COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended June 30, 2013 NAVAJO COUNTY ARIZONA Proudly Serving, Continuously Improving N AVA J O C O U N T Y B OA R D O F S U P E R V I S O R S COUNTY SUPERVISORS Chairman Sylvia Allen David Tenney District 3 District 4 Navajo County, Arizona Jonathan M. Nez District 1 Jesse Thompson Dawnafe Whitesinger District 2 District 5 Fiscal Year Ended June 30, 2013 Navajo County, Arizona Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2013 Prepared by Navajo County Finance Department County Manager James Menlove, Finance Director James G. Jayne Mary Springer, Deputy Finance Director Paige Peterson, Accounting Manager Assistant County Manager Homero Vela Navajo County, Arizona Fiscal Year Ended June 30, 2013 Navajo County, Arizona Fiscal Year Ended June 30, 2013 Comprehensive Annual Financial Report INTRODUCTORY SECTION Navajo County, Arizona Fiscal Year Ended June 30, 2013 Navajo County Comprehensive Annual Financial Report Year Ended June 30, 2013 Table of Contents Page Introductory Section Table of Contents Letter of Transmittal Organizational Chart Certificate of Achievement for Excellence in Financial Reporting i iv x xi Financial Section Independent Auditors’ Report 1 Required Supplementary Information—Management’s Discussion and Analysis 3 Basic Financial Statements Government-wide Statements Statement of Net Position Statement of Activities 12 13 Fund Statements Governmental Funds Balance Sheet Reconciliation of the Balance Sheet to the Statement of Net Position Statement of Revenues, Expenditures, and Changes in Fund Balances Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities Fiduciary Funds Statement of Fiduciary Net Position Statement of Changes in Fiduciary Net Position Notes to Financial Statements Note 1 – Summary of Significant Accounting Policies Note 2 – Deposit and Investments Note 3 – Due From Other Governments Note 4 – Capital Assets Note 5 – Construction and Other Significant Commitments Note 6 – Long-Term Liabilities Note 7 – Risk Management Note 8 – Fund Balance Classifications of the Governmental Funds Note 9 – Pensions and Other Postemployment Benefits Note 10 – Interfund Balances and Activity Note 11 – County Treasurers’ Investment Pool Note 12 – Subsequent Event Note 13 – Beginning Net Position Restated i 14 15 16 17 18 19 20 26 29 30 30 31 33 35 35 41 41 43 43 Navajo County Comprehensive Annual Financial Report Year Ended June 30, 2013 Table of Contents Page Other Required Supplementary Information Budgetary Comparison Schedules General fund Public Works/HURF Fund Flood Control District Fund Notes to Budgetary Comparison Schedules Schedule of Agent Retirement Plans’ Funding Progress 46 46 49 50 51 52 Supplementary Information List of Nonmajor Governmental Funds 56 Combining and Individual Fund Statements and Schedules Combining Balance Sheet - Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds Budgetary Comparison Schedules – Nonmajor Governmental Funds Special Revenue – Administration Special Revenue – County Attorney Special Revenue – Courts Special Revenue – Environmental and Conservation Special Revenue – Housing Special Revenue – Library District Special Revenue – Probation Special Revenue – Public Defense Special Revenue – Public Health Special Revenue – Recreation Special Revenue – Sheriff’s Office Special Revenue – Special Districts Special Revenue – Workforce Investment Act Capital Projects – General Government Debt Service – General Government Debt Service – Jail Debt Service – Special Districts Statement of Changes in Assets and Liabilities – Agency Fund ii 58 63 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 86 Navajo County Comprehensive Annual Financial Report Year Ended June 30, 2013 Table of Contents Page Statistical Section Financial Trends Net Position by Component Changes in Net Position Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds 89 90 92 94 Revenue Capacity Assessed Value and Estimated Actual Value of Taxable Property Direct Overlapping Tax Rates Principal Property Taxpayers Property Tax Levies and Collections 96 97 98 99 Debt Capacity Ratios of Outstanding Debt by Type Pledged Revenue Coverage Legal Debt Margin Information 100 101 102 Demographic and Economic Information Demographic and Economic Statistics Employment by Sector/Major Employers 103 104 Operating Information Full-Time Equivalent Employees by Function Operating Indicators by Function Capital Asset Statistics by Function 106 107 109 iii Navajo County ADMINISTRATION W. James Menlove, CPA James G. Jayne Finance Director County Manager December 17, 2013 To the Honorable Board of Supervisors and Citizens of Navajo County, Arizona: We are pleased to provide you with the Comprehensive Annual Financial Report (CAFR) for fiscal year 2013. The CAFR provides in-depth information regarding the County’s financial position. Navajo County presents the CAFR prepared in compliance with generally accepted accounting principles (GAAP) and audited by the Arizona Office of the Auditor General using generally accepted auditing standards and Government Auditing Standards. This report consists of management’s representations concerning the finances of Navajo County. Consequently, management assumes full responsibility for the completeness and reliability of the information presented in this report. To provide a reasonable basis for making these representations, County management has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for preparation of the County’s financial statements in conformity with generally accepted accounting principles. Because the cost of internal controls should not exceed the anticipated benefits, the objective of this framework is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. The Arizona Office of the Auditor General has audited the County’s financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements for fiscal year 2013 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Based upon the audit, the independent auditor concluded that there was a reasonable basis for rendering an unmodified opinion that the County’s financial statements for fiscal year 2013 are fairly presented in conformity with GAAP. The Independent Auditors Report is presented at the beginning of the Financial Section of this report. iv This report is prepared in accordance with generally accepted accounting principles, in conformity with standards of financial reporting established by the Governmental Accounting Standards Board (GASB), and using the guidelines established by the Government Finance Officers Association (GFOA) of the United States and Canada. GAAP requires that management provide an overview and analysis to accompany the basic financial statements called the Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The MD&A immediately follows the Independent Auditors’ Report in the Financial Section of this report. NAVAJO COUNTY PROFILE Navajo County was formed on March 21, 1895, and encompasses 9,953 square miles. Navajo County’s diversity is evident not only in its population, but also in its landscape. Northern Navajo County is home to the Navajo and Hopi Tribes, and is known for scenic attractions such as Monument Valley. Historic Route 66 runs through central Navajo County which is now one of the most significant transportation corridors in the United States. Holbrook, in central Navajo County, became the county seat in 1871. Southern Navajo County is home to the White Mountain Apache Tribe and resort communities with many picturesque lakes and forests. The 2012 population of the County was estimated to be 107,094. The principal industries are tourism, coal mining, manufacturing, timber production, and ranching. Navajo County’s government consists of an elected Board of Supervisors. There are five districts with one supervisor representing each district. As required by statute, the Board of Supervisors is responsible for the overall management and approval of the departmental budgets and county tax rates. The Board appoints a County Manager and each department is managed by an elected official, appointed official, or a department director. Elected offices are statutorily mandated and include the assessor, clerk of the superior court, constables, county attorney, sheriff, recorder, superintendent of schools, treasurer, and the judiciary. Navajo County provides a full range of services, including law enforcement and public safety, judicial and detention services, health services, highway construction and maintenance, education, and library services. The financial reporting entity includes all the funds of the primary government and its component units. Component units are legally separate entities for which the primary government is financially accountable. Blended component units, although legally separate entities, are in substance part of the County’s operations. Additional information on Navajo County’s blended component units can be found in the notes to the financial statements Note 1. The Board of Supervisors and the County Manager use the financial policies, budget management policies and strategic plan to guide the overall development of the budget. On an v annual basis, beginning in January, the finance department, under the County Manager’s direction, meets with each elected official and department director to outline the Board’s adopted budget priorities. Each department must provide revenue and expenditure estimates for the remainder of the current fiscal year and planned revenues and expenditures for the following year. The budget team uses these estimates to help update the 5-year financial plan. The Board of Supervisors must adopt the final budget on or before the third Monday in August. The tax rate and levy must also be set on or before the third Monday in August. FACTORS AFFFECTING NAVAJO COUNTY’S FINANCIAL CONDITION The information presented in the financial statements is best understood when it is considered from the broader perspective of the specific environment within which the County operates. Local Economy – Navajo County has experienced a 10.2 percent growth in population from 2000 through 2010. The incorporated cities and towns in the southern portion of Navajo County accounted for the largest portion of the overall increase. Communities Navajo County Heber/Overgaard Holbrook Joseph City Pinetop-Lakeside Show Low Snowflake Taylor Winslow 2000 97,470 2010 107,398 % Change 10.2% 2,722 4,917 N/A 3,582 7,695 4,460 3,176 9,520 2,822 5,053 1,386 4,282 10,660 5,590 4,112 9,655 3.7% 2.8% N/A 19.5% 38.5% 25.3% 29.5% 1.4% Navajo Nation 8,394 9,368 11.6% (Chilchinbito, Dilkon, Greasewood, Jeddito, Kayenta, Oljato, Pinon, and Shonto) Hopi Tribe 4,113 5,051 22.8% (First Mesa, Hotevilla, Kykotsmovi, Second Mesa, and Shongopovi) White Mountain Apache Tribe 7,431 (Cibecue, East Fork, Whiteriver) 6,516 (12.3%) (source: The 2000 and 2010 U.S. Census—2010 is the latest census data available) Some of the major employers in Navajo County include Arizona Public Service (utilities), Joseph City, Burlington Northern Santa Fe (railway), Winslow, Summit Healthcare (medical facility), Show Low, Northland Pioneer College (post-secondary education), Holbrook, PFFJ (pork) and Eurofresh/NatureSweet (hydroponic vegetable production), Snowflake, Fort Apache Timber Company (timber processing), White River, and tourism related business, Hondah, Show Low, Pinetop/Lakeside, and Heber/Overgaard. vi Because of the rural nature of Navajo County, the local economy continues to be impacted by the stagnant, slowly recovering state and national economies. The County’s unemployment rate (15.1 percent for June 2013) has been significantly higher than the State’s (8.5 percent for June 2013). To address the economic challenges, Navajo County has reduced expenses through reductions in workforce, position vacancies from attrition, no salary increases, decreased benefits, and reductions in operating expenses while maintaining excellent customer service. Expenditure Limitation – In November 2006, Navajo County voters approved Proposition 400, which restated the base year expenditure limitation. The expenditure limit is a constraint on the County’s annual spending that was added to the Arizona Constitution in 1980. The limit is based on the County’s actual 1980 expenditures and is adjusted each year for population growth and inflation. Basically, the service levels provided in 1980, the base year, is the benchmark for spending on today’s essential services. Navajo County elected officials agreed that the expenditure limit, based on 1980 service levels, was not sufficient to meet the current demand for basic public services. Proposition 400 allowed the County to restate the base year expenditure limit, which allowed for the allocation of resources to:     Public Safety–Increased law enforcement coverage and availability. Transportation–Additional investment in transportation infrastructure. Access to Services–Improvement of facilities and satellite office to provide more accessible government services. Quality Work Force–Focus on retention of staff, which reduced training and operating costs as employee turnover was reduced. The Board of Supervisors’ proactive decision making has allowed Navajo County to better plan for the County’s long-term financial sustainability. Sound fiscal and budget management policies allow the County to better respond to the economic challenges that we face currently and in the future. The recession of 2008-2009 continues to have a significant negative impact on the County. At the worst point of the recession the County saw monthly revenues from state shared sales tax, county sales tax, and vehicle license tax drop by as much as 27 percent, 38 percent, and 26 percent, respectively. As a rural county the negative effects of the recession have been severe and longlasting. Beginning in February 2011, nearly two years after the recession officially ended, the county began to see a modest economic recovery through nominal increases in sales tax revenues; however, these revenues are still below amounts received by the County in 2004. In addition, assessed property values continue to decline with a corresponding negative impact on property tax revenues. It is anticipated that property values will continue to drop through fiscal year 2014. vii Impact of State Economic Conditions – The downturn in the local economy corresponded to economic declines at the state and national levels. As the State of Arizona struggled to balance its budget and reduce expenses counties have been significantly impacted by the shifting of revenues away from counties while mandating that counties pay for state programs. The uncertainty of these impacts from year to year requires Navajo County to budget conservatively to allow for these cost shifts, reductions in program funding, and reduced revenue allocations. Navajo County continues to work with state legislators, County Supervisors Association, and the Arizona City/County Managers Association to find solutions to the state budget crisis with the least impact to counties. Additionally, Navajo County continues to seek alternate funding sources to increase revenues. Cost analysis is ongoing, and the County is seeking to find additional ways to further reduce spending while continuing to provide for mandated functions with excellent customer service. Economic Outlook – Though the recession formally ended on a national level in June 2009, state and local revenues continue to be repressed. Economists continue to predict that the economic recovery will be modest for years to come. Arizona was among the States hardest hit by the economic downturn; consequently, the State’s recovery has lagged behind the recovery on a national level. The weakness in the economy and the uncertainty of the state budget requires continual monitoring, evaluation and planning for Navajo County. We will continue to address these challenges through the strategic budget planning process in coordination with our elected officials and department directors. SIGNIFICANT FINANCIAL POLICIES Navajo County has developed a set of fiscal management policies that guide the budget process. These policies consist of an Operating Budget Policy, Capital Budget Policy, Revenue Policy, Reserve Policy, Debt Policy, and the Budget Management Policy. The policies have been developed to:     Provide accountability to the citizens and the Board of Supervisors. Provide guidelines for long-term financial stability, enhancing the County’s ability to withstand fiscal fluctuations at the national, state, and local levels. Provide an overall financial picture of the County as a whole. Provide a basis for incorporating long-term policies into day-to-day operations. viii AWARDS The Government Finance Officers Association (GFOA) of the United States and Canada awarded a Certificate of Achievement for Excellence in Financial Reporting to Navajo County, Arizona for its comprehensive annual financial report for the fiscal year ended June 30, 2012. This was the third consecutive year that Navajo County has received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. The GFOA presented the Distinguished Budget Presentation Award to Navajo County for its annual budget for the fiscal year beginning July 1, 2012. This was the fourth consecutive year that Navajo County has received this prestigious award. In order to receive this award, a government unit must publish a budget document that meets program criteria as a policy document, as a financial plan, an operations guide, and as a communications device. A Certificate of Achievement and the Distinguished Budget Presentation Awards are valid for a period of one year only. We believe that our current comprehensive annual financial report and budget book continue to meet the Certificate of Achievement Program and Budget Presentation Award requirements and we are submitting them to the GFOA to determine their eligibility for another certificate and award, respectively. ACKNOWLEDGMENTS Preparation of this report could be accomplished only through the coordinated efforts of the finance department, the cooperative and willing assistance provided by our elected officials and department directors and their staff, and the services provided by the Arizona Office of the Auditor General. We express appreciation to all who have contributed to this report. We wish to thank the Navajo County Board of Supervisors for their leadership and commitment to Navajo County and our citizens. Respectfully submitted, _______________________________________ James G. Jayne County Manager ix ___________________________________ W. James Menlove Finance Director Comprehensive Annual Financial Report Organizational Chart Navajo County, Arizona Fiscal Year Ended June 30, 2013 Comprehensive Annual Financial Report FINANCIAL SECTION Navajo County, Arizona Fiscal Year Ended June 30, 2013 Navajo County, Arizona Fiscal Year Ended June 30, 2013 Independent Auditors’ Report Members of the Arizona State Legislature The Board of Supervisors of Navajo County, Arizona Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and aggregate remaining fund information of Navajo County as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We 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, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and aggregate remaining fund information of Navajo County as of June 30, 2013, and the respective changes in financial position thereof for the year then ended in conformity 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 3 through 9, the Budgetary Comparison Schedules on pages 46 through 51, and the Schedule of Agent Retirement Plans’ Funding 2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051 Progress on page 52 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. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County’s basic financial statements. The combining and individual fund statements and schedules and the introductory and statistical sections listed in the table of contents are presented for purposes of additional analysis and are not required parts of the basic financial statements. The combining and individual fund statements and schedules are the responsibility of management and were derived from and 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. December 17, 2013 Debbie Davenport Auditor General Navajo County Management’s Discussion and Analysis June 30, 2013 As management of Navajo County, we offer readers of Navajo County’s financial statements this narrative overview and analysis of the financial activities of Navajo County for the fiscal year ended June 30, 2013. We encourage readers to consider the information presented here in conjunction with the financial statements. FINANCIAL HIGHLIGHTS     The assets of the County exceeded its liabilities at the close of the current fiscal year by $92.8 million (net position). Of this amount, $7.0 million (unrestricted net position) may be used to meet the government’s ongoing obligations to citizens and creditors. The total decrease in the County’s net position was $4.4 million in fiscal year 2013. At the close of fiscal year 2013, the County’s governmental funds reported combined ending fund balances of $35.6 million, an increase of $902 thousand in comparison with the prior year’s balances of $34.7 million. At the end of the fiscal year, 77.7 percent ($27.6 million) of fund balance was restricted; 8.6 percent ($3.1 million) was assigned; 10.8 percent ($3.8 million) was unassigned, and 2.9 percent ($1.0 million) was nonspendable. Restricted fund balances have externally imposed restrictions on their usage by creditors, such as through debt covenants, grantors, contributors, or laws and regulations; or by constitutional provisions or enabling legislation. The assigned and unassigned fund balances are considered unrestricted. The unrestricted fund balances are available for spending at the County’s discretion. However, the assigned fund balance is designated by management. The nonspendable fund balances includes amounts that cannot be spent because they are not in spendable form such as inventory and prepaid items. 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 comprise three components: 1. Government-wide financial statements, 2. Fund financial statements, and 3. Notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements. Government-wide financial statements The government-wide financial statements are designed to provide readers with a broad overview of the County’s finances in a manner similar to a private sector business. One of the most important questions asked about the County’s finances is, “Is the County as a whole better off or worse as a result of this year’s activities?” The Statement of Net Position and the Statement of Activities report information about the County as a whole and about its activities in a way that helps answer this question. These statements include all nonfiduciary assets and liabilities using the accrual basis of accounting. 3 Navajo County Management’s Discussion and Analysis June 30, 2013 The Statement of Net Position presents information on all of the County’s assets, deferred outflows and inflows of resources, and liabilities, with the difference between assets and deferred outflows and liabilities and deferred inflows 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. In addition to this change, other nonfinancial factors will need to be considered. 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. Therefore, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods, such as revenues pertaining to uncollected taxes and expenses pertaining to earned but unused vacation leave. All of the County’s basic services are considered to be governmental activities, including general government, public safety, highways and streets, health and welfare, culture and recreation, education, environmental and conservation, and urban redevelopment and housing. Sales taxes, property taxes, intergovernmental revenues, and user fees finance most of these activities. The government-wide financial statements can be found on pages 12 and 13 of this report. Fund financial statements The fund financial statements provide detailed information about the most significant county funds—not the County as a whole. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Some funds are required to be established by federal or state law, contractual provisions, or by bond covenants. However, the Board of Supervisors established many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants, and other monies. All of the County’s funds can be divided into two categories: governmental and fiduciary. Governmental funds—Most of the County’s basic services are reported in governmental funds, which focus on near-term inflows and outflows of spendable resources and the balances of spendable resources available at year-end. These funds are reported using an accounting method called the modified accrual basis of accounting, which measures cash and all other financial assets that can be readily converted to cash. The governmental fund statements provide a detailed short-term view of the County’s operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the County’s programs. 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 the governmental funds with similar information presented for the governmental activities in the government-wide financial statements. Reconciliations between governmental activities as reported in the Statement of Net Position and the Statement of Activities and the governmental funds as reported in the fund financial statements are provided to facilitate this comparison. The County maintains numerous individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, 4 Navajo County Management’s Discussion and Analysis June 30, 2013 expenditures, and changes in fund balances for the General Fund, Public Works/HURF Fund, Flood Control District Fund, and the Detention Facility Construction Fund, which are considered major funds. Data from the other governmental funds is combined into a single aggregated presentation. The governmental fund financial statements can be found on pages 14 through 17 of this report. Fiduciary funds—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 funds financial statements can be found on pages 18 and 19 of this report. Notes to the financial statements—The notes to the financial statements provide additional information that is essential to fully understand the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 20 through 43 of this report. Required supplementary information—In addition to the basic financial statements and accompanying notes, the report presents required supplementary information on the County’s budgeting and budgetary control and the County’s progress in funding its obligation to provide pension benefits to its employees. Required supplementary information can be found on pages 46 through 54 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS Statement of Net Position Net position may serve over time as a useful indicator of a County’s financial position. The following table reflects the condensed Statement of Net Position of the County as of June 30, 2013, compared to the prior year. Governmental Activities 2013 2012* $ 40,779,514 $ 39,378,378 73,774,320 75,551,539 114,553,834 114,929,917 Current and other assets Capital assets Total assets Other liabilities Long-term liabilities outstanding Total liabilities Net Position: Net investment in capital assets Restricted Unrestricted Total net position 4,282,976 17,513,907 21,796,883 3,687,095 14,054,503 17,741,598 58,803,447 26,943,489 7,010,015 $ 92,756,951 64,205,881 25,830,803 7,151,635 $ 97,188,319 * Capital assets were restated for fiscal year 2012 due to certain road projects such as chip seals, slurry seals, and overlays being reclassified from capitalized road improvements to road maintenance projects expensed in the year completed. See Note 13—Beginning Net Position Restated for additional information. 5 Navajo County Management’s Discussion and Analysis June 30, 2013 The County’s current and other assets and net position from governmental activities at the end of the fiscal year were $40.8 million and $92.8 million, respectively. The decrease of $1.8 million in capital assets and $4.4 million in net position was due to normal depreciation expense of existing capital assets and construction and remodel of the County jail. The County’s other liabilities and long-term liabilities outstanding at the end of the fiscal year were $4.3 million and $17.5 million, respectively. The overall increase of $596 thousand in other liabilities and $3.5 million in long-term liabilities outstanding was due to the Navajo County jail expansion and remodel. A large portion of the County’s net position, 63.4 percent ($58.8 million), reflects its investment in capital assets net of accumulated depreciation and related debt. The County uses these assets to provide services to citizens and, therefore, they are not available for future spending. Approximately 29.0 percent of the County’s net position ($26.9 million) is subject to external restrictions on how they may be used. The County’s restricted net position increased by 4 percent ($1.1 million) as compared to the prior fiscal year due to issuing pledged revenue obligations, which are restricted for capital projects. The remaining balance of the County’s net position, 7.6 percent ($7.0 million), is unrestricted and may be used to meet the County’s ongoing obligations to citizens and creditors without constraints established by debt covenants or other legal requirements. The County’s unrestricted net assets decreased 2 percent ($142 thousand) in the current fiscal year due to normal operations. Changes in Net Position The Statement of Activities presents information on how the County’s net position changed during the most current fiscal year. The following table reflects the condensed Statement of Activities of the County for the fiscal year 2013 compared to the prior year: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions Total program revenues General revenues: Property taxes Sales taxes State shared revenues Grants and contributions not restricted to specific programs Investment earnings Gain on disposal of capital assets Miscellaneous Total general revenues Total revenues 6 Governmental Activities 2013 2012* $ 5,304,439 12,173,131 9,939,261 27,416,831 $ 4,963,062 12,152,783 9,803,553 26,919,398 11,924,765 6,239,089 12,024,496 12,087,700 6,246,077 11,475,113 3,024,985 (109,711) 52,473 892,976 34,049,073 61,465,904 3,175,428 202,500 13,116 1,170,658 34,370,592 61,289,990 Navajo County Management’s Discussion and Analysis June 30, 2013 Program expenses: General government Public safety Highways and streets Health and welfare Culture and recreation Education Environmental and conservation Urban redevelopment and housing Interest on long-term debt Total program expenses Change in net position Net position, beginning, as restated Capital asset restatement Net position, ending Governmental Activities 2013 2012* $ 20,944,578 19,123,378 10,935,566 7,734,191 788,127 5,498,285 303,402 42,701 527,044 65,897,272 (4,431,368) 97,188,319 $ 92,756,951 $ 21,607,586 18,238,891 8,023,409 5,909,936 966,000 6,164,792 16,352 784 721,020 61,648,770 (358,780) 104,110,435 (6,563,336) $ 97,188,319 * Amounts were restated for fiscal year 2012 due to certain road projects such as chip seals, slurry seals, and overlays being reclassified from capitalized road improvements to road maintenance projects expensed in the year completed. See Note 13—Beginning Net Position Restated for additional information. Overall revenues increased by 0.3 percent ($176 thousand) and program expenses increased by 6.9 percent ($4.2 million) in the current fiscal year. The following summarizes the significant changes in revenues and expenses compared to the prior year. Charges for services revenues increased 6.9 percent ($341 thousand) in the current year due to increased court, jail and adult probation revenues. State shared revenues increased 4.8 percent ($549 thousand) in the current year due to modest improvement in the state economy that increased state shared sales tax revenues. Investment earnings decreased 154.2 percent ($312 thousand) in the current year due to declines in the fair market value of the County’s investments held at fiscal year-end. At maturity these investments will increase to full value. Highways and streets expenses increased 36.3 percent ($2.9 million) in the current fiscal year due to due to certain road projects such as chip seals, slurry seals and overlays being reclassified from capitalized road improvements to road maintenance projects expensed in the year completed. Health and welfare expenses increased 30.9 percent ($1.8 million) in the current fiscal year due to new grants administered by the County through an intergovernmental agreement with the Navajo Nation. Education expenses decreased 10.8 percent ($667 thousand) in the current fiscal year due to due to economic conditions which reduced revenues for the Superintendent of Schools’ Hope School, Accommodation School, and School Consortium. 7 Navajo County Management’s Discussion and Analysis June 30, 2013 FINANCIAL ANALYSIS OF THE COUNTY’S FUNDS The County reported four major funds for this fiscal year: the General Fund, Public Works/HURF Fund, Flood Control District Fund, and Detention Facility Construction Fund. At year-end, the County’s governmental funds reported combined fund balances of $35.6 million, which is an increase of $902 thousand from last year or a change of 2.6 percent. Of the total, $6.9 million constitutes unrestricted fund balances. For governmental functions overall revenues increased $676 thousand (1.1 percent) and expenditures increased $1.1 million (1.7 percent). Governmental function expenditures exceeded revenues by $3.6 million in the current fiscal year. The General Fund is the County’s primary operating fund. At the end of the current fiscal year, unrestricted fund balances of the General Fund totaled $5.9 million. Unrestricted fund balances represent 17.4 percent of total General Fund expenditures. This ratio indicates a strong fund balance position in comparison to expenditures. The Detention Facility Construction fund balance increased by $3.3 million (3.102.5 percent) in the current fiscal year due to the County entering into a long-term revenue obligation for financing an addition and remodel of the County jail. GENERAL FUND BUDGETARY HIGHLIGHTS For the General Fund, actual revenues were less than the original and final budget amounts by $1.1 million while the actual expenditures were $9.5 million less than the amount budgeted. The budget variance for revenues was due to the loss of a contract with the federal Bureau of Prisons to house federal inmates at the County jail. New contracts to house federal, state and tribal inmates have been enacted with the U.S. Marshall’s Service, the Arizona Department of Corrections, the Hopi Tribe and the White Mountain Apache Tribe. The budget variance for expenditures in the General Fund was primarily due to conservative budgeting practices and minimal spending due to continued poor economic conditions. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets During the current fiscal year, the net book value of capital assets being depreciated decreased $3.6 million due to normal depreciation expense of existing capital assets and construction and remodel of the County jail, which had not been completed as of the fiscal year end. Additional information on capital assets can be found in Notes 4 and 5 on page 30 of this report. Debt Administration At the end of the current fiscal year, the County had total long-term liabilities outstanding of $17.5 million, which included $13.7 million in revenue bonds that financed the acquisition, construction, and improvements of county buildings and facilities and financed the construction of new facilities and the remodel of existing facilities at the Navajo County jail. Included in long-term liabilities is $1.0 million of 8 Navajo County Management’s Discussion and Analysis June 30, 2013 special assessment debt with governmental commitment and $2.2 million for the future payment of compensated absences for unused employee vacation and sick leave. The remainder of the long-term liabilities consists of capital leases, claims and judgments, and estimated landfill closure and post-closure care costs. There were no significant changes to the County’s credit ratings or debt limitations during the current fiscal year. Additional information on long-term debt can be found in Note 6 on pages 31 through 33 of this report. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET The significant downturn in the national and state economies that began the latter part of 2008 continued to affect the County in fiscal year 2013. The U.S. and State economies continued to experience a moderate recovery during 2013 and continued minimal improvement is expected in fiscal year 2014. However, one of the major employers in the County discontinued operations in fiscal year 2013 causing a significant setback in the local economic recovery. The County closely monitors revenues, expenditures and applicable economic indicators to ensure that the County remains fiscally strong. The County continues to budget conservatively for revenue estimates and other factors affecting the County. REQUEST FOR INFORMATION This financial report is designed to provide a general overview of the County’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Navajo County Finance Department, P.O. Box 668, 100 Code Talker Drive, Holbrook, AZ 86025. 9 Navajo County, Arizona Fiscal Year Ended June 30, 2013 Comprehensive Annual Financial Report BASIC FINANCIAL STATEMENTS Navajo County, Arizona Fiscal Year Ended June 30, 2013 Navajo County Statement of Net Position Year Ended June 30, 2013 Assets Cash and investments Receivables (net of allowance for uncollectibles): Property taxes Accrued interest Due from other governments Cash and investments held by trustee - restricted Inventories Prepaid items Capital assets, not being depreciated Capital assets, being depreciated, net Total assets Liabilities Accounts payable Accrued payroll and employee benefits Noncurrent liabilities Due within 1 year Due in more than 1 year Total liabilities Governmental Activities $ 636,680 41,817 4,081,168 5,403,683 986,516 48,256 9,330,221 64,444,099 $ 114,553,834 $ Net Position Net investment in capital assets Restricted for: General government Highways and streets Public safety Judicial activities Education Law enforcement Environment, library, and community services Health and welfare Debt service Capital projects Unrestricted Total net position See accompanying notes to financial statements. 12 29,581,394 2,915,806 1,367,170 $ 2,183,398 15,330,509 21,796,883 $ 58,803,447 $ 435,538 8,642,890 7,421,438 2,629,587 1,798,155 975,536 247,820 409,904 1,200,697 3,181,924 7,010,015 92,756,951 Navajo County Statement of Activities Year Ended June 30, 2013 Functions/Programs Primary government: Governmental activities: General government Public safety Highways and streets Health and welfare Culture and recreation Education Environmental and conservation Urban redevelopment and housing Interest on long-term debt Total governmental activities Expenses $ 20,944,578 19,123,378 10,935,566 7,734,191 788,127 5,498,285 303,402 42,701 527,044 $ 65,897,272 Charges for Services $ $ Program Revenues Operating Grants and Contributions 3,649,106 1,146,080 104,133 243,393 161,727 $ 1,514,696 3,358,242 5,304,439 $ 12,173,131 2,500,943 129,282 4,327,485 301,660 40,823 Capital Grants and Contributions $ 9,939,261 $ 9,939,261 General revenues: Taxes: Property taxes, levied for general purpose Property taxes, levied for flood control Property taxes, levied for public health district Property taxes, levied for library district General county sales tax Shared revenues - state sales tax Shared revenues - state vehicle license tax Grants and contributions not restricted to specific programs Investment earnings Gain on disposal of capital assets Miscellaneous Total general revenues Change in net position Net position, July 1, 2012 (as restated) Net position, June 30, 2013 See accompanying notes to financial statements. 13 Net (Expense) Revenue and Changes in Net Position $ (15,780,776) (14,619,056) (892,172) (4,989,855) (497,118) (1,170,800) (1,742) (1,878) (527,044) (38,480,441) $ 7,221,914 2,280,770 1,930,396 491,685 6,239,089 10,087,589 1,936,907 3,024,985 (109,711) 52,473 892,976 34,049,073 (4,431,368) 97,188,319 92,756,951 Navajo County Balance Sheet Governmental Funds Year Ended June 30, 2013 Assets Cash and investments Receivables (net of allowance for uncollectibles): Property taxes Accrued interest Due from other funds Due from other governments Cash and investments held by trustee—restricted Inventories Prepaid items Total assets Liabilities and Fund Balances Liabilities: Accounts payable Accrued payroll and employee benefits Due to other funds Deferred revenues Total liabilities Fund balances: Nonspendable Restricted Assigned Unassigned Total fund balances Total liabilities and fund balances Detention Facility Construction Fund Other Governmental Funds Total Governmental Funds $ 7,899,813 $ 7,864,116 $ 29,581,394 116,337 9,676 253,787 13,082 115,050 1,715,767 636,680 41,817 707,602 4,081,168 $ 4,385,000 1,018,683 5,403,683 986,516 48,256 $ 41,487,116 General Fund Public Works/ HURF Fund Flood Control District Fund $ 5,092,284 $ 8,725,181 266,556 7,979 592,117 1,464,724 11,080 435 900,677 986,516 $ 7,423,660 $ 10,623,889 $ 8,025,826 $ 4,385,000 48,256 $ 11,028,741 $ $ 1,571,189 172,967 $ $ $ 492,527 858,487 1,262 201,015 1,553,291 2,021,131 3,849,238 5,870,369 $ 7,423,660 15,178 6,224 408,927 583,117 1,744,156 85,251 106,653 986,516 7,893,217 7,919,173 3,392,956 8,879,733 $ 10,623,889 7,919,173 $ 8,025,826 3,392,956 $ 4,385,000 See accompanying notes to financial statements. 14 992,044 427,985 329,492 123,223 619,062 1,499,762 48,256 8,434,473 1,046,263 (13) 9,528,979 $ 11,028,741 $ 2,915,806 1,367,170 707,602 905,328 5,895,906 1,034,772 27,639,819 3,067,394 3,849,225 35,591,210 $ 41,487,116 Navajo County Reconciliation of the Balance Sheet to the Statement of Net Position Governmental Funds Year Ended June 30, 2013 Fund balances—total governmental funds $ 35,591,210 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 funds. 73,774,320 Some receivables are not available to pay for current-period expenditures and, therefore, are deferred in the funds. 905,328 Some liabilities, including bonds and certificates of participation payable, are not due and payable in the current period and, therefore, are not reported in the funds. Net position of governmental activities (17,513,907) $ See accompanying notes to financial statements. 15 92,756,951 Navajo County Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2013 Revenues: Property taxes Special assessments Licenses and permits Fines and forfeits Intergovernmental Charges for services Investment earnings Contributions Miscellaneous Total revenues Expenditures: Current: General government Public safety Highways and streets Health and welfare Culture and recreation Education Environmental and conservation Urban redevelopment and housing Debt service: Principal Interest and other charges Bond issuance costs Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Pledged revenue obligations issued Payment to bond refunding escrow agent Capital lease agreements Sale of capital assets Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2012 Changes in nonspendable resources: Increase in reserve for inventories Fund balances, June 30, 2013 General Fund Public Works/ HURF Fund $ 7,355,796 $ 2,280,770 345,480 900,873 21,251,426 1,288,142 (19,219) $ 9,690,517 12,171 (37,371) 419,552 31,542,050 66,407 9,731,724 17,517,338 11,875,491 3,567,982 Flood Control District Fund Detention Facility Construction Fund 9,549,268 (27,180) 2,253,590 1,350,730 319,996 797 15 371,277 33,652,896 (2,110,846) 9,549,268 1,350,730 182,456 902,860 Other Governmental Funds Total Governmental Funds $ 2,422,082 502,434 124,171 638,790 12,108,618 1,741,122 (25,940) 64,512 407,017 17,982,806 $ 12,058,648 502,434 469,651 1,539,663 43,050,561 3,041,435 (109,710) 64,512 892,976 61,510,170 3,229,151 4,289,168 34,731 4,419,628 785,901 5,006,173 303,402 42,701 20,746,489 17,515,389 9,583,999 7,987,610 785,901 5,326,169 303,402 42,701 675,982 527,029 100,290 15,000 1,097,991 1,112,991 19,414,156 676,779 527,044 115,290 1,469,268 65,080,041 (1,112,991) (1,431,350) (3,569,871) 4,400,000 4,100,000 (4,345,000) 146,994 8,500,000 (4,345,000) 146,994 78,863 10,157,899 (10,157,899) 4,380,857 810,986 34,689,216 78,863 2,494,875 (1,065,638) 1,508,100 25,000 (749,803) (724,803) (1,176,082) (1,176,082) 4,400,000 7,638,024 (7,166,376) 373,642 (602,746) 6,473,115 (542,347) 9,331,072 (273,222) 8,192,395 3,287,009 105,947 (1,057,708) 10,586,687 $ 5,870,369 91,008 $ 8,879,733 $ 7,919,173 See accompanying notes to financial statements. 16 $ 3,392,956 $ 9,528,979 91,008 $ 35,591,210 Navajo County Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities Governmental Funds Year Ended June 30, 2013 Net change in fund balances—total governmental funds $ 810,986 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 allocated over their estimated useful lives and reported as depreciation expense. Capital outlay Depreciation expense 2,824,221 (4,575,050) (1,750,829) In the Statement of Activities, only the gain/loss on the sale of capital assets is reported, whereas in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net position differs from the change in fund balance by the book value of the capital assets sold. (26,390) Some revenues reported in the Statement of Activities do not represent the collection of current financial resources and, therefore, are not reported as revenues on the governmental funds Intergovernmental revenues 37,143 Collection of revenues in the governmental funds exceeded revenues reported in the Statement of Activities Property taxes Debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Position. Repayment of debt principal is an expenditure in the governmental funds but the repayment reduces long-term liabilities in the Statement of Net Position. Debt Issued Principal repaid Under the modified accrual basis of accounting used in the governmental funds, expenditures are not recognized for transactions that are not normally paid with expendable available resources. In the Statement of Activities, however, which is presented on the accrual basis of accounting, expenses are reported regardless of when the financial resources are available. Decrease in compensated absences Decrease in claims and judgments Decrease in landfill closure and post-closure care costs (133,882) (8,646,994) 5,021,779 (3,625,215) 132,545 16,016 17,250 165,811 Some cash outlays, such as purchases of inventories, are reported as expenditures in the governmental funds when purchased. In the Statement of Activities, however, they are reported as expenses when consumed. Increase in inventories Change in net position of governmental activities 91,008 $ See accompanying notes to financial statements. 17 (4,431,368) Navajo County Statement of Fiduciary Net Position Fiduciary Funds June 30, 2013 Investment Trust Funds Assets Cash and investments Interest receivable Total assets $ 128,335,432 160,643 $ 128,496,075 Liabilities Due to other governments Deposits held for others Total liabilities Agency Funds $ $ $ $ Net Position Held in trust for investment trust participants $ 128,496,075 See accompanying notes to financial statements. 18 4,490,649 2,839 4,493,488 2,387,067 2,106,421 4,493,488 Navajo County Statement of Changes in Fiduciary Net Position Fiduciary Funds Year Ended June 30, 2013 Investment Trust Funds Additions: Contributions from participants Net investment income Total additions $ Deductions: Distributions to participants 227,612,612 (399,648) 227,212,964 222,274,047 Change in net position 4,938,917 Net position, July 1, 2012 123,557,158 $ Net position, June 30, 2013 See accompanying notes to financial statements. 19 128,496,075 Navajo County Notes to Financial Statements June 30, 2013 Note 1 - Summary of Significant Accounting Policies Navajo County’s accounting policies conform to generally accepted accounting principles applicable to governmental units adopted by the Governmental Accounting Standards Board (GASB). For the year ended June 30, 2013, the County implemented the provisions of GASB Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements; GASB Statement No. 61, The Financial Reporting Entity: Omnibus, an amendment of GASB Statements No. 14 and No. 34; GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements; and GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. GASB Statement No. 60 improves consistency in financial reporting for service concession arrangements. GASB Statement No. 61 modifies existing requirements for determining which component units should be included in the financial reporting entity and the related display and disclosure requirements. GASB Statement No. 62 incorporates certain accounting and financial reporting guidance in FASB Statements and Interpretations issued on or before November 30, 1989, Accounting Principles Board Opinions, and Accounting Research Bulletins into GASB’s authoritative literature. GASB Statement No. 63 provides guidance for reporting deferred outflows of resources, deferred inflows of resources, and net position in a statement of financial position and related disclosures. The implementation of GASB Statement No. 60 had no impact on the County’s fiscal year 2013 financial statements, and the implementation of GASB Statement Nos. 61-63 had an insignificant effect on the financial statement amounts; therefore, no additional note disclosures were required. A. Reporting Entity The County is a general purpose local government that is governed by a separately elected board of five county supervisors. The accompanying financial statements present the activities of the County (the primary government) and its component units. Component units are legally separate entities for which the County is considered to be financially accountable. Blended component units, although legally separate entities, are so intertwined with the County that they are in substance part of the County’s operations. Therefore, data from these units is combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the government-wide financial statements to emphasize they are legally separate from the County. Each blended component unit discussed below has a June 30 year-end. The County has no discretely presented component units. 20 Navajo County Notes to Financial Statements June 30, 2013 The following table describes the County’s component units: Reporting Method For Separate Financial Statements A tax-levying district that provides flood control systems; the County’s Board of Supervisors serves as the board of directors Blended Not available Navajo County Library District A tax-levying district that provides and maintains library services for the County’s residents; the County’s Board of Supervisors serves as the board of directors Blended Not available Navajo County Health District A tax-levying district that provides health services for the County’s residents; the County’s Board of Supervisors serves as the board of directors Blended Not available White Mountain Lake Recreation District A tax-levying district that provides recreational services for the White Mountain Lake Community; the County’s Board of Supervisors serves as the board of directors Blended Not available Navajo County Municipal Property Corporation (MPC) A nonprofit corporation that assists in the acquisition of tangible real and personal property; the County’s Board of Supervisors appoints all members of the governing board, is able to impose its will on the MPC, and the MPC exists only to serve the County Blended Not available Navajo County Special Assessment Districts Legally separate entities that provide improvements to various properties within the County; the County’s Board of Supervisors serves as the board of directors Blended Not available Component Unit Description; Criteria for Inclusion Navajo County Flood Control District 21 Navajo County Notes to Financial Statements June 30, 2013 B. Basis of Presentation The basic financial statements include both government-wide statements and fund financial statements. The government-wide statements focus on the County as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the usefulness of the information. Government-wide statements—Provide information about the primary government (the County) and its component units. The statements include a statement of net position and a statement of activities. These statements report the overall government’s financial activities, except for fiduciary activities. Governmental activities generally are financed through taxes and intergovernmental revenues. A statement of activities presents a comparison between direct expenses and program revenues for each function of the County’s governmental 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 allocates indirect expenses to the Public Works/HURF Fund, Flood Control District Fund, and special revenue funds reported as part of the Other Governmental Funds. Program revenues include:  charges to customers or applicants for goods, services, or privileges provided;  operating grants and contributions; and  capital grants and contributions, including special assessments. Revenues that are not classified as program revenues, including internally dedicated resources and all taxes levied or imposed by the County, are reported as general revenues. Generally, the effect of interfund activity has been eliminated from the government-wide financial statements to minimize the double-counting of internal activities. Fund financial statements—Provide information about the County’s funds, including fiduciary funds and blended component units. Separate statements are presented for the governmental and fiduciary fund categories. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. All remaining governmental funds are aggregated and reported as other governmental funds. Fiduciary funds are aggregated and reported by fund type. 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 Public Works/HURF Fund is used to account for road construction and maintenance of major and nonmajor regional roads, and is funded by highway user revenues and vehicle license taxes. 22 Navajo County Notes to Financial Statements June 30, 2013 The Flood Control District Fund is used to provide flood control facilities and regulates floodplains and drainage to prevent flooding of property in Navajo County and is funded by secondary property taxes. The Detention Facility Construction Fund is used for construction of medical, kitchen and laundry facilities and remodeling the existing county jail and is funded through pledged revenue obligations. The County reports the following fund types: The investment trust funds account for pooled assets the County Treasurer holds and invests on behalf of other governmental entities. The agency funds account for assets the County holds as an agent for the State, various local governments, individuals, and other parties. C. Basis of Accounting The government-wide 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 is 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 considers all revenues reported in the governmental funds to be available if the revenues are collected within 60 days after year-end. The County’s major revenue sources that are susceptible to accrual are property taxes, intergovernmental, and charges for services. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, compensated absences, and landfill closure and postclosure care costs, 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. 23 Navajo County Notes to Financial Statements June 30, 2013 D. Cash and Investments 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 financial statements are recorded as assets when purchased and expensed when consumed. These inventories are stated at cost using the first-in, first-out method. The County accounts for its inventories in the governmental funds using the purchase method. Inventories of the governmental funds consist of expendable supplies held for consumption and are recorded as expenditures at the time of purchase. Amounts on hand at year-end are shown on the balance sheet as an asset for informational purposes only and 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. F. Property Tax Calendar The County levies real and personal property taxes on or before the third Monday in August that become due and payable in two equal installments. The first installment is due on the first day of October and becomes delinquent after the first business day of November. The second installment is due on the first day of March of the next year and becomes delinquent after the first business day of May. A lien assessed against real and personal property attaches on the first day of January preceding assessment and levy. G. Capital Assets Capital assets are reported at actual cost or estimated historical cost if historical records are not available. Donated assets are reported at estimated fair value at the time received. Capitalization thresholds (the dollar values above which asset acquisitions are added to the capital asset accounts), depreciation methods, and estimated useful lives of capital assets reported in the government-wide statements are as follows: Land Buildings and improvements Machinery and equipment Infrastructure Capitalization Threshold $10,000 10,000 5,000 10,000 24 Depreciation Method N/A Straight-line Straight-line Straight-line Estimated Useful Life N/A 15-40 years 3-7 years 35 years Navajo County Notes to Financial Statements June 30, 2013 H. Fund Balance Classifications Fund balances of the governmental funds are reported separately within classifications based on a hierarchy of the constraints placed on the use of those resources. The classifications are based on the relative strength of the constraints that control how the specific amounts can be spent. The classifications are nonspendable, restricted, and unrestricted, which includes committed, assigned, and unassigned fund balance classifications. The nonspendable fund balance classification includes amounts that cannot be spent because they are either not in spendable form, such as inventories, or are legally or contractually required to be maintained intact. Restricted fund balances are those that have externally imposed restrictions on their usage by creditors, such as through debt covenants, grantors, contributors, or laws and regulations. The unrestricted fund balance category is composed of committed, assigned, and unassigned resources. Committed fund balances are self-imposed limitations approved by the County’s Board of Supervisors, which is the highest level of decision-making authority within the County. The County did not commit any fund balances at June 30, 2013. Assigned fund balances are resources constrained by the County’s intent to be used for specific purposes, but are neither restricted nor committed. The County’s fiscal policies adopted by the Board of Supervisors has authorized the county manager to make assignments of resources for a specific purpose. The unassigned fund balance is the residual classification for the General Fund and includes all spendable amounts not reported in the other classifications. Also, deficits in fund balances of the other governmental funds are reported as unassigned. When an expenditure is incurred that can be paid from either restricted or unrestricted fund balances, the County uses restricted fund balance first. For the disbursement of unrestricted fund balances, the County will use assigned amounts first, followed by unassigned amounts. I. Investment Earnings Investment earnings is composed of interest, dividends, and net changes in the fair value of applicable investments. J. Compensated Absences Compensated absences payable consists of unused annual leave and a calculated amount of sick leave earned by employees based on services already rendered. 25 Navajo County Notes to Financial Statements June 30, 2013 Employees may accumulate up to 488 hours of annual leave during a calendar year (depending on years of service) with a maximum carryforward of 320 hours as of December 31 of each year. Upon terminating employment, all unused vacation benefits up to a maximum of 320 hours (488 upon retirement) are paid to the employee. Employees may accumulate an unlimited number of sick leave hours. Generally, sick leave benefits provide for ordinary sick pay and are cumulative. Upon retirement or death, employees who have accumulated 301 hours or more of unused sick leave and have 5 or more years of continuous service will receive a partial sick leave payment, not to exceed $5,000, based on the number of years of continuous service. Accordingly, annual and sick leave benefits do vest and, therefore, are accrued as a liability in the government-wide 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. Note 2 - Deposits and Investments 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 and notes; interest earning investments such as savings accounts, certificates of deposit, and repurchase agreements in eligible depositories; specified commercial paper, bonds, debentures, and notes issued by corporations organized and doing business in the United States; 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 Statutes have the following requirements for credit risk: 1. Commercial paper must be of prime quality and be rated within the top two ratings by a nationally recognized rating agency. 2. Corporate bonds, debentures, and notes must be rated within the top three ratings by a nationally recognized rating agency. 3. Fixed income securities must carry one of the two highest ratings by Moody’s investors service and Standard and Poor’s rating service. If only one of the above-mentioned services rates the security, it must carry the highest rating of that service. Custodial credit risk Statutes require collateral for deposits and certificates of deposit at 101 percent of all deposits not covered by federal depository insurance. 26 Navajo County Notes to Financial Statements June 30, 2013 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. The maximum maturity for investments in repurchase agreements is 180 days. Foreign currency risk Statutes do not allow foreign investments. Deposits—At June 30, 2013, cash on hand was $22,626. The carrying amount of the County’s deposits, consisting of checking, savings, and money market savings accounts, was $51,899,867, and the bank balance was $52,127,201. The County’s formal policy is to follow collateralization requirements set forth in A.R.S. §35-323 as described above. At June 30, 2013, $47,016,096 of the County’s bank balance was exposed to custodial credit risk for deposits that were uninsured with collateral held by the pledging financial institution. Investments—The County’s investments at June 30, 2013, were as follows: Investment Type U.S. agency securities U.S. Treasury securities Corporate notes U.S. Treasury money market funds Amount $ 88,696,000 21,706,140 4,452,842 1,033,683 $115,888,665 Credit risk—The County’s formal policy is to limit its portfolio to investments with the top rating issued by nationally recognized statistical rating organizations. As of June 30, 2013, credit risk for the County’s investments was as follows: Investment Type Rating Rating Agency Amount U.S. agency securities Corporate notes U.S. Treasury money market funds AAA AA+ Unrated Moody’s Standard and Poor’s $88,696,000 4,452,842 1,033,683 $94,182,525 Total 27 N/A Navajo County Notes to Financial Statements June 30, 2013 Custodial credit risk—For an investment, custodial credit 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 outside party’s possession. The County’s formal policy stipulates that securities that are held in a custody or safekeeping account must be held under the name of Navajo County or Navajo County Treasurer. At June 30, 2013, the County had $1,018,683 of U.S. Treasury money market funds that was uninsured and held by the counterparty not in the County’s name. Concentration of credit risk—The County’s formal policy stipulates that the County will diversify the investment portfolio by limiting investments to avoid over-concentration in securities from a specific issuer, excluding obligations issued or guaranteed by the United States or any of the senior debt of its agencies or sponsored agencies. The County had investments at June 30, 2013, of 5 percent or more in Federal Home Loan Bank, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation. These investments were 29.65 percent, 29.92 percent, and 16.96 percent, respectively, of the County’s total investments. Interest rate risk—The County’s formal policy is to purchase a combination of short-, medium-, and long-term investments such that maturities occur evenly over time as necessary to provide the cash flow needed for operations. At June 30, 2013, the County had the following investments in debt securities: Investment Type U.S. agency securities U.S. Treasury securities Corporate notes U.S. Treasury money market funds Amount $ 88,696,000 21,706,140 4,452,842 1,033,683 $115,888,665 Weighted Average Maturity (In Years) 3.724 2.809 1.067 .003 At June 30, 2013, $9,934,100 of the investments in U.S. agency securities and $4,452,842 of investments in corporate notes were considered to be highly sensitive to interest rate changes: U.S. agency step-up securities – On specified dates, the issuer can call the security. If the security is not called, the interest rate is increased by a specified amount. Prevailing interest rates may increase faster than the increase in the coupon interest rate. $ 9,934,100 Corporate notes floating rate securities – The coupon rate is tied to the London Interbank Offered Rate plus a fixed basis point amount which resets quarterly. The issuer can call the security on a specified date, or if the security is not called, the interest rate is reset at a specified amount. Prevailing interest rates may increase faster than the increase in the coupon interest rate. 4,452,842 Total $14,386,942 28 Navajo County Notes to Financial Statements June 30, 2013 A reconciliation of cash, deposits, and investments to amounts shown on the Statements of Net Position follows: Cash, deposits, and investments: Cash on hand Amount of deposits Amount of investments Total $ 22,626 51,899,867 115,888,665 $167,811,158 Governmental Activities Investment Trust Funds Agency Funds Total Cash and investments Cash and investments held by trustee—restricted $29,581,394 $128,335,432 $4,490,649 $162,407,475 Total $34,985,077 Statement of Net Position 5,403,683 5,403,683 $128,335,432 $4,490,649 $167,811,158 Note 3 - Due from Other Governments Amounts due from other governments at June 30, 2013, include $1,248,456 in state and county sales taxes, $172,307 in vehicle license taxes from the State of Arizona, $660,804 in state-shared revenue from highway user taxes, and $1,999,601 in various grants from the state and federal governments. 29 Navajo County Notes to Financial Statements June 30, 2013 Note 4 - Capital Assets Capital asset activity for the year ended June 30, 2013, was as follows: 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 Machinery and equipment Total Less accumulated depreciation for: Buildings and improvements Infrastructure Machinery and equipment Total Balance July 1, 2012, As Restated* $ Decreases Balance June 30, 2013 5,562,955 1,937,895 $ 1,829,371 7,500,850 1,829,371 9,330,221 37,386,354 77,064,848 26,294,475 140,745,677 10,849 984,001 994,850 $155,102 155,102 37,386,354 77,075,697 27,123,374 141,585,425 15,869,900 33,785,827 23,039,261 72,694,988 1,085,487 2,138,732 1,350,831 4,575,050 128,712 128,712 16,955,387 35,924,559 24,261,380 77,141,326 68,050,689 (3,580,200) 26,390 64,444,099 $ 75,551,539 $(1,750,829) $ 26,390 $ 73,774,320 Total capital assets being depreciated, net Governmental activities capital assets, net Increases $ 5,562,955 3,767,266 * Capital assets were restated at July 1, 2012 due to certain road project errors. See Note 13— Beginning Net Position Restated for addition information. Depreciation expense was charged to functions as follows: Governmental activities: General government Public safety Highways and streets Health and welfare Culture and recreation Education Total governmental activities depreciation expense $ 737,733 1,063,001 2,433,205 166,769 2,226 172,116 $4,575,050 Note 5 - Construction and Other Significant Commitments The County had major contractual commitments related to various capital projects at June 30, 2013, including the construction of the Winslow Levee, rehabilitation of Chevlon Bridge, and additions and improvements to the Holbrook Jail Complex. At June 30, 2013, the County had spent $3,767,266 on all projects and had remaining contractual 30 Navajo County Notes to Financial Statements June 30, 2013 commitments with contractors of $10,712,380. These projects are being primarily financed through the Flood Control District Fund, the Public Works/HURF Fund, and revenue bond monies, respectively. Note 6 - Long-Term Liabilities The following schedule details the County’s long-term liability and obligation activity for the year ended June 30, 2013: Governmental activities Balance July 1, 2012 Additions Reductions Balance June 30, 2013 Due within 1 year Pledged revenue obligations payable $ 5,545,000 $8,500,000 $ 380,000 $13,665,000 $ 385,000 Certificates of participation payable 4,345,000 4,345,000 Special assessment debt with governmental commitment 1,172,771 187,536 985,235 196,746 109,243 320,638 120,776 17,250 276,000 17,250 Capital leases payable 282,887 Landfill closure and postclosure care costs payable 293,250 Compensated absences payable 2,359,613 1,271,894 1,404,439 2,227,068 1,448,626 55,982 1,799 17,815 39,966 15,000 $14,054,503 $9,920,687 $6,461,283 $17,513,907 $2,183,398 Claims and judgments payable Total 146,994 Pledged revenue obligations—The County has issued revenue obligations that are generally callable with interest payable semiannually. The 2008 obligations were issued to acquire a new regional county service center in Show Low, to construct a new county administrative building in Heber-Overgaard, and to make improvements to the water facility and electrical system at the county complex. The Series 2012 obligations were issued to current-refund the $4,345,000 of outstanding principal relating to the 2000 Series Municipal Jail Facilities Bonds and for new construction and remodeling of jail facilities. Pledged revenue obligations outstanding at June 30, 2013, were as follows: Description Navajo County Pledged Revenue Obligations, Series 2008 Navajo County Pledged Revenue Refunding Obligations, Series 2012A Navajo County Pledged Revenue Obligations, Series 2012B Original Amount Issued Maturity Ranges Interest Rates Outstanding Principal $6,600,000 2014 – 2024 3.40 – 4.00% $ 5,165,000 4,100,000 2014 – 2027 3.24% 4,100,000 4,400,000 2014 – 2032 Total 3.24% 4,400,000 $13,665,000 31 Navajo County Notes to Financial Statements June 30, 2013 The following schedule details debt service requirements to maturity for the County’s pledged revenue obligations payable at June 30, 2013: Governmental Activities Principal Interest Year ending June 30 2014 2015 2016 2017 2018 2019-23 2024-28 2029-32 Total $ 385,000 550,000 570,000 585,000 605,000 3,395,000 4,000,000 3,575,000 $13,665,000 $ 376,076 448,699 429,692 410,080 389,370 1,584,904 911,412 236,277 $4,786,510 The County has pledged a portion of its general county and state sales tax revenues toward the payment of debt related to pledged revenue obligations outstanding at June 30, 2013. At June 30, 2013, future pledged revenues through final maturity at July 1, 2031 totaled $18,451,510, consisting of $13,665,000 for principal and $4,786,510 for interest. Future principal and interest payments are expected to require less than 5 percent of pledged sales tax revenues. Principal and interest paid for the current year and total current year revenues were $633,228 and $16,326,678, respectively. Certificate of participation—On August 12, 2012, the County issued pledged revenue obligations with an average interest rate of 3.24 percent to current-refund older, higher-rate certificates of participation issues with an average interest rate of 6.17 percent. The County realized net proceeds of $4,528,395 after payment of $112,398 in underwriting fees, insurance, and other issuance costs, plus $540,793 of sinking fund monies. These proceeds were used to purchase U.S. government securities that were placed in an irrevocable trust to provide resources for all future debt service payments on the refunded debt. The refunded debt is considered defeased, and related liabilities are not included in the County’s financial statements. Details of the refunding transactions are as follows: Amount of Series 2012A refunding obligations issued Amount of Series 2000 Municipal Jail Facilities certificates refunded Reduction in debt service payments Economic gain $4,100,000 4,345,000 194,974 310,115 Special assessment debt with governmental commitment—Special assessment bonds are payable from assessments collected from property owners benefited by the respective improvements. The special assessment districts pledged these assessments to repay the principal amount of $2,103,874 in special assessment bonds. The proceeds were used to finance the construction or improvement of roads, water and wastewater systems, and community facilities. At June 30, 2013, future pledged revenues through final maturity at July 1, 2020 totaled $1,144,831 consisting of $985,235 for principal and $160,596 for interest. Future principal and interest payments are expected to require 100 percent of 32 Navajo County Notes to Financial Statements June 30, 2013 pledged special assessment revenues. Principal and interest paid for the current year and total current year special assessment revenues were $262,104 and $248,745, respectively. While there is no legal obligation for the County to further secure the special assessment bonds of the districts below, the County has made a moral commitment to take steps necessary to prevent default. Special assessment bonds currently outstanding for governmental activities are as follows: Description Shumway Road Bucking Horse Scott's Pine Tract A Sutter Drive Total Original Amount Issued $1,150,000 524,000 184,124 245,750 $2,103,874 Maturity Ranges Interest Rates Outstanding Principal 2014-2017 2014-2020 2014-2017 2014-2016 5.40% 5.75% 6.17% 5.50% $530,000 348,000 59,159 48,076 $985,235 Annual debt service requirements to maturity for the special assessment debt with governmental commitment are as follows: Governmental Activities Principal Interest Year ending June 30 2014 2015 2016 2017 2018 2019-20 Total $196,746 214,746 219,954 223,789 63,000 67,000 $985,235 $ 54,465 43,533 31,620 19,651 7,474 3,853 $160,596 Compensated absences—Compensated absences are paid from various funds in the same proportion that those funds pay payroll costs. During fiscal year 2013, the County paid for compensated absences as follows: 64 percent from the General Fund, 12 percent from the Public Works/HURF Fund, and 24 percent from the Other Governmental Funds. Note 7 - Risk Management Public entity risk pools—The County is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. For these risks of loss, the County joined and is covered by three public entity risk pools: the Arizona Counties Insurance Pool, the Arizona Counties Workers’ Compensation Pool, and the Arizona Public Employers Health Pool, which are described below. 33 Navajo County Notes to Financial Statements June 30, 2013 The Arizona Counties Insurance Pool is a public entity risk pool currently composed of 11 member counties. The pool provides member counties catastrophic loss coverage for risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters; and provides risk management services. Such coverage includes all defense costs as well as the amount of any judgment or settlement. The County is responsible for paying a premium based on its exposure in relation to the exposure of the other participants and a deductible of $10,000 per occurrence for most property claims and $50,000 per occurrence for liability claims. The County is also responsible for any payments in excess of the maximum coverage of $300 million per occurrence for property claims and $15 million per occurrence for liability claims. However, lower limits apply to certain categories of losses. A county must participate in the pool at least 3 years after becoming a member; however, it may withdraw after the initial 3-year period. If the pool were to become insolvent, the County would be assessed an additional contribution. If the pool were to terminate, adequate provisions would be made for the County’s pending and anticipated claims based on an actuarial report funded by the pool. The Arizona Counties Workers’ Compensation Pool is a public entity risk pool currently composed of 11 member counties. The pool provides member counties with workers’ compensation coverage, as required by law, and risk management services. The County is responsible for paying a premium, based on an experience-rating formula that allocates pool expenditures and liabilities among the members. The Arizona Counties Insurance Pool and the Arizona Counties Workers’ Compensation Pool receive independent audits annually and an audit by the Arizona Department of Insurance every 5 years. Both pools accrue liabilities for losses that have been incurred but not reported. These liabilities are determined annually based on an independent actuarial valuation. Navajo County participates in the Arizona Public Employers Health Pool (APEHP), pursuant to A.R.S. §11-952.01. APEHP is a consortium of participating local governments that provides medical and dental insurance coverage to its participants’ employees. In addition, APEHP is self-funded through an agreement with participating members and APEHP administers the plan. The members’ employee and employer contributions are paid to the pool to pay benefits and administrative expenses. If the County withdraws from APEHP, it is responsible for its proportionate share of any claims’ run out costs, including claims reported but not settled, claims incurred but not reported, and administrative costs. If the APEHP were to terminate, the County would be responsible for its proportionate share of any pool deficit. Any assets remaining in the pool would be liquidated and distributed to members as planned by the pool’s Board of Directors after all pending and anticipated claims have been paid. 34 Navajo County Notes to Financial Statements June 30, 2013 Note 8 - Fund Balance Classifications of the Governmental Funds The fund balance classifications of the governmental funds as of June 30, 2013, were as follows: General Fund Fund balances: Nonspendable: Inventories Prepaid items Total nonspendable Unassigned Total fund balances Flood Control District Fund Detention Facility Construction Fund Other Governmental Funds $ 986,516 986,516 48,256 48,256 7,893,217 464,424 338,393 $7,919,173 2,810,436 135,832 25,799 1,003,448 437,090 102,625 1,903,657 1,212,769 7,893,217 7,919,173 $3,392,956 3,392,956 $1,498,830 9,010 513,291 8,434,473 63,069 96,113 422,530 464,551 1,046,263 2,021,131 (13) 3,849,238 $5,870,369 $8,879,733 Total $ $ Restricted for: General government Highways and streets Public safety Judicial activities Social services Library Law enforcement Health Recreation Education Debt service Capital projects Total restricted Assigned to: General government Judicial activities Law enforcement Education Debt service Total assigned Public Works/ HURF Fund $7,919,173 $3,392,956 $9,528,979 986,516 48,256 1,034,772 464,424 8,231,610 7,919,173 2,810,436 135,832 25,799 1,003,448 437,090 102,625 1,903,657 1,212,769 3,392,956 27,639,819 1,561,899 9,010 609,404 422,530 464,551 3,067,394 3,849,225 $35,591,210 Note 9 - Pensions and Other Postemployment Benefits Plan Descriptions—The County contributes to the four plans described below. The plans are component units of the State of Arizona and benefits are established by state statute, and the plans generally provide retirement, long-term disability, and health insurance premium benefits, including death and survivor 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. 35 Navajo County Notes to Financial Statements June 30, 2013 The Arizona State Retirement System (ASRS) administers a cost-sharing, multipleemployer defined benefit pension plan; a cost-sharing, multiple-employer defined benefit health insurance premium benefit 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 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 Public Safety Personnel Retirement System (PSPRS) administers an agent multipleemployer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium benefit plan that covers public safety personnel who are regularly assigned hazardous duty as employees of the State of Arizona and participating 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 participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. The Corrections Officer Retirement Plan (CORP) administers an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium benefit plan that covers state, county, and local correction officers; dispatchers; and probation, surveillance, and juvenile detention officers. The Administrative Office of the Courts Probation Officers is a group separately covered under the plan in which the related plan information that follows is separately referred to as the CORP-AOC. The CORP is governed by The Board of Trustees of PSPRS and participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 6. The Elected Officials Retirement Plan (EORP) administers a cost-sharing, multipleemployer defined benefit pension plan and a cost-sharing, multiple-employer defined benefit health insurance premium benefit that covers State of Arizona and county elected officials and judges, and elected officials of participating cities. The EORP is governed by The Board of Trustees of PSPRS according to the provisions of A.R.S. Title 38, Chapter 5, Article 3. EORP’s health insurance premium benefit portion is not administered as its own formal trust. Therefore, in accordance with GASB Statement No. 43, the County is required to disclose certain actuarial information related to the health insurance premium benefit portion that is similar to that of an agent multiple-employer defined benefit plan. However, the Board of Trustees obtains an actuarial valuation for both EORP portions on their statutory basis as cost-sharing plans, and therefore, actuarial information for the County, as a participating government employer, is not available. Each plan issues a publicly available financial report that includes its financial statements and required supplementary information. A report is available on their Web site or may be obtained by writing or calling the applicable plan. ASRS 3300 N. Central Ave. P.O. Box 33910 Phoenix, AZ 85067-3910 (602) 240-2000 or 1-800-621-3778 www.azasrs.gov 36 PSPRS, CORP, and EORP 3010 E. Camelback Rd., Suite 200 Phoenix, AZ 85016-4416 (602) 255-5575 www.psprs.com Navajo County Notes to Financial Statements June 30, 2013 Funding Policy—The Arizona State Legislature establishes and may amend active plan members’ and the County’s contribution rates for the ASRS, PSPRS, CORP, and EORP. Cost-sharing plans—For the year ended June 30, 2013, active ASRS members were required by statute to contribute at the actuarially determined rate of 11.14 percent (10.9 percent for retirement and 0.24 percent for long-term disability) of the members’ annual covered payroll and the County was required by statute to contribute at the actuarially determined rate of 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. Active EORP members were required by statute to contribute 11.5 percent of the members’ annual covered payroll, and the County was required to remit a designated portion of certain court fees plus additional contributions at the actuarially rate of 20.87 percent of the members’ annual covered payroll that includes the actuarially set rate of 1.8 percent for the plan’s health insurance premium benefit. The County’s contributions for the current and 2 preceding years, all of which were equal to the required contributions, were as follows: Year ended June 30 ASRS: 2013 2012 2011 Retirement Fund Health Benefit Supplement Fund Long-Term Disability Fund $107,705 104,134 103,730 $39,768 39,670 43,233 $1,698,431 1,631,434 1,556,369 Year ended June 30 EORP: Retirement Fund 2013 2012 2011 $317,998 263,472 247,432 Health Insurance Premium Benefit $30,016 29,166 27,936 Agent plans—For the year ended June 30, 2013, active PSPRS members were required by statute to contribute 9.55 percent of the members’ annual covered payroll and the County was required to contribute 28.05 percent, the aggregate of which is the actuarially required amount. The health insurance premium benefit portion of the contribution rate was actuarially set at 1.20 percent of covered payroll. Active CORP members and probation officers participating in the CORP-AOC were required by statute to contribute 8.41 percent of the members’ annual covered payroll. In addition, the County was required to contribute 7.80 percent for active CORP members and 13.12 percent for CORP-AOC members. The aggregate of the members’ and the County’s contributions is the actuarially required amount. The health insurance premium portion of the contribution rate was actuarially set at 1.00 percent of covered payroll for active CORP members and 1.27 percent for CORPAOC members. 37 Navajo County Notes to Financial Statements June 30, 2013 All participating employers in the CORP-AOC are accounted for as one group within the Corrections Officer Retirement Plan and, as such, an actuarial valuation of CORP-AOC is only performed for the group as a whole. Therefore, actuarial information and certain trend information for the County, as a participating government, are not available. Actuarial methods and assumptions—The contribution requirements for the year ended June 30, 2013, were established by the June 30, 2011, actuarial valuations, and those actuarial valuations were based on the following actuarial methods and assumptions. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the funded status of the plans and the annual required contributions are subject to continual revision as actual results are compared to past expectations and new estimates are made. The required schedule of funding progress presented as required supplementary information provides multiyear trend information that shows whether the actuarial value of the plans’ assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits. Projections of benefits are based on (1) the plans as understood by the County and plans’ members and include the types of benefits in force at the valuation date, and (2) the pattern of sharing benefit costs between the County and plans’ members to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The significant actuarial methods and assumptions used are the same for both plans and related benefits (unless noted), and the actuarial methods and assumptions used to establish the fiscal year 2013 contribution requirements, are as follows: Actuarial valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return Projected salary increases includes inflation at June 30, 2011 Entry age normal Level percent closed for unfunded actuarial accrued liability, open for excess 25 years for unfunded actuarial accrued liability, 20 years for excess 7-year smoothed market value 8.25% 5%-8% for PSPRS and CORP 5% for PSPRS and CORP 38 Navajo County Notes to Financial Statements June 30, 2013 Annual Pension/OPEB Cost—The County’s pension/OPEB cost for the agent plans for the year ended June 30, 2013, and related information follows: PSPRS Pension Annual pension/ OPEB costs Health Insurance Premium Benefit CORP Pension Health Insurance Premium Benefit $614,586 $27,468 $119,826 $17,622 614,586 27,468 119,826 17,622 Contributions made CORP-AOC Health Insurance Premium Pension Benefit Annual pension/ OPEB costs $227,743 $24,408 227,743 24,408 Contributions made Trend Information—Annual pension and OPEB cost information for the current and 2 preceding years follows for each of the agent plans. Year Ended June 30 Annual Pension/OPEB Cost 2013 $614,586 2013 27,468 100 0 Pension Health insurance premium benefit 2012 523,118 100 0 2012 33,149 100 0 Pension Health insurance premium benefit 2011 461,713 100 0 2011 32,434 100 0 2013 119,826 100 0 2013 17,622 100 0 Pension Health insurance premium benefit 2012 86,459 100 0 2012 18,360 100 0 Pension Health insurance premium benefit 2011 106,201 100 0 2011 18,788 100 0 Plan PSPRS Pension Health insurance premium benefit CORP Pension Health insurance premium benefit 39 Percentage of Annual Cost Contributed 100% Net Pension/OPEB Obligation $0 Navajo County Notes to Financial Statements June 30, 2013 Year Ended June 30 Annual Pension/OPEB Cost 2013 $227,743 2013 24,408 100 0 Pension Health insurance premium benefit 2012 240,811 100 0 2012 29,432 100 0 Pension Health insurance premium benefit 2011 229,291 100 0 2011 27,291 100 0 Plan CORP-AOC Pension Health insurance premium benefit Percentage of Annual Cost Contributed 100% Net Pension/OPEB Obligation $0 Funded Status—The funded status of the plans as of the most recent valuation date, June 30, 2013, along with the actuarial assumptions and methods used in those valuations follow. PSPRS CORP Health Health Insurance Insurance Premium Premium Pension Benefit Pension Benefit Actuarial value of assets (a) $6,013,808 $0 $3,619,777 $0 Actuarial accrued liability (b) 14,291,830 297,397 3,806,758 143,461 8,278,022 297,397 186,981 143,461 42.1% 0.0% 95.1% 0.0% $2,232,165 $2,232,165 $1,787,485 $1,787485 370.9% 13.32% 10.5% 8.03% Unfunded actuarial accrued liability (funding excess) (b) – (a) Funded ratio (a)/(b) Annual covered payroll (c) Unfunded actuarial accrued liability (funding excess) as a percentage of covered payroll ([(b)- (a)]/(c)) The actuarial methods and assumptions used are the same for all plans and related benefits, and for the most recent valuation date, are as follows: Actuarial valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return Projected salary increases includes inflation at June 30, 2013 Entry age normal Level percent closed for unfunded actuarial accrued liability, open for excess 23 years for underfunded actuarial accrued liability, 20 years for excess 7-year smoothed market value (80%/120% market) 7.85% 4.5% - 8.5% for PSPRS; 4.5% - 7.75% for CORP 4.5% for PSPRS and CORP 40 Navajo County Notes to Financial Statements June 30, 2013 Note 10 - Interfund Balances and Activity Interfund receivables and payables—Interfund balances at June 30, 2013, were as follows: Payable from General Fund Detention Facility Construction Fund Other Governmental Funds Total Payable to Public Other Works/HURF Governmental Fund Funds $435 $ 827 General Fund $583,117 9,000 $592,117 $435 114,223 $115,050 Total $ 1,262 583,117 123,223 $707,602 The interfund balances resulted from time lags between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. All interfund balances are expected to be paid in one year. Interfund transfers—Interfund transfers for the year ended June 30, 2013, were as follows: Transfer from General Fund Public Works/HURF Fund Flood Control District Fund Other Governmental Funds Total General Fund Transfers to Public Other Works/HURF Governmental Fund Funds $1,065,638 $ 749,803 908,458 836,614 $2,494,875 $25,000 $25,000 267,624 6,304,762 $7,638,024 Total $ 1,065,638 749,803 1,176,082 7,166,376 $10,157,899 Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments are due, and (3) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. Note 11 - 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 Treasurer has a fiduciary responsibility to administer those and the County’s monies under his stewardship. The Treasurer invests, on a pool basis, all idle monies not specifically invested for a fund or program. In addition, the Treasurer determines the fair value of those pooled investments annually at June 30. 41 Navajo County Notes to Financial Statements June 30, 2013 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 pool’s structure 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 Treasurer allocates interest earnings to each of the pool’s participants. The deposits and investments held by the County are included in the County Treasurer’s investment pool, except for $5,192,579 of deposits and $1,018,683 of investments in U.S. Treasury money market funds. Therefore, the deposit and investment risks of the Treasurer’s investment pool are substantially the same as the County’s deposit and investment risks. See Note 2 for disclosure of the County’s deposit and investment risks. Details of each major investment classification follow: Investment Type U.S. agency securities U.S. Treasury securities Corporate notes U.S. Treasury money market funds Principal $90,003,535 21,981,096 4,450,000 15,000 Interest Rates .50% - 1.30% .50% - .75% Variable Maturities 10/13 – 06/18 08/13 – 08/17 04/14 – 09/14 .02% N/A Amount $88,696,000 21,706,140 4,452,842 15,000 A condensed statement of the investment pool’s net position and changes in net position follows: Statement of Net Position Assets Liabilities Net position $161,782,569 4,493,488 $157,289,081 Net position held in trust for: Internal participants External participants Total net position held in trust $ 28,793,006 128,496,075 $157,289,081 Statement of Changes in Net Position Total additions Total deductions Net increase Net position held in trust: July 1, 2012 June 30, 2013 42 $296,650,029 294,014,790 2,635,239 154,653,842 $157,289,081 Navajo County Notes to Financial Statements June 30, 2013 Note 12 - Subsequent Event On August 20, 2013, Navajo County issued $10,625,000 of pledged revenue refunding obligations with an interest rate of 2.17 percent and a final maturity date of July 1, 2023. The County has pledged a portion of its general county and state sales tax revenues toward the future payment of debt related to these obligations. The net proceeds will be used for refunding the 2008 series pledged revenue obligations, constructing a Public Works facility in Holbrook, and purchasing software and equipment for the jail. Note 13 - Beginning Net Position Restated Governmental activities’ net position at July 1, 2012, has been restated from amounts previously reported as a result of errors accumulated over prior years in which the County capitalized repair and maintenance costs for infrastructure assets that did not extend the useful life or service capacity of the assets. Net position of the governmental activities has been restated as follows: Governmental activities’ net position, June 30, 2012, as previously reported To correct capital assets, being depreciated, net Governmental activities’ net position, July 1, 2012, as restated 43 $103,751,655 (6,563,336) $ 97,188,319 Navajo County, Arizona Fiscal Year Ended June 30, 2013 Comprehensive Annual Financial Report OTHER REQUIRED SUPPLEMENTARY INFORMATION Navajo County, Arizona Fiscal Year Ended June 30, 2013 Navajo County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Property taxes Licenses and permits Fines and forfeits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ 7,087,601 371,500 905,100 22,426,241 1,416,036 31,307 417,731 32,655,516 Expenditures: General government Board of Supervisors/Administration Buildings and Grounds Elections Planning and Zoning Recorder Voter Registration Assessor Information Technology Treasurer Personnel Commission County-wide Legal Defender County Attorney Superior Court Public Defender Clerk of Court Holbrook Justice Court Winslow Justice Court Snowflake Justice Court Show Low Justice Court Pinetop Justice Court 2,585,634 1,965,832 765,092 382,169 281,362 234,694 1,346,187 969,171 456,318 10,352 1,531,235 355,508 2,231,395 2,825,557 1,032,853 1,365,121 334,675 330,934 385,863 298,009 345,736 Actual Amounts $ 7,355,796 345,480 900,873 21,251,426 1,288,142 (19,219) 419,552 31,542,050 2,045,090 1,440,792 464,319 291,605 230,949 197,615 1,168,483 758,598 463,682 8,670 1,191,165 355,466 2,153,583 2,801,725 720,538 1,136,532 341,811 323,998 390,850 290,736 343,846 Variance with Final Budget $ 268,195 (26,020) (4,227) (1,174,815) (127,894) (50,526) 1,821 (1,113,466) 540,544 525,040 300,773 90,564 50,413 37,079 177,704 210,573 (7,364) 1,682 340,070 42 77,812 23,832 312,315 228,589 (7,136) 6,936 (4,987) 7,273 1,890 (Continued) See accompanying note to budgetary comparison schedules. 46 Navajo County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2013 (Continued) Original and Final Budgeted Amounts Kayenta Justice Court Kayenta Constable Pinetop Constable Snowflake Constable Holbrook Constable Winslow Constable Show Low Constable Total general government $ 113,382 62,658 58,960 50,355 27,179 47,657 56,899 20,450,787 Public safety Juvenile Detention Juvenile Probation Adult Probation Jail Operations Sheriff Total public safety Health and welfare Public Fiduciary Indigent Health Total health and welfare Education School Superintendent Actual Amounts $ 99,758 59,390 58,497 49,438 25,918 48,111 56,173 17,517,338 Variance with Final Budget $ 13,624 3,268 463 917 1,261 (454) 726 2,933,449 1,118,482 480,931 597,744 6,587,605 5,409,981 14,194,743 1,038,358 388,939 587,547 4,873,922 4,986,725 11,875,491 80,124 91,992 10,197 1,713,683 423,256 2,319,252 446,584 3,398,400 3,844,984 405,876 3,162,106 3,567,982 40,708 236,294 277,002 348,336 319,996 28,340 Debt Service Principal Interest and other charges Total debt service 797 15 812 (797) (15) (812) (Continued) See accompanying note to budgetary comparison schedules. 47 Navajo County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2012 (Continued) Original and Final Budgeted Amounts Actual Amounts Capital outlay Capital outlay $ 312,500 $ Contingency $ 4,000,000 $ Total expenditures Excess (deficiency) of revenues over expenditures 371,277 (58,777) 4,000,000 43,151,350 33,652,896 9,498,454 (10,495,834) (2,110,846) $8,384,988 6,717,585 (2,524,497) 78,863 2,494,875 (1,065,638) 78,863 (4,222,710) 1,458,859 4,193,088 1,508,100 (2,684,988) Other financing sources (uses): Capital lease agreements Sale of capital assets Transfers in Transfers out Total other financing sources and uses Net change in fund balances (6,302,746) Fund balances, July 1, 2012 Fund balances, June 30, 2013 Variance with Final Budget (602,746) 6,302,746 $ 6,473,115 $ 5,870,369 See accompanying note to budgetary comparison schedules. 48 5,700,000 170,369 $ 5,870,376 Navajo County Required Supplementary Information Budgetary Comparison Schedule Public Works/HURF Fund Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous $ 9,033,599 25,000 47,691 20,526 Total revenues Expenditures: Highways and streets Total expenditures Excess (deficiency) of revenues over expenditures $ Net change in fund balances Fund balances, July 1, 2012 Increase in reserve for inventories 656,918 (12,829) (85,062) 45,881 604,908 17,033,457 17,033,457 9,549,268 9,549,268 7,484,189 7,484,189 182,456 8,089,097 (701,439) (701,439) 25,000 (749,803) (724,803) (8,608,080) (542,347) - 25,000 (48,364) (23,364) 8,065,733 9,331,072 91,008 $ 8,879,733 See accompanying note to budgetary comparison schedules. 49 $ 9,731,724 8,608,080 $ 9,690,517 12,171 (37,371) 66,407 Variance with Final Budget 9,126,816 (7,906,641) Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses Fund balances, June 30, 2013 Actual Amounts 722,992 91,008 $ 8,879,733 Navajo County Required Supplementary Information Budgetary Comparison Schedule Flood Control District Fund Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Taxes Investment earnings Miscellaneous Total revenues $ 2,746,573 56,195 3,355 2,806,123 Expenditures: Public safety Total expenditures 9,886,589 9,886,589 Actual Amounts $ 2,280,770 (27,180) 2,253,590 902,860 7,983,326 Other financing sources (uses): Transfers out Total other financing sources and uses (1,093,500) (1,093,500) (1,176,082) (1,176,082) (8,173,966) (273,222) 8,173,966 - $ 8,192,395 $ 7,919,173 See accompanying note to budgetary comparison schedules. 50 (465,803) (83,375) (3,355) (552,533) 8,535,859 8,535,859 (7,080,466) Fund balances, July 1, 2012 Fund balances, June 30, 2013 $ 1,350,730 1,350,730 Excess (deficiency) of revenues over expenditures Net change in fund balances Variance with Final Budget (82,582) (82,582) 7,900,744 $ 18,429 7,919,173 Navajo County Required Supplementary Information Note to Budgetary Comparison Schedules June 30, 2013 Note 1 - Budgeting and Budgetary Control 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. Essentially, the County prepares its budget on the same modified accrual basis of accounting used to record actual revenues and expenditures. The County has adopted budgets in accordance with A.R.S. requirements for the General Fund, Special Revenue Funds, Capital Project Funds, and Debt Service Funds, with the exception of the County School Superintendent’s (CSS) Special Revenue Fund. In accordance with A.R.S. § 15-301(C), the CSS is designated as a local education agency (LEA). Expenditures for the LEA for an accommodation school, juvenile detention education, special education services, and unorganized territory transportation are not included in the adopted budget of the County’s Board of Supervisors. 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, each fund includes only one department. 51 Navajo County Required Supplementary Information Schedule of Agent Retirement Plans’ Funding Progress June 30, 2013 Public Safety Personnel Retirement System Actuarial Valuation Date Pension 6/30/13 Health insurance premium benefit 6/30/13 Pension 6/30/12 Health insurance premium benefit 6/30/12 Pension 6/30/11 Health insurance premium benefit 6/30/11 Actuarial Value of Plan Assets (a) Actuarial Accrued Liability (b) Unfunded actuarial accrued liability (UAAL) (funding excess) (b)-(a) $6,013,808 $14,291,830 $8,278,022 0 297,397 6,078,479 Funded Ratio (a/b) Annual Covered Payroll (c) UAAL (funding excess) as a percentage of covered payroll (b) – (a)/(c) 42.1% $2,232,165 370.9% 297,397 0.0 2,232,165 13.32 13,841,159 7,762,680 43.9 2,213,998 350.6 0 248,581 248,581 0.0 2,213,998 11.2 5,984,647 12,325,590 6,340,943 48.6 2,272,168 279.1 0 247,183 247,183 0.0 2,272,168 10.9 $3,619,777 $3,806,758 186,981 95.1% $1,787,485 0 143,461 143,461 0.0 1,787,485 8.03 3,397,424 3,657,329 259,905 92.9 1,722,806 15.1 0 132,443 132,443 0.0 1,722,806 7.7 3,133,375 3,028,823 103.5 $1,699,631 (6.2) 0 142,121 0.0 1,699,631 8.4 Corrections Officer Retirement Plan CORP Pension 6/30/13 Health insurance premium benefit 6/30/13 Pension 6/30/12 Health insurance premium benefit 6/30/12 Pension 6/30/11 Health insurance premium benefit 6/30/11 (104,552) 142,121 52 10.5% Navajo County Required Supplementary Information Schedule of Agent Retirement Plans’ Funding Progress June 30, 2013 Note 1 - Actuarial Information Available All participating employers in the CORP Administrative Office of the Courts (AOC) are accounted for as one group within the Corrections Officer Retirement Plan and, as such, an actuarial valuation of CORP-AOC is only performed for the group as a whole. Therefore, actuarial information for the County, as a participating government, is not available. 53 Navajo County, Arizona Fiscal Year Ended June 30, 2013 Comprehensive Annual Financial Report SUPPLEMENTARY INFORMATION Navajo County, Arizona Fiscal Year Ended June 30, 2013 Navajo County Nonmajor Governmental Funds June 30, 2013 Special Revenue Funds Administration Accounts for administration of a variety of programs including the Assessor, Recorder and Treasurer surcharges, election services and certain emergency service functions. Funding sources include service related surcharges, federal and state grant funds, fees and local government contributions. County Attorney Accounts for various programs administered by the County Attorney including Victim's Rights, Assistance and Restitution, Child Support Enforcement, AntiRacketeering, High-Intensity Drug Trafficking Area and Bad Check Enforcement. Funding sources include statutory fees and other surcharges related to criminal prosecution, federal and state grants and other user fees. Courts Accounts for the processing of criminal cases as well as court enhancement and record retention improvement funds. Funding sources include statutory fees and other surcharges related to the courts. Environmental and Conservation Accounts for forest health and energy conservation programs. Funding is provided by federal grants. Housing Accounts for housing and community development programs. Funding is provided by federal Community Development Block Grants. Library District Accounts for support services and materials provided to the County's community libraries. Funding sources include federal and state grants and a secondary property tax levy. Probation Accounts for Adult and Juvenile Probation programs and services provided in coordination with the State's Superior Court System. Funding sources include state grants and fees paid by probationers. Public Defense Accounts for the public defense of criminal cases including public defense enhancement funds. Funding sources include statutory fees and other surcharges related to public defense. Public Health Accounts for a variety of health service and education programs including BioTerrorism, Women, Infants and Children (WIC), Nutrition, Tobacco, Dental and infectious and contagious diseases. Funding sources include a secondary property tax levy, federal and state grants, appropriations, fees and private party contributions. Recreation Accounts for operating costs of the White Mountain Lake Recreation District. Funding sources are fees and secondary property taxes assessed the benefiting property owners within the district boundaries. Sheriff's Office Accounts for various jail and law enforcement programs including Jail Enhancement, Drug Enforcement, Anti-Racketeering, High-Intensity Drug Trafficking Area and Boating Safety. Funding sources include federal and state grants. 56 Navajo County Nonmajor Governmental Funds June 30, 2013 Special Districts Accounts for operating costs for the Silver Creek, Bucking Horse, Victory Heights, Hilltop Drive, Mountain View and North Whistle Stop Loop County Road Improvement Districts. Funding sources are secondary property taxes assessed the benefiting property owners within the district boundaries. Superintendent of Schools Accounts for educational services and programs including the Navajo County Accommodation District, juvenile detention Hope School, Special Services Consortium and unorganized school district territory. Funding sources include federal and state grants and charges for services from local school districts. Workforce Investment Act (WIA) Accounts for administration of the federal Workforce Investment Act (WIA) program. Funding is from federal grants. Capital Projects Funds General Government Accounts for construction of County buildings and improvements to existing facilities. Debt Service Funds General Government Account for the accumulation of resources for payment of principal and interest on the 2008 Series Pledged Revenue Obligations for acquisition of property and buildings at the Heber and Show Low complexes and for water and electrical upgrades at the Holbrook complex. Jail Accounts for the accumulation of resources for the payment of principal and interest on the 2012A and 2012B revenue bonds for current refunding of the 2000 Series Certificates of Participation jail construction bonds and the 2012-2014 jail addition and remodel. Funding for debt service payments is annual appropriations. Special Districts Accounts for the accumulation of resources for the payment of principal and interest on bonds and other debt instruments of the Sutter Drive, Scott's Pine Tract A, Shumway Road and Bucking Horse Improvement Districts. Funding sources are secondary property taxes assessed the benefiting property owners within the district boundaries. 57 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2013 Assets Cash and investments Receivables: Property taxes Accrued interest Due from other funds Due from other governments Cash and investments held by trustee-restricted Prepaid items Total assets Liabilities and Fund Balances: Liabilities: Accounts payable Accrued payroll and employee benefits Due to other funds Deferred revenues Total liabilities Fund balances: Nonspendable Restricted Assigned Unassigned Total fund balances(deficits) Total liabilities and fund balances Special Revenue County Attorney Courts Administration $ 386,342 $ 1,363,137 811 1,872 87,176 183,224 $ 1,392,228 Environmental and Conservation $ 1,842 940 11,385 223,881 277 $ 474,329 $ 1,548,233 $ 1,406,395 $ 224,158 $ 20,564 6,668 9,000 87,176 123,408 $ 12,450 52,222 $ 29,641 27,014 940 $ 14,535 4,778 130,967 195,639 257,216 93,705 $ 350,921 474,329 1,352,594 $ 1,352,594 1,548,233 $ 57,595 19,313 1,348,800 204,845 1,348,800 1,406,395 $ 204,845 224,158 (continued) 58 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2013 Assets Cash and investments Receivables: Property taxes Accrued interest Due from other funds Due from other governments Cash and investments held by trustee-restricted Prepaid items Total assets Liabilities and Fund Balances: Liabilities: Accounts payable Accrued payroll and employee benefits Due to other funds Deferred revenues Total liabilities Fund balances: Nonspendable Restricted Assigned Unassigned Total fund balances(deficits) Total liabilities and fund balances Special Revenue Library District Probation Housing $ $ $ 21,461 29 2,815 54,805 3 8,299 747,769 Public Defense $ 982 15 155 125,234 157 6,305 $ 8,302 $ 79,110 $ 748,921 $ 131,696 $ 1,854 $ $ 121,593 80,501 15 $ 2,172 2,706 1,854 23,138 11,114 2,815 16,244 53,311 6,448 25,799 $ 6,448 8,302 $ 25,799 79,110 $ 202,109 4,878 546,812 126,818 546,812 748,921 $ 126,818 131,696 (continued) 59 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2013 Assets Cash and investments Receivables: Property taxes Accrued interest Due from other funds Due from other governments Cash and investments held by trustee-restricted Prepaid items Total assets Liabilities and Fund Balances: Liabilities: Accounts payable Accrued payroll and employee benefits Due to other funds Deferred revenues Total liabilities Fund balances: Nonspendable Restricted Assigned Unassigned Total fund balances(deficits) Total liabilities and fund balances Special Revenue Sheriff's Recreation Office Public Health $ 60,592 $ 84,486 1,448 966 657,756 97,352 $ 45,369 132 805,248 $ 142,853 $ $ 46,929 107,368 966 213,534 368,797 $ 6,745 $ 436,451 $ 436,451 805,248 $ $ 34,500 858,839 99,672 27,576 109,487 47,706 284,441 101,598 34,500 448,746 91,152 101,598 142,853 574,398 $858,839 335,140 4,912 446 755 110,314 239,154 $ 34,510 41,255 474,116 Special Districts $ 340,498 $ 910 4,731 5,641 334,857 $ 334,857 340,498 (continued) 60 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2013 Assets Cash and investments Receivables: Property taxes Accrued interest Due from other funds Due from other governments Cash and investments held by trustee-restricted Prepaid items Total assets Liabilities and Fund Balances: Liabilities: Accounts payable Accrued payroll and employee benefits Due to other funds Deferred revenues Total liabilities Fund balances: Nonspendable Restricted Assigned Unassigned Total fund balances(deficits) Total liabilities and fund balances Special Revenue Superintendant Workforce of Schools Investment Act $ 1,973,572 $ 45,700 3,401 159 364,541 102,967 Capital Projects General Government $ 1,226 Debt Service General Government $ 459,639 562 1,018,683 $ 13,756 2,355,270 $ 148,826 $ 1,226 $ 1,478,884 $ 36,152 $ 9,891 9,545 $ 1,239 $ 500 447 19,883 36,152 $ 13,756 1,903,657 401,705 128,943 2,319,118 2,355,270 128,943 148,826 $ 1,239 $ (13) (13) 1,226 500 1,018,683 459,701 $ 1,478,384 1,478,884 (continued) 61 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2013 Debt Service Assets Cash and investments Receivables: Property taxes Accrued interest Due from other funds Due from other governments Cash and investments held by trustee-restricted Prepaid items Total assets Liabilities and Fund Balances: Liabilities: Accounts payable Accrued payroll and employee benefits Due to other funds Deferred revenues Total liabilities Fund balances: Nonspendable Restricted Assigned Unassigned Total fund balances(deficits) Total liabilities and fund balances Jail $ Debt Service Special Districts Total Nonmajor Governmental Funds $ 178,188 $ 7,864,116 97,559 206 $ $ 275,953 253,787 13,082 115,050 1,715,767 1,018,683 48,256 $ 11,028,741 $ $ $ 83,747 83,747 192,206 192,206 $ 275,953 $ 62 427,985 329,492 123,223 619,062 1,499,762 48,256 8,434,473 1,046,263 (13) 9,528,979 $ 11,028,741 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2013 Revenues: Property taxes Licenses and permits Fines and forfeits Intergovernmental Charges for services Investment earnings Special assessments Contributions Miscellaneous Total revenues Special Revenue County Attorney Courts Administration $ Expenditures: Current: General government Public safety Highways and streets Health and welfare Culture and recreation Education Environmental and conservation Urban redevelopment and housing Debt Service: Principal Interest and other charges Bond issuance costs Total expenditures Excess (deficiency) of revenues over expenditures $ $ $ 488,562 120,317 (1,174) 472,254 1,072,907 28,176 (6,590) 63,237 333,977 646,333 (5,783) 2,079 609,784 31,627 1,598,374 6,150 1,043,914 204,888 417,895 1,865,104 976,454 301,660 (1,259) 300,401 303,402 622,783 1,865,104 976,454 (12,999) (266,730) 67,460 1,940 (42,358) (40,418) 350,901 (107,443) 243,458 312,834 (361,696) (48,862) Net change in fund balances (53,417) (23,272) 18,598 Fund balances (deficits), July 1, 2012 404,338 Other financing sources (uses): Pledged revenue obligations issued Capital lease agreements Payment to bond refunding escrow agent Transfers in Transfers out Total other financing sources and uses Fund balances (deficits), June 30, 2013 Environmental and Conservation $ 350,921 1,375,866 $ 1,352,594 303,402 (3,001) (3,001) 1,330,202 $ 1,348,800 207,846 $ 204,845 (continued) 63 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2013 Revenues: Property taxes Licenses and permits Fines and forfeits Intergovernmental Charges for services Investment earnings Special assessments Contributions Miscellaneous Total revenues Housing $ $ 40,823 491,685 $ 40,826 Public Defense $ 129,282 2,030,086 383,330 (3,680) 20,600 68,620 (407) 59,021 679,988 5,232 2,414,968 49 88,862 3 Expenditures: Current: General government Public safety Highways and streets Health and welfare Culture and recreation Education Environmental and conservation Urban redevelopment and housing Debt Service: Principal Interest and other charges Bond issuance costs Total expenditures Excess (deficiency) of revenues over expenditures 132,014 2,405,358 622,017 42,701 Other financing sources (uses): Pledged revenue obligations issued Capital lease agreements Payment to bond refunding escrow agent Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances (deficits), July 1, 2012 Fund balances (deficits), June 30, 2013 Special Revenue Library District Probation 42,701 622,017 2,405,358 (1,875) 57,971 9,610 (43,152) 8,863 8,863 162,654 (194,955) (32,301) 4,501 (647) 3,854 89,554 (77,729) 11,825 6,988 25,670 13,464 (31,327) 129 533,348 158,145 (540) $ 6,448 $ 25,799 $ 546,812 132,014 $ 126,818 (continued) 64 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2013 Revenues: Property taxes Licenses and permits Fines and forfeits Intergovernmental Charges for services Investment earnings Special assessments Contributions Miscellaneous Total revenues Special Revenue Sheriff's Recreation Office Public Health $ 1,930,397 124,171 1,984,166 119,221 7,778 $ (318) 161,727 61,591 40,779 4,268,103 Expenditures: Current: General government Public safety Highways and streets Health and welfare Culture and recreation Education Environmental and conservation Urban redevelopment and housing Debt Service: Principal Interest and other charges Bond issuance costs Total expenditures Excess (deficiency) of revenues over expenditures 600 162,009 103,299 926,807 375,125 (1,043) $ (2,458) 91,962 57,096 1,461,284 89,504 1,465,915 3,937,909 34,731 163,884 14,066 1,433 94,380 9,876 3,953,408 163,884 314,695 Other financing sources (uses): Pledged revenue obligations issued Capital lease agreements Payment to bond refunding escrow agent Transfers in Transfers out Total other financing sources and uses 1,570,171 (1,875) 34,731 (108,887) 54,773 146,994 648,981 (1,121,990) (326,015) Net change in fund balances (11,320) Fund balances (deficits), July 1, 2012 447,771 Fund balances (deficits), June 30, 2013 $ Special Districts $ 436,451 59,021 (612) 58,409 (1,875) 103,473 $ 101,598 $ (50,478) 54,773 624,876 280,084 574,398 $ 334,857 (continued) 65 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2013 Revenues: Property taxes Licenses and permits Fines and forfeits Intergovernmental Charges for services Investment earnings Special assessments Contributions Miscellaneous Total revenues Special Revenue Superintendant Workforce of Schools Investment Act $ $ 4,324,564 $ (441) 2,921 204,384 4,525,667 454,743 $ (13) (4,458) (13) (4,458) 50,691 481,719 5,006,173 5,006,173 (480,506) 481,719 50,691 380,000 257,657 100,290 737,947 (26,976) (50,704) (742,405) Other financing sources (uses): Pledged revenue obligations issued Capital lease agreements Payment to bond refunding escrow agent Transfers in Transfers out Total other financing sources and uses 4,100,000 510,000 (437,241) 72,759 Net change in fund balances (480,506) Fund balances (deficits), July 1, 2012 Fund balances (deficits), June 30, 2013 Debt Service General Government 455,184 (6,202) Expenditures: Current: General government Public safety Highways and streets Health and welfare Culture and recreation Education Environmental and conservation Urban redevelopment and housing Debt Service: Principal Interest and other charges Bond issuance costs Total expenditures Excess (deficiency) of revenues over expenditures Capital Projects General Government 2,799,624 $ 2,319,118 $ 1,469,105 (4,167,959) 1,401,146 (26,976) 22,055 658,741 155,919 (22,068) 819,643 128,943 $ (13) $ 1,478,384 (continued) 66 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2013 Debt Service Revenues: Property taxes Licenses and permits Fines and forfeits Intergovernmental Charges for services Investment earnings Special assessments Contributions Miscellaneous Total revenues Jail $ Special Districts $ Expenditures: Current: General government Public safety Highways and streets Health and welfare Culture and recreation Education Environmental and conservation Urban redevelopment and housing Debt Service: Principal Interest and other charges Bond issuance costs Total expenditures Excess (deficiency) of revenues over expenditures Total Nonmajor Governmental Funds $ 294 (189) 248,745 294 248,556 2,422,082 124,171 638,790 12,108,618 1,741,122 (25,940) 502,434 64,512 407,017 17,982,806 3,229,151 4,289,168 34,731 4,419,628 785,901 5,006,173 303,402 42,701 Other financing sources (uses): Pledged revenue obligations issued Capital lease agreements Payment to bond refunding escrow agent Transfers in Transfers out Total other financing sources and uses 183,495 187,536 74,568 183,495 262,104 675,982 527,029 100,290 19,414,156 (183,201) (13,548) (1,431,350) 4,100,000 146,994 (4,345,000) 7,638,024 (7,166,376) 373,642 (4,345,000) 4,019,670 (653,746) (979,076) Net change in fund balances (1,162,277) (13,548) (1,057,708) Fund balances (deficits), July 1, 2012 1,162,277 205,754 10,586,687 Fund balances (deficits), June 30, 2013 $ - 67 $ 192,206 $ 9,528,979 Navajo County Budgetary Comparison Schedule Special Revenue - Administration Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous $ Total revenues Expenditures: General government Public safety Education Total expenditures Excess (deficiency) of revenues over expenditures 4,910,566 83,600 250 100,935 Actual Amounts $ 488,562 120,317 (1,174) 2,079 Variance with Final Budget $ (4,422,004) 36,717 (1,424) (98,856) 5,095,351 609,784 (4,485,567) 1,402,001 1,316,640 116,849 2,835,490 204,888 417,895 622,783 1,197,113 898,745 116,849 2,212,707 2,259,861 (12,999) (2,272,860) Other financing sources (uses): Transfers in 117,881 Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2012 Fund balances, June 30, 2013 $ 68 1,940 (115,941) (2,883,447) (2,765,566) (42,358) (40,418) 2,841,089 2,725,148 (505,705) (53,417) 452,288 505,705 - 404,338 350,921 (101,367) 350,921 $ $ Navajo County Budgetary Comparison Schedule Special Revenue - County Attorney Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Fines and forfeits Intergovernmental Charges for services Investment earnings Miscellaneous Contributions Total revenues $ Actual Amounts 225,000 1,602,571 75,976 3,900 64,500 20,000 1,991,947 Expenditures: General government Total expenditures $ 3,283,812 3,283,812 Excess (deficiency) of revenues over expenditures 472,254 1,072,907 28,176 (6,590) 31,627 1,598,374 Variance with Final Budget $ 1,865,104 1,865,104 247,254 (529,664) (47,800) (10,490) (32,873) (20,000) (393,573) 1,418,708 1,418,708 (1,291,865) (266,730) 1,025,135 259,361 (150,000) 350,901 (107,443) 91,540 42,557 109,361 243,458 134,097 Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses Net change in fund balances (1,182,504) Fund balances, July 1, 2012 Fund balances, June 30, 2013 (23,272) 1,182,504 $ - 69 1,159,232 1,375,866 $ 1,352,594 193,362 $ 1,352,594 Navajo County Budgetary Comparison Schedule Special Revenue - Courts Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Fines and forfeits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ 47,200 519,034 402,500 155 38,500 1,007,389 Expenditures: General government Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses Net change in fund balances $ 16,037 (185,057) 243,833 (5,938) (32,350) 36,525 1,396,813 1,396,813 (1,365,878) 67,460 1,433,338 469,794 312,834 (156,960) (412,104) 57,690 (361,696) (48,862) 50,408 (106,552) - 70 $ 976,454 976,454 1,308,188 $ 63,237 333,977 646,333 (5,783) 6,150 1,043,914 Variance with Final Budget 2,373,267 2,373,267 (1,308,188) Fund balances, July 1, 2012 Fund balances, June 30, 2013 Actual Amounts $ 18,598 1,326,786 1,330,202 22,014 1,348,800 $ 1,348,800 Navajo County Budgetary Comparison Schedule Special Revenue - Environmental and Conservation Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Intergovernmental Investment earnings Miscellaneous Total revenues $ Expenditures: Environmental and conservation Total expenditures 357,895 1,000 250,000 608,895 772,288 772,288 Actual Amounts $ 301,660 (1,259) 300,401 Variance with Final Budget $ 303,402 303,402 (56,235) (2,259) (250,000) (308,494) 468,886 468,886 Excess (deficiency) of revenues over expenditures (163,393) (3,001) 160,392 Net change in fund balances (163,393) (3,001) 160,392 Fund balances, July 1, 2012 Fund balances, June 30, 2013 $ 71 163,393 - 207,846 $ 204,845 $ 44,453 204,845 Navajo County Budgetary Comparison Schedule Special Revenue - Housing Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Intergovernmental Investment earnings Total revenues Expenditures: Urban redevelopment and housing $ 691,462 691,462 Total expenditures Excess (deficiency) of revenues over expenditures $ Net change in fund balances Fund balances (deficits), July 1, 2012 (650,639) 3 (650,636) 648,221 690,922 42,701 648,221 (1,875) (2,415) - 8,863 8,863 8,863 8,863 540 6,988 6,448 - 72 $ 42,701 (540) $ 40,823 3 40,826 Variance with Final Budget 690,922 540 Other financing sources (uses): Transfers In Total other financing sources and uses Fund balances, June 30, 2013 Actual Amounts (540) $ 6,448 $ 6,448 Navajo County Budgetary Comparison Schedule Special Revenue - Library District Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Property taxes Intergovernmental Investment earnings Miscellaneous Total revenues $ Expenditures: Culture and recreation Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers In Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2012 Fund balances, June 30, 2013 Actual Amounts 511,414 219,598 215,352 946,364 $ 491,685 129,282 59,021 679,988 664,688 664,688 622,017 622,017 42,671 42,671 281,676 57,971 (223,705) (245,564) 162,654 (194,955) 162,654 50,609 (245,564) (32,301) 213,263 36,112 25,670 (10,442) (36,112) $ 73 Variance with Final Budget - $ 129 $ 25,799 (19,729) (90,316) (156,331) (266,376) 36,241 $ 25,799 Navajo County Budgetary Comparison Schedule Special Revenue - Probation Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ 2,325,656 260,540 2,980 200 2,589,376 Expenditures: Public safety Total expenditures $ 3,124,899 3,124,899 Excess (deficiency) of revenues over expenditures (535,523) Other financing sources (uses): Transfers in Transfers out 5,577 (6,141) Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2012 Fund balances, June 30, 2013 Actual Amounts $ $ (295,570) 122,790 (6,660) 5,032 (174,408) 2,405,358 2,405,358 719,541 719,541 9,610 545,133 4,501 (647) (1,076) 5,494 (564) 3,854 4,418 (536,087) 13,464 549,551 536,087 533,348 - 74 2,030,086 383,330 (3,680) 5,232 2,414,968 Variance with Final Budget $ 546,812 (2,739) $ 546,812 Navajo County Budgetary Comparison Schedule Special Revenue - Public Defense Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ 44,329 150,000 150 194,479 Expenditures: General government Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2012 Fund balances, June 30, 2013 Actual Amounts $ 20,600 68,620 (407) 49 88,862 $ (23,729) (81,380) (557) 49 (105,617) 312,957 312,957 132,014 132,014 180,943 180,943 (118,478) (43,152) 75,326 126,000 (183,000) 89,554 (77,729) (36,446) 105,271 (57,000) 11,825 68,825 (175,478) (31,327) 144,151 175,478 158,145 (17,333) - 75 $ Variance with Final Budget $ 126,818 $ 126,818 Navajo County Budgetary Comparison Schedule Special Revenue - Public Health Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Property taxes Licenses and permits Intergovernmental Charges for services Investment earnings Contributions Miscellaneous Total revenues $ Expenditures: Health and welfare Debt Service Principal Interest and other charges Total expenditures Actual Amounts Variance with Final Budget 1,900,000 65,000 2,942,385 85,260 1,000 23,000 15,931 5,032,576 $ 1,930,397 124,171 1,984,166 119,221 7,778 61,591 40,779 4,268,103 $ 30,397 59,171 (958,219) 33,961 6,778 38,591 24,848 (764,473) 4,993,153 3,937,909 - 14,066 1,433 4,993,153 3,953,408 1,039,745 39,423 314,695 275,272 - 146,994 146,994 648,981 293,218 1,055,244 (14,066) (1,433) Excess (deficiency) of revenues over expenditures Other financing sources (uses): Capital lease agreements Transfers in 355,763 Transfers out (1,492,219) (1,121,990) 370,229 Total other financing sources and uses (1,136,456) (326,015) 810,441 Net change in fund balances (1,097,033) (11,320) 1,085,713 Fund balances, July 1, 2012 Fund balances, June 30, 2013 1,097,033 - $ 76 $ 447,771 436,451 $ (649,262) 436,451 Navajo County Budgetary Comparison Schedule Special Revenue - Recreation Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Special assessments Investment earnings Miscellaneous Total revenues $ 149,000 500 500 150,000 Expenditures: Culture and recreation Total expenditures Actual Amounts $ 249,317 249,317 161,727 (318) 600 162,009 Variance with Final Budget $ 163,884 163,884 12,727 (818) 100 12,009 85,433 85,433 Excess (deficiency) of revenues over expenditures (99,317) (1,875) 97,442 Net change in fund balances (99,317) (1,875) 97,442 Fund balances, July 1, 2012 Fund balances, June 30, 2013 99,317 - $ 77 $ 103,473 101,598 $ 4,156 101,598 Navajo County Budgetary Comparison Schedule Special Revenue - Sheriff's Office Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Fines and forfeits Intergovernmental Charges for services Investment earnings Miscellaneous $ Total revenues Expenditures: Public safety Debt Service Principal Interest and other charges Total expenditures Actual Amounts 20,000 1,016,328 315,555 2,289 39,244 $ 103,299 926,807 375,125 (1,043) 57,096 Variance with Final Budget $ 83,299 (89,521) 59,570 (3,332) 17,852 1,393,416 1,461,284 67,868 1,995,169 1,465,915 529,254 1,995,169 94,380 9,876 1,570,171 (94,380) (9,876) 424,998 Excess (deficiency) of revenues over expenditures (601,753) (108,887) 492,866 75,000 59,021 (15,979) Other financing sources (uses): Capital lease agreements Transfers in Transfers out - Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2012 Fund balances, June 30, 2013 $ 78 (612) (612) 75,000 58,409 (16,591) (526,753) (50,478) 476,275 526,753 - 624,876 574,398 98,123 574,398 $ $ Navajo County Budgetary Comparison Schedule Special Revenue - Special Districts Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Investment earnings Special assessments Miscellaneous Total revenues $ 555 64,845 122,881 188,281 Expenditures: Highways and streets Total expenditures Actual Amounts $ (2,458) 91,962 89,504 Variance with Final Budget $ (3,013) 27,117 (122,881) (98,777) 468,075 468,075 34,731 34,731 433,344 433,344 Excess (deficiency) of revenues over expenditures (279,794) 54,773 334,567 Net change in fund balances (279,794) 54,773 334,567 Fund balances, July 1, 2012 Fund balances, June 30, 2013 279,794 - $ 79 $ 280,084 334,857 $ 290 334,857 Navajo County Budgetary Comparison Schedule Special Revenue - Workforce Investment Act Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Intergovernmental Investment earnings Total revenues $ 1,166,555 59,564 1,226,119 Expenditures: Health and welfare Total expenditures Actual Amounts $ 1,234,845 1,234,845 455,184 (441) 454,743 Variance with Final Budget $ (711,371) (60,005) (771,376) 481,719 481,719 753,126 753,126 Excess (deficiency) of revenues over expenditures (8,726) (26,976) (18,250) Net change in fund balances (8,726) (26,976) (18,250) 8,726 - 155,919 128,943 147,193 128,943 Fund balances, July 1, 2012 Fund balances, June 30, 2013 $ 80 $ $ Navajo County Budgetary Comparison Schedule Capital Projects - General Government Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Investment earnings Miscellaneous Total revenues $ Expenditures: General government Total expenditures 434,285 434,285 Actual Amounts $ Variance with Final Budget (13) (13) $ (13) (434,285) (434,298) 1,227,856 50,691 1,177,165 1,227,856 50,691 1,177,165 Excess (deficiency) of revenues over expenditures (793,571) (50,704) 742,867 Other financing sources : Transfers in Transfers out Total other financing sources and uses 749,950 749,950 510,000 (437,241) 72,759 (239,950) (437,241) (677,191) (43,621) 22,055 65,676 Net change in fund balances Fund balances (deficits), July 1, 2012 Fund balances, June 30, 2013 43,621 - $ 81 $ (22,068) (13) $ (65,689) (13) Navajo County Budgetary Comparison Schedule Debt Service - General Government Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Investment earnings Total revenues $ - Expenditures: Debt Service Principal Interest and other charges Bond issuance costs Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Pledged revenue obligations issued Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2012 Fund balances, June 30, 2013 Actual Amounts $ (4,458) (4,458) $ (4,458) (4,458) 380,000 869,710 100,290 1,350,000 380,000 257,657 100,290 737,947 612,053 612,053 (1,350,000) (742,405) 607,595 8,500,000 815,000 4,100,000 1,469,105 (4,400,000) 654,105 (8,300,000) 1,015,000 (4,167,959) 1,401,146 4,132,041 386,146 (335,000) 658,741 993,741 335,000 819,643 484,643 - 82 $ Variance with Final Budget $ 1,478,384 $ 1,478,384 Navajo County Budgetary Comparison Schedule Debt Service - Jail Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Investment earnings Miscellaneous Total revenues $ 700,000 700,000 Expenditures: Debt Service Principal Interest and other charges Total expenditures $ - Excess (deficiency) of revenues over expenditures Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2012 $ 294 294 $ 294 (700,000) (699,706) (183,495) (183,495) (183,201) (883,201) (5,000,000) 4,300,000 (4,345,000) 4,019,670 655,000 (280,330) (700,000) (653,746) (979,076) (653,746) (279,076) - (1,162,277) (1,162,277) - 1,162,277 1,162,277 - 83 Variance with Final Budget 183,495 183,495 700,000 Other financing sources (uses): Payments to bond refunding agent escrow Transfers in Fund balances, June 30, 2013 Actual Amounts $ - $ - Navajo County Budgetary Comparison Schedule Debt Service - Special Districts Year Ended June 30, 2013 Original and Final Budgeted Amounts Revenues: Charges for services Investments earnings Special assessments Total revenues $ 770 1,250 295,445 297,465 Expenditures: Debt Service Principal Interest and other charges Total expenditures Actual Amounts $ (189) 248,745 248,556 Variance with Final Budget $ (770) (1,439) (46,700) (48,909) 187,536 336,596 524,132 187,536 74,568 262,104 262,028 262,028 Excess (deficiency) of revenues over expenditures (226,667) (13,548) 213,119 Net change in fund balances (226,667) (13,548) 213,119 Fund balances, July 1, 2012 Fund balances, June 30, 2013 226,667 - $ 84 $ 205,754 192,206 $ (20,913) 192,206 Comprehensive Annual Financial Report AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES Navajo County, Arizona Fiscal Year Ended June 30, 2013 Navajo County Statement of Changes in Assets and Liabilities Agency Funds Year Ended June 30, 2013 Assets Cash and investments Interest receivable Total Assets Balance July 1, 2012 Additions Deductions $ 5,191,256 2,820 $ 5,194,076 $ 14,758,919 19 $ 14,758,938 $ 15,459,526 $ $ 15,459,526 $ Liabilities Due to other governments Deposits held for other parties Total Liabilities $ 3,086,951 2,107,125 $ 5,194,076 $ 13,194,562 1,564,376 $ 14,758,938 $ 13,894,446 1,565,080 $ 15,459,526 $ 86 Balance July 1, 2013 $ 4,490,649 2,839 4,493,488 2,387,067 2,106,421 4,493,488 Comprehensive Annual Financial Report STATISTICAL SECTION Navajo County, Arizona Fiscal Year Ended June 30, 2013 Navajo County Statistical Section June 30, 2013 This part of the Navajo County comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about Navajo County’s financial health. Contents Financial Trends These schedules contain trend information to help citizens understand how the County’s financial performance and fiscal health have changed over time. Financial trend information can be found on pages 89 through 95 of this report. Revenue Capacity These schedules contain information to assist citizens in understanding the property tax; a significant local revenue source. Revenue capacity information can be found on pages 96 through 99 of this report. Debt Capacity These schedules present information to assist citizens in assessing the affordability of the County’s current levels of outstanding debt and the County’s ability to issue additional debt in the future. Debt capacity information can be found on pages 100 through 102 of this report. Demographic and Economic Information These schedules contain demographic and economic indicators that aid citizens in understanding the environment within which the County’s financial activities are transacted. Demographic information can be found on pages 103 and 105 of this report. Operating Information These schedules contain service and infrastructure data to help citizens understand how the information in the County’s financial report relates to the services the County provides and the activities we perform. Operating information can be found on pages 106 through 109 of this report. Sources Unless otherwise noted, the information in these schedules is derived from the annual financial reports for the relevant year. 88 Navajo County Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) Governmental activities: Net investment in capital assets Restricted Unrestricted Total governmental activities net position Governmental activities: Net investment in capital assets Restricted Unrestricted Total governmental activities net position 2004 2005 Fiscal Year 2006 2007 2008 $ 57,948,043 9,778,365 4,829,001 $ 72,555,409 $ 55,643,023 15,322,958 8,491,241 $ 79,457,222 $ 59,552,340 15,958,946 16,657,154 $ 92,168,440 $ 55,332,385 21,309,950 22,441,546 $ 99,083,881 $ 61,704,323 24,374,755 16,119,289 $ 102,198,367 2009 2010 Fiscal Year 2011 2012 2013 $ 73,728,006 19,040,878 15,007,820 $ 107,776,704 $ 66,038,408 23,034,928 16,207,016 $ 105,280,352 $ 70,264,651 27,364,617 6,481,167 $ 104,110,435 $ 64,205,881 25,830,803 7,151,635 $ 97,188,319 $ 58,803,447 25,924,806 8,028,698 $ 92,756,951 89 Navajo County Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) 2004 Expenses: General government Public safety Highways and streets Sanitation Economic opportunity Health and welfare Culture and recreation Education Environmental and conservation Urban redevelopment and housing Interest on long-term debt Total governmental activities expenses Program Revenues: Charges for services: General government Public Safety Highway and streets Sanitation Health and welfare Culture and recreation Operating grants and contributions: General government Public Safety Highway and streets Health and welfare Culture and recreation Education Environmental and conservation Urban redevelopment and housing Capital grants and contributions: General government Public Safety Highway and streets Total governmental activities program revenues Net (Expense) Revenue General Revenues: Property taxes General county sales tax Shared revenues Payment in lieu of taxes Grants and contributions not restricted to specific Investment earnings Fines and forfeits Rent Gain on disposal of capital assets Miscellaneous Transfers Total general revenues and transfers Change in net position - governmental activities 2005 Fiscal Year 2006 2007 15,392,349 11,361,939 9,418,291 25,103 18,389,571 11,659,715 8,434,616 94,595 19,479,297 13,099,102 8,851,369 35,887 4,241,657 585,971 232,790 4,736,700 531,045 263,909 5,874,892 468,926 289,270 19,745,840 14,534,493 10,990,269 18,880 2,162 6,274,590 554,419 4,883,527 540,314 41,798,414 507,110 44,617,261 374,442 48,473,185 179,518 57,183,698 5,224,551 802,050 4,477,711 2,810,667 28,647 92,693 93,599 11,926 4,882,461 2,910,947 115,198 2,428,758 3,696,730 228,409 1,837,979 145,307 639,532 2,241,225 3,062,299 184,839 2,227,071 38,313 4,944,866 12,567,738 29,059,696 12,956,489 33,659,638 3,949,254 525,746 942 (17,003) 29,745 16,548 (86,267) 70,821 8,942 5,000 1,718,024 2,917,059 10,997,876 926,755 135,598 10,663 4,520,895 22,715,409 95,930 $ (37,277,519) $ (21,901,852) $ (19,413,489) $ (23,524,060) $ $ $ $ $ 5,221,794 5,901,927 13,107,115 19,550,932 1,178,509 6,402,534 5,205,992 11,362,815 861,599 1,228,182 1,184,173 309,309 324,454 140,937 408,225 59,167 581,789 104,656 1,016,509 45,594,040 26,794,457 31,270,121 33,223,879 4,892,605 $ 11,856,632 8,316,521 90 $ 7,973,918 7,260,596 12,781,414 757,594 946,207 909,436 8,636,394 6,778,153 13,521,307 1,433,848 1,733,012 $ 9,699,819 (Continued) Navajo County Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) 2008 2009 Fiscal Year 2011 2012 2013 20,503,496 17,570,231 12,960,992 19,392,043 19,182,119 14,058,305 22,647,297 17,566,896 13,057,318 22,396,786 16,191,164 14,480,464 21,607,586 18,238,891 8,023,409 20,944,578 19,123,378 10,935,566 6,809,907 472,151 7,119,026 234,078 5,000 349,677 66,024,558 7,219,915 510,035 5,723,104 231,225 9,366,578 747,065 6,307,885 237,032 307,208 677,253 70,914,532 7,129,008 814,786 5,710,417 196,504 35,558 625,962 67,580,649 5,909,936 966,000 6,164,792 16,352 784 721,020 61,648,770 7,734,191 788,127 5,498,285 303,402 42,701 527,044 65,897,272 594,260 66,911,006 3,746,695 541,256 83,076 3,473,303 765,083 3,531,064 517,702 39,249 3,465,053 672,441 98,695 3,326,109 982,588 334,513 3,326,109 982,588 334,513 77,965 122,462 215,494 194,090 163,957 155,895 163,957 155,895 1,851,358 3,063,868 3,719,202 3,599,091 1,735,327 3,290,457 2,584,222 2,916,270 2,215,242 3,252,479 2,215,242 3,252,479 1,751,447 38,102 7,186,346 162,086 2,199,624 64,885 5,512,115 205,884 1,803,890 122,207 6,086,494 195,574 305,647 2,280,437 137,643 3,665,344 429,653 63,162 1,819,214 152,083 4,654,668 59,097 1,819,214 152,083 4,654,668 59,097 40,823 12,361,020 30,863,219 $ (35,161,339) $ 9,707,389 7,083,165 13,302,354 $ 2010 12,393,158 32,054,807 15,637,667 33,480,772 220,229 5,000 9,578,324 26,919,398 13,170,789 29,677,799 9,939,261 27,416,831 $ (34,856,199) $ (37,433,760) $ (37,902,850) $ (34,729,372) $ (38,480,441) $ $ $ 12,866,253 5,889,027 11,405,376 $ 12,087,700 6,246,077 11,475,113 $ 11,924,765 6,239,089 12,024,496 10,933,578 6,330,588 12,017,517 12,494,737 5,480,598 10,728,725 3,922,712 1,624,746 6,444,858 750,742 4,902,289 322,748 4,489,096 254,483 3,175,428 202,500 3,024,985 (109,711) 11,971 1,207,819 23,895 1,466,751 37,967,929 5,957 1,822,741 36,732,933 13,116 1,170,658 34,370,592 52,473 892,976 36,860,156 115,237 1,273,310 (380,236) 34,937,408 1,698,817 $ 3,111,730 $ (2,496,352) $ 91 (1,169,917) $ (358,780) 34,049,073 $ (4,431,368) Navajo County Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 2004 General fund Reserved Unreserved Assigned* Unassigned Total general fund All other governmental funds Reserved Unreserved, reported in: Special revenue funds Debt service funds Capital projects funds Nonspendable* Restricted Assigned Unassigned Total all other governmental funds 2005 Fiscal Year 124,747 10,386,065 $ 2006 2007 $ 109,411 8,174,226 $ $ 8,283,637 $ 10,510,812 $ 12,379,484 $ 16,110,913 $ 5,742,868 $ 6,699,626 $ 10,983,270 $ 7,661,943 5,695,432 7,581,812 2,864,748 3,176,207 3,443,911 21,439,571 1,995,785 4,791,323 $ 16,269,559 $ 15,571,265 $ 22,008,993 $ 28,624,379 12,379,484 $ 16,110,913 397,700 (Continued) * Due to the implementation of GASB Statement no 54 in FY 2011, categories regarding fund balance have been redefined. See Notes for Financial Statements Note 8 for details. 92 Navajo County Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 2008 $ 3,957,781 10,939,695 2009 2,883,159 7,550,215 $ $ 14,897,476 $ 10,433,374 $ $ 500,703 $ 2010 679,641 26,620,823 1,777,950 24,543 25,962,952 1,824,003 $ 28,924,019 $ 28,466,596 Fiscal Year 2011 2012 325,096 7,416,990 $ $ 7,742,086 $ $ 528,878 $ $ $ 543,055 28,973,243 1,231,112 (270,933) $ 30,476,477 920,545 25,792,646 1,529,453 (39,006) $ 28,203,638 1,034,772 26,621,136 2,064,946 (13) $ 29,720,841 31,118,113 1,924,862 76,332 $ 33,648,185 93 $ 2013 3,182,499 3,349,495 6,531,994 $ $ 2,533,698 3,939,417 6,473,115 $ 2,021,131 3,849,238 5,870,369 Navajo County Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Revenues: Property taxes Licenses and permits Fines and forfeits Intergovernmental Charges for services Investment earnings Special assessments Rents and royalties Contributions Miscellaneous Total revenues Expenditures: General government Public safety Highways and streets Sanitation Economic opportunity Health and welfare Culture and recreation Education Environmental and conservation Urban redevelopment and housing Debt service: Principal Interest and other charges Bond Issuance Costs Capital outlay Total expenditures Excess(deficiency) of revenues over expenditures Other financing sources (uses): Revenue bonds issued Payment to bond refunding escrow agent Capital lease agreements Special assessment bonds issued Sale of capital assets Transfers in Transfers out Total other financing sources and uses Net change in fund balances 2004 $ 5,598,844 687,864 768,843 36,512,199 4,505,232 1,178,509 697,839 2005 $ Fiscal Year 5,944,655 735,239 849,138 35,236,042 4,435,720 1,184,173 541,145 $ 2006 7,934,263 979,368 990,927 43,263,385 5,544,948 909,436 2007 $ 8,673,499 879,866 1,646,183 47,350,129 5,478,487 1,727,733 15,663 324,454 50,289,447 13,624 408,225 49,347,961 26,879 604,968 60,254,174 38,281 990,990 66,785,168 14,942,786 11,457,252 12,281,281 17,519,255 11,656,881 10,462,632 64,518 18,794,253 13,875,071 10,366,859 4,301,274 588,911 222,995 4,917,449 513,452 252,173 6,022,260 444,143 274,985 19,975,143 13,759,567 10,681,812 19,424 2,162 6,270,192 562,599 4,893,943 525,549 540,314 718,342 507,110 686,012 374,442 421,836 179,518 903,973 45,764,335 2,284,380 48,896,192 2,118,079 52,956,104 1,990,735 58,756,931 4,525,112 451,769 7,298,070 8,028,237 55,861 63,086 309,309 2,791,392 (2,791,392) 365,170 $ 4,890,282 140,937 3,519,951 (3,519,951) 204,023 $ 655,792 59,167 2,094,983 (2,094,983) 59,167 $ 7,357,237 104,656 3,903,479 (3,653,479) 354,656 $ 8,382,893 2.38% 2.63% 2.09% 1.06% Ratio of total debt service expenditures to non-capital expenditures (Continued) 94 Navajo County Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 2008 $ 2009 2010 $ Fiscal Year 12,294,308 619,663 1,336,602 49,652,453 2,347,245 322,747 133,181 $ 2011 12,612,528 529,657 1,317,038 46,350,655 2,583,583 254,483 198,817 2012 $ 12,092,878 397,490 1,228,579 42,113,926 2,934,743 202,499 642,688 2013 9,581,813 643,032 1,290,001 50,665,504 2,515,958 1,624,746 $ 10,780,692 513,081 1,563,382 52,104,688 2,284,384 750,741 356,318 56,956 1,222,929 67,600,939 25,916 1,466,751 69,845,953 31,141 1,273,311 68,010,651 30,333 1,822,741 65,699,835 50,540 1,170,659 60,834,002 64,512 892,976 61,510,170 22,871,415 17,525,292 14,792,747 22,160,207 18,403,733 17,778,854 21,661,752 16,838,127 10,087,829 21,894,300 17,020,246 15,462,752 20,650,249 17,394,177 9,452,610 20,746,489 17,515,389 9,583,999 6,813,069 471,342 7,119,291 234,078 5,000 7,074,321 501,738 5,515,147 231,225 9,306,800 740,591 6,139,063 237,032 307,208 7,138,323 808,312 5,674,996 196,504 35,558 7,507,775 962,712 6,019,533 16,352 784 7,987,610 785,901 5,326,169 303,402 42,701 303,173 349,677 487,701 594,260 858,416 677,253 919,249 625,962 946,316 721,020 6,238,140 76,723,224 3,030,157 75,777,343 81,675 66,935,746 274,573 70,050,775 327,361 63,998,889 676,779 527,044 115,290 1,469,268 65,080,041 (9,122,285) (5,931,390) 1,074,905 (4,350,940) (3,164,887) (3,569,871) 6,600,000 77,845 11,971 1,845,732 (1,845,732) 6,689,816 $ (2,432,469) 0.93% 6,846 $ 23,895 2,304,012 (2,304,012) 30,741 (5,900,649) 1.49% 18,913 $ 115,237 8,048,481 (6,789,602) 1,374,116 2,449,021 $ 2.30% 95 354,826 $ 12,058,648 469,651 1,539,663 43,050,561 3,041,435 (109,710) 502,434 8,500,000 (4,345,000) 146,994 5,957 6,600,855 (6,600,855) 24,870 (4,326,070) 68,446 10,017,167 (10,017,167) 423,272 $ (2,741,615) 78,863 10,157,899 (10,157,899) 4,380,857 $ 810,986 2.21% 2.62% 2.07% Navajo County Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years PRIMARY ASSESSED VALUE Fiscal Year 2004 2005 2006 2007 2008 2009 2010 **2011 2012 2013 Residential and Vacant Property 307,545,845 333,976,747 365,245,873 414,808,401 480,365,541 563,228,216 631,550,018 683,204,674 634,214,647 575,074,783 Commercial Property 298,083,506 291,305,997 300,099,462 305,200,210 315,601,599 328,530,388 345,011,622 365,730,626 371,913,522 380,102,301 Unattached Personal Property 18,092,250 19,312,521 18,588,795 14,828,110 16,347,131 16,599,092 22,964,880 20,353,287 19,936,077 19,084,628 Total Taxable Assessed *Total Direct Estimated Actual Value Tax Rate Value 623,721,601 0.8772 5,453,258,038 644,595,265 1.0316 5,682,323,267 683,934,130 1.2600 6,004,911,358 734,836,721 1.2592 6,464,822,998 812,314,271 1.2504 7,181,877,591 908,357,696 1.2238 8,083,048,537 999,526,520 1.2057 8,941,980,626 1,069,288,587 1.2035 9,625,529,702 1,026,064,246 1.2447 9,350,503,687 974,261,712 1.2864 8,838,891,218 Source: Navajo County Assessor's office * Total Direct Tax Rate contains both primary and secondary tax rates ** Revised abstract resulting from centrally assessed Transwestern lawsuit 1,059,004,850 96 Assessed Value as a Percentage of Actual Value 11.44% 11.34% 11.39% 11.37% 11.31% 11.24% 11.18% 11.11% 10.97% 11.02% NAVAJO COUNTY Direct and Overlapping Property Tax Rates Last Ten Fiscal Years County Direct Rates Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Primary 0.4772 0.6316 0.6337 0.6229 0.6041 0.5775 0.5594 0.5572 0.5984 0.6401 Fire District 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 Library District 0.0200 0.0200 0.0300 0.0400 0.0500 0.0500 0.0500 0.0500 0.0500 0.0500 Flood Control District 0.2041 0.2041 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 Public Health District 0.0759 0.0759 0.1963 0.1963 0.1963 0.1963 0.1963 0.1963 0.1963 0.1963 Cities 0.5442-0.9501 0.5610-0.9501 0.5324-0.9501 0.5216-0.9134 0.2845-0.8870 0.2845-0.8685 0.2789-0.8550 0.2789-0.8567 0.2789-0.9815 0.2789-0.9880 Other Special Districts 0.1097-2.4287 0.0767-2.4450 0.0967-2.6514 0.0871-2.6347 0.0864-2.7749 0.0785-2.7512 0.0706-2.7326 0.0707-3.5500 0.0835-3.5500 0.0910-3.5500 Community College District 1.4406 1.5092 1.5200 1.4858 1.4206 1.3382 1.1352 1.1308 1.2387 1.3515 Overlapping Rates Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 School Equalization 0.4717 0.4560 0.4358 0.0000 0.0000 0.0000 0.3306 0.3564 0.4259 0.4717 School Districts 3.4929-8.0212 3.3400-8.0200 3.3931-8.0200 3.7977-8.0200 3.1373-6.7592 3.6519-7.7773 3.6624-8.3747 3.0839-8.0000 3.1634-7.3012 2.9606-8.000 Source: Navajo County Assessor's Office and Navajo County Finance Department 1) All tax rates are per $100 assessed valuation. 2) Includes both primary and secondary tax rates. 97 Total Direct 0.8772 1.0316 1.2600 1.2592 1.2504 1.2238 1.2057 1.2035 1.2447 1.2864 Navajo County Principal Property Taxpayers Current Year and Eight Years Ago 2013 Primary Assessed Value Taxpayer Arizona Public Service Company Percentage of Total Primary Assessed Value Rank 2004 Primary Assessed Value Rank Percentage of Total Primary Assessed Value 136,252,482 1 13.98% 96,593,064 1 15.49% PacifiCorp Electric Operations 50,214,255 2 5.15% 32,473,751 2 5.21% Transwestern Pipeline Co 17,302,668 3 1.78% 7,818,785 6 1.25% Peabody Western Coal Co. 13,825,500 4 1.42% 15,712,500 3 2.52% El Paso Natural Gas Co 8,087,415 5 0.83% 9,728,495 5 1.56% Burlington Northern/Santa Fe Railway 6,782,129 6 0.70% 5,184,182 10 0.83% Citizens Telecom of White Mountains 5,833,729 7 0.60% 10,589,603 4 1.70% Navopache Electric Co-Op Inc. 5,666,680 8 0.58% 5,430,813 9 0.87% Smith Bagley 5,279,667 9 0.54% N/A N/A Unisource Energy Corporation 4,968,246 10 0.51% N/A N/A 26.09% $ 183,531,193 29.43% Total 2004 Navajo County Assessed Value $ 623,721,601 TOTALS $ 254,212,771 Total 2013 Navajo County Assessed Value $ 974,292,390 Source: Navajo County Assessor's office 98 Navajo County Property Tax Levies and Collections Last Ten Fiscal Years Fiscal Year Taxes Levied for the Fiscal Year (1) Collected within Fiscal Year Percentage Amount of Levy 2004 $ 2,973,026 $ 2,836,571 95.41% 2005 4,054,551 3,867,955 2006 4,320,531 2007 Collections in Subsequent Years $ Total Collections to Date Percentage Amount of Levy 135,518 $ 2,972,089 99.97% 95.40% 185,078 4,053,033 99.96% 4,139,945 95.82% 179,414 4,319,359 99.97% 4,582,480 4,401,681 96.05% 176,848 4,578,529 99.91% 2008 4,916,228 4,684,181 95.28% 225,469 4,909,650 99.87% 2009 5,248,574 5,003,706 95.33% 241,218 5,244,924 99.93% 2010 5,584,259 5,306,931 95.03% 270,096 5,577,027 99.87% 2011 5,879,934 5,569,913 94.73% 298,080 5,867,992 99.80% 2012 6,121,242 5,887,544 96.18% 214,174 6,101,718 99.68% 2013 6,211,345 6,001,505 96.62% 6,001,505 96.62% Source: Taxes levied obtained by Navajo County Board of Supervisors Adopted Budget net of Assessor's corrections. Collections obtained from the Navajo County Treasurer. Note: General Fund Levies and Collections Only. (1) Changes to prior year Taxes Levied due to Board orders in the current fiscal year. 99 Navajo County Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Fiscal Year Revenue Bonds Certificates of Participation Special Assessment Bonds Capital Leases Total Primary Government Percentage of Personal Income (1) Per Capita (1) 2004 6,430,000 2,191,790 70,198 8,691,988 0.45 82.77 2005 6,180,000 1,812,813 61,696 8,054,509 0.38 75.30 2006 5,915,000 1,765,055 40,684 7,720,739 0.34 70.83 2007 5,915,000 2,950,589 18,848 8,884,437 0.37 80.04 2008 6,600,000 5,635,000 2,442,125 73,520 14,750,645 0.58 131.29 2009 6,600,000 5,340,000 1,702,213 53,687 13,695,900 0.52 121.23 2010 6,265,000 5,030,000 1,517,107 25,377 12,837,484 0.47 119.48 2011 5,915,000 4,700,000 1,309,455 12,693 11,937,148 0.43 111.33 2012 5,545,000 4,345,000 1,172,771 282,887 11,345,658 0.40 105.94 2013 13,665,000 985,235 320,638 14,970,873 N/A (2) N/A (3) Source: - Details regarding the County's outstanding debt can be found in the notes to the financial statements (1) Personal income and population information can be found in the Demographic and Economic Statistics schedule. (2) Personal income was not available for 2013 (3) Population was not available for 2013. 100 Navajo County Pledged Revenue Coverage Last Ten Fiscal Years Fiscal Year 2013 Fiscal Year 2008 2009 2010 2011 2012 2013 Fiscal Year 2009 2010 2011 2012 2013 Source: County Excise Tax $ 6,239,089 2012 Series Pledged Revenue Obligation Debt Service State Shared Net Available Sales Tax Revenue Principal Interest $ 10,087,589 $ 16,326,678 $ $ 50,368 County Excise Tax $ 7,083,165 6,330,588 5,480,598 5,846,576 6,200,729 6,239,089 2008 Series Pledged Revenue Obligation Bonds Debt Service State Shared Net Available Sales Tax Revenue Principal Interest $ 10,915,470 $ 17,998,635 $ $ 9,844,858 16,175,446 131,432 8,732,190 14,212,788 335,000 240,573 9,285,088 15,131,664 350,000 228,585 9,553,213 15,753,942 370,000 215,985 10,087,589 16,326,678 380,000 202,860 $ Revenues 300,706 273,885 241,567 241,374 248,745 Special Assessment Bonds Debt Service Coverage Ratio Principal Interest $ 166,022 $ 105,882 1.11 185,106 94,237 0.98 207,652 83,934 0.83 136,684 75,045 1.14 187,536 74,568 0.78 Navajo County Finance Department 101 Coverage 324.15 Coverage Ratio 123.07 24.69 26.15 26.88 28.01 Navajo County Legal Debt Margin Information Last Ten Fiscal Years Legal Debt Margin Calculation for Fiscal Year 2013 Assessed value Debt limit (15% of assessed value) Debt applicable to limit: General obligation bonds Less: Amount set aside for repayment of general obligation debt Total net debt applicable to limit Legal debt margin Debt Limit Total net debt applicable to limit Legal debt margin $ 93,558,240 Total net debt applicable to the limit as a percentage of the debt Debt Limit Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of the debt 2004 93,558,240 0% $ $ 2005 96,689,290 96,689,290 2010 $ 149,814,683 136,253,654 149,814,683 0% 974,261,712 146,139,257 $ 146,139,257 $ 2007 110,225,508 102,590,120 0% 2009 136,253,654 0% $ Fiscal Year 2006 102,590,120 $ 110,225,508 0% $ Fiscal Year 2011 158,850,728 158,850,728 0% $ 2012 153,920,569 153,920,569 0% 2008 121,847,141 121,847,141 0% Source: The legal debt limit of Navajo County is equal to 15% of the County's net secondary assessed valuation, per the Arizona Constitution,Article 9, Section 8. Assessed valuations are provided by the Navajo County Assessor. 102 $ 0% $ 2013 146,139,257 146,139,257 0% Navajo County Demographic and Economic Statistics Last Ten Calendar Years Fiscal Year Population 2004 105,020 2005 Personal Income (thousands of dollars) $ Per Capita Personal Income Unemployment Rate 1,933,211 $ 18,408 8.4% 106,968 2,120,553 $ 19,824 8.0 2006 109,000 2,260,966 $ 20,743 7.2 2007 110,999 2,412,656 $ 21,736 6.3 2008 112,348 2,539,509 $ 22,604 9.7 2009 112,975 2,634,137 $ 23,316 14.9 2010 107,449 2,742,716 $ 25,526 16.0 2011 107,174 2,780,847 $ 25,947 15.8 2012 107,094 2,826,523 $ 26,393 15.2 2013 (1) (1) (1) (1) Source: Population and Personal Income from U.S. Bureau of Economic Analysis. Workforce Informer Arizona at www.workforce.az.gov for unemployment rate. (1) Information is not yet available for 2013. 103 Navajo County Employment by Sector and Major Employers Employment by Sector 2004 2,500 2,950 600 10,125 3,200 900 650 1,100 5,550 800 Mining and Construction Educational & Health Srvs Financial Activities Government Leisure & Hospitality Manufacturing Information Professional & Business Srvs Trade, Transportation & Utilities Other Services 2005 2,825 3,100 575 9,850 3,175 900 750 1,100 5,600 950 2006 3,200 3,250 650 9,875 3,200 975 800 1,250 5,700 925 2007 2,925 3,325 600 9,925 3,475 900 825 1,350 6,050 800 Source: Prepared in cooperation with the U.S. Department of Labor, Bureau of Labor Statistics. Arizona Department of Commerce, Strategic Investment and Research. Figures are organized under the North American Industrial Classification System (NAICS). Major Employers(1) Employer Employer Type Electric Services Prison Pharmaceuticals Retail Line-Haul Communications Auto Dealer Hospitality Hotels and Motels Education Medical Medical Government Education Utilities Utility Colleges Energy Aircraft Coal and Mining Pork Production Education Retail Hospital Auto Dealer Retail Millwork Government Millwork APS, Joseph City Arizona Department of Corrections Algae Biosciences Bashas', Taylor Burlington Northern Santa Fe Cellular One Hatch Auto Centers Hondah Resort & Casino Holiday Inn, Kayenta Kayenta Boarding B.I.A. School Keams Canyon Indian Hospital Little Colorado Medical Center Navajo Government Executive Branch Navajo County School District Navajo Tribal Utility Authority, Keams Canyon Navopache Electric Cooperative, Inc. Northland Pioneer College, Holbrook NovoPower Overseas Aircraft Support Peabody Coal Co., Kayenta PFFJ, Inc., Snowflake Pinon Unified School District #4 Safeway. Pinetop-Lakeside Summit Healthcare, Show Low Tate's Auto Center, Holbrook Wal-Mart SuperCenter, Show Low Western Moulding Co. Inc., Snowflake White Mountain Apache Tribe Western Moulding Co. Inc., Snowflake Sources: Holbrook Chamber of Commerce; Navajo Nation, Navajo Nation, Division of Economic Development: Pinetop-Lakeside Chamber of Commerce: Show Low Regional Chamber of Commerce; and SnowflakefTaylor Chamber of Commerce. 104 2008 2,375 3,300 525 10,400 3,475 800 1,000 1,275 5,650 850 (Continued) Navajo County Employment by Sector and Major Employers (Continued) Employment by Sector 2009 1,600 3,500 475 10,100 3,150 550 1,075 1,025 5,375 750 Mining and Construction Educational & Health Srvs Financial Activities Government Leisure & Hospitality Manufacturing Information Professional & Business Srvs Trade, Transportation & Utilities Other Services (Continued) (1) 2010 1,450 3,550 400 9,650 3,500 525 1,150 1,000 5,250 700 2011 1,325 3,200 425 9,500 3,625 525 1,150 1,025 5,025 525 2012 1,600 3,550 575 9,850 3,600 475 1,175 1,000 5,150 950 2013 1,600 3,575 600 9,675 3,875 125 1,175 1,175 5,175 1,050 The number of employees for the 10 largest employers in the County is not available due to State of Arizona non-disclosure restrictions. 105 Navajo County Full-Time Equivalent Employees by Function Last Eight Fiscal Years Fiscal Year Function General government Public safety Highways and streets Health and welfare Culture and recreation Total 2006 258 226 82 56 3 625 2007 272 240 84 62 3 661 2008 290 260 90 67 4 711 Source: Navajo County Budget 2006 - 2013 106 2009 284 256 90 66 4 700 2010 284 248 81 63 5 681 2011 294 239 81 65 6 685 2012 295 243 82 66 5 691 2013 278 238 78 73 8 675 Navajo County Operating Indicators by Function Last Nine Fiscal Years Fiscal Year 2006 2005 Function General Government Assessor Number of parcels assessed Elections Elections Number voting Planning & Zoning Building permits issued Public Fiduciary Guardianships/conservatorships Public Safety Adult Probation Community service hours Pre-sentence reports written for courts Probationers actively supervised Juvenile Probation Average length of detention (days) Juveniles in detention Probationers Community restitution hours Sheriff Inmate population Highways & Streets Public Works Crack sealing (miles) Street resurfacing (miles) Waste Tire Program Waste tires collected Health & Welfare Public Health District Certified copies of birth or death certificates Childhood immunization visits Restaurant inspections and re-inspections Culture & Recreation Library District Number of items circulated Number of library cards issued (by member libraries) Number of prints, media and electronic items Number of items owned by Lib. District Education School Superintendent Charter schools Charter students District students School districts 79,096 80,664 83,044 4 46,644 5 13,398 4 43,445 3,009 3,674 3,789 95 97 99 40,493 772 726 34,370 744 868 16 351 197 12,160 15 281 166 8,909 15 318 164 9,170 348 369 385 27 82 45 54 9 33 3,371 468 5,905 603 5,311 8,608 592 355,087 5,068 198,856 11,839 372,980 6,395 220,545 13,800 380,765 5,835 241,479 15,216 8 1,686 21,507 14 8 1,547 21,253 14 6 817 20,948 14 Source: Navajo County departments monthly and annual performance reports 107 2007 (continued) Navajo County Operating Indicators by Function Last Nine Fiscal Years 2008 2009 2010 Fiscal Year 2011 2012 2013 84,824 85,536 85,858 86,304 88,148 85,773 5 23,687 4 51,626 4 21,379 4 50,969 5 17,330 4 57,960 3,085 1,837 1,285 926 994 1,023 104 103 110 99 108 109 50,415 678 1,036 51,910 594 1,009 49,198 504 1,008 40,687 637 1,349 39,135 641 1,270 40,306 566 1,313 12 338 186 10,504 8 457 199 8,740 10 441 171 8,939 12 408 182 5,173 11 449 148 7,346 12 336 122 6,401 363 363 361 319 274 283 2 52 0 42 47 25 49 42 82 32 59 13 56,775 51,481 48,743 60,117 47,962 57,742 5,685 10,586 593 6,811 7,343 608 6,913 10,299 336 4,949 5,154 709 4,678 4,592 423 5,031 2,165 621 442,038 6,079 262,997 16,907 456,579 5,985 287,552 19,607 480,959 6,206 310,602 21,774 441,232 6,170 333,901 24,199 438,916 5,406 343,659 25,837 425,272 5,054 333,193 28,827 6 818 20,861 14 6 839 20,497 14 7 471 19,913 14 7 352 19,071 14 7 399 18,606 14 7 630 18,495 13 108 Navajo County Capital Asset Statistics by Function Last Ten Fiscal Years Fiscal Year 2008 2009 2010 2011 2012 2013 158 158 173 173 173 4 4 4 6 6 6 6 4 1 6 4 1 6 4 1 6 1 0 407 1 0 1 0 433 1 0 425 1 0 426 1 0 442 2 0 442 2 0 31 8 3 31 8 0 31 8 2 31 8 1 31 8 1 30 9 1 31 12 1 31 12 0 31 12 0 722.98 14 727.7 14 738.98 14 747.83 14 732.01 14 737.65 14 734.9 14 733.28 14 733.65 15 733.95 15 Sanitation Landfill/Environment Transfer Stations 0 0 0 0 0 0 0 0 0 0 Health Health Care Public health facilities Heber - Owned Show Low - Owned Snowflake - Operated Holbrook - Owned Winslow - Owned Pinetop - Owned 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Function General Government Elections Voting Machines Superior Courts Divisions Division - Satellite Justice Courts Public Safely Sheriff Inmate beds available Jail Facilites Stations Improvement Districts Flood Warning Sites Flood Control District Properties Road Improvement Districts Highways and Streets Public Works Miles of maintained roads Bridges 2004 2005 2006 2007 76 76 158 158 158 3 3 3 4 6 6 6 1 0 1 0 31 8 0 Culture and Recreation Parks & Recreation County Parks (Tall Timber, Heber) Library District Number of facilities owned Facilities operated Bookmobiles 1 1 1 1 1 1 1 1 1 1 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 0 1 0 Education Schools 1 1 1 1 1 1 1 1 1 1 Source: Navajo County capital asset reports. 109 Navajo County, Arizona Fiscal Year Ended June 30, 2013