%). This is primarily due to the capitalization of RWRs completed ROMP projects of $468,232. 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 61-62. 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, 2014 and 2013 2014 Bonds issued (at face value): General Obligation $ 10,000 Street and Highway Revenue 24,805 Sewer System Revenue Obligations 48,500 Certificates of Participation (COPs) 52,160 Total $ 135,465 30 2013 $ 88,575 128,795 92,880 $ 310,250 During the year, $10,000 of general obligation bonds were issued. The $10,000 of new debt issued in Series 2014 was for the purpose of funding various capital projects in the County. The County also issued $24,805 of transportation revenue bonds of which $8,805 was used for a refunding transaction. This refunding resulted in an economic gain of $515 and a reduction in debt service payments of $569. In addition, the County issued $52,160 in Certificates of Participation Series 2014. The County intends to use the proceeds to finance the costs of completing the Public Service Center and Office Tower. The County may also use a portion of the funds for other capital projects. Regarding business-type activities, $48,500 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 AA AA- Dec-2013 Dec-2013 Dec-2013 Mar-2014 Jan-2014 Fitch Ratings Rating Date AAAA AA AA AA- Dec-2013 Dec-2013 Dec-2013 Dec-2013 Dec-2013 ***S&P upgraded the 2005 and 2008 GO Bonds to AA based on the rating of insurance coverage on 3/19/2014. ***S&P upgraded the 2004R, 2007, 2008 & 2009 Sewer Revenue Bonds to AA based on the rating of insurance coverage on 3/19/2014. ***Excludes the 2011A Sewer Refunding Bonds which have ratings equal to the Sewer Revenue Obligations. ***S&P upgraded the 2010 Sewer Revenue Obligations to AA based on the rating of insurance coverage on 3/19/2014. 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 $1,143,554, which is significantly in excess of Pima County’s outstanding general obligation debt. Additional information regarding the County’s debt can be found in Note 7 of the financial statements on Pages 6574. Economic Factors and Next Year’s Budget As presented at The University of Arizona’s Eller College of Management’s 2014 Mid-Year Economic Update, the current economic situation in the State of Arizona and Pima County is one of mixed characteristics. Growth is occurring throughout the State in the areas of employment, population, real income and housing permit activity. Pima County in particular has experienced positive gains in aggregate retail sales. However, these growth rates are slow relative to both pre-recession levels and when comparing Pima County to the rest of the State. Within the County, it is anticipated that the real estate market and construction industry will take several more years to fully recover. In addition, actions of both the State and Federal government that financially impact the County have become increasingly unpredictable, while trending toward shifting of responsibilities to local government. Given these factors, Pima County will continue to face numerous budgetary challenges that necessitate next year’s budget to be primarily a “maintenance of effort budget,” which will sustain the County’s existing service priorities. The following discussions identify significant activities expected to occur in fiscal year 2014-15. 31 Primary Property Taxes The persistent weakness in the economy has put the County in an increasingly uncertain operating environment. The primary tax base began contracting in Fiscal Year 2010-11, while Net Assessed Value has declined 16.26% and is expected to shrink an additional 0.54% in the upcoming fiscal year. In order to compensate, the Fiscal Year 2014-15 Adopted Budget relies on a $0.6114 increase in the primary property tax rate for the General Government over the prior year tax rate. The total property tax rate for Pima County will increase from $5.0853 to $5.7167 per $100 of assessed valuation, a net increase of $0.6314. State Shared Revenues State shared sales tax revenue is projected to increase by $7.3 million in Fiscal Year 2014-15. This increase reflects a gradual recovery in the local economy. University of Arizona Medical Center – South Campus Beginning in 2010, Pima County entered into a two-year agreement with the Arizona Board of Regents on behalf of the University of Arizona, College of Medicine for funding of what is now designated as the University of Arizona Medical Center – South Campus. In May 2012, the Board of Supervisors approved a second two-year contract with the Arizona Board of Regents with an annual base funding of $15 million. In May 2014, the Board of Supervisors approved a third two-year contract with the Board of Regents continuing with the annual funding base of $15 million. Road Repair Pima County uses special revenues as a major funding source of its road repair. Since the economic recession, these revenues have continually trended downward. This decline is partly due to decreased collections in a weakened economy; but the decline is also exacerbated by the State’s diversion of those collections that remain. As such, the Board of Supervisors will take the extraordinary action of appropriating General Fund dollars to the construction and maintenance of County roads for the third consecutive year. Continuation of this subsidy will be in the amount of $5 million and the Board of Supervisors will review roads to be repaired in Fiscal Year 2015. Medical Insurance In order to insulate itself from rapidly rising medical insurance premiums, Pima County moved to a self-insured medical plan run by a third party administrator in fiscal year 2013-14. Under this new model, fiscal year 2013-14 insurance costs increased by less than 7% from the previous year. In the upcoming fiscal year, medical insurance costs are projected to increase by 5% from last year. These increases are well below the historic 15-20% yearly increases that the County experienced in the final five years under the previous insurance model. Solid Waste Effective June 1, 2013, Pima County went from a direct service model of providing solid waste services to the Public to a new model of having a private contractor providing these services. This change is anticipated to reduce the County’s annual costs for this function by over $4 million per year. Because of this action, funding within the General Fund to cover potential shortfalls is no longer needed. Stadium District Since the combined loss of Major League Baseball and stalling of the economy in 2008, the Stadium District has aggressively sought new strategies to broaden its users, decrease costs and increase revenues. Other than direct rental and concession revenue, funding for the District comes from three primary sources: a $3.50 surcharge on rental cars; a $0.50 per day tax on recreational vehicle spaces; and a 2% hotel/motel tax in the unincorporated area of the County. While fee and rental revenues paid to the District continue to trend in a positive direction, the slow 32 economic recovery continues to negatively affect tourist and recreational activities. The result has been a 23% decline in tax-based revenue over the past six years that was formerly used to fund the District. Fiscal Year 201314 projected revenues were insufficient to cover the Stadium’s operating, maintenance, and debt service costs; thus necessitating a budgeted transfer of $1.5 million from the General Fund to the District. A similar situation is expected in Fiscal Year 2014-15, which has prompted the Board of Supervisors to allocate $2.2 million from the Budget Stabilization Fund to the District as an operating transfer, should the need arise. 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, 2014 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 $ 415,700 12,138 298 6 46,016 12,938 2,086 5,017 1,018 Primary Government Business-type Activities $ 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 545,481 12,138 501 46,025 31,132 3,963 5,091 1,018 $ 750 4 32 69 2,431 1,894 104,545 106,976 1,894 499,163 212,314 12,630 63,730 511,793 276,044 478,182 651,642 439,754 88,653 1,129,824 439,754 197,361 667,302 2,822 1,511,086 3,976,297 6,422 2,465,211 Deferred outflows of resources Deferred charge on refunding $ 203 (6) 9 18,194 1,877 74 108,708 667,302 Total assets 129,781 Component Unit SW Fair Commission Total 3,520 3,520 3,520 3,520 2,300 445 60,239 3 3,106 19,766 80 2,014 6,610 19,459 300 2,506 79,698 303 3,106 21,620 83 2,014 9,116 100,920 693,623 886,361 49,129 660,387 733,638 150,049 1,354,010 1,619,999 340 1,354,456 586,868 1,941,324 3,267 1,854 3 61,936 10,988 31,615 22,720 18,820 66,885 3,591 84,514 1,582,370 $ 117,425 777,448 $ See accompanying notes to financial statements 35 61,936 10,988 31,615 89,605 18,820 3,591 201,939 2,359,818 239 35 66 $ 2,815 6,082 PIMA COUNTY, ARIZONA Statement of Activities For the Year Ended June 30, 2014 (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 Expenses $ Business-type activities: Regional Wastewater Reclamation Development Services Parking Garages Total business-type activities Total primary government $ Component unit: Southwestern Fair Commission Total component unit $ 230,742 $ 188,782 93,675 4,252 36,085 93,224 63,961 35,756 (5,75) 27,994 768,71 145,117 6,79 1,877 153,7 922, $ 5,579 5,579 $ 27,355 14,846 6,307 31 13,259 80 2,548 430 $ 64,856 5,635 5,635 Transfers Total general revenues and transfers Change in net position Net position at beginning of year Net position at end of year 4FFBDDPNQBOZJOHOPUFTUPGJOBODJBMTUBUFNFOUT 26,013 7,714 49,953 1,168 8,428 336 547 18,970 Capital Grants and Contributions $ $ 5,969 294 46,125 378 1,817 113,129 171,650 7,553 2,36 181,56 246,42 $ 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  Operating Grants and Contributions Charges for Services 54,583 6,807 113,129 121 121 $ 6,807 61,390 Exhibit A - 2 Net (Expense) Revenue and Changes in Net Position Governmental Activities $ Primary Government Business-type Activities (171,405) (165,928) 8,710 (3,053) Total $ (14,398) (92,808) (60,488) (14,539) 5,75 (27,994) (536,14 $ (536,14 33,340 7 48 34,58 34,58 Component8QLW 6:)DLU&RPPLVVLRQ (536,14 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 33,340 7 48 34,58 (501,5 Business-type activities: Regional Wastewater Reclamation Development Services Parking Garages Total business-type activities Total primary government (171,405) (165,928) 8,710 (3,053) (14,398) (92,808) (60,488) (14,539) 5,75 (27,994) $ $ $ 273,435 17,697 28,354 58,546 6,262 1,509 101,605 23,899 5,035 6,976 2,955 16,810 (16,715) 526,368 (9,77) 1,592,147 1,582,37 $ 1,237 1,4 16,715 19,43 54,018 723,430 777,448 273,435 17,697 28,354 58,546 6,262 1,509 101,605 23,899 5,035 6,976 4,192 18,2 $ 545, 44,24 2,315,577 2,359,81 $ 177 177   25 5,8 6,082 Component unit: Southwestern Fair Commission Total component unit 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 Net position at end of year 4FFBDDPNQBOZJOHOPUFTUPGJOBODJBMTUBUFNFOUT  Exhibit A - 3 PIMA COUNTY, ARIZONA Balance Sheet - Governmental Funds June 30, 2014 (in thousands) General Assets Cash and cash equivalentss Property taxes receivable (net)) Interest receivablee Due from other fundss Due from other governmentss Accounts receivablee Inventoryy Prepaid expendituress Loan receivablee Other assets s Restricted cash and cash equivalents Total assets $ 56,990 8,702 73 2,544 20,625 1,494 Capital Projects $ 169,811 Debt Service $ 38 2,159 7,097 1,952 7,685 1,888 74 Other Governmental Funds Total Governmental Funds $ $ 309,863 12,138 262 4,925 45,875 9,794 1,369 3,864 1,894 1,018 1,861 6 3,384 1,894 75,377 1,548 77 222 18,147 6,348 1,369 480 1,018 45 1,816 $ 95,706 $ 182,873 $ 9,653 $ 104,631 $ 392,863 $ 13,462 $ 25,242 $ 3 $ 16,971 3 4 4,831 4,726 70 7 4,143 $ 55,678 3 2,536 19,395 4,961 80 2,014 6,610 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 2,532 31 95 14,533 140 10 191 2,312 Total liabilities 1,816 155 30,648 29,871 8,476 8,008 384 3,213 Total deferred inflows of resources 16,868 Total liabilities and deferred inflows of resources 47,516 Deferred inflows of resources: Unavailable revenue - intergovernmental Unavailable revenue - property taxes Unavailable revenue - other Fund balances Nonspendable Restricted Committed Assigned Unassigned 181 42,731 Total fund balances 48,190 Total liabilities, deferred inflows of resources and fund balances 3 30,755 91,277 1,802 5,277 1,446 299 16,966 11,256 1,460 3,990 1,802 7,022 29,682 33,861 1,805 37,777 120,959 1,894 60,984 6,308 4,204 (6,536) 7,172 206,240 10,144 12,233 36,115 66,854 271,904 777 5,278 145,256 3,836 $ 95,706 7,848 (80) 149,012 $ 182,873 7,848 $ 9,653 See accompanying notes to financial statements 38 $ 104,631 $ 392,863 Exhibit A - 4 PIMA COUNTY, ARIZONA Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2014 (in thousands) Fund balances - total governmental funds $ 271,904 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 $ 2,869,451 (945,504) 3,520 (549,087) (149,703) (640) Some compensated absences are not due and payable shortly after June 30, 2014, and therefore are not reported in the governmental funds. Employee compensation Some liabilities are not due and payable shortly after June 30, 2014, and are therefore not reported in the governmental funds. Landfill liability Pollution remediation liability 1,923,947 (695,910) (30,294) (22,771) (639) (23,410) Some receivables are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the governmental funds. 29,682 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. 106,451 Net position of governmental activities $ 1,582,370 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, 2014 Exhibit A - 5 (in thousands) General Revenues: Property taxes Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous $ 280,965 2,928 135,953 35,671 4,211 287 7,322 Capital Projects $ $ 467,337 Total revenues 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 58,737 Other Governmental Funds Total Governmental Funds $ $ 25,037 5,054 14 762 1,740 295 14 46,127 5,347 131,078 17,101 4,441 393 8,388 32,593 59,060 212,875 771,865 41,151 20,747 37,772 2,521 31,814 335 38,886 21,813 247,507 157,572 37,772 2,521 35,357 93,193 56,745 34,196 135,746 113,337 26,777 1,030 206,356 136,825 3,543 92,858 17,859 12,383 135,746 146 14 Total expenditures 469,984 Excess (deficiency) of revenues over (under) expenditures (2,647) 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) 112,835 26,758 1,030 356 5 135,746 140,623 195,400 941,753 (103,153) (81,563) 17,475 (169,888) 239 24,192 (33,887) 46,610 (67,335) 61,489 (5,880) 360 30,392 (83,038) 239 9,488 8,805 (10,131) 78,160 360 162,683 (190,140) (9,695) 57,435 63,771 (52,047) 59,464 (12,342) (45,718) (17,792) (34,572) (110,424) 60,532 194,730 25,640 101,654 382,556 9,488 8,805 (10,131) 78,160 Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Changes in nonspendable fund balance: Change in inventory Fund balances at end of year (228) $ 385,829 8,275 292,082 57,826 8,652 1,737 17,464 48,190 $ 149,012 $ 7,848 See accompanying notes to financial statements 40 $ 66,854 (228) $ 271,904 Exhibit A-6 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 (nded June 30, 2014 (in thousands) Net change in fund balances - total governmental funds $ (110,424) 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 $ 89,408 (62,32) 27,08 (78,160) (9,48) (8,805) 113,337 10,131 (239) 5,75 (1,208) 31,326 17,544 (2,836) (822) 848 14,734 (86) (1,04) (1,8) () (3,0) 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 Deferred outflows - interest 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,QDGGLWLRQFROOHFWLRQVRIVRPH UHYHQXHVLQWKHJRYHUQPHQWDOIXQGVH[FHHGHGUHYHQXHVUHSRUWHGLQWKH 6WDWHPHQWRI$FWLYLWLHV Donations of capital assets Intergovernmental Property tax revenues Other Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds Change in compensated absences Change in landfill liability Net book value of capital asset disposals  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 activities Change in net position of governmental activities 30,57 $ See accompanying notes to financial statements  (9,77) PIMA COUNTY, ARIZONA Statement of Net Position - Proprietary Funds June 30, 2014 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 Loan receivable Capital assets: Land 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 8,354 $ 9 6 155 20 8,544 49,088 129,781 55,457 203 6 9 18,194 1,877 74 205,601 Governmental ActivitiesInternal Service Funds $ 105,837 570 36 71 141 3,144 717 1,153 111,669 49,088 10,000 Total assets Liabilities Current liabilities: Accounts payable Contract retentions 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: Compensated absences payable Loan payable Contracts and notes Sewer revenue bonds and obligations payable Wastewater loans payable Reported but unpaid losses Incurred but not reported losses Total noncurrent liabilities 10,862 838,860 721,515 131,586 (515,502) 60,000 1,247,321 1,296,409 1,768 12,927 883 (10,220) 3,730 9,088 9,088 12,630 851,787 721,515 132,469 (525,722) 63,730 1,256,409 1,305,497 46,403 (20,771) 14,531 41,722 51,722 1,493,466 17,632 1,511,098 163,391 18,960 499 19,459 1,611 300 12 3 2,506 47,594 1,535 243 1,854 300 12 3 2,506 47,594 1,535 4,561 570 371 72,521 742 73,263 2,702 473 3,175 7,942 631,125 18,145 Total liabilities Net position Net investment in capital assets Restricted for: Debt service Capital projects Healthcare Regional wastewater reclamation Unrestricted Total net position 121,427 55,457 194 6 3 18,039 1,877 54 197,057 Other Enterprise Funds 592 967 29 5,883 8,815 20,229 548 10,000 7,942 631,125 18,145 659,914 473 660,387 15,838 10,325 36,711 732,435 1,215 733,650 56,940 577,780 9,088 586,868 41,722 31,615 22,720 31,615 22,720 18,820 110,096 18,820 117,425 7,538 $ 761,031 7,329 $ 16,417 See accompanying notes to financial statements 42 $ 777,448 57,191 $ 106,451 PIMA COUNTY, ARIZONA Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds For the Year Ended June 30, 2014 Exhibit A - 8 (in thousands) Business-type Activities Enterprise Funds Regional Wastewater Reclamation Operating revenues: Charges for services Other $ Total net operating revenues Operating expenses: Employee compensation Operating supplies and services Utilities Sludge and refuse disposal Repair and maintenance Incurred losses Insurance premiums General and administrative Consultants and professional services Depreciation Total operating expenses Operating income Nonoperating revenues (expenses): Investment earnings Sewer connection fees Interest expense Debt issuance cost Gain/(loss) on disposal of capital assets Total nonoperating revenues (expenses) Income before contributions and transfers Other Enterprise Funds 160,229 1,447 $ Total Enterprise Funds 9,915 55 $ 170,144 1,502 Governmental ActivitiesInternal Service Funds $ 110,474 1,649 161,676 9,970 171,646 112,123 34,878 8,070 7,664 1,512 6,267 5,338 94 8,992 8,292 95 40,216 8,164 7,664 1,512 6,362 10,810 7,367 48,592 125,160 2,495 434 217 8,673 13,305 7,801 48,809 133,833 1,470 52,012 10,275 4,411 4,105 4,022 93,579 36,516 1,297 37,813 18,544 1,206 1,197 11,397 (15,529) (523) (3,905) 40 6 1,237 11,397 (15,529) (523) (3,899) (7,363) 46 (7,317) 1,069 (137) 29,153 1,343 30,496 19,613 Capital contributions Transfers in Transfers (out) 6,807 51,404 (36,986) 3,667 (1,370) 6,807 55,071 (38,356) 216 16,008 (5,266) Change in net position 50,378 3,640 54,018 30,571 710,653 12,777 723,430 75,880 Net position at beginning of year Net position at end of year $ 761,031 $ 16,417 See accompanying notes to financial statements 43 $ 777,448 $ 106,451 PIMA COUNTY, ARIZONA Statement of Cash Flows - Proprietary Funds For the Year Ended June 30, 2014 Exhibit A - 9 (in thousands) Business-Type Activities — Enterprise Funds Regional Other Total Wastewater Enterprise Enterprise Reclamation Funds Funds 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 Governmental ActivitiesInternal Service Funds $ $ 160,202 1,447 (26,697) (11,810) (1,560) (1,800) (34,738) (4,910) (39,648) 1,678 (23,582) (5,230) (46,919) (7,924) 88,404 1,696 90,100 25,662 51,404 (36,959) 8,531 3,667 (1,370) 55,071 (38,329) 8,531 15,981 (5,266) 9,865 22,976 2,297 25,273 20,580 (102,853) 6 (3,730) 48,500 (36,978) (23,364) (523) 7,032 10,990 6 (106,583) 722 (18,021) (97,196) (3,724) (100,920) (17,299) Cash flows from noncapital financing activities: Cash transfers in from other funds Cash transfers out to other funds Loans with other funds Net cash provided by noncapital financing activities 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 9,966 $ 107,639 170,168 1,447 (28,257) (13,610) Net cash provided by operating activities $ 48,500 (36,978) (23,364) (523) 7,032 10,990 Net cash (used for) capital and related financing activities Cash flows from investing activities: Loan receivable Interest received on cash and investments 1,068 34 1,102 (10,000) 1,176 Net cash provided by (used for) investing activities 1,068 34 1,102 (8,824) 15,252 303 15,555 20,119 210,720 8,051 218,771 86,288 Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year $ 225,972 $ (continued) See accompanying notes to financial statements 44 8,354 $ 234,326 $ 106,407 Exhibit A - 9.1 PIMA COUNTY, ARIZONA Statement of Cash Flows - Proprietary Funds For the Year Ended June 30, 2014 (in thousands) (continued) Reconciliation of operating income (loss) to net cash provided by (used for) operating activities Operating income Business-Type Activities — Enterprise Funds Total Regional Other Wastewater Enterprise Enterprise Reclamation Funds Funds $ 36,516 $ 1,297 $ 37,813 Governmental ActivitiesInternal Service Funds $ 18,544 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 liabilities Net cash provided by operating activities 48,592 217 (26) (1) 1,220 (37) (4) 148 140 88,404 1,696 (2,768) (38) (32) 437 2,153 (5) 49 $ 4,022 (30) (1) 1,220 (48) (11) 2,005 (5) $ 48,809 358 115 4,978 46 189 $ 90,100 $ 25,662 Noncash investing, capital, and noncapital financing activities during the year ended June 30, 2014: Regional Wastewater Reclamation Enterprise Fund received developer-built conveyance systems with estimated fair value of $6,541 and received other capital assets totaling $76. These contributions were recorded as an increase in capital assets and capital contributions. Regional Wastewater Reclamation Enterprise Fund retired capital assets with a net book value of $3,905. Regional Wastewater Reclamation Enterprise Fund transferred out assets with a value of $27 to the County's Internal Service Fund. Regional Wastewater Reclamation Enterprise Fund received assets from the County's general government in the amount of $278. This transaction was recorded as an increase in capital assets and capital contributions. Regional Wastewater Reclamation Enterprise Fund recorded a Pima County Board of Supervisors' approved Connection Flow-Through Sewer Credit Agreement in the amount of $95. This transaction was recorded as an increase to unearned revenue and a decrease in capital contributions. The Regional Wastewater Reclamation Enterprise Fund retired expired Sewer Credit Agreements totaling $7. This transaction was recorded as a decrease to unearned revenue and an increase in capital contributions. Other Enterprise Funds retired fully depreciated capital assets with an original cost of $263. Internal Service Funds received a transfer in of capital assets from Regional Wastewater Reclamation with a net book value of $27. Internal Service Funds received capital contributions with a value of $216 from General Government and sold capital assets with a net book value of $859. See accompanying notes to financial statements 45 PIMA COUNTY, ARIZONA Statement of Fiduciary Net Position - Fiduciary Funds June 30, 2014 Exhibit A - 10 (in thousands) Investment Trust Funds Assets Cash and cash equivalents Interest receivable Due from other governments $ 144,516 136 Agency Funds $ 68,890 1,174 $ Total assets 144,652 Liabilities Employee compensation Due to other governments Deposits and rebates Total liabilities Net position Held in trust for pool participants $ 144,652 See accompanying notes to financial statements 46 $ 70,064 $ 115 37,894 32,055 $ 70,064 Exhibit A - 11 PIMA COUNTY, ARIZONA Statement of Changes in Fiduciary Net Position Fiduciary Funds For the Year Ended June 30, 2014 (in thousands) Investment Trust Funds Additions Contributions from participants Total contributions $ Investment earnings Total investment earnings 2,452,239 2,452,239 957 957 Total additions 2,453,196 Deductions Distributions to participants 2,515,033 2,515,033 Total deductions Change in net position (61,837) Net position held in trust July 1, 2013 206,489 Net position held in trust June 30, 2014 $ See accompanying notes to financial statements 47 144,652 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (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). 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. Component units should be blended in the County’s financial statements when the component unit’s governing body is substantively the same as the County’s governing body and there is either a financial benefit or burden relationship between the County and the component unit or County management has operational responsibility for it; the component unit provides services entirely, or almost entirely, to the County; or the component unit’s total debt outstanding is expected to be repaid entirely or almost entirely with the County’s resources. Therefore, data from these units is 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. The Kino Sports Complex is dedicated primarily to soccer activities with a lighted 2,000-seat North Grandstand field, four more soccer fields, and a 2,000-seat stadium under construction. Additional amenities include two lighted softball fields and the Kino Environmental Restoration Project. The facility 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. 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. 48 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) 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. 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 information’s usefulness. 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 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 the County levies or imposes, are reported as general revenues. 49 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) 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 ancillary activities generate. Operating expenses include the cost of services, administrative expenses, and depreciation on capital assets. Other expenses, such as interest expense, are considered 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. The County also 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. The County transitioned to a medical self-insurance model on July 1, 2013 that is funded by employee and employer premium rates. 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 the County holds as an agent for the State, cities, towns, and other parties. 50 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) 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. The County recognizes property taxes to be available if collected within 30 days. 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 are 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 the statement of cash flows, the County’s cash and cash equivalents are considered to be cash on hand, demand deposits, cash and investments held by the County Treasurer, investments in the State Treasurer’s Local Government Investment Pool, and only those highly liquid investments with a maturity of 3 months or less when purchased. 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. 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. 51 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) 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 are as follows: 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 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 3 to 40 years. H. Deferred Outflows/Inflows of Resources The statement of net position and balance sheet include separate sections for deferred outflows of resources and deferred inflows of resources. Deferred outflows of resources represent a consumption of net position that applies to 52 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) future periods that will be recognized as an expense or expenditure in future periods. Deferred inflows of resources represent an acquisition of net position or fund balance that applies to future periods and will be recognized as a revenue in future periods. I. Fund Balance Classifications The governmental funds’ fund balances are reported separately within classifications based on a hierarchy of the constraints placed on those resources’ use. 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 that the County’s Board of Supervisors approved, which is the highest level of decision-making authority within the County. Only the Board can remove or change the constraints placed on committed fund balances. This approval must be given at a regular supervisory meeting. 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, it is the County’s policy to 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. J. Investment Earnings Investment earnings are composed of interest, dividends, and net changes in the fair value of applicable investments. K. Compensated Absences Compensated absences payable consists of vacation leave and a calculated amount of sick leave employees earned based on services already rendered. Employees may accumulate up to 240 hours of vacation depending on years of service, but they forfeit any unused vacation hours in excess of the maximum amount at fiscal year-end. Upon terminating employment, the County pays all unused and unforfeited vacation benefits to employees. Accordingly, vacation benefits are accrued as a liability in the government-wide and proprietary funds’ financial statements. A liability for 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. 53 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) Employees may accumulate up to 1920 hours of sick leave. Generally, sick leave benefits provide for ordinary sick pay and are cumulative but employees forfeit them 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 for the current portion and under Noncurrent Liabilities for the noncurrent portion. 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 and is reported in Employee Compensation. 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. 54 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (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: Nonspendable: Inventory Prepaid expenditures Loan receivable Permanent fund principal Total nonspendable $ $ 3,384 1,894 5,278 Restricted for: Capital Projects Streets and highways Other Justice Court /Public Service Center Judicial activities Flood Control District Health Law enforcement Library District School reserve Social services Streets and highways Tire fund Other purposes Total restricted $ 145,256 220 3,616 3,836 Assigned to: Debt service reserve Health Landfill Law enforcement School reserve Other purposes Total assigned Unassigned: Total Fund Balance $ 5 181 42,731 48,190 55 7,848 $ 45 1,894 1,369 3,864 1,894 45 7,172 21,829 11,690 5,128 2,153 5,991 536 1,368 9,704 1,307 1,278 60,984 57,155 34,792 42,813 21,829 22,186 5,128 2,153 5,991 536 1,368 9,704 1,307 1,278 206,240 124 981 238 1,225 3,740 6,308 124 1,201 238 1,225 7,356 10,144 1,358 379 322 920 1,225 4,204 7,848 1,358 379 498 920 1,230 12,233 7,848 176 $ $ 57,155 34,792 42,813 10,496 Committed to: Judicial activities Parks and recreation School reserve Sports promotion (Stadium) Other purposes Total committed 1,369 480 (80) 149,012 $ 7,848 $ (6,536) 66,854 $ 36,115 271,904 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 3: Cash and Investments Primary Government Arizona Revised Statutes (A.R.S.) authorize the County to invest public monies in the State Treasurer’s investment pool; obligations issued or guaranteed by the United States or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations, or instrumentalities; specified state and local government bonds, notes, and other evidences of indebtedness; interest-earning investments such as savings accounts, certificates of deposit, and repurchase agreements in eligible depositories; specified commercial paper issued by corporations organized and doing business in the United States; specified bonds, debentures, notes, and other evidences of indebtedness that are denominated in United States dollars; and certain open-end and closed-end mutual funds, including exchange traded funds. In addition, the County Treasurer may invest trust funds in certain fixed income securities of corporations doing business in the United States or District of Columbia. Credit risk—The State statutes have the following requirements for credit risk: 1. Commercial paper must be of prime quality and be rated within the top two ratings by a nationally recognized rating agency. 2. Corporate bonds, debentures and notes that are denominated in United States dollars must be rated ̎ A ̎ or better by at least two nationally recognized rating agencies at the time 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 unless the investment is denominated in United States dollars. Deposits—At June 30, 2014, the carrying amount of the County’s deposits was $57,664, and the bank balance was $61,206. 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, 2014, $4,599 of County’s bank balance was exposed to custodial credit risk because it was uninsured and uncollateralized. 56 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 3: Cash and Investments (continued) Investments—At June 30, 2014, the County’s investments consisted of $361,411 invested in marketable securities and $446,740 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, 2014, 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 B+/B1 Unrated AA+/Aaa AA+/Aaa S&P / Moody's S&P / Moody's S&P / Moody's S&P / Moody's Amount $ 9,989 249,873 10,773 15,898 34,013 AAAm/Aaa-mf S&P / Moody's Marketable securities 29,088 349,634 AAAf/S1+ S&P Unrated Unrated State Treasurer's Investment Pool 283,182 101,357 62,201 446,740 $ 796,374 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 $808,151 of investments, $332,323, consisting of the commercial paper, corporate bonds, municipal bonds, Federal Farm Credit Bank, Federal Home Loan Bank, and U.S. Treasury notes, is uninsured and held by a counterparty in the County’s name in book entry form. Concentration of credit risk—The County has no formal policy with respect to limiting the amount the Treasurer may invest in any one issuer. The County’s exposure as of June 30, 2014 is less than 5% per issuer. Interest rate risk—Interest rate risk is the risk that changes in interest rates will adversely affect an investment’s fair value. The County does not have a formal investment policy with respect to interest rate risk. 57 3,0$&2817<$5,=21$ 1RWHVWR)LQDQFLDO6WDWHPHQWV -XQH (in thousands) Note 3: Cash and Investments (continued) As of June 30, 2014, the County had the following investments: Investment Type Weighted Average Maturity (Years) Amount State Treasurer Investment Pool 5 State Treasurer Investment Pool 500 State Treasurer Investment Pool 7 Commercial paper Corporate bonds Municipal bonds Federal Farm Credit Bank Federal Home Loan Bank U.S. Treasury Notes Money market mutual fund Total $ 283,182 101,357 62,201 9,989 249,873 10,773 15,898 34,013 11,777 29,088 $ 808,151 0.16 5.59 0.05 0.47 1.59  2.36 3.15 1.34 0.13 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 Amount of Deposits $ 57,664 Amount of Investments $ 808,151 Total $ 865,863 Business-type Activities Investment Trust Funds Agency Funds Governmental Activities Statement of Net Position: Cash and cash equivalents Restricted cash and cash equivalents Total $ $ 415,700 2,431 418,131 $ $ 129,781 104,545 234,326 $ 144,516 $ 68,890 $ 144,516 $ 68,890 Totals $ 758,887 106,976 $ 865,863 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 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.  3,0$&2817<$5,=21$ 1RWHVWR)LQDQFLDO6WDWHPHQWV -XQH (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 $ 10,000 240,401 10,710 15,828 34,000 11,700 147,502 21,316 136 Interest Rates Maturities 0.00% 12/14 $ 9,989 0.40-7.13% 07/14-06/18 249,873 0.25-1.5%07/1-0/ 10,773 0.35-2.08%11/15-9/18 15,898 0.5-1.25%11/16-11/18 34,013 0.75-2.63%07/14-06/17 11,777 N/A N/A 147,502 N/A N/A 21,316 N/A N/A 136 $ 501,277 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, 2013 June 30, 2014  Fair Value $ 425,578 75,699 501,277 $ 501,277 $ 5,929,669 (5,997,783) (68,114) 569,391 $ 501,277 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (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 $ 69 19,016 $ Debt Service Fund $ $ Other Governmental Funds 6 $ 1,150 Internal Service Funds Total Governmental Activities 2,608 4,792 8,224 $ $ 2,683 3 24,958 8,227 1,446 525 2,456 121 4,548 94 5,422 67 17 5,600 20,625 $ 7,097 60 $ 6 $ 18,147 $ 141 $ 46,016 3,0$&2817<$5,=21$ 1RWHVWR)LQDQFLDO6WDWHPHQWV -XQH (in thousands) NRWH 5: CDSLWDO$VVHWV Capital asset activity for the year ended June 30, 2014, was as follows: Balance July 1, 2013 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 $ 657,161 1,221,637 155,586 2,034,384 Less accumulated depreciation for: Buildings and improvements ,QIUDVWUXFWXUH Equipment Total accumulated depreciation (196,366) (630,676) (83,615) (910,657) Total capital assets being depreciated, net Governmental activities capital assets, net 487,902 297,266 785,168 Increases 1,123,727 $ 1,908,895 $ Capital assets being depreciated: Buildings and improvements 6HZDJHFRQYH\DQFHV\VWHPV Equipment Total capital assets being depreciated $ (190,303) (269,768) (39,225) (499,296) $ 696,035 1,209,553  $ (96) (173,632) (173,728) 36,312 112,686 50,383 199,381 (82) (1,642) (11,574) (13,298) (18,902) (35,090) (12,352) (66,344) 59 387 10,280 10,726 233,074 76 92,401 92,477 $ (176,300) Decreases 499,163 212,314 711,477 693,391 1,332,681 194,395 2,220,467 (215,209) (665,379) (85,687) (966,275) (2,572) $ Increases 395,247 693,048 107,036 1,195,331 Less accumulated depreciation for: Buildings and improvements 6HZDJHFRQYH\DQFHV\VWHPV Equipment Total accumulated depreciation Total capital assets being depreciated, net Business-type activities capital assets, net 12,554 500,964 513,518 $ 133,037 $ Balance July 1, 2013 Business-type activities: Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated 11,357 88,680 100,037 Balance June 30, 2014 Decreases 1,254,192 $ 1,965,669 Balance June 30, 2014 (529,635) (529,635) 12,630 63,730 76,360 473,802 30,902 32,024 536,728 (17,262) (2,435) (6,591) (26,288) 851,787 721,515 132,469 1,705,771 (25,930) (13,538) (9,341) (48,809) 16,088 1,545 4,750 22,383 487,919 580,396 $ $ $ (3,905) (533,540) (200,145) (281,761) (43,816) (525,722) $ 1,180,049 1,256,409 3,0$&2817<$5,=21$ 1RWHVWR)LQDQFLDO6WDWHPHQWV -XQH (in thousands) 1RWH&DSLWDO$VVHWV FRQWLQXHG 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 $ $ $ $ 12,425 9,824 31,673 401 488 74 6,597 840 4,022 66,344 217 48,592 48,809 Balance July 1, 2013 Increases Balance June 30, 2014 Decreases Discretely presented component unit: Southwestern Fair Commission (SFC): Capital assets being depreciated: Buildings and improvements Equipment Total capital assets being depreciated $ 5,974 2,521 8,495 Less accumulated depreciation for: Buildings and improvements Equipment Total accumulated depreciation Total capital assets being depreciated, net SFC capital assets, net $ 491 134 625 (3,339) (2,021) (5,360) (304) (189) (493) 3,135 132 3,135  $ $ 132 $ $ (24) (24) 6,465 2,631 9,096 24 24 (3,643) (2,186) (5,829) 3,267 $ 3,267 3,0$&2817<$5,=21$ 1RWHVWR)LQDQFLDO6WDWHPHQWV -XQH (in thousands) Note 6: Claims, Judgments and Risk Management Self-Insurance Trust Fund (SIT Fund) The SIT Fund, an internal service fund, accounts for the financing of the insured risk 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. The SIT Fund is liable for any single general or automobile liability claim up to $2,500 per occurrence, any workers’ compensation claim up to $1,000 per occurrence, and any single medical malpractice 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 SIT Fund. Settled claims have not exceeded insurance coverage in any of the last 3 fiscal years. Payment of unemployment claims is fully self-funded. Payment of environmental claims is generally selffunded, although some claims filed could result in past insurers being liable for such losses. All of the County’s departments participate in the SIT Fund. With the exception of environmental 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 unemployment losses are based on actual claims paid. Claims liabilities at June 30, 2014, for each insurable area are as follows: Auto liability General liability Workers' compensation Medical malpractice Environmental liability $ $ 335 10,487 21,605 234 1,500 34,161 The above amounts, excluding environmental and unemployment, are reported at their present value using an expected future investment yield assumption of 2 percent. Changes in the unpaid claims liability reported in the SIT Fund are as follows: Year 2012-13 2013-14 Balance July 1 $ 35,397 $ 35,768 Current-Year Claims and Changes in Estimates 7,676 4,851 Claims Payments (7,305) (6,458) Balance June 30 $ 35,768 $ 34,161 Health Benefits Self-Insurance Trust Fund (HBT Fund) During fiscal year 2013-2014, the County created the HBT Fund, an internal service fund, to account for the financing of the County’s self-insured medical/pharmacy plan for employees and their dependents. The HBTFund is responsible for collecting employer and employee premiums through payroll deductions and  3,0$&2817<$5,=21$ 1RWHVWR)LQDQFLDO6WDWHPHQWV -XQH (in thousands) Note 6: Claims, Judgments and Risk Management (continued) reimbursing Aetna, acting as a third-party administrator, for the payment of claims. The plan consists of two plan options, a High Deductible Health Plan and a Preferred Provider Organization Plan. The County purchases commercial stop-loss insurance coverage for claims in excess of coverage provided by the HBT Fund. Settled claims have not exceeded insurance coverage during the past fiscal year. Claim liabilities are computed using a combination of two actuarial methods: the completion factor approach and the exposure approach. Accrued actuarial liabilities for the HBT Fund at June 30, 2014 for each plan option are as follows: High-Deductible Health Plan: Medical Pharmacy $ Preferred Provider Organization Plan: Medical Pharmacy $ 2,843 973 2,149 735 6,700 Changes in the unpaid claims liabilities reported in the HBT Fund are as follows: Year 2013-14 Balance July 1 $ - Current-Year Claims and Changes in Estimates 47,161 Claims Payments (40,461) Balance June 30 $ 6,700 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. Pollution Remediation The County has estimated and reported an environmental liability of $639 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.  PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (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, 2014. Balance Balance Due within July 1, 2013 Additions Reductions June 30, 2014 1 year Governmental activities: $ 456,690 10,678 467,368 $ 10,000 409 10,409 $ 59,415 2,356 61,771 Transportation revenue bonds Unamortized premium/discount Total transportation revenue bonds 126,015 2,589 128,604 24,805 2,696 27,501 Certificates of participation Unamortized premium/discount Total certificates of participation 127,735 6,759 134,494 52,160 6,383 58,543 General obligation bonds Unamortized premium/discount Total general obligation bonds $ 407,275 8,731 416,006 $ 36,815 2,059 38,874 21,995 1,029 23,024 128,825 4,256 133,081 13,685 1,292 14,977 40,995 2,339 43,334 138,900 10,803 149,703 29,680 2,463 32,143 Capital leases payable: Other capital leases Total capital leases 298 298 Installment note payable Total installment note payable 605 605 239 239 204 204 640 640 228 228 Reported but unpaid losses (Note 6) Incurred but not reported losses (Note 6) 21,606 14,162 44,936 7,075 44,821 2,097 21,721 19,140 5,883 8,815 Landfill closure and post-closure care costs (Note 8) 21,730 1,041 Pollution remediation (Note 6) 298 298 734 22,771 95 Compensated absences payable * 30,739 103 Total governmental activities long-term liabilities $ 820,340 $ 149,847 639 30,842 $ 175,644 $ 794,543 $100,920 * There was a change in reporting the current and non-current portions of the Compensated absences payable. The current portion of Compensated absences payable of $2,636 is reported as Employee compensation. 65 3,0$&2817<$5,=21$ 1RWHVWR)LQDQFLDO6WDWHPHQWV -XQH (in thousands) Note 7: Long-Term Liabilities (continued) Balance Balance Due within July 1, 2013 Additions Reductions June 30, 2014 1 year Business-type activities: Sewer revenue bonds Unamortized premium/discount Total revenue bonds payable $ 154,415 1,099 155,514 $ 16,765 318 17,083 Sewer revenue obligations Unamortized premium/discount Total revenue obligations payable 464,355 46,620 510,975 Regional Wastewater Reclamation Loans payable Total loans payable 21,169 21,169 Contracts and notes 12,645 1,610 3,087 88 $ 703,390 $ 57,230 Compensated absences payable * Total business-type activities long-term liabilities $ 48,500 7,032 55,532 $ 137,650 781 138,431 $ 17,555 515 18,070 18,725 7,494 26,219 494,130 46,158 540,288 21,890 7,634 29,524 1,489 1,489 19,680 19,680 1,535 1,535 6,313 7,942 3,175 $ 51,104 $ 709,516 $ 49,129 * There was a change in reporting the current and non-current portions of the Compensated absences payable. The current portion of Compensated absences payable of $271 is reported as Employee compensation. 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 advancerefund 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, 2014, consisted of the outstanding general obligation bonds presented below. Of the total amounts originally authorized, $4,662 from the May 20, 1997 $13,278 from the May 18, 2004 and $741 from the May 16, 2006 bond elections remain unissued.  PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 7: Long-Term Liabilities (continued) The following table presents amounts outstanding by issue. Issue Amount $ 95,000 100,000 75,000 90,000 23,535 75,000 60,000 16,225 50,000 38,575 10,000 Issue Series of 2007 Series of 2008 Series of 2009 Series of 2009A Series of 2009A Refunding Series of 2011 Series of 2012A Series of 2012B Refunding Series of 2013A Series of 2013B Refunding Series of 2014 G.O. bonds outstanding Plus unamortized premium/discount: Interest Rates 3.00 - 4.50% 4.00% 3.00 - 4.13% 3.00 - 4.00% 3.00 - 3.25% 2.25 - 5.00% 2.00 - 4.00% 2.00 - 3.00% 1.50 - 4.00% 3.00 - 4.00% 1.00 - 5.00% Maturities 2015-21 2015-22 2015-23 2015-24 2015-16 2015-26 2015-27 2015-17 2015-28 2015-20 2015-28 Call Date July 1, 2017 July 1, 2018 July 1, 2019 July 1, 2019 July 1, 2021 July 1, 2022 July 1, 2023 July 1, 2023 Total G.O. bonds outstanding Outstanding June 30, 2014 $ 48,550 63,000 36,185 63,225 660 44,185 43,750 12,155 47,000 38,565 10,000 407,275 8,731 $ 416,006 The following schedule details general obligation bond debt service requirements to maturity at June 30, 2014. Year Ending June 30, 2015 2016 2017 2018 2019 2020 - 2024 2025 - 2028 Total Principal 36,815 37,655 41,445 40,880 39,375 171,075 40,030 $ 407,275 $ Interest 14,715 13,581 12,398 11,041 9,555 26,117 3,428 $ 90,835 $ REFUNDED GENERAL OBLIGATION BONDS During fiscal year 2013-14, the County defeased $14,815 of General Obligation Bonds, Series 2005 and $1,200 of General Obligation Bonds, Series 2007 with County funds. County funds were placed in an irrevocable trust to provide for future debt service payments of the defeased debt. Accordingly, the trust account assets and liability for the defeased bonds are not included in the County’s financial statements. In prior years, the County defeased $14,435 of General Obligation Refunded Bonds, Series 2005 by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liability for the defeased bonds are not included in the County’s financial statements. At June 30, 2014, $30,450 of outstanding bonds are considered defeased, which includes debt defeased during this current year. 67 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 7: Long-Term Liabilities (continued) 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, $73,375 from the November 4, 1997 bond election remains unissued. The following table presents amounts outstanding by issue. Issue Interest Amount Rates Maturities Issue Series of 2005 $ 51,200 3.50 - 5.00% 2015-20 Series of 2007 21,000 3.25 - 4.75% 2015-22 Series of 2008 25,000 3.50 - 4.50% 2015-22 Series of 2009 15,000 3.00 - 4.00% 2015-24 Series of 2009 Refunding 8,420 3.00 - 4.00% 2015-24 Series of 2012 18,425 3.00 - 5.00% 2015-27 Series of 2012 Refunding 14,520 4.00 - 5.00% 2015-18 Series of 2014 16,000 3.00 - 5.00% 2015-28 Series of 2014 Refunding 8,805 5.00% 2017-18 Transportation bonds outstanding Plus unamortized premium/discount: Total transportation bonds outstanding Outstanding Call Date June 30, 2014 July 1, 2015 $ 19,240 July 1, 2017 14,870 July 1, 2018 20,425 July 1, 2019 13,650 July 1, 2019 7,385 July 1, 2022 16,570 11,880 July 1, 2023 16,000 8,805 128,825 4,256 $ 133,081 The following schedule details transportation bond debt service requirements to maturity at June 30, 2014. Year Ending June 30, 2015 2016 2017 2018 2019 2020 - 2024 2025 - 2028 Total Principal 13,685 14,250 14,585 15,245 14,310 46,655 10,095 $ 128,825 $ Interest 5,197 4,652 4,000 3,351 2,679 6,151 752 $ 26,782 $ Pima County has pledged future highway user revenues, net of specified operating expenses, to repay $128,825 in transportation revenue bonds issued between 2005 and 2014. 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 2028. Annual principal and interest payments on the bonds are expected to require approximately 122 percent of net revenues. Total principal and interest remaining to be paid on the bonds is $155,607. Principal and interest paid for bonds in the current year and total net highway user revenues were $17,661 and $13,702, respectively. 68 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 7: Long-Term Liabilities (continued) REFUNDED TRANSPORTATION BONDS During fiscal year 2013-14, the County defeased $9,570 of Transportation Bonds, Series 2005, by issuing $8,805 of Transportation Bonds that have an average life of 3.93 years and an average interest rate of 5.00%. This refunding transaction resulted in an economic gain of $515 and a reduction in debt service payments of $569. 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. At June 30, 2014, $9,570 of outstanding bonds are considered defeased. 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. The County also 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. On February 12, 2014, the County issued Certificates of Participation Series 2014 for $52,160 to finance the costs of completing the Public Service Center and Office Tower. The County may also use a portion of the funds for other capital projects. 69 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 7: Long-Term Liabilities (continued) The following schedule details outstanding Certificates of Participation payable at June 30, 2014. Issue Interest Outstanding Amount Rates Maturities Call Date June 30, 2014 Issue Series of 2007A $ 28,765 5.00% 2015-22 July 1, 2017 $ 18,805 Series of 2010 20,000 3.50 - 5.25% 2015-19 12,030 Series of 2013A 80,175 2.00 - 5.00% 2015-23 45,530 Series of 2013B Refunding 12,705 3.00 - 5.00% 2015-18 10,375 Series of 2014 52,160 2.00 - 5.00% 2015-29 December 1, 2023 52,160 138,900 Certificates of participation outstanding Plus unamortized premium/discount: 10,803 Total certificates of participation outstanding $ 149,703 The following schedule details debt service requirements to maturity for the County’s Certificates of Participation payable at June 30, 2014. Year Ending June 30, 2015 2016 2017 2018 2019 2020 - 2024 2025 - 2029 Total Principal 29,680 16,240 11,955 12,615 10,670 35,615 22,125 $ 138,900 $ Interest 6,572 5,087 4,409 3,808 3,256 9,622 2,875 $ 35,629 $ INSTALLMENT NOTE PAYABLE Governmental Activities In prior years, the County acquired Tasers under contract agreements at a total purchase price of $764. During fiscal year 2013-14, the County also acquired computer equipment under contract agreements at a total purchase price of $239. The outstanding balance as of June 30, 2014, for the payable totaled $640. The following schedule details debt service requirements to maturity for the County’s installment note payable at June 30, 2014. Equipment Principal Interest $ 229 $ 16 234 10 177 4 $ 640 $ 30 Year Ending June 30, 2015 2016 2017 70 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (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, 2014, the County has issued the total amounts originally authorized from the May 20, 1997 and May 18, 2004 bond elections. Issue Interest Amount Rates Maturities Issue Series of 2004 Refunding $ 25,770 4.60% 2015 Series of 2007 50,000 4.00 - 5.00% 2015-26 Series of 2008 75,000 4.00 - 5.00% 2015-23 Series of 2009 18,940 3.25 - 4.25% 2015-24 Series of 2011 Refunding 43,625 3.00 - 5.00% 2015-16 Sewer revenue bonds outstanding Plus unamortized premium/discount: Total sewer revenue bonds outstanding Call Date July 1, 2014 July 1, 2017 July 1, 2018 July 1, 2019 Outstanding June 30, 2014 $ 4,000 34,715 70,130 14,540 14,265 137,650 781 $ 138,431 The following schedule details sewer revenue bond debt service requirements to maturity at June 30, 2014. Year Ending June 30, 2015 2016 2017 2018 2019 2020 - 2024 2025 - 2026 Total Principal 17,555 15,950 11,250 11,810 12,405 61,400 7,280 $ 137,650 $ Interest 5,883 5,057 4,354 3,886 3,414 8,606 440 $ 31,640 $ On June 17, 2010, Pima County entered into an agreement, whereby future revenues were pledged, that provided monies to be used primarily to pay a portion of the capital project costs associated with the construction, expansion and improvement of sewer treatment facilities and conveyance systems for the countywide sewer system, including the Agua Nueva (previously known as Roger Road) and Tres Rios (previously known as Ina 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 Agua Nueva and Tres Rios Wastewater Reclamation Facilities. 71 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 7: Long-Term Liabilities (continued) In February 2014, the County issued Sewer Revenue Obligations Series 2014 for $48,500. 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. Issue Interest Amount Rates Maturities Issue Series of 2010 $ 165,000 2.50 - 5.00% 2015-25 Series of 2011B 189,160 5.00% 2015-26 Series of 2012A 128,795 1.75 - 5.00% 2015-27 Series of 2014 48,500 2.00 - 5.00% 2015-28 Sewer revenue obligations outstanding Plus unamortized premium/discount: Total sewer revenue obligations outstanding Outstanding Call Date June 30, 2014 July 1, 2020 $ 163,000 July 1, 2021 164,450 July 1, 2022 118,180 July 1, 2023 48,500 494,130 46,158 $ 540,288 The following schedule details sewer revenue obligation debt service requirements to maturity at June 30, 2014. Year Ending June 30, 2015 2016 2017 2018 2019 2020 - 2024 2025 - 2028 Total Principal 21,890 22,740 36,170 37,795 39,615 229,110 106,810 $ 494,130 $ Interest 23,871 22,967 21,989 20,366 18,548 61,691 9,317 $ 178,749 $ In prior years, the Regional Wastewater Reclamation Enterprise Fund entered into various loan agreements (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 Interest Rate Maturities 1.81% 2015-24 0.96% 2015-24 Total loans payable 72 Outstanding June 30, 2014 $ 13,534 6,146 $ 19,680 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 7: Long-Term Liabilities (continued) The following schedule details loans payable debt service requirements to maturity at June 30, 2014. Year Ending June 30, 2015 2016 2017 2018 2019 2020 - 2024 Total Principal 1,535 1,581 1,629 1,679 1,730 11,526 $ 19,680 $ Interest 576 529 480 430 378 1,083 $ 3,476 $ Pima County has pledged future user charges, net of specified operating expenses, to repay $137,650 in sewer revenue bonds issued between 2004 and 2011, $19,680 in sewer revenue loans issued between 2004 and 2009, and $494,130 in sewer revenue obligations issued between 2010 and 2014. 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 2028. Annual principal and interest payments on the bonds and obligations are expected to require approximately 67 percent of net revenues. The annual principal and interest payments on the loans are expected to require approximately 3 percent of net revenues. Total principal and interest remaining to be paid on the bonds is $169,290. Total principal and interest remaining to be paid on the loans is $23,156. Total principal and interest remaining to be paid on the obligations is $672,879. Principal and interest paid for bonds, obligations and loans in the current year and total customer net revenues were $65,277, $2,111, and $96,134, 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, 2014, 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. 73 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (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, 2014, is as follows: Net assessed valuation $ 7,623,691 1,143,554 Debt limit (15% of net assessed valuation): Less amount of debt applicable to debt limit: General obligation bonds outstanding $ 407,275 Less fund balance in debt service fund available for payment of general obligation bond principal (5,326) Legal debt margin available 401,949 $ 741,605 74 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) NRWH 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 $22,771 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 $4,584 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, 2014; actual costs may change due to inflation, changes in technology, or changes in regulations. Landfill Site Capacity Used June 30, 2014 Ajo Sahuarita *Tangerine 73% 56% 99% Estimated Remaining Service Life 37 Years 28 Years 36 Years *The Tangerine Landfill stopped accepting waste from the public on December 1, 2013 but remains open for internal County waste disposal needs until its remaining capacity is fully used. As the amount of County disposal is very small the estimated remaining service life was extended to 36 years. The County plans to fund the estimated closure and post-closure care costs with proceeds of general obligation bonds. 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 post-closure cost requirements referred to above. Pima County estimates that it will cost approximately $10,946 when closure occurs and plans to fund the costs with proceeds of general obligation bonds. 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.  PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) 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 retirees’ average compensation. Long-term disability benefits vary by circumstance, but generally pay a percentage of the employee’s monthly compensation. Health insurance premium benefits are generally paid as a fixed dollar amount per month towards the retiree’s healthcare insurance premiums, in amounts based on whether the benefit is for the retiree or for the retiree and his or her dependents. The ASRS administers a cost-sharing, multiple-employer defined benefit pension plan; a cost-sharing, multipleemployer defined benefit health insurance premium plan; and a cost-sharing, multiple-employer defined benefit 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. Beginning in fiscal year 2013-14, PSPRS and CORP established separate Funds for pension benefits and health insurance premium benefits. Previously, the plans recorded both pension and health insurance premium contributions in the same Pension Fund. During fiscal year 2013-14, the plans transferred prior year health insurance premium benefit contributions that exceeded benefit payments from each plan’s Pension Fund to the new Health Insurance Fund. Each plan issues a publicly available financial report that includes its financial statements and required supplementary information. A report is available on their Web sites or may be obtained by writing or calling the applicable plan. ASRS 3300 N. Central Ave Phoenix, AZ 85012 P.O. Box 33910 Phoenix, AZ 85067-3910 (602) 240-2000 or (800) 621-3778 www.azasrs.gov PSPRS and CORP 3010 East Camelback Road Suite 200 Phoenix, AZ 85016-4416 (602) 255-5575 www.psprs.com 76 3,0$&2817<$5,=21$ 1RWHVWR)LQDQFLDO6WDWHPHQWV -XQH (in thousands) Note 9: Pension and Other Post Employment Benefits (continued) 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, 2014, active ASRS members were required by statute to contribute at the actuarially determined rate of 11.54 percent (11.3 percent for retirement and 0.24 percent for long-term disability) of the members’ annual covered payroll. The County is required by statute to contribute at an actuarially determined rate. For the year ended June 30, 2014, the County contributed 11.54 percent (10.70 percent for retirement, 0.60 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, 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, 0.63 percent for health insurance premium, and 0.24 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: AS RS Retirement Fund Health Benefit S upplement Fund Long-term Disability Fund Year ended June 30, 2014 2013 2012 $ $ $ 24,733 22,902 21,290 $ $ $ 1,387 1,452 1,359 $ $ $ 555 536 518 Agent plans For the year ended June 30, 2014, active PSPRS members were required by statute to contribute 10.35 percent of the members’ annual covered payroll and the County was required to contribute at the actuarially determined rate of 33.69 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 6.70 percent. The health insurance premium portion of the contribution was set at 1.60 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 14.81 percent, the aggregate of which is the actuarially required amount. The health insurance premium portion of the contribution rate was actuarially set at 1.05 percent of covered payroll. Actuarial methods and assumptions The contribution requirements for the year ended June 30, 2014 were established by the June 30, 2012 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  PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 9: Pension and Other Post Employment Benefits (continued) 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 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 were used to establish the fiscal year 2014 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 PSPRS CORP June 30, 2012 Entry Age Normal June 30, 2012 Entry Age Normal 8.00% 5.00% - 9.00% 5.00% Level percent-of-pay closed Remaining amortization period 8.00% 5.00% - 8.25% 5.00% Level percent-of-pay closed 24 Years for underfunded, 24 Years for underfunded, 20 Years for overfunded Asset valuation method 20 Years for overfunded 7-year smoothed market 80%/120% market 7-year smoothed market 80%/120% market Annual Pension and OPEB Cost The County’s pension/OPEB cost for the PSPRS and CORP agent plans for the year ended June 30, 2014, and related information follows: PS PRS Health Insurance Pension Premium Benefit CORP Health Insurance Pension Premium Benefit Annual pension/OPEB cost $ 11,856 $ 563 $ 3,550 $ 252 Contributions made $ 11,856 $ 563 $ 3,550 $ 252 Trend Information Annual pension and OPEB cost information for the current and 2 preceding years follows for the PSPRS and CORP agent plans: 78 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 9: Pension and Other Post Employment Benefits (continued) Plan Year Ended June 30 Annual Pension/ OPEB Cost Percentage of Annual Cost Contributed Net Pension/ OPEB Obligation PSPRS Pension 2014 $ 11,856 100% Health insurance premium benefit 2014 $ 563 100% 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 2014 $ 3,550 100% Health insurance premium benefit 2014 $ 252 100% Pension 2013 $ 2,722 104% Health insurance premium benefit 2013 $ 264 54% Pension 2012 $ 2,076 107% Health insurance premium benefit 2012 $ 288 51% $ 215 $ 254 $ 121 $ 142 CORP Funded Status The plan’s funded status as of the most recent valuation date of June 30, 2014, 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. 79 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 9: Pension and Other Post Employment Benefits (continued) PSPRS CORP Health Insurance Premium Benefit Pension Actuarial accrued liability $ 324,825 Actuarial value of assets $ 141,813 Unfunded actuarial accrued liability (funding excess) $ 183,012 Funded ratio $ Unfunded actuarial accrued liability (funding excess) as a percentage of covered payroll Remaining amortization period Asset valuation method Permanent Benefit Increases $ 43.7 % Covered payroll Actuarial valuation date Actuarial cost method Actuarial Assumptions: Investment rate of return Projected salary increases includes inflation at Amortization method $ 31,544 Pension 7,337 $ 100,333 7,549 $ 48,811 (212) $ 51,522 102.9 % $ 580.2 % 31,544 0% Health Insurance Premium Benefit $ 19,765 7.85% 4.0% - 8.0% 4.00% Level percent-of-pay closed 7.85% 4.0% -7.25% 4.00% Level percent-of-pay closed Members retired on or before: July 1, 2011: 2% compounded on average Members retired on or after: August 1, 2011: 0.5% compounded on average All current retirees receive the same dollar increase amount so approximation techniques were used to develop the assumed PBI for each member 80 $ (126) 104.0 % $ 260.7 % CORP June 30, 2014 Entry Age Normal 3,122 3,248 48.6 % PSPRS June 30, 2014 Entry Age Normal 22 Years for underfunded , 20 years for overfunded 7-year smoothed market 80%/120% market $ 22 Years for underfunded , 20 years for overfunded 7-year smoothed market 80%/120% market Members retired on or befo July 1, 2011: 2.25% of benefit Members retired on or afte August 1, 2011: 0.5% of bene 19,765 0% PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (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. ov er nm en ta s ct oj e $ 53 th er O $ Capital Projects Other Governmental 2,491 $ 2,153 $ Regional Wastewater Reclamation 140 - $ 76 - 2,159 6 222 6 42 $ 140 $ 95 $ 2,544 6 6 Internal Services Total G Pr Ca pi ta l l en er a G Amounts recorded as due from: General l Re gi on al W as te w a te rR In te ec rn lam al Se at io rv n ic es To ta l Amounts recorded as due to: 4,726 $ 12 $ 29 $ 29 71 $ 5,002 B. Transfers Transfers are used to record transactions between individual funds to subsidize their operations and fund debt service payments and capital construction projects. Capital Projects $ $ Debt Service Other Governmental 3,138 $ 5,880 22,990 $ 103 337 350 20 146 17,200 36,104 23,724 310 2,115 415 Se rv ic 1,000 36,841 7,025 Regional Wastewater Reclamation $ To t al er na l G th er O $ In t e vi c se r eb t D 99 es ov er nm en ta s ct oj e Pr Ca pi ta l l en er a G Amounts recorded as transfers in: General l Re gi on al W as O te th w a te er En rR te ec rp lam r is e at io n Amounts recorded as transfers out: $ $ 24,192 64 46,610 994 61,489 3,828 30,392 51,404 51,404 Other Enterprise 3,667 3,667 Internal Service 11,709 Total $ 33,887 $ 67,335 3,892 $ 5,880 81 $ 83,038 27 $ 36,986 380 $ 1,370 $ 5,266 16,008 $ 233,762 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2014 (in thousands) Note 11: Construction and Other Significant Commitments At June 30, 2014, 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, 2014, the Pima County Facilities Management Department had construction contractual commitments of $37,309 and other contractual commitments related to service contracts of $6,728. Funding for these expenditures will be provided from general fund revenues and general obligation bonds. General Government At June 30, 2014, Pima County had contractual commitments related to service contracts for the Office of Medical Services of $21,875. Procurement had construction contractual commitments of $10,028 and other contractual commitments related to service contracts of $2,406. Information Technology had commitments related to service contracts of $8,220. Funding for these expenditures will be provided from general fund revenues, the PCWIN special revenue fund and general obligation bonds. Natural Resources, Parks and Recreation At June 30, 2014, Pima County had contractual commitments related to service contracts for the Natural Resources, Parks and Recreation Department of $8,912. Funding for these expenditures will be provided from general fund revenues. Regional Flood Control At June 30, 2014, the Regional Flood Control fund had construction contractual commitments of $4,852 and other contractual commitments related to service contracts of $6,466. Funding for these expenditures will be provided primarily from Flood Control secondary tax levy revenues. Regional Wastewater Reclamation At June 30, 2014, the Regional Wastewater Reclamation Enterprise fund had construction contractual commitments of $14,718 and other contractual commitments related to service contracts of $26,040. Funding for these expenses will be primarily from Sewer Revenue Bonds and sewer user fees. Transportation At June 30, 2014, the Pima County Transportation Department had construction contractual commitments of $43,327 and other contractual commitments related to service contracts of $10,956. Funding for these expenditures will be primarily provided from Transportation Revenue Bonds and Highway User Tax Revenue, which is the primary source of revenue for the Transportation Department. Note 12: Deficit Fund Balances The Stadium District and Other Grants – Special Revenue Fund had deficit fund balances at June 30, 2014 of $1,378 and $1,032 respectively. The deficits can be eliminated in the future through normal operations. 82 Required Supplementary Information Other Than Management’s Discussion & Analysis Exhibit B - 1 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund For the Year Ended June 30, 2014 (in thousands) Actual Amounts 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 Office of Emergency Management & Homeland Security Health Forensic Science Center Welfare County Admin - Welfare Office of Medical Services Culture and recreation Public Works (Parks and Recreation) Education and economic opportunity Community & Economic Development School Superintendent Debt Service - principal - interest Total expenditures $ 285,500 2,786 131,772 35,145 5,780 210 6,228 467,421 $ 285,500 2,786 131,772 35,145 5,780 210 6,228 467,421 $ 280,965 2,928 135,953 35,671 4,211 287 7,322 467,337 Variance with Final Budget $ (4,535) 142 4,181 526 (1,569) 77 1,094 (84) 8,997 2,074 10,870 1,207 72,328 22,508 8,305 23,260 29,324 18,204 2,400 30,042 1,623 2,568 8,997 2,074 10,870 1,207 72,328 22,508 8,305 23,260 29,324 18,204 2,400 30,042 1,623 2,568 8,378 1,894 10,864 1,242 45,800 22,454 8,066 23,222 32,289 16,628 2,055 29,864 1,531 2,069 619 180 6 (35) 26,528 54 239 38 (2,965) 1,576 345 178 92 499 135,355 517 135,355 517 136,306 519 (951) (2) 3,298 3,298 3,543 (245) 58,577 40,843 58,577 40,843 56,591 36,267 1,986 4,576 18,136 18,136 17,859 277 11,544 1,545 11,544 1,545 503,525 503,525 10,926 1,457 146 14 469,984 Deficiency of revenues under expenditures (36,104) (36,104) (2,647) 33,457 Other financing sources (uses): Transfers in Transfers (out) Total other financing (uses) 23,895 (31,848) (7,953) 23,895 (31,848) (7,953) 24,192 (33,887) (9,695) 297 (2,039) (1,742) Net change in fund balances (44,057) (44,057) (12,342) 31,715 44,057 44,057 Fund balances at beginning of year Fund balances at end of year $ 83 60,532 48,190 618 88 (146) (14) 33,541 $ 16,475 48,190 PIMA COUNTY, ARIZONA Notes to Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund June 30, 2014 (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, 2014, 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: Constables Justice and Law Enforcement Total general government Excess $ 35 2,965 3,000 Public safety: Sheriff Office of Emergency Management and Homeland Security Total public safety 951 2 953 Health: Forensic Science Center Total Health 245 245 Debt Service - principal - interest Total debt service 146 14 160 $ These expenditures were funded by greater than anticipated revenues and unspent appropriations. 84 PIMA COUNTY, ARIZONA Schedule of Agent Retirement Plans' Funding Progress June 30, 2014 Exhibit B - 2 (in thousands) Plan Year Ended June 30 PSPRS Pension 2014 Health Insurance Premium Benefit 2014 Pension 2013 Health Insurance Premium Benefit 2013 Pension 2012 Health Insurance Premium Benefit 2012 CORP Pension 2014 Health Insurance Premium Benefit 2014 Pension 2013 Health Insurance Premium Benefit 2013 Pension 2012 Health Insurance Premium Benefit 2012 Actuarial Value of Plan Assets $ 141,813 $ 7,549 $ 148,871 $ 0 $ 149,085 $ 0 $ 48,811 $ 3,248 $ 52,537 51,797 0 Funding (Liability) Excess 324,825 $ (183,012) 43.7% 7,337 212 102.9% 274,019 $ (125,148) 54.3% 7,460 (7,460) 0.0% 268,903 $ (119,818) 55.4% 7,325 (7,325) 0.0% (51,522) 48.6% 126 104.0% (33,892) 60.8% (3,195) 0.0% (31,729) 62.0% (3,161) 0.0% 100,333 $ 3,122 $ 0 $ Actuarial Accrued Liability 86,429 $ 3,195 $ 83,526 $ 3,161 Annual Covered Payroll Funded Ratio $ $ $ $ $ $ Unfunded Liability (Funding Excess) as a Percentage of Covered Payroll 31,544 580.2% 31,544 (0.7%) 30,768 406.8% 30,768 24.3% 31,920 375.4% 31,920 23.0% 19,765 260.7% 19,765 (0.6%) 19,665 172.4% 19,665 16.3% 21,743 145.9% 21,743 14.5% Note - Significant Trend Information Beginning in fiscal year 2013-14, PSPRS and CORP established separate Funds for pension benefits and health insurance premium benefits. Previously, the plans recorded both pension and health insurance premium contributions in the same Pension Fund. During fiscal year 2013-14, the plans transferred prior year health insurance premium benefit contributions that exceeded benefit payments from each plan's Pension Fund to the new Health Insurance Fund. 85 (This page is intentionally blank) 86 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 and animal care. 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. Office of Emergency Management’s Radio System Special Revenue Fund – to account for the design, procurement and deployment of a regional public safety voice communications network to serve public and non-profit entities responsible for providing public safety and emergency management services to the Pima County populace. 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.. 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) 87 PIMA COUNTY, ARIZONA Combining Balance Sheet - Nonmajor Governmental Funds June 30, 2014 (in thousands) Special Revenue Funds Regional OEM Flood Control Transportation Health District Other Other Radio Grants System Assets Cash and cash equivalents $ 15,158 $ 2,719 $ Property taxes receivable (net) 14 3 Due from other governments 4,022 16 1,898 Accounts receivable Inventory Prepaid expenditures Other assets Restricted cash and cash equivalents 140 1,127 39 132 60 22 Interest receivable Due from other funds Total assets 9,443 592 $ 33,401 10 34 15 66 360 3,027 1,589 12 $ 476 1 $ 116 44 11,137 860 8 30 182 4 1,018 $ 21,518 $ 4,850 $ 13,099 $ 35,566 $ 12,071 $ 671 $ 8,505 $ 561 $ 524 $ 2,160 $ 3,256 $ 81 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 4 994 2 3 4 1,020 Total liabilities 682 10,532 287 762 3,267 3 18 2 8 958 166 63 1 1,250 1,568 64 1,243 821 4,598 8,856 163 924 20 4,215 40 32 Deferred inflows of resources: Unavailable revenue - intergovernmental Unavailable revenue - property taxes Unavailable revenue - other 116 57 13 551 12 Total deferred inflows of resources 116 981 576 60 4,247 10,648 2,224 1,397 4,658 13,103 163 1,166 9,704 82 2,544 12 11,690 116 24,722 4,845 1,225 30 2,871 186 Total liabilities and deferred inflows of resources Fund balances Nonspendable Restricted Committed Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources and fund balances 322 (3,933) 10,870 $ 21,518 2,626 $ 11,702 4,850 $ 88 13,099 30,908 $ 35,566 (1,032) $ 12,071 508 $ 671 Exhibit C - 1 Total Special Revenue Funds Other School Reserve $ Environmental Quality 1,597 $ 2,877 Solid Waste $ 3 Library District 1,800 $ Stadium District 7,720 955 2 9 $ 14 199 22 Street Lighting Districts Governmental Funds $ $ 186 1 1 77 222 82 277 3 57 236 46 467 75,377 1,548 18,147 6,348 1,369 480 1,018 45 257 45 $ 1,818 $ 2,951 $ 2,079 $ 9,456 $ 365 $ 187 $ 104,631 $ 85 $ 29 $ 379 $ 1,159 $ 225 3 $ 7 $ 16,971 3 4 4,831 4,726 70 7 4,143 31 109 1 14 883 93 1,290 1 8 225 124 139 393 2,268 1,611 7 30,755 105 27 5,277 1,446 299 895 132 7,022 1,743 895 15 15 124 154 393 3,163 536 238 920 1,439 1,307 302 5,991 1,358 379 7 37,777 1,894 60,984 6,308 4,204 (6,536) 180 1,225 (2,603) 1,694 $ 1,818 2,797 $ 2,951 1,686 $ 2,079 6,293 $ 9,456 89 (1,378) $ 365 180 $ 187 66,854 $ 104,631 PIMA COUNTY, ARIZONA Combining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Governmental Funds For the Year Ended June 30, 2014 (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 - interest 974 49,405 279 $ 75 264 2,233 3,890 2,570 141 11 556 50,997 9,401 17,788 1 51 3,224 44 82 22,369 9,195 3,609 187 5,715 21,190 11,401 $ 20,365 20,365 11,401 Excess (deficiency) of revenues over (under) expenditures 13,702 (10,964) 9,789 Other financing sources (uses): Installment note Proceeds from sale of capital assets Transfers in Transfers (out) 158 5,296 (31,048) 11,908 (130) Total other financing sources (uses) (25,594) 11,778 Net change in fund balances (11,892) Fund balance at beginning of year 1 39 41,075 51,216 682 35,842 2,190 5,150 6,698 477 458 29 8,629 335 26 16,873 41,398 38,188 458 13,028 224 991 (15,017) 284 (6,296) 239 86 6,043 (26,747) (6,293) (20,379) (14,026) 284 814 3,496 (20,702) (998) 508 2,040 8,206 51,610 (34) (323) 3 22,762 Change in reserve for inventory 642 7 723 396 2,878 58 5 37,295 50,486 $ 37,295 Total expenditures Fund balance at end of year $ OEM Radio System Other Grants (228) $ 10,870 $ 2,626 $ 90 11,702 $ 30,908 $ (1,032) $ 508 Exhibit C - 2 Special Revenue Funds School Reserve Environmental Quality Solid Waste Library District $ $ $ 28,225 Street Lighting Districts $ $ 114 2,139 1,887 $ 4 167 13 34 1,887 Stadium District Total Other Governmental Funds 2,357 1,168 31 310 $ 1,512 1,156 12 11 524 34 960 8 4 1 1,222 30,053 2,680 115 212,875 159 41,151 20,747 37,772 2,521 31,814 335 38,886 21,813 356 5 2,521 2,791 33,775 4,689 2,819 33,775 4,689 159 195,400 (1,597) (3,722) (2,009) (44) 17,475 2,062 298 2,062 2,791 (175) (434) 113 72 901 (79) 822 185 388 (175) 1,869 2,409 46,127 5,347 131,078 17,101 4,441 393 8,388 16 (89) 4,881 (3,632) 239 360 30,392 (83,038) (73) 1,249 (52,047) (1,412) (3,795) (760) (44) (34,572) 3,098 10,088 (618) 224 101,654 (228) $ 1,694 $ 2,797 $ 1,686 $ 6,293 91 $ (1,378) $ 180 $ 66,854 (This page is intentionally blank) 92 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 & Changes in Fund Balance - Budget and Actual Capital Projects Fund For the Year Ended June 30, 2014 Exhibit C - 3 (in thousands) Budget Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Actual 1,133 37,372 25,037 5,054 762 1,740 32,593 Expenditures: Capital outlay 182,442 135,746 46,696 Total expenditures 182,442 135,746 46,696 (145,070) (103,153) 41,917 94,000 49,169 78,160 46,610 (67,335) 57,435 (15,840) (2,559) (67,335) (85,734) (45,718) (43,817) Deficiency of revenues under expenditures Other financing sources (uses): Face amount of long term debt Transfers in Transfers (out) Total other financing sources 33,862 2,377 143,169 Net change in fund balance Fund balance at beginning of year Fund balance at end of year $ Variance (1,901) 74,381 72,480 $ 93 $ 194,730 149,012 $ $ (8,825) 2,677 762 607 (4,779) 120,349 76,532 Exhibit C - 4 PIMA COUNTY, ARIZONA Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Debt Service Fund For the Year Ended June 30, 2014 (in thousands) Budget Revenues: Property taxes Intergovernmental Investment earnings Miscellaneous Total revenues $ Actual 59,612 58,737 14 295 14 59,060 Expenditures: Debt service - principal - interest - miscellaneous Total expenditures 97,455 26,563 25 124,043 112,835 26,758 1,030 140,623 (15,380) (195) (1,005) (16,580) Deficiency of revenues under expenditures (64,431) (81,563) (17,132) 9,488 8,805 (10,131) 61,489 (5,880) 63,771 9,488 8,805 (10,131) (2,584) (5,880) (302) (17,792) (17,434) Other financing sources (uses): Premium on bonds Proceeds from refunding debt Payments to escrow agent Transfers in Transfers (out) Total other financing sources $ 64,073 64,073 Net change in fund balances Fund balance at beginning of year Fund balance at end of year 59,612 Variance (358) $ 36,000 35,642 94 $ 25,640 7,848 $ $ (875) 14 295 14 (552) (10,360) (27,794) Exhibit C - 5 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Transportation - Special Revenue Fund d For the Year Ended June 30, 2014 (in thousands) Budget Revenues: Licenses and permits Intergovernmental Charges for services Investment earnings Miscellaneous $ Actual 1,111 49,234 111 120 301 $ 974 49,405 279 75 264 Variance $ (137) 171 168 (45) (37) Total revenues 50,877 50,997 120 Expenditures: Highways and streets 40,277 37,295 2,982 Total expenditures 40,277 37,295 2,982 Excess of revenues over expenditures 10,600 13,702 3,102 Other financing sources (uses): Proceeds from sale of capital assets Transfers in Transfers (out) 5,121 (30,142) 158 5,296 (31,048) 158 175 (906) Total other financing (uses) (25,021) (25,594) (573) Net change in fund balance (14,421) (11,892) 2,529 18,268 22,762 4,494 Fund balance at beginning of year Fund balance at end of year $ 3,847 95 $ 10,870 $ 7,023 Exhibit C - 6 PIMA COUNTY, ARIZONA A Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Health - Special Revenue Fund For the Year Ended June 30, 2014 (in thousands) Budget Revenues: Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous $ Actual 2,210 3,831 2,964 126 440 2,233 3,890 2,570 141 11 556 Total revenues 9,571 9,401 (170) Expenditures: Health 21,269 20,365 904 Total expenditures 21,269 20,365 904 (11,698) (10,964) 734 Other financing sources (uses): Transfers in Transfers (out) 11,787 (103) 11,908 (130) 121 (27) Total other financing sources 11,684 11,778 94 814 828 2,040 552 Deficiency of revenues under expenditures Net change in fund balance $ Variance (14) 1,488 Fund balance at beginning of year Change in reserve for inventory Fund balance at end of year $ (228) $ 1,474 96 $ 2,626 23 59 (394) 15 11 116 (228) $ 1,152 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, 2014 Exhibit C - 7 (in thousands) Budget Revenues: Property taxes Licenses and permits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Actual 25 35 60 18,328 17,788 1 51 3,224 44 82 21,190 12,484 12,484 11,401 11,401 1,083 1,083 Excess of revenues over expenditures 5,844 9,789 3,945 Other financing sources (uses): Proceeds from sale of capital assets Transfers (out) Total other financing (uses) (6,267) (6,267) 3 (6,296) (6,293) Expenditures: Flood control Total expenditures 18,208 Net change in fund balance Fund balance at beginning of year Fund balance at end of year $ Variance (423) 7,715 7,292 $ 97 $ 3 (29) (26) 3,496 $ 8,206 11,702 (420) 1 51 3,199 9 22 2,862 3,919 $ 491 4,410 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, 2014 Exhibit C - 8 (in thousands) Budget Revenues: Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous $ Total revenues Expenditures: General government Public safety Health Culture and recreation Education and economic opportunity Debt service - principal - interest Total expenditures Deficiency of revenues under expenditures 21,836 7,655 2,508 368 6,636 Actual $ Variance 22,369 9,195 3,609 187 5,715 $ 533 1,540 1,101 (181) (921) 39,003 41,075 2,072 42,850 5,122 11 931 2,108 35,842 2,190 29 396 2,878 58 5 7,008 2,932 (18) 535 (770) (58) (5) 51,022 41,398 9,624 (12,019) (323) 11,696 Other financing sources (uses): Proceeds of installment note Proceeds of capital assets Transfers in Transfers (out) 5,260 (27,030) 239 86 6,043 (26,747) 239 86 783 283 Total other financing (uses) (21,770) (20,379) 1,391 Net change in fund balance (33,789) (20,702) 13,087 52,208 51,610 Fund balance at beginning of year Fund balance at end of year $ 18,419 98 $ 30,908 (598) $ 12,489 Exhibit C - 9 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, 2014 (in thousands) Budget Revenues: Intergovernmental Investment earnings Miscellaneous Total revenues $ 66,449 9 563 67,021 Expenditures: Clerk of the Superior Court Community Development Community Services County Attorney Elections Environmental Quality Finance Flood Control Forensic Science Center Health Justice Court Juvenile Court Office of Emergency Management Office of Medical Services Office of Sustainability and Conservation Natural Resources, Parks and Recreation Recorder Sheriff Superior Court Transportation Total expenditures Actual $ 30 7,432 16,595 4,326 1,180 817 Variance 50,486 7 723 51,216 $ (15,963) (2) 160 (15,805) 140 35 8,142 155 1,200 2,092 316 3 75 99 8,416 1,056 754 52,863 5,170 11,703 2,997 5 786 10 136 20 7,817 129 1,193 785 335 4 26 54 5,783 758 477 38,188 30 2,262 4,892 1,329 1,175 31 (10) 4 15 325 26 7 1,307 (19) (1) 49 45 2,633 298 277 14,675 14,158 13,028 (1,130) Other financing sources (uses): Transfers in Transfers (out) Total other financing (uses) 279 (25,055) (24,776) 991 (15,017) (14,026) 712 10,038 10,750 Net change in fund balance (10,618) (998) 9,620 Excess of revenues over expenditures Fund balance at beginning of year Fund balance at end of year (227) (10,845) $ 99 $ (34) (1,032) $ 193 9,813 Exhibit C - 10 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Office of Emergency Management's Radio System - Special Revenue Fund For the Year Ended June 30, 2014 (in thousands) Budget Revenues: Charges for services Investment earnings Miscellaneous Actual $ 421 642 1 39 Total revenues 683 682 Expenditures: Public Safety 1,361 458 903 Total expenditures 1,361 458 903 Excess (deficiency) of revenue over (under) expenditures (678) 224 902 Other financing sources: Transfers in 284 284 Total other financing sources 284 284 508 1,186 Net change in fund balance 262 $ Variance (678) $ 380 1 (382) (1) Fund balance at beginning of year Fund balance at end of year $ (678) 100 $ 508 $ 1,186 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, 2014 Exhibit C - 11 (in thousands) Budget Revenues: Intergovernmental Total revenues $ Expenditures: School Reserve grants Total expenditures Actual 2,150 2,150 $ 2,150 2,150 Variance 1,887 1,887 $ 2,062 2,062 (263) (263) 88 88 Deficiency of revenues under expenditures (175) (175) Net change in fund balance (175) (175) Fund balance at beginning of year Fund balance at end of year 1,869 $ 1,869 101 1,869 $ 1,694 $ (175) PIMA COUNTY, ARIZONA A Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Environmental Quality - Special Revenue Fund For the Year Ended June 30, 2014 Exhibit C - 12 (in thousands) Budget Revenues: Licenses and permits Charges for services Fines and forfeits Investment earnings Miscellaneous $ Actual 2,005 15 374 $ Variance 2,139 4 167 13 34 $ 134 4 167 (2) (340) Total revenues 2,394 2,357 (37) Expenditures: Environmental Quality 3,146 2,791 355 Total expenditures 3,146 2,791 355 Deficiency of revenues under expenditures (752) (434) 318 Other financing sources (uses): Transfers in Transfers (out) 412 (117) 901 (79) 489 38 295 822 527 (457) 388 845 2,409 2,797 906 1,751 Total other financing sources Net change in fund balance Fund balance at beginning of year Fund balance at end of year 1,503 1,046 $ 102 $ $ 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, 2014 Exhibit C - 13 (in thousands) Budget Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Expenditures : Sanitation Debt service - principal Total expenditures Deficiency of revenues under expenditures Other financing sources: Proceeds from sale of capital assets Transfers in Total other financing sources 1,050 3,479 12 52 4,593 $ 2,521 298 2,819 (2,308) (1,597) 103 2,308 800 Variance $ 4,081 1 4,082 711 113 (728) (615) (1,412) $ 3,098 1,686 118 (3,448) (41) (3,371) 113 72 185 (1,508) $ 1,168 31 12 11 1,222 6,602 299 6,901 800 800 Net change in fund balance Fund balance at beginning of year Fund balance at end of year Actual 96 $ 790 886 Exhibit C - 14 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, 2014 (in thousands) Budget Revenues: Property taxes Intergovernmental Fines and forfeits Investment earnings Miscellaneous Total revenues $ Variance Actual 28,603 390 650 50 430 30,123 $ 28,225 310 524 34 960 30,053 $ (378) (80) (126) (16) 530 (70) Expenditures: Culture and recreation Total expenditures 35,305 35,305 33,775 33,775 1,530 1,530 Deficiency of revenues under expenditures (5,182) (3,722) 1,460 16 (89) (73) 16 (89) (89) (5,271) (3,795) 1,476 9,522 4,251 10,088 6,293 566 2,042 Other financing sources (uses): Transfers in Transfers (out) Total other financing (uses) Net change in fund balance Fund balance at beginning of year Fund balance at end of year $ 104 $ 16 $ Exhibit C - 15 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, 2014 (in thousands) Budget Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues Actual $ 1,652 153 21 455 2,281 Expenditures: Cultural and recreation Total expenditures $ Variance 1,512 1,156 8 4 2,680 $ (140) 1,003 (13) (451) 399 5,040 5,040 4,689 4,689 351 351 Deficiency of revenues under expenditures (2,759) (2,009) 750 Other financing sources (uses): Transfers in Transfers (out) Total other financing sources (uses) 3,471 (3,484) (13) 4,881 (3,632) 1,249 1,410 (148) 1,262 Net change in fund balance (2,772) (760) Fund balance at beginning of year Fund balance at end of year (328) (3,100) (618) (1,378) $ 105 $ 2,012 $ (290) 1,722 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Street Lighting Districts For the Year Ended June 30, 2014 Exhibit C - 16 (in thousands) Budget Revenues: Property taxes Investment earnings Total revenues $ Actual 113 113 $ Variance 114 1 115 $ 1 1 2 Expenditures: General government Total expenditures 154 154 159 159 (5) (5) Deficiency of revenues under expenditures (41) (44) (3) Net change in fund balance (41) (44) (3) Fund balance at beginning of year Fund balance at end of year (41) $ 106 $ 224 180 $ 224 221 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. Exhibit C - 17 PIMA COUNTY, ARIZONA Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2014 (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 Construction in progress Less accumulated depreciation 4,023 4 Parking Garages $ 97 16 4,331 5 6 58 4 4,140 4,404 8,544 1,768 12,927 244 3,730 (9,581) 1,768 12,927 883 3,730 (10,220) 9,088 9,088 9,088 9,088 4,140 13,492 17,632 138 231 369 361 12 373 499 243 742 463 463 10 10 473 473 832 383 1,215 3,308 9,088 4,021 9,088 7,329 639 (639) Total capital assets (net of accumulated depreciation) Total noncurrent assets Total assets Liabilities Current liabilities: Accounts payable Employee compensation Total current liabilities Noncurrent liabilities: Compensated absences payable Total noncurrent liabilities Total liabilities Net position Net investment in capital assets Unrestricted Total net position $ Total Nonmajor Enterprise Funds 3,308 107 $ 13,109 $ $ 8,354 9 6 155 20 16,417 PIMA COUNTY, ARIZONA Combining Statement of Revenues, Expenses and Changes in Fund Net Position Nonmajor Enterprise Funds For the Year Ended June 30, 2014 Exhibit C - 18 (in thousands) Development Services Operating revenues: Charges for services Other $ 7,553 55 Total Nonmajor Enterprise Funds Parking Garages $ 2,362 $ 9,915 55 Total net operating revenues 7,608 2,362 9,970 Operating expenses: Employee compensation Operating supplies and services Repair and maintenance General and administrative Consultants and professional services Depreciation 4,938 43 32 1,350 433 400 51 63 1,145 1 217 5,338 94 95 2,495 434 217 Total operating expenses 6,796 1,877 8,673 812 485 1,297 Nonoperating revenues: Investment earnings Gain on disposal of capital assets 17 6 23 40 6 Total nonoperating revenues: 23 23 46 835 508 1,343 Operating income Income before transfers Transfers in Transfers (out) Change in net position Net position at beginning of year Net position at end of year $ (366) 3,667 (1,004) 3,667 (1,370) 469 3,171 3,640 2,839 9,938 12,777 3,308 108 $ 13,109 $ 16,417 Exhibit C - 19 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2014 (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 operating activities 7,601 (351) (1,794) (4,514) Parking Garages $ 942 2,365 (1,209) (6) (396) Total Nonmajor Enterprise Funds $ 754 9,966 (1,560) (1,800) (4,910) 1,696 Cash flows from noncapital financing activities: Cash transfers in from other funds Cash transfers out to other funds (366) 3,667 (1,004) 3,667 (1,370) Net cash provided by (used for) noncapital financing activities (366) 2,663 2,297 (3,730) 6 (3,730) (3,730) (3,724) Cash flows from capital and related financing activities: Proceeds from sale of equipment Purchase of capital assets 6 Net cash provided by (used for) capital and related financing activities 6 Cash flows from investing activities: Interest received on cash and investments 14 20 34 Net cash provided by investing activities 14 20 34 596 (293) 303 Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year 3,427 Cash and cash equivalents at end of year $ (continued) 109 4,023 4,624 $ 4,331 8,051 $ 8,354 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2014 Exhibit C - 19.1 (in thousands) (continued) Reconciliation of operating income to net cash provided by operating activities Operating income Development Services $ 812 Parking Garages $ 485 Total Nonmajor Enterprise Funds $ 1,297 217 217 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization Changes in assets and liabilities: Decrease (increase) in assets: Accounts receivable Prepaid expenses Increase in liabilities: Accounts payable Other liabilities Net cash provided by operating activities $ (7) (11) 3 (4) (11) 102 46 46 3 148 49 942 $ 754 $ Noncash investing, capital, and noncapital financing activities during the period ended June 30, 2014: Development Services Enterprise Fund retired fully depreciated capital assets with an original cost of $263. 110 1,696 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. Health Benefit Self Insurance Trust Fund – to account for health care and health-related benefits. The Fund is responsible for collecting employer and employee premiums through payroll deductions, for the payment of claims. The premiums collected include amounts paid for medical, dental, vision, shortterm disability and life insurance coverages. 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, 2014 Exhibit C - 20 (in thousands) SelfInsurance Trust Assets Current assets: Cash and cash equivalents Restricted cash equivalents Interest receivable Due from other funds Due from other governments Accounts receivable Inventory Prepaid expense Total current assets Noncurrent assets: Loan receivable 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 Total assets Liabilities Current liabilities: Accounts payable Contract retentions Employee compensation Due to other funds Current portion reported but unpaid losses Current portion incurred but not reported losses Total current liabilities Noncurrent liabilities: Compensated absences payable Loan payable Reported but unpaid losses Incurred but not reported losses Total noncurrent liabilities $ Fleet Services $ 10 29 263 1,083 58,424 24,090 570 10 42 141 24 530 1 25,408 $ Total Internal Service Funds Other Internal Service 21,628 $ 3,080 13 3 2,847 10 187 69 3,349 24,488 $ 10,000 105,837 570 36 71 141 3,144 717 1,153 111,669 10,000 592 168 (161) 599 10,599 743 38,001 (14,857) 12,316 224 8,234 (5,753) 2,215 592 967 46,403 (20,771) 14,531 36,203 36,203 4,920 4,920 41,722 51,722 $ 69,023 $ 61,611 $ 24,488 $ 8,269 $ 163,391 $ 488 $ 3,532 570 139 $ 133 $ 408 $ 4,561 570 371 29 58 42 29 5,301 Total liabilities Net position Net investment in capital assets Restricted for: Healthcare Unrestricted Total net position 57,039 Health Benefit Trust 132 582 2,897 8,744 4,241 68 274 15,820 10,143 26,031 5,883 5,918 6,704 8,815 20,229 540 274 46 10,000 18 182 10,246 160 160 548 10,000 15,838 10,325 36,711 34,775 4,515 16,950 700 56,940 599 36,203 4,920 41,722 7,538 57,191 7,538 20,893 33,649 $ 34,248 $ 57,096 111 2,649 $ 7,538 $ 7,569 $ 106,451 PIMA COUNTY, ARIZONA Combining Statement of Revenues, Expenses and Changes in Fund Net Position Internal Service Funds For the Year Ended June 30, 2014 Exhibit C - 21 (in thousands) SelfInsurance Trust Operating revenues: Charges for services Other $ 15,485 87 Health Benefit Trust Fleet Services $ 24,979 238 $ 63,031 1,272 Other Internal Service $ Total Internal Service Funds 6,979 52 $ 110,474 1,649 Total operating revenues 15,572 25,217 64,303 7,031 112,123 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 2,158 261 4,851 4,052 478 293 687 2 12,782 3,321 7,679 2,414 243 966 1,246 1,016 31 3,515 17,774 1,099 109 47,161 5,214 1,018 57,179 43 1,669 161 809 505 5,844 8,992 8,292 52,012 10,275 4,411 1,470 4,105 4,022 93,579 2,790 7,443 7,124 1,187 18,544 Operating income Nonoperating revenues (expenses): Investment earnings (Loss) on disposal of capital assets Total nonoperating revenues (expenses) Income before transfers Capital contributions Transfers in Transfers (out) Net position at beginning of year Net position at end of year 915 221 (137) 60 10 1,206 (137) 915 84 60 10 1,069 3,705 7,527 7,184 1,197 19,613 216 11,962 (997) 3,854 (3,500) 2,958 18,708 7,538 31,290 38,388 7 (754) Change in net position $ 2,578 34,248 $ 112 57,096 $ 7,538 185 (15) $ 216 16,008 (5,266) 1,367 30,571 6,202 75,880 7,569 $ 106,451 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2014 Exhibit C - 22 (in thousands) SelfInsurance Trust Total Internal Service Funds Health Benefit Trust Other Internal Service $ 6,979 57 (2,807) (759) (3,400) $ 60,184 1,272 (7,774) (1,234) (40,461) (789) 570 12,801 11,198 Cash flows from noncapital financing activities: Cash transfers in from other funds Cash transfers out to other funds Loans with other funds 7 (754) 1 11,935 (997) (146) 3,854 (3,500) 10,029 185 (15) (19) 15,981 (5,266) 9,865 Net cash provided by (used for) noncapital financing activities (746) 10,792 10,383 151 20,580 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 $ 15,497 87 (5,949) (1,249) (6,458) (1,358) Net cash provided by operating activities Fleet Services $ 24,979 262 (7,052) (1,988) (2,377) 1,093 $ 107,639 1,678 (23,582) (5,230) (46,919) (7,924) 25,662 Cash flows from capital and related financing activities: Proceeds from sale of equipment Purchase of capital assets 722 (17,317) (704) 722 (18,021) Net cash used for capital and related financing activities (16,595) (704) (17,299) Cash flows from investing activities: Loan receivable Interest on cash and investments (10,000) 908 213 47 8 (10,000) 1,176 Net cash provided by (used for) investing activities (9,092) 213 47 8 (8,824) Net increase (decrease) in cash and cash equivalents (9,268) 7,211 21,628 548 20,119 Cash and cash equivalents at beginning of year 66,307 17,449 2,532 86,288 $ 57,039 $ 24,660 $ 3,080 $ 106,407 Cash and cash equivalents at end of year (continued) 113 $ 21,628 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2014 Exhibit C - 22.1 (in thousands) (continued) Reconciliation of operating income (loss) to net cash provided by operating activities Operating income SelfInsurance Trust $ 2,79 Fleet Services $ 7,443 2 3,515 Health Benefit Trust $ 7,124 Other Internal Service $ 1,187 Total Internal Service Funds $ 18,54 505 4,022 4 1 (187) 610 (2,76) (38) (32) 437 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 liabilities Net cash provided by operating activities 1 (172) (455) (485) (1,122) 63 (39) 155 (1) (2,847) 1,74 133 600 6,100 88 (1,06 $ 11,19 $ 1,09 (79) $ 570 $ 12,80 Noncash investing, capital, and financing activities during the year ended June 30, 2014: Fleet Services fund received a transfer in of capital assets from Regional Wastewater Reclamation with a net book value of $27. Fleet Services fund received capital contributions with a value of $21 from General Government and sold capital assets with a net book value of $859.  35 115 4,978 46 37 $ 25,66 Combining Statements and Other Schedules Fiduciary Funds Exhibit C - 23 PIMA COUNTY, ARIZONA Combining Statement of Fiduciary Net Position Investment Trust Funds June 30, 2014 (in thousands) Treasurer's Investment Pool Assets Cash and cash equivalents Interest receivable $ 75,563 136 $ 75,699 Total assets Total Investment Trust Funds Individual Investment Accounts 68,953 $ 68,953 144,516 136 144,652 Liabilities Total liabilities Net position Held in trust for pool participants $ 115 75,699 $ 68,953 $ 144,652 Exhibit C - 24 PIMA COUNTY, ARIZONA Combining Statement of Changes in Fiduciary Net Position Investment Trust Funds For the Year Ended June 30, 2014 (in thousands) Treasurer's Investment Pool Additions Contributions: Participants Total contributions $ Investment earnings: Total investment earnings Total additions Deductions Distributions to participants Total deductions Change in net position Net position held in trust July 1, 2013 Net position held in trust June 30, 2014 $ 116 2,306,165 2,306,165 Total Investment Trust Funds Individual Investment Accounts $ 146,074 146,074 $ 2,452,239 2,452,239 897 897 60 60 957 957 2,307,062 146,134 2,453,196 2,330,987 184,046 2,515,033 2,330,987 184,046 2,515,033 (23,925) (37,912) (61,837) 99,624 106,865 206,489 75,699 $ 68,953 $ 144,652 Exhibit C - 25 PIMA COUNTY, ARIZONA Combining Statement of Fiduciary Net Position Agency Funds June 30, 2014 (in thousands) Payroll Clearing Assets Cash and cash equivalents Due from other governments $ 115 Total assets $ 115 Liabilities Employee compensation Due to other governments Deposits & rebates Total liabilities Treasurer's Clearing 2,518 1,174 Other $ 66,257 Totals $ 3,692 66,257 70,064 3,692 37,894 28,363 115 37,894 32,055 115 $ 115 117 $ 68,890 1,174 3,692 $ 66,257 $ 70,064 Exhibit C - 26 PIMA COUNTY, ARIZONA Combining Statement of Changes in Fiduciary Net Position Agency Funds For the Year Ended June 30, 2014 (in thousands) Payroll Clearing Assets Cash and cash equivalents Total assets Balance 6/30/2013 $ Liabilities Employee compensation Total liabilities 1,081 1,081 Additions $ 1,249,545 1,249,545 Balance 6/30/2014 Deductions $ 1,250,511 1,250,511 $ 115 115 1,081 1,081 1,249,545 1,249,545 1,250,511 1,250,511 115 115 Treasurer's Clearing Assets Cash and cash equivalents Due from other governments Total assets 464 1,391 1,855 1,731,681 1,731,681 1,729,627 217 1,729,844 2,518 1,174 3,692 Liabilities Due to other governments Deposits and rebates Total liabilities 1,855 1,855 1,095,934 635,747 1,731,681 1,095,934 633,910 1,729,844 3,692 3,692 Other Assets Cash and cash equivalents 57,016 225,068 215,827 66,257 Total assets 57,016 225,068 215,827 66,257 Liabilities Due to other governments Deposits and rebates Total liabilities 35,755 21,261 57,016 170,541 54,527 225,068 168,402 47,425 215,827 37,894 28,363 66,257 Totals - All Agency Funds Assets Cash and cash equivalents Due from other governments Total assets 58,561 1,391 59,952 3,206,294 3,206,294 3,195,965 217 3,196,182 68,890 1,174 70,064 Liabilities Employee compensation Due to other governments Deposits and rebates Total liabilities 1,081 35,755 23,116 59,952 1,249,545 1,266,475 690,274 3,206,294 1,250,511 1,264,336 681,335 3,196,182 115 37,894 32,055 70,064 $ 118 $ $ $ PIMA COUNTY Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2014 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.  1 1 $ $ 11,907 27,027 9,042 3,511 6,319 54,302 1,370,950 59,789 $ 16,734 9,554 125,947 38,628 9,985 57,101 1,571,913 21,353 8,372 77,088 48,379 5,464 53,748 1,495,175 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 63,014 $ $ 2007 53,384 1,227,387 48,379 5,464 15,284 535,822 3,511 6,319 20,851 488,749 1,199,053 438 466,257 468 457,600 38,464 959,353 9,042 33,451 882,201 761,130 11,439 27,027 $ 53,384 21,353 7,934 77,088 59,789 741,453 2006 5,956 13,732 110,175 $ 1,717,367 17,390 14,403 118,847 71,618 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 Beginning in fiscal year 2005-06 and in 2008-09, all special revenue funds were reclassified and reported from a functional perspective. Source: Pima County Finance & Risk Management 1 Notes: Highways and streets Debt service Capital projects Workers' compensation Regional Wastewater Reclamation Healthcare Unrestricted Total primary government net position Special Revenue Facilities, justice, library, tax stabilization 1 and community development Primary government Net investment in capital assets Restricted for: 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 2005 5,883 9,017 69,327 $ 1,815,529 21,349 45,385 74,424 78,080 1,512,064 819 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 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 29,914 637,584 550,540 149,966 1,350,871 57,939 3,405 64,991 25,749 $ 1,048,821 Fiscal Year 2010 $ 972,346 2009 (in thousands) (accrual basis of accounting) PIMA COUNTY, ARIZONA Net Position by Component Last Ten Fiscal Years 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 64,446 32,906 $ 1,136,033 2011 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 $ $ 18,820 3,591 201,939 2,359,818 10,988 31,615 89,605 61,936 1,941,324 117,425 777,448 31,615 22,720 18,820 586,868 84,514 1,582,370 66,885 3,591 61,936 10,988 1,354,456 2014 Exhibit D-1 120 1,643 298 125,121 23,663 210,666 $ 1,797 314 133,113 12,188 217,422 9,526 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 $ $ 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 $ $ 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 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. Source: Pima County Finance & Risk Management 1 Notes: $ $ 2006 26,033 8,136 21,617 4,531 9,693 22,881 6,985 20,549 76,079 249,809 10,857 1,494 338,239 931,474 Business-type activities: Regional Wastewater Reclamation Pima Health System & Services Development Services Parking Garages Total business-type activities expenses Total primary government expenses Program revenues Governmental activities: Charges for services General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Operating grants and contributions Capital grants and contributions Subtotal governmental activities program revenues 849 161 16,152 593,235 Depreciation-unallocated1 Amortization-unallocated Interest on long-term debt Total governmental activities expenses 194,873 118,412 65,414 31,798 96,199 29,663 39,714 $ Expenses Governmental activities: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity 2005 (in thousands) (accrual basis of accounting) PIMA COUNTY, ARIZONA Changes in Net Position Last Ten Fiscal Years $ $ 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 $ $ 28,910 10,238 6,511 3,577 12,495 320 2,865 1,544 116,121 59,298 241,879 (continued) 27,355 14,846 6,307 31 13,259 80 2,548 430 113,129 54,583 232,568 6,796 1,877 153,790 922,503 7,231 1,825 153,141 910,959 (5,758) 27,994 768,713 230,742 188,782 93,675 4,252 36,085 93,224 63,961 35,756 145,117 $ $ 2014 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  $ 70,711 43,971 114,682 Change in net position: Governmental activities Business-type activities Total primary government Source: Pima County Finance & Risk Management 477,704 1,163 1,609 2,865 20,722 (1,935) 24,424 Business-type activities: State shared tax Investment earnings Miscellaneous Capital contributions Transfers Total business-type activities Total primary government 1,935 453,280 General revenues and other changes in net position 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 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) Net (expense) revenue Governmental activities Business-type activities Total governmental activities net expense 92,379 244,932 14,730 1,507 4,238 357,786 568,452 $ 2005 Program revenues Business-type activities: Charges for services Regional Wastewater Reclamation Pima Health System & Services Development Services Parking Garages Operating grants and contributions Capital grants and contributions Total business-type activities program revenues Total primary government program revenues (continued) $ $ 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 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 $ $ 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 Fiscal Year 2009 LQWKRXVDQGV DFFUXDOEDVLVRIDFFRXQWLQJ PIMA COUNTY, ARIZONA Changes in Net Position Last Ten Fiscal Years $ $ 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) $ (9,777) 54,018 44,241 545,804 16,715 19,436 1,237 1,484 (16,715) 526,368 378,032 6,262 1,509 101,605 23,899 5,035 6,976 2,955 16,810 (536,145) 34,582 (501,563) 6,807 188,372 420,940 3,914 169,079 410,958 171,650 7,553 2,362 $ 2014 6,519 2,073 156,573 2013 Exhibit D-2 122 1 147,650 214,780 Nonspendable Restricted Committed Assigned Unassigned Debt service Assigned Total other governmental funds $ $ 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 $ $ 18 124,830 1,487 52 (227) 40,868 264,729 2,011 82,957 15,305 3,221 (5,793) 3,093 73,837 81,541 4,089 522 2010 $ $ (3,553) 28,298 314,618 (791) 35,903 284,175 1,550 105,468 10,264 16,682 (9,013) 118 77,596 80,767 2,720 333 157,688 7,234 $ $ 2012 12 112,668 6,639 2,011 94,567 37,978 4,368 (9,180) 357 73,547 77,555 3,315 336 2011 Due to implementation of GASB 54 in FY 2010 categories regarding fund balances have been redefined. See Note 1 page 48 for details. See Note 2 page 55 for purpose details. 1 Source: Pima County Finance & Risk Management 1 Note: 54,384 1 12,746 37,227 4,056 33,171 Nonspendable Restricted Committed Assigned Unassigned Capital projects funds $ $ All other governmental funds Reserved Unreserved, reported in: Special revenue funds Nonspendable Restricted Committed Assigned Unassigned Total General Fund General Fund Reserved Unreserved 2005 (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 $ $ (80) 7,848 223,714 145,256 3,836 1,894 60,984 6,308 4,204 (6,536) 181 42,731 48,190 5,278 2014 Exhibit D - 3 123 Source: Pima County Finance & Risk Management 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): $ (177) 9.87% 10.90% $ (38,009) 385 69,113 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 119,523 27 116,200 50,008 (46,962) 250 (50,795) 717,212 Total expenditures Excess (deficiency) of revenues over (under) expenditures 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 General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Capital outlay Debt service - principal - interest - miscellaneous Expenditures Total revenues Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Revenues 2005 $ 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 $ 381,862 556 7,710 312,634 58,890 6,480 14,218 21,752 2008 15.89% $ (25,330) (55) 115,818 876 109,400 171,186 (166,319) 675 (141,093) 926,378 222,309 144,617 38,132 6,666 31,626 115,481 51,657 42,299 146,334 100,384 26,849 24 785,285 $ 396,241 441 6,989 292,236 55,346 6,283 5,335 22,414 Fiscal Year 2009 (in thousands) (modified accrual basis of accounting) $ 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 PIMA COUNTY, ARIZONA Changes in Fund Balances - Governmental Funds Last Ten Fiscal Years $ 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 16.56% $ (110,424) 59,464 8,805 9,488 (10,131) 239 360 78,160 162,683 (190,140) (169,888) 941,753 247,507 157,572 37,772 2,521 35,357 93,193 56,745 34,196 135,746 113,337 26,777 1,030 771,865 8,275 292,082 57,826 8,652 1,737 17,464 8,371 301,223 53,521 9,904 2,282 22,182 789,113 $ 385,829 2014 $ 391,630 2013 Exhibit D - 4 (This page is intentionally blank) 124 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. 125 $ 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 2,308,924 $ 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 4,752,612 Residential Property $ 323,147 359,662 428,486 493,055 525,779 536,958 500,836 472,558 429,967 407,857 Vacant Land $ 27,920 29,803 30,802 35,442 37,783 39,797 39,984 50,260 51,312 49,090 Other $ 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 7,518,483 Taxable Assessed Value 5.4611 5.3406 5.0674 4.6702 4.5917 4.6798 4.8491 4.8520 5.1309 5.7639 Total Direct Tax Rate $ 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 74,402,882 Estimated Limited Value 11.55% 11.46% 11.43% 11.27% 11.15% 10.86% 10.65% 10.61% 10.32% 10.11% Assessed Value as a Percentage of Limited Value Exhibit D - 5 Source: Pima County Finance & Risk Management 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. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Tax Year Commercial Property (in thousands) PIMA COUNTY, ARIZONA Taxable Assessed Value and Estimated Actual Value of Property Last Ten Tax Years 126 1.3114 1.2515 1.1845 1.1355 1.0770 1.0848 1.1094 1.1741 1.2933 1.3344 District Community College 1.2364 1.2257 1.1321 0.9601 0.9344 0.9550 1.1621 1.2639 1.4304 1.4606 Tucson City of 0.2383 0.2383 0.2258 0.2143 0.2035 0.1999 2.6603 2.7640 2.9776 0.2528 Tucson City of South 9.6038 10.1900 12.0787 District Street Lighting 0.1200 0.1200 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1400 0.1400 District 12.9000 12.9000 12.9000 19.3500 19.3500 19.3500 19.3500 19.3500 19.3500 19.3500 District 2 Flowing Wells Irrigation Central AZ Water Conservation 0.2575 0.3675 0.3975 0.3393 0.2643 0.3100 0.3460 0.3460 0.3753 0.4353 District County Library 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 District2 Silverbell Irrigation 60.0000 60.0000 65.0000 66.0000 66.0000 66.0000 66.0000 66.0000 69.0000 69.0000 District2 CortaroMarana Irrigation Overlapping Rates 0.3746 0.3746 0.3446 0.2935 0.2635 0.2635 0.2635 0.2635 0.2635 0.3035 District 1 Flood Control 0.5000 0.5000 0.5000 0.5000 District3 Mobile Home Relocation 0.0420 0.0415 0.0383 0.0411 0.0406 0.0430 0.0418 0.0447 0.0456 0.0472 Assistance Fire District 2.8000 2.8000 2.8000 2.8000 2.8000 2.8000 2.8000 2.8000 2.8000 2.8000 District 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 District Gladden Farms Vanderbilt Farms Community Community Facilities Facilities 5.4611 5.3406 5.0674 4.6702 4.5917 4.6798 4.8491 4.8520 5.1309 5.7639 Total 3.3000 3.3000 3.3000 3.3000 3.3000 3.3000 3.3000 3.3000 District Quail Creek Community Facilities 0.3000 0.3000 0.3000 0.3000 0.3000 Facilities District Gladden Farms Phase II Community 0.3000 0.3000 0.3000 0.3000 0.3000 District Saguaro Springs Community Facilities Exhibit D - 6 Mobile Home Relocation levy applies only to unsecured mobile homes. Irrigation Districts' tax rates shown are levied on a per acre basis. The Pima County Flood Control District tax levy applies only to real property. Source: Pima County Finance & Risk Management 3 2 1 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. 0.4358 0.0000 0.0000 0.0000 0.3306 0.3564 0.4259 0.4717 0.5123 0.5089 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Education Arizona Assistance Tax Year State of 0.7150 0.7150 0.6850 0.6050 0.7100 0.7500 0.7800 0.7800 0.7800 0.7000 Secondary County 4.0720 3.8420 3.6020 3.3913 3.3133 3.3133 3.4178 3.4178 3.6665 4.2779 Primary Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 County Tax County Direct Rates (per $100 of assessed value) PIMA COUNTY, ARIZONA Direct and Overlapping Property Tax Rates 127 8.1495 3.7121 8.0930 2.1532 4.8856 6.2607 1.8090 Sahuarita Unified (#30) San Fernando Elementary (#35) Empire Elementary (#37) Continental Elementary (#39) Redington Elementary (#44) Altar Valley Elementary (#51) Unorganized1 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 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 Source: Pima County Finance & Risk Management 1.4797 6.2500 7.0689 1.6945 2.9195 3.6883 6.5753 4.8839 4.2154 4.9069 3.3545 6.9680 5.0511 6.0407 4.6995 6.2976 2010 County Education District; Only applies to those geographical areas within Pima County not part of formal school districting 1 Notes: 6.7510 5.7985 Tanque Verde Unified (#13) Vail Elementary (#20) 8.6482 Sunnyside Unified (#12) 6.8422 6.4258 Amphitheater Unified (#10) Catalina Foothills Unified (#16) 7.1232 Flowing Wells Unified (#8) 4.4994 6.0991 Marana Unified (#6) Ajo Unified (#15) 7.8829 2005 Tucson Unified (#1) School District (per $100 of assessed value) 1.7682 6.5675 6.7630 2.0258 2.7531 4.8541 5.4067 4.6550 4.2095 5.6740 3.8042 6.9415 5.4033 5.9689 5.2047 6.9480 2011 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 2.1123 6.7381 4.7711 2.6146 2.1687 5.8244 7.2885 7.3000 4.7066 4.8452 5.0329 6.0364 5.8044 6.6135 6.2288 7.5094 2014 Exhibit D - 6a 128 0 Northwest Hospital LLC 0 Target Corporation 13,653 14,708 El Conquistador Hotel HDP Northwest Secondary Assessed Valuation for Tax Year Source: Pima County Assessor's Office Arizona Department of Revenue 1 Notes: $ 440,208 16,358 Westin La Paloma Total Top Ten 16,069 0 Raytheon ASARCO Mining 22,459 0 Verizon Wireless Arizona Portland Cement 0 Starr Pass Resort Developments LLC 22,377 0 Wal-Mart Stores Incorporated DND Neffson Co. (Tucson Mall) 0 104,468 Trico Electric Co-Op Inc. QWEST Corporation 0 62,970 Southwest Gas Corporation ASARCO LLC - Mission Mine 21,209 145,937 Value1 Phelps Dodge Corporation - Sierrita Mine Unisource/Tucson Electric Power Co. Taxpayer Estimated Assessed 9 10 7 8 4 5 2 3 6 1 Rank 2005 $6,050,950 7.3% 0.2% 0.2% 0.3% 0.3% 0.0% 0.4% 0.0% 0.0% 0.0% 0.4% 0.0% 0.0% 0.0% 1.7% 0.0% 1.0% 0.4% 2.4% Value Percent of Total Assessed $ 459,465 0 0 15,504 21,665 0 22,858 0 0 17,068 19,087 0 0 14,806 87,093 0 62,846 55,176 143,362 Value1 Estimated Assessed 9 6 5 8 7 10 2 3 4 1 Rank 2006 $6,869,955 6.7% 0.0% 0.0% 0.2% 0.3% 0.0% 0.3% 0.0% 0.0% 0.2% 0.3% 0.0% 0.0% 0.2% 1.3% 0.0% 0.9% 0.8% 2.1% Value Percent of Total Assessed $ 553,281 0 0 15,959 58,987 0 23,468 0 0 15,280 19,897 0 0 18,044 94,300 0 62,919 93,656 150,771 Value1 Estimated Assessed (in thousands) 9 5 6 10 7 8 2 4 3 1 Rank 2007 PIMA COUNTY, ARIZONA Principal Property Taxpayers Last Ten Fiscal Years $8,220,396 6.7% 0.0% 0.0% 0.2% 0.7% 0.0% 0.3% 0.0% 0.0% 0.2% 0.2% 0.0% 0.0% 0.2% 1.1% 0.0% 0.8% 1.1% 1.8% Value Percent of Total Assessed $ 618,100 0 0 0 33,833 44,047 23,593 0 0 15,889 21,013 0 0 18,816 87,000 0 63,698 156,780 153,431 Value1 Estimated Assessed 6 5 7 10 8 9 3 4 1 2 Rank 2008 $9,594,862 6.4% 0.0% 0.0% 0.0% 0.4% 0.5% 0.2% 0.0% 0.0% 0.2% 0.2% 0.0% 0.0% 0.2% 0.9% 0.0% 0.7% 1.6% 1.6% Value Percent of Total Assessed $ 667,355 0 0 0 0 63,572 27,561 0 0 19,384 18,888 0 0 21,029 74,646 20,042 64,775 198,694 158,764 Value1 Estimated Assessed 5 6 9 10 7 3 8 4 1 2 Rank 2009 (continued) $9,860,981 11.0% 0.0% 0.0% 0.0% 0.0% 1.1% 0.5% 0.0% 0.0% 0.3% 0.3% 0.0% 0.0% 0.3% 1.2% 0.3% 1.1% 3.3% 2.6% Value Percent of Total Assessed Exhibit D - 7 129 21,208 Trico Electric Co-Op Inc. 0 0 0 Westin La Paloma El Conquistador Hotel HDP Northwest Secondary Assessed Valuation for Tax Year Source: Pima County Assessor's Office Arizona Department of Revenue 1 Notes: 492,722 0 Raytheon Total Top Ten 0 16,635 ASARCO Mining Arizona Portland Cement 0 Target Corporation 16,582 Starr Pass Resort Developments LLC 0 17,715 DND Neffson Co. (Tucson Mall) Verizon Wireless 17,097 Northwest Hospital LLC $ 55,076 QWEST Corporation 0 28,878 ASARCO LLC Wal-Mart Stores Incorporated 65,879 Southwest Gas Corporation 164,363 89,289 $ 1 Value Phelps Dodge Corporation Unisource/Tucson Electric Power Co. Taxpayer Estimated Assessed 9 10 7 8 6 4 5 3 2 1 Rank 2010 $9,342,561 5.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.0% 0.0% 0.2% 0.2% 0.2% 0.0% 0.2% 0.6% 0.3% 0.7% 1.0% 1.8% Value Percent of Total Assessed $ 532,828 0 0 0 0 0 0 17,519 0 16,153 17,931 17,390 0 21,217 51,942 58,585 64,533 99,048 $ 168,510 Value1 Estimated Assessed 8 10 7 9 6 5 4 3 2 1 Rank 2011 $8,448,282 6.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.0% 0.2% 0.2% 0.2% 0.0% 0.3% 0.6% 0.7% 0.8% 1.2% 2.0% Value Percent of Total Assessed $ 608,128 0 0 0 0 0 0 0 14,291 0 17,998 17,723 15,581 22,133 53,225 83,778 61,718 142,419 $ 179,262 Value1 Estimated Assessed (in thousands) 10 7 8 9 6 5 3 4 2 1 Rank 2012 $8,171,212 7.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.0% 0.2% 0.2% 0.2% 0.3% 0.7% 1.0% 0.8% 1.7% 2.2% Value Percent of Total Assessed PIMA COUNTY, ARIZONA Principal Property Taxpayers Last Ten Fiscal Years $ 598,339 0 0 0 0 0 0 0 12,884 0 16,030 16,980 16,923 21,713 40,386 74,101 61,669 136,947 $ 200,706 Value1 Estimated Assessed 10 9 7 8 6 5 3 4 2 1 Rank 2013 $7,623,691 7.8% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.0% 0.2% 0.2% 0.2% 0.3% 0.5% 1.0% 0.8% 1.8% 2.6% Value Percent of Total Assessed $ 543,261 - - - - - - - - 12,298 16,037 16,982 19,366 21,845 38,035 55,322 66,789 95,186 201,401 Value1 Estimated Assessed 10 9 8 7 6 5 4 3 2 1 Rank 2014 7,579,898 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.2% 0.2% 0.3% 0.3% 0.5% 0.7% 0.9% 1.3% 2.7% Value Percent of Total Assessed Exhibit D - 7 130 Tax Levy $ 281,172 302,127 330,240 362,535 379,674 402,062 402,532 383,709 370,922 368,313 Fiscal Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 (Adjusted) $ 280,678 301,836 329,918 361,913 379,314 401,956 402,148 383,709 370,922 368,313 Real Property Tax Levy Amount $ 271,841 292,019 318,520 348,741 363,624 384,983 383,978 369,100 357,556 355,338 Levy 96.68% 96.65% 96.45% 96.20% 95.77% 95.75% 95.39% 96.19% 96.40% 96.48% Percent of Original 1 $ Years 8,667 9,756 11,298 12,946 15,416 16,679 16,295 13,148 12,182 Collections in Subsequent Represents the difference between the adjusted levy and collected to June 30, 2014. Amounts collected are on a cash basis rather than the modified accrual basis used in the financial statements. Corrections $ (494) (291) (322) (622) (360) (106) (384) Tax Roll Source: Pima County Finance & Risk Management Pima County Treasurer's Office 2 1 Note: Original Real Property End of Tax Fiscal Year Collected to June 30, (in thousands) PIMA COUNTY, ARIZONA Real Property Tax Levies and Collections Last Ten Fiscal Years Amount $ 280,508 301,775 329,818 361,687 379,040 401,662 400,273 382,248 369,738 355,338 Levy 99.94% 99.98% 99.97% 99.94% 99.93% 99.93% 99.53% 99.62% 99.68% 96.48% Percent of Adjusted June 30, 20141 Collected to Receivable2 $ 170 61 100 226 274 294 1,875 1,461 1,184 12,975 Delinquent Taxes Exhibit D - 8 Exhibit D - 9 PIMA COUNTY, ARIZONA Assessed, Limited and Full Cash (Secondary) Value of Taxable Property Last Ten Fiscal Years (in thousands) Fiscal Year 2004-05 Primary 2004-05 Secondary $ Net Assessed Limited and Full Cash Value Values 5,412,550 5,620,156 $ 1 Ratio of Net Assessed to Full Cash Value 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% 2013-14 Primary 2013-14 Secondary 7,559,129 7,623,691 73,262,703 74,590,067 10.32% 10.22% 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. Source: Pima County Finance & Risk Management 131 PIMA COUNTY, ARIZONA Comparative Net Valuations and Tax Rates Exhibit D - 10 (per $100 assessed value) (in thousands) Jurisdiction State of Arizona FY 2013-14 (Tax Year 2013) Valuation Rate $ 7,559,129 Pima County General Fund - Primary Debt Service - Secondary Free Library - Secondary 0 FY 2014-15 (Tax Year 2014) Valuation Rate $ 7,518,482 0 7,559,129 7,623,691 7,590,546 3.6665 0.7800 0.3753 7,518,482 7,579,899 7,522,894 4.2779 0.7000 0.4353 7,559,129 3.6665 1.1600 4.8265 7,518,482 4.2779 1.1353 5.4132 Education Assistance 7,559,129 0.5123 7,518,482 0.5089 Flood Control District - Secondary 6,768,457 0.2635 6,767,458 0.3035 Fire District Assistance - Secondary 7,623,691 0.0456 7,518,482 0.0472 Pima Community College District Primary Secondary Total 7,559,129 7,623,691 1.2746 0.0187 1.2933 7,518,482 0 1.3344 0 1.3344 7,590,546 0.1400 7,522,894 0.1400 3,114,079 3,151,042 0.5245 0.9059 1.4304 3,100,675 3,131,952 0.4829 0.9777 1.4606 21,690 22,126 0.2528 2.7248 2.9776 21,180 0 0.2528 0 0.2528 18,101 2.1265 18,330 2.1123 3,002,397 3,029,356 6.0056 1.4263 7.4319 3,001,654 3,028,699 6.8021 0.7073 7.5094 Total County - Primary Total County - Secondary Grand 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 Source: Pima County Finance & Risk Management (continued) 132 PIMA COUNTY, ARIZONA Comparative Net Valuations and Tax Rates Exhibit D - 10 (per $100 assessed value) (in thousands) (continued) Jurisdiction Marana Unified (District #6) Primary Secondary Total 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 187,075 188,811 Amphitheater Unified (District #10) Primary Secondary Total FY 2014-15 (Tax Year 2014) Valuation Rate 710,743 716,727 4.3493 1.8795 6.2288 4.4304 2.2842 6.7146 186,862 188,539 4.4165 2.1970 6.6135 1,381,231 1,394,361 4.3876 1.5350 5.9226 1,376,502 1,388,632 4.3674 1.4370 5.8044 Sunnyside Unified (District #12) Primary Secondary Total 412,538 420,920 3.5420 1.4583 5.0003 407,058 411,216 3.4565 2.5799 6.0364 Tanque Verde Unified (District #13) Primary Secondary Total 170,152 170,710 3.8031 1.1981 5.0012 168,681 169,220 3.8926 1.1403 5.0329 19,958 20,190 3.8882 0.0000 3.8882 19,274 19,423 4.8452 0.0000 4.8452 Catalina Foothills Unified (District #16) Primary Secondary Total 548,805 550,355 3.6625 1.1639 4.8264 555,678 558,433 3.1273 1.5793 4.7066 Vail Elementary (District #20) Primary Secondary Total 411,951 414,482 4.8308 2.3395 7.1703 417,721 420,342 4.8751 2.4249 7.3000 Ajo Unified (District #15) Primary Secondary Total Source: Pima County Finance & Risk Management $ (continued) 133 PIMA COUNTY, ARIZONA Comparative Net Valuations and Tax Rates Exhibit D - 10 (per $100 assessed value) (in thousands) (continued) Jurisdiction Sahuarita Unified (District #30) Primary Secondary Total FY 2013-14 (Tax Year 2013) Valuation Rate $ 351,925 353,344 $ FY 2014-15 (Tax Year 2014) Valuation Rate 4.1743 2.4598 6.6341 $ 310,071 311,158 $ 4.2988 2.9897 7.2885 San Fernando Elementary (District #35) Primary Secondary Total 1,245 1,265 5.7831 0 5.7831 1,288 1,293 5.8244 0 5.8244 Empire Elementary (District #37) Primary Secondary Total 7,756 7,860 1.1287 0 1.1287 7,661 7,713 2.1687 0 2.1687 303,007 305,321 1.1939 0.5088 1.7027 304,353 307,027 2.2575 0.3571 2.6146 1,056 1,056 0 0 0 1,046 1,046 0 0 0 1,385 1,450 4.8200 0 4.8200 1,405 1,453 4.7711 0 4.7711 31,278 31,402 4.8580 1.4096 6.2676 30,178 30,503 5.8245 0.9136 6.7381 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)1 Primary Secondary Total Notes: 1 Formerly known as the Mary E. Dill School District Source: Pima County Finance & Risk Management 134 PIMA COUNTY, ARIZONA Historical Collections - Hotel Excise Tax Car Rental Surcharge and Recreational Vehicle Tax Last Ten Fiscal Years Exhibit D - 11 (in thousands) Fiscal Hotel Excise Car Rental Recreational Vehicle Year Tax1 Surcharges2 Tax3 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 $ 2,885 5,212 7,796 6,901 5,628 5,637 5,887 6,626 6,286 6,276 $ 1,595 1,589 1,357 1,732 1,389 1,521 1,538 1,464 1,399 1,390 $ 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 135 200 214 210 222 159 181 165 146 136 122 PIMA COUNTY, ARIZONA Streets and Highways Revenue Last Ten Fiscal Years Exhibit D - 12 (in thousands) Fiscal Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Highway User Revenue Amount $ 53,878 56,937 58,638 57,847 53,907 50,535 50,460 44,890 47,449 49,212 $ Source: Pima County Finance and Risk Management Department 136 41,756 43,292 44,607 44,060 41,210 38,739 38,974 33,665 36,860 37,500 Vehicle License Tax $ 12,122 13,645 14,031 13,787 12,697 11,796 11,486 11,225 10,589 11,712 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. 137 267,927 231,918 290,150 349,542 388,032 420,261 455,856 461,557 467,368 416,006 Fiscal Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 3,010 2,230 1,470 725 725 Flood Control Bonds 137,736 127,000 136,541 149,801 139,683 142,226 131,375 141,536 128,604 133,081 Transportation Revenue Bonds 584,227 530,644 664,089 845,872 878,680 1,058,962 1,046,919 1,248,820 1,431,672 1,405,771 Government Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Total Primary 31,731 81,612 74,554 72,638 48,235 39,772 134,494 149,703 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 37,867,400 Income Personal 1,943 5,739 3,714 1,000 Certificates of Transportation Participation Loans Fiscal 1,093 911 Special Assessment Bonds Personal income and population statistics are based on calendar year. Prior year data updated to reflect new source. Source: Pima County Finance & Risk Management UA Economic and Business Research Center, Eller College of Management 1 Notes: Details regarding outstanding debt can be found on page 65, Note 7 of the Notes to the Financial Statements. General Obligation Bonds Governmental Activities 2.22% 1.87% 2.15% 2.56% 2.67% 3.03% 2.89% 3.38% 3.91% 3.71% Income Percentage of Personal 27,879 26,426 24,736 23,223 21,327 19,387 17,775 16,431 298 Capital Leases 622 553 681 860 893 1,079 1,062 1,261 1,437 1,394 at July 11 940,004 959,474 977,258 984,032 984,274 981,168 986,081 990,380 996,046 1,008,400 Debt per Capita Population 605 640 Installment Note Payable (in thousands) 55,809 51,710 94,356 163,701 183,389 166,935 184,782 171,022 155,514 138,431 Sewer Revenue Bonds 165,000 176,849 379,418 510,975 540,288 83,978 80,148 76,111 70,426 64,489 66,210 27,390 23,719 21,169 19,680 Regional Wastewater Loans Payable 4,852 4,562 5,280 5,842 6,481 6,305 4,657 15,365 12,645 7,942 Contracts and Notes 584,227 530,644 664,089 845,872 878,680 1,058,962 1,046,919 1,248,820 1,431,672 1,405,771 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 138 Year 3,010 2,230 1,470 725 725 Bond Debt 8,899 5,571 7,431 10,241 10,523 11,396 27,904 22,602 22,900 5,326 Principal Debt Service Funds Available for 262,038 228,577 284,189 340,026 378,234 408,865 427,952 438,955 444,468 410,680 Bond Debt Net General 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 7,623,691 Value Secondary Net Assessed Source: Pima County Finance & Risk Management UA Economic and Business Research Center, Eller College of Management Debt per Capita is shown in actual dollars and not in thousands. Personal income and population statistics are based on calendar year. Prior year data updated to reflect new source. 2 1 Note: Details regarding outstanding debt can be found on pages 65-67, Note 7 of the Notes to the Financial Statements. 267,927 231,918 290,150 349,542 388,032 420,261 455,856 461,557 467,368 416,006 Bond Debt Fiscal 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 General Obligation Flood Control General Obligation (in thousands) 4.66% 3.78% 4.14% 4.14% 3.94% 4.15% 4.58% 5.20% 5.44% 5.39% Value Percent Net General Bond Debt to Assessed 940,004 959,474 977,258 984,032 984,274 981,168 986,081 990,380 996,046 1,008,400 at July 1 1 Population PIMA COUNTY, ARIZONA Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita Last Ten Fiscal Years 279 238 291 346 384 417 434 443 447 407 per Capita2 Net General Bond Debt Exhibit D - 14 139 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 7,623,691 Value Secondary Net Assessed 21.09% 18.95% 16.12% 13.83% 12.64% 13.21% 14.29% 15.20% 16.05% 15.99% Value Percentage of Assessed 943,795 961,519 1,003,918 1,026,506 1,048,796 1,070,723 1,092,369 990,380 996,046 1,008,400 at July 1 1 Population 1,256 1,192 1,103 1,108 1,157 1,217 1,222 1,297 1,317 1,209 per Capita2 Debt Debt per Capita is shown in actual dollars and not in thousands. Personal income and population statistics are based on calendar year. Prior year data updated to reflect new source. Source: Pima County Finance & Risk Management UA Economic and Business Research Center, Eller College of Management 2 1 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. 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 1,218,736 Debt Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Total Overlapping Fiscal (dollar 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, 2014 Exhibit D - 15 (in thousands) Debt Outstanding Governmental Unit Amount Overlapping Debt repaid with property tax: School Districts $ 569,280 City of Tucson 233,450 Total overlapping Debt repaid with property tax Direct: Pima County* $ $ 416,006 Total direct 569,280 233,450 $ 802,730 $ 416,006 $ 416,006 $ 149,703 Other Debt: Certificates of participation $ 149,703 Installment note payable Transportation bonds 640 640 133,081 133,081 Total other debt $ 283,424 Total direct and overlapping debt $ 1,502,160 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. Source: Pima County Finance & Risk Management City of Tucson Finance Department Pima Community College District Finance Office 140 141 30.65% 24.87% 681,904 $ $ 27.38% 748,334 282,159 (7,431) 289,590 1,030,493 6,869,955 2007 $ $ Source: Pima County Finance & Risk Management 2008 27.42% 894,965 338,094 (10,241) 348,335 1,233,059 8,220,396 See Notes to the Financial Statements (Note 7 page 74) for calculation of the legal debt margin for the current year. Total net debt applicable to the limit as a percentage of debt limit. 584,652 Legal debt margin 225,739 (5,571) (8,899) 907,643 6,050,950 231,310 $ $ 2006 267,270 843,023 5,620,156 258,371 $ $ 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 2005 $ $ 26.15% 1,062,907 376,322 (10,523) 386,845 1,439,229 9,594,862 2009 (dollar amounts in thousands) PIMA COUNTY, ARIZONA Legal Debt Margin Last Ten Fiscal Years $ $ 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 $ 35.15% 741,605 401,949 (5,326) 407,275 1,143,554 $ 7,623,691 2014 Exhibit D - 16 142 $ 105,827 103,959 109,264 105,987 128,067 151,212 158,397 163,512 181,553 $ 57,371 69,597 78,521 73,186 69,904 74,638 73,241 73,577 77,893 Expense2 Less: Operating $ 48,456 34,362 30,743 32,801 58,163 76,574 85,156 89,935 103,660 Net Revenue Available 20,163 11,260 32,806 99,491 128,735 (unrestricted) Balances of Prior Fiscal Year 78,326 87,834 117,962 189,426 232,395 Revenues3 Pledged $ 10,053 13,957 13,325 14,187 16,952 17,110 20,895 29,759 37,025 Principal $ 5,619 6,340 7,221 9,469 9,838 17,047 21,658 28,243 30,386 Interest 6 Debt Service $ 15,672 20,297 20,546 23,656 26,790 34,157 42,553 58,002 67,411 Total Debt service requirements include principal and interest payable during the Bond Fiscal Year. Per the bond resolution, Bond Fiscal Year is defined as 7/2/20XX to 7/1/20XX. For fiscal year 2009-2010, a new Debt Coverage calculation was implemented. Sewer revenue debt rate covenants require minimum coverage of 1.20. Pledged revenues defined by BOS 2010-50. Excludes grants, depreciation, interest expense and amortization. Includes sewer connection fees. Source: Pima County Finance & Risk Management 6 5 4 3 2 1 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 2013-14 Revenues Year 1 Sewer User Fiscal Plus: Ending cash (dollar amounts in thousands) PIMA COUNTY, ARIZONA Regional Wastewater Reclamation Pledged Sewer Revenue Debt Coverage Last Nine Fiscal Years 3.09 1.69 1.50 1.39 2.92 2.57 2.77 3.27 3.45 Ratio4,5 Coverage Exhibit D - 17a 143 $ 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 $ 38,349 39,336 42,639 43,490 38,082 34,214 34,552 33,335 35,041 37,295 Operating Expense $ 19,470 22,608 22,142 21,519 20,809 20,683 18,159 13,499 14,833 13,702 Available Net Revenue $ 10,710 11,435 11,745 12,365 15,145 10,530 11,015 12,055 12,425 13,685 $ 6,058 5,257 5,659 6,147 6,203 5,709 5,244 5,537 4,969 5,197 Debt Service1 Principal Interest Debt Service Requirements include principal and interest payable in the 12 months following each fiscal year. Source: Pima County Finance & Risk Management 1 Notes: Details regarding outstanding debt can be found on pages 65-74, Note 7 of the Notes to the Financial Statements. Operating expenditures do not include interest, depreciation or amortization. 57,819 61,944 64,781 65,009 58,891 54,897 52,711 46,834 49,874 50,997 Transportation Revenue Fiscal Year Less: (dollar amounts in thousands) PIMA COUNTY, ARIZONA Transportation Revenue Bonds - Pledged Revenue Bond Coverage Last Ten Fiscal Years 1.16 1.35 1.27 1.16 0.98 1.27 1.12 0.77 0.85 0.73 Coverage Ratio Exhibit D - 17b 144 $ $ 3,115 3,042 42 31 FY 05-06 $ $ 3,118 3,015 21 82 FY 06-07 $ $ 6,002 5,920 82 FY 07-08 $ $ 3,158 3,027 131 FY 08-09 $ $ 3,118 3,007 111 FY 09-10 $ $ 3,041 3,004 37 FY 10-11 $ $ 3,004 3,004 FY 11-12 $ $ 3,725 298 3,427 FY 12-13 Funds derived from a sale/leaseback of the County's Adult Corrections Facility provided funding for construction of Kino Veteran's Memorial Sportspark & Tucson Electric Park Stadium. Source: Pima County Finance & Risk Management 1 Notes: Jail 1 Sheriff - Equipment Solid Waste - Equipment Clerk of Superior Court - Equipment Function/Department (dollar amounts in thousands) PIMA COUNTY, ARIZONA Lease, Lease-Purchase, Installment Note Payable and Purchase Agreements Scheduled Payments $ $ 458 160 298 FY 13-14 $ $ 245 161 84 FY 14-15 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 (dollar amounts in thousands) Fiscal Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Principal 41,255 48,672 50,940 56,459 96,751 83,565 72,525 78,390 67,885 112,835 Interest Total Debt Service 14,794 18,147 17,672 19,757 24,322 24,097 23,945 24,762 23,903 26,758 56,049 66,819 68,612 76,216 121,073 107,662 96,470 103,152 91,788 139,593 Total General Expenditures* Ratio of Debt Service To General Expenditures 589,708 640,336 689,968 755,413 780,044 730,379 730,278 767,261 756,959 806,007 9.5% 10.4% 9.9% 10.1% 15.5% 14.7% 13.2% 13.4% 12.1% 17.3% *Includes General, Special Revenue and Debt Service Funds, while excluding Capital Projects Fund. Source: Pima County Finance & Risk Management 145 (This page is intentionally blank) 146 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 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Population 1 940,004 959,474 977,258 984,032 984,274 981,168 986,081 990,380 996,046 1,008,400 Exhibit D - 20 Personal Per Capita Personal Unemployment Income ($) Income ($) Rate 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 37,867,400 30,397 32,620 33,839 35,637 33,505 33,917 35,085 36,162 36,794 37,552 Note: 1 Prior year statistic updated to reflect new source data Sources: Arizona Department of Administration, Office of Employment & Population Statistics UA Economic and Business Research Center, Eller College of Management Bureau of Labor Statistics 147 4.1% 4.4% 3.3% 4.7% 7.9% 8.6% 9.1% 7.6% 7.6% 6.4% 148 6,767 7,684 Pima County Government Tucson Unified School District 9 4 6 7 5 3 1 2 1.2% 1.6% 1.6% 1.8% 2.2% 2.5% 2.3% 6,701 8,018 6,954 7,701 10,754 12,515 10,535 10 443,100 18.3% 1.0% 80,908 4,123 5,306 10 8 Fort Huachuca is located in Cochise County but is listed here due to its role as a large regional employer. 81,678 4,500 1.5% Sources: UA Economic and Business Research Center, Eller College of Management Data is obtained from www.azstarnet.com/star200, a website of the Arizona Daily Star. 1 Notes: Total Work Force Total Phelps Dodge Carondelet Health Network US Border Patrol Tohono O'odam Nation 8 443,300 18.2% 0.9% 1.2% 79,899 4,900 5,848 10 8 453,500 17.6% 1.1% 1.3% 80,671 5,848 6,757 5,625 9,119 7,419 7,290 8,233 9,927 11,184 10,354 Employees City of Tucson 1.1% 1.7% 1.5% 1.9% 2.2% 2.4% 2.3% Rank Percent of Total County Employment 5,805 9 1 6 7 5 4 2 3 Employees 2007 4,595 4,980 13,098 7,623 6,765 8,233 9,742 10,756 10,282 Rank Percent of Total County Employment Wal-Mart Stores, Inc. 1.0% 1.7% 1.5% 2.0% 2.2% 2.3% 2.3% Employees 2006 5,840 9 1 6 7 5 4 3 2 Rank Percent of Total County Employment Freeport-McMoran Copper Fort Huachuca1 12,250 8,727 Davis-Monthan AFB UA Healthcare Network 9,750 10,300 Raytheon State of Arizona 10,348 University of Arizona Employer Employees 2005 PIMA COUNTY, ARIZONA Principal Employers Current Year and Nine Years Ago 8 10 9 7 4 6 5 2 1 3 Rank 2008 459,200 17.6% 1.3% 1.3% 1.3% 1.7% 1.5% 1.7% 2.3% 2.7% 2.3% Percent of Total County Employment 77,214 5,635 6,715 5,987 6,463 7,227 6,235 7,509 9,329 11,539 10,575 Employees 10 6 9 7 5 8 4 3 1 2 Rank 2009 (continued) 486,400 15.9% 1.2% 1.4% 1.2% 1.5% 1.3% 1.5% 1.9% 2.4% 2.2% Percent of Total County Employment Exhibit D - 21 149 6,709 1.6% 488,500 15.6% 0.9% 75,866 15.6% 485,800 Fort Huachuca is located in Cochise County but is listed here due to its role as a large regional employer. 75,882 10 Sources: UA Economic and Business Research Center, Eller College of Management Data is obtained from www.azstarnet.com/star200, a website of the Arizona Daily Star. 1 Notes: Total Work Force Total Carondelet Health Network 4,566 1.0% 6,000 9 76,744 455,900 16.8% 1.3% 0.0% 4,585 96,232 3,668 6,500 10 US Border Patrol 4,930 4,350 1.1% 5 Tohono O'odam Nation 9 7,300 6,198 6,099 6,790 6,076 5,399 1.5% 1.2% 1.5% 1.4% 9,100 8,807 10,300 10,846 City of Tucson 5 7 10 6 8 1.9% 2.0% 2.3% 2.3% Employees 7,450 7,308 6,198 5,594 6,674 6,170 4 3 2 1 Rank Percent of Total County Employment 7,192 5 1.2% 1.4% 1.3% 8,566 9,061 10,500 10,681 Employees 2012 Wal-Mart Stores, Inc. 8 9 6 7 1.7% 1.8% 2.2% 2.2% Percent of Total County Employment 5,463 1.5% 1.4% 6,403 4 3 1 2 Rank 2011 Freeport-McMoran Copper 8 6 1.3% 8,462 6,225 6,236 7,012 Tucson Unified School District 7 1.6% 8,866 10,500 10,481 Employees Fort Huachuca1 6,511 Pima County Government 4 1.8% 2.5% 2.1% Percent of Total County Employment 5,982 7,755 Davis-Monthan AFB 3 1 2 Rank 2010 UA Healthcare Network 8,708 12,140 Raytheon State of Arizona 10,363 Employer Employees University of Arizona (continued) PIMA COUNTY, ARIZONA Principal Employers Current Year and Nine Years Ago 7 5 10 8 6 9 3 4 2 1 Rank 2013 453,200 21.2% 0.8% 1.4% 1.0% 1.0% 1.6% 1.2% 1.3% 1.5% 1.3% 2.0% 1.9% 2.3% 2.4% Percent of Total County Employment 92,857 3,476 4,135 4,350 4,845 5,200 5,600 5,717 6,329 6,525 7,328 8,933 9,439 9,933 11,047 Employees 10 9 8 7 6 5 4 3 2 1 Rank 2014 452,429 20.5% 0.8% 0.9% 1.0% 1.1% 1.1% 1.2% N/A 1.4% 1.4% 1.6% 2.0% 2.1% 2.2% 2.4% Percent of Total County Employment Exhibit D - 21 150 940,004 959,474 977,258 984,032 984,274 981,168 986,081 990,380 996,046 1,008,400 Population 437,823 446,958 454,854 473,344 486,040 479,879 465,640 459,349 449,958 452,429 Force Rate 4.5% 3.9% 3.6% 5.7% 9.0% 9.4% 8.4% 7.4% 7.0% 6.4% Total Unemployment 1,400 1,600 1,800 1,900 1,700 1,800 1,900 2,100 2,300 2,300 Mining 25,700 27,900 26,500 22,800 16,600 15,000 14,500 14,400 15,300 15,000 Construction 28,300 28,100 27,500 27,200 25,100 24,000 23,400 23,400 23,200 23,100 Manufacturing EMPLOYMENT 59,600 62,700 64,300 62,700 58,200 56,900 57,700 57,800 58,800 59,000 & Utilities 2 Transportation 16,300 17,300 17,900 16,800 17,000 17,200 16,800 16,800 17,000 17,200 Activities Financial Exhibit D - 22 Category formerly known as Trade & Services was redefined and recategorized as Transportation & Utilities. Prior year statistic updated to reflect new source data Sources: UA Economic and Business Research Center, Eller College of Management Bureau of Labor Statistics 2 1 Notes: All Employment data is presented as not seasonally adjusted. Labor Force, Unemployment and Sector Employment for 2014 represent the average through July 2014. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Year 1 Civilian Labor PIMA COUNTY, ARIZONA Population and Employment Last Ten Calendar Years 151 261,037 289,440 263,910 240,329 190,445 169,780 164,152 145,967 138,851 138,483 Aircraft Movements 3,928,773 4,251,710 4,284,880 4,474,352 3,777,057 3,696,875 3,721,785 3,663,982 3,421,300 3,222,251 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 19,713,449 Transportation No. of Air Bus Passengers Ridership Sources: UA Economic and Business Research Center, Eller College of Management Tucson Airport Authority Pima Association of Governments Tucson Association of Realtors, Multiple Listing Service, Inc. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Fiscal Year 2.00 2.18 2.21 2.27 2.46 2.22 2.18 2.15 2.16 2.06 Riders Per Mile 12,103 11,903 6,265 4,171 2,364 2,340 2,400 2,062 3,713 2,040 Residential Bldg. Permits PIMA COUNTY, ARIZONA Transportation and Real Estate Last Ten Fiscal Years 17,039 16,630 13,821 10,718 10,472 12,471 11,545 13,436 13,587 13,379 Real Estate Multiple Listings 3,908,054 4,462,020 3,757,536 2,810,383 2,245,644 2,457,147 2,033,702 2,211,369 2,528,609 2,648,443 Sales Volume In $ 000's Exhibit D - 23 Exhibit D - 24 PIMA COUNTY, ARIZONA Economic Indicators by Calendar Year Last Ten Calendar Years (dollar amounts in thousands) Aggregate Retail Sales1 Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 $ 9,743,114,411 10,805,508,246 11,530,620,493 11,865,697,195 11,583,359,104 10,439,448,418 10,640,206,904 11,440,377,170 12,010,672,344 12,317,085,212 No. of Dwelling Units 2 Awarded 10,521 11,644 8,522 5,237 3,221 2,129 1,938 2,242 2,841 3,491 Change in Real Estate Sales Volume 26% 12% -19% -34% -25% 9% -21% 8% 13% 5% Commercial Bank Deposits (in Thousands) $ 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 12,980,645 Notes: 1 Aggregate Retail includes total taxable sales from the following categories: Retail, Restaurant & Bar, Food, and Gasoline. 2 Beginning with calendar year 2011, the number of dwelling units awarded includes both single family and multiple family unit structures combined. Sources: UA Economic and Business Research Center, Eller College of Management Tucson Association of Realtors, Multiple Listing Service, Inc. Federal Deposit Insurance Corporation 152 PIMA COUNTY, ARIZONA Population Statistics June 30, 2014 ESTIMATED POPULATION BY AGE Age Group Population 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75+ 62,281 62,552 63,369 70,218 78,689 67,919 62,819 58,569 59,572 56,817 65,538 66,163 62,412 55,277 41,698 74,549 Total 1,008,442 POPULATION PROJECTIONS Year Projected Population 2015 2016 2020 2025 2035 2045 1,022,079 1,037,232 1,100,021 1,172,515 1,312,101 1,447,403 Source: Arizona Department of Administration, Office of Employment & Population Statistics 153 Exhibit D - 25 PIMA COUNTY, ARIZONA Average Annual Jail Population Last Ten Fiscal Years Fiscal Average Jail Year Population 1 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2,009 2,028 2,008 1,913 1,826 1,636 1,687 1,926 2,037 2,061 Note: 1 Prior Year's data updated to reflect updated source Source: Pima County Sheriff's Department, Corrections Bureau 154 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. 155 6,820 Total 7,250 1,461 634 156 3 0 668 5,789 2,911 1,401 526 45 414 23 180 289 2006 6,855 1,187 559 153 3 7,093 1,202 563 128 3 0 508 5,891 6,644 1,034 451 73 3 0 507 5,610 2,684 1,491 311 34 397 29 480 184 6,728 978 422 66 2 0 488 5,750 2,870 1,488 264 33 422 32 467 174 6,704 970 421 66 2 0 481 5,734 2,850 1,529 262 23 412 27 461 170 Full-time employees (FTEs) as of 6/30: 2009 2010 2011 2,860 1,560 330 40 404 26 485 186 2008 6,470 593 0 59 3 0 531 5,877 2,473 1,540 274 24 404 377 652 133 2012 5,571 468 0 52 3 0 413 5,103 2,321 1,468 265 3 174 397 331 144 2013 6,001 501 0 60 3 0 438 5,500 2,805 1,525 258 31 319 8 442 112 2014 Exhibit D - 27 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. Pima Health Systems & Services was subsequently sold and the department closed. 5 4 Variances can be noted in the Governmental Activities categories due to a change in classification criteria in FY 2004- 2005 as well as due to employees being added to the Library District from the City of Tucson on July 1, 2006. 3 Previously known as Wastewater Management - Liquid Waste. 2 0 472 5,668 2,776 1,442 334 41 408 22 466 179 2007 Notes: 1 Internal service fund's FTEs were added to the General Government function in FY 2004-2005. 1,241 631 116 3 42 Total business-type activities Pima Health System & Services5 Development Services Parking Garages Wastewater Management- Solid Waste4 Regional Wastewater Reclamation3 449 5,579 Total governmental activities Business-type activities 2,952 1,434 351 0 408 20 164 250 Governmental activities1,2 General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Function/Program 2005 PIMA COUNTY, ARIZONA Employees by Function Last Ten Fiscal Years 156 42,755,555 42,916,920 5,071,608 7,476,315 98,220,398 $ $ Capital Projects Completed Land Buildings Improvements Infrastructure $ 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 N/A $ 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 N/A 68.5 8,734 30,204 34,131 3,927 33,929 2007 $ 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 N/A 67.3 4,452 41,542 47,509 5,967 32,796 2008 For fiscal year 2010-11 there were no Spring Training games in Tucson 3 Sidewinders attendance 7/08 through 9/08; beginning in fiscal year 2008-09, the team is no longer in Tucson 2 MGD: Millions of Gallons per Day 1 Notes: 1,430,690 6,249,123 474,045 129 388,092 23,785 Parks & Recreation Athletic field permits issued Community center admissions Volunteer hours Library Volumes in collection Total volumes borrowed Number of cardholders 146,739 165,441 N/A 66.4 8,325 27,846 31,016 37,868 42,016 65.5 11,245 3,170 30,686 2006 4,148 32,501 Cultural and Recreational2,3 Spring training attendance Sidewinders attendance Soccer attendance Avg. daily sewage treated (MGD)1 New connections Wastewater Traffic violations/citations Criminal Total Civil Total Total violations/citations Sheriff Physical arrests Program: 2005 $ 106,021,120 $ 59,922,798 14,336,536 9,028,251 22,733,535 1,425,235 7,409,820 516,780 149 403,887 25,756 103,407 58,879 N/A 67.8 1,477 49,817 56,239 6,422 33,571 1,427,089 7,517,692 526,170 168 351,692 14,321 84,520 N/A N/A 65.4 1,950 41,800 48,217 6,417 27,946 2010 $ 65,029,616 $ 36,953,802 11,994,142 1,921,052 14,160,620 Fiscal Year 2009 PIMA COUNTY, ARIZONA Operating Indicators by Program Last Ten Fiscal Years 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 N/A N/A N/A 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 7,557,865 434,841 228 347,379 10,787 20,850 N/A 36,001 62.3 1,355 32,445 36,650 4,205 24,841 2012 6,947 33,313,996 12,837,873 13,291,580 $ 59,450,396 $ 1,257,821 6,098,216 405,419 263 306,841 8,213 21,944 N/A 21,942 60.9 1,856 33,837 38,128 4,291 25,451 2013 4,335,540 8,595,432 20,436,143 108,053,960 $ 141,421,075 $ 1,193,357 4,521,039 405,507 326 327,257 11,366 N/A N/A 36,723 60.2 1,804 34,466 40,157 5,691 24,394 2014 Exhibit D - 28 157 138 7 13,942 31,713 32 12 12 81.50 3,249 73 14 9 8 2,419 34 10,558 $ 17 1,235 32,948 49 12 13 87.45 3,314 78 14 9 9 2,885 36 10,622 138 964,051 1,798 6 5 303 2006 $ 18 3,668 36,616 67 25 N/A 92.45 3,464 84 16 9 9 2,932 41 10,840 139 1,150,950 1,801 7 4 302 2007 9 757 37,373 76 26 N/A 90.00 3,492 90 17 11 9 2,991 41 10,999 140 $ 1,321,034 1,893 7 4 324 2008 $ 5 14,753 52,126 81 26 N/A 91.50 3,462 85 17 8 9 2,881 38 11,053 140 1,257,087 1,893 7 4 323 On July 1, 2006, the Pima County Library District assumed control of the operations of all County libraries. 7 $ Fiscal Year 2009 On Jan. 3, 2012 capacity was reduced when the Town of Marana obtained ownership of the Marana Wastewater Treatment Facility. 6 5 Regional Flood Control District maintained acreage only. 2005 Baseball/softball diamonds adjusted after department review. 4 No soil cement bank protection projects in 2012 and 2013. 3 Pothole repair figures were unavailable in FY 2010. 2 Annexation by other jurisdictions resulted in a decrease of Transportation (Streets and Highways). 1 Notes: Open Space Acquisitions Properties added Acres Cumulative acreage Total properties Libraries7 County City Treatment capacity (MGD)6 Wastewater Sanitary sewers (miles) Baseball/softball diamonds5 Soccer/football fields Community centers Swimming pools / splashpads Parks & Recreation Urban parks (acres) Playgrounds Flood plain / drainage way (acres)4 Bank protection (miles)3 Flood Control 1,782 926,828 $ Pothole repair2 6 5 276 Streets (miles)1 Transportation (streets and highways) Sheriff Stations Zone offices Patrol units Program: 2005 9 5,390 57,516 90 26 N/A 94.26 3,472 85 17 8 9 2,881 38 11,966 140 - 1,893 7 4 361 2010 PIMA COUNTY, ARIZONA Capital Assets and Infrastructure by Program Last Ten Fiscal Years $ 4 275 57,791 94 26 N/A 97.76 3,476 86 18 11 10 2,898 39 12,027 141 2,822,770 1,892 7 4 355 2011 $ 6 595 58,386 100 26 N/A 97.06 3,440 86 18 11 10 3,012 40 13,210 - 1,493,531 1,897 7 4 358 2012 1 1,416 59,802 101 26 N/A 97.04 3,448 87 18 11 10 3,143 40 13,645 - $ 1,462,810 1,905 7 2 305 2013 3 823 60,625 104 27 N/A 95.04 3,462 89 20 11 10 3,147 41 16,538 175 $ 1,767,246 1,854 7 2 354 2014 Exhibit D - 29 (This page is intentionally blank) 158