N AVA J O CO U N T Y Arizona C O M P R E H E N S I V E A N N U A L F I N A N C I A L R E P O RT F i s c a l Ye a r E n d e d J u n e 3 0 , 2 0 1 6 We Are Navajo County Board of Supervisors Robert K. Black, Jr. District I Chairman Jason E. Whiting District III Navajo County, Arizona Steve Williams District IV Dawnafe Whitesinger District V Vice-Chairman Jesse Thompson District II Fiscal Year Ended June 30, 2016 Navajo County, Arizona Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2016 Prepared by Navajo County Finance Department County Manager James G. Jayne Assistant County Managers Bryan Layton Paul Watson Navajo County, Arizona Finance Team James Menlove, Finance Director Paige M. Peterson, Accounting Manager Scott Flake, Accountant Olivia M. Todd, Grants Coordinator Fiscal Year Ended June 30, 2016 Navajo County, Arizona Fiscal Year Ended June 30, 2016 INTRODUCTORY SECTION Navajo County, Arizona Fiscal Year Ended June 30, 2016 Navajo County Comprehensive Annual Financial Report Year Ended June 30, 2016 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 – Deposits and Investments Note 3 – Due From Other Governments Note 4 – Capital Assets Note 5 – Construction and Other Significant Commitments Note 6 – Long-Term Liabilities Note 7 – Risk Management Note 8 – Fund Balance Classifications of the Governmental Funds Note 9 – Pensions and Other Postemployment Benefits Note 10 – Interfund Balances and Activity Note 11 – County Treasurer’s Investment Pool i 16 17 18 19 20 21 22 28 31 32 32 33 35 37 38 59 59 Navajo County Comprehensive Annual Financial Report Year Ended June 30, 2016 Table of Contents Page Other Required Supplementary Information Budgetary Comparison Schedules General Fund Public Works/HURF Fund Flood Control District Fund Public Health 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 Changes in the County’s 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 62 65 66 67 68 69 70 73 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 – Recreation District Special Revenue – Sheriff’s Office Special Revenue – Special Districts Special Revenue – Workforce Innovation and Opportunity Act Capital Projects – Public Works Construction Debt Service – General Government Debt Service – Special Districts 90 91 92 93 94 95 96 97 98 99 100 101 102 103 Statement of Changes in Assets and Liabilities – Agency Funds 106 ii 80 85 Navajo County Comprehensive Annual Financial Report Year Ended June 30, 2016 Table of Contents Page Statistical Section Financial Trends Changes in Net Position Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Net Position by Component 108 110 112 114 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 115 116 117 118 Debt Capacity Ratios of Outstanding Debt by Type Pledged Revenue Coverage Legal Debt Margin Information 119 120 121 Demographic and Economic Information Demographic and Economic Statistics Employment by Sector and Major Employers 122 123 Operating Information Full-Time Equivalent Employees by Function Operating Indicators by Function Capital Asset Statistics by Function 125 126 128 iii Navajo CouNty aDMINIStRatIoN Bryan Layton James G. Jayne Assistant County Manager County Manager December 16, 2016 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 2016. 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 2016 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 2016 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 AFFECTING 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 production, alternative energy, 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 (9.6 percent for July 2016) has been significantly higher than the State’s ( 5.8 percent for July 2016). 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. 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 2017. vii Impact of State Economic Conditions – The downturn in the local economy corresponded to economic declines at the state and national levels. As the State of Arizona struggled to balance its budget and reduce expenses counties have been significantly impacted by the shifting of revenues away from counties while mandating that counties pay for state programs. The uncertainty of these impacts from year to year requires Navajo County to budget conservatively to allow for these cost shifts, reductions in program funding, and reduced revenue allocations. Navajo County continues to work with state legislators, the County Supervisors Association, and the Arizona City/County Managers Association to find solutions to the state budget crisis with the least impact to counties. Additionally, Navajo County continues to seek alternate funding sources to increase revenues. Cost analysis is ongoing, and the County is seeking to find additional ways to further reduce spending while continuing to provide for mandated functions with excellent customer service. Economic Outlook – Though the recession formally ended on a national level in June 2009, state and local revenues continue to be repressed. Economists continue to predict that the economic recovery will be modest for years to come. Arizona was among the states hardest hit by the economic downturn. 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, 2015. This was the sixth 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, 2015. This was the seventh 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 Bryan Layton Assistant County Manager ix Voters Navajo County Board of Supervisors Constables Elected Officials County Manager Holbrook Assessor Clerk of the Superior Court Winslow County Attorney Recorder Chief Audit & Financial Compliance Officer Elections Director Public Health Services District Director Snowflake Kayenta Sheriff Show Low Treasurer Pinetop-Lakeside Superintendent of Schools Assistant County Manager Assistant County Manager/Economic Development Director NEAZIWS Executive Director Courts Presiding Judge Superior Court Judge Superior Court Judge Superior Court Judge Court Administrator Clerk of the Board Emergency Management Director Juvenile Director Chief Probation Officer Facilities Management Director Information Technology Director Justice of the Peace—Holbrook Justice of the Peace—Winslow Legal Defender Library District Director Justice of the Peace—Snowflake Justice of the Peace—Kayenta Public Defender Public Fiduciary Justice of the Peace—Show Low Justice of the Peace—PinetopLakeside Public Works Director Tribal Government Relations Director FINANCIAL SECTION Navajo County, Arizona Fiscal Year Ended June 30, 2016 Navajo County, Arizona Fiscal Year Ended June 30, 2016 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, 2016, 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. 2910 NORTH 44 th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and aggregate remaining fund information of Navajo County as of June 30, 2016, 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 1 to the financial statements, for the year ended June 30, 2016, the County adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 72, Fair Value Measurement and Application. 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 68, schedule of the County’s proportionate share of the net pension liability—cost-sharing pension plans on page 69, schedule of changes in the County’s net pension liability and related ratios—agent pension plans on pages 70 through 72, schedule of county pension contributions on pages 73 through 74, schedule of agent OPEB plans’ funding progress on page 76 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with U.S. generally accepted auditing standards, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and other information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County’s basic financial statements. The combining and individual fund statements and schedules and the introductory and statistical sections listed in the table of contents are presented for purposes of additional analysis and are not required parts of the basic financial statements. The combining and individual fund statements and schedules are management’s responsibility 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 the County received pursuant to Arizona Revised Statutes Title 28, Chapter 18, Article 2, and any other dedicated state transportation revenues the County received 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 19, 2016 Navajo County, Arizona Fiscal Year Ended June 30, 2016 Navajo County Management’s Discussion and Analysis June 30, 2016 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, 2016. We encourage readers to consider the information presented here in conjunction with the financial statements. 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 $33 million (net position). Of this amount, $62.4 million is the net investment in capital assets (e.g., land, buildings, improvements, machinery and equipment, infrastructure and construction in progress); $24.2 million is restricted for specific purposes (restricted net position); and $(53.5) million is the unrestricted net position deficit balance that is primarily a result of recognizing long-term liabilities related to pensions.  At June 30, 2016, total assets were $114.9 million, a decrease of $1.9 million or 1.7 percent in comparison with the prior fiscal year’s balance of $116.8 million.  At June 30, 2016, total liabilities were $87.6 million, an increase of $2.7 million or 3.2 percent in comparison with the prior fiscal year’s balance of $84.9 million.  At June 30, 2016, the County reported total deferred outflows of resources related to pensions of $10.7 million and deferred inflows of resources related to pensions of $4.9 million.  At June 30, 2016, the governmental funds reported combined fund balances of $32.2 million, an increase of $599 thousand or 1.9 percent in comparison with the prior year’s combined fund balances of $31.6 million.  At June 30, 2016, $24.7 million or 76.9 percent of governmental fund balances were restricted, $3.5 million or 10.9 percent were assigned, $3.3 million or 10.3 percent were unassigned, and $620 thousand or 1.9 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. 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. 5 Navajo County Management’s Discussion and Analysis June 30, 2016 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 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. 6 Navajo County Management’s Discussion and Analysis June 30, 2016 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, Flood Control District Fund, and Public Health 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 77 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, 2016, compared to the prior year. Governmental Activities 2016 2015 $ 36,635,516 $ 35,819,587 78,223,967 80,975,142 114,859,483 116,794,729 Current and other assets Capital assets Total assets Deferred outflows of resources Total deferred outflows of resources 10,664,977 11,664,841 Other liabilities Long-term liabilities outstanding Total liabilities 3,879,451 83,705,985 87,585,436 3,453,978 81,431,785 84,885,763 7 Navajo County Management’s Discussion and Analysis June 30, 2016 Governmental Activities 2016 2015 Deferred inflows of resources Total deferred inflows of resources $ 4,891,561 $ 7,531,749 Net Position: Net investment in capital assets Restricted Unrestricted (deficit) Total net position 62,361,145 24,226,548 (53,540,230) $ 33,047,463 63,750,745 23,521,625 (51,230,312) $ 36,042,058 Overall, total assets and deferred outflows of resources decreased by $2.9 million or 2.3 percent and total liabilities and deferred inflows of resources increased by $59 thousand or 0.06 percent in the current fiscal year. The following summarizes the significant changes in assets, deferred outflows/inflows of resources and liabilities compared to the prior year.  Current and other assets—the net increase of $816 thousand was primarily due to an increase in receivables of charges for services and federal and state grants.  Capital assets—the net decrease of $2.8 million was due to the additions of $2 million in capital assets and $4.9 million in accumulated depreciation in the current fiscal year.  As a result of an actuarial valuation of the total pension liability performed as of June 30, 2015 and a measurement date of June 30, 2015, deferred outflows and inflows of resources related to pensions decreased by $1 million and $2.6 million, respectively.  Other liabilities—the net increase of $425 thousand was primarily due to payroll and employee benefits accrued at the end of the fiscal year.  Long-term liabilities—the net increase of $2.3 million was mainly due to a net increase of $3.9 million in net pension liability and a reduction of $1.5 million in regularly scheduled debt service payments. A large portion of the County’s net position, $62.4 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 $24.2 million is subject to external restrictions on how they may be used. The County’s deficit of $53.5 million was an increase of $2.3 million from the prior year’s unrestricted deficit in net position due to the above-mentioned changes in assets and liabilities. 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 2016 compared to the prior year. 8 Navajo County Management’s Discussion and Analysis June 30, 2016 Governmental Activities 2016 2015 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 Payments in lieu of taxes Investment earnings Capital contributions 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, beginning Net position, ending $ 7,882,611 17,099,421 11,571,167 36,553,199 $ 6,844,292 15,319,641 11,431,446 33,595,379 12,531,782 12,536,351 507,456 6,674,867 12,964,950 1,406,936 195,437 6,365,510 13,125,229 1,547,382 165,384 6,980 2,995 1,341,167 35,086,429 71,639,628 $29,716,664 17,512,220 12,008,267 8,350,410 798,683 5,479,786 247,622 16,887 503,684 74,634,223 (2,994,595) 36,042,058 $33,047,463 35,974 1,072,052 35,394,023 68,989,402 $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 Overall revenues increased by $2.7 million or 3.8 percent and program expenses decreased by $560 thousand or 0.7 percent in the current fiscal year. The following summarizes the significant changes in revenues compared to the prior year.  Charges for services increased by $1 million or 15.2 percent in the current year largely due to $317 thousand of special assessments tax was reclassified from general revenue to program revenue and an increase of $652 thousand of employee healthcare insurance premiums collected for the County’s self-insured health benefits program.  Operating grants and contributions increased by $1.8 million or 11.6 percent in the current year mainly due to $1.4 million of additional funding received from federal and state governments for housing inmates and $543 thousand of additional grants from federal, state and local governments for the Navajo County School Superintendent’s Office’s educational programs. 9 Navajo County Management’s Discussion and Analysis June 30, 2016 FINANCIAL ANALYSIS OF THE COUNTY’S FUNDS The County reported four major funds for this fiscal year: the General Fund, Public Works/HURF Fund, Flood Control District Fund, and Public Health District Fund. At the end of the current fiscal year, the County’s governmental funds reported combined fund balances of $32.2 million, which is an increase of $599 thousand or 1.9 percent. Of the total, $6.8 million constitutes unrestricted fund balances. For governmental funds, overall revenues increased $2.6 million or 3.6 percent and expenditures decreased $3 million or 3.9 percent. Governmental fund revenues exceeded expenditures by $968 thousand 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 18.3 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 fund’s activities that changed significantly over the prior year: General Fund  Accounts payable increased by $209 thousand or 50.7% in the current year largely due to an increase of purchases near fiscal year-end.  Accrued payroll and employee benefits increased by $436 thousand or 46.8% in the current year largely due to additional payroll days accrued at fiscal year-end.  Charges for services increased by $735 thousand or 9.6 percent in the current year primarily due to an increase in employee healthcare insurance premiums collected for the County’s self-insured health benefits program.  Intergovernmental revenues increased by $1.9 million or 11.7 percent in the current year largely due to additional funding of $1.4 million received from federal and state governments for housing inmates and slight increases in state shared sales and vehicle license taxes and payments in lieu of taxes.  Public safety expenditures increased by $1.9 million or 17.1% in the current year largely due to the increase in jail costs to house federal and state inmates. Public Works/HURF Fund  Inventories decreased by $362 thousand or 36.9% 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 $78 thousand or 22.3% in the current year largely due to a general reduction of purchases near fiscal year-end.  Accrued payroll and employee benefits increased by $55 thousand or 29.7% in the current year largely due to additional payroll days accrued at fiscal year-end. 10 Navajo County Management’s Discussion and Analysis June 30, 2016 Flood Control District Fund  Accounts payable increased by $19 thousand in the current year largely due to an increase of purchases near fiscal year-end. Public Health District Fund  Due from other governments decreased by $116 thousand or 15.3 percent in the current year because additional federal grant reimbursements were received before fiscal year-end.  Accrued payroll and employee benefits increased by $14 thousand or 11.9% in the current year largely due to additional payroll days accrued at fiscal year-end.  Due to other funds increased by $143 thousand or 207.2% in the current year largely due to a negative cash balance at fiscal year-end.  Health expenditures increased by $1.1 million or 23.1 percent due to two reporting changes in the current year. The reclassifications of $434 thousand indirect cost expenditures that were previously presented as transfers out and $595 thousand of contributions for the Arizona Health Care Cost Containment System program that were previously reported in the General Fund. GENERAL FUND BUDGETARY HIGHLIGHTS For the General Fund, actual revenues were less than the original and final budget amounts by $1.9 million, while the actual expenditures were $12.4 million less than the amount budgeted. The budget variance for revenues was due to the receipt of less intergovernmental revenue than anticipated. 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 2016. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets The County’s investment in capital assets as of June 30, 2016, totaled $78.2 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:  Machinery and equipment increased $1.8 million of new additions.  Accumulated depreciation increased $4.9 million of annual depreciation expense. Additional information on capital assets can be found in Notes 4 and 5 on page 32 of this report. Debt Administration At the end of the current fiscal year, the County had total long-term liabilities outstanding of $83.9 million and consists of the following: 11 Navajo County Management’s Discussion and Analysis June 30, 2016  $64.3 million is net pension liability which increased by $3.9 million in the current fiscal year.  $15.8 million in pledged 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.  $1.7 million for the future payment of compensated absences for unused employee vacation and sick leave.  $1.2 million of incurred but not reported healthcare claims payable for the County’s self-insured employee health benefits program.  $353 thousand of special assessment debt with governmental commitment.  The remaining balance included $173 thousand of capital leases payable, $247 thousand of estimated landfill closure and post-closure care costs payable and $70 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 6 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 2016. The U.S. and State economies continued to experience a moderate recovery during 2016 and continued minimal improvement is expected in fiscal year 2017. 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 BASIC FINANCIAL STATEMENTS Navajo County, Arizona Fiscal Year Ended June 30, 2016 Navajo County Statement of Net Position June 30, 2016 Governmental Activities Assets Cash and investments Receivables (net of allowance for uncollectibles): Property taxes Accounts receivable Special assessments Due from other governments Inventories 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 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 Unrestricted (Deficit) Total net position See accompanying notes to financial statements. 14 $ 30,278,371 502,134 616,885 209,716 4,408,815 619,595 8,949,961 69,274,006 $ 114,859,483 $ $ 10,664,977 10,664,977 $ 1,177,459 2,116,302 302,769 132,921 $ 4,175,945 79,680,040 87,585,436 $ $ 4,891,561 4,891,561 $ 62,361,145 1,671,905 8,540,131 7,320,593 2,946,428 979,501 1,238,408 339,909 954,021 235,652 (53,540,230) $ 33,047,463 Navajo County Statement of Activities Year Ended June 30, 2016 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 $ 29,716,664 17,512,220 12,008,267 8,350,410 798,683 5,479,786 247,622 16,887 503,684 $ 74,634,223 Program Revenues Operating Capital Charges for Grants and Grants and Services Contributions Contributions Net (Expense) Revenue and Changes in Net Position $ 5,400,182 1,549,821 432,421 333,306 166,881 $ 3,945,966 4,911,950 $ 7,882,611 $ 17,099,421 $ (20,370,516) (11,050,449) (4,679) (5,246,385) (570,048) (445,446) 117,070 (6,887) (503,684) $ (38,081,024) $ 11,571,167 2,770,719 61,754 5,034,340 364,692 10,000 General revenues: Taxes: Property taxes, levied for general purpose Property taxes, levied for flood control Property taxes, levied for public health district Property taxes, levied for library district General county sales tax Shared revenues - state sales tax Shared revenues - state vehicle license tax Payments in lieu of taxes Investment earnings Capital contributions Gain on sale of capital assets Miscellaneous Total general revenues Change in net position Net position, July 1, 2015 Net position, June 30, 2016 See accompanying notes to financial statements. 15 $ 11,571,167 $ 7,811,116 1,837,233 2,056,438 826,995 6,365,510 10,874,837 2,250,392 1,547,382 165,384 6,980 2,995 1,341,167 35,086,429 (2,994,595) 36,042,058 $ 33,047,463 Navajo County Balance Sheet Governmental Funds June 30, 2016 General Fund Assets Cash and investments Receivables (net of allowance for uncollectibles): Property taxes Accounts receivable Special assessments Due from: Other funds Other governments Inventories Total assets 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 $ 6,960,402 Other Total Public Works/ Flood Control Public Health Governmental Governmental HURF Fund District Fund District Fund Funds Funds $ 7,311,741 290,723 559,423 441,447 1,756,270 $ 7,152,081 99,245 $ 1,723 $ 8,854,147 $ 30,278,371 33,649 52,359 209,716 502,134 616,885 209,716 642,657 129,179 1,056,328 570,626 4,408,815 619,595 $ 37,206,142 78,517 3,380 $ 10,008,265 953,560 619,595 $ 8,886,619 $ 7,251,326 $ 724,554 $ 10,335,378 $ $ $ $ $ 621,281 1,368,311 272,479 239,768 19,187 5,145 54,044 130,313 3,821 148,301 31,434 2,992 211,270 45,880 2,141,714 543,681 27,324 441,507 194,917 64,922 50,018 194,917 64,922 43,106 93,124 619,596 7,723,342 7,159,080 860,897 8,342,938 7,159,080 (670,974) 189,923 $ 8,886,619 $ 7,251,326 1,612,513 2,535,860 3,523,261 7,671,634 $ 10,008,265 See accompanying notes to financial statements. 16 $ 724,554 210,468 372,765 $ 1,177,459 2,116,302 355,535 74,162 150,000 132,921 1,295,851 570,626 302,769 150,000 132,921 4,450,077 22,282 182,894 30,805 235,981 332,139 182,894 73,911 588,944 7,376,418 966,610 460,518 8,803,546 619,596 24,732,250 3,502,470 3,312,805 32,167,121 $ 10,335,378 $ 37,206,142 Navajo County Reconciliation of the Balance Sheet to the Statement of Net Position Governmental Funds June 30, 2016 Fund balances—total governmental funds $ 32,167,121 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. 78,223,967 Some receivables are not available to pay for current-period expenditures and, therefore, are reported as unavailable revenue in the funds. 588,944 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. (83,705,985) Deferred outflows and inflows of resources related to pensions are applicable to future reporting periods and, therefore, are not reported in the funds. 5,773,416 Net position of governmental activities $ 33,047,463 See accompanying notes to financial statements. 17 Navajo County Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2016 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 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, 2015 Changes in nonspendable resources: Decrease in reserve for inventories Decrease in prepaid items Fund balances, June 30, 2016 Other Total Public Works/ Flood Control Public Health Governmental Governmental HURF Fund District Fund District Fund Funds Funds $ 7,810,483 6,365,510 $ 1,839,674 $ 2,065,544 $ 826,948 485,708 426,678 744,156 17,990,140 8,407,378 41,835 177,847 $ 11,571,167 93,174 36,457 43,461 585,647 42,371,827 73,054 11,773,852 972 1,885,531 24,362,439 12,995,336 1,424 2,918,603 155,459 906 39,962 41,120 5,399,441 9,832,498 812,461 5,088,022 266,428 16,887 27,475,209 18,013,055 9,949,660 8,698,408 812,461 5,408,227 266,428 16,887 1,375,967 495,790 206,316 15,194,905 1,529,333 503,684 2,093,691 74,767,043 5,651,942 320,205 123,692 7,151 1,049,060 41,904,349 708,736 10,541,234 129,579 1,444,196 467,478 1,232,618 441,335 16,681 7,654,953 640,374 14,304,575 3,112,770 3,703,102 117,162 1,314,617 3,046,466 2,995 1,429,982 (1,883,774) (450,797) 748,771 9,846,774 1,713,275 42,725 29,674 743 67,612 (533,438) (465,826) 766,792 7,937,713 5,682,359 (282,918) (890,330) (1,000,000) (1,000,000) 211,175 (25,440) 185,735 2,509,423 (775,540) 1,733,883 2,995 4,218,192 (4,218,192) 2,995 (558,665) 7,717,745 (97,183) 287,106 843,553 7,970,493 971,178 31,568,010 (361,567) $ 7,671,634 $ 8,342,938 $ 7,159,080 See accompanying notes to financial statements. 18 $ 12,542,649 6,365,510 485,708 604,525 1,492,927 42,328,108 10,369,286 165,384 39,962 1,341,167 75,735,226 $ 189,923 (10,500) $ 8,803,546 968,183 (361,567) (10,500) $ 32,167,121 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, 2016 Net change in fund balances—total governmental funds $ 971,178 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 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 Capital contributions Special assessments Intergovernmental revenues Collection of revenues in the governmental funds exceeded revenues reported in the Statement of Activities Property taxes Intergovernmental revenues 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 $ 2,093,691 (4,851,846) (2,758,155) 6,980 20,420 1,193,337 1,220,737 (10,867) (218,208) (229,075) 4,240,898 (7,711,531) (3,470,633) 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 1,529,333 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 Decrease in compensated absences Decrease in claims and judgments Decrease in landfill closure and post-closure care costs (406,941) 467,615 52,263 1,150 114,087 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 (361,567) (10,500) (372,067) Change in net position of governmental activities $ (2,994,595) See accompanying notes to financial statements. 19 Navajo County Statement of Fiduciary Net Position Fiduciary Funds June 30, 2016 Investment Trust Funds Assets Cash and investments Total assets Agency Funds $ 166,563,114 $ 2,939,392 $ 166,563,114 $ 2,939,392 $ 737,492 2,201,900 2,939,392 Liabilities Due to other governments Deposits held for others Total liabilities $ Net Position Held in trust for investment trust participants $ 166,563,114 See accompanying notes to financial statements. 20 Navajo County Statement of Changes in Fiduciary Net Position Fiduciary Funds Year Ended June 30, 2016 Investment Trust Funds Additions: Contributions from participants Net investment income Total additions $ Deductions: Distributions to participants 223,921,107 1,224,409 225,145,516 208,065,138 Change in net position 17,080,378 Net position, July 1, 2015 149,482,736 Net position, June 30, 2016 $ See accompanying notes to financial statements. 21 166,563,114 Navajo County Notes to Financial Statements June 30, 2016 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, 2016, the County implemented the provisions of GASB Statement No. 72, Fair Value Measurement and Application; GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain provisions of GASB Statements 67 and 68; and GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. GASB Statement No. 72 establish standards for measuring fair value and applying fair value to certain investments and disclosures related to all fair value measurements. GASB Statement No. 73 amended GASB Statement No. 68 requirements related to note disclosures for pension related required supplementary information and payables to defined benefit pension plans. GASB Statement No. 76 establishes the hierarchy of sources of accounting principles used to prepare financial statements of state and local governmental entities in conformity with generally accepted accounting principles. A. Reporting Entity The County is a general purpose local government that a separately elected board of supervisors governs. The accompanying financial statements present the activities of the County (the primary government) and its component units. Component units are legally separate entities for which the County is considered to be financially accountable. Blended component units, although legally separate entities, are so intertwined with the County that they are in substance part of the County’s operations. Therefore, data from these units is combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the government-wide financial statements to emphasize they are legally separate from the County. Each blended component unit discussed below has a June 30 year-end. The County has no discretely presented component units. 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 and County management has operational responsibility for the component unit 22 Reporting Method Blended For Separate Financial Statements Not available Navajo County Notes to Financial Statements June 30, 2016 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 and County management has operational responsibility for the component unit Blended Not available Navajo County Health District A tax-levying district that provides and maintains health services for the County’s residents; the County’s Board of Supervisors serves as the board of directors and County management has operational responsibility for the component unit Blended Not available White Mountain Lake Recreation District A tax-levying district that provides and improves recreational services for the White Mountain Lake Community; the County’s Board of Supervisors serves as the board of directors and County management has operational responsibility for the component unit 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 and there is either a financial benefit or burden relationship between the County and the component unit 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. 23 Navajo County Notes to Financial Statements June 30, 2016 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.  charges to customers or applicants for goods, services, or privileges provided;  operating grants and contributions; and  capital grants and contributions. Revenues that are not classified as program revenues, including internally dedicated resources and all taxes the County levies or imposes, are reported as general revenues. Generally, the effect of interfund activity has been eliminated from the government-wide financial statements to minimize the double-counting of internal activities. However, charges for interfund services provided and used are not eliminated if the prices approximate their external exchange values. Fund financial statements—Provide information about the County’s funds, including fiduciary funds and blended component units. Separate statements are presented for the governmental and fiduciary fund categories. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. All remaining governmental funds are aggregated and reported as nonmajor funds. Fiduciary funds are aggregated and reported by fund type. The County reports the following major governmental funds: The General Fund is the County’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Public Works/HURF Fund is used to account for road construction and maintenance of major and nonmajor regional roads, and is funded by highway user revenues and vehicle license taxes. The Flood Control District Fund is used to provide flood control facilities and regulates floodplains and drainage to prevent flooding of property in Navajo County and is funded by secondary property taxes. The Public Health District Fund is used to account 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. 24 Navajo County Notes to Financial Statements June 30, 2016 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 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 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 Money market investments with a remaining maturity of 1 year or less at the time of purchase are stated at amortized cost. All other investments are stated at fair value. 25 Navajo County Notes to Financial Statements June 30, 2016 E. Inventories Inventories in the government-wide financial statements are recorded as assets when purchased and expensed when consumed. These inventories are stated at cost using the first-in, first-out method. The County accounts for its inventories in the governmental funds using the purchase method. Inventories of the governmental funds consist of expendable supplies held for consumption and are recorded as expenditures at the time of purchase. Amounts on hand at year-end are shown on the balance sheet as an asset for informational purposes only and as nonspendable fund balance to indicate that they do not constitute “available spendable resources.” These inventories are stated at cost using the first-in, first-out method. F. Property Tax Calendar The County levies real and personal property taxes on or before the third Monday in August that become due and payable in two equal installments. The first installment is due on the first day of October and becomes delinquent after the first business day of November. The second installment is due on the first day of March of the next year and becomes delinquent after the first business day of May. A lien assessed against real and personal property attaches on the first day of January preceding assessment and levy. G. Capital Assets Capital assets are reported at actual cost or estimated historical cost if historical records are not available. Donated assets are valued at their fair market value at date of acquisition. Capitalization thresholds (the dollar values above which asset acquisitions are added to the capital asset accounts), depreciation methods, and estimated useful lives of capital assets are as follows: Land Buildings and improvements Machinery and equipment Infrastructure Capitalization Depreciation Threshold Method $10,000 N/A 10,000 Straight-line 5,000 Straight-line 10,000 Straight-line 26 Estimated Useful Life N/A 15-40 years 3-7 years 35 years Navajo County Notes to Financial Statements June 30, 2016 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. 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. The County did not commit any fund balances at June 30, 2016. 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. 27 Navajo County Notes to Financial Statements June 30, 2016 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 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 240 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 - 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 28 Navajo County Notes to Financial Statements June 30, 2016 other evidences of indebtedness; interest-earning investments such as savings accounts, certificates of deposit, and repurchase agreements in eligible depositories; specified commercial paper issued by corporations organized and doing business in the United States; specified bonds, debentures, notes, and other evidences of indebtedness that are denominated in United States dollars; and certain open-end and closed-end mutual funds, including exchange traded funds. In addition, the County Treasurer may invest trust funds in certain fixed income securities of corporations doing business in the United States or District of Columbia. Credit risk Statutes have the following requirements for credit risk: 1. Commercial paper must be of prime quality and be rated within the top two ratings by a nationally recognized rating agency. 2. Bonds, debentures, notes, and other evidences of indebtedness that are denominated in United States dollars must be rated “A” or better at the time of purchase by at least two nationally recognized rating agencies. 3. Fixed income securities must carry one of the two highest ratings by Moody’s investors service and Standard and Poor’s rating service. If only one of the 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, 2016, the carrying amount of the County’s deposits was $88,803,998, and the bank balance was $90,589,478. The County’s formal policy is to follow collateralization requirements set forth in A.R.S. §35-323 as described above. Investments—The County’s investments at June 30, 2016, categorized within the fair value hierarchy established by generally accepted accounting principles, were as follows: 29 Navajo County Notes to Financial Statements June 30, 2016 Fair value measurement using Quoted prices in active Significant markets for other identical observable assets inputs (Level 1) (Level 2) Amount Investments by fair value level U.S. Treasury securities U.S. Treasury money market funds U.S. agency securities $ 41,616,251 10,000 69,340,359 $110,966,610 $41,616,251 10,000 $41,626,251 $69,340,359 $69,340,359 Investments categorized as Level 1 are valued using prices quoted in active markets for those investments. Investments categorized as Level 2 are valued using an automated method – IDC institutional bond pricing model. 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, 2016, credit risk for the County’s investments was as follows: Investment Type Rating Rating Agency U.S. agency securities U.S. Treasury money market funds Total AAA Unrated Moody’s N/A Amount $69,340,359 10,000 $69,350,359 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, 2016, the County had $10,000 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, 2016, of 5 percent or more in U.S. Treasury, Federal National Mortgage Association, Federal Farm Credit Banks, Federal Home Loan Mortgage Corporation, and Federal Home Loan Bank securities. These investments were 37.55 percent, 24.46 percent, 18.10 percent, 13.55 percent, and 6.34 percent, respectively, of the County’s total investments. 30 Navajo County Notes to Financial Statements June 30, 2016 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, 2016, 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 Weighted Average Maturity (In Years) 1.038 0.513 0.003 Amount $ 69,340,359 41,616,251 10,000 $110,966,610 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 $ 10,269 88,803,998 110,966,610 $199,780,877 Total Governmental Activities Investment Trust Funds $30,278,371 $166,563,114 Statement of Net Position Cash and investments Agency Funds Total $2,939,392 $199,780,877 Note 3 - Due From Other Governments Amounts due from other governments at June 30, 2016, 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 Timberland Acres Domestic Water Improvement District loan $ 681,265 558,461 103,125 373,639 39,780 $1,756,270 31 Public Works/ HURF Fund Public Health Other District Governmental Fund Funds $ 681,265 558,461 228,666 764,003 $125,541 764,003 49,016 $642,657 15,000 $953,560 $642,657 Total $ 736,312 1,801,624 299,477 289,573 20,539 $1,056,328 289,573 $4,408,815 Navajo County Notes to Financial Statements June 30, 2016 Note 4 - Capital Assets Capital asset activity for the year ended June 30, 2016, was as follows: Governmental activities: Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets being depreciated: Buildings and improvements Infrastructure Machinery and equipment Total Less accumulated depreciation for: Buildings and improvements Infrastructure Machinery and equipment Total Total capital assets being depreciated, net Governmental activities capital assets, net Balance July 1, 2015 Increases $ $ 5,661,286 3,168,157 Decreases Balance June 30, 2016 40,000 80,518 $ 5,701,286 3,248,675 8,829,443 120,518 8,949,961 50,046,033 77,576,025 29,843,364 157,465,422 117,427 39,580 1,823,146 1,980,153 $144,379 144,379 50,163,460 77,615,605 31,522,131 159,301,196 19,230,384 40,216,440 25,872,899 85,319,723 1,377,206 2,153,284 1,321,356 4,851,846 144,379 144,379 20,607,590 42,369,724 27,049,876 90,027,190 72,145,699 (2,871,693) $ 80,975,142 $(2,751,175) 69,274,006 $ $ 78,223,967 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 $ 931,090 1,149,378 2,443,069 197,054 185 131,070 $4,851,846 Note 5 - Construction and Other Significant Commitments The County had major commitments at June 30, 2016, for the rehabilitation of Woodruff/Snowflake Bridge. As of June 30, 2016, the County had spent $97,776 on the rehabilitation of Woodruff/Snowflake Bridge and had an estimated $1.2 million remaining to complete. This project is primarily being financed through a contractual agreement with the Arizona Department of Transportation and the remaining share of cost for the Public Works/HURF Fund is $66,490. 32 Navajo County Notes to Financial Statements June 30, 2016 Note 6 - Long-Term Liabilities The following schedule details the County’s long-term liability and obligation activity for the year ended June 30, 2016: 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, 2015 Reductions Balance June 30, 2016 Due within 1 year $16,845,000 $1,005,000 $15,840,000 $1,180,000 573,542 326,188 60,404,458 $4,283,518 220,967 153,366 365,898 352,575 172,822 64,322,078 222,575 157,473 35,878 247,951 2,152,212 1,187,724 1,150 1,655,339 246,801 1,684,597 1,150 1,341,757 759,809 122,625 $81,431,785 406,941 50,000 $5,928,183 102,263 $3,503,983 1,166,750 70,362 $83,855,985 1,166,750 70,362 $4,175,945 Additions Pledged revenue and pledged revenue refunding obligations—The County has issued pledged revenue obligations that are generally callable with interest payable semiannually. The Series 2013 pledged revenue and pledged 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 pledged revenue refunding obligations outstanding at June 30, 2016, were as follows: Description Navajo County Pledged Revenue and Pledged 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 2017 – 2024 2.17% $ 7,635,000 4,100,000 2017 – 2027 3.24% 3,805,000 4,400,000 2017 – 2031 3.24% 4,400,000 Total 33 $15,840,000 Navajo County Notes to Financial Statements June 30, 2016 The following schedule details debt service requirements to maturity for the County’s pledged revenue obligations payable at June 30, 2016: Governmental Activities Principal Interest Year ending June 30 2017 2018 2019 2020 2021 2022-2026 2027-2031 Total $ 1,180,000 1,200,000 1,230,000 1,255,000 1,290,000 5,285,000 4,400,000 $15,840,000 $ 429,092 401,800 373,858 345,348 316,133 1,169,771 508,031 $3,544,033 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, 2016. At June 30, 2016, future pledged revenues through final maturity at July 1, 2031 totaled $19,384,033, consisting of $15,840,000 for principal and $3,544,033 for interest. Future principal and interest payments are expected to require approximately 7 percent of pledged sales tax revenues. Principal and interest paid for the current year and total current-year pledged revenues were $1,461,027 and $17,240,347, 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 $1,858,124 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, 2016, future pledged revenues through final maturity at July 1, 2019, totaled $383,502 consisting of $352,575 for principal and $30,927 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 $260,730 and $224,359, 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 Total Original Amount Issued $1,150,000 524,000 184,124 $1,858,124 34 Maturity Ranges 2017 2017-2019 2017 Interest Rates 5.40% 5.75% 6.17% Outstanding Principal $150,000 189,000 13,575 $352,575 Navajo County Notes to Financial Statements June 30, 2016 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 2017 2018 2019 Total $222,575 63,000 67,000 $352,575 $19,600 7,475 3,852 $30,927 Compensated absences—Compensated absences are paid from various funds in the same proportion that those funds pay payroll costs. During fiscal year 2016, the County paid for compensated absences as follows: 63 percent from the General Fund, 12 percent from the Public Works/HURF Fund, 8 percent from the Public Health District Fund, and 17 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 7. The liability for medical, dental and pharmacy claims is based on fiscal year 2016 actuarial report. Changes in incurred but not reported (IBNR) healthcare claims payable for the years ended June 30, 2015 and 2016, were as follows: 2015 IBNR healthcare claims payable beginning of year Current-year claims and changes in estimates Claim payments IBNR healthcare claims payable, end of year $4,758,282 3,998,473 $ 759,809 2016 $ 759,809 5,605,979 5,199,038 $1,166,750 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, 2016, the claims and judgments payable the total amount of $70,362 represents the deductible reserves on reported claims. Note 7 - Risk Management Public entity risk pools—The County is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. For these risks of loss, the County joined and is covered by 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, 2016 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 12 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. Self-insured employee benefits program—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 one comprehensive medical plan. 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 expenditures are recorded in the 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, are eliminated at the government-wide level of the financial statements. The liability for incurred but not reported healthcare claims payable at June 30, 2016, is actuarial valued and disclosed in Note 6. 36 Navajo County Notes to Financial Statements June 30, 2016 Note 8 - Fund Balance Classifications of the Governmental Funds The fund balance classifications of the governmental funds as of June 30, 2016, were as follows: General Fund Fund balances: Nonspendable: Inventories Total nonspendable Restricted for: Health insurance trust Highways and streets Flood control projects Health Judicial activities Law enforcement Education Environmental and conservation Economic stabilization and development Social services Library Public safety transportation Recreation Road projects Debt service Capital projects Other purposes Total restricted Assigned to: Health insurance reserve Economic stabilization and development Judicial activities Law enforcement Education Debt service Other capital projects Other purposes Total assigned Unassigned Total fund balances Public Works/ HURF Fund Flood Control District Fund Public Health District Fund Other Governmental Funds $ 619,596 619,596 $ $1,612,513 2,946,428 1,238,408 979,501 695,292 695,292 103,869 103,869 99,266 50,465 99,266 50,465 65,786 65,786 126,221 100,701 183,152 218,513 25,316 7,376,418 126,221 100,701 183,152 218,513 25,316 24,732,250 $7,159,080 $860,897 7,723,342 7,159,080 860,897 619,596 619,596 1,612,513 8,266,842 7,159,080 860,897 2,946,428 1,238,408 979,501 $ 543,500 7,723,342 1,612,513 Total 1,036,496 1,036,496 400,000 9,000 395,151 400,000 9,000 395,151 148,937 817,673 250,000 445,213 3,502,470 148,937 817,673 250,000 445,213 2,535,860 966,610 3,523,261 $7,671,634 (670,974) $8,342,938 37 $7,159,080 $ 189,923 460,518 3,312,805 $8,803,546 $32,167,121 Navajo County Notes to Financial Statements June 30, 2016 Note 9 - Pensions and Other Postemployment Benefits The County contributes to the plans described below. The plans are component units of the State of Arizona. At June 30, 2016, 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 $64,322,078 10,664,977 4,891,561 7,711,531 The County’s accrued payroll and employee benefits includes $153,910 of outstanding pension contribution amounts payable to all pension plans for the year ended June 30, 2016. Also, the County reported $4,240,898 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 website 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 Sum of years and age equals 80 30 years, age 55 10 years, age 62 25 years, age 60 5 years, age 50* 10 years, age 62 any years, age 65 5 years, age 50* 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, 2016 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 retirement benefit option chosen determines the survivor benefit. 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, 2016, statute required active ASRS members to contribute at the actuarially determined rate of 11.47 percent (11.35 percent for retirement and 0.12 percent for long-term disability) of the members’ annual covered payroll, and statute required the County to contribute at the actuarially determined rate of 11.47 percent (10.85 percent for retirement, 0.50 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 9.36 percent (9.17 percent for retirement, 0.13 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 an employee who contributes to the ASRS would typically fill. The County’s contributions to the pension plan for the year ended June 30, 2016, were $2,128,972. The County’s OPEB contributions for the current and 2 preceding years, all of which were equal to the required contributions, were as follows: ASRS Year ended June 30 2016 2015 2014 Health Benefit Supplement Fund Long-Term Disability Fund $ 96,268 113,693 100,058 $23,334 23,124 40,023 During fiscal year 2016, the County paid for ASRS pension and OPEB contributions as follows: 50 percent from the General Fund, 15 percent from the Public Works/HURF Fund, 11 percent from the Public Health District Fund, and 24 percent from other governmental funds. Pension liability—At June 30, 2016, the County reported a liability of $32,861,924 for its proportionate share of the ASRS’ net pension liability. The net pension liability was measured as of June 30, 2015. 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, 2014, to the measurement date of June 30, 2015. The County’s proportion of the net pension liability was based on the 39 Navajo County Notes to Financial Statements June 30, 2016 County’s actual contributions to the plan relative to the total of all participating employers’ contributions for the year ended June 30, 2015. The County’s proportion measured as of June 30, 2015, was 0.21098 percent, which was an increase of 0.001756 from its proportion measured as of June 30, 2014. Pension expense and deferred outflows/inflows of resources—For the year ended June 30, 2016, the County recognized pension expense for ASRS of $1,681,323. At June 30, 2016, 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 $ 896,731 Deferred Inflows of Resources $1,721,998 1,053,152 749,364 762,367 2,128,972 $3,775,067 $3,537,517 The $2,128,972 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, 2017. 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 2017 2018 2019 2020 $ (769,543) (1,139,063) (743,059) 760,243 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, 2014 June 30, 2015 Entry age normal 8% 3–6.75% 3% Included 1994 GAM Scale BB 40 Navajo County Notes to Financial Statements June 30, 2016 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, 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 Multi-asset Commodities Total Target Allocation 58% 25% 10% 5% 2% 100% Long-Term Expected Arithmetic Real Rate of Return 6.79% 3.70% 4.25% 3.41% 3.93% 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%) $43,060,350 $32,861,924 $25,872,659 41 Navajo County Notes to Financial Statements June 30, 2016 Pension plan fiduciary net position—Detailed information about the pension plan’s fiduciary net position is available in the separately issued ASRS financial report. 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 (agent plans), and a costsharing multiple-employer defined benefit pension plan and a cost-sharing multipleemployer 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 issues a publicly available financial report that includes financial statements and required supplementary information for PSPRS and CORP plans. The report is available on the PSPRS website 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, 2016 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, 2016 CORP Initial membership date: Before January 1, 2012 On or after January 1, 2012 Total and Permanent Disability Retirement 50% or normal retirement if more than 25 years of credited service Ordinary Disability Retirement 2.5% per year of credited service 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. In addition, from and after December 31, 2015, the Legislature may enact permanent one-time benefit increases after a Joint Legislative Budget Committee analysis of the increase’s effects on the plan. 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, 2016, 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 29 1 10 1 28 45 83 23 46 98 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, 2016, are indicated below. Rates are a percentage of active members’ annual covered payroll. 44 Navajo County Notes to Financial Statements June 30, 2016 Active members—Pension County Pension Health insurance premium benefit PSPRS Sheriff 11.65% CORP 8.41% CORP AOC 8.41% 47.62% 0% 8.84% 0% 19.10% 0.85% The County was required to contribute $35,878 for the PSPRS Attorney Investigators Pension Plan based on the estimated actuarially required contribution for an inactive member. In addition, statute required the County to contribute at the actuarially determined rate of 28.62 percent for the PSPRS of annual covered payroll of a retired member who worked for the County in a position that an employee who contributes to the PSPRS would typically fill. 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, 2016, were: PSPRS Sheriff Pension Contributions made Health Insurance Premium Benefit Annual OPEB cost Contributions made PSPRS Attorney Investigators $1,214,475 $0 $0 $35,878 $0 $0 CORP Detention $138,748 $0 $0 Contributions to the CORP AOC pension plan for the year ended June 30, 2016, were $367,198. 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 2016 2015 2014 $16,341 23,306 20,950 During fiscal year 2016, the County paid for PSPRS and CORP pension and OPEB contributions as follows: 83 percent from the General Fund and 17 percent from the other governmental funds. Pension liability—At June 30, 2016, the County reported the following net pension liabilities: 45 Navajo County Notes to Financial Statements June 30, 2016 PSPRS Sheriff PSPRS Attorney Investigators CORP CORP AOC (County’s proportionate share) Net Pension Liability $11,914,141 569,212 642,272 4,108,278 The net pension liabilities were measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. In May 2016 voters approved Proposition 124 that authorized certain statutory adjustments to PSPRS’ automatic cost-of-living adjustments. The statutory adjustments change the basis for future cost-of-living adjustments from excess investment earnings to the change in the consumer price index, limited to a maximum annual increase of 2 percent. The change in the County’s net pension liability as a result of the statutory adjustments is not known. 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 Investment rate of return Projected salary increases Inflation Permanent benefit increase Mortality rates June 30, 2015 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, 2015, 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, 2016 PSPRS and CORP Target Allocation 2% 5% 4% 7% 8% 10% 11% 10% 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 Geometric Real Rate of Return 0.75% 4.11% 5.13% 2.92% 4.77% 4.38% 9.50% 4.48% 7.08% 8.25% 6.23% Pension discount rates—The discount rate used to measure the PSPRS and CORP total pension liabilities was 7.85 percent, which was an increase of 3.56 percent for the PSPRS Attorney Investigators plan from the discount rate used as of June 30, 2014. The discount rate for the PSPRS Sheriff, CORP, and CORP AOC plans did not change from the prior year. The projection of cash flows used to determine the 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 pension plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the longterm expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 47 Navajo County Notes to Financial Statements June 30, 2016 Changes in the Net Pension Liability PSPRS Sheriff Balances at June 30, 2015 Changes for the year: Service cost Interest on the total pension liability 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, 2016 Increase (Decrease) Total Plan Pension Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) – (b) $17,034,621 $5,324,923 $11,709,698 397,350 1,309,258 (377,151) 48 (377,151) 790,385 261,993 191,904 (1,109,711) 219,746 $17,254,367 PSPRS Attorney Investigators Balances at June 30, 2015 Changes for the year: Interest on the total pension liability 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, 2016 397,350 1,309,258 Total Pension Liability (a) $ 971,244 (1,109,711) (5,044) (114,224) 15,303 $5,340,226 (790,385) (261,993) (191,904) 5,044 114,224 204,443 $11,914,141 Increase (Decrease) Plan Fiduciary Net Pension Net Position Liability (b) (a) – (b) $ 36,134 $ 935,110 40,906 40,906 6,616 (392,840) 20,181 6,616 (392,840) (20,181) 744 (744) (35,451) (380,769) $ 590,475 (35,451) (308) (37) (14,871) $ 21,263 308 37 (365,898) $ 569,212 Navajo County Notes to Financial Statements June 30, 2016 CORP Balances at June 30, 2015 Changes for the year: Service cost Interest on the total pension liability 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, 2016 Total Pension Liability (a) $3,953,613 Increase (Decrease) Plan Fiduciary Net Pension Net Position Liability (b) (a) – (b) $3,361,955 $591,658 229,853 301,883 229,853 301,883 (93,870) (93,870) 123,062 137,233 120,952 (445,789) (7,923) $3,945,690 (445,789) (3,354) 9,359 (58,537) $3,303,418 (123,062) (137,233) (120,952) 3,354 (9,359) 50,614 $642,272 The County’s proportion of the CORP AOC net pension liability 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, 2015. The County’s proportion measured as of June 30, 2015, was 1.689882 percent, which was a decrease of 0.049414 from its proportion measured as of June 30, 2014. 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% $13,908,285 7.85% $11,914,141 8.85% $10,252,088 6.85% $649,770 7.85% $569,212 8.85% $503,740 6.85% $1,132,846 7.85% $642,272 8.85% $236,334 7.85% 8.85% $4,108,278 $3,056,875 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% $5,371,595 49 1% Increase Navajo County Notes to Financial Statements June 30, 2016 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, 2016, the County recognized the following pension expense: PSPRS Sheriff PSPRS Attorney Investigators CORP CORP AOC (County’s proportionate share) Pension Expense $1,406,634 (317,886) 72,652 529,831 Pension deferred outflows/inflows of resources—At June 30, 2016, 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 $716,295 $1,525,733 6,438 1,214,475 $2,746,646 $716,295 Deferred Outflows of Resources Deferred Inflows of Resources $509 $35,878 $35,878 $509 Navajo County Notes to Financial Statements June 30, 2016 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 Changes in proportion and differences between county contributions and proportionate share of contributions County contributions subsequent to the measurement date Total Deferred Inflows of Resources $332,944 $149,500 4,824 138,748 $293,072 $332,944 Deferred Outflows of Resources Deferred Inflows of Resources $140,691 435,454 $ 23,188 22,588 77,691 367,198 $965,931 $100,879 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, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: PSPRS Sheriff Year ending June 30 2017 2018 2019 2020 2021 PSPRS Attorney Investigators CORP Detention CORP AOC $(268) (268) (269) 296 - $(58,975) (58,975) (58,977) (1,228) (465) $130,399 130,399 130,399 115,215 (8,558) $259,491 259,491 259,492 47,103 (9,701) Agent plan OPEB actuarial assumptions—The health insurance premium benefit contribution requirements for the year ended June 30, 2016, were established by the 51 Navajo County Notes to Financial Statements June 30, 2016 June 30, 2014, actuarial valuations, and those actuarial valuations were based on the following actuarial methods and assumptions. 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 2016 contribution requirements: PSPRS and CORP—OPEB Contribution Requirements Actuarial valuation date June 30, 2014 Actuarial cost method Entry age normal Amortization method Level percent closed for unfunded actuarial accrued liability, open for excess Remaining amortization period 22 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 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 2016 2015 2014 Annual OPEB Cost Percentage of Annual Cost Contributed Net OPEB Obligation $ 0 31,455 24,895 0% 100 100 $0 0 0 52 Navajo County Notes to Financial Statements June 30, 2016 Year Ended June 30 PSPRS Attorney Investigators 2016 2015 2014 Annual OPEB Cost CORP 2016 2015 2014 $ Percentage of Annual Cost Contributed Net OPEB Obligation 0 0 0 0% 0 0 $0 0 0 $ 0 14,526 14,501 0% 100 100 $0 0 0 Agent plan OPEB funded status—The health insurance premium benefit plans’ funded status as of the most recent valuation date, June 30, 2016, along with the actuarial assumptions and methods used in those valuations follow. PSPRS Sheriff $ 628,925 338,940 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) (289,985) 185.56% 2,452,015 (11.8)% PSPRS Attorney Investigators $ 6,059 34,136 CORP Detention $ 348,466 125,473 28,077 17.80% 0 (222,993) 277.72% 1,576,314 0% (14.1)% 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, 2016 Actuarial cost method Entry age normal Amortization method Level percent closed for unfunded actuarial accrued liability, open for excess Remaining amortization period 20 years for unfunded actuarial accrued liability, 20 years for excess 7-year smoothed market value; 80%/120% market Asset valuation method corridor Actuarial assumptions: Investment rate of return 7.50% 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, 2016 C. Elected Officials Retirement Plan Plan description—Elected officials and judges participate in the Elected Officials Retirement Plan (EORP), ASRS, or the Elected Officials Defined Contribution Retirement System (EODCRS). 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 PSPRS issues a publicly available financial report that includes its financial statements and required supplementary information for the EORP plans. The report is available on PSPRS’s website 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%. 54 Navajo County Notes to Financial Statements June 30, 2016 Retirement and survivor benefits are subject to automatic cost-of-living adjustments based on excess investment earning. In addition, from and after December 31, 2015, the Legislature may enact permanent one-time benefit increases after a Joint Legislative Budget Committee analysis of the increase’s effects on the plan. 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, 2016, statute required active EORP members to contribute 13 percent of the members’ annual covered payroll and the County to contribute 23.5 percent of active EORP members’ annual covered payroll. Also, statute required the County to contribute 12.15 percent to EORP of the annual covered payroll of elected officials and judges who were ASRS members and 17.50 percent to EORP of the annual covered payroll of elected officials and judges who were EODCRS members, in addition to the County’s required contributions to ASRS and EODCRS for these elected officials and judges. The County’s contributions to the pension plan for the year ended June 30, 2016, were $355,627. No OPEB contributions were required or made for the years ended June 30, 2015 and 2016. 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 2016 2015 2014 $ 0 0 26,588 During fiscal year 2016, the County paid for EORP pension contributions as follows: 100 percent from the General Fund. Pension liability—At June 30, 2016, 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 55 $14,226,251 4,435,153 $18,661,404 Navajo County Notes to Financial Statements June 30, 2016 The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The County’s proportion of the net pension liability 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, 2015. The County’s proportion measured as of June 30, 2015, was 1.8204910 percent, which was a decrease of 0.0148386 from its proportion measured as of June 30, 2014. Pension expense and deferred outflows/inflows of resources—For the year ended June 30, 2016, the County recognized pension expense for EORP of $4,338,977 and revenue of $1,193,337 for the County’s proportionate share of the State’s appropriation to EORP and the designated court fees. At June 30, 2016, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: EORP Differences between expected and actual experience Changes of assumptions or other inputs 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 Deferred Inflows of Resources $ 22,749 2,383,725 $158,389 86,282 45,028 355,627 $2,848,383 $203,417 The $355,627 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, 2017. 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 2017 2018 2019 2020 $1,932,722 284,543 7,105 64,969 Actuarial assumptions—The significant actuarial assumptions used to measure the total pension liability are as follows: 56 Navajo County Notes to Financial Statements June 30, 2016 EORP Actuarial valuation date Actuarial cost method Investment rate of return Projected salary increases Inflation Permanent benefit increase Mortality rates June 30, 2015 Entry age normal 7.85% 4.25% 4.0% Included RP-2000 mortality table projected to 2025 with projection scale AA Actuarial assumptions used in the June 30, 2015, 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% 5% 4% 7% 8% 10% 11% 10% 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 Geometric Real Rate of Return 0.75% 4.11% 5.13% 2.92% 4.77% 4.38% 9.50% 4.48% 7.08% 8.25% 6.23% Discount rate—At June 30 2015, the discount rate used to measure the EORP total pension liability was 4.86 percent, which was a decrease of 0.81 from the discount rate used as of June 30, 2014. 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 57 Navajo County Notes to Financial Statements June 30, 2016 investments of 7.85 percent was applied to periods of projected benefit payments through the year ended June 30, 2028. A municipal bond rate of 3.80 percent obtained from the 20-year Bond Buyer Index, as published by the Federal Reserve as of June 30, 2015, was applied to periods of projected benefit payments after June 30, 2028. 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 4.86 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 (3.86 percent) or 1 percentage point higher (5.86 percent) than the current rate: EORP County’s proportionate share of the net pension liability 1% Decrease (3.86%) Current Discount Rate (4.86%) 1% Increase (5.86%) $16,561,150 $14,226,251 $12,262,722 Pension Plan Fiduciary Net Position—Detailed information about the pension plan’s fiduciary net position is available in the separately issued EORP financial report. EODCRS plan—Elected officials and judges that are not members of EORP or ASRS participate in the EODCRS and the Elected Officials Defined Contribution Retirement System Disability Program (EODCDP). The EODCRS is a defined contribution pension plan. The EODCDP is a cost-sharing multiple-employer defined benefit disability (OPEB) plan for EODCRS members. The PSPRS Board of Trustees governs the EODCRS and EODCDP according to the provisions of A.R.S. Title 38, Chapter 5, Articles 3.1 and 3.2. Benefit terms, including contribution requirements, are established by state statute. For the year ended June 30, 2016, active EODCRS members were required by statute to contribute 8 percent of the members’ annual covered payroll, and the County was required by statute to contribute 6 percent of active members’ annual covered payroll to an individual employee account. Employees are immediately vested in their own contributions and the County’s contributions to the individual employee account and the earnings on those contributions. In addition, statute required active EODCRS members and the County to each contribute at the actuarially determined rate of 0.125 percent of the members’ annual covered payroll to the EODCDP plan. For the year ended June 30, 2016, the County recognized pension expense of $17,721. The County’s OPEB contributions for the current and 2 preceding years, all of which were equal to the required contributions, were as follows: EODCDP Disability Fund Year ended June 30 2016 2015 2014 58 $367 88 0 Navajo County Notes to Financial Statements June 30, 2016 Note 10 - Interfund Balances and Activity Interfund receivables and payables—Interfund balances at June 30, 2016, were as follows: Payable from General Fund Public Health District Fund Other Governmental Funds Total General Fund Payable To Other Governmental Funds $ $211,270 230,177 $441,447 3,821 125,358 $129,179 Total $ 3,821 211,270 355,535 $570,626 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, 2016, were as follows: Transfer from General Fund Public Works/HURF Fund Flood Control District Fund Public Health District Fund Other Governmental Funds Total General Fund 23,040 1,000,000 25,440 381,502 $1,429,982 Public Works/HURF Funds $28,733 Transfers to Public Health District Fund $211,175 38,879 $67,612 $211,175 $ Other Governmental Funds $1,643,866 510,398 355,159 $2,509,423 Total $1,883,774 553,438 1,000,000 25,440 775,540 $4,218,192 Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments are due, and (3) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. Note 11 - County Treasurer’s Investment Pool Arizona Revised Statutes require community colleges, school districts, and other local governments to deposit certain public monies with the County Treasurer. The Treasurer has a fiduciary responsibility to administer those and the County’s monies under his stewardship. The Treasurer invests, on a pool basis, all idle monies not specifically 59 Navajo County Notes to Financial Statements June 30, 2016 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 $905,381 in deposits. Therefore, the deposit and investment risks of the Treasurer’s investment pool are substantially the same as the County’s deposit and investment risks. See Note 2 for disclosure of the County’s deposit and investment risks. Details of each major investment classification follow: Investment Type U.S. agency securities U.S. Treasury securities U.S. Treasury money market funds Principal $69,000,000 41,500,000 10,000 Interest Rates .5 % - 1.50% .50% - .88% Maturities 01/17 – 08/19 08/16 – 10/18 .02% N/A Amount $69,340,359 41,616,251 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 $198,865,227 2,071,035 $196,794,192 Net position held in trust for: Internal participants External participants Total net position held in trust Statement of Changes in Net Position Total additions Total deductions Net increase Net position held in trust: July 1, 2015 June 30, 2016 60 $ 30,231,078 166,563,114 $196,794,192 $292,868,443 275,440,654 17,427,789 179,366,403 $196,794,192 OTHER REQUIRED SUPPLEMENTARY INFORMATION Navajo County, Arizona Fiscal Year Ended June 30, 2016 Navajo County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2016 Original and Final Budgeted Amounts Revenues: Property taxes County sales taxes Licenses and permits Fines and forfeits Intergovernmental Charges for services Investment earnings Miscellaneous $ Total revenues Expenditures: General government Board of Supervisors/Administration Facilities Management 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 7,759,427 6,800,000 425,543 782,000 20,243,643 7,781,486 65,375 400,930 $ Actual Amounts Variance with Final Budget 7,810,483 6,365,510 426,678 744,156 17,990,140 8,407,378 41,835 585,647 $ 51,056 (434,490) 1,135 (37,844) (2,253,503) 625,892 (23,540) 184,717 44,258,404 42,371,827 (1,886,577) 4,125,765 2,081,489 687,308 446,267 289,937 349,586 1,460,988 1,051,527 482,071 12,200 50,000 8,349,458 317,195 2,393,319 2,859,155 996,552 1,469,358 348,193 347,912 400,943 276,436 357,837 1,101,410 1,859,795 426,555 379,835 209,783 151,521 1,230,986 995,436 479,251 4,092 7,647 8,328,249 308,197 2,186,406 2,941,650 549,721 1,203,868 351,849 341,666 388,119 280,632 357,027 3,024,355 221,694 260,753 66,432 80,154 198,065 230,002 56,091 2,820 8,108 42,353 21,209 8,998 206,913 (82,495) 446,831 265,490 (3,656) 6,246 12,824 (4,196) 810 (Continued) See accompanying note to budgetary comparison schedules. 62 Navajo County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2016 (Continued) Original and Final Budgeted Amounts Kayenta Justice Court Kayenta Constable Pinetop Constable Snowflake Constable Holbrook Constable Winslow Constable Show Low Constable Non-capitalized capital outlay Total general government $ Public safety Juvenile Detention Juvenile Probation Adult Probation Jail Operations Sheriff Non-capitalized capital outlay Total public safety 122,658 22,802 73,454 59,692 42,226 40,741 67,537 12,463 29,595,069 $ Actual Amounts Variance with Final Budget 106,067 20,814 70,390 57,019 40,790 36,628 65,416 12,463 24,493,282 $ 16,591 1,988 3,064 2,673 1,436 4,113 2,121 5,101,787 1,372,205 521,241 607,243 5,460,595 6,509,598 8,377 14,479,259 1,063,731 413,690 561,213 5,003,790 5,944,535 8,377 12,995,336 308,474 107,551 46,030 456,805 565,063 1,483,923 491,584 2,835,100 476,614 2,569,852 14,970 265,248 3,326,684 3,046,466 280,218 349,041 320,205 28,836 Capital outlay 2,083,660 1,049,060 1,034,600 Contingency 4,500,000 - 4,500,000 54,333,713 41,904,349 12,429,364 Health and welfare Public Fiduciary Indigent Health Total health and welfare Education School Superintendent Total expenditures (Continued) See accompanying note to budgetary comparison schedules. 63 Navajo County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2016 (Continued) Original and Final Budgeted Amounts Excess (deficiency) of revenues over expenditures $ (10,075,309) Other financing sources (uses): Sale of capital assets Transfers in Transfers out Total other financing sources and uses $ 48,480 (10,026,829) Fund balances, July 1, 2015 - 2,995 1,381,502 (1,883,774) (499,277) 10,043,510 7,654,953 $ 7,671,634 See accompanying note to budgetary comparison schedules. 64 $ 10,542,787 16,681 10,026,829 $ 467,478 Variance with Final Budget 2,995 1,429,982 (1,883,774) (450,797) 48,480 Net change in fund balances Fund balances, June 30, 2016 Actual Amounts (2,371,876) $ 7,671,634 Navajo County Required Supplementary Information Budgetary Comparison Schedule Public Works/HURF Fund Year Ended June 30, 2016 Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues Original and Final Budgeted Amounts Actual Amounts $ 10,368,499 25,000 40,558 14,014 10,448,071 $ 11,571,167 93,174 36,457 73,054 11,773,852 15,488,008 15,488,008 10,541,234 10,541,234 4,946,774 4,946,774 (5,039,937) 1,232,618 6,272,555 Expenditures: Highways and streets Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses Fund balances, July 1, 2015 Decrease in reserve for inventories Fund balances, June 30, 2016 $ 1,202,668 68,174 (4,101) 59,040 1,325,781 67,612 67,612 (5,573,375) 766,792 6,340,167 5,573,375 7,937,713 (361,567) 8,342,938 2,364,338 (361,567) 8,342,938 - $ See accompanying note to budgetary comparison schedules. 65 $ 67,612 (533,438) (465,826) (533,438) (533,438) Net change in fund balances Variance with Final Budget $ Navajo County Required Supplementary Information Budgetary Comparison Schedule Flood Control District Fund Year Ended June 30, 2016 Original and Final Budgeted Amounts Revenues: Property taxes Intergovernmental Investment earnings Miscellaneous Total revenues $ 1,805,470 Actual Amounts $ 1,853,340 1,839,674 1,424 43,461 972 1,885,531 8,248,203 8,248,203 1,444,196 1,444,196 6,804,007 6,804,007 441,335 6,836,198 47,870 Expenditures: Public safety Total expenditures Excess (deficiency) of revenues over expenditures (6,394,863) Other financing uses: Transfers out Total other financing uses $ (1,000,000) (1,000,000) Net change in fund balances Fund balances, July 1, 2015 Fund balances, June 30, 2016 Variance with Final Budget (6,394,863) $ 6,394,863 - 7,717,745 7,159,080 See accompanying note to budgetary comparison schedules. 66 (1,000,000) (1,000,000) (558,665) $ 34,204 1,424 (4,409) 972 32,191 5,836,198 $ 1,322,882 7,159,080 Navajo County Required Supplementary Information Budgetary Comparison Schedule Public Health District Fund Year Ended June 30, 2016 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 2,081,926 65,000 5,377,588 156,750 50,464 35,900 230,617 7,998,245 $ 2,065,544 177,847 2,918,603 155,459 906 39,962 41,120 5,399,441 7,774,031 7,774,031 5,682,359 5,682,359 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, 2015 Fund balances, June 30, 2016 Actual Amounts (16,382) 112,847 (2,458,985) (1,291) (49,558) 4,062 (189,497) (2,598,804) 2,091,672 2,091,672 (282,918) (507,132) (25,440) 211,175 (25,440) 211,175 - (25,440) 185,735 211,175 198,774 (97,183) (295,957) $ 287,106 189,923 See accompanying note to budgetary comparison schedules. 67 $ 224,214 (198,774) - $ Variance with Final Budget $ 485,880 189,923 Navajo County Required Supplementary Information Notes to Budgetary Comparison Schedules June 30, 2016 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. 68 Navajo County Required Supplementary Information Schedule of the County’s Proportionate Share of the Net Pension Liability Cost-Sharing Pension Plans June 30, 2016 Arizona State Retirement System County’s proportion of the net pension liability County’s proportionate share of the net pension liability County’s covered payroll County’s proportionate share of the net pension liability as a percentage of its covered 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 payroll County’s proportionate share of the net pension liability as a percentage of its covered 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 payroll County’s proportionate share of the net pension liability as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability Reporting Fiscal Year (Measurement Date) 2014 through 2016 2015 2007 (2015) (2014) 0.21% 0.21% Information $ 32,861,924 $30,957,928 not available $ 19,400,464 $18,778,977 169.39% 164.85% 68.35% 69.49% Reporting Fiscal Year (Measurement Date) 2014 through 2016 2015 2007 (2015) (2014) 1.69% 1.74% Information $ 4,108,278 $ 3,902,859 not available $ 1,879,552 $ 1,854,011 218.58% 210.51% 57.89% 58.59% Reporting Fiscal Year (Measurement Date) 2014 through 2016 2015 2007 (2015) (2014) 1.82% 1.84% Information $ 14,226,251 $12,307,206 not available 4,435,153 $ 18,661,404 $ 1,551,376 3,773,504 $16,080,710 $ 1,704,339 917.01% 722.11% 28.32% 31.91% 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, 2016 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) $ Reporting Fiscal Year (Measurement Date) 2016 2015 2014 through 2007 (2015) (2014) Information 397,350 $ 426,843 not available 1,309,258 1,092,844 586,447 (377,151) (668,752) 2,472,745 (1,109,711) (1,167,336) 219,746 2,742,791 17,034,621 14,291,830 $ 17,254,367 $ 17,034,621 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) $ 790,385 261,993 191,904 $ 691,037 233,105 675,189 (1,109,711) (1,167,336) (5,044) (5,438) (114,224) (8,622) 15,303 417,935 5,324,923 4,906,988 $ 5,340,226 $ 5,324,923 County’s net pension liability—ending (a) – (b) $ 11,914,141 $ 11,709,698 30.95% 31.26% Plan fiduciary net position as a percentage of the total pension liability Covered payroll $ County’s net pension liability as a percentage of covered payroll 2,365,037 503.76% $ 2,242,753 522.11% See accompanying notes to pension plan schedules. 70 Navajo County Required Supplementary Information Schedule of Changes in the County’s Net Pension Liability and Related Ratios Agent Pension Plans June 30, 2016 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 Contributions—employer 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) Reporting Fiscal Year (Measurement Date) 2016 2015 2014 through 2007 (2015) (2014) Information $ - $ - not available 40,906 30,804 28,416 6,616 (392,840) (35,451) (34,741) (380,769) 561,461 971,244 409,783 $590,475 $971,244 $ 20,181 744 $ 6,765 (35,451) (34,741) (308) (54) (37) (14,871) (28,030) 36,134 64,164 $ 21,263 $ 36,134 County’s net pension liability—ending (a) – (b) $569,212 Plan fiduciary net position as a percentage of the total pension liability Covered payroll $ County’s net pension liability as a percentage of covered payroll 1,839 535,143 $935,110 3.60% 3.72% - 0.00% $ 0.00% See accompanying notes to pension plan schedules. 71 Navajo County Required Supplementary Information Schedule of Changes in the County’s Net Pension Liability and Related Ratios Agent Pension Plans June 30, 2016 Reporting Fiscal Year (Measurement Date) 2016 2015 2014 through 2007 (2015) (2014) Information $ 229,853 $ 262,381 not available 301,883 298,329 35,245 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) (93,870) (414,141) 240,204 (445,789) (275,163) (7,923) 146,855 3,953,613 3,806,758 $ 3,945,690 $ 3,953,613 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) $ 123,062 137,233 120,952 $ 142,344 141,818 417,329 (445,789) (275,163) (3,354) (3,281) 9,359 (82,179) (58,537) 340,868 3,361,955 3,021,087 $ 3,303,418 $ 3,361,955 County’s net pension liability—ending (a) – (b) $ Plan fiduciary net position as a percentage of the total pension liability Covered payroll County’s net pension liability as a percentage of covered payroll 642,272 $ 591,658 83.72% 85.04% $ 1,632,100 $ 1,726,328 39.35% 34.27% See accompanying notes to pension plan schedules. 72 Navajo County Required Supplementary Information Schedule of County Pension Contributions June 30, 2016 Arizona State Retirement System Statutorily required contribution County’s contributions in relation to the statutorily required contribution County’s contribution deficiency (excess) County’s covered payroll County’s contributions as a percentage of covered payroll 2016 $ 2,128,972 2,128,972 $ $ 19,429,032 2,098,505 $ $ 19,400,464 2,009,012 $ $ 18,778,977 10.96% 10.82% 10.70% Corrections Officer Retirement Plan—Administrative Office of the Courts Statutorily required contribution County’s contributions in relation to the statutorily required contribution County’s contribution deficiency (excess) County’s covered payroll County’s contributions as a percentage of covered payroll Reporting Fiscal Year 2015 2014 $ 2,098,505 $ 2,009,012 $ Reporting Fiscal Year 2016 2015 2014 367,198 $ 279,677 $ 267,905 367,198 $ $ 1,891,207 279,677 $ $ 1,879,552 267,905 $ $ 1,854,011 19.42% 14.88% 14.45% 2013-2007 Information not available 2013-2007 Information not available Elected Officials Retirement Plan Statutorily required contribution County’s contributions in relation to the statutorily required contribution County’s contribution deficiency (excess) County’s covered payroll County’s contributions as a percentage of covered payroll $ 2016 355,627 Reporting Fiscal Year 2015 2014 $ 364,573 $ 394,725 355,627 $ $ 1,532,182 364,573 $ $ 1,551,376 394,725 $ $ 1,704,339 23.21% 23.50% 23.16% See accompanying notes to pension plan schedules. 73 2013-2007 Information not available Navajo County Required Supplementary Information Schedule of County Pension Contributions June 30, 2016 PSPRS Sheriff Actuarially determined contribution County’s contributions in relation to the actuarially determined contribution County’s contribution deficiency (excess) County’s covered payroll County’s contributions as a percentage of covered payroll 2016 $ 1,214,475 Reporting Fiscal Year 2015 2014 $ 784,719 $ 692,113 1,214,475 $ $ 2,464,986 784,719 $ $ 2,365,037 692,113 $ $ 2,242,753 49.27% 33.18% 30.86% 2013-2007 Information not available PSPRS Attorney Investigators Actuarially determined contribution County’s contributions in relation to the actuarially determined contribution County’s contribution deficiency (excess) County’s covered payroll County’s contributions as a percentage of covered payroll Reporting Fiscal Year 2016 2015 2014 $ 35,878 $ 49,759 $ $ $ 35,878 0.00% $ $ 49,759 0.00% - 2013-2007 Information not available - $ $ 0.00% CORP Detention Actuarially determined contribution County’s contributions in relation to the actuarially determined contribution County’s contribution deficiency (excess) County’s covered payroll County’s contributions as a percentage of covered payroll 2016 $ 138,748 Reporting Fiscal Year 2015 2014 $ 123,060 $ 146,738 138,748 $ $ 1,572,955 123,060 $ $ 1,632,100 146,738 $ $ 1,726,328 8.82% 7.54% 8.50% See accompanying notes to pension plan schedules. 74 2013-2007 Information not available Navajo County Required Supplementary Information Notes to Pension Plan Schedules June 30, 2016 Note 1 - Change in accounting principle For the year ended June 30, 2016, the County implemented the provisions of GASB Statement No. 82, Pension Issues. The statement changed the measure of payroll that is required to be presented in required supplementary information from covered-employee payroll to covered payroll. Accordingly, payroll amounts presented in the pension plan schedules and related ratios for prior periods have been restated. Note 2 - 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 2014 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 22 years for unfunded actuarial accrued liability, 20 years for excess 7-year smoothed market value; 80%/120% market corridor In the 2013 actuarial valuation, the investment rate of return was decreased from 8.0% to 7.85% In the 2014 actuarial valuation, projected salary increases were decreased from 4.5%–8.5% to 4.0%–8.0% for PSPRS and from 4.5%–7.75% to 4.0%–7.25% for CORP. 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 2014 actuarial valuation, wage growth was decreased from 4.5% to 4.0% for PSPRS and 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) 75 Navajo County Required Supplementary Information Schedule of Agent OPEB Plans’ Funding Progress June 30, 2016 Health insurance premium benefit Unfunded actuarial accrued liability (UAAL) (funding excess) (b) – (a) UAAL (funding excess) as a percentage of covered payroll ((b) – (a)/c) Annual covered payroll (c) Actuarial Valuation Date Actuarial Actuarial value of accrued assets liability (a) (b) PSPRS Sheriff 6/30/16 6/30/15 6/30/14 $628,925 $338,940 $ (289,985) 185.56% $2,452,015 602,123 351,023 (251,100) 171.53 2,324,267 553,923 293,122 (260,801) 188.97 2,080,280 PSPRS Attorney Investigators 6/30/16 6/30/15 6/30/14 CORP 6/30/16 6/30/15 6/30/14 $ 6,059 $ 34,136 $ 7,274 18,907 7,930 - Funded ratio (a)/(b) 28,077 17.80% 11,633 38.47% (7,930) - $ - $348,466 $125,473 $ (222,993) 277.72% $1,576,314 329,954 129,078 (200,876) 255.62 1,493,854 302,076 138,877 (163,199) 217.51 1,618,686 See accompanying notes to schedule of agent OPEB plans’ funding progress 76 (11.8)% (10.8) (12.5) 0% 0 0 (14.1)% (13.4) (10.1) SUPPLEMENTARY INFORMATION Navajo County, Arizona Fiscal Year Ended June 30, 2016 Navajo County Nonmajor Governmental Funds June 30, 2016 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. 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. 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. 78 Navajo County Nonmajor Governmental Funds June 30, 2016 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 Innovation and Opportunity Act (WIOA) Accounts for administration of the federal Workforce Innovation and Opportunity Act (WIOA) 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, 2016 Special Revenue County Attorney Courts Administration Assets Cash and investments Receivables (net of allowance for uncollectibles): Property taxes Accounts receivable Special assessments Due from: Other funds Other governments Total assets Liabilities Accounts payable Accrued payroll and employee benefits Due to: Other funds Other governments Pledged revenue obligations payable Interest payable Total liabilities $ 626,211 $ 1,253,041 668 1,995 $ 626,879 $ 15,890 93,945 Environmental and Conservation $ 1,422,177 $ 707,645 69,556 152,037 $ 1,476,629 2,233 80 $ 1,424,490 $ 707,645 $ $ $ 11,499 8,029 6,195 77,056 6,079 41,224 13,162 626 90,290 8,469 72,166 420 467 123,623 182,010 119,889 19,995 596,636 1,356,983 1,409,552 695,292 (93,380) 503,256 (62,364) 1,294,619 (104,951) 1,304,601 (7,642) 687,650 Deferred Inflows of Resources Unavailable revenue–property taxes Unavailable revenue–special assessments Unavailable revenue–intergovernmental Total deferred inflows of resources Fund balances Restricted Assigned Unassigned Total fund balances(deficits) Total liabilities, deferred inflows of resources and fund balances $ 626,879 $ 1,476,629 $ 1,424,490 $ 707,645 (continued) 80 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2016 Special Revenue Library District Probation Housing Assets Cash and investments Receivables (net of allowance for uncollectibles): Property taxes Accounts receivable Special assessments Due from: Other funds Other governments Total assets Liabilities Accounts payable Accrued payroll and employee benefits Due to: Other funds Other governments Pledged revenue obligations payable Interest payable Total liabilities $ $ 645,230 $ 182,973 33,649 $ $ 2,000 2,000 $ 97,112 $ 645,230 $ 182,973 $ 2,000 $ 4,502 9,676 $ 15,715 102,381 $ 2,744 334 18,393 20,393 Deferred Inflows of Resources Unavailable revenue–property taxes Unavailable revenue–special assessments Unavailable revenue–intergovernmental Total deferred inflows of resources Fund balances Restricted Assigned Unassigned Total fund balances(deficits) Total liabilities, deferred inflows of resources and fund balances 63,463 Public Defense 13,382 15,249 2 27,560 133,345 3,080 50,465 595,421 179,893 (3,195) 47,270 (83,536) 511,885 179,893 22,282 22,282 (18,393) (18,393) $ 2,000 $ 97,112 $ 645,230 $ 182,973 (continued) 81 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2016 Special Revenue Sheriff's Special Office Districts Recreation District Assets Cash and investments Receivables (net of allowance for uncollectibles): Property taxes Accounts receivable Special assessments Due from: Other funds Other governments Total assets Liabilities Accounts payable Accrued payroll and employee benefits Due to: Other funds Other governments Pledged revenue obligations payable Interest payable Total liabilities $ $ 439 48,189 425,650 $ 517,190 $ 9,743 1,685,447 39,514 7,336 $ 169,005 $ $ 745 364 $ 57,390 194,851 687,634 44,523 19,464 $ 20,540 545,066 $ 459,009 2,183,970 $ 428 $ 64,396 35,258 1,109 Deferred Inflows of Resources Unavailable revenue–property taxes Unavailable revenue–special assessments Unavailable revenue–intergovernmental Total deferred inflows of resources Fund balances Restricted Assigned Unassigned Total fund balances(deficits) Total liabilities, deferred inflows of resources and fund balances 120,377 Superintendent of Schools 99,245 428 41,675 $ 6,268 41,675 30,805 30,805 6,268 126,221 642,987 543,500 126,221 (85,403) 557,584 (5,130) 538,370 169,005 64,396 $ 687,634 $ 545,066 979,501 148,937 991,136 2,119,574 $ 2,183,970 (continued) 82 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2016 Special Revenue Workforce Innovation & Opportunity Act Assets Cash and investments Receivables (net of allowance for uncollectibles): Property taxes Accounts receivable Special assessments Due from: Other funds Other governments Total assets Liabilities Accounts payable Accrued payroll and employee benefits Due to: Other funds Other governments Pledged revenue obligations payable Interest payable Total liabilities $ $ 227,811 227,811 $ 1,352 20,292 Capital Projects Public Works Construction $ 34,400 $ 34,400 $ 34,400 161,524 289 183,457 34,400 Deferred Inflows of Resources Unavailable revenue–property taxes Unavailable revenue–special assessments Unavailable revenue–intergovernmental Total deferred inflows of resources Fund balances Restricted Assigned Unassigned Total fund balances(deficits) Total liabilities, deferred inflows of resources and fund balances 99,266 (54,912) 44,354 $ 227,811 $ 34,400 (continued) 83 Navajo County Combining Balance Sheet Nonmajor Governmental Funds Year Ended June 30, 2016 Assets Cash and investments Receivables (net of allowance for uncollectibles): Property taxes Accounts receivable Special assessments Due from: Other funds Other governments Total assets Debt Service General Special Government Districts Total Nonmajor Governmental Funds $ 1,100,594 69,749 $ 8,854,147 154,191 33,649 52,359 209,716 $ 223,940 129,179 1,056,328 $ 10,335,378 $ 1,100,594 Liabilities Accounts payable Accrued payroll and employee benefits Due to: Other funds Other governments Pledged revenue obligations payable Interest payable Total liabilities $ $ $ 355,535 74,162 150,000 132,921 1,295,851 150,000 132,921 282,921 Deferred Inflows of Resources Unavailable revenue–property taxes Unavailable revenue–special assessments Unavailable revenue–intergovernmental Total deferred inflows of resources $ 134,951 134,951 Fund balances Restricted Assigned Unassigned Total fund balances(deficits) Total liabilities, deferred inflows of resources and fund balances 100,701 817,673 817,673 $ 1,100,594 84 210,468 372,765 (11,712) 88,989 $ 223,940 22,282 182,894 30,805 235,981 7,376,418 966,610 460,518 8,803,546 $ 10,335,378 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2016 Special Revenue County Attorney Courts Administration Revenues: Property taxes Special assessments Fines and forfeits Intergovernmental Charges for services Investment earnings (loss) Miscellaneous Total revenues $ $ Expenditures: Current: General government Public safety Highways and streets 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 130,641 433,367 430,846 1,199,764 49,128 6,646 5,346 1,691,730 1,981,629 $ 56,722 330,566 670,416 7,119 1,340 1,066,163 $ 364,692 2,982 367,674 940,960 53,644 266,428 617,652 Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances (deficits), July 1, 2015 Change in nonspendable resources Decrease in prepaid items Fund balances (deficits), June 30, 2016 133,762 106,753 3,187 152,060 395,762 Environmental and Conservation $ 2,588 1,984,217 6,872 947,832 266,428 101,246 (221,890) (292,487) 118,331 175,057 (1,241) 173,816 203,919 (107,614) 96,305 35,269 (121,773) (86,504) (48,074) (196,182) 31,827 101,246 586,404 551,330 1,490,801 1,272,774 503,256 $ 1,294,619 $ 1,304,601 $ 687,650 (continued) 85 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2016 Housing Revenues: Property taxes Special assessments Fines and forfeits Intergovernmental Charges for services Investment earnings (loss) Miscellaneous Total revenues Expenditures: Current: General government Public safety Highways and streets 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 Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances (deficits), July 1, 2015 Change in nonspendable resources Decrease in prepaid items Fund balances (deficits), June 30, 2016 Special Revenue Library District Probation Public Defense $ 826,948 $ 10,000 61,755 10,000 709 119 889,531 $ 1,970,097 338,467 3,371 100 2,312,035 $ 18,212 831 600 19,643 59,540 2,364,406 654,985 16,887 5,206 2,369,612 16,887 654,985 (6,887) 234,546 (57,577) (39,897) (200,000) (200,000) 12,639 (492) 12,147 74,320 (6,200) (6,200) (13,087) 34,546 (45,430) 34,423 (5,306) 12,724 557,315 145,470 $ (18,393) $ 47,270 511,885 $ 179,893 $ 59,540 74,320 (continued) 86 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2016 Special Revenue Sheriff's Special Office Districts Recreation Revenues: Property taxes Special assessments Fines and forfeits Intergovernmental Charges for services Investment earnings (loss) Miscellaneous Total revenues $ 169,187 $ $ 741 1,047 170,975 Expenditures: Current: General government Public safety Highways and streets 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 92,162 $ 2,426 69,184 163,772 4,011,417 8,319 379,459 4,399,195 905,329 117,162 157,476 4,055,352 157,476 125,789 1,031,118 117,162 10,892 4,066,244 13,499 623,082 46,610 332,951 60,633 (123,300) (62,667) (55,818) (55,818) 13,499 560,415 (9,208) 112,722 7,669 Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances (deficits), July 1, 2015 Change in nonspendable resources Decrease in prepaid items Fund balances (deficits), June 30, 2016 261,203 813,054 548,511 588 30,844 1,654,200 Superintendent of Schools 332,951 547,578 1,786,623 (10,500) $ 126,221 $ 557,584 $ 538,370 $ 2,119,574 (continued) 87 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2016 Special Revenue Workforce Innovation & Opportunity Act Revenues: Property taxes Special assessments Fines and forfeits Intergovernmental Charges for services Investment earnings (loss) Miscellaneous Total revenues $ 933,455 $ 933,455 Expenditures: Current: General government Public safety Highways and streets 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 668 668 - 979,026 54,969 54,969 - (45,571) (54,301) - 979,026 $ Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses 303,487 (105,994) (105,994) 303,487 (45,571) (160,295) 303,487 89,925 160,295 (303,487) - Net change in fund balances Fund balances (deficits), July 1, 2015 Change in nonspendable resources Decrease in prepaid items Fund balances (deficits), June 30, 2016 Capital Projects Public Works Detention Facility Construction Construction $ 44,354 $ - $ - (continued) 88 Navajo County Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2016 Total Nonmajor Governmental Funds Debt Service General Special Districts Government Revenues: Property taxes Special assessments Fines and forfeits Intergovernmental Charges for services Investment earnings (loss) Miscellaneous Total revenues $ $ $ 4,023 826,948 485,708 748,771 9,846,774 1,713,275 42,725 640,374 14,304,575 3,112,770 3,703,102 117,162 812,461 5,088,022 266,428 16,887 Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses 1,155,000 456,027 220,967 39,763 1,611,027 260,730 (1,607,004) (34,981) 1,375,967 495,790 206,316 15,194,905 (890,330) 1,644,099 (53,108) 1,590,991 Net change in fund balances Fund balances (deficits), July 1, 2015 Change in nonspendable resources Decrease in prepaid items Fund balances (deficits), June 30, 2016 1,115 275 225,749 4,023 Expenditures: Current: General government Public safety Highways and streets 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 224,359 2,509,423 (775,540) 1,733,883 (16,013) (34,981) 833,686 123,970 843,553 7,970,493 (10,500) $ 817,673 89 $ 88,989 $ 8,803,546 Navajo County Budgetary Comparison Schedule Special Revenue - Administration Year Ended June 30, 2016 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 2,065,600 106,500 1,500 620,000 2,793,600 Actual Amounts $ 1,789,572 1,269,900 113,100 3,172,572 Excess (deficiency) of revenues over expenditures 133,762 106,753 3,187 152,060 395,762 Variance with Final Budget $ 130,641 433,367 53,644 617,652 (378,972) (1,931,838) 253 1,687 (467,940) (2,397,838) 1,658,931 836,533 59,456 2,554,920 (221,890) 157,082 175,057 175,057 (1,241) 173,816 (1,241) 173,816 (48,074) 330,898 Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses - Net change in fund balances Fund balances, July 1, 2015 Fund balances, June 30, 2016 (378,972) 378,972 $ 90 - 551,330 $ 503,256 172,358 $ 503,256 Navajo County Budgetary Comparison Schedule Special Revenue - County Attorney Year Ended June 30, 2016 Original and Final Budgeted Amounts Revenues: Fines and forfeits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ 570,000 1,802,262 29,925 6,075 133,100 2,541,362 Expenditures: General government Total expenditures $ 4,104,694 4,104,694 Excess (deficiency) of revenues over expenditures Transfers out Total other financing sources and uses Net change in fund balances 2,120,477 2,120,477 1,270,845 203,919 158,538 (15,000) (107,614) (92,614) 30,381 96,305 65,924 - 91 (139,154) (602,498) 19,203 571 (127,754) (849,632) 45,381 (196,182) 1,532,951 $ $ (292,487) (1,532,951) Fund balances (deficits), July 1, 2015 430,846 1,199,764 49,128 6,646 5,346 1,691,730 Variance with Final Budget 1,984,217 1,984,217 (1,563,332) Other financing sources (uses): Transfers in Fund balances, June 30, 2016 Actual Amounts 1,336,769 1,490,801 $ 1,294,619 (42,150) $ 1,294,619 Navajo County Budgetary Comparison Schedule Special Revenue - Courts Year Ended June 30, 2016 Original and Final Budgeted Amounts Revenues: Fines and forfeits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Expenditures: General government Total expenditures Excess (deficiency) of revenues over expenditures Actual Amounts 55,800 325,766 730,580 36,938 $ 1,149,084 56,722 330,566 670,416 7,119 1,340 1,066,163 2,212,784 2,212,784 947,832 947,832 1,264,952 1,264,952 (1,063,700) 118,331 1,182,031 35,269 35,269 (126,091) (121,773) 4,318 (126,091) (86,504) 39,587 Other financing sources (uses): Transfers in Transfers out Total other financing sources and uses Net change in fund balances (1,189,791) Fund balances, July 1, 2015 Fund balances, June 30, 2016 Variance with Final Budget 1,189,791 $ - 92 $ $ 922 4,800 (60,164) (29,819) 1,340 (82,921) 31,827 1,221,618 1,272,774 82,983 1,304,601 $ 1,304,601 Navajo County Budgetary Comparison Schedule Special Revenue - Environmental and Conservation Year Ended June 30, 2016 Original and Final Budgeted Amounts Revenues: Intergovernmental Investment earnings Miscellaneous Total revenues $ Expenditures: Environmental and conservation Total expenditures 509,000 1,000 107,642 617,642 Actual Amounts $ 1,212,720 1,212,720 364,692 2,982 Variance with Final Budget $ 367,674 (144,308) 1,982 (107,642) (249,968) 266,428 266,428 946,292 946,292 Excess (deficiency) of revenues over expenditures (595,078) 101,246 696,324 Net change in fund balances (595,078) 101,246 696,324 595,078 586,404 Fund balances (deficits), July 1, 2015 Fund balances, June 30, 2016 $ 93 - $ 687,650 (8,674) $ 687,650 Navajo County Budgetary Comparison Schedule Special Revenue - Library District Year Ended June 30, 2016 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 Actual Amounts 832,702 154,637 15,641 1,002,980 $ 826,948 61,755 709 119 889,531 599,145 599,145 654,985 654,985 (55,840) (55,840) 403,835 234,546 (169,289) (200,000) (200,000) (200,000) (200,000) 403,835 34,546 (369,289) (403,835) 12,724 416,559 Other financing uses: Transfers out Total other financing sources and uses Net change in fund balances Fund balances (deficits), July 1, 2015 Fund balances, June 30, 2016 $ 94 Variance with Final Budget - $ 47,270 $ $ (5,754) (92,882) 709 (15,522) (113,449) 47,270 Navajo County Budgetary Comparison Schedule Special Revenue - Probation Year Ended June 30, 2016 Original and Final Budgeted Amounts Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Actual Amounts 2,191,154 341,076 3,668 100 2,535,998 Expenditures: Public safety Total expenditures $ 3,198,091 3,198,091 Excess (deficiency) of revenues over expenditures $ 12,639 (492) 12,147 12,147 (662,093) (45,430) 616,663 662,093 557,315 (104,778) - 95 604,516 12,639 (492) Total other financing sources and uses Fund balances, June 30, 2016 (221,057) (2,609) (297) (223,963) 828,479 828,479 (57,577) Other financing sources (uses): Transfers in Transfers out Fund balances (deficits), July 1, 2015 $ 2,369,612 2,369,612 (662,093) Net change in fund balances 1,970,097 338,467 3,371 100 2,312,035 Variance with Final Budget $ 511,885 $ 511,885 Navajo County Budgetary Comparison Schedule Special Revenue - Public Defense Year Ended June 30, 2016 Original and Final Budgeted Amounts Revenues: Intergovernmental Investment earnings Miscellaneous Total revenues $ 26,823 300 250 27,373 Expenditures: General government Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources: Transfers in Total other financing sources Net change in fund balances Fund balances, July 1, 2015 Fund balances, June 30, 2016 Actual Amounts $ 18,212 831 600 19,643 $ (8,611) 531 350 (7,730) 242,513 242,513 59,540 59,540 (182,973) (182,973) (215,140) (39,897) 175,243 80,710 80,710 74,320 74,320 (134,430) 34,423 168,853 134,430 145,470 11,040 - 96 $ Variance with Final Budget $ 179,893 (6,390) (6,390) $ 179,893 Navajo County Budgetary Comparison Schedule Special Revenue - Recreation District Year Ended June 30, 2016 Original and Final Budgeted Amounts Revenues: Special assessments Investment earnings Miscellaneous Total revenues $ Actual Amounts 164,500 500 165,000 169,187 741 1,047 170,975 265,000 265,000 157,476 157,476 107,524 107,524 Excess (deficiency) of revenues over expenditures (100,000) 13,499 113,499 Net change in fund balances (100,000) 13,499 113,499 100,000 112,722 12,722 Expenditures: Culture and recreation Total expenditures Fund balances, July 1, 2015 Fund balances, June 30, 2016 $ - 97 $ Variance with Final Budget $ 126,221 $ $ 4,687 241 1,047 5,975 126,221 Navajo County Budgetary Comparison Schedule Special Revenue - Sheriff's Office Year Ended June 30, 2016 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 124,600 871,381 498,330 33,034 159,878 1,687,223 $ 1,711,095 1,711,095 Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in 261,203 813,054 548,511 588 30,844 1,654,200 Variance with Final Budget $ 136,603 (58,327) 50,181 (32,446) (129,034) (33,023) 1,031,118 1,031,118 679,977 679,977 (23,872) 623,082 646,954 15,000 60,633 45,633 (123,300) (123,300) Transfers out Total other financing sources and uses 15,000 (62,667) (77,667) Net change in fund balances (8,872) 560,415 569,287 Fund balances (deficits), July 1, 2015 8,872 7,669 (1,203) Change in nonspendable resources Decrease in prepaid items Fund balances, June 30, 2016 (10,500) $ 98 - $ 557,584 (10,500) $ 557,584 Navajo County Budgetary Comparison Schedule Special Revenue - Special Districts Year Ended June 30, 2016 Original and Final Budgeted Amounts Revenues: Special assessments Investment earnings Miscellaneous Total revenues $ Actual Amounts 63,400 100 133,900 197,400 Expenditures: Highways and streets Total expenditures Excess (deficiency) of revenues over expenditures $ Fund balances, July 1, 2015 Fund balances, June 30, 2016 619,838 619,838 (539,600) 46,610 586,210 (55,818) (55,818) (55,818) (55,818) (9,208) 530,392 539,600 - 99 28,762 2,326 (64,716) (33,628) 117,162 117,162 (539,600) $ $ 737,000 737,000 Other financing uses: Transfers out Total financing uses Net change in fund balances 92,162 2,426 69,184 163,772 Variance with Final Budget 547,578 $ 538,370 7,978 $ 538,370 Navajo County Budgetary Comparison Schedule Special Revenue - Workforce Innovation and Opportunity Act Year Ended June 30, 2016 Original and Final Budgeted Amounts Revenues: Intergovernmental Total revenues $ Actual Amounts 1,416,404 1,416,404 Expenditures: Education and economic opportunity Total expenditures $ 1,418,224 1,418,224 933,455 933,455 Variance with Final Budget $ (482,949) (482,949) 979,026 979,026 439,198 299,835 Excess (deficiency) of revenues over expenditures (1,820) (45,571) (43,751) Net change in fund balances (1,820) (45,571) (43,751) 1,820 89,925 88,105 Fund balances, July 1, 2015 Fund balances, June 30, 2016 $ - 100 $ 44,354 $ 44,354 Navajo County Budgetary Comparison Schedule Capital Projects - Public Works Construction Year Ended June 30, 2016 Original and Final Budgeted Amounts Revenues: Investment earnings Total revenues Expenditures: Capital outlay Total expenditures Actual Amounts $ $ Excess (deficiency) of revenues over expenditures Fund balances, July 1, 2015 Fund balances, June 30, 2016 $ 101 668 668 $ 668 668 147,346 147,346 54,969 54,969 92,377 92,377 (147,346) (54,301) 93,045 (105,994) (105,994) (105,994) (105,994) (147,346) (160,295) (12,949) 147,346 160,295 12,949 Other financing sources (uses): Transfers out Total other financing sources and uses Net change in fund balances Variance with Final Budget - $ - $ - Navajo County Budgetary Comparison Schedule Debt Service - General Government Year Ended June 30, 2016 Original and Final Budgeted Amounts Revenues: 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 102 $ 4,023 4,023 1,611,027 1,611,027 1,097,901 1,097,901 (2,708,928) (1,607,004) 1,101,924 1,644,099 (53,108) 1,590,991 1,133,700 (53,108) 1,080,592 510,399 $ 4,023 4,023 Variance with Final Budget 2,708,928 2,708,928 510,399 Net change in fund balances Fund balances (deficits), July 1, 2015 Fund balances, June 30, 2016 Actual Amounts (2,198,529) (16,013) 2,182,516 2,198,529 833,686 (1,364,843) - $ 817,673 $ 817,673 Navajo County Budgetary Comparison Schedule Debt Service - Special Districts Year Ended June 30, 2016 Original and Final Budgeted Amounts Revenues: Special assessments Investments earnings Miscellaneous Total revenues $ Variance with Final Budget 235,700 $ 224,359 1,115 275 225,749 345,300 345,300 260,730 260,730 84,570 84,570 Excess (deficiency) of revenues over expenditures (109,600) (34,981) 74,619 Net change in fund balances (109,600) (34,981) 74,619 109,600 123,970 14,370 - $ 88,989 Expenditures: Debt Service Highways and streets Total expenditures Fund balances, July 1, 2015 Fund balances, June 30, 2016 $ 103 235,700 Actual Amounts $ $ (11,341) 1,115 275 (9,951) 88,989 Navajo County, Arizona Fiscal Year Ended June 30, 2016 AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES Navajo County, Arizona Fiscal Year Ended June 30, 2016 Navajo County Statement of Changes in Assets and Liabilities Agency Funds Year Ended June 30, 2016 Assets Cash and investments Total Assets Liabilities Due to other governments Deposits held for other parties Total Liabilities Balance July 1, 2015 Additions Deductions $ 2,967,759 $ 2,967,759 $ 14,643,180 $ 14,643,180 $ 14,671,547 $ 14,671,547 $ $ 2,939,392 2,939,392 $ $ 13,149,625 1,493,555 $ 14,643,180 $ 13,189,857 1,481,690 $ 14,671,547 $ 737,492 2,201,900 2,939,392 777,724 2,190,035 $ 2,967,759 106 Balance July 1, 2016 $ STATISTICAL SECTION Navajo County, Arizona Fiscal Year Ended June 30, 2016 Navajo County Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2007 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 (see Note) General county sales tax State shared revenues Payment in lieu of taxes Grants and contributions not restricted to specific programs Investment earnings Capital contributions Gain on disposal of capital assets Miscellaneous Transfers Total general revenues and transfers Change in net position - governmental activities 2009 2010 $ 19,392,043 19,182,119 14,058,305 7,219,915 510,035 5,723,104 231,225 179,518 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 $ 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 4,882,461 2,910,947 115,198 95,930 3,746,695 541,256 83,076 77,965 3,473,303 765,083 122,462 3,531,064 517,702 39,249 215,494 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 1,735,327 3,290,457 1,751,447 38,102 7,186,346 162,086 2,199,624 64,885 5,512,115 205,884 1,803,890 122,207 6,086,494 195,574 305,647 12,956,489 33,659,638 12,361,020 30,863,219 12,393,158 32,054,807 15,637,667 33,480,772 19,745,840 14,534,493 10,990,269 6,274,590 554,419 4,885,689 18,880 2008 $ 594,260 66,911,006 $ (23,524,060) $ (35,161,339) $ (34,856,199) $ (37,433,760) $ $ 9,707,389 $ 10,933,578 $ 12,494,737 6,778,153 13,521,307 7,083,165 13,302,354 6,330,588 12,017,517 5,480,598 10,728,725 1,433,848 1,733,012 3,922,712 1,624,746 6,444,858 750,742 4,902,289 322,748 104,656 1,016,509 11,971 1,207,819 23,895 1,466,751 33,223,879 36,860,156 37,967,929 115,237 1,273,310 (380,236) 34,937,408 $ 8,636,394 9,699,819 $ 1,698,817 $ 3,111,730 $ (2,496,352) Note: The County reclassified special assessments revenue from general revenue to program revenue beginning in FY 2016. (Continued) 108 Navajo County Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2011 $ 2012 2013 $ 2014 $ 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 3,465,053 672,441 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 5,400,182 1,549,821 432,421 333,306 166,881 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 3,945,966 4,911,950 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 2,770,719 61,754 5,034,340 364,692 10,000 9,690,517 28,508,468 9,565,055 30,431,057 11,431,446 33,595,379 11,571,167 36,553,199 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 $ 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 2016 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 2015 $ 29,716,664 17,512,220 12,008,267 8,350,410 798,683 5,479,786 247,622 16,887 503,684 74,634,223 $ (37,902,850) $ (34,729,372) $ (37,388,804) $ (34,419,508) $ (41,598,404) $ (38,081,024) $ 12,866,253 $ 12,087,700 $ $ $ 12,531,782 6,246,077 11,475,113 12,536,351 507,456 6,674,867 12,964,950 1,406,936 $ 5,889,027 11,405,376 11,704,948 542,526 6,667,433 12,773,729 1,538,954 4,489,096 254,483 3,175,428 202,500 5,957 1,822,741 36,732,933 13,116 1,170,658 34,370,592 $ (1,169,917) $ (358,780) 11,924,765 502,434 6,239,089 12,024,496 1,430,914 (109,711) $ 6,365,510 13,125,229 1,547,382 453,017 195,437 52,473 892,976 96,640 1,455,607 35,974 1,072,052 165,384 6,980 2,995 1,341,167 32,957,436 35,232,854 35,394,023 35,086,429 (4,431,368) 109 $ 813,346 $ (6,204,381) $ (2,994,595) Navajo County Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2007 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 2008 $ 16,110,913 $ 3,957,781 10,939,695 $ 16,110,913 $ 397,700 2009 2,883,159 7,550,215 $ 325,096 7,416,990 $ 14,897,476 $ 10,433,374 $ 7,742,086 $ $ $ 528,878 500,703 $ 2010 679,641 21,439,571 1,995,785 4,791,323 26,620,823 1,777,950 24,543 25,962,952 1,824,003 31,118,113 1,924,862 76,332 $ 28,624,379 $ 28,924,019 $ 28,466,596 $ 33,648,185 (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. 110 Navajo County Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2011 $ $ 2012 $ 3,182,499 3,349,495 6,531,994 $ 2013 2014 $ 2,533,698 3,939,417 6,473,115 $ 2,021,131 3,849,238 5,870,369 $ 437,220 $ 2,331,597 3,482,808 6,251,625 2015 $ 1,273,833 $ 2,836,408 3,544,712 7,654,953 2016 $ 1,612,513 $ 2,535,860 3,523,261 7,671,634 $ $ $ $ $ $ 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) $ 23,913,057 619,596 23,119,737 966,610 (210,456) $ 24,495,487 111 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 2009 2007 2008 2010 $ 8,673,499 $ 9,581,813 $ 10,780,692 $ 12,294,308 879,866 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 2,284,384 750,741 356,318 619,663 1,336,602 49,652,453 2,347,245 322,747 133,181 38,281 990,990 66,785,168 56,956 1,222,929 67,600,939 25,916 1,466,751 69,845,953 31,141 1,273,311 68,010,651 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 21,661,752 16,838,127 10,087,829 9,306,800 740,591 6,139,063 237,032 307,208 421,836 179,518 303,173 349,677 487,701 594,260 858,416 677,253 1,990,735 58,756,931 6,238,140 76,723,224 3,030,157 75,777,343 81,675 66,935,746 8,028,237 (9,122,285) (5,931,390) 1,074,905 6,600,000 77,845 6,846 104,656 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) 115,237 8,048,481 (6,789,602) 1,374,116 $ 2,449,021 1.06% 0.93% 1.49% 2.30% (Continued) 112 Navajo County Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2011 2012 $ 12,612,528 $ 12,092,878 529,657 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 30,333 1,822,741 65,699,835 50,540 1,170,659 60,834,002 64,512 892,976 61,510,170 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 16,352 784 919,249 625,962 946,316 721,020 274,573 70,050,775 (4,350,940) 18,913 2013 12,058,648 $ 2015 $ 12,542,649 6,365,510 604,525 1,492,927 42,328,108 10,369,286 165,384 485,708 42,650 1,455,607 65,577,439 43,061 1,072,052 73,099,759 39,962 1,341,167 75,735,226 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 27,475,209 18,013,055 9,949,660 8,698,408 812,461 5,408,227 266,428 16,887 821,698 461,413 75,464 7,613,324 71,341,064 2,737,814 802,936 1,529,333 503,684 327,361 63,998,889 676,779 527,044 115,290 1,469,268 65,080,041 5,207,816 77,800,720 2,093,691 74,767,043 (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 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% 1.89% 113 $ 2.13% $ 2016 12,565,289 6,674,867 522,919 1,789,993 40,045,748 9,698,659 195,437 491,734 354,826 $ 2014 $ 64,945 5,625,009 (5,625,009) 64,945 (4,636,016) 4.88% 968,183 $ 2,995 4,218,192 (4,218,192) 2,995 971,178 2.80% 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 2007 2008 Fiscal Year 2009 2010 2011 $ 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 $ 70,264,651 27,364,617 6,481,167 $ 104,110,435 2012 2013 Fiscal Year 2014 2015 2016 $ 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 $ 62,361,145 24,226,548 (53,540,230) $ 33,047,463 * Capital assets were restated for fiscal year 2012 due to certain road projects such as chip seals, slurry seals, and overlays being reclassified from capitalized road improvements to road maintenance projects expensed in the year completed. 114 Navajo County Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years PRIMARY ASSESSED VALUE Fiscal Year Residential and Vacant Property Commercial Property Unattached Personal Property Total Taxable Assessed Value 2007 2008 2009 2010 **2011 2012 2013 2014 2015 2016 414,808,401 480,365,541 563,228,216 631,550,018 683,204,674 634,214,647 575,074,783 513,683,811 468,337,874 473,702,904 305,200,210 315,601,599 328,530,388 345,011,622 365,730,626 371,913,522 380,102,301 371,638,224 359,094,468 344,422,319 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 14,676,214 734,836,721 812,314,271 908,357,696 999,526,520 1,069,288,587 1,026,064,246 974,261,712 903,345,177 845,016,717 832,801,437 *Total Direct Estimated Actual Value Tax Rate 1.2592 1.2504 1.2238 1.2057 1.2035 1.2447 1.2864 1.3850 1.5615 1.5917 6,464,822,998 7,181,877,591 8,083,048,537 8,941,980,626 9,625,529,702 9,350,503,687 8,838,891,218 8,029,406,641 7,573,933,720 7,591,032,171 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. 115 Assessed Value as a Percentage of Actual Value 11.37% 11.31% 11.24% 11.18% 11.11% 10.97% 11.02% 11.25% 11.16% 10.97% NAVAJO COUNTY Direct and Overlapping Property Tax Rates Last Ten Fiscal Years County Direct Rates Fiscal Year Primary Fire District Assistance Tax Library District Flood Control District Public Health District Total Direct 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0.6229 0.6041 0.5775 0.5594 0.5572 0.5984 0.6401 0.6995 0.8185 0.8417 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.0400 0.0500 0.0500 0.0500 0.0500 0.0500 0.0500 0.0704 0.1000 0.1000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.1963 0.1963 0.1963 0.1963 0.1963 0.1963 0.1963 0.2151 0.2430 0.2500 1.2592 1.2504 1.2238 1.2057 1.2035 1.2447 1.2864 1.3850 1.5615 1.5917 Overlapping rates Fiscal Year School Equalization School Districts Cities Other Special Districts Community College District 2007 2008 2009 2010 2011 2012 2013 2014 2015 0.0000 0.0000 0.0000 0.3306 0.3564 0.4259 0.4717 0.5123 0.5089 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 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 1.2831-1.2831 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 1.4858 1.4206 1.3382 1.1352 1.1308 1.2387 1.3515 1.4769 1.6610 2016 0.5054 2.8027-7.3012 1.3646-1.3646 0.1401-3.550 1.7423 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. 116 Navajo County Principal Property Taxpayers Current Year and Five Years Ago 2016 2010 $ 131,274,320 52,277,671 17,334,500 10,415,034 7,257,125 6,029,921 5,686,242 4,983,329 4,916,132 4,341,405 Percentage of Total Primary Assessed Value Rank 1 15.76% 2 6.28% 3 2.08% 4 1.25% 5 0.87% 6 0.72% 7 0.68% 8 0.60% 9 0.59% 10 0.52% TOTALS $ 244,515,679 29.35% 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 Total 2016 Navajo County Assessed Value Primary Assessed Value 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 6 year period. 117 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 $ 832,801,440 Percentage of Total Primary Assessed Value 19.32% $ 998,764,550 Navajo County Property Tax Levies and Collections Last Ten Fiscal Years Fiscal Year Taxes Levied for the Fiscal Year (1) 2007 $ 4,579,640 $ 4,401,681 96.11% $ 177,290 $ 4,578,971 99.99% 2008 $ 4,910,747 $ 4,684,181 95.39% $ 225,930 $ 4,910,111 99.99% 2009 $ 5,247,356 $ 5,003,706 95.36% $ 242,452 $ 5,246,158 99.98% 2010 $ 5,580,939 $ 5,306,931 95.09% $ 271,364 $ 5,578,295 99.95% 2011 $ 5,859,345 $ 5,569,913 95.06% $ 284,485 $ 5,854,398 99.92% 2012 $ 6,106,200 $ 5,887,544 96.42% $ 212,733 $ 6,100,277 99.90% 2013 $ 6,180,393 $ 6,001,505 97.11% $ 173,374 $ 6,174,879 99.91% 2014 $ 6,268,089 $ 6,070,355 96.85% $ 189,878 $ 6,260,233 99.87% 2015 $ 6,868,032 $ 6,652,088 96.86% $ 201,405 $ 6,853,493 99.79% 2016 $ 6,993,475 $ 6,748,980 96.50% $ 0 $ 6,748,980 96.50% 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. 118 Navajo County Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Fiscal Year 2007 Revenue Bonds - Certificates of Participation Special Assessment Bonds 5,915,000 2,950,589 18,848 8,884,437 0.37 80.04 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 0.69 187.59 2015 16,845,000 - 573,542 326,188 17,744,730 N/A (2) N/A (3) 2016 15,840,000 - 352,575 172,822 16,365,397 N/A (2) N/A (3) Source: Details regarding the County's outstanding debt can be found in the notes to the financial statements (1) Personal income and population information can be found in the Demographic and Economic Statistics schedule. (2) Personal income was not available for 2015 and 2016. (3) Population was not available for 2015 and 2016. 119 Navajo County Pledged Revenue Coverage Last Ten Fiscal Years County Excise Tax $ 6,667,433 6,674,867 6,365,510 2013 Series Pledged Revenue Obligations 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 10,874,837 17,240,347 1,005,000 187,488 Coverage 207.76 7.61 14.46 Fiscal Year 2013 2014 2015 2016 County Excise Tax $ 6,239,089 6,667,433 6,674,867 6,365,510 2012 Series Pledged Revenue Obligations 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 10,874,837 17,240,347 150,000 265,842 Coverage 324.15 93.41 24.97 41.46 Fiscal Year 2008 2009 2010 2011 2012 2013 2014 2008 Series Pledged Revenue Obligations (Refunded in August 2013) Debt Service County Excise State Shared Net Available Tax Sales Tax Revenue Principal Interest $ 7,083,165 $ 10,915,470 $ 17,998,635 $ $ 6,330,588 9,844,858 16,175,446 131,432 5,480,598 8,732,190 14,212,788 335,000 240,573 5,846,576 9,285,088 15,131,664 350,000 228,585 6,200,729 9,553,213 15,753,942 370,000 215,985 6,239,089 10,087,589 16,326,678 380,000 202,860 6,667,433 10,763,214 17,430,647 385,000 124,500 Fiscal Year 2014 2015 2016 Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 Source: $ Revenues 300,706 273,885 241,567 241,374 248,745 251,299 231,966 224,359 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 0.90 220,967 39,763 0.86 Navajo County Finance Department 120 Coverage Ratio 123.07 24.69 26.15 26.88 28.01 34.21 Navajo County Legal Debt Margin Information Last Ten Fiscal Years Legal Debt Margin Calculation for Fiscal Year 2016 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 2007 110,225,508 2008 $ 121,847,141 110,225,508 121,847,141 0% $ 2013 $ 146,139,257 153,920,569 146,139,257 0% 843,037,068 126,455,560 $ 126,455,560 $ 2010 149,814,683 136,253,654 0% 2012 153,920,569 0% $ Fiscal Year 2009 136,253,654 $ 149,814,683 0% $ Fiscal Year 2014 135,502,778 135,502,778 0% $ 158,850,728 0% $ 2015 126,937,062 0% $ 126,937,062 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. 121 2011 158,850,728 2016 126,455,560 126,455,560 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 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 $ 26,401 13.1 2014 109,185 2,965,679 $ 27,162 11.2 2015 (1) (1) (1) 9.6 2016 (1) (1) (1) 9.4 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 2015 and 2016. 122 Navajo County Employment by Sector and Major Employers Employment by Sector 2007 2,925 3,325 600 9,925 3,475 900 825 1,350 6,050 800 Mining and Construction Educational & Health Srvs Financial Activities Government Leisure & Hospitality Manufacturing Information Professional & Business Srvs Trade, Transportation & Utilities Other Services 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 2011 1,325 3,200 425 9,500 3,625 525 1,150 1,025 5,025 525 (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 Line-Haul Communications Auto Dealer Hospitality Hotels and Motels Retail Education Medical Retail Medical Government Education Utilities Utility Colleges Energy Coal and Mining Pork Production Education Retail Hospital Auto Dealer Retail Millwork Government APS, Joseph City Arizona Department of Corrections 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 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 Snowflake/Taylor Chamber of Commerce. 123 Navajo County Employment by Sector and Major Employers (Continued) Employment by Sector 2012 1,600 3,550 575 9,850 3,600 475 1,175 1,000 5,150 950 Mining and Construction Educational & Health Srvs Financial Activities Government Leisure & Hospitality Manufacturing Information Professional & Business Srvs Trade, Transportation & Utilities Other Services (1) 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 2016 1,525 4,125 650 8,925 3,450 250 1,050 1,325 5,475 975 The number of employees for the 10 largest employers in the County is not available due to State of Arizona non-disclosure restrictions. 124 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 2010 284 248 81 63 5 681 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 5 693 2016 288 235 96 81 4 704 Source: Navajo County Budget 2007 - 2016 125 2011 294 239 81 65 6 685 2012 295 243 82 66 5 691 Navajo County Operating Indicators by Function Last Ten Fiscal Years 2007 Function General Government Assessor Number of parcels assessed Elections Elections Number voting Planning & Zoning Building permits issued Public Fiduciary Guardianships/conservatorships Public Safety Adult Probation Community service hours Pre-sentence reports written for courts Probationers actively supervised Juvenile Probation Average length of detention (days) Juveniles in detention Probationers Community restitution hours Sheriff Inmate population Highways & Streets Public Works Crack sealing (miles) Street resurfacing (miles) Waste Tire Program Waste tires collected Health & Welfare Public Health District Certified copies of birth or death certificates Childhood immunization visits Restaurant inspections and re-inspections Culture & Recreation Library District Number of items circulated Number of library cards issued (by member libraries) Number of prints, media and electronic items Number of items owned by Library District Education School Superintendent Charter schools Charter students District students School districts 2008 2010 83,044 84,824 85,536 85,858 4 43,445 5 23,687 4 51,626 4 21,379 3,789 3,085 1,837 1,285 99 104 103 110 34,370 744 868 50,415 678 1,036 51,910 594 1,009 49,198 504 1,008 15 318 164 9,170 12 338 186 10,504 8 457 199 8,740 10 441 171 8,939 385 363 363 361 9 33 2 52 42 47 25 56,775 51,481 48,743 5,311 8,608 592 5,685 10,586 593 6,811 7,343 608 6,913 10,299 336 380,765 5,835 241,479 15,216 442,038 6,079 262,997 16,907 456,579 5,985 287,552 19,607 480,959 6,206 310,602 21,774 6 817 20,948 14 6 818 20,861 14 6 839 20,497 14 7 471 19,913 14 Source: Navajo County departments monthly and annual performance reports 126 Fiscal Year 2009 (continued) Navajo County Operating Indicators by Function Last Ten Fiscal Years 2011 2012 2013 Fiscal Year 2014 2015 2016 86,304 88,148 85,773 85,752 88,306 88,527 4 50,969 5 17,330 4 57,960 3 8,569 1 685 3 32,969 926 994 1,023 970 981 1,009 99 108 109 163 160 131 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 30,408 572 1,086 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 10 353 151 5,061 319 274 283 382 364 301 49 42 82 32 59 13 88 12 102 30 444 14 60,117 47,962 57,742 52,623 47,184 56,331 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 5,595 1,068 696 441,232 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 32,149 361,865 33,223 346,632 33,577 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 9 789 17,803 14 127 Navajo County Capital Asset Statistics by Function Last Ten Fiscal Years 2007 2008 2009 Fiscal Year 2011 2012 2010 2013 2014 2015 2016 Function General Government Elections Voting Machines Superior Courts Divisions Division - Satellite Justice Courts 158 158 158 158 173 173 173 173 173 60 4 4 4 4 6 6 6 6 4 1 6 4 1 6 4 1 6 4 1 6 4 1 6 4 1 6 407 1 0 1 0 433 1 0 425 1 0 426 1 0 442 2 0 442 2 0 441 2 0 438 2 0 438 2 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 31 14 0 747.83 14 732.01 14 737.65 14 734.9 14 733.28 14 733.65 15 733.95 15 733.95 15 734.66 15 734.32 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 Facilities 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. 128