p Fiscal Year Ended June 30, 2011 Valley Metro Regional Public Transportation Authority Phoenix, Arizona Board of Directors Chair, Councilmember Shana Ellis, Tempe Vice Chair, Councilmember Ron Aames, Peoria Treasurer, Councilmember Michael Johnson, Phoenix Vice Mayor Jim McDonald, Avondale Councilmember Eric Orsborn, Buckeye Vice Mayor Trinity Donovan, Chandler Mayor Lana Mook, El Mirage Vice Mayor Jenn Daniels, Gilbert Mayor Elaine Scruggs, Glendale Councilmember Joe Pizzillo, Goodyear Supervisor Max Wilson, Maricopa County Vice Mayor Scott Somers, Mesa Vice Mayor Robert Littlefield, Scottsdale Mayor Lyn Truitt, Surprise Vice Mayor Kathie Farr, Tolleson Councilman Rui Pereira, Wickenburg Executive Director’s Office David A. Boggs, Executive Director Bryan Jungwirth, Chief of Staff Michael Taylor, Acting Finance Director Carol Ketcherside, Planning Director Jim Wright, Operations Director Prepared By Finance Department Valley Metro Regional Public Transportation Authority Organization Chart Citizens of Maricopa County Board of Directors Executive Director’s Office Finance Operations Planning Management Services Marketing & Strategic Services Valley Metro Rail, Inc. Staff (Reports to VMR, Inc. Board of Directors) Valley Metro Regional Public Transportation Authority Table of Contents Comprehensive Annual Financial Report and Single Audit Reports Fiscal Year Ended June 30, 2011 Page Introductory Section Letter of Transmittal GFOA Certificate of Achievement iii x Financial Section Independent Auditors’ Report . Management’s Discussion and Analysis (required supplementary information) . Basic Financial Statements: . Government-wide Financial Statements: Statement of Net Assets Statement of Activities . Fund Financial Statements: Balance Sheet – Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement of Revenues, Expenditures and Changes in Fund Balance – Budget to Actual – General Fund Statement of Revenues, Expenditures and Changes in Fund Balance – Budget to Actual – Transit Planning Fund Statement of Revenues, Expenditures and Changes in Fund Balance – Budget to Actual – Transportation Demand Management Fund Statement of Net Assets – Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Assets – Proprietary Funds Statement of Cash Flows – Proprietary Funds Statement of Changes in Fiduciary Net Assets – Fiduciary Fund . Index to the Notes to the Financial Statements Notes to the Financial Statements . Other Supplementary Information – Individual Fund Financial Statements and Schedules: . Schedule of Revenues, Expenses and Changes in Net Assets – Budget to Actual – Proprietary Funds: Enterprise Funds: Transit Service Operations Fund Valley Metro Rail Fund 1 3 14 15 17 18 19 20 21 22 23 24 25 26 27 28 51 52 Statistical Section Statistical Section Contents Financial Trends 53 i Valley Metro Regional Public Transportation Authority Table of Contents (Concluded) Comprehensive Annual Financial Report and Single Audit Reports Fiscal Year Ended June 30, 2011 Net Assets by Component Changes in Net Assets Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Revenue Capacity Sales Tax Revenues by Component Maricopa County Transportation Excise Tax Revenue Distributions Maricopa County Transportation Excise Tax Revenue Collections by Category Arizona Transaction Privilege Tax Excise Tax Rates by Category Debt Capacity Transportation Excise Tax Revenue Bonds – Bond Coverage Outstanding Debt by Type Debt Service Revenue and Cost per Capita Demographic and Economic Information Regional Population Statistics Top Ten Employers for Maricopa County Local Transportation Assistance Funds Demographic and Economic Statistics Operating Information Full-time Equivalent Employees by Function/Program Operating Indicators by Program: Fixed Route System Dial-a-Ride System Shuttle / Circulator System Capital Asset Statistics by Function/Program Revenue Vehicles for Transit Service Operations Page 54 56 60 62 64 66 68 69 71 72 73 74 76 77 79 80 81 83 87 89 Single Audit Section Supplementary Schedule of Expenditures of Federal Awards Notes to the Supplementary Schedule of Expenditures of Federal Awards Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards Report on Compliance With Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance With OMB Circular A-133 Schedule of Findings and Questioned Costs ii 90 91 92 94 97 Introductory Section The Introductory Section includes the Authority’s transmittal letter and the Certificate of Achievement for Excellence in Financial Reporting. (This page intentionally left blank) x (This page intentionally left blank) Financial Section The Financial Section includes the independent auditors’ report, Management’s Discussion and Analysis (MD&A), the basic financial statements (government-wide statements and fund statements), notes to the financial statements, other Required Supplementary Information (RSI) and other financial schedules. CERTIFIED PUBLIC ACCOUNTANTS Hein f 25 versary th A nni 1986-2011 INDEPENDENT AUDITORS’ REPORT Chair and Members of the Board of Directors Valley Metro Regional Public Transportation Authority We have audited the accompanying financial statements of the governmental activities, the businesstype activities, and each major fund of Valley Metro Regional Public Transportation Authority (the Authority), as of and for the year ended June 30, 2011, which collectively comprise the Authority’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Authority’s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, and each major fund of the Valley Metro Regional Public Transportation Authority, as of June 30, 2011, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparisons for the General Fund and major special revenue funds for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 1, the Authority implemented the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, for the year ended June 30, 2011, which represents a change in accounting principle. In accordance with Government Auditing Standards, we have also issued our report dated February 27, 2012, on our consideration of Valley Metro Regional Public Transportation Authority’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. 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 10120 N. Oracle Road, Tucson, Arizona 85704 Tel: (520) 742-2611 Fax: (520) 742-2718 Co. HEINFELD, MEECH & CO., P.C. & , Meech eld Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 3 through 13 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by 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 auditing standards generally accepted in the United States of America, 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Authority’s financial statements as a whole. The accompanying supplementary information such as the introductory section, individual fund financial schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements. The individual fund financial schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the 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. HEINFELD, MEECH & CO., P.C. Certified Public Accountants February 27, 2012 Page 2 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis As management of Valley Metro Regional Public Transportation Authority (the Authority), we offer this narrative overview and analysis of the financial activities of the Authority for the fiscal year ended June 30, 2011. This discussion and analysis is designed to (1) assist the reader in focusing on significant financial issues, (2) provide an overview of the Authority’s financial activity, (3) identify changes in the Authority’s financial position, (4) identify any material deviations from the financial plan (adopted annual budget) and (5) identify individual fund issues or concerns. Financial Highlights • The Authority’s total net assets decreased $25.8 million in FY 2011, an increase of $6.9 million in governmental activities and a decrease $32.6 million in business-type activities. Total net assets of the Authority are $90.6 million, of which $67.7 million is unrestricted. • The governmental activities revenues increased by approximately $3.7 million (3.5%) over the previous year. • The business-type activities revenues decreased by approximately $11.5 million (25%) from the previous year. • At June 30, 2011, the Authority’s governmental fund balance sheet reported a combined ending fund balance of $52.4 million, an increase of $6.2 million (13.5%) compared to the previous fiscal year. OVERVIEW OF THE FINANCIAL STATEMENTS The financial statements are presented as follows: • Government-wide reporting – presents financial statements on a government-wide basis. • Fund financial statements – presents governmental, proprietary and fiduciary fund financial statements, with the focus on major funds within each fund type. • Measurement focus for governmental activities – in the government-wide financial statements all activities, including the governmental activities, are reported using the economic resources measurement focus and accrual basis of accounting. The current financial resources focus and modified accrual basis of accounting are followed for the governmental fund financial statements. • Budgetary reporting – the display of both the original adopted budget and the revised budget in the budgetary comparison schedules is required by GAAP. These schedules are only required for the general fund and major special revenue funds; these statements are presented as part of the basic financial statements, and the Authority has presented this information for the proprietary funds in the other supplementary information section as additional information. • Required narrative analysis – the financial statements are required to be accompanied by narrative introduction and analytical overview of the government’s financial activities in the form of “Management’s Discussion and Analysis” (MD&A). 3 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued) As presented below, the financial section of the Comprehensive Annual Financial Report (CAFR) for the Authority consists of this discussion and analysis, the basic financial statements and required supplementary information (other than MD&A). There are also additional non-required supplementary schedules presented after the basic financial statements. The basic financial statements include the government-wide financial statements, fund financial statements, including the budgetary statements for the general fund and major special revenue funds, and notes to the financial statements. Government-wide Financial Statements The government-wide financial statements (see pages 14 – 16) are designed to provide a broad overview of the Authority’s finances in a manner similar to those used by private businesses. All of the activities of the Authority, except those of a fiduciary nature, are included in these statements. The activities of the Authority are broken down into two columns on these statements – governmental activities and business-type activities. A total column for the Authority is also provided. • The governmental activities include the basic services of the Authority including general government (administration), regional planning, transportation demand management and regional customer services. Grants and general revenues generally support these activities. • The business-type activities include the private sector type activities which are transit service operations and light rail transit. These activities are partially supported by user charges and provide substantial benefits, both direct and indirect, to the public at large. The statement of net assets presents information on all of the Authority’s assets and liabilities, both current and noncurrent, with the difference between the two reported as net assets. The focus on net assets is designed to be similar to the emphasis for businesses. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Authority is improving or deteriorating. To assess the overall health of the 4 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued) Authority, other indicators, including non-financial indicators like the Authority’s tax base and the condition of its capital assets, should also be considered. The statement of activities presents information showing how the Authority’s net assets changed over the most recent fiscal year. Since full accrual accounting is used for the government-wide financial statements, all changes to net assets are reported at the time that the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. This statement also focuses on both the gross and net costs of the various functions of the Authority, based only on direct functional revenues and expenses. This is designed to show the extent to which the various functions depend on general taxes and revenues for support. Fund Financial Statements Also presented are more traditional fund financial statements for governmental funds, proprietary funds and fiduciary funds. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or conditions. Funds are used to ensure and demonstrate compliance with finance-related legal requirements as well as for managerial control to demonstrate fiduciary responsibility over the assets of the Authority. Governmental funds – Governmental funds are used to account for most of the Authority’s basic services. Unlike the governmental activities column on the government-wide financial statement, these fund financial statements (pages 17 - 18) focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information is useful in looking at the Authority’s near-term financial requirements. Since the governmental activities on the statements focus on near-term spendable resources, while the governmental activities on the government-wide financial statements have a longer term focus, a reconciliation of the differences between the two statements is provided following the fund financial statements and is also provided in Note 2 (pages 38 - 39). Proprietary funds – Proprietary funds are used to account for business-type activities of the Authority. Enterprise funds are used for activities that primarily serve customers outside the governmental unit. The proprietary fund financial statements (pages 23 - 25) are prepared using the same long-term focus as the government-wide financial statements. The enterprise funds generally provide information similar to the business-type activities column of the government-wide financial statements, but provide more detail and additional information (i.e., cash flows). Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of others. Fiduciary funds are not included in the government-wide financial statements because the resources of those funds are not available to support programs of the Authority. The fiduciary fund statement (page 26) is prepared on the same basis as the government-wide and proprietary fund statements. Notes to the Financial Statements – The notes to the financial statements (pages 28 – 50) provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements and should be read with the financial statements. 5 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued) Required supplementary information other than MD&A – Governments have an option of including the budgetary comparison statements of the general fund and major special revenue funds as either part of the fund financial statements within the basic financial statements, or as required supplementary information after the footnotes. The Authority has chosen to present these budgetary statements as part of the basic financial statements. GOVERNMENT-WIDE FINANCIAL ANALYSIS The following tables and analysis discuss the financial position and changes to the financial position for the Authority as a whole as of and for the year ended June 30, 2011, with comparative information for the previous year. Net Assets Net assets may serve over time as a useful indicator of a government’s financial position. The following table reflects the condensed Statement of Net Assets as of June 30, 2011 compared to the prior year: Condensed Statement of Net Assets As of June 30 (in thousands of dollars) Governmental Activities 2011 Current and other assets Noncurrent assets Cash and cash equivalents Deferred charges Capital assets Total assets $ 53,235.3 Business-type Activities 2010 $ 1,346.6 46,808.8 2011 $ 43,424.5 689.8 33,376.2 756.5 93,285.7 $ 170,842.9 $ Total Primary Government 2010 $ 37,341.4 2011 $ 96,659.8 2010 $ Percent Change 84,150.2 14.9% 68,556.2 816.9 108,271.0 33,376.2 756.5 94,632.3 68,556.2 816.9 108,960.8 -51.3% -7.4% -13.2% $ 214,985.5 $ 225,424.8 $ 262,484.1 -14.1% 29,948.1 103,161.7 $ 38,262.1 106,348.4 $ $ 38,945.9 107,186.3 -19.3% -3.5% $ 133,109.8 $ 144,610.5 $ 134,843.6 $ 146,132.2 -7.7% $ 54,581.9 $ 47,498.6 $ 1,486.5 247.2 $ 683.8 837.9 Total liabilities $ 1,733.7 $ 1,521.7 Net assets: Invested in capital assets, net of related debt Restricted Unrestricted $ 1,346.6 178.4 51,323.2 $ 689.8 45,287.1 $ 21,322.7 16,410.2 $ 106,601.8 (36,226.8) $ 22,669.3 178.4 67,733.4 $ 107,291.6 9,060.3 -78.9% 100.0% 647.6% $ 52,848.2 $ 45,976.9 $ 37,732.9 $ 70,375.0 $ 90,581.1 $ 116,351.9 -22.1% Other liabilities Long-term liabilities Total net assets 31,434.6 103,409.0 The Authority’s total net assets decreased $25.8 million in FY 2011, an increase of $6.9 million in governmental activities and a decrease of $32.6 million in business-type activities. Total net assets of the Authority are $90.6 million, of which $67.7 million is unrestricted. 6 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued) A portion of net assets (25.0%) represents the Authority’s investment in capital assets net of accumulated depreciation and related outstanding debt used to acquire those assets. The Authority uses these capital assets to provide services to the region’s citizens; consequently, it is not the Authority’s intention to sell these assets, and they are therefore not available for future spending. The capital assets are reported net of related debt; as discussed in the Capital Assets and Debt Administration section (pages 11 - 12), the Authority pledged future transportation excise tax revenues to repay the outstanding debt obligations. The capital assets themselves are not intended to be used to liquidate these liabilities. An additional 0.2% ($0.2 million) of the Authority’s net assets reflects resources that are subject to external restrictions, of which the majority is restricted for compensated absences. The remaining 74.8% ($67.7 million) represents unrestricted resources that may be used to meet the Authority’s ongoing obligations to citizens, member agencies, contractors and creditors within the respective governmental and business-type activities. The governmental activities reported an increase of $6.0 million (13.3%) of unrestricted net assets over the prior year largely attributed to an increase in the interfund balance relating to short-term loans to cover temporary cash deficits in the Transit Service Operations Fund. The significant increase of $47.0 million (129.9%) of unrestricted net assets over the prior year in business-type activities is significantly due to the change in classification of the invested in capital assets net of related debt to accurately report net assets from capital purchases net of the 2009 bond issuance. Changes in Net Assets The following table compares the revenues and expenses of the Authority for the current and previous fiscal year. The increase (decrease) in net assets for each year represents the extent to which revenues were over (under) expenses during the year. (Remainder of this page intentionally left blank) 7 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued) Changes in Net Assets Fiscal year ended June 30 (in thousands of dollars) Governmental Activities 2011 REVENUES Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Sales taxes Interest earnings Other 2010 150.4 2,055.9 2010 2011 2010 $ 27,253.1 2,607.8 14,996.6 $ 23,563.8 4,431.4 8,289.3 $ 27,403.5 4,663.7 14,996.6 -14.0% -5.0% -44.7% - 107,111.1 79.9 233.4 103,722.5 231.4 73.5 - - 215.8 560.6 587.5 650.6 107,111.1 295.7 794.0 103,722.5 818.9 724.1 3.3% -63.9% 9.7% 109,900.3 106,233.7 34,585.0 46,095.6 144,485.3 152,329.3 -5.1% 2,274.7 1,542.4 7,995.4 1,966.3 1,822.0 1,808.2 8,497.2 1,879.1 - - 2,274.7 1,542.4 7,995.4 1,966.3 1,822.0 1,808.2 8,497.2 1,879.1 24.8% -14.7% -5.9% 4.6% - - 90,336.8 66,140.2 93,074.5 60,704.3 90,337 66,140 93,074.5 60,704.3 -2.9% 9.0% 13,778.8 14,006.5 156,477.0 153,778.8 170,255.8 167,785.3 1.5% Excess (deficit) before transfers Transfers in (out) 96,121.5 (89,250.2) 92,227.2 (84,745.3) (121,892.0) 89,250.2 (107,683.2) 84,745.3 (25,770.5) - (15,456.0) - 66.7% N/A Increase (decrease) in net assets $ 6,871.3 $ 7,481.9 $ (25,770.5) $ (15,456.0) 66.7% Total expenses $ Percent Change 2011 - EXPENSES Governmental activities: Regional planning Transportation demand management Regional customer services Administration Business-type activities: Transit service operations Light rail transit 189.0 2,286.9 Total Pimary Government $ 23,374.8 2,144.5 8,289.3 Total revenues $ Business-type Activities $ (32,641.8) $ (22,937.9) The largest financing source for the Authority as a whole is sales taxes (74.1%). The major funding sources of governmental activities are sales taxes (97.5%) and federal and state grants (2.1%). The major funding source for business-type activities are charges for services (67.6%) and transfers from the government activities (72.1%). Business-type activities also received substantial federal grants and contribution revenue (8.4%). The Authority’s overall revenues decreased by $7.8 million, or 5.1%, compared to last fiscal year. Total revenues of governmental activities increased by $3.7 million, or 3.5% over the previous year mainly due to the sales tax revenues in the Public Transportation Fund. Program revenues of business-type activities decreased by $11.5 million, or 25%, compared to last fiscal year, which is largely attributable to decreases in Federal Transit Administration (FTA) capital grants. The Authority’s sales tax revenue over the prior year is limited to incorporating those elements necessary for implementing the sixth year of the Proposition 400 Transit Life Cycle Program (TLCP). The Public Transportation Fund (PTF) revenues are restricted to the implementation of the transit element of the Regional Transportation Plan (RTP). The laws pertaining to Regional Area Road Fund (RARF) revenues have changed beginning with FY 2006. Most notably, as a result of changes in the distribution of funds made by House Bill 2292, the amount of money that the Authority received previously has been divided in two, with one half going to the Maricopa Association of Governments (MAG). Additionally, the allowable use of these funds has changed as well. Previously, RARF was unrestricted as to use. However, RARF revenue is now limited to fund administration in the General Fund and planning and is no longer available to fund transit services. 8 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued) The largest user of resources for the Authority as a whole is the business-type activities (91.9%). For the governmental activities, the users of resources are regional customer services (58.0%), administration (14.3%), regional planning (16.5%), and transportation demand management (11.2%). Overall expenses increased by $2.5 million, or 1.5%, compared to last fiscal year. The governmental expenses decreased by $ 0.2 million, or 1.6%, over the prior year due to conservative spending practices. The expenses of business-type activities increased by $2.7 million, or 1.8%, compared to the prior year due to increase of disbursements in the Valley Metro Rail Fund. The increases in the business-type activities’ expenses were adhered to plan as the Authority entered its fourth year of implementing the Proposition 400 TLCP. FINANCIAL ANALYSIS OF THE AUTHORITY’S FUNDS As previously mentioned, the Authority maintains fund accounting to demonstrate compliance with budgetary and legal requirements. The following is a brief discussion of financial highlights from the fund financial statements. Governmental Funds The focus of the governmental funds financial statements (pages 17 – 22) is to provide information on near-term inflows, outflows and balances of spendable resources. The fund balance of the governmental funds is $52.3 million, an increase of $6.2 million, or 13.5%, from the previous year. Of the $52.4 million total fund balance, the Authority has restricted $0.8 million for compensated absences and the remainder is in unassigned fund balance in the General Fund (see Note 5 - page 42). Unassigned fund balance may serve as a useful indicator of a government’s net resources available for spending at the end of the year. Of the $52.4 million fund balance, $52.2 million is reported in the General Fund which includes $47.6 million of Public Transportation Funds. With the implementation of GASB Statement No. 54, the General Fund includes the Public Transportation Fund, the Regional Customer Service and the Capital and Other Grants Funds. Previously the Public Transportation Fund was shown separately and the Regional Customer Service Fund and the Capital and Other Grants Funds were part of the non major government funds. The Public Transportation Fund was a fund developed in FY 2006 for activities relating to the first year of Proposition 400 Public Transportation Fund (PTF) sales tax revenues. The $102.7 million PTF sales tax revenue increased by $3.3 million from the last year. The Regional Customer Services Fund accounts for activities related to marketing, customer services, Americans with Disabilities (ADA) compliance, contract maintenance and quality monitoring, and farebox data reporting for the region. It provides information and customer service for the region through its centralized transit information call center. The Capital and Other Grants Fund accounts for state and federal grant revenues and expenditures not related to planning, transportation demand management or regional customer services. 9 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued) The Transit Planning Fund accounts for activities related to the development of strategies to promote social and economic well-being of the community through the provision of an efficient and effective regional transit system. Revenues increased $0.6 million (254.1%) due to the increase of $.4 million in Federal grants and $.2 million in charges for services to Valley Metro Rail to complete an Origins & Destinations study. The expenditures increased 24.8% from the prior year due to an increase in short range planning and to complete an Origins and Destinations study. Prior to 2006, sales taxes allocated to the Transit Planning Fund were shown as revenues. These monies are now shown as transfers in. Total transfers in decreased 9.5% over the prior year. The Transportation Demand Management Fund accounts for activities related to the countywide ridesharing program, trip reduction program and clean air campaign. Revenues decreased 16.0% and expenditures decreased 14.7% from the prior year due to decreases in grant funds available for regional rideshare, telework and bike education programs. Proprietary Funds The proprietary fund financial statements (pages 23 – 25) are prepared on the same accounting basis and measurement focus as the government-wide financial statements, but provide additional detail since each enterprise fund is a major fund and is shown discretely on the fund statements. The Transit Service Operations Fund accounts for the activities related to the operations of local and express bus, paratransit and vanpool services for the region. Net assets decreased $35.6 million (58%) over the prior year due mainly to increases in transfers out to Valley Metro Rail for bond proceeds, decreases in Federal grants, and reduction in bus service. The Valley Metro Rail Fund accounts for staffing and administrative services that are contractually provided by the Authority to Valley Metro Rail, Inc. (VMR) and the PTF sales tax revenues and expenses of such funds related to the Regional Transportation Plan approved light rail projects. Valley Metro Rail, Inc. is a nonprofit corporation organized for the purpose of planning, designing, constructing and operating the light rail transit project in metropolitan Phoenix (see Note 1(a) on page 28). The Valley Metro Rail Fund has net assets of $12.0 million as of June 30, 2011 as compared to net assets of $9.0 million at the end of the previous year. In fiscal year 2011, the Valley Metro Rail Fund received 42.4% of the total PTF sales tax revenues distributed to the Authority from the Arizona Department of Revenue, totaling $40.8 million and received 11.3% of the $4.4 million RARF sales tax revenue received by the Authority, totaling $0.5 million. Additionally, the Valley Metro Rail Fund received $19.5 million of transfers in of 2009 Bond proceeds from the Transit Service Operations Fund for VMR capital expenditure reimbursements. GENERAL FUND BUDGETARY HIGHLIGHTS During the year there was a decrease $0.2 million in appropriations between the original and final amended expenditure budget. For the year ended June 30, 2011, actual expenditures were under the adopted budget amounts by $0.5 million. The positive variance was attributable to the Marketing and Finance & Management Services activities of the General Fund being under budget because of conservative spending practices. 10 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued) CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets As of June 30, 2011, the Authority had $94.6 million invested in various capital assets, net of accumulated depreciation, for its governmental and business-type activities. The overall net decrease in the Authority’s capital assets for the current fiscal year was 13.2%, an increase 95.2% for governmental activities and a decrease of 13.8% for business-type activities for the current year. Major capital asset events in the current year attributing to the decrease included the following: • • Depreciation expense in the current year totaled $11.7 million, $0.5 million for governmental activities capital assets and $11.2 million for business type capital assets Projects that had been recorded as work in process in the prior year were completed and subsequently conveyed to various member cities. This decreased the capital assets in total by $7.6 million. The following table provides a breakdown of capital assets of the Authority at June 30, 2011 with comparative information for the previous year. Additional information on the Authority’s capital assets may be found in Note 7 on pages 44 – 45. Capital Assets, Net of Accumulated Depreciation As of June 30 (in thousands of dollars) Governm ental Activities 2011 Non-depreciable assets: Land $ Work-in-progress Depreciable assets: Transit fleet Building Site improvements Computers & softw are Equipment Vehicles Furniture & fixtures Total assets $ Business-type Activities 2010 - $ 384.5 317.9 460.1 184.0 1,346.6 $ 2011 - $ 5,292.0 2,719.1 Total Prim ary Governm ent 2010 $ 5,292.0 13,467.3 338.4 242.7 15.1 93.6 62,411.0 12,517.4 6,610.4 100.6 3,613.4 21.8 65,484.3 12,808.5 6,823.2 211.8 4,141.5 42.4 689.8 $ 93,285.7 $ 108,271.0 2011 $ 2010 5,292.0 $ 5,292.0 2719.1 13,467.3 62411.0 12517.4 6994.9 418.6 4073.5 0.0 205.8 $ 94,632.3 Percent Change 0.0% -79.8% 65,484.3 12,808.5 6,823.2 550.2 4,384.2 15.1 136.0 -4.7% -2.3% 2.5% -23.9% -7.1% -100.0% 51.3% $ 108,960.8 -13.2% Debt Administration At June 30, 2011, the Authority had total bonded debt outstanding (including unamortized premium) of $105.1 million related to business-type activities. The Authority has pledged future transportation excise tax revenues to repay this outstanding debt. 11 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued) Business-type Activities 2011 Revenue bonds payable Plus unamortized premium: Bond premium payable $ 2010 100.1 $ 5.0 Total $ 105.1 100.1 5.4 $ 105.5 The Authority’s current bond ratings on transportation excise revenue tax bonds are AA+ from Standard & Poor’s and AA+ from Fitch. Additional information on the Authority’s bonded debt and other long-term liabilities can be found in Note 9 on pages 46 - 47. ECONOMIC FACTORS RPTA undertook a number of key projects during FY 2011, as the agency continues the implementation of the TLCP operating and capital projects. Funding for these projects and studies comes from a combination of sales tax revenues (Public Transportation Funds [PTF] and Regional Area Road Funds [RARF]) and federal grants. The key initiatives for fiscal year 2011 included: • • • • • • • • • Opening of the Valley Metro Mobility Center with a “transit walk” offering in-person Americans with Disabilities Act (ADA) assessments for the first time in the Valley. Start-up of Route 184, offering bus service to Phoenix-Mesa Gateway Airport, as well as public transportation for the first time south of Superstition Springs Mall on Power Road. New LINK bus route began on Arizona Avenue and Country Club Drive allowing a direct public transit link to METRO light rail from Chandler and Gilbert. Developed a new model for providing ADA Dial-a-Ride service in the West Valley utilizing a partnership with Discount Cab. For the first time ever, provided bus service to the Gila River Indian Community. Enhanced the mobile website and began using bar codes for enhanced communication to passengers. Kicked off the NextRide program to assist passengers with getting automated next bus and train information using a cell phone or the internet. Implemented the Interactive Voice Response system for East Valley Dial-a-Ride service making it easier for passengers to check on the status of upcoming trips or cancel trips. A real time bus tracker was initiated for the LINK bus routes, which is available at the station or by using the internet or a cell phone to see the exact location of a bus in real time. 12 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Concluded) The adopted FY 2012 combined operating and capital budget is $233.1 million (up approximately 4% from fiscal year 2011). The FY 2012 budget includes the sixth full year of projects funded with Proposition 400 PTF sales tax revenues ($103.4 million). Of the $103.4 million PTF revenue budgeted, $58.7 million is for bus operating and bus capital and $44.7 million is for light rail/high capacity capital. The total operating budget of $84.7 million represents a $563,000 (1%) decrease under the fiscal year 2011 operating budget of $85.3 million. The total capital budget of $148.4 million represents an $8.7 million (6%) increase over the fiscal year 2011 capital budget of $139.7 million. The major reason for the decrease in the operating budget is directly related to the projects programmed in the Transit Life Cycle Program (TLCP) for fiscal year 2012. The budget is balanced; decreases in net assets other than capital assets are not anticipated for fiscal year 2012. FINANCIAL CONTACT The financial report is designed to provide a general overview of the Authority’s finances and to demonstrate accountability for the use of public funds. Questions about any of the information provided in this report, or requests for additional financial information should be addressed to the Authority’s Acting Finance Director, Valley Metro RPTA, 101 N. 1st Avenue, Suite 1100, Phoenix, AZ 85003. 13 (This page intentionally left blank) Basic Financial Statements • Government-wide Financial Statements • Fund Financial Statements • Notes to the Financial Statements Valley Metro Regional Public Transportation Authority Statement of Net Assets June 30, 2011 Governmental Activities Business-type Activities Total $ 34,574,298 10,006,801 8,643,989 10,169 53,235,257 $ 10,989,469 41,076,533 (8,643,989) 2,500 43,424,513 $ 45,563,767 51,083,334 12,669 96,659,770 Assets Current Assets: Cash and cash equivalents Due from other governments Interfund balances Prepaid Items Total current assets Noncurrent Assets: Cash and cash equivalents Deferred charges Capital assets, not being depreciated Capital assets, net of accumulated depreciation Total noncurrent assets Total assets 1,346,607 1,346,607 33,376,169 756,476 8,011,141 85,274,532 127,418,318 33,376,169 756,476 8,011,141 86,621,139 128,764,925 54,581,864 170,842,831 225,424,695 276,041 579,191 30,198 601,049 3,223,865 99,001 21,234,150 2,265,000 2,622,659 503,466 3,499,906 678,192 21,264,348 2,265,000 2,622,659 1,104,515 1,486,479 29,948,141 31,434,620 247,212 247,212 377,797 102,783,942 103,161,739 625,009 102,783,942 103,408,951 1,733,691 133,109,880 134,843,571 1,346,607 178,382 51,323,184 21,322,728 16,410,223 22,669,335 178,382 67,733,407 $ 52,848,173 $ 37,732,951 $ 90,581,124 Liabilities Liabilities: Current Liabilities Accounts payable Accrued salaries and benefits Due to other governments Revenue bonds payable Bond interest payable Compensated absences payable Total current liabilities Noncurrent liabilities: Compensated absences payable Revenue bonds payable, including unamortized premium Total noncurrent liabilities Total liabilities Net Assets Invested in capital assets, net of related debt Restricted Unrestricted Total net assets See accompanying notes to the financial statements. 14 Valley Metro Regional Public Transportation Authority Statement of Activities Fiscal Year June 30, 2011 Program Revenues Charges for Services Expenses Programs Governmental activities: Regional planning: Long range Short range Capital Program support Transportation demand management: Trip reduction Ridesharing Other programs Regional customer services: Marketing Call center Other programs Administration: Executive director’s office Finance & management services Total governmental activities Business-type activities: Transit service operations Light rail transit Total business-type activities Total primary government 101,121 1,063,291 113,073 997,203 $ Operating Grants & Contributions 189,000 - $ 799,840 851,443 635,647 - Capital Grants & Contributions $ - 909,742 590,062 42,633 - - - 2,201,863 3,833,319 1,960,196 - - - 1,284,141 682,197 13,778,841 189,000 2,286,930 - 90,336,819 66,140,185 156,477,004 $ 170,255,845 15,173,161 8,201,600 23,374,761 23,563,761 2,144,496 2,144,496 4,431,426 8,289,329 8,289,329 8,289,329 $ $ $ General revenues: Sales taxes: Public transportation funds Regional area road funds Interest earnings Other income Transfers in (out) Total general revenues & transfers Change in net assets Net assets - beginning Net assets - ending (Continued) See accompanying notes to the financial statements. 15 Net (Expense) Revenues and Changes in Net Assets Governmental Activities Business Type Activities $ $ 887,719 (211,848) 522,574 (997,203) $ 887,719 (211,848) 522,574 (997,203) (909,742) (590,062) (42,633) - (909,742) (590,062) (42,633) (2,201,863) (3,833,319) (1,960,196) - (2,201,863) (3,833,319) (1,960,196) (1,284,141) (682,197) (11,302,911) - (1,284,141) (682,197) (11,302,911) $ (11,302,911) (64,729,833) (57,938,585) (122,668,418) $ (122,668,418) 102,688,559 4,422,559 79,874 233,357 (89,250,166) 18,174,183 6,871,272 52,848,173 (64,729,833) (57,938,585) (122,668,418) $ (133,971,329) 215,800 560,643 89,250,166 90,026,609 102,688,559 4,422,559 295,674 794,000 108,200,792 (32,641,809) 45,976,901 $ - Total (25,770,537) 70,374,760 $ 37,732,951 116,351,661 $ 90,581,124 16 Valley Metro Regional Public Transportation Authority Balance Sheet Governmental Funds June 30, 2011 Transit Planning General Transportation Demand Management Total Governmental Funds Assets Cash and cash equivalents Due from other governments Due from other funds Prepaid Items Total assets $ 34,574,298 9,154,974 9,251,963 6,797 $ 52,988,032 $ $ $ $ 623,452 623,452 $ 37,223 10,595 475,428 - $ $ 228,375 3,372 231,747 $ 34,574,298 10,006,801 9,251,963 10,169 $ 53,843,231 15,854 5,171 132,546 - $ Liabilities and Fund Balances Liabilities: Accounts payable Accrued salaries and benefits Due to other funds Due to other governments Total liabilities Fund balances: Nonspendable: Prepaids Restricted: Unassigned: Total fund balances Total liabilities and fund balances 222,964 563,425 30,198 276,041 579,191 607,974 30,198 816,587 523,246 153,571 1,493,404 6,797 52,164,648 100,206 - 3,372 74,804 - 10,169 175,010 52,164,648 52,171,445 $ 52,988,032 100,206 623,452 78,176 231,747 52,349,827 $ 53,843,231 $ $ Reconciliation of the balance sheet to the statement of net assets Fund balances, total governmental funds balance sheet $ 52,349,827 Amounts reported for governmental activities in the statement of net assets are different because: Governmental capital assets Less accumulated depreciation Governmental compensated absences Net assets of governmental activities, statement of net assets See accompanying notes to the financial statements. 17 4,041,918 (2,695,311) (848,261) $ 52,848,173 Valley Metro Regional Public Transportation Authority Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Fiscal Year Ended June 30, 2011 General Revenues: Sales taxes: Public transportation funds $ Regional area road funds Intergovernmental: State & county grants & pass through gra Federal Transit Administration CMAQ Charges for services Interest earnings Miscellaneous Total revenues Transportation Demand Management Transit Planning 102,688,559 4,422,559 $ - $ - Total Governmental Funds $ 102,688,559 4,422,559 149,065 79,874 191,489 107,531,546 650,775 189,000 48 839,823 635,647 851,443 41,820 1,528,910 635,647 799,840 851,443 189,000 79,874 233,357 109,900,279 - 101,121 1,063,291 113,073 997,203 - 101,121 1,063,291 113,073 997,203 - - 909,742 590,062 42,633 909,742 590,062 42,633 Expenditures: Current: Regional planning: Long range Short range Capital Program support Transportation demand management: Trip reduction Ridesharing Other programs Regional customer services: Marketing Call center Other programs Administration: Executive director’s office Finance & management services Capital outlay Total expenditures 2,201,863 3,833,319 1,815,740 - - 2,201,863 3,833,319 1,815,740 1,284,141 359,637 1,113,456 10,608,156 2,274,688 1,542,437 1,284,141 359,637 1,113,456 14,425,281 Excess (deficiency) of revenues over (under) expenditures 96,923,390 (1,434,865) (13,527) 95,474,998 (90,697,745) (90,697,745) 1,434,865 1,434,865 12,714 12,714 1,447,579 (90,697,745) (89,250,166) Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balance, beginning as restated Fund balance, ending 6,225,645 $ 45,945,800 52,171,445 See accompanying notes to the financial statements. 18 $ 100,206 100,206 (813) $ 78,989 78,176 6,224,832 $ 46,124,995 52,349,827 Valley Metro Regional Public Transportation Authority Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Fiscal Year Ended June 30, 2011 Net change in fund balances, total governmental funds $ 6,224,832 The change in net assets reported for governmental activities in the statement of different because: 1. Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of capitalized assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay expense ($1,114,341) exceeded depreciation expense ($453,736) in the current period. 660,607 2. In the Statement of Activities, only the gain/loss on the sale of capital assets is reported, whereas in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net assets differ from the change in fund balance by the book value of capital assets sold. (3,786) 3. The governmental funds, under the modified accrual basis of accounting, do not report the unpaid compensated absences as an expenditure or liability, as they are not paid with expendable available financial resources. In the statement of activities, however, which is presented on the accrual basis, expenses and liabilities are reported regardless of when financial resources are used. Change in net assets of governmental activities, statement of activities See accompanying notes to the financial statements. 19 (10,381) $ 6,871,272 Valley Metro Regional Public Transportation Authority Statement of Revenues, Expenditures and Changes in Fund Balance – Budget to Actual General Fund Fiscal Year Ended June 30, 2011 Budgeted Amounts Original Final Revenues: Sales taxes: Regional area road funds Public Transportation fund Intergovernmental: Federal Transit Administration Interest earnings Miscellaneous Total revenues $ 4,467,000 97,300,000 $ 4,422,558 98,800,000 Variance with Final Budget Over (Under) Actual Amounts $ 4,422,559 102,688,559 $ 1 3,888,559 100,000 100,000 150,515 102,117,515 150,000 100,000 150,515 103,623,073 149,065 79,874 191,489 107,531,546 (935) (20,126) 40,974 3,908,473 Expenditures: Current: Regional Customer Services: Marketing Call Center Other Programs Executive director’s office Finance & management services Capital Outlay Total expenditures 2,581,525 3,819,385 2,184,385 1,255,083 591,671 442,000 10,874,049 2,350,000 3,819,385 1,818,385 1,255,083 1,094,725 773,901 11,111,479 2,201,863 3,833,319 1,815,740 1,284,141 359,637 1,113,456 10,608,156 (148,137) 13,934 (2,645) 29,058 (735,088) 339,555 (503,323) Excess of revenues over expenditures 91,243,466 92,511,594 96,923,390 4,411,796 8,876,780 (100,120,246) (91,243,466) 9,064,210 (102,450,759) (93,386,549) (90,697,745) (90,697,745) (9,064,210) 11,753,014 2,688,804 6,225,645 7,100,600 45,945,800 12,867,220 Other financing uses: Transfers in Transfers out Total other financing uses Net change in fund balance - Fund balance, beginning Fund balance, ending (874,955) 33,078,580 $ 33,078,580 33,078,580 $ See accompanying notes to the financial statements. 20 32,203,625 $ 52,171,445 $ 19,967,820 Valley Metro Regional Public Transportation Authority Statement of Revenues, Expenditures and Changes in Fund Balance – Budget to Actual Transit Planning Fund Fiscal Year Ended June 30, 2011 Budgeted Amounts Original Final Revenues: Intergovernmental: Federal Transit Administration Charges for Services Miscellaneous Total revenues $ 650,775 189,000 48 839,823 136,723 985,728 145,187 1,259,743 2,527,381 136,723 1,220,898 145,187 1,227,743 2,730,551 101,121 1,063,291 113,073 997,203 2,274,688 (35,602) (157,607) (32,114) (230,540) (455,863) (1,799,670) (1,832,295) (1,434,865) 397,430 1,799,670 1,799,670 1,832,295 1,832,295 1,434,865 1,434,865 (397,430) (397,430) Net change in fund balance - - - - Fund balance, beginning - - 100,206 100,206 Excess of revenues over expenditures Other financing uses: Transfers in Total other financing uses Fund balance, ending $ $ Actual Amounts 709,256 189,000 898,256 Expenditures: Current: Regional planning: Long range Short range Capital Program support Total expenditures 701,711 26,000 727,711 Variance with Final Budget Over (Under) - $ See accompanying notes to the financial statements. 21 - $ 100,206 $ $ (58,481) 48 (58,433) 100,206 Valley Metro Regional Public Transportation Authority Statement of Revenues, Expenditures and Changes in Fund Balance – Budget to Actual Transportation Demand Management Fund Fiscal Year Ended June 30, 2011 Actual Amounts Budgeted Amounts Original Final Revenues: Intergovernmental: State grants & pass through grants CMAQ Miscellaneous Total revenues $ Expenditures: Current: Transportation Demand Management: Trip reduction Ridesharing Other programs Total expenditures 507,238 994,000 1,501,238 $ 512,238 994,000 1,506,238 $ 635,647 851,443 41,820 1,528,910 Variance with Final Budget Over (Under) $ 907,238 594,000 1,501,238 912,238 594,000 1,506,238 Excess of revenues over expenditures - - (13,527) (13,527) Other financing uses: Transfers in Total other financing uses - - 12,714 12,714 12,714 12,714 Net change in fund balance - - Fund balance, beginning - - Fund balance, ending $ - See accompanying notes to the financial statements. 22 $ - 909,742 590,062 42,633 1,542,437 123,409 (142,557) 41,820 22,672 (2,496) (3,938) 42,633 36,199 (813) (813) 78,989 $ 78,176 78,989 $ 78,176 Valley Metro Regional Public Transportation Authority Statement of Net Assets Proprietary Funds June 30, 2011 Business-Type Activities - Enterprise Funds Total Transit Service Valley Metro Proprietary Operations Rail Funds Assets Current assets Cash and cash equivalents Due from other governments Due from other funds Prepaid Items Total current assets $ Noncurrent assets Cash and cash equivalents Deferred charges Capital assets, not being depreciated Capital assets, net of accumulated depreciation 33,924,348 5,765,381 2,500 39,692,229 $ 10,989,469 7,152,185 4,848,951 22,990,605 $ 10,989,469 41,076,533 10,614,332 2,500 62,682,834 33,085,997 756,476 8,011,141 290,172 - 33,376,169 756,476 8,011,141 85,274,532 - 85,274,532 Total noncurrent assets 127,128,146 290,172 127,418,318 Total assets 166,820,375 23,280,777 190,101,152 Current liabilities: Accounts payable Accrued salaries and benefits Due to other funds Due to other governments Bond payable - current Bond interest payable Compensated absences payable 3,223,865 13,694 13,492,940 16,537,688 2,265,000 2,622,659 55,840 85,307 5,765,381 4,696,462 447,626 3,223,865 99,001 19,258,321 21,234,150 2,265,000 2,622,659 503,466 Total current liabilities 38,211,686 10,994,776 49,206,462 41,902 335,895 377,797 102,783,942 - 102,783,942 Total noncurrent liabilities 102,825,844 335,895 103,161,739 Total liabilities 141,037,530 11,330,671 152,368,201 21,322,728 4,460,117 11,950,106 21,322,728 16,410,223 Liabilities Noncurrent liabilities: Compensated absences payable Revenue bonds payable, including unamortized premium Net Assets Invested in capital assets, net of related debt Unrestricted Total net assets $ 25,782,845 See accompanying notes to the financial statements. 23 $ 11,950,106 $ 37,732,951 Valley Metro Regional Public Transportation Authority Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds Fiscal Year Ended June 30, 2011 Business-Type Activities - Enterprise Funds Total Transit Service Proprietary Operations Valley Metro Rail Funds Operating Revenues: Charges for services Miscellaneous Total operating revenues $ Operating Expenses: Local & express bus service Light rail staff and administration Paratransit service Vanpool service Safety and security Administrative and general Depreciation Total operating expenses Operating loss 15,173,161 560,643 15,733,804 $ 8,201,600 8,201,600 $ 23,374,761 560,643 23,935,404 42,912,290 10,634,693 1,394,994 179,439 33,512 11,209,083 66,364,011 (50,630,207) 8,360,915 8,360,915 (159,315) 42,912,290 8,360,915 10,634,693 1,394,994 179,439 33,512 11,209,083 74,724,926 (50,789,522) Non-Operating Revenues (Expenses): Lead agency disbursements Federal Transit Administration Other federal grants IRS fuel tax credit Interest income Loss on disposal of capital assets Capital conveyance Interest subsidy Interest expense Bond issuance expense Total non-operating revenues (expenses) Income (loss) before contributions and transfers (11,612,532) 7,667,042 622,287 1,554,573 188,748 85,359 (7,554,419) 589,923 (4,830,824) (60,392) (13,350,235) (57,779,270) 27,052 (57,752,218) (69,391,802) 7,667,042 622,287 1,554,573 215,800 85,359 (7,554,419) 589,923 (4,830,824) (60,392) (71,102,453) (63,980,442) (57,911,533) (121,891,975) Transfers in Transfers out 47,972,245 (19,549,889) 64,452,422 (3,624,612) 112,424,667 (23,174,501) (35,558,086) 2,916,277 (32,641,809) 61,340,931 9,033,829 70,374,760 Changes in net assets Net assets, beginning Net assets, ending $ 25,782,845 See accompanying notes to the financial statements. 24 $ 11,950,106 $ 37,732,951 Valley Metro Regional Public Transportation Authority Statement of Cash Flows Proprietary Funds Fiscal Year Ended June 30, 2011 Business-Type Activities - Enterprise Funds Transit Valley Total Service Metro Proprietary Operations Rail Funds Cash flows from operating activities Receipts from customers Payments to suppliers Payments to employees Net cash provided by (used in) operating activities $ Cash flows from noncapital and related financing activities Trans fers in - sales taxes Lead agency disbursements Due to/from other funds Federal alternative fuel tax credit Receipts from federal grants Net cash provided by (used in) noncapital and related financing activities Cash flows from capital and related financing activities Purchases of capital assets Capital conveyance Lead agency disbursements Receipts from federal capital grants Interest subsidy Interes t paid on capital debt Transfers out Trans fers in - sales taxes Net cash provided by (used in) capital and related financing activities 6,430,725 (68,363,795) (931,438) (62,864,508) $ From the Proprietary Funds Statement of Net Assets Current cash and cash equivalents Noncurrent cash and cash equivalents Total cash and cash equivalents Reconciliation of operating loss to net cash provided by (used in) operating activities Operating loss Adjus tments to reconcile operating loss to net cash provided by (used in) operating activities: Depreciation (Increase) decrease in assets: Due from other governments Other assets Increase (decrease) in liabilities: Accounts payable Accrued salaries and benefits Due to other governments Compensated absences payable Total adjustments Net cash provided by (used in) operating activities 48,439,297 (9,073,158) 19,243,989 1,554,573 622,287 50,204,227 10,582,761 60,786,988 3,861,567 (7,554,419) (3,039,374) 7,667,042 589,923 (5,245,320) (19,549,889) 32,948 (57,279,270) (3,624,612) 63,952,422 3,861,567 (7,554,419) (60,318,644) 7,667,042 589,923 (5,245,320) (23,174,501) 63,985,370 3,048,540 (20,188,982) 27,052 27,052 $ 10,298,154 981,487 $ 11,279,641 $ 33,085,997 33,085,997 10,989,469 290,172 $ 11,279,641 $ $ (50,630,207) $ $ (50,789,522) $ $ See accompanying notes to the financial s tatements. 25 215,800 215,800 (35,709,055) 68,795,052 33,085,997 11,209,083 Noncash capital and operating activities Capital assets contributed by a local member city 8,373,599 (67,610,764) (6,987,542) (66,224,707) 500,000 (500,000) 10,582,761 - 188,748 188,748 Net increase(decrease) in cash and cash equivalents Cash and cash equivalents , beginning of year Cash and cash equivalents, end of year $ 47,939,297 (8,573,158) 8,661,228 1,554,573 622,287 (23,237,522) Cash flows from investing activities Interest received on investments Net cash provided by investing activities 1,942,874 753,031 (6,056,104) (3,360,199) (159,315) (25,410,901) 69,776,539 $ 44,365,638 - 10,989,469 33,376,169 44,365,638 11,209,083 (9,303,079) 3,750 (6,258,726) - (15,561,805) 3,750 (3,061,764) 4,864 (11,054,174) (32,981) (12,234,301) (62,864,508) 18,248 3,010,357 29,237 (3,200,884) (3,360,199) (3,061,764) 23,112 (8,043,817) (3,744) (15,435,185) $ (66,224,707) - $ $ - $ - Valley Metro Regional Public Transportation Authority Statement of Changes in Fiduciary Net Assets Fiduciary Fund Fiscal Year Ended June 30, 2011 LTAF II Private Purpose Trust Fund Additions Contributions $ Total additions 3,201,875 3,201,875 Deductions Distributions 3,201,875 Total deductions 3,201,875 Changes in net assets - Net assets, beginning - Net assets, ending $ See accompanying notes to the financial statements. 26 - (This page intentionally left blank) Valley Metro Regional Public Transportation Authority Index to the Notes to the Financial Statements Page 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Summary of Significant Accounting Policies a. Financial Reporting Entity b. Basic Financial Statements c. Basis of Presentation d. Measurement Focus, Basis of Accounting and Financial Statement Presentation e. Budgetary Basis of Accounting f. Deposits and Investments g. Prepaid Items h. Capital Assets i. Transactions Between Funds j. Receivables k. Compensated Absences l. Long Term Obligations m. Net Assets n. Fund Balances o. Cash Equivalents p. Use of Estimates q. Accounting Pronouncements Reconciliation of Governmental Fund Financial Statements to Government-Wide Statements Deposits and Investments a. Deposits b. Investments Interfund Receivables/Payables and Interfund Transactions Fund Balance/Net Assets Reservations and Designations Restatement of Net Assets/Fund Balances Capital Assets Operating Leases Long-Term Liabilities a. Transportation Excise Tax Revenue Bonds b. Compensated Absences Risk Management Retirement and Pension Plans a. Plan descriptions b. Funding policy Contractual and Other Commitments a. Underground Storage Tank Revolving Fund Replenishment b. Commitments Contingencies Related Party Transactions Excess of Expenditures over Appropriations Subsequent Events 27 28 28 29-30 30-31 31-33 33 33-34 34 34 35 35 35 36 36 36-37 37 37 37 38-39 40 40 40-41 41-42 42 43 44-45 45 46-47 46-47 47 47 48 48 48 49 49 49 49 50 50 50 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements Fiscal Year Ended June 30, 2011 1. Summary of Significant Accounting Policies The accounting policies of the Regional Public Transportation Authority (the Authority) conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following summary of the more significant accounting policies of the Authority is presented to assist the reader in interpreting these financial statements, and should be viewed as an integral part of this financial report. a. Financial Reporting Entity The Authority was established under the laws of the State of Arizona in 1985 along with the passage of a one-half of one percent sales tax increase to fund regional highway and public transportation improvements. The Authority was charged with developing a regional transit plan and developing and operating a regional transit system for Maricopa County (the County). In 1993, the Authority’s Board of Directors adopted Valley Metro as the identity for the regional transit system. Valley Metro was chosen to give the region’s buses a more recognizable identity and to help unify public transit systems in the County. The Authority is governed by a Board of Directors consisting of a member of the County Board of Supervisors and the mayors (or their designees) of the member cities and towns. For fiscal year 2010-11, the members included the cities of Avondale, Chandler, El Mirage, Glendale, Goodyear, Mesa, Peoria, Phoenix, Scottsdale, Surprise, Tempe and Tolleson, and the towns of Buckeye, Gilbert and Wickenburg. A municipality may have one elected official serve on the Authority’s Board of Directors by committing a portion of their local transportation assistance funds to local public transportation. In October 2002, the city councils of Glendale, Mesa, Phoenix and Tempe approved the formation of a public nonprofit corporation by the name of Valley Metro Rail, Inc. (VMR). The nonprofit corporation was organized for the purpose of planning, designing, constructing and operating the Light Rail Transit Project. VMR contracts with the Authority for certain administrative functions, including personnel, administration and financial and accounting services. This activity is recorded in the Authority’s Valley Metro Rail Enterprise Fund. All VMR staff is hired and employed by the Authority but works solely under the direction of the legally separate entity of VMR and its Board of Directors through a contractual arrangement with the Authority. The Board of VMR is solely responsible for the governance of VMR, and the Authority’s Board of Directors has no responsibility for VMR. VMR is not a component unit of the Authority because the economic resources received by VMR are entirely for the direct benefit of VMR, and the Authority is not entitled to and has no ability to otherwise access any of the economic resources received or held by VMR. However, VMR is a related party of the Authority since the cities who are members of VMR’s Board of Directors are also members of the Authority’s Board of Directors. 28 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 b. Basic Financial Statements The government-wide financial statements (statement of net assets and statement of activities) report on the Authority as a whole, excluding fiduciary activities. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The government-wide financial statements focus more on the sustainability of the Authority as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. Generally, the effect of interfund activity has been removed from the government-wide financial statements. Net interfund activity and balances between governmental activities and business-type activities are shown in the government-wide financial statements. The government-wide Statement of Net Assets reports all financial and capital resources of the government (excluding fiduciary funds). It is displayed in a format of assets less liabilities equal net assets, with the assets and liabilities shown in order of their relative liquidity. Net assets are required to be displayed in three components: 1) invested in capital assets, net of related debt, 2) restricted and 3) unrestricted. Invested in capital assets, net of related debt is capital assets net of accumulated depreciation and reduced by outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction or improvement of those assets. Restricted net assets are those with constraints placed on their use by either: 1) externally imposed by creditors (such as through debt covenants), grantors, contributors or laws or regulations of other governments, or 2) imposed by law through constitutional provisions or enabling legislation. All net assets not otherwise classified as restricted are shown as unrestricted. Generally, the Authority would first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. Reservations or designations of net assets imposed by the reporting government, whether by administrative policy or legislative action of the reporting government, are not shown on the government-wide financial statements. Note 5 discusses the internal reservations and designations of fund balances/net assets in the various funds to demonstrate the government’s intended use of those net assets. The government-wide Statement of Activities demonstrates the degree to which the direct expenses of the various functions and segments of the Authority are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or users who purchase, use or directly benefit from goods, services or privileges provided by a particular function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes, investment income and the other revenues not identifiable with particular functions or segments are included as general revenues. The general revenues support the net costs of the functions and segments not covered by program revenues. 29 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 Also part of the basic financial statements are fund financial statements for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. c. Basis of Presentation The accounts of the Authority are organized and operated on the basis of funds. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts, which includes assets, liabilities, fund equity, revenues and expenditures/expenses. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements. The following fund categories are used by the Authority: Governmental Funds Governmental funds are used to account for the Authority’s general government activities. The focus of Governmental Fund measurement, in the fund financial statements, is upon determination of financial position and changes in financial position rather than upon net income. The Authority reports the following major Governmental Funds: The General Fund is the Authority’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 Transit Planning Fund accounts for the receipt and expenditure of U.S. Department of Transportation, Federal Transit Administration, Federal Transit Technical Studies grant monies and member cities local match restricted for various planning studies. The Transportation Demand Management Fund accounts for the receipt and expenditure of various grant monies restricted for activities related to the countywide ridesharing program, trip reduction program and clean air campaign. Proprietary Funds Proprietary funds account for activities of the Authority similar to those found in the private sector, where cost recovery and the determination of net income are useful or necessary for sound fiscal management. The focus of proprietary fund measurement is upon the determination of operating income, changes in net assets, financial position and cash flows. Currently, enterprise funds are the only type of proprietary funds that the Authority uses. 30 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 Enterprise funds are used to account for those operations that provide services to the general public for a fee. Enterprise funds are also required for any activity whose principal revenue sources meet any of the following criteria: 1) any activity that has issued debt backed solely by the fees and charges of the activity, 2) if the cost of providing services for an activity, including capital costs such as depreciation or debt service, must legally be recovered through fees and charges, or 3) it is the policy of the Authority to establish activity fees or charges to recover the cost of providing services, including capital costs. The Authority reports the following major enterprise funds: The Transit Service Operations Fund accounts for the activities related to the operations of local and express bus, dial-a-ride and vanpool services for the region. The Valley Metro Rail Fund accounts for the activities related to the staffing and administrative services that are contractually provided by the Authority to Valley Metro Rail, Inc. and transfers in of the Public Transportation Fund (PTF) and the Regional Area Road Funds (RARF) sales tax revenues and expenses of such funds related to the Regional Transportation Plan approved light rail projects. Fiduciary Funds Fiduciary funds account for assets held by the Authority in a trustee or agency capacity on behalf of others and therefore are not available to support Authority programs. The reporting focus is upon net assets and changes in net assets and employs accounting principles similar to proprietary funds. Fiduciary funds are not included in the government-wide financial statements since they are not assets of the Authority available to support Authority programs. Currently, private-purpose trust funds are the only type of fiduciary funds that the Authority uses: Private-purpose trust fund accounts for assets held by the Authority under the terms of a formal trust agreement where both the principal and income may be used to support individuals, private organizations or other governments as set forth in the trust agreement. The private-purpose trust fund of the Authority is as follows: The LTAF II Fund accounts for state general fund monies received from the Arizona Department of Transportation and distributed to the cities and county within the Authority’s region. d. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. 31 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 Governmental fund types are presented, in the fund financial statements, using the flow of current financial resources measurement focus and modified accrual basis of accounting. With this measurement focus, operating statements present increases and decreases in net current assets and unreserved fund balance is a measure of available spendable resources. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they are “measurable and available”). “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon thereafter to pay liabilities of the current period. The Authority considers revenues available under modified accrual, if they are earned by June 30 (all eligibility requirements have been met) and the revenue is expected to be collected within six months after year-end. Expenditures are recorded when the related fund liability is incurred. This is the traditional basis of accounting for governmental funds and also is the manner in which these funds are normally budgeted. This presentation is deemed most appropriate to 1) demonstrate legal and covenant compliance, 2) demonstrate the sources and uses of liquid resources, and 3) demonstrate how the Authority’s actual revenues and expenditures conform to the annual budget. Since the governmental fund financial statements are presented on a different basis than the governmental activities column of the government-wide financial statements, a reconciliation is provided immediately following each fund statement. These reconciliations briefly explain the adjustments necessary to transform the fund financial statements into the governmental activities column of the government-wide financial statements. Additional reconciliations are also provided in Note 2. When applying the “susceptible to accrual” concept to intergovernmental revenues pursuant to GASB Statement No. 33 – Recipient Reporting for Certain Shared Nonexchange Transactions (Statement No. 33), receivables and revenues are recognized when the applicable eligibility requirements, including time requirements, are met. Resources transmitted before the eligibility requirements are met are reported as deferred revenue. Interest income is recognized on the modified accrual basis. Changes in fair value of investments are recognized in investment income at the end of the year. Sales taxes, entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. For the governmental fund statements, grant revenue earned but not expected to be received within six months of year end is deferred. The proprietary fund and private purpose trust funds financial statements are prepared on the same basis (economic resources measurement focus and accrual basis of accounting) as the government-wide financial statements. Therefore, the total enterprise funds on the proprietary fund financial statements will directly reconcile to the businesstype activities column on the government-wide financial statements. The flow of economic resources measurement focus emphasizes the determination of net income. 32 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. On the proprietary fund financial statements, operating revenues are those that flow directly from the operations of that activity, i.e., charges to customers or users who purchase or use the goods or services of that activity. Operating expenses are those that are incurred to provide those goods or services. Non-operating revenues and expenses are items like investment income and interest expense that are not a result of the direct operations of the activity. e. Budgetary Basis of Accounting An annual budget of revenues and expenditures is prepared and adopted by the Board of Directors each fiscal year for all funds. The legal level of budgetary control is the total annual appropriated budget. Costs in excess of the total annual appropriated budget require approval of the Board of Directors. Transfers of appropriations between departments require the approval of the Executive Director. The annual budget is adopted on the modified accrual basis. Encumbrance accounting is used and all appropriations lapse at year end. Prior to final adoption, a proposed budget is presented to the Board of Directors for review and public comment is received. Final adoption of the budget must be on or before June 30 of each year. Budgetary comparison statements for the general fund and major special revenue funds must be presented as part of the basic financial statements or as required supplementary information. The Authority has chosen to present this information as part of the basic financial statements. These statements must display original budget, amended budget and actual results (on a budgetary basis). Budgetary comparisons for the major enterprise funds are presented following the notes to the financial statements. Where necessary, a reconciliation has been provided of the adjustments required to convert the budgetary revenues and expenditures or changes in net assets on a budgetary basis to revenues and expenditures/expenses or change in net assets on a GAAP basis. f. Deposits and Investments State statutes authorize the Authority to invest in obligations of the U.S. Treasury and any of its agencies, corporations or instrumentalities, collateralized repurchase agreements, certificates of deposit and the State of Arizona’s Local Government Investment Pool (LGIP). Currently the Authority invests only in the LGIP, which is operated by the Arizona State Treasurer’s Office, as authorized by Arizona Revised Statues, §35-326. Arizona Revised Statutes §35-312 and §35-313 regulate authorized investments. Local Government Investment Pool investments are carried at fair value. The fair value of pooled investments is determined annually and is based on current market prices. The fair value of participants’ position in the pool approximates the value of the pool shares. The method used to determine the value of participants’ equity withdrawn is based on the book value of the participants’ percentage participation at the date of such withdrawal. 33 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 The Authority maintains pooled cash and investments. Income from pooled cash and investments is allocated to the individual funds based on the fund’s month end cash balance in relation to the total pooled cash and investments. Authority management has determined that the investment income related to all funds except the Valley Metro Rail Enterprise Fund should be allocated to the General Fund. Each fund’s equity in the pooled cash and investments is tracked on an ongoing basis. In the event that a certain fund overdraws its share of pooled cash, the overdraft is reported as due to other funds at year end. g. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. h. Capital Assets All capital assets, whether owned by governmental activities or business-type activities, must be recorded and depreciated (unless the modified approach is used) in the government-wide financial statements. No long-term assets or depreciation are shown in the governmental fund financial statements. Capital assets are defined as assets with an initial, individual cost of more than $5,000 and an estimated useful life greater than one year. The Authority has no public domain infrastructure (e.g., roads, bridges, sidewalks and other assets that are immovable and of value only to the Authority) or capital construction projects. Capital assets are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at the estimated fair market value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major improvements are capitalized and depreciated over the remaining useful lives of the related capital assets. Property, plant and equipment are depreciated using the straight-line method over the following estimated useful lives: Useful Life (Years) Assets Equipment Vehicles Cars and vans Buses greater than 30 feet Buses greater than 40 feet Computers and software Site improvements Buildings 3-20 4 10 20 3 16-30 46-50 Capital assets transferred between funds are transferred at their net book value (cost less accumulated depreciation) or net realizable value, if lower, as of the date of the transfer. 34 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 i. Transactions Between Funds Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are reported in the fund financial statements as “due to/from other funds”. See Note 4 for further discussion of the interfund receivables/payables at June 30. Certain transactions occurring between funds that are combined within the same fund type or displayed in the same financial statement column for presentation in these annual financial statements have been eliminated from the financial statements. In the government-wide financial statements, only the net interfund activity and balances between governmental activities and business-type activities are shown (reported as “internal balances”). j. Receivables Receivables primarily result from various grants awarded by the Federal Transit Administration and the Federal Highway Administration. These receivables are passed through to the Authority and are due from the City of Phoenix, Maricopa Association of Governments, Maricopa County, Pima County and the Arizona Department of Transportation as reimbursement for eligible grant expenditures associated with operating, capital projects and capital maintenance. During the fiscal year ended June 30, 2011, the Authority recorded $1,554,573 as nonoperating revenues and receivables of alternative fuel tax credit filed with the Internal Revenue Service (IRS) for fuel purchases. $725,000 is reserved for capital purchases. The federal alternative fuel tax credit went into effect October 1, 2006, as part of the 2005 Transportation Act. Government and certain nonprofit organizations that qualify for the credit but do not have excise tax liability can receive cash payment from the federal government in the amount of $0.50 per gallon-equivalent. This credit applies to CNG, liquefied natural gas(LNG), propane, and several other less frequently used fuels. The Authority registered with the IRS and was approved as a qualifying agency to receive the alternative fuel tax credit. k. Compensated Absences Employees of the Authority are entitled to 23.6 - 31.5 paid time off days (vacation and sick leave) per calendar year - based on an eight-hour workday, depending upon length of service. The valuation of accrued leave benefits is calculated in accordance with GASB Statement No. 16. Unpaid compensated absences are recorded as a liability when the benefits are earned in the proprietary fund financial statements. For governmental funds, there is no legal requirement to accumulate expendable available financial resources to liquidate the obligation; thus expenditures are recognized in the governmental funds when payments are made to employees. The current portion of the accrued compensated absences liability is based on the average annual amount of leave charged over the preceding three years. Generally, resources from the General Fund are used to liquidate the governmental funds liabilities for compensated absences. 35 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 l. Long-term Obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities on the statement of net assets. Bond premiums and discounts, as well as issuance costs and the difference between the reacquisition price and the net carrying amount of the old debt, are deferred and amortized over the life of the bonds using the straight-line method over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. m. Net Assets In the government-wide financial statements, net assets are reported in three categories: net assets invested in capital assets, net of related debt; restricted net assets; and unrestricted net assets. Net assets invested in capital assets, net of related debt is separately reported because capital assets make up a significant portion of total net assets. Restricted net assets account for the portion of net assets restricted by parties outside the Authority. Unrestricted net assets are the remaining net assets not included in the previous two categories. n. Fund Balances Fund balances of the governmental funds are reported separately within classifications based on a hierarchy of the constraints placed on the use of those resources. The classifications are based on the relative strength of the constraints that control how the specific amounts can be spent. The classifications are nonspendable and spendable fund balances. Spendable fund balances include restricted, 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 or are legally or contractually required to be maintained intact. 36 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 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 committed fund balances are self-imposed limitations approved by the Authority’s Board of Directors, which is the highest level of decision-making authority within the Authority. Only RPTA’s Board of Directors can remove or change the constraints placed on committed fund balances. The Board of Directors must commit fund balances before the end of the fiscal year. Assigned fund balances are resources constrained by the Authority’s intent to be used for specific purposes, but are neither restricted nor committed. The Board of Directors has authorized the Executive Director or designee to make assignments of resources for a specific purpose. The unassigned fund balance is the residual classification for the General Fund and includes all spendable amounts not reported in the other classifications. Also, deficits in fund balances of the other governmental funds are reported as unassigned. When an expenditure is incurred, it is the Authority’s policy to use restricted fund balance first, then committed, assigned and unassigned fund balances as resources are available. o. Cash Equivalents The Authority considers short-term investments in the State of Arizona’s Local Government Investment Pool, mutual fund-money market, U.S. Treasury bills and notes with maturities of three months or less at acquisition date to be cash equivalents. p. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America necessarily requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenditures during the reporting financial period. Actual results could differ from these estimates. q. Accounting Pronouncements GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, has been implemented by the Board of Directors for the current fiscal year. GASB Statement No. 2, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, as amended, requires that governments’ enterprise activities apply all applicable GASB pronouncements as well as the following pronouncements issued on or before November 20, 1989, unless those pronouncements conflict with or contradict GASB pronouncements: Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board Opinions and Accounting Research Bulletins. Governments are given the option whether or onto to apply all FASB Statements and Interpretations issued after November 30, 1989, except those that conflict with or contradict GASB pronouncements. The Authority has elected not to implement FASB Statements and Interpretations issued after November 33, 1989. 37 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 2. Reconciliation of Governmental Fund Financial Statements to Government-Wide Statements The governmental fund financial statements are presented on a current financial resources measurement focus and modified accrual accounting basis while the government-wide financial statements are prepared on a long-term economic resources measurement focus and accrual accounting basis. Reconciliations briefly explaining the adjustments necessary to transform the fund financial statements into the governmental activities column of the government-wide financial statements immediately follow each fund financial statement. Additional reconciliations are provided below. Reconciliation of Governmental Funds Balance Sheet and the government-wide Statement of Net Assets: Total Governmental Funds Assets Cash and cash equivalents Due from other governments Due from other funds Internal balances Prepaid items Capital assets (net) Total assets Liabilities Accounts payable Accrued salaries and benefits Due to other funds Due to other governments Other liabilities Compensated absences Total liabilities $ $ $ Fund Balance/Net Assets Total fund balance/net assets $ Reclassifications for Internal Balances and Eliminations Long-term Assets/ Liabilities 34,574,298 10,006,801 9,251,963 10,169 53,843,231 $ 1,346,607 1,346,607 $ 276,041 579,191 607,974 30,198 1,493,404 $ 848,261 848,261 $ 52,349,827 $ 498,346 $ $ $ Statement of Net Assets Totals (9,251,963) 8,643,989 (607,974) $ (607,974) (607,974) $ 276,041 579,191 30,198 848,261 1,733,691 $ 52,848,173 - $ 34,574,298 10,006,801 8,643,989 10,169 1,346,607 54,581,864 When capital assets that are to be used in governmental activities are purchased, the costs of those assets are reported as expenditures in governmental funds, and thus a reduction in fund balance. However, the statement of net assets includes those capital assets among the assets of the Authority as a whole: Cost of capital assets Accumulated depreciation Capital assets, net $ $ 4,041,918 (2,695,311) 1,346,607 Interfund transactions between governmental activities of $607,974 are eliminated in the consolidation of these activities for the statement of net assets. 38 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 Under the modified accrual basis of accounting, the governmental funds do not accrue for unpaid compensated absences in the amount of $848,261 as a liability, as they are not paid with expendable available financial resources. However, the statement of net assets includes the unpaid compensated absences as long-term liabilities regardless of when financial resources are used, and thus a reduction in net assets. Reconciliation of Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances and the Government-wide Statement of Activities: Total Governmental Funds Revenues Sales taxes Intergovernmental Interest earnings Charges for services Miscellaneous Total revenues $ 107,111,118 2,286,930 79,874 189,000 233,357 109,900,279 Capital Purchases $ - Depreciation Compensated and Disposals Absences $ - $ Statement of Activities Totals - $ 107,111,118 2,286,930 79,874 189,000 233,357 109,900,279 - - 2,274,688 Expenditures/Expenses Current: Regional planning Transportation demand management Regional customer services Administration Capital outlay Total expenditures/expenses and other uses 1,542,437 7,850,922 1,643,778 1,113,456 (1,114,343) 141,557 312,179 3,786 10,381 - 1,542,437 7,992,479 1,966,338 2,899 14,425,281 (1,114,343) 457,522 10,381 13,778,841 Other financing uses/changes in net assets Transfers in Transfers out Net transfers 1,447,579 (90,697,745) (89,250,166) - - Net change for the year 2,274,688 $ 6,224,832 - $ 1,114,343 $ (457,522) $ (10,381) 1,447,579 (90,697,745) (89,250,166) $ 6,871,272 When capital assets that are to be used in governmental activities are purchased, the resources expended for those assets are reported as expenditures in governmental funds. However, in the statement of activities, the cost of those assets is allocated over their useful lives and reported as depreciation expense. As a result, fund balance decreases by the amount of the financial resources expended for capital outlay ($1,114,343), whereas net assets decrease by the amounts of disposals and depreciation expense charged for the year ($457,522). The governmental funds do not report the change in unpaid compensated absences in the amount of $10,381 as expenditures, as they are not paid with expendable available financial resources. However, the statement of net assets includes the change in unpaid compensated absences as accrued expenses regardless of when financial resources are used, and thus a reduction in net assets. 39 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 3. Deposits and Investments The Authority maintains a cash and investment pool that is available for use by all funds. Each fund type’s portion of this pool is displayed on the government-wide Statement of Net Assets as “Cash and Investments”. a. Deposits The carrying amount of the Authority’s deposits at June 30, 2011, was $32,655,888 and the bank ledger balance was $35,463,541. The difference of $2,807,653 represents deposits in transit and outstanding checks. Of the bank balance, $250,000 was covered by federal depository insurance and $35,213,541 was covered by collateral held by the pledging financial institution in the Authority’s name. Cash held with trustee in the amount of $37,049,779 has federal depository insurance coverage in the amount of $250,000 and $36,799,779 was covered by collateral held by the pledging financial institution’s trust department but not in the Authority’s name. b. Investments Interest Rate Risk. As a means of managing its exposure to fair value losses arising from increasing interest rates, the Authority’s investment policy provides for matching investment maturities with anticipated cash flow requirements while maintaining an emphasis on liquidity. Unless matched to a specific cash flow requirement, the Authority will not directly invest in securities maturing more than two years from the date of purchase. Historically, the Authority has limited its investments to participation in the State of Arizona’s Local Government Investment Pool (LGIP). As of June 30, 2011, the Authority’s investments in the LGIP, investing in money market mutual funds, have the weighted average maturities less than 90 days. Credit Risk. State statutes authorize the Authority to invest in obligations of the U.S. Treasury and any of its agencies, corporations or instrumentalities, collateralized repurchase agreements, certificates of deposit and the LGIP. The Authority’s investment policy does not further limit its investment choices. The LGIP is operated by the Arizona State Treasurer’s Office, as authorized by Arizona Revised Statutes §35-326. Arizona Revised Statutes §35-312 and §35-313 regulate authorized investments. The LGIP is overseen according to Arizona State Statute by the State Board of Investment. The Authority’s investment in the LGIP is stated at fair value, which is the same as the value of the Authority’s pool shares. The LGIP does not receive a credit quality rating. Investments, including investments held by trustee, at June 30, 2011 consist of the following: State of Arizona Local Government Investment Pool 40 $ 9,234,269 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 Governmental Accounting Standards Board Statement No. 40, Deposit and Investment Risk Disclosures, provides for disclosures of custodial credit risk associated with investment securities. An exception is provided for investments in external investment pools and for investments in open-ended mutual funds. Cash and Investments at June 30, 2011 consist of the following: Carrying amount of the Authority’s deposits Investments in the LGIP Cash and investments with Trustee Total cash and investments $ 32,655,888 9,234,269 37,049,779 78,939,936 $ Of the $37,049,779 of cash and investments held with Trustee, $32,162,120 represents unspent bond proceeds that will be used in future periods to pay for capital purchases. The remaining $4,887,659 is principal and interest due on the bonds July 1, 2011. 4. Interfund Receivables/Payables and Interfund Transactions Interfund receivables and payables within the governmental activities and business-type activities are eliminated for the government-wide financial statements at June 30, 2011. The following interfund receivables and payables are included in the fund financial statements at June 30, 2011: Due from other funds General Fund Due to other funds Governmental funds: Transit Planning $ Transportation Demand Management Total governmental funds Enterprise funds: Transit Service Operations Valley Metro Rail Total enterprise funds Grand totals $ 475,428 132,546 607,974 8,643,989 8,643,989 9,251,963 Transit Service Operations Fund $ $ - 5,765,381 5,765,381 5,765,381 Valley Metro Rail Fund $ $ Total - 4,848,951 4,848,951 4,848,951 $ 475,428 132,546 607,974 13,492,940 5,765,381 19,258,321 $ 19,866,295 The interfund balances for the governmental funds at June 30, 2011 are short-term loans to cover temporary cash deficits in various funds. This occasionally occurs prior to grant and other reimbursements. 41 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 The interfund balances within the business-type activities funds are amounts held in the Transit Service Operations Fund for debt service payments to be made by the Valley Metro Rail Fund and short-term loans to cover temporary cash deficits in pooled cash accounts. All interfund balances outstanding at June 30, 2011 are expected to be repaid within one year. Interfund transfers are primarily used for transfers of sales tax revenues from the General Fund and the Public Transportation Fund to the various funds that receive earmarked sales tax revenues. Interfund transfers between the enterprise funds are for transfers of bond proceeds for reimbursements of light rail capital expenditures. The following interfund transfers are reflected in the fund financial statements for the year ended June 30, 2011. Transfers Out General Fund Transfers In Governmental funds: Transit Planning $ Transportation Demand Management Total governmental funds Enterprise funds: Transit Service Operations Valley Metro Rail Total enterprise funds Grand totals 1,434,865 12,714 1,447,579 44,347,633 44,902,533 89,250,166 $ 90,697,745 Transit Service Operations Fund $ Valley Metro Rail Fund - $ 19,549,889 19,549,889 $ 19,549,889 $ Totals - 3,624,612 3,624,612 3,624,612 $ 1,434,865 12,714 1,447,579 47,972,245 64,452,422 112,424,667 $ 113,872,246 Net transfers from governmental activities to business-type activities on the government-wide statement of activities to the enterprise funds are in the amount $89,250,166. 5. Fund Balance Reservations and Designations Fund Balance classifications reported in the governmental funds include the following: General Fund Nonspendable Prepaids Spendable Restricted Transit Planning Transportation Demand Management Unassigned $ 6,797 52,164,648 $ 52,171,445 42 Transit Planning Fund Transportation Demand Management Fund $ - $ 3,372 $ 100,206 100,206 $ 74,804 78,176 Totals $ 10,169 100,206 74,804 52,164,648 $ 52,349,827 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 6. Restatement of Fund Balances As a result of the implementation of GASB Statement No.54, the Public Transportation Fund Regional Customer Services Fund and Capital and Other Grants Fund previously reported as Special Revenue Funds, were reclassified to be included as part of the General Fund. The Transit Planning Fund and Transportation Demand Management Fund continue to be reported as Special Revenue Funds due to their fund definitions and restricted funding sources. The following summary is to reconcile beginning Fund Balances to the prior year audited financial statements: Nonspendable Governmental Funds General Fund Public Transportation Fund Transit Planning Fund Transportation Demand Management Fund Nonmajor Governmental Funds Total Governmental Funds Fund Balances As Previously Stated Restatement Due to Change in Accounting Principle Fund Balances As Restated $ $ $ $ 43 4,690,767 41,012,210 100,206 78,989 242,823 46,124,995 41,255,033 (41,012,210) (242,823) $ - $ 45,945,800 100,206 78,989 46,124,995 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 7. Capital Assets A summary of capital asset activity, for the government-wide financial statements, for the year ended June 30, 2011: Balances, July 1, 2010 Governmental activities: Depreciable assets: Site Improvements Computers & software Equipment Vehicles Furniture & fixtures Total depreciable assets at historical cost $ Business-type activities: Non-depreciable assets: Land Work in progress Total non-depreciable assets Depreciable assets: Transit fleet Building Site improvements Computers & software Equipment Furniture & fixtures Total depreciable assets at historical cost Less accumulated depreciation for: Transit fleet Building Site improvements Computers & software Equipment Furniture & fixtures Total accumulated depreciation Business-type activities capital assets, net $ 3,073,993 Less accumulated depreciation for: Site Improvements Computers & software Equipment Vehicles Furniture & fixtures Total accumulated depreciation Governmental activities capital assets, net 2,092,511 572,034 134,911 274,537 Increases 430,572 240,441 311,102 132,228 Decreases $ 1,114,343 (1,754,155) (329,314) (119,766) (180,972) (2,384,207) (46,071) (260,861) (90,574) (15,148) (41,082) (453,736) (115,990) (30,428) Balances, June 30, 2011 $ 430,572 2,332,952 767,146 134,911 376,337 (146,418) 4,041,918 112,878 29,754 142,632 (46,071) (2,015,016) (307,010) (134,914) (192,300) (2,695,311) $ 689,786 $ 660,607 $ (3,786) $ 1,346,607 $ 5,292,000 13,467,250 18,759,250 $ 2,557,051 2,557,051 $ (13,305,160) (13,305,160) $ 5,292,000 2,719,141 8,011,141 101,829,892 13,390,733 7,802,996 325,536 6,799,462 127,037 6,864,410 243,483 201,002 - (4,782,677) (54,075) - 103,911,625 13,390,733 8,046,479 271,461 7,000,464 127,037 130,275,656 7,308,895 (4,836,752) 132,747,799 (36,345,548) (582,206) (979,783) (113,766) (2,657,992) (84,647) (40,763,942) $108,270,964 44 (9,654,854) (291,103) (456,332) (57,063) (729,104) (20,627) (11,209,083) $ (1,343,137) 4,499,758 4,499,758 $ (13,642,154) (41,500,644) (873,309) (1,436,115) (170,829) (3,387,096) (105,274) (47,473,267) $ 93,285,673 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 Depreciation expense was charged to the following functions in the basic financial statements: Governmental Activities $ 141,557 312,179 $ 453,736 Regional customer services Administration Transit service operations Total depreciation expense Business Type Activities $ 11,209,083 $ 11,209,083 The Authority’s enterprise funds in the business-type activities have entered into contracts having remaining commitments at June 30, 2011 totaling approximately $1.7 million. These commitments have not been recorded in the accompanying financial statements. Only the currently payable portions of these contracts have been included in the accounts payable in the accompanying financial statements. In the Business-Type Activities, the decrease in construction in progress is greater than total additions, due to the capital conveyance of completed projects to member cities during the fiscal year. 8. Operating Leases The Authority leases office space under three separate lease agreements. Total rent expenditures were $790,120 for the fiscal year ended June 30, 2011. The future minimum lease payments under noncancelable operating lease at June 30, 2011 were as follows: 101 N 1st Ave Phoenix, AZ June 30 2012 2013 2014 2015 2016 2017-21 2022-26 Total $ 4600 E Washington St Phoenix, AZ 552,593 566,071 579,549 593,027 606,505 $ 391,208 391,208 457,785 524,362 535,487 2,843,445 2,474,314 $ 7,617,809 $ 2,897,745 45 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 9. Long-Term Liabilities a. Transportation Excise Tax Revenue Bonds In May 2009, the Board adopted the issuance of transportation revenue bonds, which are specifically for the purpose of payment or reimbursement of the costs of capital projects expenditures in the regional transportation plan. These bonds are payable solely from the revenues received by the Authority from the transportation excise tax revenues collected by the Arizona Department of Revenue. The bonds were issued on June 30, 2009 in two series. Series 2009A consisted of $73,795,000 transportation excise tax revenue bonds – tax exempt bonds and Series 2009B consisted of $26,280,000 transportation excise tax revenue bonds – federally taxable Build America Bonds. Annual installments of $2,265,000 to $9,260,000 will be made through 2026; interest ranges from 3.25 to 6.46 percent. The Authority has pledged future transportation excise tax revenues to repay a total of $100,075,000 in outstanding transportation revenue bonds. Proceeds of the bonds were used for improvements and expansions to the Authority’s bus and light rail projects. The bonds are payable solely from excise tax revenues and are payable through July 1, 2026. For the fiscal year ended June 30, 2011, the revenues available for service of this debt were $102,688,559 while interest paid on the debt was $5,245,318. Principal payment date is July 1. Interest payment dates are January 1 and July 1. Transportation Excise Revenue Bonds annual debt service requirements at June 30, 2011 were as follows: Year Ending June 30 2012 2013 2014 2015 2016 2017-2021 2022-2026 Total Principal 2,265,000 5,085,000 5,290,000 5,555,000 5,835,000 33,555,000 42,490,000 $ 100,075,000 $ $ $ Interest 5,200,018 5,053,018 4,819,068 4,547,943 4,282,006 16,816,940 6,723,166 47,442,159 Amortization of Costs of Issuance and Premium Year Ending June 30 2012 2013 2014 2015 2016 2017-2021 2022-2026 Total Issuance Costs $ 60,392 60,392 60,392 60,392 60,393 301,962 152,552 $ 756,475 46 Premium Amortization $ 414,495 414,495 414,495 414,495 414,495 2,072,476 828,990 $ 4,973,941 Total 7,465,018 10,138,018 10,109,068 10,102,943 10,117,006 50,371,940 49,213,166 $ 147,517,159 $ Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 The revenue bonds liability activity for the fiscal year ended June 30, 2011 was as follows: Balance, July 1, 2010 Revenue bonds payable Plus: Bond premium Total b. Additions Reductions Amount Due Within One Year Balance, June 30, 2011 $ 100,075,000 5,388,437 $ - $ (414,495) $ 100,075,000 4,973,942 $ 2,265,000 - $ 105,463,437 $ - $ (414,495) $ 105,048,942 $ 2,265,000 Compensated Absences Compensated absences activity for the fiscal year ended June 30, 2011 is as follows: Balance, July 1, 2010 Additions Reductions Amount Due Within One Year Balance, June 30, 2011 Compensated absences: Governmental activities Business-type activities $ 837,880 885,007 $ 616,278 615,146 $ (605,897) (618,890) $ 848,261 881,263 $ 601,049 503,466 Total $ 1,722,887 $ 1,231,424 $ (1,224,787) $ 1,729,524 $ 1,104,515 10. Risk Management The Authority 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. These risks are covered by commercial insurance purchased from independent third parties. The Authority purchases insurance coverage for property, general liability, automobile liability, umbrella liability, commercial crime, public entity employment practices liability, public entity management liability and excess liability. In addition, the Authority purchases workers’ compensation, employee life insurance and health and dental insurance coverage for all of its full-time employees. Settled claims for these risks have never exceeded commercial insurance limits and there were no significant changes in insurance coverage from the prior year. Insurance coverage for transit operations is carried by the contracted operators of service; the operators indemnify the Authority for all liability arising from transit operations. 47 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 11. Retirement and Pension Plans a. Plan descriptions The Authority contributes to a cost-sharing, multiple-employer defined benefit pension plan; a cost-sharing multiple employer defined benefit health care plan; and a costsharing, multiple-employer defined benefit long-term disability plan, all of which are administered by the Arizona State Retirement System (ASRS). The ASRS (through its Retirement Fund) provides retirement (i.e., pension), death and survivor benefits; the Health Benefit Supplement Fund provides health insurance premium benefits (i.e., a monthly subsidy); and the Long-Term Disability Fund provides long-term disability benefits. Benefits are established by state statute. The System is governed by the Arizona State Retirement System Board according to the provisions of A.R.S. Title 38, Chapter 5, Article 2. The System issues a comprehensive annual financial report that includes financial statements and required supplementary information. The most recent report may be obtained by writing the System, 3300 North Central Avenue, P.O. Box 33910, Phoenix, Arizona 85067-3910 or by calling (602) 240-2000 or (800) 621-3778. b. Funding policy The Arizona State Legislature establishes and may amend active plan members’ and the Authority’s contribution rates. For the current fiscal year, active ASRS members were required by statute to contribute at the actuarially determined rate of 9.85 percent (9.60 percent for retirement and 0.25 percent for long-term disability) of the members’ annual covered payroll and the Authority was required by statute to contribute at the actuarially determined rate of 9.85 percent (9.01 percent for retirement, 0.59 percent for health insurance premium, and 0.25 percent for long-term disability) of the members’ annual covered payroll. The Authority’s contributions for the current and two preceding years, all of which were equal to the required contributions, were as follows. Retirement Fund Year ending June 30: 2011 2010 2009 $ 1,104,744 1,053,332 1,071,324 48 Health Benefit Supplement Fund Long-Term Disability Fund $ $ 72,342 83,357 84,781 30,653 50,520 51,382 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2011 12. Contractual and Other Commitments a. Underground Storage Tank Revolving Fund Replenishment In fiscal year 1994, the Arizona State Legislature allocated $6,000,000 to the Authority from the Arizona Area A portion of the underground storage tank revolving fund. Beginning with the first fiscal year and in each subsequent fiscal year that the Authority is allocated at least $2,000,000 from the Lottery, the amount allocated to the Authority will be reduced by a maximum of $2,000,000 each fiscal year until a total of $6,000,000 has been withheld to replenish the underground storage tank revolving fund. In the event the Authority does not receive at least $2,000,000 from the Lottery in a given year, no amounts will be withheld from the respective year’s allocation. The Authority received a Lottery distribution of $1,760,759 in fiscal year 1998 which is the only year the Authority has received a Lottery distribution. b. Commitments The Authority has entered into various contracts for the administration and operation of transit services, travel demand management services, and regional transit planning. Commitments under these contracts exist only to the extent that services are requested or provided, and all contracts provide for cancellation without cause. In addition, the Authority has entered into various contractual agreements to reimburse member cities for bus stop improvements, the Scottsdale Loop 101 Park-and-Ride, the Surprise Park-and-Ride, the Buckeye Park-and-Ride, and ADA reimbursement contracts. At June 30, 2011, the Authority had outstanding contractual commitments for these services aggregating approximately $7.6 million. These commitments have not been recorded in the accompanying financial statements because the member cities either had not incurred the related expenses or had not requested reimbursement for the related expenses. Only the currently payable portions of these contracts have been included in accounts payable in the accompanying financial statements. 13. Contingencies As a sub-recipient of federal and state grant monies, amounts passed through or receivable from other agencies are subject to audit and adjustment by grantor agencies. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the Authority expects such amounts, if any, to be immaterial. 49 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Concluded) Fiscal Year Ended June 30, 2011 14. Related Party Transactions As mentioned in Note 1 (a), the members of VMR’s Board of Directors are also members of the sixteen-member Authority’s Board of Directors. VMR contracts with the Authority for certain administrative functions, including personnel, administration, financial and accounting services, purchasing and computer support services. All VMR staff is hired and employed by the Authority but work solely under the direction of the VMR and its Board of Directors, through a contractual agreement with the Authority. For the period ended June 30, 2011, VMR paid $8,201,600 for services provided by the Authority. At June 30, 2011, the Authority reported $893,459 receivable from VMR and $1,686,105 payable to VMR. Additionally, during the fiscal year, RPTA entered into a lease arrangement with Valley Metro Rail to use a portion of their office space. 15. Excess of Expenditures over Appropriations For the fiscal year ended June 30, 2011, the Public Transportation Fund incurred $120 of bank charges that were not budgeted. 16. Subsequent Events In February, 2012, the Board of Directors approved a contract award to Total Transit, Inc. for the provision of paratransit services for the East valley communities. This new contract changes the current service delivery model (traditional dial-a-ride service utilizing 12-14 passenger accessible mini-buses) to a brokerage model in which multiple providers would use a mixed-fleet of vehicles including wheelchair-accessible vans and taxi service based on customer need. This new contract and change in the model of delivering service will save the agency approximately $3.0 million annually. On February 16, 2012, the governing boards of the Regional Public Transportation Authority and Valley Metro Rail, Inc. each voted unanimously to offer Steve Banta a five-year contract as the single Chief Executive Officer over both agencies. The vote capped a year-long effort involving many meetings among members of both transit boards. This contract becomes effective March 1, 2012. 50 Other Supplementary Information Valley Metro Regional Public Transportation Authority Schedule of Revenues, Expenses and Changes in Net Assets – Budget to Actual Transit Service Operations Fund Fiscal Year Ended June 30, 2011 Actual Amounts (budgetary basis) Budgeted Amounts Original Final Operating Revenues: Charges for services Miscellaneous Total operating revenues $ 22,019,205 22,019,205 $ 17,063,098 493,243 17,556,341 $ 15,173,161 560,643 15,733,804 Variance with Final Budget Over (Under) $ $ (1,889,937) 67,400 (1,822,537) Operating Expenses: Local & express bus service Paratransit service Vanpool service Safety and security Administrative and general Contingency Capital outlay Total operating expenses Operating income (loss) 49,419,879 11,247,761 893,000 689,145 33,776 3,137,171 42,882,340 108,303,072 (86,283,867) 43,751,217 11,442,209 812,045 967,062 33,776 1,044,423 9,948,100 67,998,832 (50,442,491) 42,912,290 10,634,693 1,394,994 179,439 33,512 4,414,571 59,569,499 (43,835,695) (838,927) (807,516) 582,949 (787,623) (264) (1,044,423) (5,533,529) (8,429,333) 10,251,870 Non-Operating Revenues (Expenses): Lead agency disbursements Federal Transit Administration grants Other federal grants Capital Conveyance IRS fuel tax credit Interest income Interest subsidy Interest expense Bond issuance expense Total nonoperating revenues (expenses) Income (loss) before transfers (27,029,093) 47,954,008 20,924,915 (65,358,952) (12,080,847) 11,631,709 750,000 600,862 (49,841,629) (11,612,532) 7,667,042 622,287 (7,554,419) 1,554,573 188,748 589,923 (4,830,824) (60,392) (13,435,594) (57,271,289) 468,315 (3,964,667) 622,287 (7,554,419) 804,573 188,748 589,923 (4,830,824) (60,392) (14,036,456) (3,784,586) 43,294,954 (14,405,640) 44,756,812 (5,152,183) 47,972,245 (19,549,889) 3,215,433 (14,397,706) Transfers in Transfers out Change in net assets budgetary basis $ (36,469,638) Explanation of differences between budgetary basis and GAAP basis Excess revenues over expenses - budgetary basis Capital outlay is an expense for budgetary purposes, but assets are capitalized and are not an expense for GAAP purposes Depreciation is not a budgeted expense, but is an expense for GAAP purposes The loss on disposal of capital assets is not a budgeted revenue, but is a revenue for GAAP purposes Changes in net assets per the statement of revenues, expenses and changes in fund net assets 51 $ (10,237,000) $ (28,848,933) $ (28,848,933) 4,414,571 (11,209,083) 85,359 $ (35,558,086) $ (14,966,859) Valley Metro Regional Public Transportation Authority Schedule of Revenues, Expenses and Changes in Net Assets – Budget to Actual Valley Metro Rail Fund Fiscal Year Ended June 30, 2011 Actual Amounts Budgeted Amounts Original Final Operating Revenues: Charges for services Total operating revenues $ Operating Expenses: Light rail staff and administration Total operating expenses Operating income (loss) Non-Operating Revenues (Expenses): Lead agency disbursements Interest income Total nonoperating revenues (expenses) Income (loss) before transfers Transfers in Transfers out Change in net assets budgetary basis 8,874,939 8,874,939 $ 8,874,939 8,874,939 8,874,939 8,874,939 - 8,874,939 8,874,939 - (58,371,511) (58,371,511) $ 8,201,600 8,201,600 Variance with Final Budget Over (Under) $ (673,339) (673,339) 8,360,915 8,360,915 (159,315) (514,024) (514,024) (159,315) (52,237,124) (52,237,124) (57,779,270) 27,052 (57,752,218) (5,542,146) 27,052 (5,515,094) (58,371,511) (52,237,124) (57,911,533) (5,355,779) 58,371,511 - 52,237,124 - 64,452,422 (3,624,612) 12,215,298 (3,624,612) $ - 52 $ - $ 2,916,277 $ 3,234,907 (This page intentionally left blank) Statistical Section The Statistical Section includes selected financial and demographic information regarding the Authority. Statistical Section The Statistical Section presents detailed information as a context for understanding what the information in the financial statements, note disclosures and required supplementary information says about the Authority’s overall financial health. Financial Trends These schedules contain trend information to help the reader understand how the Authority’s financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the Authority’s most significant local revenue source, the sales tax. Debt Capacity These schedules contain information to help the reader assess the affordability of the Authority’s current levels of outstanding debt, the Authority’s ability to issue additional debt in the future. There is no statute on the Authority’s debt limit on the issuance of bonds. The only limitation is the ability to secure the debts with available excise tax monies. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the Authority’s financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the Authority’s financial report relates to the services the Authority provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The Authority implemented GASB Statement No. 34 in FY 2001-02; schedules presenting government-wide information include information beginning in that year. 53 Valley Metro Regional Public Transportation Authority Net Assets By Component Last Ten Fiscal Years (accrual basis of accounting) FY 2001/02 Governmental activities Invested in capital assets, net of related debt Restricted Unrestricted Total governmental activities net asset $ $ 152,674 2,303,561 2,456,235 FY 2002/03 $ $ 175,418 2,303,561 2,478,979 FY 2003/04 $ $ 199,619 3,300,859 3,500,478 FY 2004/05 $ $ 161,090 3,300,859 3,461,949 Business-type activities Invested in capital assets, net of related debt Restricted Unrestricted Total business-type activities net assets $ 17,034,467 726,021 12,075 $ 17,772,563 $ 14,186,807 1,116,356 943,423 $ 16,246,586 $ 11,497,494 1,559,108 1,250,277 $ 14,306,879 $ 12,283,769 1,827,192 1,299,780 $ 15,410,741 Primary government Invested in capital assets, net of related debt Restricted Unrestricted Total primary government net assets $ 17,187,141 726,021 2,315,636 $ 20,228,798 $ 14,362,225 1,116,356 3,246,984 $ 18,725,565 $ 11,697,113 1,559,108 4,551,136 $ 17,807,357 $ 12,444,859 1,827,192 4,600,639 $ 18,872,690 54 FY 2005/06 $ $ $ $ $ $ FY 2006/07 FY 2007/08 FY 2008/09 FY 2009/10 FY 2010/11 249,177 12,224,193 12,473,370 $ 1,362,413 42,677,444 $ 44,039,857 $ 1,467,040 28,106,773 $ 29,573,813 $ 1,229,916 37,265,160 $ 38,495,076 $ 689,786 45,287,115 $ 45,976,901 $ 27,042,048 5,301,289 17,159,298 49,502,635 $ 47,945,807 1,778,889 21,142,003 $ 70,866,699 $ 72,537,461 2,332,524 17,991,644 $ 92,861,629 $ 98,580,060 4,062,157 (9,329,497) $ 93,312,720 $ 106,601,704 (36,226,944) $ 70,374,760 21,322,728 16,410,223 $ 37,732,951 27,291,225 5,301,289 29,383,491 61,976,005 $ 49,308,220 1,778,889 63,819,447 $114,906,556 $ 74,004,501 2,332,524 46,098,417 $ 122,435,442 $ 99,809,976 4,062,157 27,935,663 $ 131,807,796 $ 107,291,490 9,060,171 $ 116,351,661 $ 22,669,335 178,382 67,733,407 $ 90,581,124 55 1,346,607 178,382 51,323,184 $ 52,848,173 Valley Metro Regional Public Transportation Authority Changes in Net Assets Last Ten Fiscal Years (accrual basis of accounting) FY 2001/02 Expenses Governmental activities: Regional planning: Long range Short range Capital Program support Transportation demand management: Trip reduction Ridesharing Other programs Regional customer services: Marketing Call center Other programs Administration: Executive director’s office Communications & government relations Finance & management services Community funded transportation Capital outlay Total governmental activities expenses Business-type activities: Transit service operations Regional customer services Light rail transit Total business-type activities expenses Total primary government expenses $ FY 2002/03 212,391 256,925 307,518 29,746 $ FY 2003/04 367,279 274,302 118,161 43,722 $ FY 2004/05 167,057 242,945 163,818 53,199 $ 162,287 145,690 236,219 171,169 853,216 608,955 497,885 820,699 589,798 294,016 784,056 656,311 267,869 931,196 514,977 486,102 - - - - 262,172 162,556 87,255 1,000,000 134,200 4,412,819 226,215 207,283 91,684 51,652 94,589 3,179,400 238,134 247,948 106,305 51,652 90,972 3,070,266 400,777 161,979 293,648 51,652 180,099 3,735,795 28,475,928 5,010,019 16,765,586 50,251,533 30,011,849 4,229,972 5,033,179 39,275,000 30,650,723 4,710,645 2,982,701 38,344,069 34,834,292 5,123,118 3,667,400 43,624,810 $ 54,664,352 $ 42,454,400 $ 41,414,335 $ 47,360,605 56 FY 2005/06 $ FY 2006/07 187,496 322,430 197,256 534,285 $ 403,337 558,664 164,722 1,298,591 FY 2007/08 $ 316,147 735,888 224,767 1,113,474 FY 2008/09 $ 292,509 317,886 154,523 1,183,750 FY 2009/10 $ 308,339 358,149 106,185 1,049,353 FY 2010/11 $ 101,121 1,063,291 113,073 997,203 865,290 645,052 326,903 719,854 594,549 385,257 819,553 592,460 373,833 897,234 561,620 424,091 1,052,649 504,614 250,976 909,742 590,062 42,633 - 2,578,094 3,087,948 1,623,744 3,110,366 3,599,018 1,857,934 2,810,408 3,807,893 2,129,063 2,585,192 3,896,440 2,015,543 2,201,863 3,833,319 1,960,196 514,158 207,304 549,635 4,349,809 1,712,451 260,965 715,001 14,103,177 1,033,066 908,275 14,684,781 1,111,340 799,503 14,489,820 1,128,667 750,461 14,006,568 1,284,141 682,197 13,778,841 38,578,007 5,767,760 16,909,968 61,255,735 60,090,164 63,225,727 123,315,891 96,796,902 65,243,366 162,040,268 99,625,805 70,492,629 170,118,434 93,074,466 60,704,307 153,778,773 90,336,819 66,140,185 156,477,004 $ 65,605,544 $137,419,068 $176,725,049 $184,608,254 $167,785,341 $170,255,845 (Continued) 57 Valley Metro Regional Public Transportation Authority Changes in Net Assets (Continued) Last Ten Fiscal Years (accrual basis of accounting) FY 2001/02 Program revenues Governmental activities: Charges for services Operating grants and contributions Capital grants and contributions Total governmental activities program revenues $ 2,486,448 122,392 FY 2002/03 $ 3,370 2,259,396 94,488 FY 2003/04 $ 32,501 1,949,879 92,140 FY 2004/05 $ 49,642 2,288,916 172,438 2,608,840 2,357,254 2,074,520 2,510,996 11,474,892 4,603,962 319,875 53,288 4,683,109 5,323,908 13,324,905 5,374,355 14,423,963 4,623,029 594,796 56,957 3,997,064 2,569,035 4,108,637 609,542 15,487,044 4,640,901 534,764 70,001 4,378,852 2,982,701 1,834,067 820,223 18,135,892 5,344,925 526,891 49,550 4,962,128 3,667,400 5,140,813 387,845 Business-type activities: Charges for services Transit service operations: Local & express bus service Paratransit service Vanpool service Other activities Regional customer services Light rail transit Operating grants and contributions Capital grants and contributions Total business-type activities program revenues Total primary government program revenues 45,158,294 30,983,023 30,748,553 38,215,444 $ 47,767,134 $ 33,340,277 $ 32,823,073 $ 40,726,440 Net (Expense)/Revenue Governmental activities Business-type activities Total primary government net expense $ (1,803,979) (5,093,239) $ (6,897,218) $ (822,146) (8,291,977) $ (9,114,123) $ (995,746) (7,595,516) $ (8,591,262) $ (1,224,799) (5,409,366) $ (6,634,165) $ $ $ $ General Revenues and Other Changes in Net Assets Governmental activities: Sales taxes Interest earnings Other income Transfers in (out) Total governmental activities Business-type activities: Sales taxes Interest earnings Other income Transfers in (out) Total business-type activities: Total primary government Change in net assets: Governmental activities Business-type activities Total primary government net expense $ $ $ 1,941,168 167,272 (789,672) 1,318,768 5,400,322 45,490 16,775 789,672 6,252,259 7,571,027 (485,211) 1,159,020 673,809 58 $ $ 2,587,302 64,528 21,603 (1,828,543) 844,890 4,914,755 22,702 1,828,543 6,766,000 7,610,890 22,744 (1,525,977) $ (1,503,233) $ $ 3,071,725 83,977 966 (1,139,423) 2,017,245 4,516,066 320 1,139,423 5,655,809 7,673,054 1,021,499 (1,939,707) $ (918,208) $ $ $ 1,154,022 103,981 1,047 1,259,050 6,559,344 2,774 6,562,118 7,821,168 34,251 1,152,752 1,187,003 FY 2005/06 $ 75,295 2,358,485 48,382 FY 2006/07 $ 25,046 2,494,611 198,777 FY 2007/08 $ 2,062,602 - FY 2008/09 $ 2,632,463 - FY 2009/10 $ 150,353 2,055,931 - FY 2010/11 $ 189,000 2,286,930 - 2,482,162 2,718,434 2,062,602 2,632,463 2,206,284 2,475,930 18,963,733 4,075,963 692,342 182,809 3,376,143 5,209,939 1,186,038 17,286,134 20,131,861 2,118,843 685,743 36,729 5,565,540 642,313 19,041,093 19,861,844 2,043,104 844,115 6,421,524 1,421,891 16,237,008 19,936,194 3,029,151 926,245 8,614,280 2,609,156 40,555,599 15,849,887 2,408,268 864,663 8,130,261 2,607,770 14,996,556 9,811,268 2,431,467 318,945 2,611,481 8,201,600 2,144,496 8,289,329 50,973,101 48,222,122 46,829,486 75,670,625 44,857,405 33,808,586 $ 53,455,263 $ 50,940,556 $ $ (1,867,647) (10,282,634) $ (12,150,281) $ (11,384,743) (75,093,769) $ (86,478,512) $ (12,622,179) (115,210,782) $ (127,832,961) $ (11,857,357) (94,447,809) $ (106,305,166) $ (11,800,284) (108,921,368) $ (120,721,652) $ (11,302,911) (122,668,418) $ (133,971,329) $ 55,084,706 124,312 (44,329,950) 10,879,068 $134,235,260 1,664,357 (92,948,387) 42,951,230 $ 130,490,779 2,503,935 142,810 (134,981,389) (1,843,865) $ 113,297,696 36,310 75,176 (92,630,562) 20,778,620 $ 103,722,510 231,398 73,531 (84,745,330) 19,282,109 $ 107,111,118 79,874 233,357 (89,250,166) 18,174,183 44,578 44,329,950 44,374,528 $ 55,253,596 945,155 2,564,291 92,948,387 96,457,833 $139,409,063 536,116 1,688,207 134,981,389 137,205,712 $ 135,361,847 34,862 2,233,476 92,630,562 94,898,900 $ 115,677,520 587,487 650,591 84,745,330 85,983,408 $ 105,265,517 215,800 560,643 89,250,166 90,026,609 $ 108,200,792 $ $ 31,566,487 21,364,064 $ 52,930,551 $ (14,466,044) 21,994,930 $ 7,528,886 $ $ $ 9,011,421 34,091,894 $ 43,103,315 48,892,088 $ $ 59 78,303,088 8,921,263 451,091 9,372,354 $ 47,063,689 7,481,825 (22,937,960) $ (15,456,135) $ 36,284,516 6,871,272 (32,641,809) $ (25,770,537) Valley Metro Regional Public Transportation Authority Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) FY 2001/02 General fund: Reserved Unreserved, designated Unreserved, undesignated Nonspendable: Prepaid Items Unassigned Total general fund All other governmental funds: Reserved Unreserved, designated, reported in special revenue funds Unreserved, undesignated, reported in special revenue funds Nonspendable: Prepaid Items Restricted Total all other governmental funds FY 2002/03 FY 2003/04 FY 2004/05 $ 238,405 2,065,156 $ 318,191 1,985,370 $ 384,887 2,915,972 $ 350,173 2,950,686 $ 2,303,561 $ 2,303,561 $ 3,300,859 $ 3,300,859 $ - $ - $ - $ - $ - - - - - - - - - $ - $ Note: 2011 was the first year the Authority implemented GASB Statement No. 54. 60 - $ - FY 2005/06 $ FY 2006/07 649,225 1,638,892 $ FY 2007/08 1,002,229 1,433,788 $ FY 2008/09 233,480 2,888,105 $ FY 2009/10 755,184 2,882,500 $ FY 2010/11 837,880 3,852,887 $ $ 2,288,117 $ 2,436,017 $ 3,121,585 $ 3,637,684 $ 4,690,767 $ - $ - $ - $ - $ - 9,936,076 21,059,001 19,182,426 410,974 25,218,669 34,382,659 6,797 52,164,648 $ 52,171,445 41,434,228 $ $ 9,936,076 $ 40,241,427 $ 25,629,643 $ 34,382,659 61 $ 41,434,228 $ 3,372 175,010 178,382 Valley Metro Regional Public Transportation Authority Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) FY 2001/02 Revenues Sales taxes $ Intergovernmental: State & county grants & pass through grants Federal Transit Administration CMAQ Other federal grants Charges for services Interest earnings Miscellaneous Total revenues Expenditures Governmental activities: Regional planning: Long range Short range Capital Program support Transportation demand management: Trip reduction Ridesharing Other programs Regional customer services: Marketing Call center Other programs Administration: Executive director’s office Communications & government relations Finance & management services Community funded transportation Capital outlay Total expenditures Excess of revenues over expenditures Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) Net change in fund balances $ FY 2002/03 1,941,168 $ FY 2003/04 2,587,302 $ FY 2004/05 3,071,725 $ 1,154,022 409,000 553,492 1,604,348 42,000 167,272 4,717,280 400,000 599,460 1,312,424 42,000 3,370 64,528 21,603 5,030,687 400,000 335,365 1,264,654 42,000 32,501 83,977 966 5,231,188 400,000 526,176 1,493,178 42,000 49,642 103,981 1,047 3,770,046 212,391 256,925 307,518 29,746 367,279 274,302 118,161 43,722 167,057 242,945 163,818 53,199 162,287 145,690 236,219 171,169 853,216 608,955 497,885 820,699 589,798 294,016 784,056 656,311 267,869 931,196 514,977 486,102 - - - - 262,172 226,215 238,134 400,777 162,556 87,255 1,000,000 153,369 4,431,988 207,283 91,684 51,652 117,333 3,202,144 247,948 106,305 51,652 115,173 3,094,467 161,979 293,648 51,652 214,350 3,770,046 285,292 1,828,543 2,136,721 - (789,672) (789,672) (1,828,543) (1,828,543) (1,139,423) (1,139,423) - (504,380) 62 $ - $ 997,298 $ - FY 2005/06 FY 2006/07 FY 2007/08 FY 2008/09 FY 2009/010 FY 2010/011 $ 55,084,706 $134,235,260 $130,490,779 $113,297,696 $103,722,510 $107,111,118 400,000 569,622 1,395,577 41,668 75,295 124,312 57,691,180 400,000 993,727 1,298,056 1,604 25,046 1,664,357 138,618,050 422,887 268,661 1,287,054 84,000 2,503,935 144,672 135,201,988 455,671 612,190 1,411,497 36,310 228,281 116,041,645 688,659 266,015 1,101,257 231,398 223,988 106,233,827 635,647 799,840 851,443 189,000 79,874 233,357 109,900,279 187,496 322,430 197,256 534,285 403,337 558,664 164,722 1,298,591 311,129 733,017 222,439 1,104,198 292,509 317,886 154,523 1,183,750 308,339 358,149 106,185 1,049,353 101,121 1,063,291 113,073 997,203 865,290 645,052 326,903 719,854 594,549 385,257 816,128 601,220 370,142 897,234 561,620 424,091 1,052,649 504,614 250,976 909,742 590,062 42,633 - 2,578,094 3,087,948 1,511,164 3,084,872 3,563,629 1,380,563 2,810,408 3,807,893 1,733,413 2,585,192 3,896,440 1,662,194 2,201,863 3,833,319 1,815,740 514,158 1,712,451 1,030,804 1,111,340 1,128,667 1,284,141 207,304 419,571 218,151 4,437,896 260,965 580,415 765,641 14,621,652 318,945 1,078,709 14,615,795 462,737 384,564 14,141,968 419,178 61,909 13,383,845 359,637 1,113,456 14,425,281 53,253,284 123,996,398 120,586,193 101,899,677 92,849,982 95,474,998 814,701 (45,144,651) (44,329,950) 9,349,388 (102,892,535) (93,543,147) 11,165,777 (146,147,166) (134,981,389) 9,975,889 (102,606,451) (92,630,562) 9,658,964 (94,404,294) (84,745,330) 1,447,579 (90,697,745) (89,250,166) $ 30,453,251 $ (14,395,196) $ $ 8,923,334 63 9,269,115 $ 8,104,652 $ 6,224,832 Valley Metro Regional Public Transportation Authority Sales Tax Revenues by Component Last Ten Fiscal Years (accrual basis of accounting) FY 2001/02 Governmental activities Regional area road funds Public transportation funds Total governmental activities sales taxes $ FY 2002/03 $ $ 1,941,168 1,941,168 Business-type activities Regional area road funds $ Public transportation funds Total business-type activities sales taxes $ 5,400,322 5,400,322 $ Primary government Regional area road funds Public transportation funds Total primary government sales taxes 7,341,490 7,341,490 $ $ $ $ $ $ FY 2003/04 2,587,302 2,587,302 $ 4,914,755 4,914,755 $ 7,502,057 7,502,057 $ $ $ $ FY 2004/05 3,071,725 3,071,725 $ 4,516,066 4,516,066 $ 7,587,791 7,587,791 $ $ $ $ 1,154,022 1,154,022 6,559,344 6,559,344 7,713,366 7,713,366 (1) With the implementation of GASB Statement #34 in FY 2002, activities related to transit service operations, light rail transit and regional customer services were changed from general governmental to proprietary (business-type). Therefore, the functional expenditures listed for FY 2000/01 and earlier include the activities of these functions as part of general governmental, and the activities listed for FY 2001/02 and later exclude these activities from general governmental. As a result, most revenue categories will be greater for FY 2000/01 and prior years and should not be used as comparative data against FY 2001/02 activity and beyond. (2) With the implementation of the Public Transportation sales tax in January 2006, several changes to sales tax distributions were made. The regional area road fund sales tax distribution was reduced to one-half of the amount distributed in prior years. The collections of sales taxes under the new statute are distributed 33.3% to the Authority on a monthly basis. During FY 2005/06, only six months of collections of the Public Transportation sales tax were reported. 64 FY 2005/06 (2) FY 2006/07 (2) FY 2007/08 (2) FY 2008/09 (2) FY 2009/10 (2) FY 2010/11 (2) $ 3,938,570 51,146,136 $ 55,084,706 $ 4,047,593 130,187,667 $134,235,260 $ 4,167,168 126,323,611 $130,490,779 $ 4,277,292 109,020,404 $113,297,696 $ 4,371,192 99,351,318 $103,722,510 $ $ - $ - $ - $ - $ - $ 3,938,570 51,146,136 $ 55,084,706 $ 4,047,593 130,187,667 $134,235,260 $ 4,167,168 126,323,611 $130,490,779 $ 4,277,292 109,020,404 $113,297,696 $ 4,371,192 99,351,318 $103,722,510 $ $ $ $ $ $ 65 $ 4,422,559 102,688,559 $107,111,118 $ - 4,422,559 102,688,559 $107,111,118 Valley Metro Regional Public Transportation Authority Maricopa County Transportation Excise Tax Revenue Distributions Last Ten Fiscal Years (in thousands) FY 2001/02 Regional area road funds Freeways $ Regional Public Transportation Authority / Maricopa Association of Governments (1) Arterial streets Total regional area road fund distributions Public transportation funds Total Maricopa County transportation excise tax revenue distributions $ FY 2002/03 260,222 $ FY 2003/04 261,219 $ FY 2004/05 281,012 $ FY 2005/06 (2) 309,092 $ 292,487 7,341 7,502 7,588 7,713 7,877 267,563 268,721 288,600 316,805 16,127 316,491 - - - - 51,146 267,563 $ 268,721 $ 288,600 $ 316,805 $ 367,637 Source: The Maricopa County Transportation Excise Tax Year-End Report prepared by the Arizona Department of Transportation, Financial Management Services, Office of Financial Planning. Note: The Maricopa County Transportation Excise Tax, often referred to as the “1/2 cent sales tax,” is levied upon business activities in Maricopa County, including retail sales, contracting, utilities, rental of real and personal property, restaurant and bar receipts, and other activities. Under Proposition 300 (passed by the voters in 1985 becoming effective on January 1, 1986), the transportation excise tax revenues are deposited in the Maricopa County Regional Area Road Fund (RARF) which is administered by the Arizona Department of Transportation. The revenues deposited into the RARF account are the principal sources of funding for the Regional Freeway System in Maricopa County and the Regional Public Transportation Authority and are dedicated through December 31, 2005. In November 2004, Maricopa County’s voters approved Proposition 400, Maricopa County Transportation Excise Tax, which became effective on January 1, 2006, and extends the 1/2 cent sales tax for another 20 years through December 31, 2025. The sales tax extension will be used for construction of new freeways, widening of existing freeways and highways, improvements to the arterial street system, regional bus service and high-capacity transit services such as light rail. The collections of the Maricopa County Transportation Excise Tax are as follows: Freeways 56.2%, Public Transportation Fund 33.3%, and Arterial Streets 10.5%. (1) The Authority received a portion of the RARF excise tax funds for transit costs through December 31, 2005. On January 1, 2006 these funds are distributed evenly to the Authority and the Maricopa Association of Governments to be used for administrative and planning purposes per Proposition 400. These funds are netted from the Freeway funds. (2) Distributions are a mix of both Proposition 300 and Proposition 400 collections. 66 Valley Metro Regional Public Transportation Authority Maricopa County Transportation Excise Tax Revenue Distributions Last Ten Fiscal Years (in thousands) FY 2006/07 (2) $ $ 213,119 FY 2007/08 $ 205,576 FY 2008/09 $ 176,235 FY 2009/10 $ 159,604 FY 2010/11 $ 165,321 8,095 8,334 8,555 8,742 8,845 41,050 262,264 39,832 253,742 34,376 219,166 31,327 199,673 32,379 206,545 130,188 126,324 109,020 99,351 102,689 392,452 $ 380,066 $ 328,186 $ 67 299,024 $ 309,234 (This page intentionally left blank) Valley Metro Regional Public Transportation Authority Maricopa County Transportation Excise Tax Revenue Collections by Category Last Ten Fiscal Years (in thousands) Fiscal Year 2001/02 2002/03 2003/04 2004/05 2005/06 (1) 2006/07 (1) 2007/08 (1) 2008/09 (1) 2009/10 (1) 2010/11 (1) Retail Sales Contracting Utilities $ 131,393 133,922 144,817 158,179 182,378 187,817 177,845 153,681 143,205 152,003 $ 41,218 38,894 43,524 52,325 64,822 73,864 66,046 46,865 28,953 28,012 $ 18,432 18,485 19,980 20,813 23,600 26,697 28,630 28,510 29,385 29,511 Restaurant Rental Real and Bar Property $ 21,748 22,646 24,807 27,191 30,656 33,073 33,021 30,763 30,558 31,729 $ 24,529 25,747 27,163 29,310 32,949 36,398 38,605 37,757 35,825 35,731 Rental Personal Property Other Total $ 13,928 12,834 12,631 12,624 13,923 15,053 15,111 13,470 11,983 11,606 $ 16,315 16,193 15,678 16,363 19,309 19,550 20,808 17,140 19,115 20,643 $ 267,563 268,721 288,600 316,805 367,637 392,452 380,066 328,186 299,024 309,235 Source: The Maricopa County Transportation Excise Tax Year-End Report, prepared by the Arizona Department of Transportation, Financial Management Services, Office of Financial Planning. Note: The Maricopa County Transportation Excise Tax, often referred to as the “1/2 cent sales tax,” is levied upon business activities in Maricopa County, including retail sales, contracting, utilities, rental of real and personal property, restaurant and bar receipts, and other activities. Under Proposition 300 (passed by the voters in 1985 becoming effective on January 1, 1986), the transportation excise tax revenues are deposited in the Maricopa County Regional Area Road Fund (RARF) which is administered by the Arizona Department of Transportation. The revenues deposited into the RARF account are the principal sources of funding for the Regional Freeway System in Maricopa County and the Regional Public Transportation Authority and are dedicated through December 31, 2005. In November 2004, Maricopa County’s voters approved Proposition 400, Maricopa County Transportation Excise Tax, which became effective on January 1, 2006, and extends the 1/2 cent sales tax for another 20 years through December 31, 2025. The sales tax extension will be used for construction of new freeways, widening of existing freeways and highways, improvements to the arterial street system, regional bus service and high-capacity transit services such as light rail. The collections of the Maricopa County Transportation Excise Tax are as follows: Freeways 56.2%, Public Transportation Fund 33.3%, and Arterial Streets 10.5%. Note: Information for individual taxpayers is confidential, and state statutes prohibit releasing the information. (1) Fiscal year collections are a mix of both Proposition 300 and Proposition 400 collections. Revenue Category Definitions: Retail Sales Includes retail sales of automobiles, durable goods and other general merchandise, apparel, building materials, furniture and other tangible personal property. The tax on food was repealed in July 1980. Contracting Includes prime contracting and dealership of manufactured buildings and owner-builder operations. Utilities Includes producing and/or furnishing to consumers electricity, natural or artificial gas, and water. Restaurant and Bar Includes operations of restaurants and drinking establishments. Rental of Real Property Includes leasing or renting real property, hotels and motels. Rental of Personal Property Includes leasing or renting tangible personal property such as leased vehicles and construction equipment. Other Includes intrastate transportation of persons, freight or operations of property, intrastate telecommunication services, intrastate operation of pipelines for oil or natural or artificial gas, job printing, engraving, embossing and publication, publication of newspapers, magazines and other periodicals, operations of amusement places and miscellaneous other revenues. 68 Valley Metro Regional Public Transportation Authority Arizona Transaction Privilege Tax Excise Tax Rates by Category Last Ten Fiscal Years FY 2001/02 FY 2002/03 FY 2003/04 FY 2004/05 FY 2005/06 Retail sales Percent of Total Maricopa County Transaction Privilege Tax Collections 49.1100% Transaction Privilege Tax Rate 5.0000% Transportation Excise Tax Rate 0.5000% Contracting Percent of Total Maricopa County Transaction Privilege Tax Collections 15.4000% Transaction Privilege Tax Rate 5.0000% Transportation Excise Tax Rate 0.5000% Rental of Real Property (including hotels and motels) (1) Percent of Total Maricopa County Transaction Privilege Tax Collections 9.1700% Transaction Privilege Tax Rate 1.8200% Transportation Excise Tax Rate 0.5120% Restaurants and Bars Percent of Total Maricopa County Transaction Privilege Tax Collections 8.1300% Transaction Privilege Tax Rate 5.0000% Transportation Excise Tax Rate 0.5000% Utilities Percent of Total Maricopa County Transaction Privilege Tax Collections 6.8900% Transaction Privilege Tax Rate 5.0000% Transportation Excise Tax Rate 0.5000% Rental of Personal Property Percent of Total Maricopa County Transaction Privilege Tax Collections 5.2100% Transaction Privilege Tax Rate 5.0000% Transportation Excise Tax Rate 0.5000% Communications Percent of Total Maricopa County Transaction Privilege Tax Collections 3.7300% Transaction Privilege Tax Rate 5.0000% Transportation Excise Tax Rate 0.5000% Amusements Percent of Total Maricopa County Transaction Privilege Tax Collections 1.1200% Transaction Privilege Tax Rate 5.0000% Transportation Excise Tax Rate 0.5000% Publishing and Printing Percent of Total Maricopa County Transaction Privilege Tax Collections 0.7000% Transaction Privilege Tax Rate 5.0000% Transportation Excise Tax Rate 0.5000% Other Percent of Total Maricopa County Transaction Privilege Tax Collections 0.5600% Transaction Privilege Tax Rate 5.0000% Transportation Excise Tax Rate 0.5000% Mining Percent of Total Maricopa County Transaction Privilege Tax Collections 0.0000% Transaction Privilege Tax Rate 3.1250% Transportation Excise Tax Rate 0.3125% 49.8400% 5.0000% 0.5000% 50.1800% 5.0000% 0.5000% 49.9300% 5.0000% 0.5000% 49.9300% 5.0000% 0.5000% 14.4700% 5.0000% 0.5000% 15.0800% 5.0000% 0.5000% 16.5200% 5.0000% 0.5000% 16.5200% 5.0000% 0.5000% 9.5800% 1.8200% 0.5120% 9.0500% 1.8200% 0.5120% 9.2500% 1.8200% 0.5120% 9.2500% 1.8200% 0.5120% 8.4300% 5.0000% 0.5000% 8.6000% 5.0000% 0.5000% 8.5800% 5.0000% 0.5000% 8.5800% 5.0000% 0.5000% 6.8800% 5.0000% 0.5000% 6.9200% 5.0000% 0.5000% 6.5700% 5.0000% 0.5000% 6.5700% 5.0000% 0.5000% 4.7800% 5.0000% 0.5000% 4.3800% 5.0000% 0.5000% 3.9800% 5.0000% 0.5000% 3.9800% 5.0000% 0.5000% 3.4500% 5.0000% 0.5000% 3.3400% 5.0000% 0.5000% 3.2000% 5.0000% 0.5000% 3.2000% 5.0000% 0.5000% 1.1100% 5.0000% 0.5000% 1.0600% 5.0000% 0.5000% 1.0500% 5.0000% 0.5000% 1.0500% 5.0000% 0.5000% 0.7000% 5.0000% 0.5000% 0.6300% 5.0000% 0.5000% 0.6100% 5.0000% 0.5000% 0.6100% 5.0000% 0.5000% 0.7600% 5.0000% 0.5000% 0.7600% 5.0000% 0.5000% 0.3100% 5.0000% 0.5000% 0.3100% 5.0000% 0.5000% 0.0000% 3.1250% 0.3125% 0.0000% 3.1250% 0.3125% 0.0000% 3.1250% 0.3125% 0.0000% 3.1250% 0.3125% Source: The Maricopa County Transportation Excise Tax Year-End Report for the applicable fiscal year prepared by the Arizona Department of Transportation, Financial Management Services, Office of Financial Planning. (1) In 1990 and 1993, legislation reduced the transaction privilege tax rate for real property rentals; however, for transportation excise tax purposes, the rate was retained at its prior level. 69 FY 2006/07 FY 2007/08 FY 2008/09 FY 2009/10 FY 2010/11 47.8600% 5.0000% 0.5000% 46.8000% 5.0000% 0.5000% 46.8300% 5.0000% 0.5000% 46.8300% 5.0000% 0.5000% 49.1600% 5.0000% 0.5000% 18.8200% 5.0000% 0.5000% 17.4000% 5.0000% 0.5000% 14.2800% 5.0000% 0.5000% 14.2800% 5.0000% 0.5000% 9.0600% 5.0000% 0.5000% 9.2700% 1.8200% 0.5120% 10.1000% 1.8200% 0.5120% 11.5000% 1.8200% 0.5120% 11.5000% 1.8200% 0.5120% 11.5500% 1.8200% 0.5120% 8.4300% 5.0000% 0.5000% 8.7000% 5.0000% 0.5000% 9.3700% 5.0000% 0.5000% 9.3700% 5.0000% 0.5000% 10.2600% 5.0000% 0.5000% 6.8000% 5.0000% 0.5000% 7.5000% 5.0000% 0.5000% 8.6900% 5.0000% 0.5000% 8.6900% 5.0000% 0.5000% 9.5400% 5.0000% 0.5000% 3.8400% 5.0000% 0.5000% 4.0000% 5.0000% 0.5000% 4.1000% 5.0000% 0.5000% 4.1000% 5.0000% 0.5000% 3.7500% 5.0000% 0.5000% 2.9300% 5.0000% 0.5000% 3.3000% 5.0000% 0.5000% 2.9900% 5.0000% 0.5000% 2.9900% 5.0000% 0.5000% 3.2700% 5.0000% 0.5000% 1.0600% 5.0000% 0.5000% 1.1000% 5.0000% 0.5000% 1.1900% 5.0000% 0.5000% 1.1900% 5.0000% 0.5000% 1.1800% 5.0000% 0.5000% 0.5300% 5.0000% 0.5000% 0.5000% 5.0000% 0.5000% 0.4900% 5.0000% 0.5000% 0.4900% 5.0000% 0.5000% 0.5200% 5.0000% 0.5000% 0.4600% 5.0000% 0.5000% 0.6000% 5.0000% 0.5000% 0.5600% 5.0000% 0.5000% 0.5600% 5.0000% 0.5000% 1.7100% 5.0000% 0.5000% 0.0000% 3.1250% 0.3125% 0.0000% 3.1250% 0.3125% 0.0000% 3.1250% 0.3125% 0.0000% 3.1250% 0.3125% 0.0000% 3.1250% 0.3125% 70 (This page intentionally left blank) Valley Metro Regional Public Transportation Authority Transportation Excise Tax Revenue Bonds Bond Coverage Last Three Fiscal Years Fiscal Year 2009 2010 2011 Principal $ 2,265,000 Interest $ 5,259,888 5,245,318 Total $ 5,259,888 7,510,318 Pledged Revenue $ 109,020,404 99,351,318 102,688,559 Coverage N/A 18.89 13.67 Note 1: On June 30, 2009, the Authority raised $100,075,000 on bonds issued secured by its portion of the Transportation Excise Tax revenues collected by the Arizona Department of Revenue. Note 2: The pledged revenues of the Authority represent future sales taxes to be collected and used to repay the debt outstanding. 71 Valley Metro Regional Public Transportation Authority Outstanding Debt by Type Last Three Fiscal Years Business-type Activities Fiscal Year Ended June 30 2009 2010 2011 Transportation Excise Tax Revenue Bonds $ Percentage of Personal Income 100,075,000 100,075,000 100,075,000 0.07% 0.07% 0.06% Source: The source of this information is the Authority’s financial records. 72 Per Capita $ 25.09 26.35 26.22 Valley Metro Regional Public Transportation Authority Transportation Excise Tax Revenue Bonds Debt Service Revenue and Cost Per Capita Last Three Fiscal Years Fiscal Year 2009 2010 2011 Principal $ 2,265,000 Interest $ 5,259,888 5,245,318 $ Total Cost Revenue Maricopa County Population (1) 5,259,888 7,510,318 $ 109,020,404 99,351,318 102,688,559 $ 3,987,942 4,115,811 3,817,117 Cost Per Capita Revenue Per Capita $ $ (1) Source: Maricopa Association of Governments, Resident Population Estimates Documentation 73 1 2 27 24 27 Valley Metro Regional Public Transportation Authority Regional Population Statistics Last Ten Fiscal Years Maricopa County Avondale Buckeye Chandler El Mirage Gilbert Glendale Goodyear (3) Mesa Peoria Phoenix Queen Creek (3) Scottsdale Surprise (3) Tempe FY 2001/02 (1) FY 2002/03 (1) FY 2003/04 (1) FY 2004/05 (1) FY 2005/06 (1) 3,192,125 40,445 N/A 186,875 11,915 122,360 224,970 N/A 414,075 117,200 1,344,775 N/A 209,960 38,400 159,435 3,296,250 47,610 N/A 194,390 20,645 133,640 227,495 N/A 427,550 122,655 1,365,675 N/A 214,090 45,125 159,425 3,406,170 54,200 N/A 209,140 25,550 151,975 231,150 N/A 435,380 126,815 1,390,830 N/A 218,095 51,885 159,905 3,537,630 60,490 N/A 221,555 28,420 165,325 234,225 N/A 448,845 132,805 1,421,450 N/A 221,980 64,210 161,420 3,648,545 66,110 N/A 231,785 29,630 178,000 236,030 N/A 452,355 137,285 1,452,825 N/A 223,835 78,265 160,735 (1) Source: Maricopa Association of Governments, Resident Population Estimates Documentation (2) Source: U.S. Census (3) Data for fiscal years prior to membership of the Authority was not available. The Regional Public Transportation Authority (“Authority”) was established in 1985 to develop a regional transit plan and to develop and operate a regional transit system in Maricopa County, Arizona. The Authority is governed by a sixteenmember Board of Directors consisting of a member of the Maricopa County Board of Supervisors, and the mayors (or their designees) of the cities of Avondale, Chandler, El Mirage, Glendale, Goodyear, Mesa, Peoria, Phoenix, Scottsdale, Surprise, Tempe and Tolleson and the towns of Buckeye, Gilbert and Queen Creek. Any municipality in Maricopa County may join the Authority and have one elected official serve on the Board of Directors by committing a portion of its local transportation assistance funds to local public transportation. State legislation designates that 100% of the proceeds from the Arizona State Lottery received by participating municipalities with 300,000 or more in population, known as local transportation assistance funds, must be expended for public transportation in the respective municipalities to maintain a position on the Authority’s Board of Directors. For all other municipalities, the requirement is 33.3% for cities with a population between 60,000 and 300,000 and 75% for cities with less than 60,000 population. Local transportation assistance funds (“LTAF”) and minimum public transportation expenditures for participating municipalities for the last ten years are on the LTAF statistics table. 74 FY 2006/07 (1) FY 2007/08 (1) FY 2008/09 (1) FY 2009/10 (1) FY 2010/11 (1) 3,792,675 72,210 N/A 235,450 32,605 185,030 243,540 49,720 451,360 145,135 1,505,265 18,690 237,120 98,140 165,890 3,907,492 75,256 N/A 241,205 33,583 203,656 246,076 55,954 456,344 151,541 1,538,568 21,363 240,126 104,895 167,871 3,987,942 76,648 50,143 244,376 33,647 214,820 248,435 59,436 459,682 155,557 1,561,485 23,329 242,337 108,761 172,641 4,023,331 76,900 52,764 245,087 33,610 217,521 249,197 61,916 461,102 158,709 1,575,423 24,926 243,501 109,482 174,833 3,817,117 76,238 50,876 236,123 31,797 208,453 226,721 65,275 439,041 154,065 1,445,632 26,361 217,385 117,517 161,719 75 (This page intentionally left blank) Valley Metro Regional Public Transportation Authority Top Ten Employers for Maricopa County Current Fiscal Year and Nine Years Prior 2011 Employer State of Arizona Wal-Mart Stores, Inc. Banner Health Systems City of Phoenix Wells Fargo & Company Maricopa County Apollo Group Inc. Arizona State University Honeywell Aerospace Bank of America Motorola The Kroger Co. US Postal Service - Arizona District Raytheon Missile Systems Total for Principal Employers Total Employment in Maricopa County As of June 30 Employees 52,420 31,280 27,431 16,375 14,000 12,996 12,299 12,043 10,145 10,000 2002 Rank Percentage of Total County Employment 1 2 3 4 5 6 7 8 9 10 3.22% 1.92% 1.68% 1.01% 0.86% 0.80% 0.76% 0.74% 0.62% 0.61% 198,989 12.22% 1,628,700 Rank Percentage of Total County Employment 59,348 13,800 13,973 12,917 1 6 4 7 3.82% 0.89% 0.90% 0.83% 13,860 5 0.89% 17,500 2 1.13% 15,500 9,837 9,756 9,700 176,191 3 8 9 10 1.00% 0.63% 0.63% 0.62% 11.34% Employees 1,552,400 Source: The Business Journal, Book of Lists Workforce Informer Arizona at www.workforce.az.gov for total employed in Maricopa County. 76 Valley Metro Regional Public Transportation Authority Local Transportation Assistance Funds Last Ten Fiscal Years FY 2001/2002 Avondale Local transportation assistance funds Minimum local expenditures required Percentage required Buckeye (1) Local transportation assistance funds Minimum local expenditures required Percentage required Chandler Local transportation assistance funds Minimum local expenditures required Percentage required El Mirage Local transportation assistance funds Minimum local expenditures required Percentage required Gilbert Local transportation assistance funds Minimum local expenditures required Percentage required Glendale Local transportation assistance funds Minimum local expenditures required Percentage required Goodyear (1) Local transportation assistance funds Minimum local expenditures required Percentage required Mesa Local transportation assistance funds Minimum local expenditures required Percentage required Peoria Local transportation assistance funds Minimum local expenditures required Percentage required Phoenix Local transportation assistance funds Minimum local expenditures required Percentage required Queen Creek (1) Local transportation assistance funds Minimum local expenditures required Percentage required Scottsdale Local transportation assistance funds Minimum local expenditures required Percentage required Surprise (1) (2) Local transportation assistance funds Minimum local expenditures required Percentage required Tempe Local transportation assistance funds Minimum local expenditures required Percentage required Tolleson Local transportation assistance funds Minimum local expenditures required Percentage required FY 2002/2003 FY 2003/2004 FY 2004/2005 received 203,685 152,764 75.0% 220,818 165,614 75.0% 252,589 189,442 75.0% 277,421 208,066 75.0% received N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A received 1,002,340 334,113 33.3% 1,020,285 340,095 33.3% 1,031,314 343,771 33.3% 1,072,387 357,462 33.3% received 43,192 32,394 75.0% 65,053 48,790 75.0% 109,530 82,148 75.0% 130,312 97,734 75.0% received 622,681 207,560 33.3% 668,051 222,684 33.3% 709,012 236,337 33.3% 778,323 259,441 33.3% received 1,242,059 414,020 33.3% 1,228,273 409,424 33.3% 1,206,948 402,316 33.3% 1,186,391 395,464 33.3% received NA NA NA NA NA NA NA NA NA NA NA NA received 2,249,873 2,249,873 100.0% 2,260,734 2,260,734 100.0% 2,268,317 2,268,317 100.0% 2,233,853 2,233,853 100.0% received 616,116 205,372 33.3% 639,879 213,293 33.3% 650,732 216,911 33.3% 650,326 216,775 33.3% received 7,498,747 7,498,747 100.0% 7,342,097 7,342,097 100.0% 7,245,430 7,245,430 100.0% 7,138,976 7,138,976 100.0% received NA NA NA NA NA NA NA NA NA NA NA NA received 1,150,630 383,543 33.3% 1,146,323 382,108 33.3% 1,135,830 378,610 33.3% 1,119,229 373,076 33.3% received N/A N/A N/A N/A N/A N/A 239,405 179,554 75.0% 265,383 88,373 33.3% received 800,415 266,805 33.3% 870,471 290,157 33.3% 845,811 281,937 33.3% 821,152 273,717 33.3% received N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Source: State of Arizona, Office of the Treasurer (1) Data for fiscal years prior to membership of the Authority was not available. (2) Percentages of proceeds designated for expenditures have been revised according to the reported population starting FY2004/05. The Regional Public Transportation Authority (“Authority”) was established in 1985 to develop a regional transit plan and to develop and operate a regional transit system in Maricopa County, Arizona. The Authority is governed by a sixteen-member Board of Directors consisting of a member of the Maricopa County Board of Supervisors, and the mayors (or their designees) of the cities of Avondale, Chandler, El Mirage, Glendale, Goodyear, Mesa, Peoria, Phoenix, Scottsdale, Surprise, Tempe and Tolleson and the towns of Buckeye, Gilbert and Queen Creek. Any municipality in Maricopa County may join the Authority and have one elected official serve on the Board of Directors by committing a portion of its local transportation assistance funds to local public transportation. State legislation designates that 100% of the proceeds received by participating municipalities with 300,000 or more in population from the Arizona State Lottery, known as local transportation assistance funds, must be expended for public transportation in the respective municipalities to maintain a position on the Authority’s Board of Directors. For all other municipalities, the requirement is 33.3% for cities with a population between 60,000 and 300,000 and 75% for cities with less than 60,000 population. Local transportation assistance funds (“LTAF”) and minimum public transportation expenditures for participating municipalities for the last ten years are shown above. (3) Funding was eliminated in March 2010. 77 Valley Metro Regional Public Transportation Authority Local Transportation Assistance Funds (Continued) Last Ten Fiscal Years FY 2005/2006 FY 2006/2007 FY 2007/2008 299,299 99,667 33.3% 317,127 105,603 33.3% 331,478 110,382 33.3% N/A N/A N/A N/A N/A N/A N/A N/A N/A 1,096,287 365,064 33.3% 1,111,863 370,250 33.3% FY 2008/2009 FY 2009/2010 FY 2010/2011 (3) 318,231 105,971 33.3% 185,086 61,634 33.3% 0.0% 171,121 128,341 75.0% 121,083 90,812 75.0% 0.0% 1,080,826 359,915 33.3% 1,019,970 339,650 33.3% 590,108 196,506 33.3% 0.0% 140,622 105,467 75.0% 142,134 106,600 75.0% 149,672 112,254 75.0% 142,011 106,508 75.0% 81,249 60,937 75.0% 0.0% 818,025 272,402 33.3% 853,858 284,335 33.3% 849,374 282,842 33.3% 861,189 286,776 33.3% 518,737 172,739 33.3% 0.0% 1,158,998 385,946 33.3% 1,132,226 377,031 33.3% 1,117,962 372,281 33.3% 1,040,568 346,509 33.3% 599,909 199,770 33.3% 0.0% NA NA NA 197,755 148,316 75.0% 228,238 171,179 75.0% 236,610 177,458 75.0% 143,523 107,642 75.0% 0.0% 2,220,987 2,220,987 100.0% 2,169,928 2,169,928 100.0% 2,071,953 2,071,953 100.0% 1,929,717 1,929,717 100.0% 1,110,018 1,110,018 100.0% 0.0% 657,162 218,835 33.3% 658,598 219,313 33.3% 666,237 221,857 33.3% 640,826 213,395 33.3% 375,639 125,088 33.3% 0.0% 7,033,839 7,033,839 100.0% 6,969,140 6,969,140 100.0% 6,909,870 6,909,870 100.0% 6,506,059 6,506,059 100.0% 3,770,600 3,770,600 100.0% 0.0% NA NA NA 76,224 57,168 75.0% 85,796 64,347 75.0% 91,884 68,913 75.0% 57,536 43,152 75.0% 0.0% 1,098,399 365,767 33.3% 1,073,727 357,551 33.3% 1,088,492 362,468 33.3% 1,015,408 338,131 33.3% 585,184 194,866 33.3% 0.0% 317,703 105,795 33.3% 375,434 125,019 33.3% 450,508 150,019 33.3% 443,564 147,707 33.3% 262,631 87,456 33.3% 0.0% 798,826 266,009 33.3% 771,039 256,756 33.3% 761,513 253,584 33.3% 709,867 236,386 33.3% 416,885 138,823 33.3% 0.0% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 16,500 12,375 75.0% 0.0% 78 Valley Metro Regional Public Transportation Authority Demographic and Economic Statistics Last Ten Fiscal Years Fiscal Year Population (1,2) Income (1,2) (in thousands) Per Capita Income (1,2) 3,817,117 4,115,811 3,987,942 3,907,492 3,792,675 3,648,545 3,537,630 3,498,587 3,388,711 3,293,441 $ 135,393,497 152,216,281 147,912,041 143,729,512 139,665,253 134,339,487 120,716,738 110,278,789 101,378,940 96,998,974 $ 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 27,185 36,983 37,090 36,783 36,825 36,820 34,124 31,521 29,917 29,452 Median Age (1,3) 34.8 36.8 33.6 33.7 33.4 33 33 33 33 33 School Enrollment (4) Unemployment Rate (5) 684,028 684,510 683,966 732,146 707,771 689,411 652,333 626,461 600,577 565,517 8.3% 8.8% 8.1% 4.2% 3.5% 3.6% 4.1% 4.4% 5.2% 5.6% (1) Calendar year (2) Source: Arizona Workforce Informer, Labor Market Information, for Maricopa County Population for fiscal years 2005 through 2010 are estimates from the Department of Economic Security. Personal income for fiscal years 2008 through 2010 were not available. The income amounts provided are estimates based on a 2.91% growth rate. (3) For years through 2000, median age is based on the 1990 U.S. Census. For 2001 through 2008, median age is based on the 2000 U.S. Census. For 2009 and 2010, median age is from Maricopa Association of Governments Human Services Coordination Transportation Plan, 2009 Update. (4) Source: Arizona Department of Education, Research and Evaluation Section. School enrollment is based on the census at the start of the school year. (5) Maricopa County Labor Force and NonFarm Employment. 79 Valley Metro Regional Public Transportation Authority Full-time Equivalent Employees (FTE) by Function/Program Last Ten Fiscal Years 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Function/Program Governmental activities: Regional planning Transportation demand management Regional customer services Administration Total governmental activities FTE 3.58 10.25 7.8 21.63 4.45 10.25 7.9 22.6 4.59 10.25 4.72 7.9 27.46 4.54 10.25 4.67 8.9 28.36 7.91 10.25 4.2 14.75 37.11 7.88 9 71.5 20.1 108.5 8.13 10.5 74.6 22.2 115.4 8.03 10 78.24 22.2 118.5 8.1 10 78.26 22.2 118.6 7.7 9 72.85 20.4 110.0 Business-type activities: Transit service operations Light rail transit (1) Total business-type activities FTE 6.09 21.28 27.37 6.4 31 37.4 4.54 33 37.54 4.64 42 46.64 4.89 47 51.89 10.52 51 61.52 8.57 58 66.57 8.53 92 100.5 8.44 96 104.4 10.05 84 94.05 Total primary government FTE 49.00 60.00 65.00 75.00 89.00 170.00 182.00 219.00 223.00 204.00 Source: Adopted Valley Metro Operating Budgets for the applicable years. (1) Light rail transit staff are employees of the Authority and report to the Valley Metro Rail, Inc. Board of Directors. 80 Valley Metro Regional Public Transportation Authority Operating Indicators by Program – Fixed Route System Last Ten Fiscal Years Fixed Route System (1) City of Phoenix Transit System Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Regional Public Transportation Authority (2) Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio City of Tempe Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio City of Glendale - Luke Link (3) Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Total fixed route system Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio $ $ $ $ $ $ $ $ $ $ FY 2000/2001 FY 2001/2002 FY 2002/2003 FY 2003/2004 FY 2004/2005 31,897,150 12,525,236 801,069 65,946,654 2.07 33.5% 34,642,732 14,498,806 941,752 76,314,996 2.20 25.5% 37,543,692 16,479,011 1,089,891 90,376,532 2.41 23.0% 40,427,904 16,956,333 1,115,462 93,661,178 2.32 24.8% 42,909,890 17,420,722 1,146,819 89,543,836 2.09 27.0% 4,179,015 4,702,350 320,533 15,585,768 3.73 18.3% 3,201,550 3,302,089 246,388 12,028,529 3.76 13.9% 35,978 103,338 5,530 245,369 6.82 10.1% 39,313,693 20,633,013 1,373,520 93,806,320 2.39 28.4% $ $ $ $ $ $ 4,979,305 4,727,196 321,379 17,271,336 3.47 16.3% 3,865,511 3,730,509 350,657 12,485,395 3.23 17.2% 36,404 89,650 3,876 136,565 3.75 22.3% $ $ $ $ 43,523,952 23,046,161 1,617,664 106,208,292 2.44 23.0% $ $ $ $ $ $ $ $ $ $ 5,688,992 4,799,475 379,892 17,059,807 3.00 19.7% 4,906,953 3,814,559 267,347 13,110,640 2.67 20.6% 51,246 106,326 4,630 163,768 3.20 30.5% 48,190,883 25,199,371 1,741,760 120,710,747 2.50 22.3% $ $ $ $ $ $ 6,503,504 4,971,133 375,171 18,200,836 2.80 18.3% 4,813,237 3,826,195 314,932 14,864,954 3.09 18.2% 70,823 131,400 7,088 228,160 3.22 20.9% $ $ $ $ 51,815,468 25,885,061 1,812,653 126,955,128 2.45 23.1% $ $ $ $ $ $ $ $ $ $ 6,203,696 4,379,307 276,517 16,445,778 2.65 23.1% 4,805,598 3,797,053 311,852 15,738,112 3.27 17.3% 93,024 139,789 7,962 218,243 2.35 26.8% 54,012,208 25,736,871 1,743,150 121,945,969 2.26 25.2% Source: Reports prepared by the Regional Public Transportation Authority (RPTA): Performance Management Analysis System for fiscal years 2001 through 2007. Annual Transit Performance Report for fiscal years beginning FY 2008. (1) Fixed route systems are comprised of various operators and contractors of service in Maricopa County; as the regional authority, the Regional Public Transportation Authority in its role compiles and reports on system efficiency and effectiveness performance indicators. (2) The Regional Public Transportation Authority statistics include the City of Mesa fixed route system and the City of Scottsdale fixed route system that were separately managed through fiscal year 2004 and fiscal year 2001, respectively. (3) NA - City of Glendale did not run a fixed route. Note: Information for fiscal year 2010-11 was not available at the time the CAFR was drafted. 81 FY 2005/2006 $ $ $ $ $ $ $ $ $ $ 44,182,683 17,166,702 1,166,967 93,058,555 2.11 26.6% 6,484,886 4,956,352 389,349 19,613,325 3.02 20.7% 5,063,284 3,868,790 297,027 16,738,459 3.31 17.9% 101,444 142,109 8,121 232,802 2.29 27.5% 55,832,297 26,133,953 1,861,464 129,643,141 2.32 24.6% FY 2006/2007 $ $ $ $ $ $ $ $ $ $ 44,101,320 18,412,020 1,166,986 108,350,712 2.46 27.0% 6,772,065 5,521,319 381,620 22,493,215 3.32 20.2% 6,808,547 4,497,200 364,249 19,496,217 2.86 16.2% FY 2007/2008 $ $ $ $ $ $ FY 2008/2009 42,670,621 18,826,324 998,142 117,350,016 2.75 27.5% 7,908,819 6,218,876 377,267 30,076,788 3.80 18.1% 4,896,103 4,372,291 326,640 19,947,661 4.07 16.6% $ $ $ $ $ $ 44,642,019 18,238,826 1,172,816 109,867,153 2.46 32.1% 8,390,453 6,548,640 372,580 34,853,186 4.15 15.5% 5,846,385 4,752,561 371,445 27,191,179 4.65 11.8% 227,702 252,413 19,455 435,099 1.91 227.5% NA NA NA NA NA NA NA NA NA NA NA NA 57,909,634 28,682,952 1,932,310 150,775,243 4.32 224.6% 55,475,543 29,417,491 1,702,049 167,374,465 3.02 24.5% 58,878,857 29,507,613 1,916,841 171,911,518 3.00 25.5% $ $ 82 $ $ FY 2009/2010 $ $ $ $ $ $ $ $ $ $ 35,806,019 17,692,736 1,196,437 113,744,493 3.18 30.9% 7,277,608 6,392,468 438,051 33,248,059 4.57 20.4% 5,217,425 4,889,470 370,738 28,676,837 5.50 17.2% 116,952 101,154 37,006 820,392 7.01 3.1% 48,418,004 29,075,828 2,042,232 176,489,781 3.65 26.6% Valley Metro Regional Public Transportation Authority Operating Indicators by Program – Dial-a-Ride System Last Ten Fiscal Years FY 2000/2001 Dial-a-Ride System (1) Phoenix Dial-a-Ride Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Phoenix Reserve-a-Ride Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio East Valley Dial-a-Ride Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Maricopa County STS Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Sun Cities Area Transit Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio $ $ $ $ $ $ $ $ $ $ 237,886 2,961,140 191,525 6,909,752 29.05 6.4% 203,616 567,565 50,909 2,442,020 11.99 2.6% 266,624 1,952,587 115,673 4,524,032 16.97 8.0% 141,541 634,593 45,553 1,653,677 11.68 4.3% 61,317 222,535 18,847 617,129 10.06 25.3% FY 2001/2002 $ $ $ $ $ $ $ $ $ $ 270,493 3,238,681 230,951 9,462,730 34.98 5.2% 193,986 550,850 51,559 2,589,906 13.35 3.3% 252,441 1,995,550 116,884 4,772,217 18.90 7.6% 124,822 455,897 56,251 1,379,719 11.05 4.5% 60,400 218,313 17,998 656,655 10.87 22.9% FY 2002/2003 $ $ $ $ $ $ $ $ $ $ 333,860 3,687,477 255,922 10,385,900 31.11 4.9% 162,760 540,282 47,155 2,689,066 16.52 3.2% 240,879 1,371,852 117,217 5,076,798 21.08 7.0% 106,395 732,376 70,238 1,587,982 14.93 1.1% 60,345 226,194 19,226 671,365 11.13 22.4% FY 2003/2004 $ $ $ $ $ $ $ $ $ $ 369,791 3,901,614 262,372 11,150,114 30.15 4.8% 153,697 540,388 50,754 2,757,131 17.94 3.1% 222,736 2,048,542 111,514 4,963,617 22.28 6.5% 103,533 730,180 67,836 1,534,951 14.83 1.0% 61,147 229,917 20,015 671,410 10.98 22.7% FY 2004/2005 $ $ $ $ $ $ $ $ $ $ 393,053 4,084,991 274,099 12,375,324 31.49 4.0% 152,631 518,616 47,282 2,853,105 18.69 2.7% 223,130 1,622,795 118,032 5,338,924 23.93 6.6% 105,342 523,119 41,189 3,249,859 30.85 0.4% 58,069 254,897 22,648 714,915 12.31 21.3% Source: Reports prepared by the Regional Public Transportation Authority: Performance Management Analysis System for fiscal years 2001 through 2007. Annual Transit Performance Report for fiscal years beginning FY 2008. (1) Dial-a-ride systems are comprised of various operators and contractors of service in Maricopa County; as the regional authority, the Regional Public Transportation Authority in its role compiles and reports on system efficiency and effectiveness performance indicators. NR Not reported Note: Information for fiscal year 2010-11 was not available at the time the CAFR was drafted. 83 FY 2005/2006 $ $ $ $ $ $ $ $ 415,733 4,276,365 285,137 12,452,214 29.95 5.0% FY 2006/2007 $ $ 410,838 NA 287,882 13,655,624 33.24 4.7% FY 2007/2008 $ $ 391,420 4,806,031 292,601 14,759,075 37.71 4.1% FY 2008/2009 $ $ 396,474 4,064,584 295,057 14,991,465 37.81 4.2% FY 2009/2010 $ $ 353,674 3,675,478 283,686 14,749,818 41.70 7.3% NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR 220,153 1,796,728 121,607 6,596,249 29.96 5.2% 226,050 NA 126,131 7,685,324 34.00 5.0% 240,424 NA 131,842 8,461,088 35.19 4.6% 262,364 2,090,445 137,604 9,760,107 37.20 4.1% 248,462 2,123,274 129,168 9,322,558 37.52 4.9% 100,243 913,009 56,585 3,312,076 33.04 0.3% 57,091 230,472 21,802 689,473 12.08 23.5% $ $ $ $ $ $ 91,082 NA 49,524 3,368,464 36.98 0.0% 45,612 NA 16,526 697,877 15.30 18.0% $ $ $ $ $ $ 87,134 NA 47,511 3,350,837 38.46 0.0% 34,924 NA 12,974 560,024 16.04 22.0% $ $ $ $ $ $ $ $ 35,488 362,525 24,641 256,574 7.23 0.0% NR NR NR NR NR NR 27,652 109,741 13,081 610,581 22.08 17.4% 30,509 120,305 30,509 558,965 18.32 18.6% $ $ (Continued) 84 Valley Metro Regional Public Transportation Authority Operating Indicators by Program – Dial-a-Ride System (Continued) Last Ten Fiscal Years FY 2000/2001 Dial-a-Ride System (1) Glendale Dial-a-Ride Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Peoria Dial-a-Ride Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio El Mirage Dial-a-Ride Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Surprise Dial-a-Ride Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Total Dial-a-Ride System Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio $ $ $ $ $ $ $ $ $ $ 66,536 281,461 20,718 1,442,170 21.68 5.4% 33,540 169,360 8,352 598,195 17.84 6.1% 2,054 12,698 2,080 88,592 43.13 1.7% 5,777 38,834 2,726 77,418 13.40 8.5% 1,018,891 6,840,773 456,383 18,352,985 18.01 6.7% FY 2001/2002 $ $ $ $ $ $ $ $ $ $ 76,622 316,961 22,662 1,807,835 23.59 4.9% 32,176 196,224 9,457 624,322 19.40 5.4% 1,204 6,020 750 93,178 77.39 1.5% 7,775 45,800 2,818 105,800 13.61 6.2% 1,019,919 7,024,296 509,330 21,492,362 21.07 6.0% FY 2002/2003 $ $ $ $ $ $ $ $ $ $ 81,768 376,504 25,782 2,074,611 25.37 4.7% 30,399 189,984 9,276 727,770 23.94 5.0% 1,103 9,172 1,834 93,632 84.89 0.9% 7,094 43,716 3,881 162,931 22.97 4.6% 1,024,603 7,177,557 550,531 23,470,055 22.91 5.4% FY 2003/2004 $ $ $ $ $ $ $ $ $ $ 86,132 387,531 26,252 2,255,038 26.18 4.7% 29,258 158,456 7,920 738,683 25.25 4.5% 1,061 7,230 NR 76,813 72.40 1.0% 7,387 48,768 4,891 185,646 25.13 4.3% 1,034,742 8,052,626 551,554 24,333,403 23.52 5.2% FY 2004/2005 $ $ $ $ $ $ $ $ $ $ 87,831 386,587 29,554 2,247,156 25.58 5.0% 33,805 153,805 8,258 827,786 24.49 4.0% 1,558 10,017 NR 70,459 45.22 1.7% 8,181 68,291 5,016 283,624 34.67 3.5% 1,063,600 7,623,118 546,078 27,961,152 26.29 4.5% Source: Reports prepared by the Regional Public Transportation Authority: Performance Management Analysis System for fiscal years 2001 through 2007. Annual Transit Performance Report for fiscal years beginning FY 2008. (1) Dial-a-ride systems are comprised of various operators and contractors of service in Maricopa County; as the regional authority, the Regional Public Transportation Authority in its role compiles and reports on system efficiency and effectiveness performance indicators. NR Not reported Note: Information for fiscal year 2010-11 was not available at the time the CAFR was drafted. 85 FY 2005/2006 $ $ $ $ $ $ $ $ $ $ 89,055 390,561 29,594 2,387,554 26.81 4.6% 42,560 159,903 9,975 927,312 21.79 5.1% 1,466 12,284 1,613 74,023 50.49 2.0% 12,578 86,045 6,554 367,093 29.19 3.5% 938,879 7,865,367 532,887 26,805,994 28.55 4.9% FY 2006/2007 $ $ $ $ $ $ $ $ $ $ 84,132 NA 29,448 2,446,602 29.08 3.3% 45,790 NA 12,663 1,045,445 22.83 4.5% 1,947 NA 1,820 99,256 50.98 3.7% 17,339 NA 8,037 506,921 29.24 3.6% 922,790 NA 532,031 29,505,513 31.97 4.4% FY 2007/2008 $ $ $ $ $ $ $ $ $ $ 88,638 NA 30,642 2,878,740 32.48 3.8% 40,122 NA 14,875 1,239,982 30.91 3.2% 1,131 NA 1,764 97,262 86.00 2.3% 20,075 NA 8,698 589,469 29.36 3.7% 903,868 NA 540,907 31,936,477 35.33 4.1% FY 2009/2010 FY 2008/2009 $ $ $ $ $ $ $ $ $ $ 86 92,381 408,986 30,594 2,431,098 26.32 4.4% 38,978 212,812 14,567 1,239,982 31.81 3.1% $ $ $ $ 89,808 411,136 29,927 2,430,543 27.06 4.3% 32,921 158,846 13,218 1,109,380 33.70 2.9% 1,459 NA 1,680 102,139 70.01 2.9% NR NR NR NR NR NR 19,336 79,989 7,918 644,740 33.34 3.0% 22,151 83,761 8,561 591,150 26.69 3.8% 874,132 7,329,082 524,842 30,057,041 34.39 4.3% $ $ $ $ 777,525 6,572,800 478,158 28,762,414 36.99 6.2% Valley Metro Regional Public Transportation Authority Operating Indicators by Program – Shuttle / Circulator System Last Nine Fiscal Years Shuttle/Circulator System City of Phoenix (1) Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio City of Tempe (2) Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio City of Scottsdale (3) (4) Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio City of Glendale (5) Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Regional Public Transportation Authority (6) Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Total Shuttle/Circulator System Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Source: FY 2001/2002 FY 2002/2003 FY 2003/2004 437,421 361,830 26,505 1,058,452 2.42 0.0% 770,348 604,325 40,480 1,619,238 2.10 0.0% 747,351 577,579 37,636 1,435,044 1.92 0.0% $ $ $ $ $ $ $ $ $ $ 1,222,122 601,509 61,681 1,995,345 1.63 0.0% 42,456 30,060 4,676 290,066 6.83 0.0% 51,180 66,784 8,055 267,801 5.23 4.6% $ $ $ $ $ $ $ $ 1,445,714 441,587 30,949 1,517,734 1.05 0.0% 49,498 33,129 4,683 308,684 6.24 0.0% 54,093 78,895 6,361 185,407 3.43 5.7% $ $ $ $ $ $ $ $ 1,705,025 487,780 40,149 1,771,216 1.04 0.0% 52,599 37,272 6,185 377,726 7.18 0.0% 59,692 93,794 7,897 203,149 3.39 5.9% FY 2004/2005 $ $ $ $ $ $ $ $ 794,945 601,547 38,156 2,386,820 3.00 0.0% 1,999,795 475,609 39,831 1,835,387 0.92 0.0% 92,139 57,696 8,167 547,764 5.94 0.0% 82,569 100,295 8,301 144,934 1.76 11.0% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 1,753,179 1,060,183 100,917 3,611,664 2.06 N/A 2,319,653 1,157,936 82,473 3,631,063 1.57 N/A 2,564,667 1,196,425 91,867 3,787,135 1.48 N/A 2,969,448 1,235,147 94,455 4,914,905 4.20 N/A $ $ $ $ $ $ Reports prepared by the Regional Public Transportation Authority: Performance Management Analysis System for fiscal years 2001 through 2007. Annual Transit Performance Report for fiscal years beginning FY 2008. (1) City of Phoenix - Alex, Dart, Dash, Deer Run, Durango Shuttle, Mart & Smart; prior to FY 07-08 included only Dash and Alex. (2) City of Tempe - FLASH, Orbit-Earth, Jupiter, Mars, Mercury, Neighborhood FLASH & Venus; prior to FY 07-08 included only FLASH, Neighborhood FLASH. (3) City of Scottsdale - Neighborhood Trolley and Downtown Trolley; prior to FY 07-08 included only Roundup. (4) City of Scottsdale did not track revenue miles for FY 07-08. (5) City of Glendale - GUS 7 Luke Link (6) RPTA- BUZZ Note: Information for fiscal year 2010-11 was not available at the time the CAFR was drafted. N/A – Indicates information is not applicable. 87 Valley Metro Regional Public Transportation Authority Operating Indicators by Program – Shuttle / Circulator System Last Nine Fiscal Years FY 2005/2006 $ $ $ $ $ $ $ $ $ $ 766,676 580,884 36,923 1,812,780 2.36 0.0% 2,034,656 479,595 48,794 1,954,659 0.96 0.0% 125,435 80,489 14,025 953,477 7.60 0.0% FY 2006/2007 $ $ $ $ $ $ 96,258 96,838 7,969 158,442 1.65 10.3% 735,941 580,080 36,710 1,889,393 2.57 0.0% 1,616,729 482,538 52,379 2,091,895 1.29 0.0% 274,961 219,861 33,828 1,887,546 6.86 0.0% 97,681 NR NR NR NR NR N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 3,023,025 1,237,806 107,711 4,879,358 1.61 N/A 2,725,312 1,282,479 122,917 5,868,834 2.15 N/A $ $ FY 2007/2008 $ $ $ $ $ $ $ $ $ $ $ $ 1,799,974 1,614,317 79,529 7,173,722 3.99 0.1% 2,456,646 1,613,904 150,171 6,833,012 2.78 0.0% 384,000 48,240 2,400,000 6.25 0.0% 110,941 110,005 8,858 176,574 1.59 16.3% N/A N/A N/A N/A N/A N/A 4,751,561 3,338,226 286,798 16,583,308 3.49 0.2% FY 2008/2009 2,599,292 1,960,474 118,173 9,626,975 3.70 0.0% $ $ $ $ 3,307,223 2,105,878 206,964 11,414,395 3.45 0.0% $ $ $ $ 572,925 439,307 48,648 2,627,403 4.59 0.0% $ $ 113,382 98,760 8,735 668,581 5.90 3.6% $ $ 80,133 60,795 5,755 319,570 3.99 0.0% $ $ $ $ FY 2009/2010 6,672,955 4,665,213 388,275 24,656,925 3.88 0.1% 88 2,643,678 1,609,412 99,367 7,306,773 2.76 0.0% 3,660,543 1,819,126 194,057 10,070,159 2.75 0.0% 652,230 358,482 37,006 N/A N/A N/A $ $ $ $ $ $ 116,952 104,154 12,412 820,392 7.01 3.1% 200,504 105,935 8,726 547,823 2.73 0.0% 7,273,907 3,997,109 351,567 18,745,147 2.58 N/A Valley Metro Regional Public Transportation Authority Capital Asset Statistics by Function/Program Revenue Vehicles for Transit Service Operations Last Ten Fiscal Years Fiscal Year 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 Local and Express Bus Paratransit / Dial-a-Ride 72 80 80 133 181 172 192 257 251 242 63 67 62 61 57 75 76 76 111 80 Vanpool NA NA NA 250 303 308 347 421 376 376 Source: National Transit Data Base (NTD) (1999/00-2007/08) FAS GOV 100 Asset Accounting (2008/09-current) (1) For years FY98 through FY04, the NTD reported numbers included vans that were owned by the contractor; thus, those assets are not reported. 89 Single Audit Section The Single Audit Section includes the Authority’s schedule of expenditures of federal awards, and the independent auditors’ reports on internal controls and compliance with applicable laws and regulations. Valley Metro Regional Public Transportation Authority Supplementary Schedule of Expenditures of Federal Awards Fiscal Year Ended June 30, 2011 Federal Grantor Agency and Program Title CFDA Pass-Through Number Grantor Pass-Through Identifying Number Awards Expended Department of Transportation Federal Transit Administration Urbanized Area Formula (Section 5307) Urbanized Area Formula (Section 5307) Urbanized Area Formula (Section 5307) Urbanized Area Formula (Section 5307) Urbanized Area Formula (Section 5307)-ARRA 20.507 20.507 20.507 20.507 20.500 City of Phoenix City of Phoenix City of Phoenix City of Phoenix City of Phoenix AZ-90-X070 AZ-90-X074 AZ-90-X080 AZ-90-X103 AZ-96-X002 Total Federal Transit Cluster $ 57,691 166,941 211,019 1,544,641 4,504,513 6,484,805 New Freedoms (Section 5317) New Freedoms (Section 5317) New Freedoms (Section 5317) 20.521 City of Phoenix 20.521 City of Phoenix 20.521 City of Phoenix AZ-57-X001 AZ-57-X008 AZ-57-X009 213,440 172,324 455,864 New Freedoms (Section 5317) 20.521 City of Phoenix AZ-57-X012 228,095 Job Access/Reverse Commute -JARC (Section 5316) Job Access/Reverse Commute -JARC (Section 5316) 20.516 City of Phoenix 20.516 City of Phoenix AZ-37-X011 AZ-37-X017 99,375 97,394 Total Transit Service Program Cluster FHWA Transfer Funds (STP/CMAQ) FHWA Transfer Funds (STP/CMAQ) State Rural Area Formula (Section 5311) Gila Bend State Rural Area Formula (Section 5311) Wickenburg State Rural Area Formula (Section 5311) ARRA 1,266,492 20.205 20.205 20.509 20.509 20.509 City of Phoenix City of Phoenix ADOT ADOT ADOT AZ-90-X080 AZ-95-0004 AZ-18-X038 AZ-18-X041 AZ-85-X001 Total Federal Transit Administration Federal Highway Administration Congestion Mitigation and Air Quality Improvement Program Funds: Regional Ridesharing Program Regional Ridesharing Program Trip Reduction Program Trip Reduction Program Trip Reduction Program 254,256 368,031 65,662 379,903 24,400 8,843,549 20.205 20.205 20.205 20.205 20.205 MAG MAG Maricopa County Maricopa County Maricopa County 413 413 C-85-10-021-3-01 C-85-11-006-3-00 C-85-11-004-3-00 227,368 362,694 58,673 202,709 255,000 1,106,444 Transportation Enhancement Funds: Regional Bicycle & Pedestrian Safety Regional Bicycle Safe Routes to School Regional Bicycle Bike Pedal Safety 20.200 ADOT 20.200 ADOT 20.200 ADOT Total Federal Highway Administration JPA 08-0851 JPA 08-083-1 JPA 10-0421 94,138 76,176 210,333 380,647 1,487,091 Total Expenditures of Federal Awards $ 10,330,640 90 Valley Metro Regional Public Transportation Authority Notes to Supplementary Schedule of Expenditures of Federal Awards Fiscal Year Ended June 30, 2011 1. General The Schedule of Expenditures of Federal Awards presents the activity of all federal award programs of the Regional Public Transportation Authority (the “Authority”). All federal awards received are passed through the City of Phoenix, Arizona Department of Transportation (ADOT), Maricopa County and Maricopa Association of Governments (MAG). Federal financial award activities are reported in the special revenue and enterprise funds in the Authority’s fund financial statements. 2. Basis of Accounting and Reporting Entity The accompanying Schedule of Expenditures of Federal Awards is presented using a basis of accounting that is consistent with the basic financial statements, as is described in Note 1 of the Authority’s basic financial statements. The Authority, for purposes of the Schedule of Expenditures of Federal Awards, includes all funds of the primary government as defined by Governmental Accounting Standards Board Statement No. 14, The Financial Reporting Entity. 3. Catalog of Federal Domestic Assistance (CFDA) Numbers The program titles and CFDA numbers were obtained from the 2011 Catalog of Federal Domestic Assistance. 4. Period of Award There is no specified time period in which the grant award must be spent. 91 CERTIFIED PUBLIC ACCOUNTANTS Hein f 25 versary th A nni 1986-2011 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Directors Valley Metro Regional Public Transportation Authority We have audited the financial statements of the governmental activities, the business-type activities, and each major fund of Valley Metro Regional Public Transportation Authority as of and for the year ended June 30, 2011, which collectively comprise Valley Metro Regional Public Transportation Authority’s basic financial statements and have issued our report thereon dated February 27, 2012, which was modified as to consistency because of the implementation of Governmental Accounting Standards Board Statement No. 54. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting Management of Valley Metro Regional Public Transportation Authority is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered Valley Metro Regional Public Transportation Authority’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Valley Metro Regional Public Transportation Authority’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of Valley Metro Regional Public Transportation Authority’s internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses and, therefore there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as described in the accompanying schedule of findings and questioned costs we identified a certain deficiency in internal control over financial reporting that we consider to be a material weakness. Page 92 10120 N. Oracle Road, Tucson, Arizona 85704 Tel: (520) 742-2611 Fax: (520) 742-2718 Co. HEINFELD, MEECH & CO., P.C. & , Meech eld A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying schedule of findings and questioned costs as item 2011-1 to be a material weakness. Compliance and Other Matters As part of obtaining reasonable assurance about whether Valley Metro Regional Public Transportation Authority’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Valley Metro Regional Public Transportation Authority’s response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit Valley Metro Regional Public Transportation Authority’s response and, accordingly, we express no opinion on it. This report is intended solely for the information and use of management, the Board of Directors, others within the entity, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. HEINFELD, MEECH & CO., P.C. Certified Public Accountants February 27, 2012 Page 93 CERTIFIED PUBLIC ACCOUNTANTS Hein f 25 versary th A nni 1986-2011 REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Independent Auditors’ Report Board of Directors Valley Metro Regional Public Transportation Authority Compliance We have audited Valley Metro Regional Public Transportation Authority’s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of Valley Metro Regional Public Transportation Authority’s major federal programs for the year ended June 30, 2011. Valley Metro Regional Public Transportation Authority’s major federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of Valley Metro Regional Public Transportation Authority’s management. Our responsibility is to express an opinion on Valley Metro Regional Public Transportation Authority’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Valley Metro Regional Public Transportation Authority’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of Valley Metro Regional Public Transportation Authority’s compliance with those requirements. In our opinion, Valley Metro Regional Public Transportation Authority complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2011. Page 94 10120 N. Oracle Road, Tucson, Arizona 85704 Tel: (520) 742-2611 Fax: (520) 742-2718 Co. HEINFELD, MEECH & CO., P.C. & , Meech eld Internal Control Over Compliance Management of Valley Metro Regional Public Transportation Authority is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered Valley Metro Regional Public Transportation Authority’s internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Valley Metro Regional Public Transportation Authority’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. Schedule of Expenditures of Federal Awards We have audited the financial statements of the governmental activities, the business-type activities, and each major fund, of Valley Metro Regional Public Transportation Authority as of and for the year ended June 30, 2011, and have issued our report thereon dated February 27, 2012, which was modified as to consistency because of the implementation of Governmental Accounting Standards Board Statement No. 54. Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise Valley Metro Regional Public Transportation Authority’s basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133, and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the financial statements taken as a whole. Page 95 This report is intended solely for the information and use of management, the Board of Directors, others within the entity, federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. HEINFELD, MEECH & CO., P.C. Certified Public Accountants February 27, 2012 Page 96 VALLEY METRO REGIONAL PUBLIC TRANSPORTATION AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2011 SUMMARY OF AUDITORS’ RESULTS Financial Statements Type of auditors’ report issued: Unqualified Internal control over financial reporting:  Material weakness(es) identified?  Significant deficiency(ies) identified? X Noncompliance material to financial statements noted? yes yes X no none reported yes X no yes yes X X no none reported X no Federal Awards Internal control over major programs:  Material weakness(es) identified?  Significant deficiency(ies) identified? Type of auditors’ report issued on compliance for major programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with section 510(a) of OMB Circular A-133? yes Identification of major programs: CFDA Numbers 20.500, 20.507 20.516, 20.521 20.200 Name of Federal Program or Cluster Federal Transit Cluster Transit Services Program Cluster Highway Research and Development Program Dollar threshold used to distinguish between Type A and Type B programs: $309,919 Auditee qualified as low-risk auditee? X Page 97 yes no VALLEY METRO REGIONAL PUBLIC TRANSPORTATION AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2011 FINDINGS RELATED TO FINANCIAL STATEMENTS REPORTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Reference Number: 2011-1 Type of Finding: Material weakness Description: Insufficient internal controls over financial reporting and the schedule of expenditures of federal awards CRITERIA The Authority’s management is responsible for establishing and maintaining internal controls that include controls for the generally accepted accounting principles (GAAP) basis financial statements issued by the Authority. The Authority’s system of internal controls must extend beyond the general ledger and the supporting schedules prepared by the Authority; rather it must also include controls over the GAAP basis financial statements. In addition, OMB Circular A-133 requires proper presentation of federal awards in the Schedule of Expenditures of Federal Awards. CONDITION/CONTEXT Management requested outside consultants prepare a draft of the financial statements, including related note disclosures. The outsourcing of these services is not unusual and is a result of management's cost benefit decision to rely on the accounting expertise of the consultants. The Authority's management did not have adequate internal control procedures in place over the financial statements issued by the Authority using the basis of accounting required by GAAP. In addition, the Authority’s internal controls over federal reporting for the Schedule of Expenditures of Federal Awards did not include a review process to ensure that Catalog of Federal Domestic Assistance (CFDA) numbers are correct. EFFECT Audit adjustments were necessary to properly state account balances, transaction classifications, and related note disclosures. In addition, incorrect presentation of a program CFDA number resulted in an understatement of expenditures; as a result, the program cluster was not audited as a major federal program as required in the prior year. CAUSE The Authority's limited resources contribute to difficulties in establishing controls over financial reporting at the financial statement level. In addition, a clerical error was made on the Schedule of Expenditures and Federal Awards. Page 98 VALLEY METRO REGIONAL PUBLIC TRANSPORTATION AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2011 FINDINGS RELATED TO FINANCIAL STATEMENTS REPORTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS (Concl’d) Reference Number: 2011-1 RECOMMENDATION The Authority must design and implement effective internal control procedures to ensure the financial statements and related notes are complete and free from material misstatements and misclassification. Specifically, the Authority should use checklists to aid in the review of the financial statements and related notes to the financial statements. The Authority's personnel should obtain additional training to increase their understanding of the GAAP basis financial statements drafted by the consulting firm as well as the related adjusting entries and reclassifications notated throughout the audit of the Authority's financial statements. In addition, the Authority must design and implement effective internal control procedures to ensure the federal reporting and presentation of the Schedule of Expenditures of Federal Awards and related notes are free from material misstatements and misclassification. Such controls should include a review of the Schedule of Expenditures and Federal Awards to include verification of CFDA numbers. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS The Authority concurs with this recommendation and will implement a checklist to aid in the review of the financial statements. As budget allows, personnel will obtain ongoing training to increase their understanding of the GAAP basis financial statements. In addition, we have asked the Federal grantee to include in the Intergovernmental agreements verification of CFDA numbers for all future grants. Page 99 VALLEY METRO REGIONAL PUBLIC TRANSPORTATION AUTHORITY SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS YEAR ENDED JUNE 30, 2011 Status of Federal Award Findings and Questioned Costs Reference Number: 2010-1 Program Name: Federal Transit Cluster CFDA Nos.: 20.500, 20.507 Status: Corrected. Page 100 101 N 1st Avenue, Suite1100 • Phoenix, Arizona 85003 602-262-7433 • www.ValleyMetro.org