NAVAJO COUNTY Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended June 30, 2015 We are Navajo County NAVAJO COUNTY 1 FISCAL YEAR 14 - 15 Navajo County Board of Supervisors Chairwoman Dawnafe Whitesinger District 5 Jason E. Whiting Robert K. Black, Jr. Steve Williams Jesse Thompson District 3 District 1 District 4 District 2 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2015 Navajo County, Arizona Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2015 Prepared by Navajo County Finance Department County Manager James G. Jayne Assistant County Manager Finance Team James Menlove, Finance Director Paige Peterson, Accounting Manager Homero Vela NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2015 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2015 Navajo County Comprehensive Annual Financial Report Year Ended June 30, 2015 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 – Change in Accounting Principle Note 3 – Deposits and Investments Note 4 – Due From Other Governments Note 5 – Capital Assets Note 6 – Construction and Other Significant Commitments Note 7 – Long-Term Liabilities Note 8 – Risk Management Note 9 – Fund Balance Classifications of the Governmental Funds Note 10 – Pensions and Other Postemployment Benefits Note 11 – Interfund Balances and Activity Note 12 – County Treasurer’s Investment Pool i 16 17 18 19 20 21 22 28 28 31 32 32 33 35 37 37 58 59 Navajo County Comprehensive Annual Financial Report Year Ended June 30, 2015 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 Pension Plan Schedules Schedule of the County’s Proportionate Share of the Net Pension Liability– Cost-Sharing Pension Plans Schedule of County Pension Contributions Net Pension Liability and Related Ratios–Agent Pension Plans Schedule of County Pension Contributions Notes to Pension Plan Schedules Schedule of Agent OPEB Plans’ Funding Progress Notes to Schedule of Agent OPEB Plans’ Funding Progress 62 65 66 67 68 69 72 74 75 76 Supplementary Information List of Nonmajor Governmental Funds 78 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 – 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 – Public Works Construction Capital Projects – Detention Facility Construction Debt Service – General Government Debt Service – Special Districts 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 Statement of Changes in Assets and Liabilities – Agency Funds 108 ii 80 85 Navajo County Comprehensive Annual Financial Report Year Ended June 30, 2015 Page Table of Contents Statistical Section Financial Trends Changes in Net Position Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Net Position by Component 110 112 114 116 Revenue Capacity Assessed Value and Estimated Actual Value of Taxable Property Direct and Overlapping Property Tax Rates Principal Property Taxpayers Property Tax Levies and Collections 117 118 119 120 Debt Capacity Ratios of Outstanding Debt by Type Pledged Revenue Coverage Legal Debt Margin Information 121 122 123 Demographic and Economic Information Demographic and Economic Statistics Employment by Sector/Major Employers 124 125 Operating Information Full-Time Equivalent Employees by Function Operating Indicators by Function Capital Asset Statistics by Function 127 128 130 iii NAVAJO COUNTY ADMINISTRATION W. James Menlove, CPA James G. Jayne Finance Director County Manager December 16, 2015 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 2015. 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 2015 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 2015 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 2014 population of the County was estimated to be 109,185. 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 (10.5 percent for July 2015) has been significantly higher than the State’s (6.1 percent for July 2015). To address the economic challenges, Navajo County has reduced expenses through reductions in workforce, position vacancies from attrition, 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 2007. 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 2016. vii Impact of State Economic Conditions – The downturn in the local economy corresponded to economic declines at the state and national levels. As the State of Arizona struggled to balance its budget and reduce expenses counties have been significantly impacted by the shifting of revenues away from counties while mandating that counties pay for state programs. The uncertainty of these impacts from year to year requires Navajo County to budget conservatively to allow for these cost shifts, reductions in program funding, and reduced revenue allocations. Navajo County continues to work with state legislators, County Supervisors Association, and the Arizona City/County Managers Association to find solutions to the state budget crisis with the least impact to counties. Additionally, Navajo County continues to seek alternate funding sources to increase revenues. Cost analysis is ongoing, and the County is seeking to find additional ways to further reduce spending while continuing to provide for mandated functions with excellent customer service. Economic Outlook – Though the recession formally ended on a national level in June 2009, state and local revenues continue to be repressed. Economists continue to predict that the economic recovery will be modest for years to come. Arizona was among the states hardest hit by the economic downturn; consequently, the state’s recovery has lagged behind the recovery on a national level. The weakness in the economy and the uncertainty of the state budget requires continual monitoring, evaluation and planning for Navajo County. We will continue to address these challenges through the strategic budget planning process in coordination with our elected officials and department directors. SIGNIFICANT FINANCIAL POLICIES Navajo County has developed a set of fiscal management policies that guide the budget process. These policies consist of an Operating Budget Policy, Capital Budget Policy, Revenue Policy, Reserve Policy, Debt Policy, and the Budget Management Policy. The policies have been developed to:     Provide accountability to the citizens and the Board of Supervisors. Provide guidelines for long-term financial stability, enhancing the County’s ability to withstand fiscal fluctuations at the national, state, and local levels. Provide an overall financial picture of the County as a whole. Provide a basis for incorporating long-term policies into day-to-day operations. viii AWARDS The Government Finance Officers Association (GFOA) of the United States and Canada awarded a Certificate of Achievement for Excellence in Financial Reporting to Navajo County, Arizona for its comprehensive annual financial report for the fiscal year ended June 30, 2014. This was the fifth 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, 2014. This was the sixth 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 30,2015 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2015 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, 2015, 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, 2015, and the respective changes in financial position for the year then ended in accordance with U.S. generally accepted accounting principles. Emphasis of Matter As discussed in Note 2 to the financial statements, for the year ended June 30, 2015, the County adopted new accounting guidance, Governmental Accounting Standards Board Statement No. 68, Accounting and Financial Reporting for Pensions, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. Accordingly, the County restated beginning net position balances of its financial statements for this change in accounting principle. Our opinions are not modified with respect to this matter. Other Matters Required Supplementary Information U.S. generally accepted accounting principles require that the Management’s Discussion and Analysis on pages 5 through 12, Budgetary Comparison Schedules on pages 62 through 67, Schedule of the County’s Proportionate Share of the Net Pension Liability—Cost-Sharing Pension Plans on page 68, Schedule of Changes in the County’s Net Pension Liability and Related Ratios—Agent Pension Plans on pages 69 through 71, Schedule of County Pension Contributions on pages 72 through 73, and Schedule of Agent OPEB Plans’ Funding Progress on page 75. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with U.S. generally accepted auditing standards, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County’s basic financial statements. The combining and individual fund statements and schedules and the introductory and statistical sections listed in the table of contents are presented for purposes of additional analysis and are not required parts of the basic financial statements. The combining and individual fund statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with U.S. generally accepted auditing standards. In our opinion, the combining and individual fund statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Compliance Over the Use of Highway User Revenue Fund and Other Dedicated State Transportation Revenue Monies In connection with our audit, nothing came to our attention that caused us to believe that the County failed to use highway user revenue fund monies received by the County pursuant to Arizona Revised Statutes Title 28, Chapter 18, Article 2, and any other dedicated state transportation revenues received by the County solely for the authorized transportation purposes, insofar as they relate to accounting matters. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the County’s noncompliance with the use of highway user revenue fund monies and other dedicated state transportation revenues, insofar as they relate to accounting matters. The communication related to compliance over the use of highway user revenue fund and other dedicated state transportation revenue monies in the preceding paragraph is intended solely for the information and use of the members of the Arizona State Legislature, the Board of Supervisors, management, and other responsible parties within the County and is not intended to be and should not be used by anyone other than these specified parties. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we will issue our report on our consideration of the County’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters at a future date. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control over financial reporting and compliance. Debbie Davenport Auditor General December 16, 2015 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2015 Navajo County Management’s Discussion and Analysis June 30, 2015 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, 2015. We encourage readers to consider the information presented here in conjunction with the financial statements. For the year ended June 30, 2015, the County implemented the provisions of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. The implementation of these GASB Statements had a significant effect on the financial statement amounts. Net position as of July 1, 2014, has been restated from $93.6 million as previously reported in the fiscal year 2014 CAFR to $42.2 million for the prior period adjustments of the beginning net pension liability and County pension contributions made in FY 2014. Other financial areas that were significantly affected are explained below. FINANCIAL HIGHLIGHTS  The assets and deferred outflows of resources of the County exceeded its liabilities and deferred inflows of resources at the close of the current fiscal year by $36 million (net position). Of this amount, $63.7 million is the net investment in capital assets (e.g., land, buildings, improvements, machinery and equipment, infrastructure and construction in progress); $23.5 million is restricted for specific purposes (restricted net position); and $(51.2) million is the unrestricted net position deficit balance that is primarily a result of the implementation of GASB 68.  At June 30, 2015, total assets were $116.8 million, a decrease of $3.3 million or 2.8 percent in comparison with the prior fiscal year’s balance of $120.1 million.  At June 30, 2015, total liabilities were $84.9 million, an increase of $58.3 million or 219.7 percent in comparison with the prior fiscal year’s balance of $26.6 million.  At June 30, 2015, the County reported total deferred outflows of resources related to pensions of $11.7 million and deferred inflows of resources related to pensions of $7.5 million.  At June 30, 2015, the governmental funds reported combined fund balances of $31.6 million, a decrease of $4.7 million or 13.1 percent in comparison with the prior year’s combined fund balances of $36.3 million.  At June 30, 2015, $23.3 million or 73.9 percent of governmental fund balances were restricted, $5.4 million or 17.1 percent were assigned, $1.9 million or 5.9 percent were unassigned, and $992 thousand or 3.1 percent 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. 5 Navajo County Management’s Discussion and Analysis June 30, 2015 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. 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 6 Navajo County Management’s Discussion and Analysis June 30, 2015 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, expenditures, and changes in fund balances for the General Fund, Public Works/HURF Fund, and the Flood Control District 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 60 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 62 through 76 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, 2015, compared to the prior year. 7 Navajo County Management’s Discussion and Analysis June 30, 2015 Current and other assets Capital assets Total assets Deferred outflows of resources Total deferred outflows of resources Other liabilities Long-term liabilities outstanding Total liabilities Deferred inflows of resources Total deferred inflows of resources Net Position: Net investment in capital assets Restricted Unrestricted (deficit) Total net position Governmental Activities 2015 2014 $ 35,819,587 $ 41,103,155 80,975,142 79,019,986 116,794,729 120,123,141 11,664,841 3,453,978 81,431,785 84,885,763 3,880,859 22,671,985 26,552,844 7,531,749 - 63,750,745 23,521,625 (51,230,312) $ 36,042,058 65,059,354 24,056,612 4,454,331 $ 93,570,297 The County’s current and other assets and capital assets at the end of the current fiscal year were $35.8 million and $81 million, respectively. The current and other assets decreased by $5.3 million mostly due to a decrease in the cash and investments held by trustee balance for the construction and improvements of the Holbrook Jail Complex and Public Works Complex. The capital assets increased by $2 million mainly attributed to a net increase of $6.7 million in capital additions and $4.7 million in depreciation expense incurred in the current fiscal year. As a result of the County’s implementation of Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions, and GASB Statement No. 71 Pension Transition for Contributions Made Subsequent to the Measurement Date, the County reported the deferred outflows of resources of $11.7 million and deferred inflows of resources of $7.5 million related to pensions. The other liabilities and long-term liabilities outstanding at the end of the fiscal year were $3.5 million and $81.4 million, respectively. The other liabilities slightly decreased by $427 thousand primarily due to a total decrease of $712 thousand in accounts payable, accrued payroll and employee benefits and due to other governments and a total increase of $285 thousand in pledged revenue obligations principal and interest payable. The increase of $58.7 million in long-term liabilities was largely due to the additions of $60.4 million in net pension liability as a result of the County’s implementation of GASB Statement Nos. 68 and 71, and $760 thousand in incurred but not reported healthcare claims liability as a result of the newly created County’s self-insured health benefits program. The remaining difference was due to an increase of $222 thousand in compensated absences and $123 thousand in claims and judgments payable and a decrease of $2.7 million in regularly scheduled debt service payments. A large portion of the County’s net position, $63.8 million, reflects its investment in capital assets net of accumulated depreciation and related debt. The County uses these assets to provide services to citizens and, therefore, they are not available for future spending. The County’s restricted net position of $23.5 million is subject to external restrictions on how they may be used. 8 Navajo County Management’s Discussion and Analysis June 30, 2015 The County’s deficit of $51.2 million was a decrease of $55.7 million from the prior year’s unrestricted net position of $4.5 million due largely to the County’s implementation of GASB Statement Nos. 68 and 71, as mentioned above. 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 2015 compared to the prior year. Governmental Activities 2015 2014 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 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 Change in net position Net position as restated, beginning Net position, ending $ 6,844,292 15,319,641 11,431,446 33,595,379 $ 5,040,051 15,825,951 9,565,055 30,431,057 12,536,351 507,456 6,674,867 12,964,950 1,406,936 195,437 35,974 1,072,052 35,394,023 68,989,402 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 $31,968,411 16,655,632 11,190,411 7,956,284 665,292 5,669,487 211,478 73,852 802,936 75,193,783 (6,204,381) 42,246,439 $36,042,058 $22,213,348 16,995,243 9,534,493 8,039,343 694,108 6,190,399 329,829 365,994 487,808 64,850,565 813,346 92,756,951 $93,570,297 Overall revenues increased by $3.3 million or 5.1 percent and program expenses increased by $10.3 million or 16 percent in the current fiscal year. The following summarizes the significant changes in revenues and expenses compared to the prior year.  Charges for services increased by $1.8 million or 35.8 percent in the current year largely due to two 9 Navajo County Management’s Discussion and Analysis June 30, 2015 new revenue sources, $1.2 million of employee healthcare insurance premiums collected for the County’s new self-insured health benefits program and $556 thousand of fines and forfeits received in RICO seized monies.  Capital grants and contributions increased by $1.9 million or 19.5 percent in the current year mainly due to additional funding received from federal, state and local governments in the Public Works/HURF Fund for various road projects.  General government expense increased by $9.8 million or 43.9 percent in the current fiscal year. The increase is largely due to the additions of $4.7 million of net pension-related expense as a result of the County’s implementation of GASB Statement Nos. 68 and 71, and $4.6 million of net healthcare benefit expense incurred in the newly created County’s self-insured health benefits program. The remaining increase of $517 thousand was attributed to immaterial increases in the following expense categories: compensated absences, claims and judgments, and capital asset depreciation.  Highways and streets expenses increased by $1.7 million or 17.4 percent in the current fiscal year mainly due to increase in road repair and maintenance projects as a result of additional funding received from federal, state and local governments in the Public Works/HURF Fund.  Education and economic opportunity expenses decreased by $521 thousand or 8.4 percent in the current fiscal year, primarily due to the County School Superintendent’s Office received less operating grants and contributions from the federal and state governments. FINANCIAL ANALYSIS OF THE COUNTY’S FUNDS The County reported three major funds for this fiscal year: the General Fund, Public Works/HURF Fund and Flood Control District Fund. At the end of the current fiscal year, the County’s governmental funds reported combined fund balances of $31.6 million, which is a decrease of $4.7 million or a change of 13.1 percent. Of the total, $7.2 million constitutes unrestricted fund balances. For governmental funds, overall revenues increased $7.5 million or 11.5 percent and expenditures increased $6.5 million or 9.1 percent. Governmental fund expenditures exceeded revenues by $4.7 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 $7.7 million. Fund balances represent 18.9 percent of total General Fund expenditures. This ratio indicates a strong fund balance position in comparison to expenditures. The following provides an explanation of major funds activities that changed significantly over the prior year: General Fund  Cash and investments increased by $2.8 million or 66% in the current year largely due to reserves for the County’s medical self-insurance fund and a contract to house federal inmates in the County jail. 10 Navajo County Management’s Discussion and Analysis June 30, 2015  Accounts payable decreased by $157,945 or 28% in the current year largely due to a general reduction of purchases near fiscal year end.  Accrued payroll and employee benefits decreased by $110,821 or 11% in the current year largely due to a reduction in allowable annual leave hours an employee can carry-over at fiscal year-end.  General government expenditures increased by $6.5 million or 36% in the current year largely due to the implementation of the County’s medical self-insurance plan in the current fiscal year. Public Works/HURF Fund  Inventories decreased by $111,109 or 10% in the current year largely due to the use of materials in the current fiscal year that had previously been stockpiled for road projects.  Accounts payable decreased by $218,142 or 38% in the current year largely due to a general reduction of purchases near fiscal year end. GENERAL FUND BUDGETARY HIGHLIGHTS For the General Fund, actual revenues were more than the original and final budget amounts by $1.7 million, while the actual expenditures were $10.5 million less than the amount budgeted. The budget variance for revenues was due to the receipt of payment in lieu of taxes (PILT) from the federal government which was not budgeted due to the uncertainty of PILT appropriations. The budget variance for expenditures 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 2015. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets The County’s investment in capital assets as of June 30, 2015, totaled $81 million, (net of accumulated depreciation). This investment in capital assets includes land, construction in progress, buildings and improvements, infrastructure, and machinery and equipment. The following provides the major changes in capital assets during the current fiscal year:  Buildings increased by $12.6 million primarily due to the completion of the County Jail addition and remodel and the Holbrook Public Works complex.  The construction in progress for the Winslow Levee flood control project incurred additional costs of $658 thousand.  Machinery and equipment increased $896 thousand of new additions.  Accumulated depreciation increased $4.7 million of annual depreciation expense. Additional information on capital assets can be found in Notes 5 and 6 on page 32 of this report. 11 Navajo County Management’s Discussion and Analysis June 30, 2015 Debt Administration At the end of the current fiscal year, the County had total long-term liabilities outstanding of $81.4 million and consists of the following:  $60.4 million is net pension liability which was recognized as a result of the County’s implementation of GASB Statement Nos. 68 and 71.  $16.8 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.  $2.2 million for the future payment of compensated absences for unused employee vacation and sick leave.  $760 thousand of incurred but not reported healthcare claims payable which was recorded as a result of the newly created County’s self-insured health benefits program.  $574 thousand of special assessment debt with governmental commitment.  The remaining balance included $326 thousand of capital leases payable, $248 thousand of estimated landfill closure and post-closure care costs payable and $123 thousand of claims and judgments payable. 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 7 on pages 33 through 35 of this report. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET The significant downturn in the national and state economies that began the latter part of 2008 continued to affect the County in fiscal year 2015. The U.S. and State economies continued to experience a moderate recovery during 2015 and continued minimal improvement is expected in fiscal year 2016. The local economy in the County remains mainly flat. 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. 12 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2015 Navajo County Statement of Net Position Year Ended June 30, 2015 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 Deferred Outflows of Resources Deferred outflows related to pensions Total deferred outflows of resources Liabilities Accounts payable Accrued payroll and employee benefits Due to other governments Pledged revenue obligations payable Interest payable Noncurrent liabilities Due within 1 year Due in more than 1 year Total liabilities Deferred Inflows of Resources Deferred inflows related to pensions Total deferred inflows of resources 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 Capital projects Unrestricted (Deficit) Total net position See accompanying notes to financial statements. 14 $ 29,939,915 543,613 148,577 134,778 4,007,832 53,209 981,163 10,500 8,829,443 72,145,699 $ 116,794,729 $ 11,664,841 $ 11,664,841 $ 1,378,840 1,519,010 270,777 150,000 135,351 2,554,619 78,877,166 $ 84,885,763 $ $ 7,531,749 7,531,749 $ 63,857,163 1,534,010 7,931,114 7,774,699 3,104,984 402,287 1,055,713 288,739 926,649 236,717 160,295 (51,230,312) $ 36,042,058 Navajo County Statement of Activities Year Ended June 30, 2015 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 $ 31,968,411 16,655,632 11,190,411 7,956,284 665,292 5,669,487 211,478 73,852 802,936 $ 75,193,783 Program Revenues Operating Capital Charges for Grants and Grants and Services Contributions Contributions Net (Expense) Revenue and Changes in Net Position $ 5,079,224 1,390,048 100,758 274,262 $ 3,613,033 3,715,424 $ 6,844,292 $ 15,319,641 $ (23,276,154) (11,550,160) 341,793 (4,783,024) (536,347) (1,181,093) 200,509 (10,992) (802,936) $ (41,598,404) $ 11,431,446 2,898,998 128,945 4,488,394 411,987 62,860 $ 11,431,446 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 as restated, July 1, 2014 Net position, June 30, 2015 See accompanying notes to financial statements. 15 $ 7,806,394 1,845,674 2,043,163 841,120 345,608 161,848 6,674,867 10,891,962 2,072,988 1,406,936 195,437 35,974 1,072,052 35,394,023 (6,204,381) 42,246,439 $ 36,042,058 Navajo County Balance Sheet Governmental Funds June 30, 2015 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 Public Works/ HURF Fund Flood Control District Fund Other Governmental Funds Total Governmental Funds $ 7,080,649 $ 6,629,054 $ 7,705,829 $ 8,524,383 $ 29,939,915 277,105 91,380 6,871 168,639 50,326 134,778 543,613 148,577 134,778 207,540 1,637,914 918,631 115,162 1,451,287 322,702 4,007,832 53,209 97,869 $ 9,294,588 $ 8,535,719 $ 7,803,698 10,500 $ 10,508,284 53,209 981,163 10,500 $ 36,142,289 $ $ $ $ $ 981,163 Liabilities Accounts payable Accrued payroll and employee benefits Due to: Other funds Other governments Pledged revenue obligations payable Interest payable 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 412,230 931,873 350,582 184,879 406 2,634 444 94,089 28,371 34,174 246 15,304 1,438,636 598,006 18,590 194,284 67,363 6,715 200,999 67,363 1,273,833 2,836,408 3,544,712 7,654,953 $ 9,294,588 981,163 6,964,286 7,717,745 (7,736) 7,937,713 7,717,745 $ 8,535,719 $ 7,803,698 See accompanying notes to financial statements. 16 615,622 399,624 1,378,840 1,519,010 293,641 127,210 150,000 135,351 1,721,448 322,702 270,777 150,000 135,351 3,776,680 81,359 162,474 285,404 529,237 343,006 162,474 292,119 797,599 10,500 7,373,550 2,552,485 (1,678,936) 8,257,599 $ 10,508,284 991,663 23,329,414 5,388,893 1,858,040 31,568,010 $ 36,142,289 Navajo County Reconciliation of the Balance Sheet to the Statement of Net Position Governmental Funds June 30, 2015 Fund balances—total governmental funds $ 31,568,010 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. 80,975,142 Some receivables are not available to pay for current-period expenditures and, therefore, are reported as unavailable in the funds. 797,599 Long-term liabilities, such as net pension liabilities and pledged revenue obligations payable, are not due and payable in the current period and, therefore, are not reported in the funds. (81,431,785) Deferred outflows and inflows of resources related to pensions and deferred charges or credits on debt refundings are applicable to future reporting periods and, therefore, are not reported in the funds. 4,133,092 Net position of governmental activities $ 36,042,058 See accompanying notes to financial statements. 17 Navajo County Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2015 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 Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures 7,816,586 6,674,867 Flood Control District Fund Other Governmental Funds Total Governmental Funds $ 1,861,197 $ 2,887,506 $ 418,597 863,371 16,109,417 7,672,018 46,693 $ 11,431,446 100,758 43,170 54,007 525,931 40,127,480 55,187 11,630,561 1,915,225 24,295,342 11,097,449 21 1,220,974 10,229,232 3,732,518 322,289 120,264 10,578 855,330 40,433,770 (306,290) Other financing sources (uses): Sale of capital assets Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2014 Changes in nonspendable resources: Decrease in reserve for inventories Decrease in prepaid items Fund balances, June 30, 2015 Public Works/ HURF Fund 10,229,232 1,220,974 1,401,329 694,251 491,734 104,322 926,622 12,504,864 1,925,883 51,567 43,061 490,934 19,426,493 12,565,289 6,674,867 491,734 522,919 1,789,993 40,045,748 9,698,659 195,437 43,061 1,072,052 73,099,759 2,933,450 4,444,288 16,557 4,591,078 702,563 5,169,034 223,528 73,852 27,228,792 16,762,711 10,245,789 8,323,596 702,563 5,491,323 223,528 73,852 2,617,550 792,358 4,352,486 25,916,744 2,737,814 802,936 5,207,816 77,800,720 (6,490,251) (4,700,961) 64,945 5,625,009 (5,625,009) 64,945 43,760 3,278,442 (1,612,584) 1,709,618 (1,302,258) (1,302,258) (1,010,057) (1,010,057) 21,185 2,346,567 (1,700,110) 667,642 1,403,328 6,251,625 99,071 7,949,751 (315,806) 8,033,551 (5,822,609) 14,092,208 (4,636,016) 36,327,135 (12,000) $ 8,257,599 (111,109) (12,000) 31,568,010 (111,109) $ 7,654,953 $ 7,937,713 $ 7,717,745 See accompanying notes to financial statements. 18 $ 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, 2015 Net change in fund balances—total governmental funds $ (4,636,016) 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 6,661,622 (4,677,495) 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. Some revenues reported in the Statement of Activities do not represent the collection of current financial resources and, therefore, are not reported as revenues on the governmental funds Intergovernmental revenues Special assessments (28,971) 1,034,163 15,722 Collection of revenues in the governmental funds exceeded revenues reported in the Statement of Activities Property taxes County pension contributions are reported as expenditures in the governmental funds when made. However, they are reported as deferred outflows of resources in the Statement of Net Position because the reported net pension liability is measured a year before the County's report date. Pension expense, which is the change in the net pension liability adjusted for changes in deferred outflows and inflows of resources related to pensions, is reported in the Statement of Activities. County pension contributions Pension expense 1,049,885 (28,938) 3,700,293 (9,766,311) Repayment of debt principal is an expenditure in the governmental funds but the repayment reduces long-term liabilities in the Statement of Net Position. Principal repaid (6,066,018) 2,737,814 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. Increase in IBNR healthcare claim costs Increase in compensated absences Increase in claims and judgments Decrease in landfill closure and post-closure care costs (759,809) (221,520) (122,625) 10,799 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. Decrease in inventories Decrease in prepaid items (111,109) (12,000) Change in net position of governmental activities 1,984,127 (1,093,155) (123,109) $ (6,204,381) See accompanying notes to financial statements. 19 Navajo County Statement of Fiduciary Net Position Fiduciary Funds June 30, 2015 Investment Trust Funds Assets Cash and investments Total assets Agency Funds $ 149,482,736 $ 2,967,759 $ 149,482,736 $ 2,967,759 $ 777,724 2,190,035 2,967,759 Liabilities Due to other governments Deposits held for others Total liabilities $ Net Position Held in trust for investment trust participants $ 149,482,736 See accompanying notes to financial statements. 20 Navajo County Statement of Changes in Fiduciary Net Position Fiduciary Funds Year Ended June 30, 2015 Investment Trust Funds Additions: Contributions from participants Net investment income Total additions $ Deductions: Distributions to participants 224,141,882 992,580 225,134,462 211,321,652 Change in net position 13,812,810 Net position, July 1, 2014 135,669,926 Net position, June 30, 2015 $ See accompanying notes to financial statements. 21 149,482,736 Navajo County Notes to Financial Statements June 30, 2015 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, 2015, the County implemented the provisions of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date, and GASB Statement No. 69, Government Combinations and Disposals of Governmental Operations. GASB Statement Nos. 68 and 71 establish standards for measuring and recognizing net pension (assets and) liabilities, deferred outflows of resources, deferred inflows of resources, and expenses/expenditures related to pension benefits provided through defined benefit pension plans. In addition, Statement No. 68 requires disclosure of information related to pension benefits. GASB Statement No. 69 establishes accounting and financial reporting standards related to government combinations and disposals of government operations. The implementation of GASB Statement No. 69 had no impact on the County’s fiscal year 2015 financial statements, and the implementation of GASB Statement Nos. 68 and 71 had a significant effect on the financial statement amounts. 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 Navajo County Flood Control District Description; Criteria for Inclusion A tax-levying district that provides flood control systems; the County’s Board of Supervisors serves as the board of directors 22 Reporting Method Blended For Separate Financial Statements Not available Navajo County Notes to Financial Statements June 30, 2015 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, 2015 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 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. 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 24 Navajo County Notes to Financial Statements June 30, 2015 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, 2015 F. Property Tax Calendar The County levies real and personal property taxes on or before the third Monday in August that become due and payable in two equal installments. The first installment is due on the first day of October and becomes delinquent after the first business day of November. The second installment is due on the first day of March of the next year and becomes delinquent after the first business day of May. A lien assessed against real and personal property attaches on the first day of January preceding assessment and levy. G. Capital Assets Capital assets are reported at actual cost or estimated historical cost if historical records are not available. Donated assets are reported at estimated fair value at the time received. Capitalization thresholds (the dollar values above which asset acquisitions are added to the capital asset accounts), depreciation methods, and estimated useful lives of capital assets are as follows: Capitalization Depreciation Estimated Threshold Method Useful Life Land $10,000 N/A N/A Buildings and improvements 10,000 Straight-line 15-40 years Machinery and equipment 5,000 Straight-line 3-7 years Infrastructure 10,000 Straight-line 35 years H. Deferred Outflows/Inflows of Resources The statement of net position and balance sheet include separate sections for deferred outflows of resources and deferred inflows of resources. Deferred outflows of resources represent a consumption of net position that applies to future periods that will be recognized as an expense or expenditure in future periods. Deferred inflows of resources represent an acquisition of net position or fund balance that applies to future periods and will be recognized as a revenue in future periods. I. Pensions For purposes of measuring the net pension (asset and) liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plan’s fiduciary net position and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 26 Navajo County Notes to Financial Statements June 30, 2015 J. Fund Balance Classifications The governmental funds’ fund balances are reported separately within classifications based on a hierarchy of the constraints placed on those resources’ use. The classifications are based on the relative strength of the constraints that control how the specific amounts can be spent. The classifications are nonspendable, restricted, and unrestricted, which includes committed, assigned, and unassigned fund balance classifications. The nonspendable fund balance classification includes amounts that cannot be spent because they are either not in spendable form, such as inventories, or are legally or contractually required to be maintained intact. Restricted fund balances are those that have externally imposed restrictions on their usage by creditors (such as through debt covenants), grantors, contributors, or laws and regulations. The unrestricted fund balance category is composed of committed, assigned, and unassigned resources. Committed fund balances are self-imposed limitations that the County’s Board of Supervisors approved, which is the highest level of decision-making authority within the County. Only the Board can remove or change the constraints placed on committed fund balances. Assigned fund balances are resources constrained by the County’s intent to be used for specific purposes, but that are neither restricted nor committed. The Board of Supervisors has authorized the county’s manager to assign 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. The County will use committed amounts first when disbursing unrestricted fund balances, followed by assigned amounts, and lastly unassigned amounts. K. Investment Earnings Investment earnings is composed of interest, dividends, and net changes in the fair value of applicable investments. L. Compensated Absences Compensated absences payable consists of vacation leave and a calculated amount of sick leave employees earned based on services already rendered. Employees may accumulate up to 240 hours of vacation depending on years of service, but they forfeit any unused vacation hours in excess of the maximum amount at calendar 27 Navajo County Notes to Financial Statements June 30, 2015 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 280 hours plus 75 percent 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. 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 - Change in Accounting Principle Net position as of July 1, 2014, has been restated as follows for the implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. Governmental Activities Net Position as previously reported at June 30, 2014 Prior period adjustment—implementation of GASB 68: Net pension liability (measurement date as of June 30, 2013) Deferred outflows—county contributions made during fiscal year 2014 Total prior period adjustment Net position as restated, July 1, 2014 $93,570,297 54,836,809 (3,512,951) 51,323,858 $42,246,439 Note 3 - 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 28 Navajo County Notes to Financial Statements June 30, 2015 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 abovementioned services rates the security, it must carry the highest rating of that service. Custodial credit risk Statutes require collateral for deposits at 102 percent of all deposits federal depository insurance does not cover. 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, 2015, the carrying amount $54,871,947, and the bank balance was $57,875,519. follow collateralization requirements set forth in A.R.S. the bank balance, $57,187,657 was uninsured with financial institution. of the County’s deposits was The County’s formal policy is to §35-323 as described above. Of collateral held by the pledging Investments—The County’s investments at June 30, 2015, were as follows: Investment U.S. agency securities U.S. Treasury securities U.S. Treasury money market funds 29 Amount $105,498,195 22,000,000 63,208 $127,561,403 Navajo County Notes to Financial Statements June 30, 2015 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, 2015, credit risk for the County’s investments was as follows: Investment Type Rating Rating Agency Amount U.S. agency securities U.S. Treasury money market funds Total AAA Unrated Moody’s N/A $105,498,195 63,208 $105,561,403 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, 2015, the County had $63,208 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, 2015, of 5 percent or more in Federal Home Loan Bank, Federal Home Loan Mortgage Corporation, U.S. Treasury, Federal Farm Credit Banks, and Federal National Mortgage Association securities. These investments were 30.96 percent, 25.87 percent, 17.25 percent, 14.11 percent, and 11.76 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, 2015, the County had the following investments in debt securities: Investment Type U.S. agency securities U.S. Treasury securities U.S. Treasury money market funds Amount $105,498,195 22,000,000 63,208 $127,561,403 Weighted Average Maturity (In Years) 1.995 0.333 0.003 At June 30, 2015, $15,500,000 of the investments were in U.S. agency step-up securities and considered to be highly sensitive to interest rate changes. 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. 30 Navajo County Notes to Financial Statements June 30, 2015 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 54,871,947 127,561,403 $182,443,619 Governmental Activities Investment Trust Funds $29,939,915 $149,482,736 Agency Funds Total Statement of Net Position Cash and investments Cash and investments held by trustee—restricted Total $2,967,759 $182,390,410 53,209 $29,993,124 53,209 $149,482,736 $2,967,759 $182,443,619 Note 4 - Due from Other Governments Amounts due from other governments at June 30, 2015, 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 $ 747,946 607,129 97,464 Public Other Works/HURF Governmental Fund Funds Total $ 747,946 607,129 199,782 725,639 $102,318 725,639 153,262 88,329 $1,196,172 1,437,763 32,113 $1,637,914 2,345 $918,631 255,115 $1,451,287 289,573 $4,007,832 31 Navajo County Notes to Financial Statements June 30, 2015 Note 5 - Capital Assets Capital asset activity for the year ended June 30, 2015, was as follows: Balance July 1, 2014 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 $ 5,601,070 10,106,492 Increases $ Decreases Balance June 30, 2015 60,216 5,557,375 $12,495,710 $ 5,661,286 3,168,157 15,707,562 5,617,591 $12,495,710 8,829,443 37,459,871 77,518,295 29,446,720 144,424,886 12,586,162 57,730 895,849 13,539,741 499,205 499,205 50,046,033 77,576,025 29,843,364 157,465,422 18,050,064 38,064,329 24,998,069 81,112,462 1,180,320 2,152,111 1,345,064 4,677,495 470,234 470,234 19,230,384 40,216,440 25,872,899 85,319,723 63,312,424 8,862,246 28,971 72,145,699 $ 79,019,986 $14,479,837 $12,524,681 $ 80,975,142 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 $ 840,692 1,053,087 2,442,788 192,922 2,226 145,780 $4,677,495 Note 6 - Construction and Other Significant Commitments The County had major contractual commitments at June 30, 2015, for the construction of the Winslow Levee and rehabilitation of Woodruff/Snowflake Bridge. As of June 30, 2015, the County had spent $3,168,157 on these projects and had remaining contractual commitments with contractors of $3,543,520. These projects are being financed primarily through the Flood Control District Fund and Public Works/HURF Fund, respectively. 32 Navajo County Notes to Financial Statements June 30, 2015 Note 7 - Long-Term Liabilities The following schedule details the County’s long-term liability and obligation activity for the year ended June 30, 2015: Governmental activities Pledged revenue obligations payable Special assessment debt with governmental commitment Capital leases payable Net pension liability Landfill closure and postclosure care costs payable Compensated absences payable Incurred but not reported healthcare claims payable Claims and judgments payable Total Balance July 1, 2014, as restated Reductions Balance June 30, 2015 $19,125,000 $2,280,000 $16,845,000 786,508 571,035 54,836,809 212,966 244,847 4,549,346 573,542 326,188 60,404,458 $ 220,967 153,366 35,878 10,799 247,951 10,799 1,346,012 2,152,212 1,373,800 759,809 $8,643,970 759,809 122,625 $81,431,785 Additions $10,116,995 258,750 1,930,692 1,567,532 $77,508,794 759,809 122,625 $12,566,961 Due within 1 year $2,554,619 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, 2015, 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 2016 – 2024 2.17% $ 8,640,000 4,100,000 2016 – 2027 3.24% 3,805,000 4,400,000 2016 – 2032 3.24% Total 33 4,400,000 $16,845,000 Navajo County Notes to Financial Statements June 30, 2015 The following schedule details debt service requirements to maturity for the County’s pledged revenue obligations payable at June 30, 2015: Governmental Activities Principal Interest Year ending June 30 2016 2017 2018 2019 2020 2021-25 2026-30 2031-32 Total $ 1,155,000 1,185,000 1,215,000 1,230,000 6,025,000 4,190,000 1,845,000 $16,845,000 $ 226,665 439,996 412,975 385,196 356,849 1,338,953 643,626 60,183 $3,864,443 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, 2015. At June 30, 2015, future pledged revenues through final maturity at July 1, 2031 totaled $20,709,443, consisting of $16,845,000 for principal and $3,864,443 for interest. Future principal and interest payments are expected to require less than 7 percent of pledged sales tax revenues. Principal and interest paid for the current year and total current year revenues were $3,014,997 and $17,566,829, respectively. 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, 2015, future pledged revenues through final maturity at July 1, 2019, totaled $636,075 consisting of $573,542 for principal and $62,533 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 $256,319 and $231,966, 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 34 Maturity Ranges 2016-2017 2016-2019 2016-2017 2016 Interest Rates 5.40% 5.75% 6.17% 5.50% Outstanding Principal $285,000 245,000 27,236 16,306 $573,542 Navajo County Notes to Financial Statements June 30, 2015 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 2016 2017 2018 2019 Total $220,967 222,575 63,000 67,000 $573,542 $31,606 19,600 7,475 3,852 $62,533 Compensated absences—Compensated absences are paid from various funds in the same proportion that those funds pay payroll costs. During fiscal year 2015, the County paid for compensated absences as follows: 67 percent from the General Fund, 11 percent from the Public Works/HURF Fund, and 22 percent from the Other Governmental Funds. Incurred but not reported healthcare claims payable—On July 1, 2014, Navajo County implemented a self-insured health benefits program as described in Note 8. The liability for medical, dental and pharmacy claims is based on fiscal year 2015 actuarial report. Accrued actuarial liabilities at June 30, 2015, for each insurable area are as follows: Amount Medical Dental Pharmacy Total $709,701 26,747 23,361 $759,809 Claims and judgments payable—Claims and judgments are generally paid from the fund that accounts for the activity that gave rise to the claim. At June 30, 2015, the claims and judgments payable totally $122,625 represents the deductible reserves on reported claims. Note 8 - 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 two public entity risk pools: the Arizona Counties Property and Casualty Pool and the Arizona Counties Workers’ Compensation Pool, which are described below. The Arizona Counties Property and Casualty Pool is a public entity risk pool currently composed of 12 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 35 Navajo County Notes to Financial Statements June 30, 2015 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. On July 1, 2014, Navajo County implemented a self-insured health benefits program in partnership with Summit Healthcare and the Aetna Network. The program offers three different comprehensive medical plans. The uninsured risk of loss per individual is $250,000 per plan year. 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 their dependents. The County pays for the services using premiums it receives from employees and County contributions. Health benefits program expenses are recorded in General Fund and employee premiums and County contributions are recorded in the applicable governmental funds through payroll deductions and transferred to the General Fund. However, the County contributions are considered as internal activities and therefore eliminated at the government-wide level of the financial statements. The liability for incurred but not reported healthcare claims payable at June 30, 2015, is actuarial valued and disclosed in Note 7 for each insurable area. 36 Navajo County Notes to Financial Statements June 30, 2015 Note 9 - Fund Balance Classifications of the Governmental Funds The fund balance classifications of the governmental funds as of June 30, 2015, were as follows: General Fund Fund balances: Nonspendable: Inventories Prepaid items Total nonspendable Public Works/ HURF Fund Flood Control District Fund $ 981,163 $ Assigned to: General government Judicial activities Law enforcement Education Debt service Total assigned Unassigned Total fund balances $1,273,833 6,964,286 $7,717,745 1,273,833 6,964,286 $7,717,745 2,567,772 9,000 259,636 2,836,408 3,544,712 $7,654,953 (7,736) $7,937,713 Total 10,500 981,163 10,500 10,500 991,663 1,044,986 552,290 70,001 3,102,784 95,963 13,838 1,003,461 636,573 112,722 402,287 178,350 160,295 7,373,550 2,318,819 7,516,576 7,787,746 3,102,784 95,963 13,838 1,003,461 636,573 112,722 402,287 178,350 160,295 23,329,414 100,000 40,524 1,631,383 780,578 2,552,485 2,667,772 9,000 300,160 1,631,383 780,578 5,388,893 (1,678,936) 1,858,040 $ 8,257,599 $31,568,010 $ 981,163 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 Other Governmental Funds $7,717,745 Note 10 - Pensions and Other Postemployment Benefits The County contributes to the plans described below. The plans are component units of the State of Arizona. 37 Navajo County Notes to Financial Statements June 30, 2015 At June 30, 2015, the County reported the following aggregate amounts related to pensions for all plans to which it contributes: Statement of Net Position and Statement of Activities Net pension liabilities Deferred outflows of resources Deferred inflows of resources Pension expense Governmental Activities $60,404,458 11,664,841 7,531,749 9,766,311 The County’s accrued payroll and employee benefits includes $120,697 of outstanding pension contribution amounts payable to all pension plans for the year ended June 30, 2015. Also, the County reported $3,700,293 of pension contributions as expenditures in the governmental funds related to all pension plans to which it contributes. A. Arizona State Retirement System Plan description—County employees not covered by the other pension plans described below participate in the Arizona State Retirement System (ASRS). The ASRS administers a cost-sharing multiple-employer defined benefit pension plan, a cost-sharing multipleemployer defined benefit health insurance premium benefit (OPEB) plan, and a costsharing multiple-employer defined benefit long-term disability (OPEB) plan. The Arizona State Retirement System Board governs the ASRS according to the provisions of A.R.S. Title 38, Chapter 5, Articles 2 and 2.1. The ASRS issues a publicly available financial report that includes its financial statements and required supplementary information. The report is available on its Web site at www.azasrs.gov. Benefits provided—The ASRS provides retirement, health insurance premium supplement, long-term disability, and survivor benefits. State statute establishes benefit terms. Retirement benefits are calculated on the basis of age, average monthly compensation, and service credit as follows: ASRS Years of service and age required to receive benefit Final average salary is based on Benefit percent per year of service Retirement Initial membership date: Before July 1, 2011 On or after July 1, 2011 30 years age 55 Sum of years and age equals 80 25 years age 60 10 years age 62 10 years age 62 5 years age 50* 5 years age 50* any years age 65 any years age 65 Highest 36 consecutive months Highest 60 consecutive of last 120 months months of last 120 months 2.1% to 2.3% 2.1% to 2.3% * With actuarially reduced benefits. 38 Navajo County Notes to Financial Statements June 30, 2015 Retirement benefits for members who joined the ASRS prior to September 13, 2013, are subject to automatic cost-of-living adjustments based on excess investment earning. Members with a membership date on or after September 13, 2013, are not eligible for cost-of-living adjustments. Survivor benefits are payable upon a member’s death. For retired members, the survivor benefit is determined by the retirement benefit option chosen. For all other members, the beneficiary is entitled to the member’s account balance that includes the member’s contributions and employer’s contributions, plus interest earned. Contributions—In accordance with state statutes, annual actuarial valuations determine active member and employer contribution requirements. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. For the year ended June 30, 2015, active ASRS members were required by statute to contribute at the actuarially determined rate of 11.6 percent (11.48 percent for retirement and 0.12 percent for long-term disability) of the members’ annual covered payroll, and the County was required by statute to contribute at the actuarially determined rate of 11.6 percent (10.89 percent for retirement, 0.59 percent for health insurance premium benefit, and 0.12 percent for long-term disability) of the active members’ annual covered payroll. In addition, the County was required by statute to contribute at the actuarially determined rate of 9.57 percent (9.31 percent for retirement, 0.20 percent for health insurance premium benefit and 0.06 percent for long-term disability) of annual covered payroll of retired members who worked for the County in positions that would typically be filled by an employee who contributes to the ASRS. The County’s contributions to the pension plan for the year ended June 30, 2015, were $2,098,505. The County’s contributions for the current and 2 preceding years for OPEB, all of which were equal to the required contributions, were as follows: ASRS Year ended June 30 2015 2014 2013 Health Benefit Supplement Fund Long-Term Disability Fund $113,693 100,058 107,705 $23,124 40,023 39,768 During fiscal year 2015, the County paid for ASRS pension and OPEB contributions as follows: 50 percent from the General Fund, 16 percent from the Public Works Fund, and 34 percent from other governmental funds. Pension liability—At June 30, 2015, the County reported a liability of $30,957,928 for its proportionate share of the ASRS’ net pension liability. The net pension liability was measured as of June 30, 2014. The total pension liability used to calculate the net pension liability was determined using update procedures to roll forward the total pension liability from an actuarial valuation as of June 30, 2013, to the measurement date of June 30, 2014. The County’s proportion of the net pension liability was based on the 39 Navajo County Notes to Financial Statements June 30, 2015 County’s actual contributions to the plan relative to the total of all participating employers’ contributions for the year ended June 30, 2014. The County’s proportion measured as of June 30, 2014, was 0.209224 percent, which was a decrease of 0.003195 from its proportion measured as of June 30, 2013. Pension expense and deferred outflows/inflows of resources—For the year ended June 30, 2015, the County recognized pension expense for ASRS of $1,875,287. At June 30, 2015, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: ASRS Differences between expected and actual experience Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between county contributions and proportionate share of contributions County contributions subsequent to the measurement date Total Deferred Outflows of Resources $1,573,372 Deferred Inflows of Resources $5,413,586 53,739 426,125 2,098,505 $3,725,616 $5,839,711 The $2,098,505 reported as deferred outflows of resources related to ASRS pensions resulting from county contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to ASRS pensions will be recognized in pension expense as follows: Year ending June 30 2016 2017 2018 2019 $ (831,228) (831,228) (1,196,746) (1,353,398) Actuarial Assumptions—The significant actuarial assumptions used to measure the total pension liability are as follows: ASRS Actuarial valuation date Actuarial roll forward date Actuarial cost method Investment rate of return Projected salary increases Inflation Permanent benefit increase Mortality rates June 30, 2013 June 30, 2014 Entry age normal 8% 3–6.75% 3% Included 1994 GAM Scale BB 40 Navajo County Notes to Financial Statements June 30, 2015 Actuarial assumptions used in the June 30, 2013, valuation were based on the results of an actuarial experience study for the 5-year period ended June 30, 2012. The long-term expected rate of return on ASRS pension plan investments was determined to be 8.79 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: ASRS Asset Class Equity Fixed income Real estate Commodities Total Target Allocation 63% 25% 8% 4% 100% Long-Term Expected Real Rate of Return 7.03% 3.20% 4.75% 4.50% Discount Rate—The discount rate used to measure the ASRS total pension liability was 8 percent, which is less than the long-term expected rate of return of 8.79 percent. The projection of cash flows used to determine the discount rate assumed that contributions from participating employers will be made based on the actuarially determined rates based on the ASRS Board’s funding policy, which establishes the contractually required rate under Arizona statute. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the County’s proportionate share of the ASRS net pension liability to changes in the discount rate—The following table presents the County’s proportionate share of the net pension liability calculated using the discount rate of 8 percent, as well as what the County’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (7 percent) or 1 percentage point higher (9 percent) than the current rate: ASRS County’s proportionate share of the net pension liability 1% Decrease (7%) Current Discount Rate (8%) 1% Increase (9%) $39,129,233 $30,957,928 $26,524,585 Pension plan fiduciary net position—Detailed information about the pension plan’s fiduciary net position is available in the separately issued ASRS financial report. 41 Navajo County Notes to Financial Statements June 30, 2015 B. Public Safety Personnel Retirement System and Corrections Officer Retirement Plan Plan descriptions—County sheriff employees and county attorney investigators who are regularly assigned hazardous duty participate in the Public Safety Personnel Retirement System (PSPRS). The PSPRS administers an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium benefit (OPEB) plan (agent plans). A seven-member board known as the Board of Trustees and the participating local boards govern the PSPRS according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. County detention officers and Administrative Office of the Courts (AOC) probation, surveillance, and juvenile detention officers participate in the Corrections Officer Retirement Plan (CORP). The CORP administers an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium benefit (OPEB) plan for county detention officers and dispatchers (agent plans), and a cost-sharing multiple-employer defined benefit pension plan and a cost-sharing multiple-employer defined benefit health insurance premium benefit (OPEB) plan for AOC officers (cost-sharing plans). The PSPRS Board of Trustees and the participating local boards govern CORP according to the provisions of A.R.S. Title 38, Chapter 5, Article 6. The PSPRS and CORP issue publicly available financial reports that include their financial statements and required supplementary information. The reports are available on the PSPRS Web site at www.psprs.com. Benefits provided—The PSPRS and CORP provide retirement, health insurance premium supplement, disability, and survivor benefits. State statute establishes benefit terms. Retirement, disability, and survivor benefits are calculated on the basis of age, average monthly compensation, and service credit as follows: PSPRS Retirement and Disability Years of service and age required to receive benefit Final average salary is based on Initial membership date: Before January 1, 2012 On or after January 1, 2012 20 years any age 15 years age 62 25 years age 52.5 Highest 36 consecutive months of last 20 years Highest 60 consecutive months of last 20 years 42 Navajo County Notes to Financial Statements June 30, 2015 PSPRS Initial membership date: Before January 1, 2012 On or after January 1, 2012 Benefit percent Normal Retirement 50% less 2.0% for each year of credited service less than 20 years OR plus 2.0% to 2.5% for each year of credited service over 20 years, not to exceed 80% 2.5% per year of credited service, not to exceed 80% Accidental Disability Retirement 50% or normal retirement, whichever is greater Catastrophic Disability Retirement 90% for the first 60 months then reduced to either 62.5% or normal retirement, whichever is greater Ordinary Disability Retirement Normal retirement calculated with actual years of credited service or 20 years of credited service, whichever is greater, multiplied by years of credited service (not to exceed 20 years) divided by 20 Survivor Benefit Retired Members 80% to 100% of retired member’s pension benefit Active Members 80% to 100% of accidental disability retirement benefit or 100% of average monthly compensation if death was the result of injuries received on the job CORP Initial membership date: Before January 1, 2012 On or after January 1, 2012 Retirement and Disability Years of service and age required to receive benefit Sum of years and age equals 80 20 years any age 10 years age 62 25 years age 52.5 10 years age 62 Final average salary is based on Highest 36 consecutive months of last 10 years Highest 60 consecutive months of last 10 years Benefit percent Normal Retirement Accidental Disability Retirement 2.0% to 2.5% per year of credited service, not to exceed 80% 50% or normal retirement if more than 20 years of credited service 43 50% or normal retirement if more than 25 years of credited service Navajo County Notes to Financial Statements June 30, 2015 CORP Initial membership date: Before January 1, 2012 On or after January 1, 2012 Total and Permanent Disability Retirement Ordinary Disability Retirement 50% or normal retirement if more than 25 years of credited service 2.5% per year of credited service or normal retirement, whichever is greater Survivor Benefit Retired Members 80% of retired member’s pension benefit Active Members 40% of average monthly compensation or 100% of average monthly compensation if death was the result of injuries received on the job. If there is no surviving spouse or eligible children, the beneficiary is entitled to 2 times the member’s contributions. Retirement and survivor benefits are subject to automatic cost-of-living adjustments based on excess investment earning. PSPRS also provides temporary disability benefits of 50 percent of the member’s compensation for up to 12 months. Employees covered by benefit terms—At June 30, 2015, the following employees were covered by the agent pension plans’ benefit terms: Inactive employees or beneficiaries currently receiving benefits Inactive employees entitled to but not yet receiving benefits Active employees Total PSPRS Sheriff PSPRS Attorney Investigators CORP 30 1 8 1 20 50 78 17 46 93 Contributions and annual OPEB cost—State statutes establish the pension contribution requirements for active PSPRS and CORP employees. In accordance with state statutes, annual actuarial valuations determine employer contribution requirements for PSPRS and CORP pension and health insurance premium benefits. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. Contributions rates for the year ended June 30, 2015, are indicated below. Rates are a percentage of active members’ annual covered payroll. 44 Navajo County Notes to Financial Statements June 30, 2015 Active members—Pension County Pension Health insurance premium benefit PSPRS Sheriff 11.05% CORP 8.41% CORP AOC 8.41% 33.18% 7.54% 14.88% 1.33% 0.89% 1.24% The County was required to contribute $49,759 for the PSPRS Attorney Investigators Pension Plan based on the estimated actuarially required contribution for an inactive member. In addition, the County was required by statute to contribute at the actuarially determined rate of 19.65 percent for the PSPRS of annual covered payroll of a retired member who worked for the County in a position that would typically be filled by an employee who contributes to the PSPRS. For the agent plans, the County’s contributions to the pension plan and annual OPEB cost and contributions for the health insurance premium benefit for the year ended June 30, 2015, were: Pension Contributions made Health Insurance Premium Benefit Annual OPEB cost Contributions made PSPRS Sheriff PSPRS Attorney Investigators CORP Detention $784,719 $49,759 $123,060 $31,455 $31,455 $0 $0 $14,526 $14,526 Contributions to the CORP AOC pension plan for the year ended June 30, 2015, were $279,677. The County’s contributions for the current and 2 preceding years for the CORP AOC OPEB, all of which were equal to the required contributions, were as follows: CORP AOC Health Insurance Fund Year ended June 30 2015 2014 2013 $23,306 20,950 24,408 During fiscal year 2015, the County paid for PSPRS and CORP pension and OPEB contributions as follows: 80.31 percent from the General Fund and 19.69 percent from other governmental funds. Pension liability—At June 30, 2015, the County reported the following net pension liabilities: 45 Navajo County Notes to Financial Statements June 30, 2015 PSPRS Sheriff PSPRS Attorney Investigators CORP CORP AOC (County’s proportionate share) Net Pension Liability $11,709,698 935,110 591,658 3,902,859 The net pension liabilities were measured as of June 30, 2014, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The total pension liabilities as of June 30, 2014, reflect the following changes of benefit terms and actuarial assumptions.  In February 2014, the Arizona Supreme Court affirmed a Superior Court ruling that a 2011 law that changed the mechanism for funding permanent benefit increases was unconstitutional. As a result, the plans changed benefit terms to reflect the prior mechanism for funding permanent benefit increases and revised actuarial assumptions to explicitly value future permanent benefit increases.  The wage growth actuarial assumption was decreased from 4.5 percent to 4.0 percent. Pension actuarial assumptions—The significant actuarial assumptions used to measure the total pension liability are as follows: PSPRS and CORP—Pension Actuarial valuation date Actuarial cost method Discount rate Projected salary increases Inflation Permanent benefit increase Mortality rates June 30, 2014 Entry age normal 7.85% 4.0%–8.0% for PSPRS and 4.0%–7.25% for CORP 4.0% Included RP-2000 mortality table (adjusted by 105% for both males and females) Actuarial assumptions used in the June 30, 2014, valuation were based on the results of an actuarial experience study for the 5-year period ended June 30, 2011. The long-term expected rate of return on PSPRS and CORP pension plan investments was determined to be 7.85 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: 46 Navajo County Notes to Financial Statements June 30, 2015 PSPRS and CORP Target Allocation 2% 4% 4% 7% 8% 10% 11% 11% 13% 14% 16% 100% Asset Class Short term investments Absolute return Risk parity Fixed income Real assets GTAA Private equity Real estate Credit opportunities Non-U.S. equity U.S. equity Total Long-Term Expected Real Rate of Return 3.25% 6.75% 6.04% 4.75% 5.96% 5.73% 9.50% 6.50% 8.00% 8.63% 7.60% Pension discount rates—The following discount rates were used to measure the total pension liabilities: Discount rates PSPRS Sheriff 7.85% PSPRS Attorney Investigators 4.29% CORP 7.85% CORP AOC 7.85% The projection of cash flows used to determine the PSPRS and CORP discount rates assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between the actuarially determined contribution rate and the member rate. Based on those assumptions, the PSPRS Sheriff, CORP Detention, and CORP AOC plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments for these plans to determine the total pension liability. However, based on the above assumptions, the PSPRS Attorney Investigators plan’s fiduciary net position was projected to be insufficient to make all projected future benefit payments of current plan members. Therefore, to determine the total pension liability for this plan, the long-term expected rate of return on pension plan investments of 7.85 percent was applied to periods of projected benefit payments through the year ended June 30, 2015. A municipal bond rate of 4.29 percent obtained from the Federal Reserve statistical release (H.15) as of June 30, 2014, was applied to periods of projected benefit payments after June 30, 2015. 47 Navajo County Notes to Financial Statements June 30, 2015 Changes in the Net Pension Liability PSPRS Sheriff Balances at June 30, 2014 Changes for the year: Service cost Interest on the total pension liability Changes of benefit terms Differences between expected and actual experience in the measurement of the pension liability Changes of assumptions or other inputs Contributions—employer Contributions—employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net changes Balances at June 30, 2015 Increase (Decrease) Total Plan Pension Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) – (b) $14,291,830 $ 4,906,988 $ 9,384,842 426,843 1,092,844 586,447 426,843 1,092,844 586,447 (668,752) 2,472,745 (668,752) 2,472,745 (691,037) (233,105) (675,189) 691,037 233,105 675,189 (1,167,336) 2,742,791 $17,034,621 PSPRS Attorney Investigators Balances at June 30, 2014 Changes for the year: Service cost Interest on the total pension liability Changes of benefit terms Differences between expected and actual experience in the measurement of the pension liability Changes of assumptions or other inputs Contributions—employer Contributions—employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net changes Balances at June 30, 2015 48 Total Pension Liability (a) $409,783 (1,167,336) (5,438) (8,622) 417,935 $ 5,324,923 5,438 8,622 2,324,856 $11,709,698 Increase (Decrease) Plan Fiduciary Net Pension Net Position Liability (b) (a) – (b) $ 64,164 $345,619 30,804 28,416 30,804 28,416 1,839 535,143 1,839 535,143 6,765 (34,741) 561,461 $971,244 (6,765) (34,741) (54) 54 (28,030) $ 36,134 589,491 $935,110 Navajo County Notes to Financial Statements June 30, 2015 CORP Balances at June 30, 2014 Changes for the year: Service cost Interest on the total pension liability Changes of benefit terms Differences between expected and actual experience in the measurement of the pension liability Changes of assumptions or other inputs Contributions—employer Contributions—employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net changes Balances at June 30, 2015 Total Pension Liability (a) $3,806,758 Increase (Decrease) Plan Fiduciary Net Pension Net Position Liability (b) (a) – (b) $3,021,087 $ 785,671 262,381 298,329 35,245 262,381 298,329 35,245 (414,141) 240,204 (414,141) 240,204 (142,344) (141,818) (417,329) 142,344 141,818 417,329 (275,163) 146,855 $3,953,613 (275,163) (3,281) (82,179) 340,868 $3,361,955 3,281 82,179 (194,013) $ 591,658 The County’s proportion of the CORP AOC net pension liability as of June 30, 2013 and 2014, was based on the County’s actual contributions to the plan relative to the total of all participating counties’ actual contributions for the year ended June 30, 2014. The County’s proportion measured as of June 30, 2013 and 2014, was 1.739296 percent. Sensitivity of the County’s net pension liability to changes in the discount rate— The following table presents the County’s net pension liabilities calculated using the discount rates noted above, as well as what the County’s net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher than the current rate: 1% Decrease Current Discount Rate 6.85% $13,641,272 7.85% $11,709,698 8.85% $10,097,351 3.29% $1,122,517 4.29% $935,110 5.29% $790,219 6.85% $1,115,198 7.85% $591,658 8.85% $159,873 7.85% 8.85% $3,902,859 $2,863,632 PSPRS Sheriff Rate Net pension liability PSPRS Attorney Investigators Rate Net pension liability CORP Rate Net pension liability CORP AOC Rate County’s proportionate share of the net pension liability 6.85% $5,153,634 49 1% Increase Navajo County Notes to Financial Statements June 30, 2015 Pension plan fiduciary net position—Detailed information about the pension plans’ fiduciary net position is available in the separately issued PSPRS and CORP financial reports. Pension expense—For the year ended June 30, 2015, the County recognized the following pension expense: PSPRS Sheriff PSPRS Attorney Investigators CORP CORP AOC (County’s proportionate share) Pension Expense $1,782,545 591,747 227,973 522,250 Pension deferred outflows/inflows of resources—At June 30, 2015, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: PSPRS Sheriff Deferred Outflows of Resources Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments County contributions subsequent to the measurement date Total PSPRS Attorney Investigators Net difference between projected and actual earnings on pension plan investments County contributions subsequent to the measurement date Total 50 Deferred Inflows of Resources $540,693 $1,999,239 225,198 784,719 $2,783,958 $765,891 Deferred Outflows of Resources Deferred Inflows of Resources $2,256 $49,759 $49,759 $2,256 Navajo County Notes to Financial Statements June 30, 2015 CORP Detention Deferred Outflows of Resources Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments County contributions subsequent to the measurement date Total CORP AOC Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments County contributions subsequent to the measurement date Total Deferred Inflows of Resources $335,948 $194,852 138,546 123,060 $317,912 $474,494 Deferred Outflows of Resources Deferred Inflows of Resources $ 185,258 573,393 $216,062 279,677 $1,038,328 $216,062 The amounts reported as deferred outflows of resources related to pensions resulting from county contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ending June 30 2016 2017 2018 2019 2020 PSPRS Sheriff PSPRS Attorney Investigators CORP Detention CORP AOC $289,147 289,147 289,147 289,147 76,758 $(564) (564) (564) (564) - $(67,477) (67,477) (67,477) (67,477) (9,733) $111,643 111,643 111,643 111,643 96,017 Agent plan OPEB actuarial assumptions—The health insurance premium benefit contribution requirements for the year ended June 30, 2015, were established by the June 30, 2013, actuarial valuations, and those actuarial valuations were based on the following actuarial methods and assumptions. 51 Navajo County Notes to Financial Statements June 30, 2015 Actuarial valuations involve estimates of the reported amounts’ value 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 for the health insurance premium benefit 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 all PSPRS and CORP plans and related benefits (unless noted), and the following actuarial methods and assumptions were used to establish the fiscal year 2015 contribution requirements: PSPRS and CORP—OPEB Contribution Requirements Actuarial valuation date June 30, 2013 Actuarial cost method Entry age normal Amortization method Level percent closed for unfunded actuarial accrued liability, open for excess Remaining amortization period 23 years for unfunded actuarial accrued liability, 20 years for excess Asset valuation method 7-year smoothed market value; 20% corridor Actuarial assumptions: Investment rate of return 7.85% Projected salary increases 4.5%–8.5% for PSPRS and 4.5%–7.75% for CORP Wage growth 4.5% for PSPRS and CORP Agent plan OPEB trend information—Annual OPEB cost information for the health insurance premium benefit for the current and 2 preceding years follows for each of the agent plans: Year Ended June 30 PSPRS Sheriff 2015 2014 2013 Annual OPEB Cost Percentage of Annual Cost Contributed $31,455 24,895 27,468 100% 100 30.6 52 Net OPEB Obligation $ 0 0 (19,053) Navajo County Notes to Financial Statements June 30, 2015 Year Ended June 30 PSPRS Attorney Investigators 2015 2014 2013 Annual OPEB Cost CORP Detention 2015 2014 2013 $ Percentage of Annual Cost Contributed Net OPEB Obligation 0 0 0 0% 0 0 $ $14,526 14,501 17,622 100% 100 0 $ 0 0 0 0 0 (17,622) Agent plan OPEB funded status—The health insurance premium benefit plans’ funded status as of the most recent valuation date, June 30, 2015, along with the actuarial assumptions and methods used in those valuations follow. PSPRS Sheriff $ 602,123 351,023 Actuarial value of assets (a) Actuarial accrued liability (b) Unfunded actuarial accrued liability (funding excess) (b) – (a) Funded ratio (a)/(b) Annual covered payroll (c) Unfunded actuarial accrued liability (funding excess) as a percentage of covered payroll (b) – (a) / (c) (251,100) 171.53% 2,324,267 0% PSPRS Attorney Investigators $ 7,274 18,907 CORP Detention $ 329,954 129,078 11,633 38.47% 0 (200,876) 255.62% 1,493,854 0% 0% The actuarial methods and assumptions used are the same for all the PSPRS and CORP health insurance premium benefit plans (unless noted), and for the most recent valuation date are as follows: PSPRS and CORP—OPEB Funded Status Actuarial valuation date June 30, 2015 Actuarial cost method Entry age normal Amortization method Level percent closed for unfunded actuarial accrued liability, open for excess Remaining amortization period 21 years for unfunded actuarial accrued liability, 20 years for excess Asset valuation method 7-year smoothed market value; 20% corridor Actuarial assumptions: Investment rate of return 7.85% Projected salary increases 4%–8% for PSPRS and 4%–7.25% for CORP Wage growth 4% for PSPRS and CORP 53 Navajo County Notes to Financial Statements June 30, 2015 C. Elected Officials Retirement Plan Plan description—Elected officials and judges participate in the Elected Officials Retirement Plan (EORP). EORP administers a cost-sharing multiple-employer defined benefit pension plan and a cost-sharing multiple-employer defined benefit health insurance premium benefit (OPEB) plan for elected officials and judges who were members of the plan 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. The EORP issues a publicly available financial report that includes its financial statements and required supplementary information. The report is available on PSPRS’s Web site at www.psprs.com. Benefits provided—The EORP provides retirement, health insurance premium supplement, disability, and survivor benefits. State statute establishes benefit terms. Retirement, disability, and survivor benefits are calculated on the basis of age, average yearly compensation, and service credit as follows: EORP Retirement and Disability Years of service and age required to receive benefit Final average salary is based on Benefit percent Normal Retirement Disability Retirement Survivor Benefit Retired Members Active Members and Other Inactive Members Initial membership date: Before January 1, 2012 On or after January 1, 2012 20 years any age 10 years age 62 5 years age 65 5 years any age* any years and age if disabled Highest 36 consecutive months of last 10 years 10 years age 62 5 years age 65 any years and age if disabled 4% per year of service, not to exceed 80% 80% with 10 or more years of service 40% with 5 to 10 years of service 20% with less than 5 years of service 3% per year of service, not to exceed 75% 75% with 10 or more years of service 37.5% with 5 to 10 years of service 18.75% with less than 5 years of service 75% of retired member’s benefit 75% of disability retirement benefit 50% of retired member’s benefit 50% of disability retirement benefit Highest 60 consecutive months of last 10 years * With reduced benefits of 0.25% for each month early retirement precedes the member’s normal retirement age, with a maximum reduction of 30%. Retirement and survivor benefits are subject to automatic cost-of-living adjustments based on excess investment earning. 54 Navajo County Notes to Financial Statements June 30, 2015 Contributions—State statutes establish active member and employer contribution requirements. Statute also appropriates $5 million annually through fiscal year 2043 for the EORP from the State of Arizona to supplement the normal cost plus an amount to amortize the unfunded accrued liability and designates a portion of certain court fees for the EORP. For the year ended June 30, 2015, active EORP members were required by statute to contribute 13 percent of the members’ annual covered payroll, and the County was required to contribute 23.5 percent of active EORP members’ annual covered payroll. In addition, the County was required by statute to contribute 23.5 percent of annual covered payroll of retired members who worked for the County in positions that would typically be filled by an employee who contributes to the EORP. The County’s contributions to the pension plan for the year ended June 30, 2015, were $364,573. No OPEB contributions were required or made for the year ended June 30, 2015. The County’s OPEB contributions for the current and 2 preceding years, all of which were equal to the required contributions, were as follows: EORP Health Insurance Fund Year ended June 30 2015 2014 2013 $ 0 26,588 30,016 During fiscal year 2015, the County paid for EORP pension contributions as follows: 100 percent from the General Fund. Pension liability—At June 30, 2015, the County reported a liability for its proportionate share of the EORP’s net pension liability that reflected a reduction for the County’s proportionate share of the State’s appropriation for EORP. The amount the County recognized as its proportionate share of the net pension liability, the related state support, and the total portion of the net pension liability that was associated with the County were as follows: County’s proportionate share of the EORP net pension liability State’s proportionate share of the EORP net pension liability associated with the County Total $12,307,206 3,773,504 $16,080,710 The net pension liability was measured as of June 30, 2014, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. In February 2014, the Arizona Supreme Court affirmed a Superior Court ruling that a 2011 law that changed the mechanism for funding permanent benefit increases was unconstitutional. As a result, for the June 30, 2014, actuarial valuation, the plan changed benefit terms to reflect the prior mechanism for funding permanent benefit increases and revised actuarial assumptions to explicitly value future permanent benefit increases. 55 Navajo County Notes to Financial Statements June 30, 2015 The County’s proportion of the net pension liability as of June 30, 2013 and 2014, was based on the County’s actual contributions to the plan relative to the total of all participating employers’ actual contributions for the year ended June 30, 2014. The County’s proportion measured as of June 30, 2013 and 2014, was 1.8353296 percent. Pension expense and deferred outflows/inflows of resources—For the year ended June 30, 2015, the County recognized pension expense for EORP of $4,766,509 and revenue of $1,118,510 for the County’s proportionate share of the State’s appropriation to EORP. At June 30, 2015, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: EORP Deferred Outflows of Resources Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments County contributions subsequent to the measurement date Total Deferred Inflows of Resources $ 54,078 3,330,617 $233,335 364,573 $3,749,268 $233,335 The $364,573 reported as deferred outflows of resources related to EORP pensions resulting from county contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to EORP pensions will be recognized in pension expense as follows: Year ending June 30 2016 2017 2018 2019 $1,890,926 1,377,101 (58,334) (58,334) Actuarial assumptions—The significant actuarial assumptions used to measure the total pension liability are as follows: EORP Actuarial valuation date Actuarial cost method Investment rate of return Projected salary increases Inflation Permanent benefit increase Mortality rates June 30, 2014 Entry age normal 7.85% 4.25% 4.0% Included RP-2000 mortality table projected to 2025 with projection scale AA 56 Navajo County Notes to Financial Statements June 30, 2015 Actuarial assumptions used in the June 30, 2014, valuation were based on the results of an actuarial experience study for the 5-year period ended June 30, 2011. The long-term expected rate of return on EORP pension plan investments was determined to be 7.85 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: EORP Target Allocation 2% 4% 4% 7% 8% 10% 11% 11% 13% 14% 16% 100% Asset Class Short term investments Absolute return Risk parity Fixed income Real assets GTAA Private equity Real estate Credit opportunities Non-U.S. equity U.S. equity Total Long-Term Expected Real Rate of Return 3.25% 6.75% 6.04% 4.75% 5.96% 5.73% 9.50% 6.50% 8.00% 8.63% 7.60% Discount rate—At June 30 2014, the discount rate used to measure the EORP total pension liability was 5.67 percent, which was a decrease of 2.18 from the discount rate used as of June 30, 2013. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate, employer contributions will be made at the statutorily set rates, and state contributions will be made as currently required by statute. Based on those assumptions, the pension plan’s fiduciary net position was projected to be insufficient to make all projected future benefit payments of current plan members. Therefore, to determine the total pension liability for the plan, the long-term expected rate of return on pension plan investments of 7.85 percent was applied to periods of projected benefit payments through the year ended June 30, 2030. A municipal bond rate of 4.29 percent obtained from the 20-year Bond Buyer Index, as published by the Federal Reserve as of June 30, 2014, was applied to periods of projected benefit payments after June 30, 2030. Sensitivity of the County’s proportionate share of the EORP net pension liability to changes in the discount rate—The following table presents the County’s proportionate share of the net pension liability calculated using the discount rate of 5.67 percent, as well as what the County’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (4.67 percent) or 1 percentage point higher (6.67 percent) than the current rate: 57 Navajo County Notes to Financial Statements June 30, 2015 EORP 1% Decrease (4.67%) Current Discount Rate (5.67%) 1% Increase (6.67%) $14,367,636 $12,307,206 $10,567,500 County’s proportionate share of the net pension liability Pension Plan Fiduciary Net Position—Detailed information about the pension plan’s fiduciary net position is available in the separately issued EORP financial report. Note 11 - Interfund Balances and Activity Interfund receivables and payables—Interfund balances at June 30, 2015, were as follows: Payable from General Fund Public Works/HURF Fund Flood Control District Fund Other Governmental Funds Total General Fund $ 28,371 246 178,923 $207,540 Payable To Other Governmental Funds $ 444 114,718 $115,162 Total $ 444 28,371 246 293,641 $322,702 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, 2015, were as follows: Transfer from General Fund Public Works/HURF Fund Flood Control District Fund Other Governmental Funds Total General Fund $ 792,745 1,010,057 1,475,640 $3,278,442 Transfers To Other Governmental Funds $1,612,584 509,513 224,470 $2,346,567 Total $1,612,584 1,302,258 1,010,057 1,700,110 $5,625,009 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 58 Navajo County Notes to Financial Statements June 30, 2015 General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. Note 12 - 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 the County holds are included in the County Treasurer’s investment pool, except for $897,668 in deposits and $53,209 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 3 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 U.S. Treasury money market funds Principal $105,498,195 22,000,000 10,000 Interest Rates .5 % - 1.40% .50% - .88% Maturities 09/16 – 11/19 12/16 – 08/17 .02% N/A Amount $105,498,195 22,000,000 10,000 A condensed statement of the investment pool’s net position and changes in net position follows: Statement of Net Position Assets Liabilities Net position $181,482,473 2,116,070 $179,366,403 Net position held in trust for: Internal participants External participants Total net position held in trust $ 29,883,667 149,482,736 $179,366,403 59 Navajo County Notes to Financial Statements June 30, 2015 Statement of Changes in Net Position Total additions Total deductions Net increase Net position held in trust: July 1, 2014 June 30, 2015 60 $298,637,827 282,630,483 16,007,344 163,359,059 $179,366,403 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2015 Navajo County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2015 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 Fleet Management 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 7,666,474 6,816,000 475,928 798,250 15,360,092 6,724,134 46,470 576,126 $ Actual Amounts Variance with Final Budget 7,816,586 6,674,867 418,597 863,371 16,109,417 7,672,018 46,693 525,931 $ 38,463,474 40,127,480 3,007,440 2,000,490 803,148 402,436 285,563 224,738 1,371,624 977,574 465,815 12,000 50,000 7,591,766 364,941 2,406,703 2,866,194 1,043,566 1,367,171 351,503 338,552 386,157 298,128 350,121 2,150,765 1,842,859 407,914 313,423 242,355 154,173 1,185,498 854,134 477,004 7,023 8,531 7,189,615 385,094 2,342,684 2,903,123 730,364 1,147,465 351,698 342,441 387,550 262,966 342,228 150,112 (141,133) (57,331) 65,121 749,325 947,884 223 (50,195) 1,664,006 856,675 157,631 395,234 89,013 43,208 70,565 186,126 123,440 (11,189) 4,977 41,469 402,151 (20,153) 64,019 (36,929) 313,202 219,706 (195) (3,889) (1,393) 35,162 7,893 (Continued) See accompanying note to budgetary comparison schedules. 62 Navajo County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2015 (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 $ Public safety Juvenile Detention Juvenile Probation Adult Probation Jail Operations Sheriff Total public safety 106,567 30,174 72,671 59,397 41,859 40,372 66,884 27,383,554 $ Actual Amounts Variance with Final Budget 103,180 34,197 65,044 54,454 34,041 43,530 62,831 24,426,184 $ 3,387 (4,023) 7,627 4,943 7,818 (3,158) 4,053 2,957,370 1,317,081 473,332 589,957 5,071,226 5,836,887 13,288,483 1,003,679 399,333 558,269 3,875,081 5,261,087 11,097,449 313,402 73,999 31,688 1,196,145 575,800 2,191,034 463,919 3,416,000 430,855 3,301,663 33,064 114,337 3,879,919 3,732,518 147,401 329,954 322,289 7,665 Capital outlay 1,702,500 855,330 847,170 Contingency 4,300,000 - 4,300,000 50,884,410 40,433,770 10,450,640 Health and welfare Public Fiduciary Indigent Health Total health and welfare Education School Superintendent Total expenditures Excess (deficiency) of revenues over expenditures (12,420,936) (306,290) 12,114,646 (Continued) See accompanying note to budgetary comparison schedules. 63 Navajo County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2015 (Continued) Original and Final Budgeted Amounts Other financing sources (uses): Sale of capital assets Transfers in Transfers out Variance with Final Budget 43,760 3,278,442 (1,612,584) $ 9,160,214 (3,866,138) 5,294,076 1,709,618 (3,584,458) (7,126,860) 1,403,328 8,530,188 7,126,860 6,251,625 $ $ Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2014 Fund balances, June 30, 2015 Actual Amounts $ - $ 7,654,953 See accompanying note to budgetary comparison schedules. 64 43,760 (5,881,772) 2,253,554 (875,235) $ 7,654,953 Navajo County Required Supplementary Information Budgetary Comparison Schedule Public Works/HURF Fund Year Ended June 30, 2015 Original and Final Budgeted Amounts Actual Amounts Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous $ 10,481,283 521,823 47,224 69,654 $ 11,431,446 100,758 43,170 55,187 Total revenues 11,119,984 11,630,561 510,577 16,560,791 16,560,791 10,229,232 10,229,232 6,331,559 6,331,559 Excess (deficiency) of revenues over expenditures (5,440,807) 1,401,329 6,842,136 Other financing sources (uses): Transfers out Total other financing sources and uses (1,352,258) (1,352,258) (1,302,258) (1,302,258) Expenditures: Highways and streets Total expenditures Net change in fund balances (6,793,065) Fund balances, July 1, 2014 Increase in reserve for inventories Fund balances, June 30, 2015 - $ 7,937,713 950,163 (421,065) (4,054) (14,467) 50,000 50,000 6,892,136 7,949,751 (111,109) See accompanying note to budgetary comparison schedules. 65 $ 99,071 6,793,065 $ Variance with Final Budget 1,156,686 (111,109) $ 7,937,713 Navajo County Required Supplementary Information Budgetary Comparison Schedule Flood Control District Fund Year Ended June 30, 2015 Original and Final Budgeted Amounts Revenues: Property taxes Intergovernmental Investment earnings Miscellaneous Total revenues $ Expenditures: Public safety Total expenditures Excess (deficiency) of revenues over expenditures $ Net change in fund balances $ 50,997 40 1,888,237 8,814,072 8,814,072 1,220,974 1,220,974 7,593,098 7,593,098 694,251 7,620,086 $ 23,997 21 3,010 (40) 26,988 (1,010,057) (1,010,057) (1,010,057) (1,010,057) - (7,935,892) (315,806) 7,620,086 7,935,892 - $ 8,033,551 7,717,745 See accompanying note to budgetary comparison schedules. 66 Variance with Final Budget 1,861,197 21 54,007 1,915,225 (6,925,835) Other financing uses: Transfers out Total other financing uses Fund balances, July 1, 2014 Fund balances, June 30, 2015 1,837,200 Actual Amounts $ 97,659 7,717,745 Navajo County Required Supplementary Information Notes to Budgetary Comparison Schedules June 30, 2015 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. In addition, the County budgets its expenditures by function. 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. 67 Navajo County Required Supplementary Information Schedule of the County’s Proportionate Share of the Net Pension Liability Cost-Sharing Pension Plans June 30, 2015 Arizona State Retirement System County’s proportion of the net pension liability County’s proportionate share of the net pension liability County’s covered-employee payroll County’s proportionate share of the net pension liability as a percentage of its covered-employee payroll Plan fiduciary net position as a percentage of the total pension liability Corrections Officer Retirement Plan—Administrative Office of the Courts County’s proportion of the net pension liability County’s proportionate share of the net pension liability County’s covered-employee payroll County’s proportionate share of the net pension liability as a percentage of its covered-employee payroll Plan fiduciary net position as a percentage of the total pension liability Elected Officials Retirement Plan County’s proportion of the net pension liability County’s proportionate share of the net pension liability State’s proportionate share of the net pension liability associated with the County Total County’s covered-employee payroll County’s proportionate share of the net pension liability as a percentage of its covered-employee payroll Plan fiduciary net position as a percentage of the total pension liability Reporting Fiscal Year (Measurement Date) 2015 2014 through 2006 (2014) 0.21% Information $ 30,957,928 not available $ 18,860,000 164.15% 69.49% Reporting Fiscal Year (Measurement Date) 2015 2014 through 2006 (2014) 1.74% Information $ 3,902,859 not available $ 1,854,011 210.51% 58.59% Reporting Fiscal Year (Measurement Date) 2015 2014 through 2006 (2014) 1.84% Information $ 12,307,206 not available 3,773,504 $ 16,080,710 $ 1,704,339 722.11% 31.91% See accompanying notes to pension plan schedules. 68 Navajo County Required Supplementary Information Schedule of Changes in the County’s Net Pension Liability and Related Ratios Agent Pension Plans June 30, 2015 PSPRS Sheriff Total pension liability Service cost Interest on the total pension liability Changes of benefit terms Differences between expected and actual experience in the measurement of the pension liability Changes of assumptions or other inputs Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability—beginning Total pension liability—ending (a) Plan fiduciary net position Contributions—employer Contributions—employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net change in plan fiduciary net position Plan fiduciary net position—beginning Plan fiduciary net position—ending (b) County’s net pension liability—ending (a) – (b) Reporting Fiscal Year (Measurement Date) 2015 2014 through 2006 (2014) Information $ 426,843 not available 1,092,844 586,447 (668,752) 2,472,745 (1,167,336) 2,742,791 14,291,830 $ 17,034,621 $ 691,037 233,105 675,189 (1,167,336) (5,438) (8,622) 417,935 4,906,988 $ 5,324,923 $ 11,709,698 Plan fiduciary net position as a percentage of the total pension liability Covered-employee payroll 31.26% $ 2,080,278 County’s net pension liability as a percentage of coveredemployee payroll 562.89% See accompanying notes to pension plan schedules. 69 Navajo County Required Supplementary Information Schedule of Changes in the County’s Net Pension Liability and Related Ratios Agent Pension Plans June 30, 2015 PSPRS Attorney Investigators Total pension liability Service cost Interest on the total pension liability Changes of benefit terms Differences between expected and actual experience in the measurement of the pension liability Changes of assumptions or other inputs Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability—beginning Total pension liability—ending (a) Plan fiduciary net position Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net change in plan fiduciary net position Plan fiduciary net position—beginning Plan fiduciary net position—ending (b) County’s net pension liability—ending (a) – (b) Reporting Fiscal Year (Measurement Date) 2015 2014 through 2006 (2014) Information $ - not available 30,804 28,416 $ $ $ 6,765 (34,741) (54) (28,030) 64,164 36,134 $ 935,110 Plan fiduciary net position as a percentage of the total pension liability Covered-employee payroll 1,839 535,143 (34,741) 561,461 409,783 971,244 3.72% $ County’s net pension liability as a percentage of coveredemployee payroll See accompanying notes to pension plan schedules. 70 0.00% Navajo County Required Supplementary Information Schedule of Changes in the County’s Net Pension Liability and Related Ratios Agent Pension Plans June 30, 2015 CORP Detention Total pension liability Service cost Interest on the total pension liability Changes of benefit terms Differences between expected and actual experience in the measurement of the pension liability Changes of assumptions or other inputs Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability—beginning Total pension liability—ending (a) Plan fiduciary net position Contributions—employer Contributions—employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net change in plan fiduciary net position Plan fiduciary net position—beginning Plan fiduciary net position—ending (b) County’s net pension liability—ending (a) – (b) Reporting Fiscal Year (Measurement Date) 2015 2014 through 2006 (2014) Information $ 262,381 not available 298,329 35,245 (414,141) 240,204 (275,163) 146,855 3,806,758 $ 3,953,613 $ 142,344 141,818 417,329 (275,163) (3,281) (82,179) 340,868 3,021,087 $ 3,361,955 $ Plan fiduciary net position as a percentage of the total pension liability Covered-employee payroll 591,658 85.04% $ 1,618,689 County’s net pension liability as a percentage of coveredemployee payroll 36.55% See accompanying notes to pension plan schedules. 71 Navajo County Required Supplementary Information Schedule of County Pension Contributions June 30, 2015 Arizona State Retirement System Reporting Fiscal Year 2015 2014 2013-2006 $ 2,098,505 $ 2,018,020 Information not available 2,098,505 2,018,020 $ - $ $ 19,270,018 $ 18,860,000 Statutorily required contribution County’s contributions in relation to the statutorily required contribution County’s contribution deficiency (excess) County’s covered-employee payroll County’s contributions as a percentage of covered-employee payroll 10.89% 10.70% Corrections Officer Retirement Plan—Administrative Office of the Courts Reporting Fiscal Year 2015 2014 2013-2006 $ 279,677 $ 270,489 Information not available 279,677 270,489 $ - $ $ 1,879,552 $ 1,871,896 Statutorily required contribution County’s contributions in relation to the statutorily required contribution County’s contribution deficiency (excess) County’s covered-employee payroll County’s contributions as a percentage of covered-employee payroll 14.88% Elected Officials Retirement Plan 14.45% Reporting Fiscal Year 2015 2014 2013-2006 $ 364,573 $ 391,061 Information not available 364,573 391,061 $ - $ $ 1,551,376 $ 1,688,519 Statutorily required contribution County’s contributions in relation to the statutorily required contribution County’s contribution deficiency (excess) County’s covered-employee payroll County’s contributions as a percentage of covered-employee payroll 23.50% See accompanying notes to pension plan schedules. 72 23.16% Navajo County Required Supplementary Information Schedule of County Pension Contributions June 30, 2015 PSPRS Sheriff Reporting Fiscal Year 2015 2014 2013-2006 $ 784,719 $ 691,037 Information not available 784,719 691,037 $ - $ $ 2,365,037 $ 2,080,278 Actuarially determined contribution County’s contributions in relation to the actuarially determined contribution County’s contribution deficiency (excess) County’s covered-employee payroll County’s contributions as a percentage of covered-employee payroll 33.18% 33.22% PSPRS Attorney Investigators Reporting Fiscal Year 2015 2014 2013-2006 $ 49,759 $ - Information not available 49,759 $ - $ $ - $ - Actuarially determined contribution County’s contributions in relation to the actuarially determined contribution County’s contribution deficiency (excess) County’s covered-employee payroll County’s contributions as a percentage of covered-employee payroll 0.00% CORP Detention 0.00% Reporting Fiscal Year 2015 2014 2013-2006 $ 123,060 $ 142,344 Information not available 123,060 142,311 $ - $ 33 $ 1,632,100 $ 1,618,689 Actuarially determined contribution County’s contributions in relation to the actuarially determined contribution County’s contribution deficiency (excess) County’s covered-employee payroll County’s contributions as a percentage of covered-employee payroll 7.54% See accompanying notes to pension plan schedules. 73 8.79% Navajo County Required Supplementary Information Notes to Pension Plan Schedules June 30, 2015 Note 1 - Actuarially Determined Contribution Rates Actuarial determined contribution rates for PSPRS and CORP are calculated as of June 30 two years prior to the end of the fiscal year in which contributions are made. The actuarial methods and assumptions used to establish the contribution requirements are as follows: Actuarial cost method Amortization method Remaining amortization period as of the 2013 actuarial valuation Asset valuation method Actuarial assumptions: Investment rate of return Projected salary increases Wage growth Retirement age Mortality Entry age normal Level percent closed for unfunded actuarial accrued liability, open for excess 23 years for unfunded actuarial accrued liability, 20 years for excess 7-year smoothed market value; 20% corridor In the 2013 actuarial valuation, the investment rate of return was decreased from 8.0% to 7.85% In the 2013 actuarial valuation, projected salary increases were decreased from 5.0%–9.0% to 4.5%–8.5% for PSPRS and from 5.0%–8.25% to 4.5%–7.75% for CORP In the 2013 actuarial valuation, wage growth was decreased from 5.0% to 4.5% for PSPRS and CORP Experience-based table of rates that is specific to the type of eligibility condition. Last updated for the 2012 valuation pursuant to an experience study of the period July 1, 2006 June 30, 2011. RP-2000 mortality table (adjusted by 105% for both males and females) Note 2 - PSPRS Attorney Investigators Pension Plan The County does not have an active employee that participates in the PSPRS Attorney Investigators Plan. Therefore, the County contribution of $49,759 was not required until fiscal year 2015 which was based on the actuarially calculated amount for an inactive member. 74 Navajo County Required Supplementary Information Schedule of Agent OPEB Plans’ Funding Progress June 30, 2015 Actuarial Valuation Date Actuarial value of assets (a) Actuarial accrued liability (b) Unfunded actuarial accrued liability (UAAL) (funding excess) (b) – (a) PSPRS Sheriff 6/30/15 6/30/14 6/30/13 $ 602,123 553,923 - $ 351,023 293,122 297,397 $ 7,274 7,930 - $ 329,954 302,076 - PSPRS Attorney Investigators 6/30/15 6/30/14 6/30/13 CORP 6/30/15 6/30/14 6/30/13 Annual covered payroll (c) UAAL (funding excess) as a percentage of covered payroll (b) – (a)/c) $ (251,100) 171.53% (260,801) 188.97% 297,397 - $ 2,324,267 $ 2,080,280 2,232,165 0% 0 13.3 $ 18,907 - $ $ $ - 0% 0 - $ 129,078 138,877 143,461 $ (200,876) 255.62% (163,199) 217.51% 143,461 - $ 1,493,854 1,618,686 1,787,485 0% 0 8 Funded ratio (a)/(b) 11,633 38.47% (7,930) - See accompanying notes to schedule of agent OPEB plans’ funding progress 75 Navajo County Required Supplementary Information Notes to Schedule of Agent OPEB Plans’ Funding Progress June 30, 2015 Note 1 - 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. 76 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2015 Navajo County Nonmajor Governmental Funds June 30, 2015 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 District 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 District 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. 78 Navajo County Nonmajor Governmental Funds June 30, 2015 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 Public Works Construction Accounts for construction of the public works complex in Holbrook and it is funded through pledged revenue obligations. 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. 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. 79 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2015 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 Pledged revenue obligations payable Interest payable Total liabilities $ 511,598 $ 1,476,514 10,300 3,547 51,559 51,976 113,270 6,818 $ 573,457 $ 1,645,307 $ 846 10,791 $ $ 593,633 $ 1,376,093 $ 593,633 $ $ 1,006 5,546 13,073 34,006 10,137 353 59,377 7,863 40,311 15,929 628 49 22,127 152,306 103,319 7,229 1,378,506 594,045 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 33,412 51,654 $ 1,369,275 Environmental and Conservation 2,200 2,200 520,942 100,000 (69,612) 551,330 $ 573,457 1,578,808 (88,007) (105,732) 1,490,801 1,272,774 $ 1,645,307 $ 1,376,093 (7,641) 586,404 $ 593,633 (continued) 80 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2015 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 Pledged revenue obligations payable Interest payable Total liabilities $ $ $ 719,421 $ 125,985 32,371 30 410 15,785 15,727 5,014 $ 72,128 $ 719,421 $ 147,136 $ 25,125 9,953 $ 40,982 85,219 $ 5,293 1,493 167 13 1,629 462 11,861 24,044 6 5,306 37,169 162,106 1,666 13,838 633,762 145,470 (1,114) 12,724 (76,447) 557,315 145,470 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 23,942 Public Defense 22,235 22,235 (5,306) (5,306) $ - $ 72,128 $ 719,421 $ 147,136 (continued) 81 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2015 Public Health District 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 Pledged revenue obligations payable Interest payable Total liabilities $ $ 83,911 3,439 106,594 Special Districts $ 511,753 52,357 $ 7,320 9,113 758,432 $ 845,782 $ 158,951 $ $ 54,656 116,426 $ 277 $ 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 Recreation Sheriff's District Office 47,459 160,873 10,500 226,152 33,629 $ 554,495 5,212 43,235 68,761 28,757 1,971 70,351 47,433 268,600 2,248 166,231 - 59,124 43,981 $ 230,952 290,076 43,981 636,573 112,722 (349,467) 287,106 112,722 845,782 $ 158,951 6,917 52,252 52,252 6,917 10,500 369,699 40,524 (413,054) 7,669 $ 226,152 552,290 (4,712) 547,578 $ 554,495 (continued) 82 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2015 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 Pledged revenue obligations payable Interest payable Total liabilities Special Revenue Superintendent Workforce of Schools Investment Act Capital Projects Public Works Detention Facility Construction Construction $ $ 1,749,016 160,842 101 25,280 177,202 $ 128,705 $ 1,951,498 $ 128,705 $ 160,943 $ 154,687 10,188 $ 8,551 27,146 $ 606 2,795 288 42 164,875 38,780 648 402,287 1,631,383 (247,047) 1,786,623 95,963 160,295 (6,038) 89,925 160,295 $ 275,696 27,791 303,487 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 $ 1,951,498 $ 128,705 $ 160,943 (303,487) (303,487) $ (continued) 83 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2015 Debt Service General Special Government Districts 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 Pledged revenue obligations payable Interest payable Total liabilities $ 1,065,929 $ 53,108 $ 1,119,037 $ 125,665 168,639 50,326 134,778 $ 235,546 115,162 1,451,287 10,500 10,508,284 $ 150,000 135,351 285,351 81,359 162,474 285,404 529,237 111,576 53,108 780,578 833,686 $ 1,119,037 84 615,622 399,624 293,641 127,210 150,000 135,351 1,721,448 $ 111,576 $ 8,524,383 53,209 $ 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 $ 109,881 Total Nonmajor Governmental Funds 10,500 7,373,550 2,552,485 (1,678,936) 8,257,599 125,242 (1,272) 123,970 $ 235,546 $ 10,508,284 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2015 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 $ $ 395,023 98,888 3,106 35,500 532,517 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 Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures 107,437 346,325 674,250 1,110,653 30,296 8,135 375 14,218 1,837,927 1,835,169 $ 58,855 315,230 706,515 8,148 Environmental and Conservation $ 411,987 2,437 3,886 1,092,634 414,424 916,767 38,498 223,528 Other financing sources (uses): Sale of capital assets Transfers in Transfers out Total other financing sources and uses 492,260 1,835,169 916,767 223,528 40,257 2,758 175,867 190,896 202,166 (20,441) 181,725 234,194 (75,356) 158,838 (148,318) (148,318) Net change in fund balances 221,982 161,596 27,549 190,896 Fund balances (deficits), July 1, 2014 Change in nonspendable resources Decrease in prepaid items 329,348 1,329,205 1,245,225 395,508 551,330 $ 1,490,801 $ 1,272,774 Fund balances (deficits), June 30, 2015 $ $ 586,404 (continued) 85 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2015 Housing Revenues: Property taxes Special assessments Licenses and permits Fines and forfeits Intergovernmental Charges for services Investment earnings (loss) Contributions Miscellaneous Total revenues Special Revenue Library District Probation Public Defense $ 838,896 $ 62,860 62,860 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 Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures 130,912 442 $ 2,039,899 363,627 3,981 27,497 997,747 5,260 2,412,767 $ 19,544 872 410 20,826 74,077 2,392,101 546,314 73,852 73,852 546,314 2,392,101 (10,992) 451,433 20,666 (53,251) 4,051 (2,529) (2,529) (408,575) (408,575) 4,051 80,513 (10,903) 69,610 Net change in fund balances (13,521) 42,858 24,717 16,359 Fund balances (deficits), July 1, 2014 Change in nonspendable resources Decrease in prepaid items 8,215 (30,134) 532,598 129,111 557,315 $ 145,470 Other financing sources (uses): Sale of capital assets Transfers in Transfers out Total other financing sources and uses Fund balances (deficits), June 30, 2015 $ (5,306) $ 12,724 $ 74,077 (continued) 86 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2015 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 $ 2,048,610 $ 164,454 $ 95,314 104,322 $ 2,905,584 169,941 3,245 42,686 37,589 5,311,977 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 Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures 768 193,517 785,746 556,616 759 1,969 355 165,577 14,765 1,551,403 97,283 1,705,862 16,557 4,591,078 156,249 29,104 1,894 Other financing sources (uses): Sale of capital assets Transfers in Transfers out Total other financing sources and uses 95,479 3,268 4,622,076 156,249 689,901 9,328 1,804,609 (112,886) Fund balances (deficits), July 1, 2014 Change in nonspendable resources Decrease in prepaid items 399,992 16,557 (253,206) 211,175 (1,013,962) (802,787) Net change in fund balances Fund balances (deficits), June 30, 2015 Special Districts 80,726 60,418 (20,000) 40,418 9,328 103,394 (212,788) 80,726 232,457 466,852 (12,000) $ 287,106 $ 112,722 $ 7,669 $ 547,578 (continued) 87 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2015 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 $ $ 852,036 11,980 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 Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures 350,855 3,838,225 852,036 4,314,536 816,000 4,314,536 816,000 2,312,360 2,312,360 36,036 (2,312,360) - $ (476,311) Other financing sources (uses): Sale of capital assets Transfers in Transfers out Total other financing sources and uses 21,000 185 21,000 (26) 159 - $ 2,040,126 2,040,126 (2,040,126) 89,165 Net change in fund balances (455,311) Fund balances (deficits), July 1, 2014 Change in nonspendable resources Decrease in prepaid items Fund balances (deficits), June 30, 2015 3,475,390 Capital Projects Public Works Detention Facility Construction Construction 2,241,934 $ 1,786,623 $ - 89,165 36,195 (2,312,360) (1,950,961) 53,730 2,472,655 1,647,474 89,925 $ 160,295 $ (303,487) (continued) 88 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2015 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 Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures 231,966 4,174 1,551 599 4,773 233,517 2,887,506 491,734 104,322 926,622 12,504,864 1,925,883 51,567 43,061 490,934 19,426,493 2,933,450 4,444,288 16,557 4,591,078 702,563 5,169,034 223,528 73,852 Other financing sources (uses): Sale of capital assets Transfers in Transfers out Total other financing sources and uses 2,280,000 734,997 212,967 52,199 3,014,997 265,166 2,617,550 792,358 4,352,486 25,916,744 (3,010,224) (31,649) (6,490,251) 21,185 2,346,567 (1,700,110) 667,642 1,464,885 1,464,885 Net change in fund balances (1,545,339) (31,649) (5,822,609) Fund balances (deficits), July 1, 2014 Change in nonspendable resources Decrease in prepaid items 2,379,025 155,619 14,092,208 Fund balances (deficits), June 30, 2015 (12,000) $ 833,686 89 $ 123,970 $ 8,257,599 Navajo County Budgetary Comparison Schedule Special Revenue - Administration Year Ended June 30, 2015 Original and Final Budgeted Amounts Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Expenditures: General government Public safety Education and economic opportunity Total expenditures Excess (deficiency) of revenues over expenditures 5,615,019 123,164 476 735,000 6,473,659 Actual Amounts $ 395,023 98,888 3,106 35,500 532,517 Variance with Final Budget $ (5,219,996) (24,276) 2,630 (699,500) (5,941,142) 1,743,988 1,053,734 100,000 2,897,722 107,437 346,325 38,498 492,260 1,636,551 707,409 61,502 2,405,462 3,575,937 40,257 (3,535,680) 140,000 (3,872,214) (3,732,214) 202,166 (20,441) 181,725 62,166 3,851,773 3,913,939 Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2014 Fund balances, June 30, 2015 $ 90 (156,277) 221,982 378,259 156,277 329,348 173,071 - $ 551,330 $ 551,330 Navajo County Budgetary Comparison Schedule Special Revenue - County Attorney Year Ended June 30, 2015 Original and Final Budgeted Amounts Revenues: Fines and forfeits Intergovernmental Charges for services Investment earnings Contributions Miscellaneous Total revenues $ Actual Amounts 1,022,246 2,310,076 60,476 4,000 Expenditures: General government Total expenditures Excess (deficiency) of revenues over expenditures $ Variance with Final Budget 100,377 3,497,175 674,250 1,110,653 30,296 8,135 375 14,218 1,837,927 4,857,827 4,857,827 1,835,169 1,835,169 3,022,658 3,022,658 2,758 1,363,410 (1,360,652) $ (347,996) (1,199,423) (30,180) 4,135 375 (86,159) (1,659,248) Other financing sources (uses): Transfers in 338,197 234,194 (104,003) Transfers out Total other financing sources and uses (48,371) 289,826 (75,356) 158,838 (26,985) (130,988) Net change in fund balances (1,070,826) Fund balances, July 1, 2014 Fund balances, June 30, 2015 1,070,826 $ - 91 $ 161,596 1,232,422 1,329,205 258,379 1,490,801 $ 1,490,801 Navajo County Budgetary Comparison Schedule Special Revenue - Courts Year Ended June 30, 2015 Original and Final Budgeted Amounts Revenues: Fines and forfeits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Actual Amounts 57,850 352,704 937,012 16,621 14,851 1,379,038 Expenditures: General government Total expenditures $ Variance with Final Budget 58,855 315,230 706,515 8,148 3,886 1,092,634 $ 1,005 (37,474) (230,497) (8,473) (10,965) (286,404) 2,418,714 2,418,714 916,767 916,767 1,501,947 1,501,947 (1,039,676) 175,867 1,215,543 Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in 523,516 Transfers out Total other financing sources and uses Net change in fund balances 582,487 (207,289) (148,318) 58,971 27,549 1,246,965 $ - 92 (523,516) (148,318) (1,246,965) Fund balances (deficits), July 1, 2014 Fund balances, June 30, 2015 - (730,805) 1,274,514 1,245,225 $ 1,272,774 (1,740) $ 1,272,774 Navajo County Budgetary Comparison Schedule Special Revenue - Environmental and Conservation Year Ended June 30, 2015 Original and Final Budgeted Amounts Revenues: Intergovernmental Investment earnings Miscellaneous Total revenues $ Expenditures: Environmental and conservation Total expenditures Actual Amounts Variance with Final Budget 500,000 17,642 350,000 867,642 $ 411,987 2,437 $ 1,258,471 1,258,471 223,528 223,528 1,034,943 1,034,943 414,424 (88,013) (15,205) (350,000) (453,218) Excess (deficiency) of revenues over expenditures (390,829) 190,896 581,725 Net change in fund balances (390,829) 190,896 581,725 395,508 $ 586,404 4,679 586,404 Fund balances, July 1, 2014 Fund balances, June 30, 2015 $ 93 390,829 - $ Navajo County Budgetary Comparison Schedule Special Revenue - Library District Year Ended June 30, 2015 Original and Final Budgeted Amounts Revenues: Property taxes Intergovernmental Investment earnings Miscellaneous Total revenues $ Expenditures: Culture and recreation Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers In Transfers out Total other financing sources and uses Net change in fund balances Fund balances (deficits), July 1, 2014 Fund balances, June 30, 2015 Actual Amounts 846,247 299,829 92,188 17,500 1,255,764 $ 838,896 130,912 442 27,497 997,747 826,189 826,189 546,314 546,314 279,875 279,875 429,575 451,433 21,858 94 $ (7,351) (168,917) (91,746) 9,997 (258,017) (408,575) (408,575) - (408,575) (408,575) - 21,000 42,858 (21,000) $ Variance with Final Budget - 21,858 (30,134) $ 12,724 (9,134) $ 12,724 Navajo County Budgetary Comparison Schedule Special Revenue - Probation Year Ended June 30, 2015 Original and Final Budgeted Amounts Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ 2,316,569 330,297 4,834 501 2,652,201 Expenditures: Public safety Total expenditures $ 3,255,845 3,255,845 Excess (deficiency) of revenues over expenditures (603,644) Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses Net change in fund balances (276,670) 33,330 (853) 4,759 (239,434) 2,392,101 2,392,101 863,744 863,744 20,666 624,310 (949) - 5,000 4,051 (949) - 95 $ 4,051 - 24,717 598,644 $ 2,039,899 363,627 3,981 5,260 2,412,767 Variance with Final Budget 5,000 (598,644) Fund balances, July 1, 2014 Fund balances, June 30, 2015 Actual Amounts 623,361 532,598 $ 557,315 (66,046) $ 557,315 Navajo County Budgetary Comparison Schedule Special Revenue - Public Defense Year Ended June 30, 2015 Original and Final Budgeted Amounts Revenues: Intergovernmental Investment earnings Miscellaneous Total revenues $ 28,718 3,389 9,705 41,812 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, 2014 Fund balances, June 30, 2015 Actual Amounts $ 19,544 872 410 20,826 $ (9,174) (2,517) (9,295) (20,986) 285,142 285,142 74,077 74,077 211,065 211,065 (243,330) (53,251) 190,079 119,092 119,092 80,513 (10,903) 69,610 (38,579) (10,903) (49,482) (124,238) 16,359 140,597 124,238 129,111 4,873 - 96 $ Variance with Final Budget $ 145,470 $ 145,470 Navajo County Budgetary Comparison Schedule Special Revenue - Public Health District Year Ended June 30, 2015 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 Actual Amounts 2,056,380 121,000 3,753,043 115,300 15,159 42,885 1,579,113 7,682,880 $ 2,048,610 104,322 2,905,584 169,941 3,245 42,686 37,589 5,311,977 6,766,717 6,766,717 4,622,076 4,622,076 916,163 689,901 Variance with Final Budget $ (7,770) (16,678) (847,459) 54,641 (11,914) (199) (1,541,524) (2,370,903) 2,144,641 2,144,641 (226,262) Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2014 Fund balances, June 30, 2015 $ 2,695,566 (3,806,423) (1,110,857) 211,175 (1,013,962) (802,787) (194,694) (112,886) 81,808 194,694 399,992 205,298 - 97 $ 287,106 (2,484,391) 2,792,461 308,070 $ 287,106 Navajo County Budgetary Comparison Schedule Special Revenue - Recreation District Year Ended June 30, 2015 Original and Final Budgeted Amounts Revenues: Special assessments Investment earnings Miscellaneous Total revenues $ 163,554 1,446 Expenditures: Culture and recreation Total expenditures Actual Amounts $ Variance with Final Budget 165,000 164,454 768 355 165,577 $ 900 (678) 355 577 265,000 265,000 156,249 156,249 108,751 108,751 Excess (deficiency) of revenues over expenditures (100,000) 9,328 109,328 Net change in fund balances (100,000) 9,328 109,328 103,394 112,722 3,394 112,722 Fund balances, July 1, 2014 Fund balances, June 30, 2015 100,000 - $ 98 $ $ Navajo County Budgetary Comparison Schedule Special Revenue - Sheriff's Office Year Ended June 30, 2015 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 440,150 856,860 628,420 3,070 189,830 2,118,330 $ 2,440,441 2,440,441 193,517 785,746 556,616 759 14,765 1,551,403 Variance with Final Budget $ 1,804,609 1,804,609 (246,633) (71,114) (71,804) (2,311) (175,065) (566,927) 635,832 635,832 Excess (deficiency) of revenues over expenditures (322,111) Other financing sources (uses): Transfers in (253,206) 48,371 60,418 12,047 (20,000) (20,000) 48,371 40,418 (7,953) (273,740) (212,788) 60,952 273,740 232,457 (41,283) (12,000) (12,000) Transfers out Total other financing sources and uses Net change in fund balances Fund balances (deficits), July 1, 2014 68,905 Change in nonspendable resources Decrease in prepaid items Fund balances, June 30, 2015 $ 99 - $ 7,669 $ 7,669 Navajo County Budgetary Comparison Schedule Special Revenue - Special Districts Year Ended June 30, 2015 Original and Final Budgeted Amounts Revenues: Special assessments Investment earnings Miscellaneous Total revenues $ 96,032 400 100,000 196,432 Expenditures: Highways and streets Total expenditures Actual Amounts $ 95,314 1,969 97,283 Variance with Final Budget $ (718) 1,569 (100,000) (99,149) 450,000 450,000 16,557 16,557 433,443 433,443 Excess (deficiency) of revenues over expenditures (253,568) 80,726 334,294 Net change in fund balances (253,568) 80,726 334,294 253,568 - 466,852 547,578 213,284 547,578 Fund balances, July 1, 2014 Fund balances, June 30, 2015 $ 100 $ $ Navajo County Budgetary Comparison Schedule Special Revenue - Workforce Investment Act Year Ended June 30, 2015 Original and Final Budgeted Amounts Revenues: Intergovernmental Investment earnings Total revenues $ 1,198,814 100,061 1,298,875 Expenditures: Education and economic opportunity Total expenditures Excess (deficiency) of revenues over expenditures Actual Amounts $ 852,036 852,036 Variance with Final Budget $ (346,778) (100,061) (446,839) 1,115,835 1,115,835 816,000 816,000 299,835 299,835 183,040 36,036 (147,004) Other financing sources: Sale of capital assets Transfers out Total other financing sources 185 (26) 159 Net change in fund balances Fund balances (deficits), July 1, 2014 Fund balances, June 30, 2015 183,040 (183,040) - $ 101 185 (26) 159 36,195 $ 53,730 89,925 (146,845) $ 236,770 89,925 Navajo County Budgetary Comparison Schedule Capital Projects - Public Works Construction Year Ended June 30, 2015 Original and Final Budgeted Amounts Expenditures: Capital outlay Total expenditures $ Other financing sources: Pledged revenue obligations issued Transfers in Total other financing sources 4,950,000 50,000 5,000,000 Net change in fund balances Fund balances (deficits), July 1, 2014 Fund balances, June 30, 2015 3,000,000 3,000,000 2,000,000 $ 102 (2,000,000) - Actual Amounts Variance with Final Budget $ 2,312,360 2,312,360 (2,312,360) 2,472,655 $ 160,295 $ 687,640 687,640 (4,950,000) (50,000) (5,000,000) (4,312,360) 4,472,655 $ 160,295 Navajo County Budgetary Comparison Schedule Capital Projects - Detention Facility Construction Year Ended June 30, 2015 Original and Final Budgeted Amounts Expenditures: Capital outlay Total expenditures Other financing sources: Pledged revenue obligations issued Transfers in Total other financing sources Actual Amounts Variance with Final Budget 2,000,000 2,000,000 2,040,126 2,040,126 (40,126) (40,126) 1,390,000 89,165 89,165 (1,390,000) 89,165 (1,300,835) 1,390,000 Net change in fund balances (610,000) (1,950,961) (1,340,961) Fund balances, July 1, 2014 Fund balances (deficits), June 30, 2015 610,000 - 1,647,474 $ (303,487) 1,037,474 $ (303,487) $ 103 Navajo County Budgetary Comparison Schedule Debt Service - General Government Year Ended June 30, 2015 Original and Final Budgeted Amounts Revenues: Charges for services Investment earnings Total revenues Expenditures: Debt Service 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, 2014 Fund balances, June 30, 2015 Actual Amounts $ 104 599 4,174 4,773 Variance with Final Budget $ 599 4,174 4,773 2,669,618 2,669,618 3,014,997 3,014,997 (345,379) (345,379) (2,669,618) (3,010,224) (340,606) 1,464,885 1,464,885 1,464,885 1,464,885 (1,204,733) (1,545,339) 1,204,733 2,379,025 - $ 833,686 (340,606) 1,174,292 $ 833,686 Navajo County Budgetary Comparison Schedule Debt Service - Special Districts Year Ended June 30, 2015 Original and Final Budgeted Amounts Revenues: Special assessments Investments earnings Miscellaneous Total revenues $ Variance with Final Budget $ 231,966 1,551 $ 962 249,611 233,517 (16,683) 1,551 (962) (16,094) 608,643 608,643 265,166 265,166 343,477 343,477 Excess (deficiency) of revenues over expenditures (359,032) (31,649) 327,383 Net change in fund balances (359,032) (31,649) 327,383 Expenditures: Debt Service Highways and streets Total expenditures Fund balances (deficits), July 1, 2014 Fund balances, June 30, 2015 $ 105 248,649 Actual Amounts 359,032 155,619 - $ 123,970 (203,413) $ 123,970 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2015 Navajo County Statement of Changes in Assets and Liabilities Agency Funds Year Ended June 30, 2015 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 $ 2,895,693 $ 15,289,509 $ 15,217,443 $ $ 2,895,693 $ 15,289,509 $ 15,217,443 $ $ $ 13,954,962 1,341,022 $ 15,295,984 $ 13,906,641 1,317,277 $ 15,223,918 $ 729,403 2,166,290 $ 2,895,693 108 Balance July 1, 2015 $ 2,967,759 2,967,759 777,724 2,190,035 2,967,759 NAVAJO COUNTY, ARIZONA FISCAL YEAR ENDED JUNE 30,2015 Navajo County Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2006 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 $ 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 Gain on disposal of capital assets Miscellaneous Transfers Total general revenues and transfers Change in net position - governmental activities 19,479,297 13,099,102 8,851,369 5,874,892 468,926 289,270 35,887 2007 $ 19,745,840 14,534,493 10,990,269 6,274,590 554,419 4,885,689 18,880 2008 2009 $ 19,392,043 19,182,119 14,058,305 7,219,915 510,035 5,723,104 231,225 374,442 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 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 3,473,303 765,083 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 3,719,202 3,599,091 1,751,447 38,102 7,186,346 162,086 2,199,624 64,885 5,512,115 205,884 12,567,738 29,059,696 12,956,489 33,659,638 12,361,020 30,863,219 12,393,158 32,054,807 594,260 66,911,006 122,462 $ (19,413,489) $ (23,524,060) $ (35,161,339) $ (34,856,199) $ $ $ 9,707,389 $ 10,933,578 $ 7,973,918 8,636,394 7,260,596 12,781,414 757,594 6,778,153 13,521,307 7,083,165 13,302,354 6,330,588 12,017,517 946,207 909,436 59,167 581,789 1,433,848 1,733,012 104,656 1,016,509 3,922,712 1,624,746 11,971 1,207,819 6,444,858 750,742 23,895 1,466,751 31,270,121 33,223,879 36,860,156 37,967,929 11,856,632 $ 9,699,819 $ 1,698,817 $ 3,111,730 (Continued) 110 Navajo County Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2010 $ 2011 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 $ 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 5,079,224 1,390,048 100,758 274,262 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 3,613,033 3,715,424 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 2,898,998 128,945 4,488,394 411,987 62,860 9,690,517 28,508,468 9,565,055 30,431,057 11,431,446 33,595,379 13,170,789 29,677,799 $ 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 2015 $ 22,396,786 16,191,164 14,480,464 7,129,008 814,786 5,710,417 196,504 35,558 625,962 67,580,649 220,229 5,000 9,578,324 26,919,398 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 22,647,297 17,566,896 13,057,318 9,366,578 747,065 6,307,885 237,032 307,208 677,253 70,914,532 15,637,667 33,480,772 $ 2013 $ 31,968,411 16,655,632 11,190,411 7,956,284 665,292 5,669,487 211,478 73,852 802,936 75,193,783 $ (37,433,760) $ (37,902,850) $ (34,729,372) $ (37,388,804) $ (34,419,508) $ (41,598,404) $ 12,494,737 $ 12,866,253 $ $ $ 5,889,027 11,405,376 6,246,077 11,475,113 11,704,948 542,526 6,667,433 12,773,729 1,538,954 $ 5,480,598 10,728,725 11,924,765 502,434 6,239,089 12,024,496 1,430,914 12,536,351 507,456 6,674,867 12,964,950 1,406,936 4,902,289 322,748 115,237 1,273,310 (380,236) 34,937,408 4,489,096 254,483 5,957 1,822,741 36,732,933 3,175,428 202,500 13,116 1,170,658 34,370,592 $ (2,496,352) $ (1,169,917) $ 12,087,700 (109,711) 52,473 892,976 32,957,436 (358,780) 111 $ (4,431,368) $ 453,017 96,640 1,455,607 195,437 35,974 1,072,052 35,232,854 35,394,023 813,346 $ (6,204,381) Navajo County Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2006 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 2007 $ $ 2008 12,379,484 16,110,913 3,957,781 10,939,695 $ 12,379,484 $ 16,110,913 $ 14,897,476 $ 10,433,374 $ 10,983,270 $ $ $ 7,581,812 $ 2009 397,700 500,703 $ 2,883,159 7,550,215 679,641 26,620,823 1,777,950 24,543 25,962,952 1,824,003 3,443,911 21,439,571 1,995,785 4,791,323 $ 22,008,993 $ 28,624,379 $ 28,924,019 $ 28,466,596 (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. 112 Navajo County Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2010 $ 325,096 7,416,990 2011 $ 2012 2013 $ 3,182,499 3,349,495 6,531,994 $ $ 2,533,698 3,939,417 6,473,115 $ 2,021,131 3,849,238 5,870,369 2014 $ 437,220 $ 2,331,597 3,482,808 6,251,625 2015 $ 1,273,833 $ 2,836,408 3,544,712 7,654,953 $ 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) $ 30,075,510 991,663 22,055,581 2,552,485 (1,686,672) $ 23,913,057 31,118,113 1,924,862 76,332 $ 33,648,185 113 Navajo County Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 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 Fiscal Year 2008 2006 2007 2009 $ 7,934,263 $ 8,673,499 $ 9,581,813 $ 10,780,692 979,368 990,927 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 1,624,746 513,081 1,563,382 52,104,688 2,284,384 750,741 356,318 26,879 604,968 60,254,174 38,281 990,990 66,785,168 56,956 1,222,929 67,600,939 25,916 1,466,751 69,845,953 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 22,160,207 18,403,733 17,778,854 7,074,321 501,738 5,515,147 231,225 686,012 374,442 421,836 179,518 303,173 349,677 487,701 594,260 2,118,079 52,956,104 1,990,735 58,756,931 6,238,140 76,723,224 3,030,157 75,777,343 7,298,070 8,028,237 (9,122,285) (5,931,390) 6,600,000 77,845 6,846 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) 23,895 2,304,012 (2,304,012) 30,741 $ (5,900,649) 2.09% 1.06% 0.93% 1.49% (Continued) 114 Navajo County Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2010 2011 $ 12,294,308 $ 12,612,528 619,663 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 11,699,519 6,667,433 606,269 1,247,497 39,645,165 3,241,520 453,017 518,762 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 43,061 1,072,052 73,099,759 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 27,228,792 16,762,711 10,245,789 8,323,596 702,563 5,491,323 223,528 73,852 858,416 677,253 919,249 625,962 946,316 721,020 274,573 70,050,775 327,361 63,998,889 821,698 461,413 75,464 7,613,324 71,341,064 2,737,814 802,936 81,675 66,935,746 676,779 527,044 115,290 1,469,268 65,080,041 5,207,816 77,800,720 1,074,905 (4,350,940) (3,164,887) (3,569,871) (5,763,625) (4,700,961) 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 18,913 115,237 8,048,481 (6,789,602) 1,374,116 $ 2,449,021 2.30% $ 2012 $ 2013 12,092,878 $ 354,826 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% 115 2014 $ $ 2.13% 2015 $ 12,565,289 6,674,867 522,919 1,789,993 40,045,748 9,698,659 195,437 491734 $ 64,945 5,625,009 (5,625,009) 64,945 (4,636,016) 4.88% Navajo County Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) Governmental activities: Net investment in capital assets Restricted Unrestricted Total governmental activities net position Governmental activities: Net investment in capital assets Restricted Unrestricted (deficit) Total governmental activities net position 2006 2007 Fiscal Year 2008 2009 2010 $ 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 $ 66,038,408 23,034,928 16,207,016 $ 105,280,352 2011 2012 Fiscal Year 2013 2014 2015 $ 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 $ 63,750,745 23,521,625 (51,230,312) $ 36,042,058 116 Navajo County Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years PRIMARY ASSESSED VALUE Fiscal Year 2006 2007 2008 2009 2010 **2011 2012 2013 2014 2015 Residential and Vacant Property 365,245,873 414,808,401 480,365,541 563,228,216 631,550,018 683,204,674 634,214,647 575,074,783 513,683,811 468,337,874 Commercial Property 300,099,462 305,200,210 315,601,599 328,530,388 345,011,622 365,730,626 371,913,522 380,102,301 371,638,224 359,094,468 Unattached Personal Property 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 17,584,375 Total Taxable *Total Direct Estimated Actual Assessed Value Tax Rate Value 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 8,029,406,641 845,016,717 1.5615 7,573,933,720 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 1,059,004,850 117 Assessed Value as a Percentage of Actual Value 11.39% 11.37% 11.31% 11.24% 11.18% 11.11% 10.97% 11.02% 11.25% 11.16% NAVAJO COUNTY Direct and Overlapping Property Tax Rates Last Ten Fiscal Years County Direct Rates Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Primary 0.6337 0.6229 0.6041 0.5775 0.5594 0.5572 0.5984 0.6401 0.6995 0.8185 Fire District 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 Library District 0.0300 0.0400 0.0500 0.0500 0.0500 0.0500 0.0500 0.0500 0.0704 0.1000 Flood Control District 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 Public Health District 0.1963 0.1963 0.1963 0.1963 0.1963 0.1963 0.1963 0.1963 0.2151 0.2430 Cities 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 0.2789-1.2831 Other Special Districts 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 0.1291-3.550 Community College District 1.5200 1.4858 1.4206 1.3382 1.1352 1.1308 1.2387 1.3515 1.4769 1.6610 Overlapping Rates Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 School Equalization 0.4358 0.0000 0.0000 0.0000 0.3306 0.3564 0.4259 0.4717 0.5123 0.5089 School Districts 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 2.6662-8.000 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. 118 Total Direct 1.2600 1.2592 1.2504 1.2238 1.2057 1.2035 1.2447 1.2864 1.3850 1.5615 Navajo County Principal Property Taxpayers Current Year and Five Years Ago 2015 Taxpayer Arizona Public Service Company PacifiCorp Electric Operations Peabody Western Coal Co. Transwestern Pipeline Co Burlington Northern/Santa Fe Railway Kinder Morgan Navopache Electric Co-Op Inc. Citizens Telecom of White Mountains Unisource Energy Corporation Smith Bagley Primary Assessed Value $ 131,274,320 52,277,671 17,334,500 10,415,034 7,359,777 6,029,921 5,686,243 5,010,520 4,916,132 4,367,509 TOTALS $ 244,671,627 Total 2015 Navajo County Assessed Value 2010 Percentage of Total Primary Assessed Value Rank 1 15.54% 2 6.19% 3 2.05% 4 1.23% 5 0.87% 6 0.71% 7 0.67% 8 0.59% 9 0.58% 10 0.52% 28.95% Primary Assessed Value Rank $ 107,346,606 1 31,068,621 2 16,669,389 3 11,923,788 4 4,483,725 8 9,163,477 5 3,328,331 9 6,231,982 7 2,821,246 10 N/A N/A Source: Navajo County Assessor's office Note: Information for principle property taxpayers was not available prior to fiscal year 2010; consequently the comparison is for a 5 year period. 119 10.75% 3.11% 1.67% 1.19% 0.45% 0.92% 0.33% 0.62% 0.28% N/A $ 193,037,165 Total 2010 Navajo County Assessed Value $ 845,018,236 Percentage of Total Primary Assessed Value 19.33% $ 998,764,550 Navajo County Property Tax Levies and Collections Last Ten Fiscal Years Fiscal Year Taxes Levied for the Fiscal Year (1) 2006 $ 4,320,274 $ 4,139,945 95.83% $ 179,585 4,319,530 99.98% 2007 $ 4,579,700 $ 4,401,681 96.11% $ 177,251 4,578,932 99.98% 2008 $ 4,910,817 $ 4,684,181 95.38% $ 225,885 4,910,067 99.98% 2009 $ 5,247,935 $ 5,003,706 95.35% $ 242,130 5,245,835 99.96% 2010 $ 5,583,364 $ 5,306,931 95.05% $ 272,298 5,579,229 99.93% 2011 $ 5,862,332 $ 5,569,913 95.01% $ 285,779 5,855,691 99.89% 2012 $ 6,109,358 $ 5,887,544 96.37% $ 213,618 6,101,163 99.87% 2013 $ 6,184,503 $ 6,001,505 97.04% $ 174,168 6,175,673 99.86% 2014 $ 6,280,222 $ 6,070,355 96.66% $ 196,179 6,266,534 99.78% 2015 $ 6,881,029 $ 6,652,088 96.67% $ 6,652,088 96.67% Collected within Fiscal Year Percentage Amount of Levy Collections in Subsequent Years Total Collections to Date Percentage Amount of Levy - 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. 120 Navajo County Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Certificates of Participation Special Assessment Bonds 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 0.4 105.94 2013 13,665,000 - 985,235 320,638 14,970,873 0.52 137.73 2014 19,125,000 - 786,508 571,035 20,482,543 N/A (2) 187.59 2015 16,845,000 - 573,542 326,188 17,744,730 N/A (2) Source: N/A (2) 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. 121 Navajo County Pledged Revenue Coverage Last Ten Fiscal Years County Excise Tax $ 6,667,433 6,674,867 2013 Series Pledged Revenue Obligation Debt Service State Shared Net Available Sales Tax Revenue Principal Interest $ 10,763,214 $ 17,430,647 $ 83,899 10,891,962 17,566,829 1,985,000 324,035 Coverage 207.76 7.61 Fiscal Year 2013 2014 2015 County Excise Tax $ 6,239,089 6,667,433 6,674,867 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 10,891,962 17,566,829 295,000 408,402 Coverage 324.15 93.41 24.97 Fiscal Year 2008 2009 2010 2011 2012 2013 2014 2008 Series Pledged Revenue Obligation Bonds (Refunded in August 2013) Debt Service County Excise State Shared Net Available Coverage Tax Sales Tax Revenue Principal Interest Ratio $ 7,083,165 $ 10,915,470 $ 17,998,635 $ $ 6,330,588 9,844,858 16,175,446 131,432 123.07 5,480,598 8,732,190 14,212,788 335,000 240,573 24.69 5,846,576 9,285,088 15,131,664 350,000 228,585 26.15 6,200,729 9,553,213 15,753,942 370,000 215,985 26.88 6,239,089 10,087,589 16,326,678 380,000 202,860 28.01 6,667,433 10,763,214 17,430,647 385,000 124,500 34.21 Fiscal Year 2014 2015 Fiscal Year 2009 2010 2011 2012 2013 2014 2015 Source: $ Revenues 300,706 273,885 241,567 241,374 248,745 251,299 231,966 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 0.99 212,967 43,352 0.90 Navajo County Finance Department 122 Navajo County Legal Debt Margin Information Last Ten Fiscal Years Legal Debt Margin Calculation for Fiscal Year 2015 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 2006 102,590,120 2007 $ 110,225,508 102,590,120 110,225,508 0% $ 2012 $ 153,920,569 158,850,728 153,920,569 0% 846,247,083 126,937,062 $ 126,937,062 $ 2009 136,253,654 121,847,141 0% 2011 158,850,728 0% $ Fiscal Year 2008 121,847,141 $ 136,253,654 0% $ Fiscal Year 2013 146,139,257 146,139,257 0% $ 2014 135,502,778 135,502,778 0% 2010 149,814,683 149,814,683 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. 123 $ 0% $ 2015 126,937,062 126,937,062 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 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 2,869,655 $ 26,739 13.1 2014 109,185 (1) (1) 7.7 2015 (1) (1) (1) 6.6 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 2014 and 2015. 124 Navajo County Employment by Sector and Major Employers Employment by Sector 2006 3,200 3,250 650 9,875 3,200 975 800 1,250 5,700 925 Mining and Construction Educational & Health Srvs Financial Activities Government Leisure & Hospitality Manufacturing Information Professional & Business Srvs Trade, Transportation & Utilities Other Services 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 2010 1,450 3,550 400 9,650 3,500 525 1,150 1,000 5,250 700 (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. 125 Navajo County Employment by Sector and Major Employers (Continued) Employment by Sector 2011 1,325 3,200 425 9,500 3,625 525 1,150 1,025 5,025 525 Mining and Construction Educational & Health Srvs Financial Activities Government Leisure & Hospitality Manufacturing Information Professional & Business Srvs Trade, Transportation & Utilities Other Services (1) 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 2015 1,725 3,900 625 9,775 3,200 175 1,200 1,150 4,875 950 The number of employees for the 10 largest employers in the County is not available due to State of Arizona non-disclosure restrictions. 126 Navajo County Full-Time Equivalent Employees by Function Last Nine 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 Function General government Public safety Highways and streets Health and welfare Culture and recreation Total 2013 278 238 78 73 8 675 2014 277 236 83 80 4 680 2015 278 238 91 81 5 692 Source: Navajo County Budget 2007 - 2015 127 2010 284 248 81 63 5 681 2011 294 239 81 65 6 685 2012 295 243 82 66 5 691 Navajo County Operating Indicators by Function Last Ten Fiscal Years 2006 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 2007 2009 80,664 83,044 84,824 85,536 5 13,398 4 43,445 5 23,687 4 51,626 3,674 3,789 3,085 1,837 97 99 104 103 40,493 772 726 34,370 744 868 50,415 678 1,036 51,910 594 1,009 15 281 166 8,909 15 318 164 9,170 12 338 186 10,504 8 457 199 8,740 369 385 363 363 45 54 9 33 2 52 42 56,775 51,481 5,905 603 5,311 8,608 592 5,685 10,586 593 6,811 7,343 608 372,980 6,395 220,545 13,800 380,765 5,835 241,479 15,216 442,038 6,079 262,997 16,907 456,579 5,985 287,552 19,607 8 1,547 21,253 14 6 817 20,948 14 6 818 20,861 14 6 839 20,497 14 Source: Navajo County departments monthly and annual performance reports 128 Fiscal Year 2008 (continued) Navajo County Operating Indicators by Function Last Ten Fiscal Years 2010 2011 2012 Fiscal Year 2013 2014 2015 85,858 86,304 88,148 85,773 85,752 88,306 4 21,379 4 50,969 5 17,330 4 57,960 3 8,569 1 685 1,285 926 994 1,023 970 981 110 99 108 109 163 160 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 33,793 828 1,101 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 9 339 297 5,093 361 319 274 283 382 364 47 25 49 42 82 32 59 13 88 12 102 30 48,743 60,117 47,962 57,742 52,623 47,184 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 5,341 1,250 503 480,959 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 34,214 368,114 13,957 336,617 32,149 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 6 829 17,575 13 129 Navajo County Capital Asset Statistics by Function Last Ten Fiscal Years 2006 2007 2008 Fiscal Year 2010 2011 2009 2012 2013 2014 2015 Function General Government Elections Voting Machines Superior Courts Divisions Division - Satellite Justice Courts 158 158 158 158 158 173 173 173 173 173 3 4 4 4 4 6 6 6 6 6 4 1 6 4 1 6 4 1 6 4 1 6 4 1 6 1 0 407 1 0 1 0 433 1 0 425 1 0 426 1 0 442 2 0 442 2 0 441 2 0 438 2 0 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 26 13 0 738.98 14 747.83 14 732.01 14 737.65 14 734.9 14 733.28 14 733.65 15 733.95 15 733.95 15 734.66 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 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. 130