COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended June 30, 2014 NAVAJO COUNTY ARIZONA Proudly Serving, Continuously Improving Navajo County Board of Supervisors Chairman Jesse Thompson District 2 Sylvia Allen David Tenney Dawnafe Whitesinger Jonathan M. Nez District 3 District 4 District 5 District 1 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2014 Navajo County, Arizona Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2014 Prepared by Navajo County Finance Department County Manager Finance Team James G. Jayne James Menlove, Finance Director Mary J. Springer, Deputy Finance Director Paige Peterson, Accounting Manager Assistant County Manager Homero Vela NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2014 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2014 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2014 Navajo County Comprehensive Annual Financial Report Year Ended June 30, 2014 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 5 Basic Financial Statements Government-wide Statements Statement of Net Position Statement of Activities 14 15 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 i 16 17 18 19 20 21 22 28 31 32 32 33 35 37 37 43 44 45 Navajo County Comprehensive Annual Financial Report Year Ended June 30, 2014 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 48 51 52 53 54 Supplementary Information List of Nonmajor Governmental Funds 58 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 District Special Revenue – Recreation District Special Revenue – Sheriff’s Office Special Revenue – Special Districts Special Revenue – Workforce Investment Act Capital Projects – Detention Facility Construction Capital Projects – General Government Debt Service – General Government Debt Service – Special Districts Statement of Changes in Assets and Liabilities – Agency Fund ii 60 65 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 88 Navajo County Comprehensive Annual Financial Report Year Ended June 30, 2014 Table of Contents Page Statistical Section Financial Trends Changes in Net Position Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Net Position by Component 90 92 94 96 Revenue Capacity Assessed Value and Estimated Actual Value of Taxable Property Direct Overlapping Tax Rates Principal Property Taxpayers Property Tax Levies and Collections 97 98 99 100 Debt Capacity Ratios of Outstanding Debt by Type Pledged Revenue Coverage Legal Debt Margin Information 101 102 103 Demographic and Economic Information Demographic and Economic Statistics Employment by Sector/Major Employers 104 105 Operating Information Full-Time Equivalent Employees by Function Operating Indicators by Function Capital Asset Statistics by Function 107 108 110 iii Navajo County ADMINISTRATION W. James Menlove, CPA James G. Jayne Finance Director County Manager December 17, 2014 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 2014. 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 2014 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 2014 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 2013 population of the County was estimated to be 108,694. 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, and Northland Pioneer College (post-secondary education), Holbrook, pork and hydroponic vegetable production, Snowflake, Fort Apache Timber Company (timber processing), White River, and tourism related business, Kayenta (Monument Valley), 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 (13.2 percent for June 2014) has been significantly higher than the State’s (6.9 percent for June 2014). 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 long-lasting. 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 2015. 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, the 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, 2013. This was the fourth 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, 2013. This was the fifth 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 ___________________________________ James Menlove Finance Director Organizational Chart NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2014 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2014 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2014 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, 2014, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We 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. 2910 NORTH 44 th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051 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, 2014, and the respective changes in financial position for the year then ended in accordance with U.S. generally accepted accounting principles. Other Matters Required Supplementary Information U.S. generally accepted accounting principles require that the Management’s Discussion and Analysis on pages 5 through 11, the Budgetary Comparison Schedules on pages 48 through 53, and the Schedule of Agent Retirement Plans’ Funding Progress on pages 54 through 55 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with U.S. generally accepted auditing standards, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County’s basic financial statements. The combining and individual fund statements and schedules and the introductory and statistical sections listed in the table of contents are presented for purposes of additional analysis and are not required parts of the basic financial statements. The combining and individual fund statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with U.S. generally accepted auditing standards. In our opinion, the combining and individual fund statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Compliance Over the Use of Highway User Revenue Fund and Other Dedicated State Transportation Revenue Monies In connection with our audit, nothing came to our attention that caused us to believe that the County failed to use highway user revenue fund monies received by the County pursuant to Arizona Revised Statutes Title 28, Chapter 18, Article 2, and any other dedicated state transportation revenues received by the County solely for the authorized transportation purposes, insofar as they relate to accounting matters. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the County’s noncompliance with the use of highway user revenue fund monies and other dedicated state transportation revenues, insofar as they relate to accounting matters. The communication related to compliance over the use of highway user revenue fund and other dedicated state transportation revenue monies in the preceding paragraph is intended solely for the information and use of the members of the Arizona State Legislature, the Board of Supervisors, management, and other responsible parties within the County and is not intended to be and should not be used by anyone other than these specified parties. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we will issue our report on our consideration of the County’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters at a future date. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control over financial reporting and compliance. Debbie Davenport Auditor General December 17, 2014 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2014 Navajo County Management’s Discussion and Analysis June 30, 2014 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, 2014. 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 $93.6 million (net position). Of this amount, $4.5 million (unrestricted net position) may be used to meet the government’s ongoing obligations to citizens and creditors. The total increase in the County’s net position was $813 thousand in fiscal year 2014. At the close of fiscal year 2014, the County’s governmental funds reported combined ending fund balances of $36.3 million, an increase of $736 thousand in comparison with the prior year’s balances of $35.6 million. At the end of the fiscal year, 74.7 percent ($27.2 million) of governmental fund balances were restricted; 15.5 percent ($5.6 million) were assigned; 6.7 percent ($2.4 million) were unassigned, and 3.1 percent ($1.1 million) were 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 balances are designated by management. The nonspendable fund balances include 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. 5 Navajo County Management’s Discussion and Analysis June 30, 2014 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 14 and 15 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, 6 Navajo County Management’s Discussion and Analysis June 30, 2014 expenditures, and changes in fund balances for the General Fund, Public Works/HURF Fund, Flood Control District Fund, and the Public Works 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 16 through 19 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 20 and 21 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 22 through 45 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 48 through 55 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, 2014, compared to the prior year. Net position amounts were reclassified for fiscal year 2013, and as a result, these amounts will not agree to the prior-year audited CAFR. Governmental Activities 2014 2013 $ 41,103,155 $ 40,779,514 79,019,986 73,774,320 120,123,141 114,553,834 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 3,880,859 22,671,985 26,552,844 4,282,976 17,513,907 21,796,883 65,059,354 24,056,612 4,454,331 $ 93,570,297 63,188,447 22,558,489 7,010,015 $ 92,756,951 The County’s current and other assets and net position from governmental activities at the end of the fiscal year were $41.1 million and $93.6 million, respectively. The increase of $5.2 million in capital assets is due to the construction and improvements of the Holbrook Jail Complex and Public Works 7 Navajo County Management’s Discussion and Analysis June 30, 2014 Complex. The slight increase of $813 thousand in net position was due to the above-mentioned construction projects and the issuance of the pledged revenue obligations of $5.8 million for these projects. The County’s other liabilities and long-term liabilities outstanding at the end of the fiscal year were $3.9 million and $22.7 million, respectively. The increase of $5.2 million in long-term liabilities outstanding was due to the Navajo County jail expansion and remodel and the construction of the Public Works Complex. A large portion of the County’s net position, 69.5 percent ($65.1 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 25.7 percent of the County’s net position ($24.1 million) is subject to external restrictions on how they may be used. The remaining balance of the County’s net position, 4.8 percent ($4.5 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. 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 2014 compared to the prior year. Certain revenues and expenses were reclassified for fiscal year 2013, and as a result, these amounts will not agree to the prior-year audited CAFR: Governmental Activities 2014 2013 Program revenues: Charges for services Operating grants and contributions Capital grants and contributions Total program revenues General revenues: Property taxes Special assessments Sales taxes State shared revenues Payment in lieu of taxes Investment earnings Gain on disposal of capital assets Miscellaneous Total general revenues Total revenues 8 $ 5,040,051 15,825,951 9,565,055 30,431,057 11,704,948 542,526 6,667,433 12,773,729 1,538,954 453,017 96,640 1,455,607 35,232,854 65,663,911 $ 5,050,750 13,767,201 9,690,517 28,508,468 11,924,765 502,434 6,239,089 12,024,496 1,430,914 (109,711) 52,473 892,976 32,957,436 61,465,904 Navajo County Management’s Discussion and Analysis June 30, 2014 Governmental Activities 2014 2013 Program expenses: General government Public safety Highways and streets Health and welfare Culture and recreation Education and economic opportunity Environmental and conservation Urban redevelopment and housing Interest on long-term debt Total program expenses $22,213,348 16,995,243 9,534,493 8,039,343 694,108 6,190,399 329,829 365,994 487,808 64,850,565 $21,592,792 18,252,030 10,986,490 7,906,401 788,127 5,498,285 303,402 42,701 527,044 65,897,272 Change in net position Net position, beginning Net position, ending 813,346 92,756,951 $93,570,297 (4,431,368) 97,188,319 $92,756,951 Overall revenues increased by 6.8 percent ($4.2 million) and program expenses decreased by 1.6 percent ($1.0 million) in the current fiscal year. The following summarizes the significant changes in revenues and expenses compared to the prior year. Operating grants and contributions increased 15 percent ($2.1 million) in the current year due to increased federal and state grants. State shared revenues increased 6.2 percent ($749 thousand) and county sales tax increased 6.9 percent ($428 thousand) in the current year due to modest improvement in the state economy that increased sales tax revenues. Investment earnings increased 512.9 percent ($563 thousand) in the current year due to improvement in the fair market value of the County’s investments held at fiscal year-end. Highways and streets expenses decreased 13.2 percent ($1.5 million) in the current fiscal year due to decrease in road repair and maintenance projects. Education and economic opportunity expenses increased 12.6 percent ($692 thousand) in the current fiscal year due to the reclassification of expenditures for the federally funded Workforce Investment Act expenditures from the health and welfare function. Urban redevelopment and housing expenses increased 757 percent ($323 thousand) in the current fiscal year due to the improvement costs incurred on the community projects from the Community Development Block Grant, which is received by the County once in every four years. 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 Public Works Construction Fund. At year-end, the County’s governmental funds reported combined fund balances of $36.3 million, which is an increase of $736 9 Navajo County Management’s Discussion and Analysis June 30, 2014 thousand from last year or a change of 2.1 percent. Of the total, $8.1 million constitutes unrestricted fund balances. For governmental functions, overall revenues increased $4.1 million (6.6 percent) and expenditures increased $6.3 million (9.6 percent). Governmental function expenditures exceeded revenues by $5.8 million in the current fiscal year. The General Fund is the County’s primary operating fund. At the end of the current fiscal year, fund balances of the General Fund totaled $6.3 million. Fund balances represent 17.9 percent of total General Fund expenditures. This ratio indicates a strong fund balance position in comparison to expenditures. GENERAL FUND BUDGETARY HIGHLIGHTS For the General Fund, actual revenues were less than the original and final budget amounts by $849 thousand, while the actual expenditures were $10.2 million less than the amount budgeted. The budget variance for revenues was due to the loss of contracts with the federal U.S. Marshall’s Service and the Arizona Department of Corrections to house federal and state inmates at the County jail. New contracts to house tribal inmates have been enacted with the U.S. Bureau of Indian Affairs, 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. The County held approximately 70 General Fund positions vacant during fiscal year 2014. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets During the current fiscal year, the net book value of capital assets being depreciated decreased $1.1 million due to normal depreciation expense of existing capital assets. The increase of $6.7 million of capital assets not being depreciated was due to the construction and remodel of the County jail and the construction of the Holbrook Public Works Complex, which have not been completed as of the fiscal year end. Additional information on capital assets can be found in Notes 4 and 5 on page 32 of this report. Debt Administration At the end of the current fiscal year, the County had total long-term liabilities outstanding of $22.7 million, which included $19.1 million in revenue obligations 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 $787 thousand of special assessment debt with governmental commitment and $1.9 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 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 33 through 35 of this report. 10 Navajo County Management’s Discussion and Analysis June 30, 2014 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 2014. The U.S. and State economies continued to experience a moderate recovery during 2014 and continued minimal improvement is expected in fiscal year 2015. However, one of the major employers in the County discontinued operations in fiscal year 2014 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. 11 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2014 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2014 Navajo County Statement of Net Position Year Ended June 30, 2014 Governmental Activities Assets Cash and investments Receivables (net of allowance for uncollectibles): Property taxes Accounts receivable Special assessments 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 Due to other governments Noncurrent liabilities Due within 1 year Due in more than 1 year Total liabilities $ 480,088 116,044 152,504 4,590,025 6,908,792 1,092,272 22,500 15,707,562 63,312,424 $ 120,123,141 $ Net Position Net investment in capital assets Restricted for: General government Highways and streets Public safety Judicial activities Education and economic opportunity Law enforcement Environment, library, and community services Health and welfare Debt service Unrestricted Total net position See accompanying notes to financial statements. 14 27,740,930 1,828,135 1,704,945 347,779 $ 2,940,872 19,731,113 26,552,844 $ 65,059,354 $ 1,200,640 7,636,857 8,239,958 2,935,739 413,614 892,056 308,556 1,004,100 1,425,092 4,454,331 93,570,297 Navajo County Statement of Activities Year Ended June 30, 2014 Functions/Programs Primary government: Governmental activities: General government Public safety Highways and streets Health and welfare Culture and recreation Education and economic opportunity Environmental and conservation Urban redevelopment and housing Interest on long-term debt Total governmental activities Expenses $ 22,213,348 16,995,243 9,534,493 8,039,343 694,108 6,190,399 329,829 365,994 487,808 $ 64,850,565 Program Revenues Operating Capital Charges for Grants and Grants and Services Contributions Contributions Net (Expense) Revenue and Changes in Net Position $ 3,537,721 919,746 252,982 329,602 $ 2,700,852 3,976,671 $ 5,040,051 $ 15,825,951 $ (15,974,775) (12,098,826) 283,544 (4,889,024) (544,442) (923,704) 204,893 10,634 (487,808) $ (34,419,508) $ 9,565,055 2,820,717 149,666 5,266,695 534,722 376,628 $ 9,565,055 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 Special assessments, levied for special districts Special assessments, levied for recreation district General county sales tax Shared revenues - state sales tax Shared revenues - state vehicle license tax Payments in lieu of taxes Investment earnings Gain on disposal of capital assets Miscellaneous Total general revenues Change in net position Net position, July 1, 2013 Net position, June 30, 2014 See accompanying notes to financial statements. 15 $ 7,146,914 2,014,941 1,914,819 628,274 378,765 163,761 6,667,433 10,763,214 2,010,515 1,538,954 453,017 96,640 1,455,607 35,232,854 813,346 92,756,951 $ 93,570,297 Navajo County Balance Sheet Governmental Funds June 30, 2014 Assets Cash and investments Receivables (net of allowance for uncollectibles): Property taxes Accounts receivable Special assessments Due from: Other funds Other governments Cash and investments held by trustee—restricted Inventories Prepaid items Total assets Liabilities Accounts payable Accrued payroll and employee benefits Due to: Other funds Other governments Total liabilities Deferred Inflows of Resources Unavailable revenue–property taxes Unavailable revenue–special assessments Unavailable revenue–intergovernmental Total deferred inflows of resources Fund balances: Nonspendable Restricted Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources and fund balances General Fund Public Works/ HURF Fund Flood Control District Fund $ 4,261,860 $ 6,639,675 $ 8,035,549 262,971 22,367 5,368 2,153,219 1,496,085 623 1,013,964 Public Works Construction Fund Other Governmental Funds Total Governmental Funds $ 8,803,846 $ 27,740,930 108,665 88,309 152,504 480,088 116,044 152,504 458 444 2,079,976 2,154,744 4,590,025 4,526,641 2,382,151 6,908,792 1,092,272 22,500 $ 43,257,899 $ 108,452 $ 1,092,272 $ 8,196,502 $ 8,751,902 $ 8,144,001 $ 4,527,099 22,500 $ 13,638,395 $ $ $ $ $ 570,175 1,042,694 1,067 122,914 1,736,850 568,724 198,496 34,931 802,151 4,992 7,412 15,160 27,564 204,476 82,886 3,551 208,027 82,886 437,220 2,331,597 3,482,808 6,251,625 $ 8,196,502 223,602 1,830,057 785 2,054,444 1,092,272 6,857,479 8,033,551 2,472,655 7,949,751 8,033,551 2,472,655 $ 8,751,902 $ 8,144,001 $ 4,527,099 See accompanying notes to financial statements. 16 460,642 456,343 1,828,135 1,704,945 323,620 173,989 1,414,594 2,154,744 347,779 6,035,603 84,582 146,752 372,914 604,248 371,944 146,752 376,465 895,161 22,500 9,356,887 3,288,638 (1,048,472) 11,619,553 $ 13,638,395 1,114,772 27,157,792 5,620,235 2,434,336 36,327,135 $ 43,257,899 Navajo County Reconciliation of the Balance Sheet to the Statement of Net Position Governmental Funds June 30, 2014 Fund balances—total governmental funds $ 36,327,135 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. 79,019,986 Some receivables are not available to pay for current-period expenditures and, therefore, are reported as unavailable in the funds. 895,161 Some liabilities, including pledged revenue obligations payable, are not due and payable in the current period and, therefore, are not reported in the funds. Net position of governmental activities (22,671,985) $ 93,570,297 See accompanying notes to financial statements. 17 Navajo County Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2014 General Fund Revenues: Property taxes County sales 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 and economic opportunity 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 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, 2013 Changes in nonspendable resources: Increase in reserve for inventories Decrease in prepaid items Fund balances, June 30, 2014 Public Works/ HURF Fund $ 7,143,453 6,667,433 Flood Control District Fund Public Works Construction Fund Other Governmental Funds Total Governmental Funds $ 2,538,760 518,762 196,432 341,422 14,033,204 1,727,061 104,672 42,650 570,416 20,073,379 $ 11,699,519 6,667,433 518,762 606,269 1,247,497 39,645,165 3,241,520 453,017 42,650 1,455,607 65,577,439 3,496,908 4,246,687 23,910 4,312,262 691,882 5,830,316 347,079 365,994 21,296,099 17,165,782 8,446,932 7,909,342 691,882 6,146,055 347,079 365,994 17,252 3,531,260 3,548,512 704,503 447,765 58,212 2,688,374 23,213,892 821,698 461,413 75,464 7,613,324 71,341,064 (3,544,463) (3,140,513) (5,763,625) 4,550,000 6,075,000 (4,806,395) 9,609 3,090,410 (2,518,492) 1,850,132 10,625,000 (4,806,395) 488,368 98,822 7,753,432 (7,753,432) 6,405,795 (1,290,381) 12,921,934 642,170 35,591,209 $ 2,017,306 409,837 906,075 16,046,884 1,261,477 86,341 9,565,055 252,982 131,540 126,415 842,081 33,363,581 42,943 9,992,520 167 2,143,910 17,799,191 11,693,298 22 $ 4,049 4,049 1,225,797 8,423,022 3,597,080 315,739 117,195 13,648 1,393,690 34,929,841 8,423,022 1,225,797 (1,566,260) 1,569,498 918,113 488,368 89,213 3,188,492 (1,818,557) 1,947,516 (2,605,236) (2,605,236) 381,256 5,870,369 (1,035,738) 8,879,733 (803,735) (803,735) 114,378 7,919,173 1,474,530 (7,412) 6,017,118 2,472,655 105,756 $ 6,251,625 $ 7,949,751 $ 8,033,551 See accompanying notes to financial statements. 18 $ 2,472,655 (12,000) $ 11,619,553 105,756 (12,000) $ 36,327,135 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, 2014 Net change in fund balances—total governmental funds $ 642,170 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 9,745,253 (4,497,405) 5,247,848 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. Collection of revenues in the governmental funds exceeded revenues reported in the Statement of Activities Intergovernmental revenues Property taxes Special assessments 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, including amounts paid to refunding escrow agent (2,182) (39,360) 5,429 23,763 (10,168) (11,113,368) 5,601,698 (5,511,670) 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 296,376 39,966 17,250 353,592 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 Decrease in prepaid items 105,756 (12,000) 93,756 Change in net position of governmental activities $ See accompanying notes to financial statements. 19 813,346 Navajo County Statement of Fiduciary Net Position Fiduciary Funds June 30, 2014 Investment Trust Funds Assets Cash and investments Total assets Agency Funds $ 135,669,926 $ 2,895,693 $ 135,669,926 $ 2,895,693 $ 729,403 2,166,290 2,895,693 Liabilities Due to other governments Deposits held for others Total liabilities $ Net Position Held in trust for investment trust participants $ 135,669,926 See accompanying notes to financial statements. 20 Navajo County Statement of Changes in Fiduciary Net Position Fiduciary Funds Year Ended June 30, 2014 Investment Trust Funds Additions: Contributions from participants Net investment income Total additions $ Deductions: Distributions to participants 222,884,614 2,005,474 224,890,088 217,716,236 Change in net position 7,173,851 Net position, July 1, 2013 128,496,075 Net position, June 30, 2014 $ See accompanying notes to financial statements. 21 135,669,926 Navajo County Notes to Financial Statements June 30, 2014 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, 2014, the County implemented the provisions of GASB Statement No. 65, Items Previously Reported as Assets and Liabilities; GASB Statement No. 66, Technical Corrections—2012, an amendment of GASB Statements No. 10 and No. 62; and GASB Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees. GASB Statement No. 65 reclassifies certain items that were previously reported as assets and liabilities as deferred outflows of resources or deferred inflows of resources and recognizes certain other items that were previously reported as assets and liabilities as revenues or expenses. GASB Statement No. 66 resolves conflicting guidance in previous GASB pronouncements related to risk financing activities, operating leases, purchases of loans, and servicing fees. GASB Statement No. 70 improves accounting and financial reporting for governments that extend or receive nonexchange financial guarantees. The implementation of GASB Statement No. 70 had no impact on the County’s fiscal year 2014 financial statements, and the implementation of GASB Statement Nos. 65 and 66 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. The County has no discretely presented component units. Each blended component unit discussed below has a June 30 year-end. The following table describes the County’s component units: Component Unit Description; Criteria for Inclusion Reporting Method For Separate Financial Statements Navajo County Flood Control District A tax-levying district that provides flood control systems; the County’s Board of Supervisors serves as the board of directors Blended Not available 22 Navajo County Notes to Financial Statements June 30, 2014 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 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 B. Basis of Presentation The basic financial statements include both government-wide statements and fund financial statements. The government-wide statements focus on the County as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the information’s usefulness. Government-wide statements—Provide information about the primary government (the County) and its component units. The statements include a statement of net position and a statement of activities. These statements report the overall government’s financial activities, except for fiduciary activities. 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. 23 Navajo County Notes to Financial Statements June 30, 2014 Revenues that are not classified as program revenues, including internally dedicated resources and all taxes the County levies or imposes, are reported as general revenues. Generally, the effect of interfund activity has been eliminated from the government-wide financial statements to minimize the double-counting of internal activities. However, charges for interfund services provided and used are not eliminated if the prices approximate their external exchange values. Fund financial statements—Provide information about the County’s funds, including fiduciary funds and blended component units. Separate statements are presented for the governmental 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 nonmajor 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. 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 Public Works Construction Fund is used for construction of the public works complex in Holbrook, and is funded through pledged revenue obligations. The County also 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. 24 Navajo County Notes to Financial Statements June 30, 2014 Revenues are recorded when earned, and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Property taxes are recognized as revenue in the year for which they are levied. Grants and donations are recognized as revenue as soon as all eligibility requirements the provider imposed have been met. Under the terms of grant agreements, the County funds certain programs by a combination of grants and general revenues. Therefore, when program expenses are incurred, there are both restricted and unrestricted net position resources available to finance the program. The County applies grant resources to such programs before using general revenues. Governmental funds in the fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when they become both measurable and available. The County 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, special assessments, intergovernmental, charges for services, and investment earnings. 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. 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 cost, which approximates 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. 25 Navajo County Notes to Financial Statements June 30, 2014 F. Property Tax Calendar The County levies real and personal property taxes on or before the third Monday in August that become due and payable in two equal installments. The first installment is due on the first day of October and becomes delinquent after the first business day of November. The second installment is due on the first day of March of the next year and becomes delinquent after the first business day of May. A lien assessed against real and personal property attaches on the first day of January preceding assessment and levy. G. Capital Assets Capital assets are reported at actual cost or estimated historical cost if historical records are not available. Donated assets are reported at estimated fair value at the time received. Capitalization thresholds (the dollar values above which asset acquisitions are added to the capital asset accounts), depreciation methods, and estimated useful lives of capital assets are as follows: Land Buildings and improvements Machinery and equipment Infrastructure Capitalization Threshold $10,000 10,000 5,000 10,000 Depreciation Method N/A Straight-line Straight-line Straight-line Estimated Useful Life N/A 15-40 years 3-7 years 35 years H. Deferred Inflows of Resources The balance sheet includes a separate section for deferred inflows of resources. Deferred inflows of resources represent an acquisition of net position or fund balance that applies to future periods and will be recognized as a revenue in future periods. I. Fund Balance Classifications The governmental funds’ fund balances are reported separately within classifications based on a hierarchy of the constraints placed on those resources’ use. The classifications are based on the relative strength of the constraints that control how the specific amounts can be spent. The classifications are nonspendable, restricted, and unrestricted, which includes committed, assigned, and unassigned fund balance classifications. 26 Navajo County Notes to Financial Statements June 30, 2014 The nonspendable fund balance classification includes amounts that cannot be spent because they are either not in spendable form, such as inventories, or are legally or contractually required to be maintained intact. Restricted fund balances are those that have externally imposed restrictions on their usage by creditors (such as through debt covenants), grantors, contributors, or laws and regulations. The unrestricted fund balance category is composed of committed, assigned, and unassigned resources. Committed fund balances are self-imposed limitations that the County’s Board of Supervisors approved, which is the highest level of decision-making authority within the County. Only the Board can remove or change the constraints placed on committed fund balances. Assigned fund balances are resources constrained by the County’s intent to be used for specific purposes, but are neither restricted nor committed. The Board of Supervisors has authorized the County’s 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 will use restricted fund balance first. For the disbursement of unrestricted fund balances, the County will use committed amounts first, followed by assigned amounts, and lastly unassigned amounts. J. Investment Earnings Investment earnings are composed of interest, dividends, and net changes in the fair value of applicable investments. K. Compensated Absences Compensated absences payable consists of vacation leave and a calculated amount of sick leave employees earned based on services already rendered. Employees may accumulate up to 280 hours of vacation depending on years of service, but they forfeit any unused vacation hours in excess of the maximum amount at calendar year-end. Upon terminating employment, the County pays all unused and unforfeited vacation benefits up to a maximum of 240 hours. Upon retirement, the County pays up to a maximum of 320 hours plus 75% of vacation hours earned in the employee’s final year of employment. Accordingly, vacation benefits 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. 27 Navajo County Notes to Financial Statements June 30, 2014 Employees may accumulate an unlimited number of sick leave hours. Generally, sick leave benefits provide for ordinary sick pay and are cumulative but employees forfeit them upon terminating employment. However, upon retirement or death, employees who have accumulated at least 500 hours of sick leave and at least 5 continuous service years receive some benefit payments. Benefit payments vary based on the number of continuous service years but cannot exceed $5,000. Accordingly, 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 retirements and deaths 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, notes, and other evidences of indebtedness; interest earning investments such as savings accounts, certificates of deposit, and repurchase agreements in eligible depositories; specified commercial paper issued by corporations organized and doing business in the United States; specified bonds, debentures, notes, and other evidences of indebtedness that are denominated in United States dollars; and certain open-end and closed-end mutual funds, including exchange traded funds. In addition, the County Treasurer may invest trust funds in certain fixed income securities of corporations doing business in the United States or District of Columbia. Credit risk 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. Bonds, debentures, notes, and other evidences of indebtedness that are denominated in United States dollars must be rated “A” or better, at the time of purchase, by at least two nationally recognized rating agencies. 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. 28 Navajo County Notes to Financial Statements June 30, 2014 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 unless the investment is denominated in United States dollars. Deposits—At June 30, 2014, the carrying amount of the County’s deposits was $43,833,579, and the bank balance was $46,493,421. The County’s formal policy is to follow collateralization requirements set forth in A.R.S. §35-323 as described above. At June 30, 2014, $44,546,954 of the County’s bank balance was exposed to custodial credit risk as follows: Uninsured and uncollateralized Uninsured with collateral held by the pledging financial institution $ 870,281 43,676,673 $44,546,954 Investments—The County’s investments at June 30, 2014, were as follows: Investment U.S. agency securities U.S. Treasury securities Corporate notes U.S. Treasury money market funds Amount $ 93,567,983 27,000,000 3,000,000 5,803,510 $129,371,493 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, 2014, credit risk for the County’s investments was as follows: Investment Type Rating Rating Agency U.S. agency securities Corporate notes U.S. Treasury money market funds AAA AA+ Unrated Moody’s Standard and Poor’s Total 29 N/A Amount $ 93,567,983 3,000,000 5,803,510 $102,371,493 Navajo County Notes to Financial Statements June 30, 2014 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, 2014, the County had $5,803,510 of U.S. Treasury money market funds that were uninsured, not registered in the County’s name and held by the counterparty’s trust department or agent but 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, 2014, of 5 percent or more in Federal Home Loan Bank, Federal Home Loan Mortgage Corporation and Federal National Mortgage Association securities. These investments were 36 percent, 17.01 percent, and 15.46 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, 2014, 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 $ 93,567,983 27,000,000 3,000,000 5,803,510 $129,371,493 Weighted Average Maturity (In Years) 3.544 2.810 0.211 0.003 At June 30, 2014, $16,573,673 of the investments in U.S. agency securities and $3,000,000 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. $16,573,673 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. Total 3,000,000 $19,573,673 30 Navajo County Notes to Financial Statements June 30, 2014 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 $ 10,269 43,833,579 129,371,493 $173,215,341 Governmental Activities Investment Trust Funds Agency Funds Total $27,740,930 $135,669,926 $2,895,693 $166,306,549 Statement of Net Position Cash and investments Cash and investments held by trustee—restricted Total 6,908,792 $34,649,722 6,908,792 $135,669,926 $2,895,693 $173,215,341 Note 3 - Due from Other Governments Amounts due from other governments at June 30, 2014, are shown as follows: General Fund State-shared sales tax County sales tax State-shared vehicle license tax Highway user revenue Grants and contributions from state and federal governments Reimbursements for services provided for governmental units $ 721,648 615,676 91,707 Public Other Works/HURF Governmental Fund Funds $ Total $ 721,648 615,676 188,340 670,901 96,633 670,901 40,641 96,026 $1,805,574 1,942,241 26,413 $1,496,085 150,404 $1,013,964 274,402 $2,079,976 451,219 $4,590,025 31 Navajo County Notes to Financial Statements June 30, 2014 Note 4 - Capital Assets Capital asset activity for the year ended June 30, 2014, was as follows: Balance July 1, 2013 Governmental activities: Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets being depreciated: Buildings and improvements Infrastructure Machinery and equipment Total Less accumulated depreciation for: Buildings and improvements Infrastructure Machinery and equipment Total Total capital assets being depreciated, net Governmental activities capital assets, net $ 5,562,955 3,767,266 Increases Balance June 30, 2014 38,115 6,676,203 $336,977 5,601,070 10,106,492 9,330,221 6,714,318 $336,977 15,707,562 37,386,354 77,075,697 27,123,374 141,585,425 73,517 442,598 2,851,797 3,367,912 528,451 528,451 37,459,871 77,518,295 29,446,720 144,424,886 16,955,387 35,924,559 24,261,380 77,141,326 1,094,677 2,139,770 1,262,958 4,497,405 526,269 526,269 18,050,064 38,064,329 24,998,069 81,112,462 64,444,099 (1,129,493) 2,182 63,312,424 $339,159 $ 79,019,986 $ 73,774,320 $ Decreases $ 5,584,825 $ 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 $ 747,410 1,008,632 2,413,754 161,587 2,226 163,796 $4,497,405 Note 5 - Construction and Other Significant Commitments The County had major contractual commitments related to various capital projects at June 30, 2014, for the construction of the Winslow Levee, rehabilitation of Woodruff/Snowflake Bridge, and additions and improvements to the Public Works Complex and Holbrook Jail Complex. At June 30, 2014, the County had spent $10,106,492 on these projects and had remaining contractual commitments with contractors of $6,352,071. These projects are being financed primarily through the Flood Control District Fund, Public Works/HURF Fund, and revenue obligation monies, respectively. 32 Navajo County Notes to Financial Statements June 30, 2014 Note 6 - Long-Term Liabilities The following schedule details the County’s long-term liability and obligation activity for the year ended June 30, 2014: Governmental activities Balance July 1, 2013 Additions Reductions Balance June 30, 2014 Due within 1 year Pledged revenue obligations payable $13,665,000 $10,625,000 $5,165,000 $19,125,000 $1,150,000 198,727 786,508 214,055 237,971 571,035 244,847 17,250 258,750 17,250 1,558,108 1,930,692 1,314,720 $22,671,985 $2,940,872 Special assessment debt with governmental commitment 985,235 Capital leases payable 320,638 Landfill closure and postclosure care costs payable 276,000 Compensated absences payable 2,227,068 Claims and judgments payable Total 488,368 1,261,732 39,966 39,966 $17,513,907 $12,375,100 $7,217,022 Pledged revenue and revenue refunding obligations—The County has issued pledged revenue obligations that are generally callable with interest payable semiannually. The Series 2013 pledged revenue and revenue refunding obligations of $10,625,000 were issued for construction projects and refunding the Series 2008 Navajo County pledged revenue obligations. The obligations of $10,625,000 were allocated as follows: $1,215,000 to complete the detention facilities, $4,550,000 to construct a public works complex in Holbrook and $4,860,000 to refund the outstanding principal balance of $4,780,000 relating to the Series 2008 Navajo County pledged revenue obligations. The Series 2012A pledged revenue refunding obligations of $4,100,000 were issued to refund the outstanding principal balance of $4,345,000 relating to the Series 2000 Jail Facility certificate of participation. The Series 2012B pledged revenue obligations of $4,400,000 were issued to construct and remodel jail facilities. Pledged revenue and revenue refunding obligations outstanding at June 30, 2014, were as follows: Description Navajo County Pledged Revenue and Revenue Refunding Obligations, Series 2013 Navajo County Pledged Revenue Refunding Obligations, Series 2012A Navajo County Pledged Revenue Obligations, Series 2012B Original Amount Issued Maturity Ranges Interest Rates Outstanding Principal $10,625,000 2015 – 2024 2.17% $10,625,000 4,100,000 2015 – 2027 3.24% 4,100,000 4,400,000 2015 – 2032 3.24% 4,400,000 Total 33 $19,125,000 Navajo County Notes to Financial Statements June 30, 2014 The following schedule details debt service requirements to maturity for the County’s pledged revenue obligations payable at June 30, 2014: Governmental Activities Principal Interest Year ending June 30 2015 2016 2017 2018 2019 2020-24 2025-29 2030-32 Total $ 1,150,000 1,130,000 1,155,000 1,185,000 1,215,000 6,470,000 4,095,000 2,725,000 $19,125,000 $ 492,709 466,393 439,996 412,975 385,196 1,487,551 777,843 134,217 $4,596,880 The County has pledged a portion of its general county and state sales tax revenues toward the payment of debt related to revenue obligations outstanding at June 30, 2014. At June 30, 2014, future pledged revenues through final maturity at July 1, 2031 totaled $23,721,880, consisting of $19,125,000 for principal and $4,596,880 for interest. Future principal and interest payments are expected to require less than 8 percent of pledged sales tax revenues. Principal and interest paid for the current year and total current year revenues were $767,131 and $17,430,647, respectively. Refunded Navajo County Pledged Revenue Obligations, Series 2008 - On August 20, 2013, the County issued pledged revenue refunding obligations with an interest rate of 2.17 percent to current-refund older, higher-rate issues with an average interest rate of 3.95 percent. The County realized net proceeds of $4,806,395 after payment of $53,605 in issuance costs. Details of the refunding transactions are as follows: Amount of Series 2013 refunding pledged revenue obligations issued Amount of Navajo County Pledged Revenue Obligations, Series 2008, refunded Reduction in debt service payments Economic gain $4,860,000 4,780,000 431,847 401,887 Special assessment debt with governmental commitment—Special assessment debt is 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 debt. The proceeds were used to finance the construction or improvement of roads, water and wastewater systems, and community facilities. At June 30, 2014, future pledged revenues through final maturity at July 1, 2019 totaled $892,315 consisting of $786,508 for principal and $105,807 for interest. Future principal and interest payments are expected to require 100 percent of pledged special assessment revenues. Principal and interest paid for the current year and total current year special assessment revenues were $253,209 and $251,299, 34 Navajo County Notes to Financial Statements June 30, 2014 respectively. While there is no legal obligation for the County to further secure the special assessment debt of the districts below, the County has made a moral commitment to take steps necessary to prevent default. Special assessment debt currently outstanding for governmental activities is 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 2015-2017 2015-2019 2015-2017 2015-2016 5.40% 5.75% 6.17% 5.50% $415,000 298,000 40,896 32,612 $786,508 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 2015 2016 2017 2018 2019 Total 214,055 220,872 221,582 63,000 67,000 $786,508 43,381 31,568 19,531 7,475 3,852 $105,807 Compensated absences—Compensated absences are paid from various funds in the same proportion that those funds pay payroll costs. During fiscal year 2014, the County paid for compensated absences as follows: 63 percent from the General Fund, 12 percent from the Public Works/HURF Fund, and 25 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 Property and Casualty Pool, the Arizona Counties Workers’ Compensation Pool, and the Arizona Public Employers Health Pool, which are described below. 35 Navajo County Notes to Financial Statements June 30, 2014 The Arizona Counties Property and Casualty 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 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. 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 law requires, 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 Property and Casualty 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. If a pool were to become insolvent, the County would be assessed an additional contribution. 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. 36 Navajo County Notes to Financial Statements June 30, 2014 Note 8 - Fund Balance Classifications of the Governmental Funds The fund balance classifications of the governmental funds as of June 30, 2014, were as follows: General Fund Fund balances: Nonspendable: Inventories Prepaid items Total nonspendable 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 Unassigned Total fund balances Public Works/ HURF Fund Flood Control District Fund Public Works Construction Fund Other Governmental Funds $1,092,272 $ 1,092,272 22,500 22,500 6,857,479 763,420 466,948 $ 437,220 $8,033,551 437,220 6,857,479 8,033,551 $2,472,655 2,472,655 2,139,210 9,000 183,387 2,935,739 121,025 17,539 892,056 664,085 103,394 413,614 1,331,593 1,647,474 9,356,887 $ 1,092,272 22,500 1,114,772 1,200,640 7,324,427 8,033,551 2,935,739 121,025 17,539 892,056 664,085 103,394 413,614 1,331,593 4,120,129 27,157,792 2,331,597 41,434 1,929,164 1,205,636 3,288,638 2,251,614 9,000 224,821 1,929,164 1,205,636 5,620,235 3,482,808 (1,048,472) 2,434,336 $6,251,625 112,404 Total $7,949,751 $8,033,551 $2,472,655 $11,619,553 $36,327,135 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, state statutes establish benefits, 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. The health insurance premium benefit is paid as a fixed dollar amount per month toward 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. 37 Navajo County Notes to Financial Statements June 30, 2014 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 Arizona State Retirement System Board governs the ASRS 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 the 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 CORP in which the related plan information that follows is separately referred to as the CORP-AOC. The CORP is governed by the PSPRS Board of Trustees and the 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 plan that covers State of Arizona and county elected officials and judges, and elected officials of participating cities who were plan members on December 31, 2013. This plan was closed to new members as of January 1, 2014. The PSPRS Board of Trustees governs the EORP according to the provisions of A.R.S. Title 38, Chapter 5, Article 3. Beginning in fiscal year 2014, PSPRS, CORP, and EORP established separate funds for pension benefits and health insurance premium benefits. Previously, the plans recorded both pension and health insurance premium contributions in the same Pension Fund. During fiscal year 2014, the plans transferred prior-year health insurance premium benefit contributions that exceeded benefit payments from each plan’s Pension Fund to the new Health Insurance Fund. Each plan issues a publicly available financial report that includes its financial statements and required supplementary information. A report is available on their Web sites or may be obtained by writing or calling the applicable plan. ASRS 3300 N. Central Ave. P.O. Box 33910 Phoenix, AZ 85067-3910 (602) 240-2000 or 1-800-621-3778 www.azasrs.gov 38 PSPRS, CORP, and EORP 3010 E. Camelback Rd., Ste 200 Phoenix, AZ 85016-4416 (602) 255-5575 www.psprs.com Navajo County Notes to Financial Statements June 30, 2014 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, 2014, statute required active ASRS members to contribute at the actuarially determined rate of 11.54 percent (11.3 percent for retirement and 0.24 percent for long-term disability) of the members’ annual covered payroll and statute required the County to contribute at the actuarially determined rate of 11.54 percent (10.7 percent for retirement, 0.6 percent for health insurance premium benefit, and 0.24 percent for long-term disability) of the members’ annual covered payroll. Statute required active EORP members to contribute 13 percent of the members’ annual covered payroll and statute required the County to remit a designated portion of certain court fees plus additional contributions at a percent of the members’ annual covered payroll. Through December 31, 2013, the additional contributions were at the actuarially determined rate of 25.94 percent. Beginning January 1, 2014, the additional contributions were at the statutorily required rate of 23.5 percent. Both rates include the actuarially set rate of 1.56 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: Retirement Fund Health Benefit Supplement Fund Long-Term Disability Fund $1,784,370 1,698,431 1,631,434 $100,058 107,705 104,134 $40,023 39,768 39,670 Year ended June 30 ASRS: 2014 2013 2012 Pension Fund Health Insurance Benefit $394,725 317,998 263,472 $26,588 30,016 29,166 Year ended June 30 EORP: 2014 2013 2012 Agent plans—For the year ended June 30, 2014, statute required active PSPRS members to contribute 10.35 percent of the members’ annual covered payroll, and the County was required to contribute 31.97 percent, the aggregate of which is the actuarially required amount. The health insurance premium benefit portion of the contribution rate was actuarially set at 1.11 percent of covered payroll. Statute required active CORP and CORP-AOC members to contribute 8.41 percent of the members’ annual covered payroll. In addition, statute required the County to contribute 9.34 percent for active CORP members and 15.58 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 0.84 percent of covered payroll for active CORP members and 1.13 for CORP-AOC members. 39 Navajo County Notes to Financial Statements June 30, 2014 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 prepared only 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, 2014, were established by the June 30, 2012, actuarial valuations, and those actuarial valuations were based on the following actuarial methods and assumptions. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the plans’ funded status 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 the County and plans’ members understand them 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 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 following actuarial methods and assumptions were used to establish the fiscal year 2014 contribution requirements: 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, 2012 Entry age normal Level percent closed for unfunded actuarial accrued liability, open for excess 24 years for unfunded actuarial accrued liability, 20 years for excess 7-year smoothed market value (80%/120% market) 8% 5%–9% for PSPRS and 5%–8.25% for CORP 5% for PSPRS and CORP Annual Pension/OPEB Cost—The County’s pension/OPEB cost for the agent plans for the year ended June 30, 2014, and related information follows: 40 Navajo County Notes to Financial Statements June 30, 2014 PSPRS Annual pension/ OPEB costs CORP Pension Health Insurance Premium Benefit Pension Health Insurance Premium Benefit $692,113 $24,895 $146,738 $14,501 692,113 24,895 146,738 14,501 Contributions made CORP-AOC Health Insurance Premium Pension Benefit Annual pension/ OPEB costs $267,905 $20,950 267,905 20,950 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 Percentage of Annual Cost Contributed 2014 $692,113 100% 2014 24,895 Pension Health insurance premium benefit 2013 614,586 103.1 19,053 2013 27,468 30.6 (19,053) Pension Health insurance premium benefit 2012 523,118 104.9 25,672 2012 33,149 22.6 (25,672) 2014 146,738 100 0 2014 14,501 100 0 Pension Health insurance premium benefit 2013 119,826 114.7 17,622 2013 17,622 - (17,622) Pension Health insurance premium benefit 2012 86,459 121.2 18,360 2012 18,360 - (18,360) Plan PSPRS Pension Health insurance premium benefit CORP Pension Health insurance premium benefit 41 100 Net Pension/OPEB Obligation $ 0 0 Navajo County Notes to Financial Statements June 30, 2014 Year Ended June 30 Annual Pension/OPEB Cost Percentage of Annual Cost Contributed Net Pension/OPEB Obligation 2014 $267,905 100% $0 2014 20,950 100 0 Pension Health insurance premium benefit 2013 227,743 100 0 2013 24,408 100 0 Pension Health insurance premium benefit 2012 240,811 100 0 2012 29,432 100 0 Plan CORP-AOC Pension Health insurance premium benefit Funded Status—The plans’ funded status as of the most recent valuation date, June 30, 2014, along with the actuarial assumptions and methods used in those valuations follow. PSPRS Health Insurance Premium Pension Benefit Pension Health Insurance Premium Benefit Actuarial value of assets (a) $5,399,797 $553,923 $3,393,316 $302,076 Actuarial accrued liability (b) 17,034,621 293,122 3,953,613 138,877 Unfunded actuarial accrued liability (funding excess) (b) – (a) 11,634,824 (260,801) 560,297 (163,199) 31.7% 188.97% 85.8% 217.51% $2,080,280 $1,618,686 $1,618,686 (12.5)% 34.6% (10.1)% Funded ratio (a)/(b) Annual covered payroll (c) Unfunded actuarial accrued liability (funding excess) as a percentage of covered payroll [(b)- (a)]/(c) $2,080,280 559.3% CORP The actuarial methods and assumptions used are the same for both plans and related benefits (unless noted), 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, 2014 Entry age normal Level percent-of-pay closed 22 years for unfunded actuarial accrued liability, 20 years for excess 7-year smoothed market value (80%/120% market) 7.85% 4.0% – 8.0% for PSPRS; 4.5% – 7.25% for CORP 4.0% for PSPRS and CORP 42 Navajo County Notes to Financial Statements June 30, 2014 Note 10 - Interfund Balances and Activity Interfund receivables and payables—Interfund balances at June 30, 2014, were as follows: Payable from Public Works/HURF Fund General Fund General Fund Payable to Public Works Construction Fund $623 Public Works Construction Fund $1,830,057 Other Governmental Funds Total 323,162 $2,153,219 Other Governmental Funds $444 Total $ 1,067 1,830,057 $623 $458 $458 $444 323,620 $2,154,744 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, 2014, were as follows: Transfer from General Fund Public Works/HURF Fund Flood Control District Fund Public Works Construction Fund Other Governmental Funds Total Transfers to Public Works Other General Construction Governmental Fund Fund Funds $1,818,557 510,296 $ 920,410 $1,174,530 503,735 300,000  1,764,347 $3,188,492  $1,474,530 7,412 754,145 $3,090,410 Total $1,818,557 2,605,236 803,735 7,412 2,518,492 $7,753,432 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. 43 Navajo County Notes to Financial Statements June 30, 2014 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. 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 $844,492 in deposits and $6,908,792 of cash and investments held by trustee. 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 $93,567,983 27,000,000 3,000,000 15,000 Interest Rates .59% - 1.30% .50% - .88% Variable Maturities 09/16 – 05/19 10/16 – 08/17 09/14 .02% N/A Amount $93,189,924 26,869,230 3,000,030 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 $165,451,788 2,092,729 $163,359,059 Net position held in trust for: Internal participants External participants Total net position held in trust $ 27,689,133 135,669,926 $163,359,059 44 Navajo County Notes to Financial Statements June 30, 2014 Statement of Changes in Net Position Total additions Total deductions Net increase Net position held in trust: July 1, 2013 June 30, 2014 $298,616,709 292,546,731 6,069,978 157,289,081 $163,359,059 Note 12 - Subsequent Event On July 1, 2014, Navajo County implemented a self-insured health benefits program in partnership with Summit Healthcare and the Aetna Network with the intent to limit increases in healthcare costs. The program offers three different comprehensive medical plans and life and accidental death and dismemberment insurance to employees. In addition, the County established an onsite health care facility named High Desert Health Care clinic in the County’s Holbrook complex. Under the program, the County contracts directly with healthcare providers to deliver healthcare services to its eligible employees and related family members. The County pays for the services using premiums it receives from employees and County contributions. Health benefits program expenses are recorded in County’s General Fund and premiums and County contributions are recorded in the applicable governmental funds through payroll deductions. 45 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2014 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2014 Navajo County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Property taxes County sales tax Licenses and permits Fines and forfeits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ 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 7,218,553 6,211,839 452,858 870,000 17,284,209 1,941,576 33,020 200,787 34,212,842 3,407,855 1,965,832 797,592 382,169 281,362 234,694 1,346,187 966,109 456,318 9,602 1,531,235 355,508 2,220,666 2,825,557 1,032,853 1,365,121 334,675 330,934 385,863 298,009 345,736 $ Actual Amounts Variance with Final Budget 7,143,453 6,667,433 409,837 906,075 16,046,884 1,261,477 86,341 842,081 33,363,581 $ 2,132,684 1,744,983 243,347 284,148 237,080 164,049 1,169,766 834,039 442,516 7,274 1,539,337 372,498 2,170,242 2,737,927 714,677 1,103,507 327,359 317,442 366,434 275,332 327,105 (75,100) 455,594 (43,021) 36,075 (1,237,325) (680,099) 53,321 641,294 (849,261) 1,275,171 220,849 554,245 98,021 44,282 70,645 176,421 132,070 13,802 2,328 (8,102) (16,990) 50,424 87,630 318,176 261,614 7,316 13,492 19,429 22,677 18,631 (Continued) See accompanying note to budgetary comparison schedules. 48 Navajo County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2014 (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 21,290,967 Public safety Juvenile Detention Juvenile Probation Adult Probation Jail Operations Sheriff Total public safety $ Actual Amounts Variance with Final Budget 112,194 58,424 58,520 57,247 26,729 48,707 56,467 17,930,034 $ 1,188 4,234 440 (6,892) 450 (1,050) 432 3,360,933 1,624,482 480,931 597,744 6,084,558 5,409,981 14,197,696 1,247,329 393,039 559,813 4,430,595 5,062,522 11,693,298 377,153 87,892 37,931 1,653,963 347,459 2,504,398 446,584 3,398,400 3,844,984 417,276 3,179,804 3,597,080 29,308 218,596 247,904 Education School Superintendent 348,336 315,739 32,597 Capital outlay Capital outlay 972,005 905,322 66,683 Health and welfare Public Fiduciary Indigent Health Total health and welfare Contingency 4,000,000 Total expenditures Excess (deficiency) of revenues over expenditures 4,000,000 44,653,988 34,441,473 10,212,515 (10,441,146) (1,077,892) 9,363,254 (Continued) See accompanying note to budgetary comparison schedules. 49 Navajo County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2014 (Continued) Original and Final Budgeted Amounts Other financing sources (uses): Sale of capital assets Transfers in Transfers out Variance with Final Budget $ 7,502,439 (3,092,413) 89,213 3,188,492 (1,818,557) 4,410,026 1,459,148 $ $ Total other financing sources and uses Net change in fund balances (6,031,120) Fund balances, July 1, 2013 Fund balances, June 30, 2014 Actual Amounts $ - 6,412,376 5,870,369 $ 6,251,625 See accompanying note to budgetary comparison schedules. 50 (2,950,878) 381,256 6,031,120 89,213 (4,313,947) 1,273,856 (160,751) $ 6,251,625 Navajo County Required Supplementary Information Budgetary Comparison Schedule Public Works/HURF Fund Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Expenditures: Highways and streets Total expenditures 9,495,198 25,000 53,475 9,396 9,583,069 Actual Amounts $ 9,565,055 252,982 131,540 42,943 9,992,520 Variance with Final Budget $ 69,857 227,982 78,065 33,547 409,451 16,292,055 16,292,055 8,423,022 8,423,022 7,869,033 7,869,033 Excess (deficiency) of revenues over expenditures (6,708,986) 1,569,498 8,278,484 Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses (1,711,803) (1,711,803) (2,605,236) (2,605,236) (8,420,789) (1,035,738) 7,385,051 8,420,789 8,879,733 105,756 7,949,751 458,944 105,756 7,949,751 Net change in fund balances Fund balances, July 1, 2013 Increase in reserve for inventories Fund balances, June 30, 2014 $ - $ See accompanying note to budgetary comparison schedules. 51 (893,433) (893,433) $ Navajo County Required Supplementary Information Budgetary Comparison Schedule Flood Control District Fund Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Property taxes Intergovernmental Investment earnings Miscellaneous Total revenues $ 2,017,954 Actual Amounts $ 2,075,341 2,017,306 22 126,415 167 2,143,910 8,997,225 8,997,225 1,225,797 1,225,797 7,771,428 7,771,428 918,113 7,839,997 57,387 Expenditures: Public safety Total expenditures Excess (deficiency) of revenues over expenditures (6,921,884) Other financing uses: Transfers out Total other financing uses (278,839) (278,839) Net change in fund balances Fund balances, July 1, 2013 Fund balances, June 30, 2014 7,200,723 - $ 7,919,173 8,033,551 (648) 22 69,028 167 68,569 (524,896) (524,896) 114,378 See accompanying note to budgetary comparison schedules. 52 $ (803,735) (803,735) (7,200,723) $ Variance with Final Budget 7,315,101 $ 718,450 8,033,551 Navajo County Required Supplementary Information Notes to Budgetary Comparison Schedules June 30, 2014 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. Note 2 - Budgetary Basis of Accounting The County’s budget is prepared on a basis consistent with generally accepted accounting principles, except for the following unbudgeted item: - Present value of net minimum capital lease payments. The following schedule reconciles the deficiency of revenues over expenditures from the Statement of Revenues, Expenditures, and Changes in Fund Balance to the budgetary comparison schedule: General Fund Deficiency of revenues over expenditures from the Statement of Revenues, Expenditures, and Changes in Fund Balance Present value of net minimum capital lease payments Deficiency of revenues over expenditures from the budgetary comparison schedule 53 $(1,566,260) 488,368 $(1,077,892) Navajo County Required Supplementary Information Schedule of Agent Retirement Plans’ Funding Progress June 30, 2014 Public Safety Personnel Retirement System Actuarial Valuation Date Pension 6/30/14 Health Insurance premium benefit 6/30/14 Pension 6/30/13 Health Insurance premium benefit 6/30/13 Pension 6/30/12 Health Insurance premium benefit 6/30/12 Actuarial Value of Plan Assets (a) Actuarial Accrued Liability (b) $5,399,797 $17,034,621 553,923 293,122 6,013,808 14,291,830 0 Unfunded actuarial accrued liability (UAAL) (funding excess) (b)-(a) $11,634,824 Funded Ratio (a/b) $2,080,280 559.3% 188.97 2,080,280 (12.5) 8,278,022 42.1 2,232,165 370.9 297,397 297,397 0.0 2,232,165 13.3 6,078,479 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 $3,393,316 $3,953,613 $ 560,297 85.8% $1,618,686 302,076 138,877 3,619,777 (260,801) 31.7% Annual Covered Payroll (c) UAAL (funding excess) as a percentage of covered payroll (b) – (a)/(c) Corrections Officer Retirement Plan CORP Pension 6/30/14 Health insurance premium benefit 6/30/14 Pension 6/30/13 Health insurance premium benefit 6/30/13 Pension 6/30/12 Health insurance premium benefit 6/30/12 34.6% (163,199) 217.51 1,618,686 (10.1) 3,806,758 186,981 95.1 1,787,485 10.5 0 143,461 143,461 0.0 1,787,485 8.0 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 54 Navajo County Required Supplementary Information Schedule of Agent Retirement Plans’ Funding Progress June 30, 2014 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 prepared only for the group as a whole. Therefore, actuarial information for the County, as a participating government, is not available. Note 2 - Factors That Affect the Identification of Trends Beginning in fiscal year 2014, PSPRS and CORP established separate funds for pension benefits and health insurance premium benefits. Previously, the plans recorded both pension and health insurance premium contributions in the same Pension Fund. During fiscal year 2014, the plans transferred prior-year health insurance premium benefit contributions that exceeded benefit payments from each plan’s Pension Fund to the new Health Insurance Fund. 55 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2014 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2014 Navajo County Nonmajor Governmental Funds June 30, 2014 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. 58 Navajo County Nonmajor Governmental Funds June 30, 2014 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 Detention Facility Construction Accounts for construction of medical, kitchen and laundry detention facilities and remodeling the existing county jail and it is funded through pledged revenue obligations. General Government Accounts for construction of County buildings and improvements to existing facilities. Debt Service Funds General Government Accounts for the accumulation of resources for payment of principal and interest on the 2012 and 2013 Series Pledged Revenue Obligations for construction of the Public Works Complex in Holbrook and construction and remodel of jail facilities. 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. 59 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2014 Special Revenue County Attorney Courts Administration Assets Cash and investments Cash and investments held by trustee–restricted Receivables (net of allowance for uncollectibles): Property taxes Accounts receivable Special assessments Due from: Other funds Other governments Prepaid items Total assets Liabilities Accounts payable Accrued payroll and employee benefits Due to: Other funds Other governments Total liabilities $ 285,572 $ 1,216,309 $ 1,293,282 414 5,078 627 68,446 244,400 4,162 $ 354,432 $ 1,465,787 $ 1,298,071 $ 417,000 $ 2,950 7,416 $ $ $ 15,450 6,001 9,000 590 19,956 Deferred Inflows of Resources Unavailable revenue–property taxes Unavailable revenue–special assessments Unavailable revenue–intergovernmental Total deferred inflows of resources Fund balances Nonspendable Restricted Assigned Unassigned Total fund balances(deficits) Total liabilities, deferred inflows of resources and fund balances Environmental and Conservation 36,626 65,085 10,252 39,191 $ 382,000 35,000 34,871 136,582 629 2,774 52,846 41 21,492 1,419,367 1,387,261 403,150 5,128 5,128 360,270 112,404 (143,326) 329,348 $ 354,432 (90,162) (142,036) 1,329,205 1,245,225 $ 1,465,787 $ 1,298,071 (7,642) 395,508 $ 417,000 (continued) 60 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2014 Special Revenue Library District Probation Housing Assets Cash and investments Cash and investments held by trustee–restricted Receivables (net of allowance for uncollectibles): Property taxes Accounts receivable Special assessments Due from: Other funds Other governments Prepaid items Total assets Liabilities Accounts payable Accrued payroll and employee benefits Due to: Other funds Other governments Total liabilities $ 10,743 $ $ $ 134,016 25,891 225 34,538 959 1,638 $ 10,743 $ 60,429 $ 666,919 $ 135,654 $ 2,528 $ 11,961 11,572 $ 16,460 96,699 $ 4,551 1,975 42,797 4,222 70,552 2,528 Deferred Inflows of Resources Unavailable revenue–property taxes Unavailable revenue–special assessments Unavailable revenue–intergovernmental Total deferred inflows of resources Fund balances Nonspendable Restricted Assigned Unassigned Total fund balances(deficits) Total liabilities, deferred inflows of resources and fund balances 665,735 Public Defense 21,162 134,321 17 6,543 20,011 20,011 $ 21,840 17,539 600,913 129,111 (13,625) 8,215 (47,673) (30,134) (68,315) 532,598 129,111 10,743 $ 60,429 $ 666,919 $ 135,654 (continued) 61 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2014 Public Health Assets Cash and investments Cash and investments held by trustee–restricted Receivables (net of allowance for uncollectibles): Property taxes Accounts receivable Special assessments Due from: Other funds Other governments Prepaid items Total assets Liabilities Accounts payable Accrued payroll and employee benefits Due to: Other funds Other governments Total liabilities Deferred Inflows of Resources Unavailable revenue–property taxes Unavailable revenue–special assessments Unavailable revenue–intergovernmental Total deferred inflows of resources Fund balances Nonspendable Restricted Assigned Unassigned Total fund balances(deficits) Total liabilities, deferred inflows of resources and fund balances Special Revenue Sheriff's Recreation Office $ $ 98,830 $ 82,774 22,188 262,134 Special Districts $ 25,303 51,716 7,019 926,420 $ 1,031,382 $ 150,546 $ $ $ 565 $ 61,082 133,847 467,699 43,916 52,530 291,375 444 178,014 22,500 488,395 70,588 36,109 $ 474,718 $ 1,200 56,899 163,596 565 1,200 64,571 46,587 275,444 340,015 92,342 92,342 46,587 664,085 103,394 (264,093) 399,992 103,394 $ 1,031,382 6,666 $ 150,546 6,666 22,500 291,143 41,434 (122,620) 232,457 $ 488,395 466,948 (96) 466,852 $ 474,718 (continued) 62 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2014 Special Revenue Capital Projects Superintendent Workforce Detention Facility General of Schools Investment Act Construction Government Assets Cash and investments Cash and investments held by trustee–restricted Receivables (net of allowance for uncollectibles): Property taxes Accounts receivable Special assessments Due from: Other funds Other governments Prepaid items Total assets Liabilities Accounts payable Accrued payroll and employee benefits Due to: Other funds Other governments Total liabilities $ 2,022,734 $ 603,807 1,208,762 34,474 231,776 $ 354,623 $ 2,288,984 $ 354,623 $ 1,812,569 $ $ 29,765 42,967 $ 165,095 31,569 15,481 47,050 227,278 883 300,893 165,095 99,185 1,647,474 (45,455) 53,730 1,647,474 Deferred Inflows of Resources Unavailable revenue–property taxes Unavailable revenue–special assessments Unavailable revenue–intergovernmental Total deferred inflows of resources Fund balances Nonspendable Restricted Assigned Unassigned Total fund balances(deficits) Total liabilities, deferred inflows of resources and fund balances 413,614 1,929,164 (100,844) 2,241,934 $ 2,288,984 $ 354,623 $ 1,812,569 (continued) 63 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2014 Assets Cash and investments Cash and investments held by trustee–restricted Receivables (net of allowance for uncollectibles): Property taxes Accounts receivable Special assessments Due from: Other funds Other governments Prepaid items Total assets Debt Service General Special Government Districts Total Nonmajor Governmental Funds $ 1,205,636 $ $ 155,349 1,173,389 $ 2,379,025 8,803,846 2,382,151 93,769 108,665 88,309 152,504 $ 249,118 444 2,079,976 22,500 $ 13,638,395 Liabilities Accounts payable Accrued payroll and employee benefits Due to: Other funds Other governments Total liabilities $ 460,642 456,343 323,620 173,989 1,414,594 Deferred Inflows of Resources Unavailable revenue–property taxes Unavailable revenue–special assessments Unavailable revenue–intergovernmental Total deferred inflows of resources $ 93,499 93,499 Fund balances Nonspendable Restricted Assigned Unassigned Total fund balances(deficits) Total liabilities, deferred inflows of resources and fund balances $ 1,173,389 1,205,636 2,379,025 $ 2,379,025 64 158,204 (2,585) 155,619 $ 249,118 84,582 146,752 372,914 604,248 22,500 9,356,887 3,288,638 (1,048,472) 11,619,553 $ 13,638,395 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2014 Special Revenue County Attorney Courts Administration Revenues: Property taxes Special assessments Licenses and permits Fines and forfeits Intergovernmental Charges for services Investment earnings (loss) Contributions Miscellaneous Total revenues $ $ Expenditures: Current: General government Public safety Highways and streets Health and welfare Culture and recreation Education and economic opportunity 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 $ 62,713 323,426 749,771 21,548 41,204 441,166 31,218 1,837,253 1,303 1,158,761 300,648 264,215 1,959,055 1,130,466 $ 534,722 3,020 537,742 6,860 347,079 571,723 Other financing sources (uses): Pledged revenue obligations issued Payment to bond refunding escrow agent Sale of capital assets Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances (deficits), July 1, 2013 Change in nonspendable resources Decrease in prepaid items Fund balances (deficits), June 30, 2014 282,664 110,625 6,673 278,709 1,452,925 52,807 21,594 Environmental and Conservation $ 1,959,055 1,130,466 347,079 190,663 (130,557) (121,802) 28,295 199,141 (90,157) 108,984 146,785 (48,372) 98,413 5,440 (137,310) (131,870) (21,573) (23,389) (103,575) 350,921 1,352,594 1,348,800 329,348 $ 1,329,205 $ 1,245,225 190,663 204,845 $ 395,508 (continued) 65 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2014 Housing Revenues: Property taxes Special assessments Licenses and permits Fines and forfeits Intergovernmental Charges for services Investment earnings (loss) Contributions Miscellaneous Total revenues Public Defense $ 624,507 $ 376,628 (4) 376,624 Expenditures: Current: General government Public safety Highways and streets Health and welfare Culture and recreation Education and economic opportunity 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 151,072 (181) $ 2,064,077 373,889 11,156 17,288 469 1,986 4,197 2,453,319 19,743 48,516 823,914 106,739 2,466,656 540,311 365,994 Other financing sources (uses): Pledged revenue obligations issued Payment to bond refunding escrow agent Sale of capital assets Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances (deficits), July 1, 2013 Change in nonspendable resources Decrease in prepaid items Fund balances (deficits), June 30, 2014 Special Revenue Library District Probation $ 365,994 540,311 10,630 283,603 (13,337) (86,996) (8,863) (8,863) 21,915 (361,451) (339,536) 4,073 (4,950) (877) 89,780 (491) 89,289 1,767 (55,933) (14,214) 2,293 6,448 25,799 546,812 126,818 532,598 $ 129,111 8,215 $ (30,134) 2,466,656 $ 106,739 (continued) 66 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2014 Special Revenue Sheriff's Recreation Office Public Health Revenues: Property taxes Special assessments Licenses and permits Fines and forfeits Intergovernmental Charges for services Investment earnings (loss) Contributions Miscellaneous Total revenues $ 1,914,253 $ 151,684 $ 115,779 196,432 2,656,834 133,171 5,844 42,265 36,723 4,985,522 Expenditures: Current: General government Public safety Highways and streets Health and welfare Culture and recreation Education and economic opportunity 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 1,683 906,810 306,329 7,445 4,378 153,367 21,888 1,242,472 120,157 1,515,816 23,910 4,312,262 151,571 28,545 2,454 Other financing sources (uses): Pledged revenue obligations issued Payment to bond refunding escrow agent Sale of capital assets Transfers in Transfers out Total other financing sources and uses 92,231 6,515 4,343,261 151,571 642,261 1,796 1,614,562 96,247 49,145 (6,996) 42,149 (36,459) Fund balances (deficits), July 1, 2013 Change in nonspendable resources Decrease in prepaid items 23,910 (372,090) 590,843 (1,269,563) (678,720) Net change in fund balances Fund balances (deficits), June 30, 2014 Special Districts 1,796 436,451 101,598 (329,941) 96,247 574,398 370,605 (12,000) $ 399,992 $ 103,394 $ 232,457 $ 466,852 (continued) 67 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2014 Special Revenue Superintendent Workforce of Schools Investment Act Revenues: Property taxes Special assessments Licenses and permits Fines and forfeits Intergovernmental Charges for services Investment earnings (loss) Contributions Miscellaneous Total revenues $ Expenditures: Current: General government Public safety Highways and streets Health and welfare Culture and recreation Education and economic opportunity 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 4,494,212 $ 307 772,853 4,965,781 857,675 (77,184) Other financing sources (uses): Pledged revenue obligations issued Payment to bond refunding escrow agent Sale of capital assets Transfers in Transfers out Total other financing sources and uses $ 348 $ 348 (1,971) (1,971) 857,675 4,607 2,679,244 2,683,851 9,130 9,130 (84,822) (2,683,503) (11,101) 1,215,000 9,609 (77,184) Fund balances (deficits), July 1, 2013 Change in nonspendable resources Decrease in prepaid items 2,319,118 $ 2,241,934 $ 324,474 (313,360) 11,114 (276,979) 938,021 9,609 Net change in fund balances Fund balances (deficits), June 30, 2014 772,546 12,635 385 381,365 4,888,597 4,965,781 Capital Projects General Detention Facility Construction Government (75,213) (1,745,482) 13 128,943 3,392,956 (13) 53,730 $ 1,647,474 $ (continued) 68 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2014 Total Nonmajor Governmental Funds Debt Service General Special Districts Government Revenues: Property taxes Special assessments Licenses and permits Fines and forfeits Intergovernmental Charges for services Investment earnings (loss) Contributions Miscellaneous Total revenues $ $ Expenditures: Current: General government Public safety Highways and streets Health and welfare Culture and recreation Education and economic opportunity 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 4,956 3,255 4,002 8,958 254,554 2,538,760 518,762 196,432 341,422 14,033,204 1,727,061 104,672 42,650 570,416 20,073,379 3,496,908 4,246,687 23,910 4,312,262 691,882 5,830,316 347,079 365,994 385,000 382,131 53,605 198,727 56,665 820,736 255,392 (811,778) Other financing sources (uses): Pledged revenue obligations issued Payment to bond refunding escrow agent Sale of capital assets Transfers in Transfers out Total other financing sources and uses 704,503 447,765 58,212 2,688,374 23,213,892 (838) (3,140,513) 4,860,000 (4,806,395) 6,075,000 (4,806,395) 9,609 3,090,410 (2,518,492) 1,850,132 1,658,814 1,712,419 Net change in fund balances 900,641 Fund balances (deficits), July 1, 2013 Change in nonspendable resources Decrease in prepaid items Fund balances (deficits), June 30, 2014 251,299 (838) 1,478,384 (1,290,381) 156,457 12,921,934 (12,000) $ 2,379,025 69 $ 155,619 $ 11,619,553 Navajo County Budgetary Comparison Schedule Special Revenue - Administration Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ 4,911,612 114,200 308 261,828 5,287,948 Actual Amounts $ 282,664 110,625 6,673 41,204 441,166 Variance with Final Budget $ (4,628,948) (3,575) 6,365 (220,624) (4,846,782) Expenditures: General government Public safety Education and economic opportunity Total expenditures 593,762 1,657,641 92,279 2,343,682 300,648 264,215 6,860 571,723 293,114 1,393,426 85,419 1,771,959 Excess (deficiency) of revenues over expenditures 2,944,266 (130,557) (3,074,823) 100,000 (3,436,781) 199,141 (90,157) 99,141 3,346,624 (3,336,781) 108,984 3,445,765 Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2013 Fund balances, June 30, 2014 $ 70 (392,515) (21,573) 370,942 392,515 - 350,921 329,348 (41,594) 329,348 $ $ Navajo County Budgetary Comparison Schedule Special Revenue - County Attorney Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Fines and forfeits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Actual Amounts 630,000 1,589,719 101,000 44,998 341,368 2,707,085 Expenditures: General government Total expenditures $ 4,063,731 4,063,731 Excess (deficiency) of revenues over expenditures 278,709 1,452,925 52,807 21,594 31,218 1,837,253 Variance with Final Budget $ 1,959,055 1,959,055 (1,356,646) (351,291) (136,794) (48,193) (23,404) (310,150) (869,832) 2,104,676 2,104,676 (121,802) 1,234,844 Other financing sources (uses): Transfers in 367,988 146,785 (221,203) Transfers out Total other financing sources and uses (72,052) 295,936 (48,372) 98,413 23,680 (197,523) (1,060,710) (23,389) Net change in fund balances Fund balances, July 1, 2013 Fund balances, June 30, 2014 1,060,710 $ - 71 1,037,321 1,352,594 $ 1,329,205 291,884 $ 1,329,205 Navajo County Budgetary Comparison Schedule Special Revenue - Courts Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Fines and forfeits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Actual Amounts 56,397 419,211 767,555 195 Expenditures: General government Total expenditures Excess (deficiency) of revenues over expenditures $ Variance with Final Budget 1,243,358 62,713 323,426 749,771 21,548 1,303 1,158,761 2,484,095 2,484,095 1,130,466 1,130,466 1,353,629 1,353,629 28,295 1,269,032 (1,240,737) $ 6,316 (95,785) (17,784) 21,353 1,303 (84,597) Other financing sources (uses): Transfers in 695,336 Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2013 Fund balances, June 30, 2014 5,440 (881,584) (186,248) (137,310) (131,870) 744,274 54,378 (1,426,985) (103,575) 1,323,410 1,426,985 $ - 72 (689,896) 1,348,800 $ 1,245,225 (78,185) $ 1,245,225 Navajo County Budgetary Comparison Schedule Special Revenue - Environmental and Conservation Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Intergovernmental Investment earnings Miscellaneous Total revenues $ Actual Amounts Variance with Final Budget 400,000 1,000 350,000 751,000 $ 534,722 3,020 537,742 134,722 2,020 (350,000) (213,258) 962,416 962,416 347,079 347,079 615,337 615,337 Excess (deficiency) of revenues over expenditures (211,416) 190,663 402,079 Net change in fund balances (211,416) 190,663 402,079 211,416 204,845 - $ 395,508 Expenditures: Environmental and conservation Total expenditures Fund balances, July 1, 2013 Fund balances, June 30, 2014 $ 73 $ (6,571) $ 395,508 Navajo County Budgetary Comparison Schedule Special Revenue - Housing Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Intergovernmental Investment loss Total revenues $ 720,074 Expenditures: Urban redevelopment and housing Total expenditures Excess (deficiency) of revenues over expenditures Other financing uses: Transfers out Total other financing uses $ $ 74 Variance with Final Budget 720,074 376,628 (4) 376,624 690,886 690,886 365,994 365,994 324,892 324,892 29,188 10,630 (18,558) (8,863) (8,863) (8,863) (8,863) 29,188 1,767 (27,421) (29,188) - 6,448 8,215 35,636 8,215 - Net change in fund balances Fund balances (deficits), July 1, 2013 Fund balances, June 30, 2014 Actual Amounts $ $ $ (343,446) (4) (343,450) Navajo County Budgetary Comparison Schedule Special Revenue - Library District Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Property taxes Intergovernmental Investment earnings Miscellaneous Total revenues $ Actual Amounts 636,455 203,064 201,201 1,040,720 Expenditures: Culture and recreation Total expenditures Excess (deficiency) of revenues over expenditures $ 624,507 151,072 (181) 48,516 823,914 Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2013 Fund balances, June 30, 2014 $ 75 $ (11,948) (51,992) (181) (152,685) (216,806) 598,644 598,644 540,311 540,311 58,333 58,333 442,076 283,603 (158,473) 21,915 21,915 (245,564) (361,451) (115,887) (245,564) (339,536) (93,972) 196,512 (55,933) (252,445) (196,512) 25,799 222,311 Other financing sources (uses): Transfers In Transfers out Variance with Final Budget - $ (30,134) $ (30,134) Navajo County Budgetary Comparison Schedule Special Revenue - Probation Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ 2,232,727 317,645 3,778 48 2,554,198 Expenditures: Public safety Total expenditures $ 3,160,984 3,160,984 Excess (deficiency) of revenues over expenditures Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2013 $ $ (168,650) 56,244 7,378 4,149 (100,879) 694,328 694,328 (13,337) 593,449 4,296 4,073 (223) (5,064) (4,950) 114 (768) (877) (607,554) (14,214) 593,340 607,554 546,812 (60,742) - 76 2,064,077 373,889 11,156 4,197 2,453,319 Variance with Final Budget 2,466,656 2,466,656 (606,786) Other financing sources (uses): Transfers in Fund balances, June 30, 2014 Actual Amounts $ 532,598 (109) $ 532,598 Navajo County Budgetary Comparison Schedule Special Revenue - Public Defense Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Intergovernmental Charges for services Investment earnings Total revenues $ 19,000 60,000 2,914 81,914 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, 2013 Fund balances, June 30, 2014 Actual Amounts $ (1,712) (59,531) (928) (62,171) 106,739 106,739 206,734 206,734 (231,559) (86,996) 144,563 176,824 (80,000) 89,780 (491) (87,044) 79,509 96,824 89,289 (7,535) (134,735) 2,293 - 77 $ 313,473 313,473 134,735 $ 17,288 469 1,986 19,743 Variance with Final Budget 137,028 126,818 $ 129,111 (7,917) $ 129,111 Navajo County Budgetary Comparison Schedule Special Revenue - Public Health Year Ended June 30, 2014 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 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, 2013 Fund balances, June 30, 2014 $ 78 Actual Amounts 1,945,634 120,000 2,864,204 90,500 106,155 15,000 616,763 5,758,256 $ 1,914,253 196,432 2,656,834 133,171 5,844 42,265 36,723 4,985,522 4,733,872 4,733,872 4,343,261 4,343,261 1,024,384 642,261 Variance with Final Budget $ (31,381) 76,432 (207,370) 42,671 (100,311) 27,265 (580,040) (772,734) 390,611 390,611 (382,123) 211,175 (1,636,151) 590,843 (1,269,563) 379,668 366,588 (1,424,976) (678,720) 746,256 (400,592) (36,459) 364,133 400,592 - 436,451 399,992 35,859 399,992 $ $ Navajo County Budgetary Comparison Schedule Special Revenue - Recreation Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Special assessments Investment earnings Miscellaneous Total revenues $ Actual Amounts 152,500 1,000 500 154,000 Expenditures: Culture and recreation Total expenditures $ 248,516 248,516 151,684 1,683 153,367 Variance with Final Budget $ (816) 683 (500) (633) 151,571 151,571 96,945 96,945 Excess (deficiency) of revenues over expenditures (94,516) 1,796 96,312 Net change in fund balances (94,516) 1,796 96,312 101,598 7,082 Fund balances, July 1, 2013 Fund balances, June 30, 2014 94,516 $ - 79 $ 103,394 $ 103,394 Navajo County Budgetary Comparison Schedule Special Revenue - Sheriff's Office Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Fines and forfeits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Expenditures: Public safety Total expenditures Actual Amounts 125,000 958,822 333,606 3,085 81,176 1,501,689 $ 1,997,611 1,997,611 Excess (deficiency) of revenues over expenditures 906,810 306,329 7,445 21,888 1,242,472 Variance with Final Budget $ 1,614,562 1,614,562 (495,922) (372,090) 48,552 49,145 48,552 (6,996) 42,149 (125,000) (52,012) (27,277) 4,360 (59,288) (259,217) 383,049 383,049 123,832 Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2013 593 (6,996) (6,403) (447,370) (329,941) 117,429 447,370 574,398 127,028 (12,000) 232,457 (12,000) 232,457 Change in nonspendable resources Increase (decrease) in prepaid items Fund balances, June 30, 2014 $ 80 - $ $ Navajo County Budgetary Comparison Schedule Special Revenue - Special Districts Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Special assessments Investment earnings Total revenues $ 98,050 652 98,702 Expenditures: Highways and streets Total expenditures Actual Amounts $ 115,779 4,378 120,157 Variance with Final Budget $ 17,729 3,726 21,455 417,119 417,119 23,910 23,910 393,209 393,209 Excess (deficiency) of revenues over expenditures (318,417) 96,247 414,664 Net change in fund balances (318,417) 96,247 414,664 318,417 - 370,605 466,852 52,188 466,852 Fund balances, July 1, 2013 Fund balances, June 30, 2014 $ 81 $ $ Navajo County Budgetary Comparison Schedule Special Revenue - Workforce Investment Act Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Intergovernmental Investment earnings Total revenues $ 1,014,248 Expenditures: Health and welfare Total expenditures Excess (deficiency) of revenues over expenditures Actual Amounts $ 1,014,248 772,546 307 772,853 1,147,090 1,147,090 857,675 857,675 289,415 289,415 (84,822) 48,020 9,609 9,609 9,609 9,609 (132,842) (75,213) 57,629 132,842 - 128,943 53,730 (3,899) 53,730 (132,842) Other financing sources: Sale of capital assets Total other financing sources Net change in fund balances Fund balances, July 1, 2013 Fund balances, June 30, 2014 $ 82 Variance with Final Budget $ $ $ (241,702) 307 (241,395) Navajo County Budgetary Comparison Schedule Capital Projects - Detention Facility Construction Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Investment earnings Total revenues $ $ Excess (deficiency) of revenues over expenditures Other financing sources (uses): Pledged revenue obligations issued Transfers out Total other financing sources and uses Net change in fund balances Fund balances (deficits), July 1, 2013 Fund balances, June 30, 2014 $ 83 Variance with Final Budget - 348 348 4,750,000 4,750,000 4,607 2,679,244 2,683,851 (4,607) 2,070,756 2,066,149 (4,750,000) (2,683,503) 2,066,497 5,600,000 (275,000) 1,215,000 (276,979) (4,385,000) (1,979) 5,325,000 938,021 (4,386,979) Expenditures: Debt Service Bond issuance costs Capital outlay Total expenditures Actual Amounts $ 348 348 575,000 (1,745,482) (2,320,482) (575,000) 3,392,956 3,967,956 $ 1,647,474 $ 1,647,474 - Navajo County Budgetary Comparison Schedule Capital Projects - General Government Year Ended June 30, 2014 Revenues: Investment earnings (loss) Miscellaneous Total revenues Expenditures: Capital outlay Total expenditures Original and Final Budgeted Amounts Actual Amounts Variance with Final Budget $ $ (1,971) $ $ Excess (deficiency) of revenues over expenditures Other financing sources: Transfers in Transfers out Total other financing sources and uses 10,000 66,159 76,159 (1,971) (11,971) (66,159) (78,130) 260,926 260,926 9,130 9,130 251,796 251,796 (184,767) (11,101) 173,666 500,000 324,474 (313,360) 11,114 (175,526) (313,360) (488,886) 500,000 Net change in fund balances Fund balances (deficits), July 1, 2013 Fund balances, June 30, 2014 $ 84 315,233 13 (315,220) (315,233) (13) 315,220 - $ - $ - Navajo County Budgetary Comparison Schedule Debt Service - General Government Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Investment earnings Miscellaneous Total revenues Expenditures: Debt Service General government Total expenditures $ $ Excess (deficiency) of revenues over expenditures Other financing sources (uses): Pledged revenue obligations issued Payments to bond refunding agent escrow Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2013 Fund balances, June 30, 2014 Actual Amounts $ 85 4,956 4,002 8,958 Variance with Final Budget $ 4,956 4,002 8,958 2,608,641 2,608,641 820,736 820,736 1,787,905 1,787,905 (2,608,641) (811,778) 1,796,863 5,395,528 (4,860,000) 4,860,000 (4,806,395) (535,528) 53,605 2,608,641 1,658,814 (949,827) (1,000,000) 2,144,169 1,712,419 1,000,000 (431,750) (464,472) 900,641 1,365,113 464,472 1,478,384 1,013,912 - $ 2,379,025 $ 2,379,025 Navajo County Budgetary Comparison Schedule Debt Service - Special Districts Year Ended June 30, 2014 Original and Final Budgeted Amounts Revenues: Special assessments Investments earnings Total revenues $ Expenditures: Debt Service Highways and streets Total expenditures 259,000 Actual Amounts 259,000 $ 251,299 3,255 254,554 416,941 416,941 255,392 255,392 Variance with Final Budget $ (7,701) 3,255 (4,446) 161,549 161,549 Excess (deficiency) of revenues over expenditures (157,941) (838) 157,103 Net change in fund balances (157,941) (838) 157,103 Fund balances, July 1, 2013 Fund balances, June 30, 2014 $ 86 157,941 156,457 - $ 155,619 (1,484) $ 155,619 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2014 Navajo County Statement of Changes in Assets and Liabilities Agency Funds Year Ended June 30, 2014 Balance July 1, 2013 Assets Cash and investments Interest receivable Total Assets Liabilities Due to other governments Deposits held for other parties Total Liabilities Balance July 1, 2014 Additions Deductions 4,490,649 2,839 $ 4,493,488 $ 15,613,644 $ $ 15,613,644 $ 17,208,600 2,839 $ 17,211,439 $ $ 14,180,568 1,439,700 $ 15,620,268 $ 15,838,232 1,379,831 $ 17,218,063 $ $ 2,387,067 2,106,421 $ 4,493,488 88 $ $ 2,895,693 2,895,693 729,403 2,166,290 2,895,693 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2014 Navajo County Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year Expenses: General government Public safety Highways and streets Health and welfare Culture and recreation Education and economic opportunity Environmental and conservation Urban redevelopment and housing Interest on long-term debt Total governmental activities expenses 2005 2006 2007 2008 $ 18,389,571 11,659,715 8,434,616 4,736,700 531,045 263,909 94,595 $ 19,479,297 13,099,102 8,851,369 5,874,892 468,926 289,270 35,887 $ 19,745,840 14,534,493 10,990,269 6,274,590 554,419 4,885,689 18,880 507,110 44,617,261 374,442 48,473,185 179,518 57,183,698 $ 20,503,496 17,570,231 12,960,992 6,809,907 472,151 7,119,026 234,078 5,000 349,677 66,024,558 5,224,551 802,050 4,477,711 2,810,667 28,647 93,599 11,926 4,882,461 2,910,947 115,198 95,930 3,746,695 541,256 83,076 77,965 2,428,758 3,696,730 228,409 1,837,979 145,307 639,532 92,693 2,241,225 3,062,299 184,839 2,227,071 38,313 4,944,866 1,851,358 3,063,868 12,567,738 29,059,696 12,956,489 33,659,638 12,361,020 30,863,219 Program Revenues: Charges for services: General government Public Safety Highway and streets Health and welfare Culture and recreation Operating grants and contributions: General government Public Safety Highway and streets Health and welfare Culture and recreation Education and economic opportunity 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 Special assessments General county sales tax State shared revenues Payment in lieu of taxes Grants and contributions not restricted to specific programs 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 70,821 8,942 1,718,024 2,917,059 10,997,876 926,755 135,598 (86,267) 22,715,409 1,751,447 38,102 7,186,346 162,086 $ (21,901,852) $ (19,413,489) $ (23,524,060) $ (35,161,339) $ $ $ $ $ 6,402,534 7,973,918 8,636,394 9,707,389 5,205,992 11,362,815 861,599 7,260,596 12,781,414 757,594 6,778,153 13,521,307 7,083,165 13,302,354 1,228,182 1,184,173 946,207 909,436 1,433,848 1,733,012 3,922,712 1,624,746 140,937 408,225 59,167 581,789 104,656 1,016,509 11,971 1,207,819 26,794,457 31,270,121 33,223,879 36,860,156 4,892,605 $ 11,856,632 $ 9,699,819 $ 1,698,817 (Continued) 90 Navajo County Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2009 $ 2010 2011 $ 22,647,297 17,566,896 13,057,318 9,366,578 747,065 6,307,885 237,032 307,208 677,253 70,914,532 $ 22,396,786 16,191,164 14,480,464 7,129,008 814,786 5,710,417 196,504 35,558 625,962 67,580,649 122,462 3,531,064 517,702 39,249 215,494 3,465,053 672,441 98,695 194,090 3,326,109 982,588 334,513 163,957 155,895 3,649,106 1,146,080 12,171 243,393 3,537,721 919,746 252,982 329,602 3,719,202 3,599,091 1,735,327 3,290,457 2,584,222 2,916,270 2,215,242 3,252,479 1,966,176 4,500,832 2,700,852 3,976,671 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 2,500,943 129,282 4,327,485 301,660 40,823 2,820,717 149,666 5,266,695 534,722 376,628 9,690,517 28,508,468 9,565,055 30,431,057 19,392,043 19,182,119 14,058,305 7,219,915 510,035 5,723,104 231,225 594,260 66,911,006 3,473,303 765,083 12,393,158 32,054,807 15,637,667 33,480,772 2012 $ 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 2013 $ 220,229 5,000 9,578,324 26,919,398 13,170,789 29,677,799 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 2014 $ 22,213,348 16,995,243 9,534,493 8,039,343 694,108 6,190,399 329,829 365,994 487,808 64,850,565 $ (34,856,199) $ (37,433,760) $ (37,902,850) $ (34,729,372) $ (37,388,804) $ (34,419,508) $ 10,933,578 $ 12,494,737 $ 12,866,253 $ $ $ 6,330,588 12,017,517 5,480,598 10,728,725 5,889,027 11,405,376 6,246,077 11,475,113 6,444,858 750,742 4,902,289 322,748 4,489,096 254,483 3,175,428 202,500 1,430,914 (109,711) 1,538,954 453,017 23,895 1,466,751 115,237 1,273,310 (380,236) 34,937,408 5,957 1,822,741 36,732,933 13,116 1,170,658 34,370,592 52,473 892,976 96,640 1,455,607 32,957,436 35,232,854 37,967,929 $ 3,111,730 $ (2,496,352) $ (1,169,917) $ 91 12,087,700 (358,780) $ 11,924,765 502,434 6,239,089 12,024,496 (4,431,368) $ 11,704,948 542,526 6,667,433 12,773,729 813,346 Navajo County Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2005 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 $ 2006 124,747 10,386,065 $ 2007 $ 2008 12,379,484 16,110,913 $ 3,957,781 10,939,695 $ 10,510,812 $ 12,379,484 $ 16,110,913 $ 14,897,476 $ 6,699,626 $ 10,983,270 $ $ 5,695,432 7,581,812 3,176,207 $ 15,571,265 397,700 500,703 3,443,911 21,439,571 1,995,785 4,791,323 26,620,823 1,777,950 24,543 $ 22,008,993 $ 28,624,379 $ 28,924,019 (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) Fiscal Year 2009 $ 2,883,159 7,550,215 2010 $ 325,096 7,416,990 2011 2012 $ $ 3,182,499 3,349,495 6,531,994 $ 2,533,698 3,939,417 6,473,115 $ 437,220 $ 2,331,597 3,482,808 6,251,625 $ 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 1,114,772 26,720,572 3,288,638 (1,048,472) $ 30,075,510 25,962,952 1,824,003 $ 28,466,596 $ 2,021,131 3,849,238 5,870,369 2014 $ 10,433,374 679,641 $ 2013 31,118,113 1,924,862 76,332 $ 33,648,185 93 Navajo County Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year Revenues: Property taxes County sales 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 Health and welfare Culture and recreation Education and Economic Opportunity 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 Ratio of total debt service expenditures to non-capital expenditures 2005 2006 2007 2008 $ 5,944,655 $ 7,934,263 $ 8,673,499 $ 9,581,813 735,239 849,138 35,236,042 4,435,720 1,184,173 541,145 979,368 990,927 43,263,385 5,544,948 909,436 879,866 1,646,183 47,350,129 5,478,487 1,727,733 643,032 1,290,001 50,665,504 2,515,958 1,624,746 13,624 408,225 49,347,961 26,879 604,968 60,254,174 38,281 990,990 66,785,168 56,956 1,222,929 67,600,939 17,519,255 11,656,881 10,462,632 4,917,449 513,452 252,173 64,518 18,794,253 13,875,071 10,366,859 6,022,260 444,143 274,985 19,975,143 13,759,567 10,681,812 6,270,192 562,599 4,896,105 19,424 22,871,415 17,525,292 14,792,747 6,813,069 471,342 7,119,291 234,078 5,000 718,342 507,110 686,012 374,442 421,836 179,518 303,173 349,677 2,284,380 48,896,192 2,118,079 52,956,104 1,990,735 58,756,931 6,238,140 76,723,224 451,769 7,298,070 8,028,237 (9,122,285) 6,600,000 63,086 77,845 140,937 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 11,971 1,845,732 (1,845,732) 6,689,816 $ (2,432,469) 2.63% 2.09% 1.06% 0.93% (Continued) 94 Navajo County Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2009 2010 2011 $ 10,780,692 $ 12,294,308 513,081 1,563,382 52,104,688 2,284,384 750,741 356,318 619,663 1,336,602 49,652,453 2,347,245 322,747 133,181 529,657 1,317,038 46,350,655 2,583,583 254,483 198,817 397,490 1,228,579 42,113,926 2,934,743 202,499 642,688 469,651 1,539,663 43,050,561 3,041,435 (109,710) 502,434 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 42,650 1,455,607 65,577,439 22,160,207 18,403,733 17,778,854 7,074,321 501,738 5,515,147 231,225 21,661,752 16,838,127 10,087,829 9,306,800 740,591 6,139,063 237,032 307,208 21,894,300 17,020,246 15,462,752 7,138,323 808,312 5,674,996 196,504 35,558 20,650,249 17,394,177 9,452,610 7,507,775 962,712 6,019,533 16,352 784 20,746,489 17,515,389 9,583,999 7,987,610 785,901 5,326,169 303,402 42,701 21,296,099 17,165,782 8,446,932 7,909,342 691,882 6,146,055 347,079 365,994 487,701 594,260 858,416 677,253 919,249 625,962 946,316 721,020 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 65,080,041 821,698 461,413 75,464 7,613,324 71,341,064 (5,931,390) 1,074,905 (4,350,940) (3,164,887) (3,569,871) (5,763,625) 8,500,000 (4,345,000) 146,994 10,625,000 (4,806,395) 488,368 98,822 7,753,432 (7,753,432) 6,405,795 642,170 $ 6,846 23,895 2,304,012 (2,304,012) 30,741 $ (5,900,649) 1.49% 2012 12,612,528 $ 18,913 $ 115,237 8,048,481 (6,789,602) 1,374,116 2,449,021 2.30% $ 12,092,878 354,826 2013 $ 12,058,648 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% 95 2014 $ 11,699,519 6,667,433 606,269 1,247,497 39,645,165 3,241,520 453,017 518,762 $ 2.13% 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 2005 2006 Fiscal Year 2007 $ 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 $ 73,728,006 19,040,878 15,007,820 $ 107,776,704 2010 2011 Fiscal Year 2012 2013 2014 $ 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 $ 65,059,354 24,056,612 4,454,331 $ 93,570,297 96 2008 2009 Navajo County Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years PRIMARY ASSESSED VALUE Fiscal Year 2005 2006 2007 2008 2009 2010 **2011 2012 2013 2014 Residential and Vacant Property 333,976,747 365,245,873 414,808,401 480,365,541 563,228,216 631,550,018 683,204,674 634,214,647 575,074,783 513,683,811 Commercial Property 291,305,997 300,099,462 305,200,210 315,601,599 328,530,388 345,011,622 365,730,626 371,913,522 380,102,301 371,638,224 Unattached Personal Property 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 18,023,142 Total Taxable Assessed *Total Direct Estimated Actual Value Tax Rate Value 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 8,838,891,218 903,345,177 1.3850 8,029,406,641 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 97 Assessed Value as a Percentage of Actual Value 11.34% 11.39% 11.37% 11.31% 11.24% 11.18% 11.11% 10.97% 11.02% 11.25% NAVAJO COUNTY Direct and Overlapping Property Tax Rates Last Ten Fiscal Years County Direct Rates Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Primary 0.6316 0.6337 0.6229 0.6041 0.5775 0.5594 0.5572 0.5984 0.6401 0.6995 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 0.0300 0.0400 0.0500 0.0500 0.0500 0.0500 0.0500 0.0500 0.0704 Flood Control District 0.2041 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 Public Health District 0.0759 0.1963 0.1963 0.1963 0.1963 0.1963 0.1963 0.1963 0.1963 0.2151 Cities 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 0.2789-1.1934 Other Special Districts 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 0.1131-3.550 Community College District 1.5092 1.5200 1.4858 1.4206 1.3382 1.1352 1.1308 1.2387 1.3515 1.4769 Overlapping Rates Fiscal Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 School Equalization 0.4560 0.4358 0.0000 0.0000 0.0000 0.3306 0.3564 0.4259 0.4717 0.5123 School Districts 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 2.8322-8.000 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. 98 Total Direct 1.0316 1.2600 1.2592 1.2504 1.2238 1.2057 1.2035 1.2447 1.2864 1.3850 Navajo County Principal Property Taxpayers Current Year and Ten Years Ago 2014 Taxpayer Arizona Public Service Company PacifiCorp Electric Operations Peabody Western Coal Co. Transwestern Pipeline Co Burlington Northern/Santa Fe Railway El Paso Natural Gas Co Navopache Electric Co-Op Inc. Citizens Telecom of White Mountains Smith Bagley Unisource Energy Corporation Total 2014 Navajo County Value Primary Assessed Value $ 135,671,176 55,275,181 15,827,002 12,839,040 7,633,285 7,160,409 6,417,901 5,433,659 4,994,177 3,958,786 TOTALS $ 255,210,616 2004 Percentage of Total Primary Assessed Value Rank 1 15.02% 2 6.12% 3 1.75% 4 1.42% 5 0.84% 6 0.79% 7 0.71% 8 0.60% 9 0.55% 10 0.44% 28.25% Primary Assessed Value Rank $ 96,593,064 1 32,473,751 2 15,712,500 3 7,818,785 6 5,184,182 10 9,728,496 5 5,430,813 9 10,589,603 4 N/A N/A N/A N/A $ 903,351,854 Source: Navajo County Assessor's office 99 15.49% 5.21% 2.52% 1.25% 0.83% 1.56% 0.87% 1.70% N/A N/A $ 183,531,194 Total 2004 Navajo County Assessed Value Assessed Percentage of Total Primary Assessed Value 29.43% $ 623,721,601 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 2005 $ 4,053,921 $ 3,867,955 95.41% 2006 4,320,473 4,139,945 2007 4,579,748 2008 Collections in Subsequent Years $ Total Collections to Date Percentage Amount of Levy 185,302 $ 4,053,257 99.98% 95.82% 179,497 4,319,442 99.98% 4,401,681 96.11% 177,120 4,578,802 99.98% 4,911,184 4,684,181 95.38% 225,698 4,909,879 99.97% 2009 5,248,229 5,003,706 95.34% 241,697 5,245,403 99.95% 2010 5,583,907 5,306,931 95.04% 271,303 5,578,234 99.90% 2011 5,863,040 5,569,913 95.00% 284,306 5,854,219 99.85% 2012 6,109,793 5,887,544 96.36% 211,478 6,099,022 99.82% 2013 6,185,083 6,001,505 97.03% 168,247 6,169,752 99.75% 2014 6,284,454 6,070,355 96.59% 6,070,355 96.59% - 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. 100 Navajo County Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Certificates of Participation Special Assessment Bonds 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 Fiscal Year Revenue Bonds Capital Leases Total Primary Government Percentage of Personal Income (1) Per Capita (1) 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 0.43 111.38 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) 137.73 2014 19,125,000 - 786,508 571,035 20,482,543 N/A (2) N/A (2) 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) Population for 2014 and personal income for 2013 and 2014 were not available. 101 Navajo County Pledged Revenue Coverage Last Ten Fiscal Years Fiscal Year 2014 Fiscal Year 2013 2014 Fiscal Year 2008 2009 2010 2011 2012 2013 2014 Fiscal Year 2009 2010 2011 2012 2013 2014 Source: County Excise Tax $ 6,667,433 2013 Series Pledged Revenue Obligation Debt Service State Shared Net Available Sales Tax Revenue Principal Interest $ 10,763,214 $ 17,430,647 $ 83,899 Coverage 207.76 County Excise Tax $ 6,239,089 6,667,433 2012 Series Pledged Revenue Obligation Debt Service State Shared Net Available Sales Tax Revenue Principal Interest $ 10,087,589 $ 16,326,678 $ $ 50,368 10,763,214 17,430,647 186,604 Coverage 324.15 93.41 County Excise Tax $ 7,083,165 6,330,588 5,480,598 5,846,576 6,200,729 6,239,089 6,667,433 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 10,763,214 17,430,647 385,000 124,500 $ Revenues 300,706 273,885 241,567 241,374 248,745 251,299 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 0.95 198,727 54,482 0.99 Navajo County Finance Department 102 Coverage Ratio 123.07 24.69 26.15 26.88 28.01 34.21 Navajo County Legal Debt Margin Information Last Ten Fiscal Years Legal Debt Margin Calculation for Fiscal Year 2014 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 $ 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 2005 96,689,290 2006 $ 102,590,120 96,689,290 102,590,120 0% $ 2011 $ 158,850,728 149,814,683 158,850,728 0% 903,351,854 135,502,778 $ 135,502,778 $ 2008 121,847,141 110,225,508 0% 2010 149,814,683 0% $ Fiscal Year 2007 110,225,508 $ 121,847,141 0% $ Fiscal Year 2012 153,920,569 153,920,569 0% $ 2013 146,139,257 146,139,257 0% 2009 136,253,654 136,253,654 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. 103 $ 0% $ 2014 135,502,778 135,502,778 0% Navajo County Demographic and Economic Statistics Last Ten Calendar Years Fiscal Year Population Personal Income (thousands of dollars) Per Capita Personal Income Unemployment Rate 2005 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 108,694 (1) (1) 13.1 2014 (1) (1) (1) (1) Source: Population and Personal Income from U.S. Bureau of Economic Analysis. Workforce Informer Arizona at www.laborstats.az.gov for unemployment rate. (1) Information is not yet available for 2013 and 2014. 104 Navajo County Employment by Sector and Major Employers Employment by Sector 2005 2,825 3,100 575 9,850 3,175 900 750 1,100 5,600 950 Mining and Construction Educational & Health Srvs Financial Activities Government Leisure & Hospitality Manufacturing Information Professional & Business Srvs Trade, Transportation & Utilities Other Services 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 2008 2,375 3,300 525 10,400 3,475 800 1,000 1,275 5,650 850 2009 1,600 3,500 475 10,100 3,150 550 1,075 1,025 5,375 750 (Continued) 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 Line-Haul Communications Auto Dealer Hospitality Hotels and Motels Retail Education Medical Retail Medical Government Education Utilities Utility Colleges Energy Aircraft Coal and Mining Pork Production Education Retail Hospital Auto Dealer Retail Millwork Government APS, Joseph City Arizona Department of Corrections Algae Biosciences Burlington Northern Santa Fe Cellular One Hatch Auto Centers Hondah Resort & Casino Holiday Inn, Kayenta Home Depot Kayenta Boarding B.I.A. School Keams Canyon Indian Hospital K-Mart 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 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. 105 Navajo County Employment by Sector and Major Employers (Continued) Employment by Sector 2010 1,450 3,550 400 9,650 3,500 525 1,150 1,000 5,250 700 Mining and Construction Educational & Health Srvs Financial Activities Government Leisure & Hospitality Manufacturing Information Professional & Business Srvs Trade, Transportation & Utilities Other Services 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 2014 1,625 3,575 700 9,325 3,700 150 1,150 1,425 4,700 925 (Continued) (1) The number of employees for the 10 largest employers in the County is not available due to State of Arizona non-disclosure restrictions. 106 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 2007 272 240 84 62 3 661 2008 290 260 90 67 4 711 2009 284 256 90 66 4 700 Source: Navajo County Budget 2007 - 2014 107 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 2014 277 236 83 80 4 680 Navajo County Operating Indicators by Function Last Ten Fiscal Years Fiscal Year 2006 2007 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 Library District Education School Superintendent Charter schools Charter students District students School districts 2008 79,096 80,664 83,044 84,824 4 46,644 5 13,398 4 43,445 5 23,687 3,009 3,674 3,789 3,085 95 97 99 104 40,493 772 726 34,370 744 868 50,415 678 1,036 16 351 197 12,160 15 281 166 8,909 15 318 164 9,170 12 338 186 10,504 348 369 385 363 27 82 45 54 9 33 2 52 56,775 3,371 468 5,905 603 5,311 8,608 592 5,685 10,586 593 355,087 5,068 198,856 11,839 372,980 6,395 220,545 13,800 380,765 5,835 241,479 15,216 442,038 6,079 262,997 16,907 8 1,686 21,507 14 8 1,547 21,253 14 6 817 20,948 14 6 818 20,861 14 (continued) Source: Navajo County departments monthly and annual performance reports 108 Navajo County Operating Indicators by Function Last Ten Fiscal Years 2009 Fiscal Year 2011 2012 2010 2013 2014 85,536 85,858 86,304 88,148 85,773 85,752 4 51,626 4 21,379 4 50,969 5 17,330 4 57,960 3 8,569 1,837 1,285 926 994 1,023 970 103 110 99 108 109 163 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 36,388 571 1,181 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 10 355 307 5,252 363 361 319 274 283 382 0 42 47 25 49 42 82 32 59 13 88 12 51,481 48,743 60,117 47,962 57,742 52,623 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 5,353 1,096 483 456,579 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 28,827 378,584 14,303 334,866 34,214 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 6 742 17,090 11 109 Navajo County Capital Asset Statistics by Function Last Ten Fiscal Years Fiscal Year 2009 2010 2005 2006 2007 2008 2011 2012 2013 2014 76 158 158 158 158 158 173 173 173 173 3 3 4 4 4 4 6 6 6 4 1 6 4 1 6 4 1 6 4 1 6 6 6 6 1 0 407 1 0 1 0 433 1 0 425 1 0 426 1 0 442 2 0 442 2 0 441 2 0 1 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 31 13 0 727.7 14 738.98 14 747.83 14 732.01 14 737.65 14 734.9 14 733.28 14 733.65 15 733.95 15 733.95 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 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 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 Culture and Recreation Parks & Recreation County Parks (Tall Timber, Heber) Library District Number of facilities owned Facilities operated Bookmobiles Education Schools Source: Navajo County capital asset reports. 110