City of Mesa, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2009 Financial Services Department P.O. Box 1466 Mesa Arizona 85211-1466 480-644-2275 mesaaz.gov City of Mesa, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2009 Scott Smith Mayor Chris Brady City Manager Dave Richins Councilmember, District 1 Bryan Raines Deputy City Manager Alex Finter Councilmember, District 2 Jack Friedline Deputy City Manager Dennis Kavanaugh Councilmember, District 3 Kari Kent Deputy City Manager Kyle Jones Vice Mayor, District 4 Dina Higgins Councilmember, District 5 Scott Somers Councilmember, District 6 Prepared By: Financial Services Department P.O. Box 1466 Mesa, AZ 85211-1466 (480) 644-2275 www.mesaaz.gov Citizens of Mesa July 2009 Mayor and City Council City Clerk Linda Crocker City Court Matt Tafoya Advisory Boards & Committees City Auditor Jennifer Ruttman (Interim) City Attorney Debbie Spinner CITY MANAGER Chris Brady Police Vicki Myers (Interim) Economic Development Bill Jabjiniak Human Resources Gary Manning Government Relations Office Scott Butler Deputy City Manager Bryan Raines Administrative Liaison To:  Economic Development  Human Resources  Community and Neighborhood Services Committee Administrative Liaison To:  Police  Fire  Court  Public Information & Communications  Public Safety Committee Fire Harry Beck Public Information & Communications Office Steve Wright Assistant to the City Manager/Special Projects Natalie Lewis Assistant to the City Manager Trisha Sorensen Deputy City Manager Jack Friedline Deputy City Manager Kari Kent    Business Services Ed Quedens Financial Services Doug Yeskey Chuck Odom Facilities Maintenance Dennis Ray  Audit and Finance Committee Employee Benefits Advisory Committee Parks, Recreation & Commercial Facilities Bryan Raines (Acting) Fleet Services Pete Scarafiotti Transportation and Infrastructure Committee Engineering Beth Huning Water Resources Kathryn Sorensen Transportation Dan Cleavenger Energy Resources Frank McRae Falcon Field Corinne Nystrom  Neighborhood Services Ray Villa Arts and Cultural Johann Zietsman Library Heather Wolf Manager of Technology and Innovation Alex Deshuk General & Economic Development Committee Employee Benefits Advisory Committee Development and Sustainability Christine Zielonka Solid Waste William Black Mayor / Council Support Information Technology Alex Deshuk Communications Mike Brown Mgmt. Performance & Accountability Bill Follette Introductory Section TABLE OF CONTENTS Page SECTION I – INTRODUCTORY SECTION Table of Contents Letter of Transmittal – Financial Services Manager Certificate of Achievement for Excellence in Financial Reporting SECTION II - FINANCIAL SECTION I V X Exhibits Independent Auditors' Report Management’s Discussion and Analysis 1 3 Basic Financial Statements Government-wide Financial Statements Statement of Net Assets Statement of Activities A-1 A-2 18 19 A-3 21 A-4 A-5 22 23 A-6 24 A-7 25 A-8 A-9 27 29 A-10 31 Fund Financial Statements Governmental Funds Financial Statements Balance Sheet Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets Statement of Revenues, Expenditures and Changes in Fund Balances Reconciliation of the Statement of Revenues, Expenditures And Changes in Fund Balances of Governmental Funds to the Statement of Activities Proprietary Funds Financial Statements Statement of Net Assets Statement of Revenues, Expenses and Changes in Fund Net Assets Statement of Cash Flows Fiduciary Funds Financial Statements Statement of Fiduciary Assets and Liabilities I TABLE OF CONTENTS (Continued) Notes to Financial Statements Note 1 - Summary of Significant Accounting Policies Note 2 - Reconciliation of Governmental Fund Financial Statements to Government-wide Financial Statements Note 3 - Retirement and Pension Plans Note 4 - Post Employment Benefits Note 5 - Long-term Obligations Note 6 - Liabilities to be Paid From Assets Held in Escrow Note 7 - Capital Contributions Note 8 - Commitments and Contingent Liabilities Note 9 - Enterprise Activities Operations Detail Note 10 - Net Assets Note 11 - Pledged Revenues Note 12 - Joint Ventures Note 13 - Subsequent Event Exhibits Page 32 50 56 59 63 73 74 74 75 76 76 77 80 Required Supplementary Information Budgetary Comparison Schedules – General Fund and Major Special Revenue Funds: General Fund Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Budget Basis) Highway User Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Budget Basis) Note to Required Supplementary Information – Budgetary Reporting B-1 81 B-2 82 83 C-1 84 C-2 85 Combining Balance Sheet C-3 Combining Statement of Revenues, Expenditures and Changes in Fund Balances C-4 86 88 Combining Financial Statements Non-major Governmental Funds Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-major Special Revenue Funds Non-major Debt Service Funds Combining Balance Sheet C-5 Combining Statement of Revenues, Expenditures and Changes in Fund Balances C-6 II 90 92 TABLE OF CONTENTS (Continued) Exhibits Combining Financial Statements (Continued) Page Non-major Capital Projects Funds Combining Balance Sheet C-7 Combining Statement of Revenues, Expenditures and Changes in Fund Balances C-8 94 96 Internal Service Funds Combining Statement of Net Assets Combining Statement of Revenues, Expenses and Changes in Net Assets Combining Statement of Cash Flows C-9 C-10 C-11 98 100 102 C-12 104 D-1 105 D-2 107 D-3 108 D-4 119 D-5 124 D-6 D-7 125 126 D-8 127 D-9 132 Agency Fund Statement of Changes in Assets and Liabilities Supplemental Information Budgetary Comparison Schedules – General Fund and Major Governmental Funds General Fund Schedule of Expenditures by Program – Budget and Actual (Budget Basis) Highway User Revenue Fund Schedule of Expenditures by Program – Budget and Actual (Budget Basis) Budgetary Comparison Schedules – Other Non-major Governmental Funds Non-major Special Revenue Funds Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual (Budget Basis) Non-major Special Revenue Funds Schedule of Expenditures by Program Budget and Actual (Budget Basis) Non-major Capital Project Funds Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual (Budget Basis) Budgetary Comparison Schedules – Proprietary Funds Enterprise Fund Schedule of Revenues, Expenses and Changes in Net Assets – Budget and Actual (Budget Basis) Enterprise Fund Reconciliation of Budget to GAAP Changes in Net Assets Internal Service Funds Schedule of Revenues, Expenses and Changes in Net Assets – Budget and Actual (Budget Basis) Internal Service Funds Reconciliation of Budget to GAAP Changes in Net Assets III TABLE OF CONTENTS (Concluded) Capital Assets Used in the Operation of Governmental Funds Schedule by Source Exhibits D-10 Page 133 SECTION III - STATISTICAL SECTION Financial Trends Net Assets by Components - Last Eight Fiscal Years (Accrual Basis of Accounting) Changes in Net Assets - Last Eight Fiscal Years (Accrual Basis of Accounting) Fund Balance, Governmental Funds - Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Changes in Fund Balance, Governmental Funds - Last Ten Fiscal Years (Modified Accrual Basis of Accounting) I II 134 136 III 142 IV 144 V VI 146 148 VII VIII IX X XI 149 151 152 153 155 XII XIII 157 158 XIV XV XVI 159 161 163 Revenue Capacity Sales Tax Collections by Category - Last Ten Fiscal Years Direct and Overlapping Sales Tax Rates - Last Ten Fiscal Years Debt Capacity Ratios of Outstanding Debt by Type - Last Ten Fiscal Years Ratios of General Bonded Debt Outstanding – Last Ten Fiscal Years Direct and Overlapping Governmental Activities Debt Legal Debt Margin Information – Last Ten Fiscal Years Pledged-Revenue Coverage – Last Ten Fiscal Years Demographic Information Demographic and Economic Statistics – Last Ten Fiscal Years Principal Employers – Current Year and Nine Years Ago Operating Information Full-Time Equivalent City Government Employees by Function/Program Last Eight Fiscal Years Operating Indicators by Function/Program – Last Ten Fiscal Years Capital Asset Statistics by Function/Program – Last Ten Fiscal Years IV Financial Section INDEPENDENT AUDITORS’ REPORT The Honorable Mayor and the City Council of the City of Mesa, Arizona We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the City of Mesa, Arizona (City), as of and for the year ended June 30, 2009, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City’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, each major fund, and the aggregate remaining fund information of the City of Mesa, Arizona, as of June 30, 2009, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund and Highway User Revenue Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 8, 2009 on our consideration of the City’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. (1) The Honorable Mayor and the City Council of the City of Mesa, Arizona The management’s discussion and analysis on pages 13 through 17, the Public Safety Personnel Retirement System Schedule of Funding Progress on page 59 and the Other Postemployment Benefit Plan Schedule of Funding Progress on page 62 are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual nonmajor fund financial statements, supplemental information, introductory section and statistical section are presented for purposes of additional analysis and are not required parts of the basic financial statements. The combining and individual nonmajor fund financial statements and supplemental information have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. LarsonAllen LLP Mesa, Arizona December 8, 2009 (2) MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the City of Mesa, Arizona (the City), we offer this discussion and analysis of the financial activities of the City for the fiscal year ended June 30, 2009. This discussion and analysis is designed to 1) assist the reader in focusing on significant financial issues, 2) provide an overview of the City’s financial activities, 3) identify changes in the City’s financial position, 4) identify any material deviations from the financial plan (the approved annual budget), and 5) identify individual fund issues and concerns. The management’s discussion and analysis should be read in conjunction with the transmittal letter presented on pages V–IX, as well as the financial statements beginning on page 18 and the accompanying notes to the financial statements. Financial Highlights  The City’s total net assets decreased $67.6 million in fiscal year 2009.  Total net assets of the City are $1.75 billion, of which $370 million are unrestricted and may be used to meet the City’s ongoing obligations to citizens and creditors. However, $313 million of the unrestricted net assets are invested in joint ventures as of June 30, 2009.  As of the end of fiscal year 2009, the City’s governmental funds reported a combined ending fund balance of $196.8 million, a $17 million increase from the previous year. A complete reconciliation of the governmental funds’ fund balance to the governmental activities’ net assets is on page 22.  At the end of the fiscal year, the City’s unreserved fund balance for the General Fund was $74.7 million, or 19.6% of total General Fund expenditures, compared to $50.3 million, or 12.7% of total General Fund expenditures the previous year.  The City issued $61.8 million in general obligation debt during the current fiscal year for new storm sewer and public safety improvement projects.  The City issued $59.9 million in taxable utility system revenue debt during the current fiscal year. These taxable bonds qualify as Build America Bonds under the America’s Economic Recovery and Reinvestment Act of 2009 and include a 35% interest rebate from the Federal government that will total $30.8 million over the life of the bonds. OVERVIEW OF THE FINANCIAL STATEMENTS This management discussion and analysis serves as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: government-wide financial statements, fund financial statements and notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. 3 Government-wide Financial Statements The government-wide financial statements (pages 18–20) are designed to provide a broad overview of the City’s finances in a manner similar to private businesses. All the activities of the City, except fiduciary activities, are included in these statements. The statement of net assets presents information on all the City’s assets and liabilities, with the difference between the two being reported as net assets. Over time increases and decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net assets changed over the most recent fiscal year. 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 City, based only on direct functional revenues and expenses. This is designed to show the extent to which the various functions depend on general revenues for support. The activities of the City are presented in two columns on these statements – governmental activities and business-type activities. A total column for the City is also provided.  The governmental activities include the City’s basic services including general government (administration), public safety, cultural-recreational, and community environment. Taxes and general revenues generally support these activities.  The business-type activities include private sector type activities such as the City-owned electric, gas, water, wastewater and solid waste systems, as well as the City-owned airport, golf courses, convention center and district cooling. These activities are primarily supported by user charges and fees. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting 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 City. Traditional fund financial statements are presented for governmental funds, proprietary funds and fiduciary funds. These fund financial statements now focus on major funds of the City, rather than fund types used in the previous financial reporting model. Governmental funds – Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements (pages 21-24) 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 evaluating the City’s near-term financing requirements. Since the governmental fund financial 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 is provided with the fund financial statements and also in Note 2 to the basic financial statements (pages 50-55). 4 Proprietary funds – The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Internal service funds are used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its fleet support; materials and supplies; printing and graphics; and the property and public liability; workers’ compensation and employee benefits self-insurance programs. Since the primary customers of the internal service funds are the governmental activities, the assets and liabilities of those funds are included in the governmental activities column of the government-wide statement of net assets. The costs of internal service funds are allocated to the various user functions on the government-wide statement of activities. The proprietary fund financial statements (pages 25–30) are prepared on the same long-term focus as the governmentwide financial statements. The enterprise funds provide the same information as the government-wide financial statements, only with more detail. The internal service funds are combined into a single column on the proprietary funds statements. Additional detail of the internal service funds can be found in the combining statements (pages 98-103). Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of others outside the City government. Fiduciary funds are not reflected in the government-wide financial statements because the resources are not available to support the City’s programs. The fiduciary fund financial statement (page 31) is prepared on the same basis as the governmentwide and proprietary fund financial statements. Notes to the financial statements – The notes to the financial statements (pages 32–80) provide additional information that is essential to the full understanding of the data provided in the government-wide and fund financial statements and should be read with the financial statements. Other information – Governments have an option of including the budgetary comparisons statements for 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 notes to the financial statements. The City has chosen to present these budgetary statements as required supplementary information beginning on page 81. GOVERNMENT-WIDE FINANCIAL ANALYSIS The following tables, graphs and analysis discuss the financial position and changes to the financial position for the City as a whole as of and for the year ended June 30, 2009 and as of and for the year ended June 30, 2008. Net Assets As noted earlier, 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 of the City for June 30, 2009 and 2008. 5 Condensed Statement of Net Assets As of June 30 (In thousands of dollars) Cash and Other Assets Capital Assets Total Assets $ Governmental Business-type Activities Activities 2009 375,676 1,238,993 1,614,669 $ 2008 358,566 1,213,950 1,572,516 $ 2009 446,887 1,232,484 1,679,371 $ Total 2008 467,744 1,187,868 1,655,612 $ Primary Government 2009 2008 822,563 $ 826,310 2,471,477 2,401,818 3,294,040 3,228,128 $ Change Dollars Percent (3,747) (0.45) % 69,659 2.90 65,912 2.04 Non-current Liabilities, Outstanding Other Liabilities Total Liabilities 540,612 98,638 639,250 470,338 96,077 566,415 845,466 58,372 903,838 788,301 54,888 843,189 1,386,078 157,010 1,543,088 1,258,639 150,965 1,409,604 127,439 6,045 133,484 10.13 4.00 9.47 Net Assets: Invested in Capital Assets, Net of Related Debt Restricted Unrestricted 791,524 92,532 91,363 794,721 86,252 125,128 413,944 82,697 278,892 410,074 94,133 308,216 1,205,468 175,229 370,255 1,204,795 180,385 433,344 673 (5,156) (63,089) 0.06 (2.86) (14.56) (67,572) (3.72) Total Net Assets $ 975,419 $ 1,006,101 $ 775,533 $ 812,423 $ 1,750,952 $ 1,818,524 $ In the case of the City, the combined net assets (governmental activities and business-type activities) exceeded liabilities by $1.75 billion at the close of the most recent year. The net assets decreased $67.6 million (3.7%) in fiscal year 2009. The governmental activities decreased $30.7 million, a 3% decrease, while the business-type activities decreased $36.9 million, a 4.5% decrease. The largest portion of net assets (69%) reflects the City’s investment in capital assets (land, buildings, equipment, infrastructure, etc.) less any outstanding related debt used to acquire those assets. The City uses these capital assets to provide services to citizens, consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. $175.2 million of the City’s net assets represent resources that are subject to external restrictions on how they may be used. The unrestricted net assets of $370.2 million may be used to meet the City’s ongoing obligations to citizens and creditors. However, $313 million of the unrestricted net assets are invested in joint ventures. Changes in Net Assets The following table shows the revenues and expenses of the City for the fiscal years ended June 30, 2009 and 2008. 6 Changes in Net Assets (In thousands of dollars) Governmental Business-type Activities Activities 2009 REVENUES Program Revenues: Charges for Services Operating Grants & Contributions Capital Grants & Contributions General Revenues: Sales Taxes Occupancy Taxes Unrestricted State-Shared Contributions Unrestricted Investment Income Miscellaneous $ Total Revenues EXPENSES Governmental Activities: General Government Public Safety Cultural-Recreational Community Environment Interest on Long-term Debt Business-type Activities: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center District Cooling Total Expenses Increase (decrease) in Net Assets Before Special Item and Transfers Transfers Change in Net Assets Net Assets-Beginning Net Assets-Ending 2008 48,459 $ 58,130 $ Government 2009 2008 2008 283,287 $ 287,894 $ 331,746 $ Change Dollars Percent 346,024 $ (14,278) (4.13) % 63,054 63,787 101 11 63,155 63,798 (643) (1.01) 35,436 21,916 31,222 80,570 66,658 102,486 (35,828) (34.96) 126,520 1,808 117,543 14,741 1,896 15,849 147,763 2,395 122,561 14,746 6,282 6,679 1,894 407 6,546 694 126,520 1,808 117,543 14,741 3,790 16,256 147,763 2,395 122,561 14,746 12,828 7,373 (21,243) (587) (5,018) (5) (9,038) 8,883 (14.38) (24.51) (4.09) (0.03) (70.46) 120.48 425,306 444,259 316,911 375,715 742,217 819,974 (77,757) (9.48) 54,226 290,928 67,039 121,736 18,658 63,633 292,396 72,999 99,415 19,083 - - 54,226 290,928 67,039 121,736 18,658 63,633 292,396 72,999 99,415 19,083 (9,407) (1,468) (5,960) 22,321 (425) (14.78) % (0.50) (8.16) 22.45 (2.23) - - 27,633 35,992 68,956 80,349 31,953 3,703 3,082 4,558 976 31,612 43,247 59,225 61,293 32,878 3,317 3,012 5,447 769 27,633 35,992 68,956 80,349 31,953 3,703 3,082 4,558 976 31,612 43,247 59,225 61,293 32,878 3,317 3,012 5,447 769 (3,979) (7,255) 9,731 19,056 (925) 386 70 (889) 207 (12.59) (16.78) 16.43 31.09 (2.81) 11.64 2.32 (16.32) 26.92 552,587 547,526 257,202 240,800 809,789 788,326 21,463 2.72 (127,281) (103,267) 59,709 134,915 (67,572) 31,648 (99,220) 96,599 94,121 (96,599) (94,121) (30,682) (9,146) (36,890) 40,794 812,423 771,629 1,006,101 $ 2009 Total Primary 975,419 1,015,247 $ 1,006,101 $ 775,533 $ 812,423 - - (67,572) 31,648 1,818,524 $ 1,750,952 (99,220) 1,786,876 $ 1,818,524 $ 0.00 (313.51) 31,648 1.77 (67,572) (3.72) Governmental Activities As presented in the following two graphs, the largest funding sources, including transfers, for the governmental activities are taxes (24%) and state-shared revenues (23%). The largest users of resources for the governmental activities are Public Safety (53%), Community Environment (22%), Cultural-Recreational (12%), and General Government (10%). 7 (313.51) Revenues by Source Including Transfers – Governmental Activities For the Fiscal Year Ended June 30, 2009 Transfers 19% Taxes 24% State-Shared 23% Miscellaneous 6% Capital Grants & Contributions 7% Operating Grants & Contributions 12% Charges for Services 9% Functional Expenses – Governmental Activities For the Fiscal Year Ended June 30, 2009 Public Safety 53% CulturalRecreational 12% Community Environment 22% General Government 10% Interest on Long-term Debt 3% The following graph shows the functional revenues and expenses of the governmental activities to demonstrate the extent to which the governmental functions produce direct revenues to offset the program costs. It should be noted that this is not intended to represent the full cost allocation to these functions. General revenues of the City, including a $96.6 million transfer from the business-type activities, cover expenses not generated by direct program revenues. 8 Expenses and Program Revenues – Governmental Activities For the Fiscal Year ended June 30, 2009 (In millions of dollars) $250 $200 $150 $100 $50 $0 General Government Public Safety Expenses Cultural Recreational Community Environment Program Revenues Governmental activities decreased the net assets of the City by $30.6 million accounting for a 3% decrease. Governmental activities accounted for 57% of the total revenues and 68% of the total expenses of the City in fiscal year 2009. This compares to 54% of total revenues and 69% of the total expenses in fiscal year 2008. Governmental Activities Revenues For Fiscal Years 2009 and 2008 (In millions of dollars) Program Revenues Taxes State-Shared Contributions Investment Income Miscellaneous $0 $20 $40 $60 $80 2009 2008 $100 $120 $140 $160 The graph above compares governmental activities revenues from fiscal year 2009 to fiscal year 2008. Total governmental activities revenues decreased $19 million from $444.3 million to $425.3 million. This is the second consecutive year that governmental activities revenues declined. Key factors in this change includes:  The program revenues (charges for services, grants and contributions that are clearly identifiable to an operating activity) of the governmental activities increased $3 million 9 over the previous year. Charges for services decreased by $9.7 million over the previous year as the demand for City-provided services weakened due to the economic conditions. There was a $10.2 million increase in the amount of capital contributions of streets, storm sewers and retention basins by developers over the previous year. These capital contributions are not cash revenues and therefore are not available to cover operating expenses.  Sales taxes decreased by $21.2 million over the previous year primarily as a result of the weakening national and local economy and the downturn in the construction industry within the City limits.  Investment income decreased by $4.4 million over the previous year due to lower interest rates obtained by the City for its investments. Governmental Activities Functional Expenses For Fiscal Years 2009 and 2008 (In millions of dollars) General Government Public Safety Cultural-Recreational Community Environment Interest on Long-term Debt $0 $50 $100 2009 $150 $200 $250 $300 2008 The graph above compares governmental activities expenses from fiscal year 2009 to fiscal year 2008. Total governmental expenses increased by $5.1 million (0.9%) from $547.5 million to $552.6 million. Key factors in this change included:  The City implemented $29 million in budget reductions during fiscal year 2008-2009 that affected all departments within the City. The reductions included a 2% wage reduction effective January 1, 2009, workforce reductions of over 300 full time positions with the majority of the impact affecting the Governmental Activities programs and changes to the types of services provided. The General Government and Cultural-Recreational functional areas were most impacted by these changes.  The Transit Maintenance Facility owned by the City was sold to the Regional Public Transit Authority for $12.2 million. The facility was recorded on the City’s books at $18.5 million resulting in a loss on sale of city property of $6.3 million which is reflected in the Community Environment functional area. 10  The City accrued an additional expense of $45.4 million in the governmental activities as a result of the implementation in fiscal year 2008 of the Governmental Accounting Standards Board (GASB) Statement No. 45 – Accounting and Financial Reporting by Employers for Postemployment Benefits other than Pension Plans. GASB Statement No. 45 requires the City to recognize the cost of providing postemployment healthcare benefits in the year the employee services are received. Business-type Activities As presented in the following two graphs, the largest funding sources and users of resources for the business-type activities are Water, Wastewater, Solid Waste, Gas and Electric. Revenues by Source – Business-type Activities Water 36% Wastewater 21% Gas 13% Solid Waste 15% Electric 12% Other Programs 3% Functional Expenses – Business-type Activities Wastewater 31% Water 27% Solid Waste 12% Gas 14% Other Programs 5% Electric 11% Business-type activities decreased the City’s net assets by $36.9 million a 4.5% decrease. Total business-type activities program and general revenues decreased by $58.8 million (15.7%) from $375.7 million to $316.9 million, while the business-type activities total expenses increased by $16.4 million (6.6%) from $240.8 million to $257.2 million. Business-type activities accounted for 43% of the total revenues and 32% of the total expenses of the City in fiscal year 2009. This compares to 46% of total revenues and 31% of the expenses in fiscal year 2008. 11 Business-type Activities Program Revenues For Fiscal Years 2009 and 2008 (In millions of dollars) Electric Gas Water Wastewater Solid Waste Other Activities $0 $50 $100 2009 $150 2008 The graph above compares program revenues for the Business-type Activities from fiscal year 2009 to fiscal year 2008. Total business-type activities program revenues decreased by $58.8 million (15.6%) from $375.7 million to $316.9 million. Key factors in this change includes:  Capital contributions decreased by $49 million from the previous year and while they continue to be a major revenue source for the business-type activities the amount contributed each year is dependent on how well the construction activity in the City is performing. The decrease from the previous year can be attributed to fewer water and wastewater lines contributed by developers as the new home construction activity in the City has decreased significantly.  Changes in Electric and Gas revenues and expenses resulted from commodity costs differences that are passed on through to the customers. Business-type Activities Functional Expenses For the Fiscal Years 2009 and 2008 Electric Gas Water Wastewater Soild Waste Other… $0 $20 $40 $60 2009 12 2008 $80 $100  The increase in the Water and Wastewater activities resulted primarily from increased depreciation amounts related to the City’s participation in joint ventures with other cities.  The transfer to the General Fund increased by $2.5 million over the previous fiscal year. This transfer is used by the governmental activities programs to cover expenses not generated by direct program revenues. Financial Analysis of the City’s Funds As previously mentioned, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The following is a brief discussion of the financial highlights from the fund financial statements. Governmental Funds - The focus of the City’s governmental funds (pages 21-24) is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. Unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. The City’s governmental funds reported combined ending fund balance of $196.8 million, a $17 million increase from the previous year. $128 million of this total amount is in unreserved fund balance, available for spending in the coming year. The remainder of fund balance ($68.9 million) is reserved to indicate it is not available for new spending as it is already committed. These fund balance reservations include $22.7 million committed to liquidate contracts and purchase orders of the prior fiscal year, $18.1 million reserved for Quality of Life Projects, $27.7 million reserved for Transportation programs and the remaining $0.3 million is reserved for prepaid costs. The General Fund is the chief operating fund of the City and accounts for many of the major functions of the government including general government, public safety, cultural-recreational and community environment services. At the end of the current fiscal year, total fund balance of the General Fund was $126.6 million, while unreserved fund balance was $74.7 million. As a measure of the General Fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. For 2009, unreserved fund balance represents 19.6% of total General Fund expenditures of $382 million, while total fund balance represents 33.1% of the same amount. For 2008, unreserved fund balance was 12.7% of total General Fund expenditures of $395 million, while total fund balance was 34.2% of the same amount. Total fund balance of the City’s General Fund decreased by $8.6 million during the current fiscal year from $135.2 million to $126.6 million. Total revenues of $323 million were $19.6 million less than the previous year, while total expenditures of $382 million were $13.2 million less than the previous year. Sales taxes collected were $21.2 million less than the previous year primarily as a result of the weakening local economy and the downturn in the construction industry. The decrease in General Fund expenditures is a primarily a result of the budget reductions implemented by the City during fiscal year 2008-09. A city-wide 2% reduction in wages in addition to a reduction in over 300 full-time positions contributed to the decrease in expenditures reflected in the fund financial statements. The increase in Community Environment 13 expenditures is a result of additional street maintenance which is now funded by the 0.5 percent dedicated sales tax passed by the voters in 2006. The transfer in of $96.6 million, mostly from the Enterprise Fund, was reduced by $46 million in transfers out to other funds, compared with a transfer in from the Enterprise Fund of $95 million that was reduced by $41 million in transfers out to other funds in the previous year. The Highway User Revenue Fund that accounts for the capital and maintenance costs for the City’s streets received $3.9 million less in state-shared revenue and had a decrease of $6.1 million in street-related expenditures. The City’s Capital Project Funds that account for the acquisition and construction of major capital facilities other than those reported in the proprietary funds reported an increase of $8 million in capital expenditures. These expenditures were for improvements in law enforcement, fire, storm sewers, streets, parks and other city facilities. Proprietary Funds - The City’s Enterprise Fund (pages 25-30) provides the same type of information as the government-wide financial statements, except in more detail. The total net assets of the Enterprise Fund decreased by $36.3 million in fiscal year 2009 from $813.2 million to $776.9 million. The unrestricted net assets of the Enterprise Fund amounted to $280.3 million. However, $259.4 million of the unrestricted net assets are invested in joint ventures. Other factors concerning the finances of the Enterprise Fund have already been addressed in the discussion on the City’s business-type activities. Budgetary Highlights The City’s annual budget is the legally adopted expenditure control document of the City. Budgetary comparison schedules are required for the General Fund and major special revenue funds and may be found on pages 84-86. These schedules compare the original adopted budget, the budget as amended throughout the year, and the actual expenditures prepared on a budgetary basis. Budgetary schedules for the other governmental funds as well as the proprietary funds are also presented on pages 105-132. Amendments to the adopted budget may occur throughout the year in a legally permissible manner (see Note 1.r. and Note 1.s. of the notes to the financial statements for more information on budget policies). No amendments increasing the City’s total adopted budget of $1.194 billion occurred during fiscal year 2009. Contingency allocations were made at fiscal year-end to cover programs in the General Fund of $15.2 million. General Fund revenues of $324.2 million, on a budgetary basis, were less than budgeted revenues of $354.2 million by $30 million while expenditures of $424.2 million were only 77% of budgeted expenditures. The shortfall in revenues is due to lower revenue received in all areas primarily because of the weakening local and national economy. Reduced expenditures resulted from budget reductions including a 2% wage reduction, eliminating over 300 full-time positions, a hiring freeze and unused contingency allocations. Capital Asset and Debt Administration Capital Assets – The City’s investment in capital assets for its governmental and business-type activities amounts to $2.4 billion (net of accumulated depreciation/amortization) as of June 30, 2009. This investment in capital assets includes land, buildings, other improvements, machinery 14 and equipment and infrastructure. Infrastructure assets are items that are normally immovable and have value only to the City, such as streets, street lighting systems and storm drainage systems. The following table provides a breakdown of the City’s capital assets at June 30, 2009 and 2008. Capital Assets (net of accumulated depreciation/amortization) As of June 30 (In thousands of dollars) Governmental Activities 2009 2008 257,858 $ 245,538 217,712 234,722 73,647 81,975 45,494 56,740 478,752 486,472 Land $ Water Rights Buildings Other Improvements Machinery & Equipment Infrastructure Excess of Cost over Net Assets Acquired Construction-in-Progress 165,530 Total $ 1,238,993 108,503 $ 1,213,950 $ Business-type Activities 2009 2008 52,028 $ 49,916 15,524 14,658 47,709 51,711 914,082 867,341 51,914 57,320 - 3,594 147,633 $ 1,232,484 4,012 142,910 $ 1,187,868 $ $ Total Primary Government 2009 2008 309,886 $ 295,454 15,524 14,658 265,421 286,433 987,729 949,316 97,408 114,060 478,752 486,472 3,594 313,163 2,471,477 $ 4,012 251,413 2,401,818 $ Change Dollars Percent 14,432 4.88 % 866 5.91 (21,012) (7.34) 38,413 4.05 (16,652) (14.60) (7,720) (1.59) $ (418) (10.42) 61,750 24.56 69,659 2.90 Major capital assets completed or constructed during the current fiscal year included:  The City continued construction of the South Central Arizona Project Water Treatment Plant with $5.3 million spent during fiscal year 2009. The $87.7 million facility will serve the growing southeast area of the City. The plant will have an initial capacity of 24 million gallons a day with the ability to expand to 48 million gallons a day.  The City completed construction of the Police Technical Services Building with $0.5 million spent during fiscal year 2009. The $21.8 million project includes larger facilities for the crime laboratory.  The City continued construction of a new City Court building with $24.6 million spent during fiscal year 2009. The $36.8 million facility will have more courtrooms, office space for judges, juror facilities and records storage. Additional information on the City’s capital assets can be found in Note 1(l.) of the notes to the financial statements. Debt Administration - At the end of the current fiscal year, the City had total bonded debt outstanding of $1.205 billion. Of this amount, $267 million comprises debt backed by the full faith and credit of the City and $938 million represents bonds secured by specified revenue sources (i.e., Utility System Revenue Bonds and Highway User Revenue Bonds). The City’s outstanding long-term debt, including bonds, capital leases and notes payable was $1.222 billion at June 30, 2009. $419 million of this total was in governmental activities and $803 million was in business-type activities. The City’s outstanding long-term debt (considering 15 new borrowings, debt retirements and refunding) increased $76 million. New borrowings during the fiscal year included $61.8 million in general obligation bonds and $59.9 million in taxable utility system revenue bonds. The City issued $59.9 million in taxable utility systems revenue bonds that qualify as Build America Bonds under the America’s Economic Recovery and Reinvestment Act of 2009. These taxable bonds include a 35% interest rebate from the United States Government. The total interest rebate to be received from the Federal government over the life of the bonds is $30.8 million. The City saved approximately $12.4 million in interest costs by issuing taxable utility systems revenue bonds versus non-taxable bonds. The following schedule shows the outstanding long-term debt of the City as of June 30, 2009 and 2008. Outstanding Long-term Debt (In thousands of dollars) Governmental Activities 2009 2008 General Obligation Bonds $ 264,200 $ 218,129 Utility System Revenue Bonds Highway User Revenue Fund Bonds 137,543 139,173 Municipal Development Corp. Bonds 9,970 Special Assessment Bonds with Governmental Commitment 7,294 8,046 Capital Leases 9,730 17,488 Notes Payable Total $ 418,767 $ 392,806 $ $ Business-type Activities 2009 2008 2,978 $ 3,315 800,222 748,419 - 158 333 803,691 $ 1,526 432 753,692 Total 2009 267,178 $ 800,222 137,543 - $ $ 7,294 9,888 333 1,222,458 $ 2008 221,444 748,419 139,173 9,970 8,046 19,014 432 1,146,498 Change Dollars Percent $ 45,734 20.65 % 51,803 6.92 (1,630) (1.17) (9,970) (100.00) $ (752) (9,126) (99) 75,960 The City’s current bond ratings are as follows: General Obligation Bonds Highway User Revenue Bonds Utility Systems Revenue Bonds Standard and Poor’s Corporation Moody’s Investors Service AA AA AA- A1 A2 A1 The Arizona Constitution provides that the general obligation bonded indebtedness of a city for general municipal purposes may not exceed 6 percent of the secondary assessed valuation of the taxable property in that city. In addition to the 6 percent limitation for general municipal purpose bonds, cities may issue general obligation bonds up to an additional 20 percent of the secondary assessed valuation for supplying such city with water, artificial light or sewers, and for the acquisition and development of land for open space preserves, parks, playgrounds and recreational facilities, public safety, law enforcement, fire and emergency services facilities and streets and transportation facilities. The total debt margin available July 1, 2009 is: 6% Bonds 20% Bonds Total Available $271,407,694 703,597,710 $975,005,404 16 (9.35) (48.00) (22.92) 6.63 Additional information on the City’s long-term obligations can be found in Note 5 and Note 6 of the notes to the financial statements. Economic Factors In June 2009, the City Council approved a $1.137 billion budget, which is approximately a 4.7% decrease from the prior year’s budget. The fiscal year 2009 – 10 budget includes $961 million for operations and $176 million for scheduled bond capital improvements. This has been a difficult period economically and the City of Mesa, like every other municipality throughout the country did not emerge unscathed. The decline that began in the housing market impacted the general economy through the 2008-2009 fiscal year. This was felt directly by the City with a dramatic decline in local sales tax revenue and in State-shared revenue receipts. The City addressed the economic change early and took proactive steps to reforecast revenue projections and dramatically reduced planned expenditures. Ultimately, over $60 million in anticipated expenditures were eliminated from the fiscal year 2009-2010 budget. With this new budget comes a reflection of the new economy, the benefits of a leaner organization and the positive impacts of a successful General Obligation Bond election in 2008 that has enabled the City to initiate important street and public safety projects. Significant economic factors affecting the City are as follows:  The City’s unemployment rate of 8.0% compares favorably to the state unemployment rate of 9.1% and the national average rate of 9.7%. This unemployment rate is nearly double the previous year’s rate reflecting the loss of jobs within the City and the State.  New residential building permits decreased significantly compared to the previous fiscal year. This decrease reflects the downturn that is occurring in the economy and housing construction industry within the City limits. Requests for Information This financial report is designed to provide a general overview of the City of Mesa, Arizona’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to City of Mesa Controller, P.O. Box 1466, Mesa, Arizona, 85211-1466. 17 Basic Financial Statements CITY OF MESA, ARIZONA EXHIBIT A-1 STATEMENT OF NET ASSETS JUNE 30, 2009 Governmental Activities ASSETS Cash and Cash Equivalents Investments Receivables: Accounts and Miscellaneous (Net of Allowances) Accrued Interest Due From Other Governments Internal Balances Inventory Prepaid Costs Deposits Restricted Assets: Cash and Cash Equivalents Accounts Receivable Customer Deposits Unamortized Bond Issue Costs Investment in Joint Ventures Capital Assets: Non-Depreciable Depreciable, Net Total Assets $ 216,908,515 14,294,852 $ 16,772,120 304,063 26,995,374 1,385,105 4,462,097 1,019,320 260,092 39,881,478 10,798,119 Total $ 23,942,720 252,622 2,578,205 (1,385,105) 21,683 11,225,650 256,789,993 25,092,971 40,714,840 556,685 29,573,579 4,462,097 1,041,003 11,485,742 28,411,560 10,406,316 1,093,537 53,362,890 94,053,952 3,141,048 2,929,525 259,447,548 122,465,512 10,406,316 3,141,048 4,023,062 312,810,438 423,388,665 815,604,329 1,614,668,835 215,184,449 1,017,299,487 1,679,371,381 638,573,114 1,832,903,816 3,294,040,216 3,380,443 19,408,571 34,230,697 8,281,526 616,062 32,720,205 9,091,419 49,281,485 3,380,443 28,499,990 34,230,697 8,281,526 616,062 82,001,690 39,429,541 501,182,795 639,249,840 11,899,189 833,566,502 903,838,595 51,328,730 1,334,749,297 1,543,088,435 791,523,460 413,943,796 1,205,467,256 18,098,414 45,026,375 1,226,626 28,180,725 91,363,395 975,418,995 244,252 4,945,742 22,781 37,945,161 29,030,709 10,412,185 96,592 278,891,568 775,532,786 18,098,414 244,252 4,945,742 22,781 82,971,536 29,030,709 10,412,185 1,226,626 28,180,725 96,592 370,254,963 1,750,951,781 LIABILITIES Warrants Outstanding Accounts Payable Other Accrued Expenses Customer and Defendant Deposits Compensated Absences Liabilities Payable From Restricted Assets Noncurrent Liabilities: Due Within One Year Due in More Than One Year Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted For: Quality of Life Projects Convention Center Airport Golf Courses Capital Projects Debt Service Bond Indentures Grant Programs Transportation Programs Water, Wastewater & Solid Waste Improvements Unrestricted Total Net Assets Primary Government Business-Type Activities $ The accompanying notes are an integral part of the financial statements. 18 $ $ CITY OF MESA, ARIZONA EXHIBIT A-2 STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Program Revenues Operating Grants and Contributions Charges for Services Expenses Capital Grants and Contributions Functions/Programs Primary Government: Governmental Activities: General Government $ Public Safety Cultural-Recreational 54,225,566 $ 15,645,016 290,927,716 11,173,011 $ 1,653,966 $ 2,438,011 250,520 67,039,000 16,073,507 1,228,867 291,027 121,735,796 5,567,840 57,733,698 34,894,512 18,658,530 - - - 552,586,608 48,459,374 63,054,542 35,436,059 Electric 27,633,642 35,312,658 - 1,111 Gas 35,991,817 41,707,578 2,795 180,734 Water 68,955,827 95,994,839 92,500 17,012,468 Wastewater 80,349,057 54,719,926 - 11,693,556 Solid Waste 31,953,188 46,762,035 5,502 101,485 Airport 3,703,129 2,958,955 - 2,183,047 Golf Course 3,082,522 2,309,899 - 50,000 Convention Center 4,558,208 2,686,663 - - 975,687 834,376 - - 257,203,077 283,286,929 100,797 31,222,401 Community Environment Interest on Long-Term Debt Total Government Activities Business-type Activities: District Cooling Total Business-type Activities Total Primary Government $ 809,789,685 $ 331,746,303 $ 63,155,339 $ 66,658,460 General Revenues: Sales Taxes Occupancy Taxes Unrestricted State Shared Revenue Contributions Not Restricted to Specific Programs Unrestricted Investment Income Miscellaneous Transfers In (Out) Total General Revenues and Transfers Change in Net Assets Net Assets - Beginning Net Assets - Ending The accompanying notes are an integral part of the financial statements. 19 EXHIBIT A-2 (Continued) Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Activities $ Business-type Activities (36,926,584) $ (36,926,584) - (277,066,174) (49,445,599) - (49,445,599) (23,539,746) - (23,539,746) (18,658,530) - (18,658,530) (405,636,633) - (405,636,633) 7,680,127 7,680,127 - 5,899,290 5,899,290 - 44,143,980 44,143,980 - (13,935,575) (13,935,575) - 14,915,834 14,915,834 - 1,438,873 1,438,873 - (722,623) (722,623) - (1,871,545) (1,871,545) - (141,311) (141,311) (405,636,633) 57,407,050 $ 57,407,050 57,407,050 $ (348,229,583) 126,519,701 - 126,519,701 1,807,601 - 1,807,601 117,542,894 - 117,542,894 14,740,889 - 14,740,889 1,895,561 1,894,369 3,789,930 407,356 16,256,780 15,849,424 96,599,000 (96,599,000) - 374,955,070 (94,297,275) 280,657,795 (30,681,563) (36,890,225) (67,571,788) 1,006,100,558 $ $ (277,066,174) - $ - Total 975,418,995 812,423,011 $ 775,532,786 1,818,523,569 $ 1,750,951,781 20 CITY OF MESA, ARIZONA EXHIBIT A-3 GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2009 General Fund Non-major Governmental Funds Highway User Revenue Fund Total Governmental Funds ASSETS Cash and Cash Equivalents Investments Accounts Receivable (Net of Allowances) Accrued Interest Receivable Due From Other Governments Due From Other Funds Prepaid Costs Deposits Restricted Assets: Cash and Cash Equivalents Accounts Receivable $ 99,607,099 9,278,802 15,298,497 243,526 21,136,283 4,606,700 329,666 260,092 $ Total Assets $ 154,628,149 $ 3,014,850 $ 113,382,950 $ 271,025,949 $ $ 1,049,108 1,965,300 - $ 5,519,695 2,641,400 1,241 - $ 3,380,443 17,883,262 4,606,700 8,281,526 616,062 91,652 3,775,832 15 98 3,014,737 - $ - 75,529,968 75,399 21,241 2,805,526 424 - $ 28,319,908 6,630,484 175,137,082 9,278,802 15,373,896 264,865 26,956,546 4,606,700 330,090 260,092 28,411,560 10,406,316 LIABILITIES AND FUND BALANCES Liabilities: Warrants Outstanding Accounts Payable Due To Other Funds Customer and Defendant Deposits Compensated Absences Payable From Restricted Assets: Accrued Lease Interest Payable Accrued Bond Interest Payable Deferred Revenue Matured General Obligation Bonds Payable Matured Highway User Revenue Bonds Payable Matured Capital Leases Payable Total Liabilities Fund Balances Reserved For Encumbrances Reserved For Prepaid Costs Reserved For Quality of Life Projects Reserved for Transportation Programs Unreserved, reported in: General Fund Special Revenue Funds Capital Project Funds Total Fund Balances Total Liabilities and Fund Balances 3,380,443 11,314,459 8,280,285 616,062 4,463,194 - - 12,320 9,406,329 6,630,484 16,392,910 2,025,000 483,349 12,320 9,406,329 11,093,678 16,392,910 2,025,000 483,349 28,054,443 3,014,408 43,112,728 74,181,579 5,729,345 329,666 18,098,414 27,704,953 442 - 17,011,816 424 - 22,741,603 330,090 18,098,414 27,704,953 74,711,328 - - 24,815,604 28,442,378 74,711,328 24,815,604 28,442,378 126,573,706 442 70,270,222 196,844,370 $ 154,628,149 The accompanying notes are an integral part of the financial statements. 21 $ 3,014,850 $ 113,382,950 $ 271,025,949 CITY OF MESA, ARIZONA EXHIBIT A-4 RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS JUNE 30, 2009 Fund Balances - total governmental funds $ 196,844,370 Amounts reported for governmental activities in the statement of net assets are different because (also see Note 2 to the basic financial statements): Capital assets used in governmental activites are not financial resources and therefore not reported in the governmental funds. 1,234,609,608 Other assets used in governmental activities are not financial resources and therefore not reported in the governmental funds. 54,456,427 Long-term liabilities, including bonds payable are not due and payable in the current period and therefore not reported in the governmental funds. (537,609,112) Deferred revenue for long-term rehabilitation loans and special assessments is shown on the governmental funds, but is not deferred on the statement of net assets. 6,693,381 Internal service funds are used by management to charge the costs of certain activites to individual funds. 20,424,321 Net assets of the governmental activities - statement of net assets The accompanying notes are an integral part of the financial statements. 22 $ 975,418,995 CITY OF MESA, ARIZONA EXHIBIT A-5 GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2009 General Fund Revenues: Sales Taxes Occupancy Taxes Special Assessments Licenses and Permits Intergovernmental Charges For Services Fines and Forfeitures Investment Income Miscellaneous Total Revenues $ 126,519,701 1,807,601 10,223,883 139,581,318 19,277,450 9,479,944 1,423,495 14,405,497 Highway User Revenue Fund Non-major Governmental Funds $ $ 34,143,594 34,860 33,544 7,880 40,009 Total Governmental Funds 1,202,384 3,202,525 17,359,688 5,030,974 701,940 190,341 309,067 $ 126,519,701 1,807,601 1,202,384 13,426,408 191,084,600 24,343,284 10,215,428 1,621,716 14,754,573 322,718,889 34,259,887 27,996,919 384,975,695 36,506,727 227,209,867 53,161,005 25,246,682 28,315,434 3,653,689 10,000 19,084,531 36,506,727 230,863,556 53,171,005 72,646,647 39,793,109 1,036,465 36,905,901 18,219,451 625,773 27,738 37,069,793 36,905,901 18,219,451 625,773 27,738 77,899,367 Total Expenditures 381,917,390 29,351,899 115,596,876 526,866,165 Excess (Deficiency) of Revenues Over (Under) Expenditures (59,198,501) 4,907,988 (87,599,957) (141,890,470) Other Financing Sources (Uses): Transfers In Transfers Out Face Amount of Bonds Issued Premium on Issuance of Bonds 96,736,344 (46,133,698) - (8,854,036) - 58,960,523 (4,118,133) 61,830,000 436,509 155,696,867 (59,105,867) 61,830,000 436,509 Total Other Financing Sources (Uses) 50,602,646 (8,854,036) 117,108,899 158,857,509 Net Change in Fund Balances (8,595,855) (3,946,048) 29,508,942 16,967,039 3,946,490 40,761,280 179,877,331 70,270,222 $ 196,844,370 Expenditures: Current: General Government Public Safety Cultural-Recreational Community Environment Debt Service: Principal Retirement Interest on Bonds Interest on Leases Service Charges Capital Outlay Fund Balances - Beginning Fund Balances - Ending 135,169,561 $ 126,573,706 The accompanying notes are an integral part of the financial statements. 23 $ 442 $ CITY OF MESA, ARIZONA EXHIBIT A-6 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Net change in fund balances - total governmental funds $ 16,967,039 Amounts reported for governmental activities in the statement of activities are different because (also see Note 2 to the basic financial statements): Revenues in the statement of activities that do not provide current financial resources are not reported in the governmental funds. (806,338) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (44,668,668) Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays ($77,899,367) exceeded depreciation ($51,246,340) in the current period. 26,653,027 The net effect of miscellaneous transactions involving capital assets (e.g., donations, transfers and disposals) is to increase net assets. 636,300 The issuance of long-term debt (e.g., bonds and capital leases) provides current financial resources to governmental funds, while the repayment of principal of long-term debt consumes financial resources of governmental funds. Neither transaction has any effect on net assets. (24,924,099) Governmental funds report the effect of bond issuance costs, premiums and deferred amounts related to refunding when the new debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. 10,659 Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue (expense) of certain internal service funds is reported with governmental activities. Change in net assets of the governmental activities - statement of activities The accompanying notes are an integral part of the financial statements. 24 (4,549,483) $ (30,681,563) CITY OF MESA, ARIZONA EXHIBIT A-7 STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2009 Business-type Governmental Activities Activities Internal Service Funds Enterprise Fund ASSETS Current Assets: Cash and Cash Equivalents Investments Accounts Receivable (Net of Allowances of $1,800,700) Accrued Premiums Receivable Accrued Interest Receivable Due From Other Governments Inventory Prepaid Costs Deposits $ Restricted Assets: Cash and Cash Equivalents Customer Deposits Total Current Assets 39,881,478 10,798,119 23,942,720 252,622 2,578,205 21,683 11,225,650 $ 41,771,433 5,016,050 722,218 676,006 39,198 38,828 4,462,097 689,230 - 42,167,697 3,141,048 134,009,222 53,415,060 95,258 - 10,596,206 - 41,194,791 2,929,525 54,815,780 - Noncurrent Assets: Restricted Assets: Impact & Development Fees: Cash and Cash Equivalents Bond Replacement, Extensions and Reserves: Cash and Cash Equivalents Capital Projects: Cash and Cash Equivalents Unamortized Bond Issue Costs Total Restricted Assets Capital Assets: Land Water Rights Buildings Other Improvements Machinery and Equipment Construction in Progress Excess of Cost Over Net Assets Acquired Less Accumulated Depreciation and Amortization 52,027,492 15,523,973 74,361,132 1,281,588,116 128,749,601 147,632,984 12,522,509 (479,921,871) 2,014,156 5,088,624 2,068,032 3,572 (4,790,998) Total Capital Assets, Net Investment in Joint Ventures 1,232,483,936 259,447,548 4,383,386 - 1,546,747,264 4,383,386 Total Noncurrent Assets Total Assets $ The accompanying notes are an integral part of the financial statements. 25 1,680,756,486 $ 57,798,446 CITY OF MESA, ARIZONA EXHIBIT A-7 (Continued) STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2009 Business-type Governmental Activities Activities Internal Service Funds Enterprise Fund LIABILITIES Current Liabilities-Payable From Current Assets: Accounts Payable Other Accrued Expenses $ Current Liabilities-Payable From Restricted Assets: Bond Replacement, Extensions and Reserves-Accounts Payable Capital Projects-Accounts Payable Accrued Notes Interest Payable Accrued Capital Lease Interest Payable Accrued Bond Interest Payable Deferred Revenue Matured Bonds Payable Matured Leases Payable Customer Deposits and Prepayments Current Portion of Long-term Liabilities: Current Portion of Revenue Bonds Payable Current Portion of General Obligation Bonds Payable Current Portion of Notes Payable Current Portion of Leases Payable Current Portion of Compensated Absences Total Current Liabilities 9,091,419 - $ 1,525,309 34,230,697 184,021 3,261,376 3,301 7,478 18,883,619 56,389 10,147,090 460,175 16,278,036 - 10,475,000 266,811 104,464 158,413 894,501 70,272,093 98,744 35,854,750 789,746,570 2,711,291 228,725 18,264,494 3,864,964 18,750,458 771,804 2,132,676 Total Long-Term Liabilities 833,566,502 2,904,480 Total Liabilities 903,838,595 38,759,230 413,943,796 4,383,385 244,252 4,945,742 22,781 37,945,161 29,030,709 10,412,185 96,592 280,276,673 14,655,831 Long-Term Liabilities: Revenue Bonds Payable, Net of Deferred Amounts on Refundings General Obligation Bonds Payable Notes Payable Unamortized Bond Premium Compensated Absences Post Employment Benefits NET ASSETS Invested In Capital Assets, Net of Related Debt Restricted For: Convention Center Airport Golf Courses Capital Projects Debt Service Bond Indentures Water, Wastewater & Solid Waste Improvements Unrestricted Total Net Assets $ 776,917,891 $ 775,532,786 Adjustment to reflect the consolidation of the internal service funds related to the enterprise fund. (1,385,105) Total net assets of the business-type activities The accompanying notes are an integral part of the financial statements. 26 $ 19,039,216 CITY OF MESA, ARIZONA EXHIBIT A-8 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Operating Revenues: Electric Sales Pledged as Security for Revenue Bonds Gas Sales Pledged as Security for Revenue Bonds Water Sales Pledged as Security for Revenue Bonds Wastewater Charges Pledged as Security for Revenue Bonds Solid Waste Charges Pledged as Security for Revenue Bonds Airport Fees Golf Course Fees Convention Center Fees District Cooling Charges Charges For Services Self-Insurance Contributions Other Total Operating Revenues Business-type Governmental Activities Enterprise Fund Activities Internal Service Funds $ $ 35,312,658 41,707,578 95,994,839 54,719,926 46,762,035 2,958,955 2,309,899 2,686,663 834,376 - 18,075,556 58,809,677 620,854 283,286,929 77,506,087 24,873,281 31,081,222 37,130,016 22,636,294 29,675,803 2,507,657 2,772,771 4,289,707 594,482 - 19,261,933 63,375,637 Total Operating Expenses 155,561,233 82,637,570 Operating Income (Loss) Before Depreciation and Amortization Depreciation and Amortization 127,725,696 (54,688,319) (5,131,483) (412,069) 73,037,377 (5,543,552) (Continued) Operating Expenses: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center District Cooling Warehouse, Maintenance & Services Self-Insurance Operating Income (Loss) The accompanying notes are an integral part of the financial statements. 27 CITY OF MESA, ARIZONA EXHIBIT A-8 (Continued) STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Business-type Governmental Activities Enterprise Fund Activities Internal Service Funds 1,870,898 23,471 100,797 407,356 351,866 - Nonoperating Revenues (Expenses): Investment Income Pledged as Security for Revenue Bonds Investment Income Unpledged Intergovernmental Miscellaneous Pledged as Security for Revenue Bonds Interest Expense: Revenue Bonds General Obligation Bonds Notes Payable Capital Leases Amortization of Bond Issuance and Administrative Costs Loss on Disposal of Capital Assets Equity Interest in Joint Ventures (32,139,657) (164,731) (22,306) (50,852) (563,714) 1,188,588 (14,591,141) Total Nonoperating Revenues (Expenses) (43,941,291) Income before Transfers and Capital Contributions (151) 351,715 29,096,086 (5,191,837) Capital Contributions Transfers In Transfers Out 31,222,401 (96,599,000) Change in Net Assets (36,280,513) (5,159,195) Total Net Assets - Beginning 813,198,404 24,198,411 Total Net Assets - Ending $ 776,917,891 Adjustment to reflect consolidation of internal service funds related to the enterprise fund. Change in net assets of the business-type activities (609,712) $ The accompanying notes are an integral part of the financial statements. 28 (36,890,225) 24,642 8,000 - $ 19,039,216 CITY OF MESA, ARIZONA EXHIBIT A-9 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Business-type Activities Governmental Activities Internal Service Enterprise Fund Cash Flows From Operating Activities: Cash Received From Customers Cash Received From Users Cash Payments to Suppliers Cash Payments to Employees $ 277,967,646 5,841,843 (89,906,458) (51,440,078) Funds $ 76,745,672 (67,100,472) (8,844,935) Net Cash Provided By Operating Activities 142,462,953 800,265 Cash Flows From Noncapital Financing Activities: Deferred Revenue Intergovernmental Transfers In From Other Funds Transfers Out to Other Funds 3,594 100,797 (96,599,000) 32,642 - Net Cash Provided By (Used For) Noncapital Financing Activities (96,494,609) 32,642 Cash Flows From Capital and Related Financing Activities: Proceeds From Bond Sales Payment to Refunded Bond Escrow Agent Acquisition and Construction of Capital Assets Investment in Joint Ventures Proceeds From Sale of Capital Assets Principal Paid on Bonds, Leases and Notes Maturities Interest Paid on Bonds, Leases and Notes Bond Issuance and Administrative Expenses Capital Contributed by Other Governments Capital Contributed by Subdividers 60,307,356 (73,626,502) (22,553,403) 2,591,051 (9,420,875) (35,612,791) (301,550) 2,182,481 5,064,634 12,443 (6,539) (151) - Net Cash Prived By (Used For) Capital and Related Financing Activities (71,369,599) 5,753 Cash Flows From Investing Activities: Purchase of Investment Securities Proceeds from Sale and Maturities of Investment Securities Interest Received on Investments (9,995,000) 10,000,000 2,897,311 (5,016,050) 490,240 2,902,311 (4,525,810) Net (Decrease) in Cash and Cash Equivalents (22,498,944) (3,687,150) Cash and Cash Equivalents at Beginning of Year 156,434,374 45,458,583 Net Cash Provided By (Used For) Investing Activities Cash and Cash Equivalents at End of Year $ 133,935,430 The accompanying notes are an integral part of the financial statements. 29 $ 41,771,433 CITY OF MESA, ARIZONA EXHIBIT A-9 (Continued) STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Business-type Activities Governmental Activities Internal Service Enterprise Fund Reconciliation of Operating Income (Loss) to Net Cash Provided By Operating Activities: Operating Income (Loss) $ 73,037,377 Funds $ (5,543,552) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided By Operating Activities: Depreciation and Amortization Changes in Assets and Liabilities: (Increase) Decrease in Receivables Decrease in Inventory Increase (Decrease) in Prepaid Costs Increase in Accounts Payable Increase in Other Accrued Expense 54,688,319 412,069 522,560 3,996,404 10,218,293 - (671,553) 171,848 (206,856) 1,097,112 8,416,197 Total Adjustments 69,425,576 9,218,817 Net Cash Provided By Operating Activities $ 142,462,953 $ 3,675,265 Noncash Transactions Affecting Financial Position: Contributions of Capital Assets Transfers of Capital Assets from Governmental Funds Loss on Disposal of Capital Assets Amortization of Bond Premium Amortization of Debt Issuance Costs Amortization of Deferred Amounts on Refundings Accretion of Certificates of Supplementary Interest Payments Increase of Fair Market Value of Investments $ 23,974,720 566 1,402,469 2,120,574 262,164 1,742,114 12,828 50,723 $ 24,642 16,050 The accompanying notes are an integral part of the financial statements. 30 CITY OF MESA, ARIZONA EXHIBIT A-9 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Business-type Activities Governmental Activities Internal Service Enterprise Fund Cash Flows From Operating Activities: Cash Received From Customers Cash Received From Users Cash Payments to Suppliers Cash Payments to Employees $ 277,967,646 5,841,843 (89,906,458) (51,440,078) Funds $ 76,745,672 (67,100,472) (8,844,935) Net Cash Provided By Operating Activities 142,462,953 800,265 Cash Flows From Noncapital Financing Activities: Deferred Revenue Intergovernmental Transfers In From Other Funds Transfers Out to Other Funds 3,594 100,797 (96,599,000) 32,642 - Net Cash Provided By (Used For) Noncapital Financing Activities (96,494,609) 32,642 Cash Flows From Capital and Related Financing Activities: Proceeds From Bond Sales Payment to Refunded Bond Escrow Agent Acquisition and Construction of Capital Assets Investment in Joint Ventures Proceeds From Sale of Capital Assets Principal Paid on Bonds, Leases and Notes Maturities Interest Paid on Bonds, Leases and Notes Bond Issuance and Administrative Expenses Capital Contributed by Other Governments Capital Contributed by Subdividers 60,307,356 (73,626,502) (22,553,403) 2,591,051 (9,420,875) (35,612,791) (301,550) 2,182,481 5,064,634 12,443 (6,539) (151) - Net Cash Prived By (Used For) Capital and Related Financing Activities (71,369,599) 5,753 Cash Flows From Investing Activities: Purchase of Investment Securities Proceeds from Sale and Maturities of Investment Securities Interest Received on Investments (9,995,000) 10,000,000 2,897,311 (5,016,050) 490,240 2,902,311 (4,525,810) Net (Decrease) in Cash and Cash Equivalents (22,498,944) (3,687,150) Cash and Cash Equivalents at Beginning of Year 156,434,374 45,458,583 Net Cash Provided By (Used For) Investing Activities Cash and Cash Equivalents at End of Year $ 133,935,430 The accompanying notes are an integral part of the financial statements. 29 $ 41,771,433 CITY OF MESA, ARIZONA EXHIBIT A-9 (Continued) STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Business-type Activities Governmental Activities Internal Service Enterprise Fund Reconciliation of Operating Income (Loss) to Net Cash Provided By Operating Activities: Operating Income (Loss) $ 73,037,377 Funds $ (5,543,552) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided By Operating Activities: Depreciation and Amortization Changes in Assets and Liabilities: (Increase) Decrease in Receivables Decrease in Inventory Increase (Decrease) in Prepaid Costs Increase in Accounts Payable Increase in Other Accrued Expense 54,688,319 412,069 522,560 3,996,404 10,218,293 - (671,553) 171,848 (206,856) 1,097,112 8,416,197 Total Adjustments 69,425,576 9,218,817 Net Cash Provided By Operating Activities $ 142,462,953 $ 3,675,265 Noncash Transactions Affecting Financial Position: Contributions of Capital Assets Transfers of Capital Assets from Governmental Funds Loss on Disposal of Capital Assets Amortization of Bond Premium Amortization of Debt Issuance Costs Amortization of Deferred Amounts on Refundings Accretion of Certificates of Supplementary Interest Payments Increase of Fair Market Value of Investments $ 23,974,720 566 1,402,469 2,120,574 262,164 1,742,114 12,828 50,723 $ 24,642 16,050 The accompanying notes are an integral part of the financial statements. 30 CITY OF MESA, ARIZONA EXHIBIT A-10 FIDUCIARY FUNDS STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES JUNE 30, 2009 Payroll Agency ASSETS Cash and Cash Equivalents $ 9,054,712 Total Assets $ 9,054,712 LIABILITIES Accrued Payroll Payable $ 9,054,712 Total Liabilities $ 9,054,712 The accompanying notes are an integral part of the financial statements. 31 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 The City of Mesa, Arizona, (the “City”) was incorporated July 5, 1883 with an approximate population of 300 and an area of one square mile. Today, the City’s estimated population is 465,272 within an area of approximately 136 square miles. The City’s charter was adopted August 18, 1967 providing for a Council-Manager form of government. The City provides a full range of municipal services including police and fire protection, parks and recreation, library, transportation, health and certain social services and general administration. In addition, the City owns and operates an enterprise whose activities include operations of electricity, gas, water, wastewater, solid waste, airport, golf courses, convention center and district cooling. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as applied to governmental units. The Governmental Accounting Standards Board (“GASB”) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The City’s other significant accounting policies are described below: a. Reporting Entity The accompanying financial statements include the City and its blended component unit, the City of Mesa Municipal Development Corporation, collectively referred to as “the financial reporting entity”. In accordance with GASB No. 14, the component unit discussed below has been included in the City’s reporting entity because of the significance of its operational or financial relationship with the City. City of Mesa Municipal Development Corporation is a nonprofit corporation that is organized under the laws of the State of Arizona to assist the City in the acquisition and financing of municipal projects and facilities. The corporation is governed by a board of directors which is responsible for approving the corporation’s bond sales. Bond sales must also be approved by the City Council. Although it is legally separate from the City, the corporation is reported as if it is part of the primary government because its sole purpose is to finance the acquisition and or construction of public facilities for the City. Separate financial statements for the corporation can be obtained through the City’s Accounting Services Division. b. Jointly Governed Organizations Phoenix – Mesa Gateway Airport Authority (“PMGAA”) is a nonprofit corporation established and funded by the City, the City of Phoenix, and Towns of Gilbert and Queen Creek, and the Gila River Indian Community. The purpose of the entity is the redevelopment of Williams Air Force Base that was closed in September 1993 to become PMGAA. The Board of Directors consists of the mayors for the respective municipalities and the governor of the tribal community. The City contributed $1.7 million to the PMGAA operating and capital budget during this fiscal year. (Continued) 32 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Regional Public Transportation Authority (“RPTA”) is a voluntary association of local governments, including the cities of Mesa, Tempe, Scottsdale, Glendale, Phoenix and Maricopa County. Its purpose is to create a regional public transportation plan for Maricopa County. The Board of Directors consists of the mayors of those cities and a member of the County Board of Supervisors. Arizona Municipal Water Users Association (“AMWUA”) is a nonprofit corporation established and funded by cities in Maricopa County for the development of an urban water policy and to represent the cities’ interests before the Arizona legislature. The City’s annual membership fee for this fiscal year was approximately $202,000. In addition, AMWUA contracts with the cities jointly using a multi-city sanitary sewer system to perform certain accounting, administrative and support services (see Note 12). c. Basic Financial Statements Government-wide Financial Statements: The government-wide financial statements (the statement of net assets and the statement of activities) report on the City 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 services. The government-wide focus is more on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. For the most part, 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. Certain charges between the Enterprise Fund’s utility systems and the various functional activities are not eliminated, as this would distort the direct costs and program revenues reported for the various functions concerned. The government-wide statement of net assets reports all financial and capital resources of the City, excluding fiduciary funds. It is presented in a format of assets less liabilities equals net assets, with the assets and liabilities shown in order of their relative liquidity. Net assets are required to be presented in three components: invested in capital assets, net of related debt; restricted and unrestricted. Invested in capital assets, net of related debt is capital assets net of accumulated depreciation and reduced by outstanding balances of bonds, capital leases, 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 externally either imposed by creditors (such as bond covenants), grantors, contributors, laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. All net assets not otherwise classified as restricted, are shown as unrestricted. Generally, the City would first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. 33 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 The government-wide statement of activities demonstrates the degree to which the direct expenses of the various functional activities and segments of the City are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific functional activity (General Government, Public Safety, Cultural-Recreational, etc.) or segment. Expenses reported for the various functional activities or segments include indirect expenses, such as overhead costs. Interest on long-term debt is not allocated to the various functions in the governmental activities. Program revenues include charges to customers or applicants who directly benefit from goods, services or privileges provided by a given function or segment. Program revenues also include grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment, including special assessments. Taxes and other items not properly included as program revenues are reported as general revenues. The general revenues support the net costs of the functions and segments not covered by program revenues. Historically, the previous reporting model did not summarize or present net cost by function or activity. Fund Financial Statements: The fund financial statements are, in substance, very similar to the financial statements presented in the previous model. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds. However, the fiduciary funds are not included in the government-wide financial statements. The focus of the fund financial statements is on major funds, as defined by GASB Statement No. 34. Major individual governmental funds are reported as separate columns in the fund financial statements. The City has only one enterprise fund, which is reported as a major fund. Nonmajor governmental funds, as well as the internal service funds, are summarized into a single column on the fund financial statements and are detailed in combining statements included as supplementary information after the basic financial statements. d. Measurement Focus, Basis Accounting and Financial Statement Presentation Government-wide Financial Statements: The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when the liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met. Governmental Fund Financial Statements: The governmental fund financial statements are reported using the current financial resources measurement focus and modified accrual basis of accounting. Revenues are recognized in the accounting period in which they become susceptible to accrual, i.e., - measurable and available to finance the City’s operations. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers revenues to be available if they are collected within 60 days of the end of the current period. Principal revenue sources considered to be susceptible to accrual are City sales taxes, intergovernmental revenues and interest on investments. 34 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 In applying the susceptible to accrual concept to intergovernmental revenues pursuant to GASB Statement No. 33, receivables and revenues are recognized when all the applicable eligibility requirements, including time requirements, have been met. Resources transmitted before the eligibility requirements are met are reported as deferred revenue. Expendituredriven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. City sales taxes collected and held by merchants at year-end on behalf of the City are recognized as revenue. State shared revenues, including sales and income taxes, highway user and auto lieu taxes, and lottery distributions for transportation assistance, which are collected and held by the State at year-end, on behalf of the City, are also recognized as revenue. Special assessments are recognized as revenue only to the extent that individual installments are considered current assets. Annual installments not currently receivable are reflected as deferred special assessments revenue. Licenses and permits, charges for services and miscellaneous revenues are recorded as revenue when received as cash because they are generally not available until actually received. Changes in the fair value of investments are recognized in revenue at the end of each year. Expenditures are generally recognized when the related fund liability is incurred, as under accrual accounting. An exception to this general rule is interest on long-term debt which is recorded when due. Since the governmental fund financial statements are presented on a different measurement focus and basis of accounting than the government-wide financial statements, a reconciliation is presented on the page following each governmental fund financial statement, which briefly explains the adjustments necessary to transform the fund-based financial statements into the governmental activities column of the government-wide financial statements. Additional reconciliations are also provided in Note 2. Proprietary Funds and Fiduciary Funds Financial Statements: The financial statements of the proprietary fund are reported using the economic resources measurement focus and accrual basis of accounting, similar to the government-wide financial statements described above. GASB Statement No. 20 requires that governments’ proprietary and business-type activities apply all applicable GASB pronouncements as well as the following pronouncements issued on or before November 30, 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 not to apply all FASB Statements and Interpretations issued after November 30, 1989, except for those that conflict with or contradict GASB pronouncements to its enterprise fund and business-type activities. 35 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 The City has elected not to implement FASB Statements and Interpretations issued after November 30, 1989. The proprietary fund financial statements distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. All revenues and expenses not meeting this definition, such as investment income and interest expense are reported as non-operating revenues and expenses. Internal service funds of the City, which provide services primarily to the other funds of the City, are presented in summary form as part of the proprietary fund financial statements. Since the principal users of the internal services are the City’s governmental activities, financial statements of the internal service funds are consolidated into the governmental activities column when presented at the government-wide level. The costs of these services are reflected in the appropriate functional activity (General Government, Public Safety, Cultural-Recreational, etc.) on the government-wide statement of activities and the revenues and expenses within the internal service funds are eliminated from the government-wide financial statements to avoid any doubling up effect of these revenues and expenses. The City’s fiduciary fund is presented in the fund financial statements. The City’s fiduciary fund is an agency fund, which is custodial in nature and does not involve measurement of results of operations. The agency fund is accounted for on the accrual basis of accounting. Since by definition these assets are being held for the benefit of a third party and cannot be used to address activities or obligations of the City, these funds are not incorporated into the government-wide financial statements. e. Fund Accounting The financial transactions of the City are recorded in individual funds. Each fund is accounted for by providing a separate set of self-balancing accounts that comprises its assets, liabilities, reserves, fund equity, revenues and expenditures/expenses. The various funds are reported by generic classification within the fund financial statements. GASB Statement No. 34 sets forth minimum criteria for the determination of major funds. The non-major funds are combined in a column in the fund financial statements and detailed in the combining section. The City reports the following major governmental funds: The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. The Highway User Revenue Fund accounts for capital projects and maintenance of the City’s streets and highways, as mandated by the Arizona Revised Statutes. Financing for this fund is provided by the state shared fuel taxes. 36 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 The City reports the following non-major governmental funds: Ten non-major Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditures for specific purposes. Five non-major Debt Service Funds are used to account for the accumulation of resources for the payment of long-term obligation principal, interest and service charges. Eight non-major Capital Project Funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds. The City reports the following major proprietary fund: The Enterprise Fund has been established to account for all enterprise functions. This includes the City-owned electric, gas, water, wastewater and solid waste systems, as well as the City-owned airport, golf courses, convention center and district cooling. Additionally, the City reports the following fund types: The Internal Service Funds are used to account for operations that provide services to other departments of the government on a cost-reimbursement basis. These services include fleet support, materials and supply, printing and graphics, and self-insurance for property and public liability, workers’ compensation and employee benefit programs. The Agency Fund is used to account for assets being held by the City as an agent in a temporary custodial capacity. The Payroll Agency Fund accounts for all payroll transactions. f. Cash and Cash Equivalents and Investments At year-end, City cash totaled $2,688,464 which includes $219,410 of petty cash. The carrying amount of the City’s deposits was $2,469,049 and the bank balance was a deficit $369,164. The difference of $2,838,213 represents deposits in transits, outstanding checks and other reconciling items. Interest Rate Risk. The City’s investment policy for limiting its exposure from rising interest rates complies with Arizona Revised Statute §35-323, which limits investments of public monies to maturities of less than three years. The City has purchased its own Special Improvement District Bonds with maturities that exceed three years. 37 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Credit Risk. The City’s Policy is consistent with the City Charter which authorizes the investment of City funds in accordance with Arizona Revised Statute §35-313. These investments include obligations of the U.S. Treasury and U.S. agencies, certificates of deposit in eligible depositories, repurchase agreements, obligations of the State of Arizona or any of its counties or incorporated cities, towns or duly organized school districts, improvement districts in this state and the State Treasurer’s Investment Pool. The State Treasurer’s Investment Pool, including the Plan 6 Pool, is overseen according to Arizona State Statute by the State Board of Deposit. The fair value of each share as of June 30, 2009, is equal to $1.00. The State Treasurer’s Investment Pool #7 that the City participates in does not receive a credit quality rating. The City’s investment in the bonds of U.S. Government agencies are rated AAA by Standard & Poor’s and Aaa by Moody’s. The Money Market Mutual Funds are all invested in U.S. Treasury securities. The City’s Special Improvement District bonds have no credit rating. The City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The City’s investments that are reflected in the financial statements as cash equivalents total $385,621,753. The City’s investments and cash equivalents at June 30, 2009 are as follows: Investment Maturities (In Years) Investment Type Fair Value Less Than 1 U.S. Agencies City of Mesa Special Improvement District Bonds State Treasurer Plan 6 Pool $ 20,067,600 Total Investments $ 25,092,971 $ 4,261,602 763,769 $ 1-2 - $ 20,067,600 763,769 744,000 - 763,769 $ 20,811,600 3-12 * $ 3,517,602 ** - $ 3,517,602 *$20,067,600 of these bonds are callable from July 7, 2009 to April 15, 2010. **These bonds are callable from July 1, 2009 to July 1, 2020. 38 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Fair Value Investments: U.S. Government Agencies City of Mesa Special Improvement District Bonds Investments in State Treasurer's Plan 6 Pool Total Investments as Reported in the Financial Statements Cash Equivalents: Money Market Mutual Funds Investments in State Treasurer's Local Government Investment Pool Repurchase Agreement $ 20,067,600 4,261,602 763,769 25,092,971 936,287 300,685,466 84,000,000 Total Cash Equivalents 385,621,753 Total Investments and Cash Equivalents $ 410,714,724 Interest income from investments is recorded as revenue within the fund that made the investment, with the exception of the Debt Service, Capital Projects and Agency Funds. Income from investments within these funds is recorded in the General or Enterprise Fund based upon their general governmental or enterprise related function. The City had a net increase in the fair value of investments during fiscal year 2008-09 of $334,100. This amount takes into account all changes in fair value (including purchases and sales) that occurred during the year. 39 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 g. Accounts Receivable and Due from Other Governments Accounts receivable are recorded in the various funds and displayed in the financial statements net of an allowance for uncollectibles as follows: Fund Governmental Activities: General Fund: Taxes Courts Other Customers Restricted Due from Other Governments State Shared Revenues Other Highway User Revenue Fund: Due from Other Governments: State Shared Revenues Other Non-Major Governmental Funds: Customers Restricted-Spec. Assessments Due from Other Governments Internal Service Funds Customers Due from Other Governments Total Governmental Activities Business-Type Activities: Utility Customers Other Customers Due from Other Governments Total Business-type Activities Receivables $ $ $ $ 40 12,094,408 45,622,538 2,936,591 3,775,832 Allowance $ (1,501,100) (42,720,119) (1,133,821) Net $ 10,593,308 2,902,419 1,802,770 3,775,832 8,623,985 12,512,298 8,623,985 12,512,298 3,005,224 9,513 3,005,224 9,513 75,399 6,630,484 2,805,526 75,399 6,630,484 2,805,526 1,398,224 38,828 99,528,850 1,398,224 38,828 $ 54,173,810 24,979,505 1,184,716 2,578,205 28,742,426 $ (45,355,040) $ (1,890,201) (331,300) $ (2,221,501) $ 23,089,304 853,416 2,578,205 $ 26,520,925 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 h. Deferred Revenue Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. At the end of the current fiscal year, the various components of deferred revenue reported in the governmental funds were as follows: Rehabilitation Revolving Loans not yet due (General Fund) $ 62,897 Surcharges included in Court Receivables (General Fund) 3,712,935 Grants received prior to meeting all eligibility requirements (General Fund) 687,362 Special assessments not yet due (Debt Service Fund) 6,630,484 Total deferred revenue for governmental funds $11,093,678 The deferred revenue of $56,389 reported in the Enterprise Fund represents grants received prior to meeting all eligibility requirements. i. Interfund Receivables, Payables, and Transfers The following interfund activities are included in the fund financial statements at June 30, 2009: Interfund Receivables Fund Governmental funds: General Fund Highway User Revenue Fund Special Revenue Funds Total Governmental funds Interfund Payables $ 4,606,700 $ $ 4,606,700 $ 1,965,300 2,641,400 4,606,700 The interfund balances at June 30, 2009 are short-term loans to cover temporary cash deficits in various funds. All interfund balances outstanding at June 30, 2009 are expected to be repaid within one year. The net transfers of $96,598,434 from business-type activities to governmental activities on the government-wide statement of activities are primarily operational subsidies from the Enterprise Fund to the General Fund and capital assets with a book value of $566 that were transferred between governmental and business-type activities. The following interfund transfers are reflected in the fund financial statements for the year ended June 30, 2009: 41 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Fund Governmental funds: General Fund Highway User Revenue Fund Non-major Governmental Funds Total governmental funds Proprietary funds: Enterprise Fund Internal Service Funds Total Transfers Out $ 46,133,698 8,854,036 4,118,133 59,105,867 Transfers In $ 96,736,344 58,960,523 155,696,867 96,599,000 $ 155,704,867 8,000 $ 155,704,867 The interfund transfers generally fall within one of the two following categories: 1) debt service payments made from a debt service fund but funded from an operating fund; 2) subsidy transfers. j. Inventory The warehouse inventory is valued at the lower of average cost or market, while fleet support services inventory is valued at cost on a first-in, first out (FIFO) basis. The cost of inventory is reported as an expenditure at the time individual items are consumed. k. Unbilled Accounts Receivable Unbilled utility service receivables are recorded in the year in which the services are provided. At June 30, 2009, unbilled utility service receivables are recorded in the Enterprise Fund as follows: Electric Gas Water Wastewater Solid Waste $ 1,551,093 710,597 4,602,392 2,058,148 1,734,860 $ 10,657,090 l. Capital Assets Capital assets, including infrastructure (streets, sidewalks, street lighting, storm drainage and other assets that are immovable and of value only to the City) are defined as assets with an initial cost of $5,000 or more and an estimated useful life of more than one year. All capital assets, whether owned by governmental activities or business-type activities are required to be recorded and depreciated in the government-wide financial statements. 42 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Capital assets are recorded at cost or estimated historical cost if purchased or constructed. Contributions of assets are stated at fair market value based on appraisals or engineering estimates of value at the time of receipt. When assets are retired or sold, the costs of the assets and the related accumulated depreciation are eliminated from the accounts, and any resultant gain or loss is charged to income or expense. Prior to June 30, 1978, the City did not maintain detailed property cost records of its capital assets other than for rolling stock. A physical inventory was performed during the fiscal year ended June 30, 1978 and detailed property records were prepared. Generally, the assets were recorded at cost. Where historical cost information was not available, the assets were valued at estimated cost using engineering estimates, appraisals or current replacement cost, adjusted to the year of acquisition. Depreciation has been provided using the straight-line method based on the estimated useful lives of the assets. Amortization of capital leased assets has been provided using the straightline method based on the shorter of the lease period or estimated useful lives of the leased assets. The estimated useful lives are as follows: Buildings Other Improvements Machinery and Equipment Infrastructure Excess Cost over Net Assets Acquired 43 15-50 Years 10-50 Years 3-30 Years 10-99 Years 30 Years (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 A summary of capital asset activity, for the government-wide financial statements, for the year ended June 30, 2009 follows: Governmental Activities: Non-depreciable Assets: Land Construction-in-Progress Total Non-depreciable Assets Depreciable Assets: Buildings Other Improvements Machinery & Equipment Infrastructure Total Depreciable Assets Less Accumulated Depreciation for: Buildings Other Improvements Machinery & Equipment Infrastructure Total Accum. Depreciation Total Depreciable Assets, net Governmental Activities Capital Assets, net Balance July 1, 2008 $ 245,538,370 108,503,151 354,041,521 Additions $ 298,130,406 132,426,744 152,502,961 722,463,437 1,305,523,548 (63,409,511) (50,451,408) (95,762,968) (235,991,038) (445,614,925) 859,908,623 $ 1,213,950,144 $ Balance June 30, 2009 Retirements 13,836,462 73,891,273 87,727,735 $ (1,516,392) (16,864,199) (18,380,591) 5,567,021 1,735,726 7,415,817 13,258,251 27,976,815 (18,887,665) (6,362,092) (7,833,596) (636,294) (33,719,647) (6,182,201) (4,993,652) (18,571,168) (20,979,118) (50,726,139) (22,749,324) 2,493,800 1,291,681 7,742,906 636,290 12,164,677 (21,554,970) 64,978,411 $ (39,935,561) $ 257,858,440 165,530,225 423,388,665 284,809,762 127,800,378 152,085,182 735,085,394 1,299,780,716 (67,097,912) (54,153,379) (106,591,230) (256,333,866) (484,176,387) 815,604,329 $ 1,238,992,994 Depreciation expense was charged to governmental functions in the government-wide financial statements as follows: General Government Public Safety Cultural – Recreational Community Environment Capital assets held by the City’s internal service funds are charged to the various functions based on their usage of the assets Total Depreciation 44 $ 5,519,286 14,774,115 7,066,457 22,954,212 412,069 $ 50,726,139 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Business-type Activities: Non-depreciable Assets: Land Water Rights Construction-in-Progress Total Non-depreciable Assets Depreciable Assets: Buildings Other Improvements Machinery & Equipment Excess of Cost over Net Assets Acquired Total Depreciable Assets Less Accum. Depr. & Amort. for: Buildings Other Improvements Machinery & Equipment Excess of Cost over Net Assets Acquired Total Accum. Depr. & Amort. Total Depreciable Assets, net Business-type Activities Capital Assets, net Balance July 1, 2008 $ Additions 49,916,159 14,657,794 142,910,279 207,484,232 $ 2,204,162 866,179 141,115,028 144,185,369 Retirements $ (92,829) (136,392,323) (136,485,152) Balance June 30, 2009 $ 52,027,492 15,523,973 147,632,984 215,184,449 76,435,965 1,199,459,936 122,030,106 29,121 84,120,112 10,868,964 (2,103,954) (1,991,932) (4,149,469) 74,361,132 1,281,588,116 128,749,601 12,522,509 1,410,448,516 95,018,197 (8,245,355) 12,522,509 1,497,221,358 (24,724,736) (332,118,902) (64,710,350) (1,927,333) (36,091,328) (16,252,239) 703,790 4,127,404 (8,510,760) (430,064,748) 980,383,768 (417,417) (54,688,317) 40,329,880 4,831,194 (3,414,161) (26,652,069) (367,506,440) (76,835,185) (8,928,177) (479,921,871) 1,017,299,487 $ 1,187,868,000 $ 184,515,249 $ (139,899,313) $ 1,232,483,936 Depreciation and Amortization expense was charged to enterprise functions in the government-wide financial statement as follows: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center District Cooling $ 3,544,011 2,921,296 16,785,970 27,506,007 1,837,677 1,196,111 249,582 266,459 381,206 Total Depreciation and Amortization 45 $ 54,688,319 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Construction in progress and related construction commitments are composed of the following: Construction in Progress Governmental Activities General Government Public Safety Cultural-Recreational Community Environmental Warehouse, Maintenance & Services Total $ $ Commitments 13,763,731 54,563,410 20,115,497 77,084,015 3,572 165,530,225 $ 9,949,363 13,342,524 77,875,873 40,667,175 257,713 4,996,878 46,191 390,159 406,195 147,932,071 $ $ 143,393 15,792,272 2,204,740 8,358,228 26,498,633 Business-type Activities Electric Gas Water Sewer Solid Waste Airport District Cooling Golf Course Convention Center Total $ $ $ 1,237,186 1,315,410 4,446,819 3,062,880 3,672,363 790,830 104,020 979,815 15,609,323 m. Excess of Cost Over Net Assets Acquired This item represents intangible assets acquired by the City in purchasing water and wastewater companies in past years. The intangible assets include water rights, plant capacity and the stream of revenues expected from present and future customers over the lives of the tangible assets acquired. This intangible asset is amortized using the straight-line method over 30 years. The total of this asset and the accumulated amortization through June 30, 2009 was $12,522,509 and $8,928,177 respectively. 46 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 n. Capitalization of Interest For the year ended June 30, 2009, the City capitalized net interest costs of $4,086,711 (interest expense of $4,398,695 reduced by interest income of $311,984 in the Business-type Activities Enterprise Fund). Total interest expense and income in the Business-type Activities Enterprise Fund before capitalization was $36,776,241 and $2,206,353 respectively. o. Self-Insurance Internal Service Fund The Property and Public Liability, Workers’ Compensation and Employee Benefits Internal Service Funds have been established to account for the costs of claims incurred by the City under self-insurance programs. The City is fully self-insured for all public liability risks, up to a maximum of $2,000,000 per occurrence, for the current policy year under the Property and Public Liability Insurance program. In addition, the City carries full property insurance with a $50,000 per occurrence deductible. Under the Workers’ Compensation Program, the City is subject to a maximum deductible of $1,000,000 liability per occurrence. In the Employee Benefits Fund, the City has excess insurance coverage when an individual’s claims exceeds $150,000 per contract year. There were no changes in insurance coverage during this fiscal year for any of the three Self-Insurance Funds. The various funds of the City include, as expenditures, amounts contributed to each of the self-insurance funds during the fiscal year. The Property and Public Liability and the Employee Benefits Self-Insurance Funds establish a liability for actuarially computed estimates for those claims incurred but not yet reported. The claims incurred but not reported in the Workers’ Compensation Fund consist of actual claims reported during July 2009. The stop loss receivable balance for the Workers’ Compensation Fund at June 30, 2009 is $61,336. Over the past three fiscal years the Fund has received settlements in excess of insurance coverage of $363,075 with $126,100 received this current fiscal year. The Property and Public Liability Fund does not have a stop loss receivable at June 30, 2009, and the Fund has not received any settlements in excess of insurance coverage over the past three fiscal years. The stop loss receivable for the Employee Benefits Fund at June 30, 2009 is $80,061. Over the past three fiscal years the Fund has received settlements in excess of insurance coverage of $1,445,344 with $362,985 received this current fiscal year. 47 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Changes in the balances of claims liabilities during the past two fiscal years are as follows: Property & Public Liability Workers' Compensation Employee Benefits Total Unpaid Claims, 7/1/07 Adjustments to Reserves-FY 07-08 Claim Payments-FY 07-08 $ 6,400,000 13,839,941 (3,439,941) $ 5,514,283 3,211,836 (2,486,791) $ 2,623,082 43,477,067 (40,449,752) $ 14,537,365 60,528,844 (46,376,484) Unpaid Claims, 6/30/08 $ 16,800,000 $ 6,239,328 $ 5,650,397 $ 28,689,725 Adjustments to Reserves-FY 08-09 Claim Payments-FY 08-09 $ 8,304,458 (1,604,458) $ 3,146,731 (2,423,429) $ 45,104,935 (46,962,265) $ 56,556,124 (50,990,152) Unpaid Claims, 6/30/09 $ 23,500,000 $ 6,962,630 $ 3,793,067 $ 34,255,697 All unpaid claims are reported as current liabilities in the Statement of Net Assets as the change in these amounts have already been expensed in the statement of activities. The Property and Public Liability Self Insurance Fund reported an increase in unpaid claim reserves of $6.7 million during the fiscal year ended June 30, 2009. This increase is a result of additional litigation cases being filed against the City and changes to existing litigation case reserves as more information becomes available. p. Compensated Absences The current portion of governmental funds accrued vacation and sick leave benefits payable are included as a liability in the fund financial statements. The entire amount of accumulated unpaid vested vacation pay and an estimated amount for sick leave related to the proprietary funds is included as a liability in the fund financial statements. The remaining long-term balances related to governmental activities are included in the government-wide financial statement (see Note 5 for additional disclosure of long-term balances). q. Statement of Cash Flows A statement of cash flows classifies cash receipts and payments according to whether they stem from operating, non-capital financing, capital and related financing, or investing activities. For purposes of the statements of cash flows, the City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. This includes 48 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 repurchase agreements and all monies in the State Treasurer’s Local Government Investment Pool since the City may deposit or withdraw cash at any time without prior notice or penalty. r. Budgets and Budgetary Accounting Each year, the City Manager issues a budget calendar giving specific completion dates for various phases of the budget preparation process. The final adoption of the operating budget is by ordinance. Prior to June 1, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them. Public hearings are conducted by the City to obtain citizen comments. Prior to June 30, the budget for the ensuing year is legally adopted through passage of an ordinance; these appropriations lapse at the end of each fiscal year. Legal control over the budget derives from State statutes that prohibit the City from exceeding its adopted budget in total, and from the resolution itself that limits expenditures by fund and by departmental groupings. Transfers of sums within a specific fund or departmental group may be made upon City Manager approval. The legally adopted budget consists of all funds except the Agency Fund. Capital Projects (both Governmental and Proprietary) are budgeted as one item (as shown in Exhibit D-5). Governmental debt service expenditures are budgeted in the General Fund and Special Revenue Funds. Budget schedules for the major governmental funds (General and Highway User Revenue Funds) are presented in the Required Supplementary Information Section, and the other funds are located in the Supplementary Information Section. Additional detailed budget schedules for the General and Highway User Revenue Funds are also located in the Supplementary Information Section. On June 3, 1980, the voters of Arizona approved an expenditure limitation for all local governments. This limitation restricts the growth of expenditures to a percentage determined by population and inflation, with certain expenditures excluded from the limitation. The State Economic Estimates Commission determines and publishes, prior to April 1st of each year, the expenditure limitation for the following fiscal year for each governmental unit. Fiscal year 1979-80 is the base year for calculations. Budgets for all funds are adopted in accordance with the requirements of the Arizona Constitution, Arizona Revised Statutes and the Mesa City Charter. There are certain differences between the basis used for budgetary purposes and that used for reporting in 49 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 accordance with generally accepted accounting principles. For additional detail, see the note to required supplementary information and the individual budget schedules in the supplemental information exhibits. Budgeted amounts are as originally adopted by the City Council on June 23, 2008. s. Contingency Services The principal purpose of a contingency is to cover any unforeseen expenditures that may arise after the budget is adopted, and to cover expenditures resulting from prior year encumbrances. It is impossible to estimate revenues exactly or to determine in a prior year the exact expenditure of each program or activity for the ensuing year. Thus a contingency is essential for budgetary purposes. Any balance of a contingency appropriation not used during one fiscal year is available to help finance the following year’s budget. The contingency applications are reflected in the budget basis financial statements for the fiscal year ended June 30, 2009 and are made in accordance with State Statutes. 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 governmental fund financial statement. Additional reconciliations are provided on the next page. 50 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Reconciliation of the Governmental Funds Balance Sheet to the government-wide Statement of Net Assets: Assets Cash and Cash Equivalents Investments Accounts Receivable, net Interest Receivable Due From Other Governments Due From Other Funds Inventories Prepaid Costs Deposits Restricted Cash and Cash Equivalents Restricted Accounts Receivable - Deferred Unamortized Bond Issuance Costs Investment in Joint Ventures Capital Assets Total Assets Liabilities Warrants Outstanding Accounts Payable Other Accrued Expenses Due To Other Funds Customer and Defendant Deposits Compensated Absences Restricted Lease Interest Payable Restricted Bond Interest Payable Restricted Deferred Revenue M atured G.O. Bonds Payable M atured HURF Bonds Payable M atured Capital Leases Payable Long-term Liabilities Total Liabilities Fund Balance/Net Assets Total Fund Balance/Net Assets Total Liabilities and Fund Balance/Net Assets Total Governmental Funds $ 175,137,082 9,278,802 15,373,896 264,865 26,956,546 4,606,700 Long-term Assets/ Liabilities(1) $ Internal Service Funds(2) Reclassifications and Eliminations $ 41,771,433 5,016,050 1,398,224 39,198 38,828 1,385,105 4,462,097 689,230 330,090 260,092 28,411,560 10,406,316 $ $ 271,025,949 1,093,537 53,362,890 1,234,609,608 $ 1,289,066,035 4,383,386 $ 59,183,551 $ $ $ $ $ 3,380,443 17,883,262 216,908,515 14,294,852 16,772,120 304,063 26,995,374 (4,606,700) 1,385,105 4,462,097 1,019,320 260,092 28,411,560 10,406,316 1,093,537 53,362,890 1,238,992,994 (4,606,700) $ 1,614,668,835 $ 1,525,309 34,230,697 4,606,700 8,281,526 616,062 12,320 9,406,329 11,093,678 16,392,910 2,025,000 483,349 (4,606,700) (6,693,381) 74,181,579 537,609,112 530,915,731 3,003,224 38,759,230 196,844,370 758,150,304 20,424,321 $ 271,025,949 $ 1,289,066,035 $ 59,183,551 Statement of Net Assets Total (4,606,700) $ 3,380,443 19,408,571 34,230,697 8,281,526 616,062 12,320 9,406,329 4,400,297 16,392,910 2,025,000 483,349 540,612,336 639,249,840 975,418,995 (4,606,700) $ 1,614,668,835 (1) When capital assets (land, buildings, equipment, etc.) that are to be used in governmental activities are purchased or constructed, 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 City as a whole. 51 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Costs of capital assets Accumulated depreciation $1,713,994,997 (479,385,389) $1,234,609,608 Investment in joint ventures that are to be used in governmental activities are also reported in the governmental funds as expenditures as constructed. These assets are included in the statement of net assets for the City as a whole. Investment in joint ventures $ 53,362,890 Bond issuance costs are expended when incurred in governmental funds, but are deferred and amortized over the life of the bonds in the statement of net assets. Unamortized bond issuance costs $ 1,093,537 Long-term liabilities applicable to the City’s governmental activities are not due and payable in the current period, and accordingly are not reported as fund liabilities in the governmental fund statement. Bonds payable Capital leases Compensated absences Post employment benefits Unamortized bond premium $ 409,037,054 9,729,856 19,014,538 92,049,525 7,778,139 $ 537,609,112 Deferred revenue is affected by two changes. Deferred revenue for the long-term special assessment receivables and for the rehabilitation loan program shown on the governmental fund statements is not deferred on the statement of net assets. Deferred special assessment revenue Deferred rehabilitation loan revenue (2) $ $ 6,630,484 62,897 6,693,381 Internal service funds are used by management to charge the costs of certain activities, such as fleet support, materials and supplies, printing and graphics, and self-insurance, to the individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net assets, but are not included on the governmental funds balance sheet. Total $ 20,424,321 52 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance to the Government-wide Statement of Activities: R e v e n u e s a n d O t h e r S o u rc e s Ta xe s Oc c upa nc y Ta xe s S pe c ia l As s e s s m e nts Lic e ns e s a nd P e rm its Inte rgo ve rnm e nta l C ha rge s fo r S e rvic e s C o ntributio ns F ine s a nd F o rfe iture s Inve s tm e nt Inc o m e M is c e lla ne o us Othe r S o urc e s : C a pita l C o ntributio ns Tra ns fe rs In F a c e Am o unt o f B o nd S a le s P re m ium s o n Is s ua nc e o f B o nds To ta l R e ve nue s a nd Othe r S o urc e s To ta l Go ve rnm e nta l F unds $ 126,519,701 $ 1,807,601 1,202,384 13,426,408 191,084,600 24,343,284 C a pita l R e la te d Ite m s (2) $ Inte rna l S e rvic e F unds (3) $ Lo ng-te rm De bt Tra ns a c tio ns (4) $ Elim ina tio ns a nd Adjus tm e nts (5) $ S ta te m e nt of Ac tivitie s $ (806,151) (187) 14,740,889 10,215,428 1,621,716 14,754,573 E xp e n d it u re s / E xp e n s e s C urre nt: Ge ne ra l Go ve rnm e nt P ublic S a fe ty C ultura l-R e c re a tio na l C o m m unity Enviro nm e nt De bt S e rvic e : P rinc ipa l P a ym e nts Inte re s t o n B o nds Inte re s t o n C a pita l Le a s e s S e rvic e C ha rge s C a pita l Outla y To ta l Expe nditure s \Expe ns e s O t h e r F in a n c in g Us e s / C h a n g e s in N e t A s s e t s Tra ns fe rs Out To ta l Expe nditure s \Expe ns e s & Othe r F ina nc ing Us e s Ne t C ha nge fo r the Ye a r Lo ng-te rm R e ve nue s / Expe ns e s (1) 351,866 620,854 436,509 24,949,082 (24,642) 155,696,867 61,830,000 436,509 (436,509) 602,939,071 (806,338) 5,562,664 31,622,310 4,418,876 3,092,556 36,905,901 18,219,451 625,773 27,738 77,899,367 526,866,165 24,924,440 15,738,251 9,853,056 14,813,948 7,144,666 43,722,810 2,296,042 13,574,420 2,254,189 2,171,083 (58,960,523) (61,792,512) (58,960,523) 7,077 53,482 50,264 102,700 (27,738) (77,899,367) (2,364,887) 44,668,668 20,295,734 (36,879,072) - (8,000) $ 44,668,668 (45,475,006) $ (2,364,887) 27,289,327 $ 20,287,734 (4,549,483) $ (58,960,523) (36,879,072) (24,913,440) $ (58,960,523) - $ (1) Revenues that are “unavailable” and do not provide current financial resources are not reported in the governmental funds. These revenues are reported in the statement of activities. However, the subsequent collection of these revenues in the governmental funds will reduce the amount reported in the statement of activities. Special assessment revenue Rehabilitation loan revenue Total $ (806,151) (187) $ (806,338) Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Accrual of long-term compensated absences Accrual of post employment benefits Total 53 $ 24,949,082 96,736,344 522,042,389 54,225,566 290,927,716 67,039,000 121,735,796 (36,905,901) (199,279) 12,585 59,105,867 585,972,032 16,967,039 24,642 (61,830,000) 36,506,727 230,863,556 53,171,005 72,646,647 $ 37,488 126,519,701 1,807,601 396,233 13,426,408 191,084,413 24,343,284 14,740,889 10,215,428 1,973,582 15,849,424 722,537 (45,391,205) $ (44,668,668) (Continued) 18,020,172 638,358 552,586,608 137,344 552,723,952 (30,681,563) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 (2) When capital assets that are to be used in the governmental activities are purchased or constructed, or are to be classified as investment in joint venture, 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, whereas net assets decrease by the amount of depreciation expense charged for the year. Capital outlay for capital assets Capital outlay for joint venture Depreciation expense Depreciation expense for joint venture Total $ 75,104,190 2,795,177 (50,314,070) (932,270) $ 26,653,027 The net effect of miscellaneous transactions involving capital assets (donations, transfers and disposals) is to increase net assets. $ 24,949,082 (24,288,140) (24,642) $ 636,300 Donation of capital assets Loss on disposal of capital assets Transfer of capital assets reclassified to transfer in Total (3) Internal service funds are used by management to charge the costs of certain activities, such as fleet support, materials and supplies, printing and graphics, and self-insurance, to the individual funds. The adjustments for internal service funds “close” those funds by charging the additional amounts to participating governmental activities to completely cover the internal service funds’ costs for the year. Revenue and other sources Expenditures and other uses Transfers in from General Fund Transfer of capital assets from governmental activities Change in net assets 54 $ 15,713,609 (20,295,734) 8,000 $ 24,642 (4,549,483) (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 (4) Bond and capital lease proceeds are reported as financing sources and the repayment of principal consumes financial resources in the governmental funds. Neither transaction has any effect on the statement of activities. New debt issued (including refunded debt) General Obligation bond proceeds Principal repayments Total (61,830,000) 36,905,901 $ (24,924,099) Governmental funds report bond issue costs, premiums and deferred amounts relating to refunding when first issued. In the statement of activities these amounts are deferred and amortized. Amortization of bond issue costs $ (213,522) Amortization of deferred amounts (162,835) Accretion of certificates 349,528 Amortization of bond premiums 37,488 Total $ 10,659 (5) Interfund transfers between governmental activities, other than Internal Service Funds, are eliminated in the consolidation of these activities for the statement of activities. The elimination is reflected as a reduction of transfers in and transfers out to eliminate the doubling up effect of these transactions within the governmental activities. Elimination of transfers to/from the Internal Service Funds is netted into the results of the Internal Service Funds in (3) above. $ 58,960,523 58,960,523 $ - Transfers out Transfers in Total 55 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 3. RETIREMENT AND PENSION PLANS All full-time employees of the City are covered by one of three pension plans. The Arizona State Retirement System is for the benefit of the employees of the state and certain other governmental jurisdictions. All full-time City employees, except fire and police personnel, are included in the plan that is a multiple-employer cost-sharing defined benefit pension plan. All police and fire personnel participate in the Public Safety Personnel Retirement System that is an agent multipleemployer plan. In addition, the Mayor and Councilmembers contribute to the State’s Elected Officials Retirement Plan that is also a multiple-employer cost-sharing pension plan. Arizona State Retirement System: a. Plan Description All the City’s full-time general employees participate in the Arizona State Retirement System (“System”), a multiple-employer, cost-sharing defined benefit pension plan. The System was established by the State of Arizona to provide pension benefits for employees of the state and employees of participating political subdivisions and school districts. The System is administered in accordance with Title 38, Chapter 5 of the Arizona Revised Statutes. The System provides for retirement, disability, and death and survivor benefits. The System issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to the Arizona State Retirement System, 3300 N. Central Avenue, Suite 1300, Phoenix, Arizona, 85012 or by calling 1-800-621-3778. b. Funding Policy Covered employees were required by state statute to contribute 9.45 percent of their salary to the System during fiscal year 2008-09 and the City was required to match it. The Arizona Revised Statutes (“A.R.S.”) provide statutory authority for determining the employees’ and employers’ contribution amounts as a percentage of covered payroll. Employers are required to contribute at the same rate as employees. Although the statutes prescribe the basis of making the actuarial calculation, the Arizona legislature is able to legislate a contribution rate other than the actuarially determined rate. The City’s contributions to the System for the years ending June 30, 2009, 2008 and 2007 were $13,247,002, $14,784,935 and $12,608,847 respectively, which were equal to the required contributions for each year. The City’s employees contributed equal amounts to the System for the same time period. Elected Officials Retirement Plan: a. Plan Description The City’s Mayor and Councilmembers participate in the Elected Officials Retirement Plan (“EORP”) a multiple employer, cost-sharing defined benefit pension plan. The Fund Manager of the Public Safety Personnel Retirement System (“PSPRS”) is the administrator (Continued) 56 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 for the EORP that was established by Title 38, Chapter 5, Article 3 of the Arizona Revised Statutes to provide pension benefits for state and county elected officials, judges and certain city elected officials. EORP provides retirement benefits as well as death and disability benefits. EORP issues a publicly available financial report that includes financial statements and required supplementary information. This report may be obtained by writing to the Elected Officials Retirement Plan, 1020 East Missouri Avenue, Phoenix, Arizona, 85014 or by calling 602-255-5575. b. Funding Policy The retirement plan’s funding policy (required by State Statutes) provides for periodic employer contributions at actuarially determined rates and employee contributions of 7 percent of their annual covered salary. The employer rate for 2008-09 was 28 percent. The City’s contributions to EORP for the fiscal years ending June 30, 2009, 2008 and 2007 were $42,300, $30,470, and $27,309 respectively, which were equal to the required contributions for each year. The City’s employees contributed $10,575, $10,554, and $10,305 for the same time period. Public Safety Personnel Retirement System: a. Plan Description The City contributes to the Public Safety Personnel Retirement System (“PSPRS”), an agent multiple-employer public safety employee retirement system that acts as a common investment and administrative agent for the various fire and police agencies within the state. All police and fire personnel are eligible to participate in the plan. The plan provides retirement and disability benefits, and death benefits to plan members and beneficiaries. The PSPRS is jointly administered by the Fund Manager and 162 Local Boards and was established by Title 38, Chapter 5 Article 4 of the Arizona Revised Statutes. The PSPRS issues a publicly available financial report that includes financial statements and required supplementary information. This report may be obtained by writing to Public Safety Personnel Retirement System, 1020 East Missouri, Phoenix, Arizona, 85014 or by calling 602-255-5575. b. Funding Policy PSPRS members are required to contribute 7.65 percent of their annual covered salary and the City is required to contribute an actuarially determined rate. The rate for 2008-09 was 21.93 percent for fire personnel and 20.99 percent for police members. Benefit and contribution provisions are established by state law and may be amended only by the State of Arizona Legislature. (A.R.S. Section 38-843) 57 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 c. Annual Pension Cost Police personnel contributed $4,608,079 and fire personnel $2,183,699 during fiscal year 2008-09. For 2009, the City’s annual pension cost of $12,643,605 for police and $6,259,938 for fire was equal to the City’s required and actual contributions. The required contribution was determined as part of the June 30, 2007 actuarial valuation using the projected unit credit actuarial cost method. The actuarial assumptions included (a) 8.5 percent investment rate of return, (b) projected salary increases of 5.0 percent attributable to inflation, (c) additional projected salary increases ranging from .5 percent to 3.5 percent per year, attributable to seniority/merit. The actuarial value of PSPRS assets was determined using the smooth market value method. PSPRS’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll over an closed period of 29 years. d. Three Year Trend Information for PSPRS (Latest Available Information): Police Fiscal Year Ending 2006 2007 2008 Annual Pension Cost (APC) $ 5,802,278 7,112,462 9,525,313 Percentage of APC Contributed 100% 100 100 Net Pension Obligation $ - Percentage of APC Contributed 100% 100 100 Net Pension Obligation $ - Fire Fiscal Year Ending 2006 2007 2008 Annual Pension Cost (APC) $ 1,645,421 3,501,613 5,098,956 58 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Required Supplementary Information Schedule of Funding Progress (Latest Information Available): e. POLICE Actuarial Valuation Actuarial Accrued Date Value of Liability June 30, Assets (AAL) 2006 $ 221,090,247 $ 270,935,375 2007 218,252,079 307,553,149 2008 233,493,642 320,603,102 Percent Funded 81.6% 71.0 72.8 Unfunded AAL $ 49,845,128 $ 89,301,070 87,109,460 Annual Covered Payroll 50,936,366 55,407,996 59,211,259 Unfunded AAL as a % of Covered Payroll 97.9% 161.2 147.1 Annual Covered Payroll 24,893,935 27,164,554 28,607,906 Unfunded AAL as a % of Covered Payroll 125.0% 188.8 164.5 FIRE Actuarial Valuation Actuarial Accrued Date Value of Liability June 30, Assets (AAL) 2006 $ 146,502,960 $ 177,620,036 2007 137,833,130 189,128,576 2008 145,931,808 192,991,745 Percent Funded 82.5% 72.9 75.6 Unfunded AAL $ 31,117,076 $ 51,295,446 47,059,937 4. POST EMPLOYMENT BENEFITS In addition to the pension benefits described in Note 3, the City provides post-retirement health care benefits to all eligible retirees in accordance with the compensation plan adopted by the City Council each fiscal year. These benefits include medical, dental and vision insurance programs and are the same as those offered to active employees. Retirees may select single or family coverage. As of June 30, 2009, approximately 1,321 former employees were eligible for these benefits, an increase of 58 participants from the prior year or an 4.6% increase. The cost of post-employment healthcare benefits, from an accrual accounting perspective, similar to the cost of pension benefits, should be associated with the periods in which the cost occurs, rather than in the future year when it will be paid. In implementing the requirements of GASB Statement No. 45, the City recognizes the cost of post employment healthcare in the year the employee services are received, reports the accumulated liability from prior years, and provides information useful in assessing potential demands on the City’s future cash flows. Recognition of 59 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 the liability accumulated from prior years will be amortized over 30 years, the first period commencing with the fiscal year ending June 30, 2008. The unfunded actuarial accrued annual required contribution for current retirees as well as current active members for fiscal year 08-09 was $55,930,430. A liability of $10,539,225 is accrued in the proprietary funds financial statements, the remaining $45,391,205 has been accrued in the governmental activities column in the government-wide financial statements. Plan Description The City provides post-employment medical care (OPEB) for retired employees through a singleemployer defined benefit medical plan. The plan provides medical benefits for eligible retirees, their spouses and dependents through the City’s self-insurance health insurance plan which covers both active and retired members. The benefits, benefit levels and contribution rates are determined annually by the City’s Benefits Advisory Board and approved by the Mesa City Council. The plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The plan does not issue a separate financial report. Benefits Provided The City provides post-employment medical care benefits to its retirees. To be eligible for benefits, an employee must qualify for retirement under one of the state retirement plans for public employees and be covered under the City’s medical plan during their active status. Employees must enroll in a City plan immediately after they retire or their eligibility for this benefits ceases. All medical care benefits are provided through the City’s self-insured health plan. The benefit levels are the same as those afforded to active employees. Upon a retiree’s death, the retiree’s dependents are no longer eligible for City coverage. As of July 1, 2008, Membership Consisted of: Retirees and Beneficiaries Receiving Benefits Active Employees Total 1,191 3,324 4,515 Funding Policy The plan premium rates are determined annually by the Benefits Advisory Board and approved by the City Council. The City’s contribution to the retirees health insurance premium is determined by their length of service with the City and their original hire date. To receive maximum benefits an employee must meet the following: Ten years of service for employees hired prior to January 1, 2001 Fifteen years of service for employees hired at January 1, 2001 but before January 1, 2006. Twenty years of service for employees hired on or after January 1, 2006. As of January 1, 2009, new hires are no longer eligible for benefits. (Continued) 60 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 For fiscal year ended June 30, 2009, the City contributed $9,263,745 to the plan (approximately 65.3 percent of total premiums). Plan members receiving benefits contributed $4,932,870 or approximately 34.7 percent of total premiums. Annual OPEB costs Net OPEB Obligation The City’s annual other post-employment benefit (OPEB) cost is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The City’s annual OPEB cost for the current year and the related information for the plan are as follows at June 30, 2009: Annual Required Contribution Interest on Net OPEB Obligation Adjusted to Annual Required Contribution Annual OPEB Cost Contributions Made Increase in Net OPEB Obligation Net OPEB Obligation – Beginning of year Net OPEB Obligation – End of year $ $ 65,194,175 65,194,175 9,263,745 55,930,430 57,002,229 112,932,659 The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2009 were as follows: Fiscal Year Ended 2009 Annual Required Contributions $65,194,175 Actual Contributions $9,263,746 Percentage of OPEB Cost Contributed 14.21% Net OPEB Obligation $112,932,659 Funded Status and Funding Progress The funded status of the plan as of June 30, 2009 was as follows: Actuarial Value of Plan Assets Actuarial Accrued Liability Unfunded actuarial accrued liability Funded ratio Covered payroll Unfunded actuarial accrued liability as a percentage of covered payroll $ 664,071,640 664,071,640 0% 338,835,124 $ $ 196.0% Actuarial Methods and Assumptions Projections of benefits are based on the substantive plan (the plan understood by the employer and plan members) and include the type of benefits in force at the valuation date and the pattern of sharing benefits between the City and the plan members at that point. Actuarial calculations 61 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant method and assumptions used for this fiscal year valuation were as follows: Valuation Date Actuarial Cost Method Amortization method Remaining amortization period Asset Valuation Method July 1, 2007 Entry age normal, level dollar amount 30 years, open, level dollar amount 30 years remaining as of June 30, 2007 N/A, no assets in trust Actuarial Assumptions: Discount rate Projected salary increases Health care cost trend rate: 4.50% N/A Medical, Drug, Vision9.0% in 2008-2009, grading down in 0.5% annual increments to an ultimate rate of 5.0% Dental, Mental Health 5% for all years Retiree contribution increase Same as medical Trend N/A Cost of living adjustments Medical Reimbursements The federal government may provide the City subsidies per the Medicare Part D Prescription Drug Subsidy Program for providing healthcare for Medicare eligible employees. Any current and future year subsidies are recorded as revenue in the year received and is not recognized as a reduction to the actuarial accrued liability. Required Supplementary Information Unfunded Actuarial Actuarial AAL as a Actuarial Accrued Valuation Value Liability Percent Date of Assets (AAL) Funded 664,071,640 0.00% July 1, 2007 $ - $ $ Annual Percentage Unfunded Covered of Covered AAL Payroll Payroll 338,835,124 196.0% 664,071,640 $ The City implemented GASB Statement No. 45 for the fiscal year ended June 30, 2008. Information for prior years is not available. 62 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 5. LONG-TERM OBLIGATIONS a. Changes in Long-Term Obligations The following is a summary of changes in long-term obligations. Beginning Balances Additions Reductions Ending Balances Governmental Activities: Bonds Payable: General Obligation Bonds Municipal Development Corp. Bonds Highway User Revenue Bonds Special Assessment Bonds with Governmental Commitment Add Certificates of Supplemental Interest Less Deferred Amounts on Refundings Total Bonds Payable Capital Leases Less Deferred Amounts on Refundings Unamortized Bond Premiums Post Employment Benefits Compensated Absences Governmental Activities Total 8,046,000 1,473,597 (8,087,019) 375,318,025 17,502,575 (14,685) 9,045,639 47,744,912 20,742,036 $ 470,338,502 $ Business-type Activities: Bonds Payable: Revenue Bonds General Obligation Bonds Add Certificates of Supplemental Interest Less Deferred Amounts on Refundings Total Bonds Payable Notes Payable Capital Leases Less Deferred Amounts on Refundings Unamortized Bond Premiums Post Employment Benefits Compensated Absences Business-type Activities Total $ 767,445,000 $ 59,900,000 (9,815,000) $ 817,530,000 $ 3,289,553 (332,090) 2,957,463 54,062 2,040 (14,868) 41,234 (19,055,416) 1,726,392 (17,329,024) 751,733,199 59,902,040 (8,435,566) 803,199,673 431,565 (98,376) 333,189 1,541,281 (1,382,868) 158,413 (15,722) 15,722 20,385,068 (2,120,574) 18,264,494 9,257,317 10,431,068 (937,927) 18,750,458 4,968,626 2,811,146 (3,020,307) 4,759,465 $ 788,301,334 $ 73,144,254 $ (15,979,896) $ 845,465,692 $ $ 221,625,447 $ 61,830,000 9,970,000 142,290,000 55,604 61,885,604 0 54,763,107 13,891,054 130,539,765 Amounts Due Within One Year (16,392,910) $ 267,062,537 $ 24,058,189 (9,970,000) (2,025,000) 140,265,000 5,720,000 (752,000) (405,132) 1,378,467 (28,166,575) (7,772,719) 14,685 (1,267,500) (8,325,818) (14,748,004) $ (60,265,931) $ 7,294,000 744,000 1,124,069 (6,708,552) 409,037,054 30,522,189 9,729,856 4,323,736 7,778,139 94,182,201 19,885,086 4,583,616 540,612,336 $ 39,429,541 10,475,000 266,811 10,741,811 104,464 158,413 894,501 11,899,189 For the governmental activities, compensated absences are generally liquidated by the General Fund. 63 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 b. Bonds Payable At June 30, 2009, long-term bonds payable consisted of: Classified in Governmental Activities on the government-wide financial statements: General Obligation Bonds $36,500,000 2000 general obligation serial bonds (partially refunded by general obligation refunding bonds, series 2002A, 2004 & 2006), due in annual principal installments ranging from $2,500,000 to $2,750,000, plus semi-annual interest of 6.50 percent through July 1, 2011. $ 2,750,000 $25,375,000 2002 general obligation serial bonds (partially refunded by general obligation refunding bonds, series 2002A, 2004 & 2006), due in annual principal installments ranging from $1,750,600 to $1,825,000, plus semi-annual interest ranging from 5.25 percent to 6.00 percent through July 1, 2011. 1,743,700 $24,720,000 2002 general obligation refunding serial bonds, due in annual principal installments ranging from $59,706 to $9,498,229, plus semi-annual interest ranging from 3.75 percent to 5.375 percent through July 1, 2015. 15,185,387 $41,680,611 2002A general obligation refunding serial bonds, due in annual principal installments ranging from $1,461,369 to $10,277,813, plus semi-annual interest ranging from 3.75 percent to 4.20 percent through July 1, 2016. Total bonds outstanding at June 30, 2008, include $1,473,597 of certificates of ownership of supplemental interest payments and $98,701 of capital appreciation maturing through 2010. 39,248,285 $22,565,000 2003 general obligation serial bonds, due in annual installments ranging from $1,250,000 to $2,315,000, plus semi-annual interest ranging from 3.50 percent to 5.00 percent through July 1, 2022. 22,565,000 $46,230,300 2004 general obligation refunding serial bonds, due in annual installments ranging from $34,839 to $31,852,800, plus semi-annual interest ranging from 2.4 percent to 5.0 percent through July 1, 2018. $11,705,000 2005 general obligation serial bonds, due in annual installments ranging from $500,000 to $3,250,000, plus semi-annual interest ranging from 4.0 percent to 5.0 percent through July 1, 2024. 44,073,277 11,705,000 $9,710,000 2006 general obligation serial bonds, due in annual installments ranging from $135,000 to $4,225,000, plus semi-annual interest ranging from 4.40 percent to 5.0 percent through July 1, 2025. 9,710,000 $25,482,000 2006 general obligation refunding serial bonds, due in annual installments ranging from $143,425 to $11,306,746, plus semi-annual interest ranging from 4.25 percent to 5.25 percent through July 1, 2014. 24,399,773 $15,915,000 2007 general obligation serial bonds due in annual installments ranging from $615,000 to $5,500,000 plus semi-annual interest ranging from 4.125 percent to 6.0 percent through July 1, 2027. 15,915,000 64 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 $15,450,000 2008 general obligation serial bonds due in annual installments ranging from $375,000 to $6,675,000 plus semi-annual interest ranging from 4.25 percent to 5.0 percent through July 1, 2028. 15,075,000 $61,830,000 2009 general obligation bonds serial bonds due in annual installments ranging from $1,750,000 to $10,125,000 plus semi-annual interest ranging from 4.0 percent to 4.625 percent through July 1, 2029. 61,830,000 Total General Obligation Bonds Deferred amounts on refundings Certificates of Supplemental Interest Total General Obligation Bonds not including deferred amounts on refundings and certificates of supplemental interest $264,200,422 3,986,184 (1,124,069) $267,062,537 Street and Highway User Revenue Bonds $7,900,000 1999 street and highway user revenue bonds (partially refunded by street and highway user revenue refunding bonds, series 2002A, 2004 & 2005), due in annual principal installments ranging from $225,000 to $750,000, plus semi-annual interest of 6.50 percent through July 1, 2010. $ 750,000 $20,000,000 2000 street and highway user revenue bonds (partially refunded by street and highway user revenue refunding bonds, series 2002A, 2004 & 2005), due in annual principal installments of $1,500,000, plus semi-annual interest of 6.50 percent through July 1, 2011. 3,000,000 $25,800,000 2002 street and highway user revenue bonds (partially refunded by street and highway user revenue refunding bonds, series 2002A, 2004 & 2005), due in annual principal installments ranging from $800,000 to $1,000,000, plus semi-annual interest ranging from 5.75 percent to 6.25 percent through July 1, 2012. 2,800,000 $31,985,000 2002 street and highway user revenue refunding bonds, due in annual installments ranging from $40,000 to $6,270,000, plus semi-annual interest ranging from 2.0 percent to 5.0 percent through July 1, 2017. 30,367,938 $26,805,000 2003 street and highway user revenue bonds, due in annual principal installments ranging from $500,000 to $9,750,000, plus semi-annual interest ranging from 4.25 percent to 5.50 percent through July 1, 2022. 26,805,000 $9,585,000 2004 street and highway user revenue bonds (partially refunded by street and highway user revenue refunding bonds, series 2005), due in annual principal installments ranging from $100,000 to $225,000, plus semi-annual interest ranging from 4.00 percent to 5.00 percent through July 1, 2022. 1,585,000 $17,760,000 2004 street and highway user revenue refunding bonds, due in annual installments ranging from $20,000 to $7,250,000, plus semi-annual interest ranging from 3.5 percent to 5.0 percent through July 1, 2018. 17,001,274 $23,800,000 2005 street and highway user revenue refunding bonds, due in annual principal installments ranging from $25,000 to $8,000,000, plus semi-annual interest ranging from 2.75 percent to 5.0 percent through July 1, 2023. 22,658,420 65 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 $10,225,000 2005 street and highway user revenue bonds, due in annual principal installments ranging from $50,000 to $8,500,000, plus semi-annual interest ranging from 4.0 percent to 5.0 percent through July 1, 2024. $11,675,000 2006 street and highway user revenue bonds, due in annual installments ranging from $850,000 to $9,850,000, plus semi-annual interest ranging from 4.50 percent to 5.25 percent through July 1, 2025. 10,225,000 11,675,000 $10,675,000 2007 street and highway user revenue bonds, due in annual principal installments ranging from $1,000,000 to $3,900,000, plus semi annual interest ranging from 4.25 percent to 5.0 percent through July 1, 2027. Total Street and Highway User Revenue Bonds Deferred amounts on refundings Total Street and Highway User Revenue Bonds not including deferred amounts on refundings 10,675,000 $137,542,632 2,722,368 $140,265,000 Special Assessment Bonds (payable from special assessments levied on the benefited properties) $5,025,000 2005 special assessment district bonds, due in annual principal installments of $335,000, plus semi-annual interest of 5.80 percent, through January 1, 2021. $ 4,020,000 $4,091,840 2007 special assessment district bonds, due in annual principal installments ranging from $408,840 to $410,000, plus semi-annual interest of 5.0 percent, through January 1, 2017. Total Special Assessment Bonds 3,274,000 $ Total bonds payable recorded in governmental activities 7,294,000 $409,037,054 Classified in Business-type Activities on the government-wide financial statements: General Obligation Bonds $1,200,000 2002 general obligation serial bonds (partially refunded by 2002A, 2004 & 2006 general obligation refunding bonds), due in annual principal installments ranging from $79,100 to $82,490, plus semi-annual interest ranging from 5.25 percent to 6.00 percent through July 1, 2011. $ 81,300 $120,000 2002 general obligation refunding serial bonds, due in annual principal installments ranging from $294 to $46,771, plus semi-annual interest ranging from 3.75 percent to 5.375 percent through July 1, 2015. 74,135 $1,529,379 2002A general obligation refunding serial bonds, due in annual principal installments ranging from $53,631 to $377,187, plus semi-annual interest ranging from 3.75 percent to 4.20 percent through July 1, 2016. Total bonds outstanding at June 30, 2007, include $54,062 of certificates of ownership of supplemental interest payments and $3,640 of capital appreciation maturing through 2010. 1,440,129 66 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 $214,700 2004 general obligation refunding serial bonds, due in annual principal installments ranging from $35,000 to $32,000,000, plus semi-annual interest ranging from 2.4 percent to 5.0 percent through July 1, 2016. 214,539 $1,168,000 2006 general obligation refunding serial bonds, due in annual principal installments ranging from $6,574 to $518,254, plus semi-annual interest ranging from 4.25 percent to 5.25 percent through July 1, 2014. 1,168,000 Total General Obligation Bonds Deferred amounts on refundings Certificates of Supplemental Interest Total General Obligation Bonds not including deferred amounts on refundings and certificates of supplemental interest $ 2,978,103 20,594 (41,234) $ 2,957,463 $ 4,000,000 Utility Systems Revenue Bonds $94,730,000 1997 utility systems revenue serial bonds (partially refunded by 1998, 2002 & 2006 utility systems revenue refunding bonds), due on July 1, 2012, plus semi-annual interest of 7.25 percent through July 1, 2012. $34,600,000 1998 utility systems revenue serial bonds (partially refunded by 2002A, 2006, 2006 (2nd Series) and 2008 utility systems revenue refunding bonds), due in annual principal installments ranging from $1,000,000 to $4,500,000, plus semiannual interest ranging from 4.50 percent to 6.50 percent through July 1, 2018. 3,050,000 $32,500,000 1998 utility systems revenue refunding serial bonds (partially refunded by 2002A, 2006 and 2008 utility systems revenue refunding bonds), due in annual principal installments ranging from $100,000 to $9,105,000, plus semi-annual interest ranging from 4.25 percent to 5.00 percent through July 1, 2013. 16,631 $69,200,000 2000 utility systems revenue serial bonds (partially refunded by 2002, 2002A & 2004 utility systems revenue refunding bonds), due in annual principal installments ranging from $4,200,000 to $5,250,000, plus semi-annual interest of 6.50 percent through July 1, 2011. 10,250,000 $57,950,000 2002 utility systems revenue serial bonds (partially refunded by 2004 & 2006 utility systems revenue refunding bonds), due in annual principal installments ranging from $950,000 to $1,000,000, plus semi-annual interest ranging from 4.25 percent to 5.75 percent through July 1, 2017. 8,000,000 $129,000,000 2002 utility systems revenue refunding serial bonds, due in annual principal installments ranging from $65,000 to $29,550,000, plus semi-annual interest ranging from 3.40 percent to 5.25 percent through July 1, 2017. 126,374,810 $48,850,000 2002A utility systems revenue refunding serial bonds, due in annual principal installments ranging from $40,000 to $17,890,000, plus semi-annual interest ranging from 3.00 percent to 5.00 percent through July 1, 2017. 47,261,600 $50,470,000 2003 utility systems revenue serial bonds, (partially refunded by 2006 (Series 2) utility systems revenue refunding bonds), due in annual principal installments ranging from $970,000 to $25,500,000, plus semi-annual interest ranging from 3.50 percent to 5.00 percent through July 1, 2022. 24,970,000 67 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 $64,625,000 2004 utility systems revenue serial bonds, (partially refunded by 2006 (Series 2) utility systems revenue refunding bonds), due in annual principal installments ranging from $1,125,000 to $11,000,000, plus semi-annual interest ranging from 5.00 percent to 6.00 percent through July 1, 2028. 6,125,000 $40,345,000 2004 utility systems revenue refunding serial bonds, due in annual principal installments ranging from $20,000 to $21,010,000, plus semi-annual interest ranging from 3.50 percent to 5.00 percent through July 1, 2019. 38,425,378 $91,200,000 2005 utility systems revenue serial bonds, (partially refunded by 2006 (Series 2) utility systems revenue refunding bonds), due in annual principal installments ranging from $750,000 to $24,000,000, plus semi-annual interest ranging from 4.125 percent to 5.0 percent through July 1, 2029. 71,200,000 $105,400,000 2006 utility systems revenue serial bonds, (partially refunded by 2006 (Series 2) utility systems revenue refunding bonds), due in annual principal installments ranging from $8,650,000 to $36,750,000, plus semi-annual interest ranging from 4.375 percent to 5.0 percent through July 1, 2030. 87,325,000 $61,300,000 2006 utility systems revenue refunding serial bonds, due in annual principal installments ranging from $2,075,000 to $18,000,000, plus semi-annual interest ranging from 4.0 percent to 5.0 percent through July 1, 2021. 54,712,930 $127,260,000 2006 (Series 2) utility systems revenue refunding serial bonds, due in annual principal installments ranging from $50,000 to $25,845,000 plus semi-annual interest ranging from 4.0 percent to 5.25 percent through July 1, 2028. 119,698,668 $65,550,000 2007 utility systems revenue serial bonds, due in annual principal installments ranging from $2,500,000 to $41,800,000 plus semi-annual interest ranging from 4.25 percent to 6.25 percent through July 1, 2031. 65,550,000 $52,875,000 2008 utility systems revenue serial bonds, due in annual principal installments ranging from $700,000 to $44,675,000 plus semi-annual interest ranging from 4.875 percent to 5.25 percent through July 1, 2032. 52,875,000 $21,125,000 2008 utility systems revenue refunding serial bonds, due in annual principal installments ranging from $100,000 to $2,200,000 plus semi-annual interest ranging from 3.00 percent to 4.00 percent through July 1, 2018. 20,486,553 $59,900,000 2009 utility systems revenue refunding serial bonds, due in annual principal installments ranging from $900,000 to $48,250,000 plus semi-annual interest ranging from 5.875 percent to 6.375 percent through July 1, 2033. 59,900,000 Total Utility Systems Revenue Bonds Deferred amounts on refundings Total Utility System Revenue Bonds not including deferred amounts on refundings $800,221,570 17,308,430 Total bonds payable recorded in business-type activities $803,199,673 68 817,530,000 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 The following tables summarize the City’s debt service requirements to maturity for its long term bonds payable at June 30, 2009. The accretion of certificates of supplementary interest payments and the deferred amounts on refundings are not included. Governmental Activities General Obligation Bonds Fiscal Year 2010 2011 2012 2013 2014 2015-19 2020-24 2025-29 TOTALS $ $ Principal 24,058,189 21,675,395 20,955,640 21,868,905 14,007,922 77,701,486 39,620,000 47,175,000 267,062,537 $ $ Interest 13,413,020 10,934,312 10,001,477 9,007,439 7,953,756 30,770,719 15,763,900 6,500,981 104,345,604 $ $ Highway User Revenue Bonds Total 37,471,209 32,609,707 30,957,117 30,876,344 21,961,678 108,472,205 55,383,900 53,675,981 Fiscal Year 2010 2011 2012 2013 2014 2015-19 2020-24 2025-29 371,408,141 TOTALS Principal 5,720,000 6,030,000 6,390,000 6,745,000 7,040,000 40,215,000 49,600,000 18,525,000 $ $ 140,265,000 $ $ Interest 6,691,417 6,365,243 6,028,242 5,695,242 5,378,088 21,919,258 11,387,150 1,307,375 64,772,015 $ $ Total 12,411,417 12,395,243 12,418,242 12,440,242 12,418,088 62,134,258 60,987,150 19,832,375 205,037,015 Special Assessment Bonds Fiscal Year 2010 2011 2012 2013 2014 2015-19 2020-22 TOTALS $ $ Principal 744,000 744,000 744,000 744,000 744,000 2,904,000 670,000 7,294,000 $ $ 69 Interest 376,920 337,040 297,160 257,280 217,400 529,400 38,860 2,054,060 $ $ Total 1,120,920 1,081,040 1,041,160 1,001,280 961,400 3,433,400 708,860 9,348,060 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Business-type Activities General Obligation Bonds Fiscal Year 2010 2011 2012 2013 2014 2015-19 2020-24 2025-29 2030-33 TOTALS $ $ Principal 266,811 469,605 679,360 706,095 357,078 478,514 2,957,463 $ $ Interest 176,362 122,824 103,842 70,522 35,783 49,994 559,327 $ $ Revenue Bonds Total 443,173 592,429 783,202 776,617 392,861 528,508 - Fiscal Year 2010 2011 2012 2013 2014 2015-19 2020-24 2025-29 2030-33 3,516,790 TOTALS $ $ Principal 10,475,000 12,585,000 24,840,000 34,030,000 35,595,000 184,950,000 147,740,000 186,240,000 181,075,000 817,530,000 $ $ Interest 40,499,501 39,523,106 38,875,331 37,545,356 35,910,706 151,516,151 110,852,031 71,360,274 24,858,408 550,940,864 $ $ Total 50,974,501 52,108,106 63,715,331 71,575,356 71,505,706 336,466,151 258,592,031 257,600,274 205,933,408 1,368,470,864 Special Assessment Bonds The City acts as trustee for special assessment districts whereby it collects the assessments levied against owners of property within established districts and disburses the amounts collected to retire the bonds issued to finance the improvements. At June 30, 2009, the special assessments receivable, together with amounts paid in advance and interest to be received over the life of the assessment period, is adequate for the scheduled maturities of the bonds payable and the related interest. Improvement bonds are collateralized by properties within the districts. In the event of default by the property owner, the City may enforce an auction sale to satisfy the debt service requirements of the improvement bonds. The City is contingently liable on special assessment bonds to the extent that proceeds from auction sales are insufficient to retire outstanding bonds. Special assessment bonds payable with governmental commitment currently outstanding as of June 30, 2009 are $7,294,000. General Obligation Bonds The general obligation bonds are backed by the ultimate taxing power and general revenues of the City; however, $2,978,103 of these bonds at June 30, 2009 is carried as a liability of the Enterprise Fund to reflect the intention of retirement from resources of that fund. All bonds, except Special Assessment Bonds, are callable by the City at various dates and at various premiums. The Arizona Constitution provides that the general obligation bonded indebtedness of a city for general municipal purposes may not exceed 6 percent of the secondary assessed valuation of the taxable property in that city. In addition to the 6 percent limitation for general municipal purpose bonds, cities may issue general obligation bonds up to an additional 20 70 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 percent of the secondary assessed valuation for supplying such city with water, artificial light or sewers, and for the acquisition and development of land for open space preserves, parks, playgrounds and recreation facilities, public safety, law enforcement, fire and emergency services facilities and streets and transportation facilities. The total debt margin available July 1, 2009 is: 6% Bonds 20% Bonds $271,407,694 703,597,710 Total Available $975,005,404 City revenue bond indenture ordinances require that the net amount of revenues of the electric, gas, water, wastewater and solid waste systems (total revenues less operations and maintenance expenses) equal 120 percent of the principal and interest requirement in each fiscal year. The above covenant and all other bond covenants have been met. c. Reserves for Bond Indentures Pursuant to the provisions of the Bond Resolution of the City of Mesa Utility System Revenue and Refunding bonds, Replacement and Reserve Funds are required to be established, into which a sum equal to 2 percent of the gross revenues – as determined on a modified accrual basis – must be deposited until a sum equal to two percent of all tangible assets of the Utility System is accumulated. As of June 30, 2009, the amount provided in the Replacement and Extension Funds equaled $10,412,185 which is in compliance with the bond provisions. d. Notes Payable The City has entered into a loan agreement with the State of Arizona Department of Transportation Aeronautics Division State Aviation Fund for the construction of T-Hangars at the airport. The interest rate on the notes is 6.02 percent. The following table reflects the annual requirements to amortize all notes outstanding as of June 30, 2009, as presented in the business-type activities. Fiscal Year Ending June 30 2010 2011 2012 TOTALS Principal $ $ 104,464 110,929 117,796 333,189 71 Interest $ $ 17,207 10,742 3,875 31,824 Total $ $ 121,671 121,671 121,671 365,013 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 e. Lease Obligations The following is a schedule by years of future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of June 30, 2009. The deferred amounts on refundings are not included. Governmental Activities Fiscal Year 2010 2011 2012 2013 2014 2015 TOTALS $ $ Principal 4,323,736 3,240,527 1,344,045 681,953 67,952 71,643 9,729,856 $ $ Interest 370,601 204,646 83,368 34,186 6,581 2,889 702,271 Business-type Activities Total 4,694,337 3,445,173 1,427,413 716,139 74,533 74,532 $ $ 10,432,127 $ Principal 158,413 $ $ 158,413 $ Interest 3,558 3,558 Total 161,971 - $ $ 161,971 The assets acquired through capital leases are as follows: Businesstype Activities Governmental Activities Asset: Land Buildings Other Improvements Machinery & Equipment Infrastructure Construction Work in Process Less: Accumulated depreciation Total $ $ 3,642,860 11,167,294 3,933,180 29,070,000 85,936 4,337,426 (13,842,754) 38,393,942 $ $ 10,646,407 2,813,974 (10,074,731) 3,385,650 f. Short-term Debt The City had no short-term debt activity for the fiscal year ended June 30, 2009. 72 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 6. LIABILITIES TO BE PAID FROM ASSETS HELD IN ESCROW Liabilities to be paid from assets held in escrow include bonded debt of the City that has been provided for through an Advanced Refunding Bond Issue. Under an advanced refunding arrangement, refunding bonds are issued and the net proceeds, plus additional resources that may be required, are used to purchase securities issued or guaranteed by the United States Government. These securities are then deposited in an irrevocable trust under an escrow agreement which provides that all proceeds from the trust will be used to fund the principal and interest payments of the previously issued bonded debt being refunded. The trust deposits have been computed so that the securities in the trust, along with future cash flow generated by the securities, will be sufficient to service the previously issued bonds. In accordance with GASB Statement No. 7, the refunded debt outstanding at June 30, 2009 as reflected below is not included in the City’s financial statements. Utility Systems Revenue Bond Issue dated September 1, 1995 $ 7,000,000 Utility System Revenue Bond Issue dated April 1, 1997 7,000,000 Utility System Revenue Refunding Bond Issue dated March 1, 1998 7,405,000 Utility System Revenue Bond Issue dated March 1, 1998 13,125,000 General Obligation Bond Issue dated November 1, 1999 2,250,000 General Obligation Bond Issue dated November 1, 2000 2,500,000 General Obligation Bond Issue dated January 1, 2002 23,000,000 Utility System Revenue Bond Issue dated January 1, 2002 49,000,000 Street and Highway User Revenue Bond Issue dated January 1, 2002 23,000,000 Utility System Revenue Bond Issue dated March 1, 2003 25,500,000 Street and Highway User Revenue Bond Issue dated June 1, 2004 8,000,000 Utility System Revenue Bond Issue dated June 1, 2004 58,500,000 Utility System Revenue Bond Issue dated June 1, 2005 20,000,000 Utility System Revenue Bond Issue dated June 1, 2006 18,075,000 Total Refunded Bonds Outstanding $264,355,000 73 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 7. CAPITAL CONTRIBUTIONS During the year, external capital contributions consisted of the following: Property Owners Governmental Activities: Federal and State Funds Contributions - Capital Assets Total Business-type Activities: Federal and State Funds Developers - Impact and Development Fees Contributions-In-Aid Contributions - Capital Assets Total 8. Governmental Agencies $ 13,784,751 $ 13,784,751 $ $ - $ 822,406 162,500 984,906 Developers $ $ 10,486,977 10,486,977 $ 2,183,047 $ 55,997 2,239,044 Total $ $ 11,164,331 11,164,331 $ 10,486,977 24,949,082 35,436,059 $ - $ 2,183,047 $ 4,242,229 822,406 23,974,719 31,222,401 4,242,229 $ 23,756,222 27,998,451 COMMITMENTS AND CONTINGENT LIABILITIES a. Pending Litigation The City is subject to a number of lawsuits, investigations, and other claims (some of which involve substantial amounts) that are incidental to the ordinary course of its operations, including those related to wrongful death and personal injury matters. Although the City Attorney does not currently possess sufficient information to reasonably estimate the amounts of the liabilities to be recorded upon the settlement of such claims and lawsuits, some claims could be significant to the City’s operations. While the ultimate resolution of such lawsuits, investigations, and claims cannot be determined at this time, in the opinion of City management, based on the advice of the City Attorney, the resolution of these matters will not have a material adverse effect on the City’s financial position. b. Sick Leave Benefits Sick leave benefits provided for ordinary sick pay are not vested with the employee. Fifty percent of unused benefits are payable only upon retirement of an employee. In accordance with the criteria, sick leave paid within 60 days of the year-end has been recorded as a liability in the governmental fund financial statements. Long-term liabilities of governmental funds are not shown on the fund financial statements. In the government-wide financial statements as well as the proprietary fund financial statements an amount of estimated sick pay to employees has been expensed and the liability is shown in the appropriate funds. These amounts have been calculated based on the vested method. (Continued) 74 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 The total sick leave balance at June 30, 2009, was $39,786,111 of which $7,942,626 is recorded as a liability. 9. ENTERPRISE ACTIVITIES OPERATIONS DETAIL The Enterprise Fund includes operations of electricity, gas, water, wastewater, solid waste, airport, golf course, convention center and district cooling. Although the City’s Enterprise Fund does not meet the requirements for disclosing segment information, these services provided by the City are of such significance as to warrant certain additional disclosures. Operating revenue, expenses and operating income for the year ended June 30, 2009 for these services are as follows: Operating Revenues Functions Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center District Cooling $ 35,312,658 41,707,578 95,994,839 54,719,926 46,762,035 2,958,955 2,309,899 2,686,663 834,376 Total $ 283,286,929 Operating Expenses Depreciation and Amortization Other Operating Income (Loss) $ 24,873,281 31,081,222 37,130,016 22,636,294 29,675,803 2,507,657 2,772,771 4,289,707 594,482 $ 6,895,366 7,705,060 42,078,853 4,577,625 15,248,555 (744,813) (712,454) (1,869,503) (141,312) $ 155,561,233 $ 73,037,377 3,544,011 2,921,296 16,785,970 27,506,007 1,837,677 1,196,111 249,582 266,459 381,206 $ 54,688,319 $ 10. NET ASSETS a. Restricted Net Assets The government-wide statement of net assets reports $175,229,563 of restricted net assets, of which $46,279,139 is restricted by enabling legislation. b. Designated Net Assets The net assets in the Employee Benefit and Workers’ Compensation Self Insurance Funds are designated for anticipated future losses and are a result of excess premiums charged to increase the fund balance specifically for this purpose. (Continued) 75 CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 c. Deficit Net Assets The deficit in the Property and Public Liability Self-Insurance Fund is the result of the large increases in the estimated liability for claims during the fiscal year. Contributions from the various funds will need to be increased in future years to cover this deficit. 11. PLEDGED REVENUES a. Utility System Revenue Bonds The City has pledged future utility customer revenues, net of specified operating expenses, to repay approximately $1.175 billion in utility system revenue bonds issued since 1997. Proceeds from the bonds provided financing for the construction of various utility related projects including new gas pipelines and water and wastewater treatment plants. The bonds are payable solely from utility customer net revenues and are payable through 2033. Annual principal and interest payments on the bonds were 61 percent of net revenues. The total principal and interest remaining to be paid on the bonds is $1,368,470,864. Principal and interest paid for the current year and total customer net revenues were $47,039,639 and $76,505,459, respectively. b. Highway User Revenue Bonds The City has pledged future Highway User Taxes Revenue to repay $196.2 million in highway user revenue bonds issued since 1999. Proceeds from the bonds provided financing for streets projects. The bonds are payable soley from the state shared Highway User Tax revenues and are payable through 2027. Annual principal and interest payments on the bonds were 26 percent of eligible revenues. The total principal and interests remaining to be paid on the bonds is $205,037,015. Principal and interest paid for the current year and total highway user tax revenues were $8,847,688 and $34,259,887, respectively. c. Special Assessment Bonds The special assessment revenues collected by the City are pledged to repay $9.2 million of special assessment bonds issued since 2005. Proceeds from the bonds are used to finance improvements that property owners have agreed to pay. In the event of default by the property owner, an auction sale may be enforced by the City. If collections and auction proceeds are not sufficient to retire outstanding bonds the City is contingently liable. These bonds are payable through 2021. Annual principal and interest payments on the bonds are expected to be covered 100% with collections from the property owners. The total principal and interest remaining to be paid on the bonds is $9,348,060. Principal and interest paid for the current year and total assessments collected were $1,169,040, and $1,202,384, respectively. 76 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 12. JOINT VENTURES The City participates with the cities of Phoenix, Glendale, Scottsdale and Tempe in a multi-city sanitary sewer system (the “System”) in which Phoenix is the lead agency. The City of Phoenix is responsible for the planning, budgeting, construction, operation and maintenance of the plant. As lead agency, Phoenix provides all management personnel and financing arrangements. The various cities participate in ownership of the plant and are charged for operating expenses based on gallons of flow. The different agencies participate in each facility at varying rates depending on their needs at the time each facility was constructed. The City’s investment in the joint venture is reflected in the proprietary funds financial statements. The System has no debt outstanding. Audited summary financial information on the System (GAAP basis) as of and for the fiscal year ended June 30, 2008 (latest information available) is as follows: Assets Equity in Pooled Cash and Investments Receivables Inventories at Average Cost Capital Assets $ Total Assets 47,197,000 22,720,000 530,000 796,149,000 866,596,000 Liabilities 60,939,000 Net Assets $ 805,657,000 Total Revenues Total Expenses $ 170,890,000 (67,887,000) Increase (Decrease) in Net Assets $ 103,003,000 Separate financial statements for the activity under the Joint Venture agreement can be obtained through the AMWUA office at 4041 N. Central Avenue, Phoenix, Arizona, 85012. The City also participates with the City of Phoenix in a water treatment plant. The City of Phoenix is responsible for the planning, budgeting, construction, operation and maintenance of the plant. As lead agency, Phoenix provides all management personnel and financing arrangements. Phoenix and Mesa participate in ownership of the plant and are charged for operating expenses based on gallons of water treated. The City’s investment in the joint venture is reflected in the proprietary funds financial statements. 77 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 The water treatment plant has no debt outstanding. Audited summary financial information for the plant (GAAP basis) as of and for the fiscal year ended June 30, 2008 (latest information available) is as follows: Assets Equity in Pooled Cash and Investments Receivables Inventories Capital Assets, Net of Accumulated Depreciation $ Total Assets 10,036,000 6,698,000 199,000 182,226,000 199,159,000 Liabilities 11,940,000 Net Assets $ 187,219,000 Total Revenues Total Expenses $ 26,424,000 (26,809,000) Increase in Net Assets $ (385,000) Separate financial statements for the activity can be obtained through the City of Phoenix at 305 W. Washington Street, Phoenix, Arizona, 85003. Construction of a joint water reclamation plant with the Towns of Gilbert and Queen Creek was completed on December 2, 2006. The City acts as the lead agency and is responsible for the planning, budgeting, construction, operation and maintenance of the plant. As lead agent, the City provides all management personnel and financing arrangements. Mesa, Gilbert and Queen Creek participate in ownership of the plant and are charged for operating expenses based on gallons of flow. The City’s investment in the joint venture is reflected in the proprietary funds financial statements. Separate financial statements are not prepared. Total investment in the joint venture as of June 30, 2009 is: Mesa’s Share Gilbert’s Share Queen Creek’s Share $ 75,085,379 71,433,661 31,280,378 Total Joint Venture $177,799,418 78 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 In June 2002, the City agreed to participate in the Central Phoenix/East Valley Light Rail Transit (LRT). The City participates with the cities of Phoenix, Tempe and Glendale. Valley Metro Rail, Inc. (VMR) will design, construct, and operate the LRT project. A total of $54,381,117 has been spent on this project through the fiscal year ended June 30, 2009. The City has received $36.1 million of funding from the Federal Transit Administration (FTA); Congestion Mitigation Air Quality (DMAQ) and Public Transit Funds (PTF) related to this project. The City’s investment in the joint venture is reflected in the governmental activities column on the government-wide financial statements. Audited summary financial information on the system (GAAP basis), as of and for the fiscal year ended June 30, 2008, (latest information available) is as follows: Assets Current Assets Non Current Assets Total Assets $ 247,783,659 1,083,561,843 1,331,345,502 Liabilities 247,783,659 Net Assets $ 1,083,561,843 Total Revenues Total Expenses $ 333,133,251 (23,378,898) Increase in Net Assets $ 309,754,353 Separate financial statements for the activity can be obtained through Valley Metro Rail Inc. at 101 North First Avenue, Suite 1300, Phoenix, Arizona, 85003. 79 (Continued) CITY OF MESA, ARIZONA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 13. SUBSEQUENT EVENTS On August 19, 2009, the City entered into four separate loan agreements with the Water Infrastructure Finance Authority of Arizona. The purposes of the loans are to make improvements and upgrades to existing water and wastewater projects. The loans utilize funds from the United States Environmental Protection Agency pursuant to the federal American Reinvestment and Recovery Act of 2009. Subject to the City meeting the required specifications of the loan documents, two of the loans include a combined interest and fee rate subsidy and the two remaining loans include a principal forgiveness portion. Total principal (without principal forgiveness) is $4,170,441 and the loans have a 20 year repayment period. The total principal forgiveness is $626,000. Total interest over the 20 years with principal forgiveness and the combined interest and fee rate subsidy is $785,818. On November 1, 2009, the City issued $20,000,000 of Highway Project Advancement Notes to provide funds to the Arizona Department of Transportation (ADOT) for the acceleration of the right-of-way acquisition and for design of highway improvements to State Route 802 between State Route 202L and Ellsworth Road. The bonds mature on July 1, 2015 and the total interest payable is $3,966,667. The City has entered into an intergovernmental agreement with ADOT and the Maricopa Association of Governments to advance the improvements to State Route 802. The agreement provides for repayment by ADOT to the City of the full amount of the City advance, without interest, from monies available to ADOT for the project within a 60-month loan period. The repayments are not secured by any lien upon or pledge of any particular revenues, monies or property of ADOT. No assurance can be given that ADOT will have funds available for repayments due at the times or in the amounts set forth under the agreement. 80 (Concluded) Required Supplementary Information CITY OF MESA, ARIZONA EXHIBIT B-1 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget Final Budget Actual Amounts Budgetary Basis $ 149,603,000 14,070,000 149,580,000 20,481,000 15,870,000 2,729,000 5,098,525 $ 149,603,000 14,070,000 149,580,000 20,481,000 15,870,000 2,729,000 5,098,525 $ 132,691,935 10,223,882 139,508,341 19,603,550 12,431,371 1,197,337 14,689,460 $ (16,911,065) (3,846,118) (10,071,659) (877,450) (3,438,629) (1,531,663) 9,590,935 357,431,525 357,431,525 330,345,876 (27,085,649) 3,200,000 3,200,000 6,161,310 (2,961,310) 354,231,525 354,231,525 324,184,566 (30,046,959) 54,009,831 256,364,891 65,157,209 25,235,400 54,263,230 73,858,978 55,368,573 256,239,812 74,404,296 26,413,287 57,038,173 58,879,043 39,438,068 229,423,718 63,224,441 25,349,133 43,369,123 - 15,930,505 26,816,094 11,179,855 1,064,154 13,669,050 58,879,043 13,864,151 7,681,983 13,864,151 7,811,666 14,924,144 8,501,798 (1,059,993) (690,132) 550,435,673 550,019,001 424,230,425 125,788,576 (196,204,148) (195,787,476) (100,045,859) 95,741,617 Other Financing Sources (Uses): Transfers In Transfers Out 75,327,000 (1,511,000) 75,327,000 (1,511,000) 96,703,000 (4,358,700) (21,376,000) 2,847,700 Total Other Financing Sources (Uses) 73,816,000 73,816,000 92,344,300 (18,528,300) (122,388,148) (121,971,476) (7,701,559) 114,269,917 Fund Balance - Beginning 63,123,444 63,123,444 57,200,270 (5,923,174) Decrease in Restricted Fund Balance 59,264,704 59,264,704 23,120,994 (36,143,710) Revenues: Taxes Licenses and Permits Intergovernmental Charges For Services Fines and Forfeitures Investment Income Miscellaneous Total Revenues Less: Bad Debts Total Net Revenues Variance With Final Budget Positive (Negative) Expenditures: Current: General Government Public Safety Cultural-Recreational Community Environment Capital Outlay Contingencies Debt Service: Principal Retirement Interest/Service Charges on Bonds Total Expenditures Deficiency of Revenues Under Expenditures Net Change in Fund Balance Fund Balance - Ending $ - See Note to Required Supplementary Information. 81 $ 416,672 $ 72,619,705 $ 72,203,033 CITY OF MESA, ARIZONA EXHIBIT B-2 HIGHWAY USER REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget Final Budget Actual Amounts - Budgetary Basis Variance With Final Budget Positive (Negative) Revenues: Intergovernmental $ 39,569,000 Charges For Services $ 35,000 Fines and Forfeitures 39,569,000 $ 34,143,594 35,000 34,860 $ (5,425,406) (140) 16,000 16,000 33,544 17,544 Investment Income 277,000 277,000 7,880 (269,120) Miscellaneous 148,000 148,000 40,009 (107,991) Total Revenues 40,045,000 40,045,000 34,259,887 (5,785,113) Expenditures: Current: 32,893,780 32,869,790 28,315,434 4,554,356 Capital Outlay Community Environment 1,107,821 1,091,225 1,036,465 54,760 Contingencies 683,000 723,586 - 723,586 Principal Retirement 2,025,000 2,025,000 2,025,000 - Interest/Service Charges on Bonds 6,822,668 6,822,668 6,829,036 43,532,269 43,532,269 38,205,935 (3,487,269) (3,487,269) (3,946,048) 4,964,506 4,964,506 3,946,490 Debt Service: Total Expenditures (6,368) 5,326,334 Deficiency of Revenues Under Expenditures Fund Balance - Beginning Fund Balance - Ending $ 1,477,237 See Note to Required Supplementary Information. 82 $ 1,477,237 $ 442 (458,779) (1,018,016) $ (1,476,795) CITY OF MESA, ARIZONA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION – BUDGETARY REPORTING FOR THE FISCAL YEAR ENDED JUNE 30, 2009 The financial statements for the City are prepared in accordance with generally accepted accounting principles – “GAAP basis”. Since Mesa, like most other Arizona cities, prepares its annual budget on a modified cash basis that differs from the “GAAP basis”, additional schedules of revenues and expenditures are presented for the General Fund to provide a meaningful comparison of actual results to budget on the “budget basis”. Adjustments necessary to convert the results of operations of the General Fund for the year ended June 30, 2009 on the “GAAP basis” to the “budget basis” as follows: Net Change in Fund Balance-Budget Basis Exhibit B-1 $ Basis Differences: Compensated Absences Special Assessments Sales Tax Accrual Unrealized Gain on Investments 742,173 33,344 (1,786,913) 269,627 Timing Differences: Grants & Contributions Interest Earnings in Escrow Account Net Change in Fund Balance-GAAP Basis Exhibit A-5 83 (7,701,559) 95,211 (247,738) $ (8,595,855) Combining Statements NON-MAJOR FUNDS OTHER GOVERNMENTAL FUNDS Special Revenue Funds Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. Local Transportation Assistance Fund accounts for expenditures on local transportation operations and capital outlay, as mandated by the Arizona State Legislature. The principal financing source for this fund is the state shared lottery revenue. Mesa Housing Authority Fund accounts for expenditures of the City’s housing assistance programs that consist of housing owned and operated by the City and rent subsidy payments to private sector owners of dwelling units. Financing for this fund is derived from tenants and the United States Department of Housing and Urban Development. Cemetery Fund is designed to provide an accumulation of monies from which the interest earnings will provide perpetual care of the Cemetery. Public Art Fund is designed to provide a balance of monies from which public art projects throughout the City may be developed. Funds are provided through allocations from the General Fund. Development Impact Fees Fund is designed to provide a balance of monies to ensure that new development bears a proportionate share of the cost of improvements to the City’s parks, cultural facilities, libraries, fire facilities and equipment, police facilities and equipment, general government facilities and storm sewers. These funds are provided through the collection of development impact fees. Court Construction Fee Fund is designed to provide an accumulation of monies for the construction and debt service of the new Mesa Municipal Court building. These funds are provided through a fee on all court cases, except for parking violations. Mesa Arts Center Restoration Fund is designed to provide an accumulation of monies to be used to replace or refurbish the Mesa Arts Center facilities. These funds are provided through a fee on all ticketed events at the facility. Regional Transportation Plan (RTP) Fund accounts for Maricopa Association of Government (MAG) Proposition 400 sales tax funds that are allocated to local subdivisions for transportation projects. Special Revenue Funds (cont.) Environmental Compliance Fund accounts for expenditures that are a result of federal and state environmental requirements. Financing for this fund is derived from a monthly environmental compliance fee that is charged to each utility customer. Vehicle Replacement Fund accounts for expenditures related to the acquisition of replacement vehicles for the City’s governmental funds. The funds are provided through transfers from the City’s General Fund. Debt Service Funds These funds are established to account for the accumulation of resources for, and the payment of, principal and interest not serviced by the Enterprise Fund. General Obligation Bond Redemption Fund accumulates monies for the payment of principal and interest requirements of the City’s General Obligation Bonds. Special Assessment Bond Redemption Fund accumulates monies for the payment of the Special Assessment Bonds that are issued to finance the costs of improvements which are to be paid from special assessments levied against the benefited properties. Municipal Development Corporation Bond Redemption Fund accumulates monies for payment of the principal and interest requirements of the City’s Municipal Development Corporation Bonds. Capital Lease Redemption Fund accumulates monies for the payment of principal and interest requirements of capital leases relating to the acquisition of land, computer equipment, communication equipment, police helicopters and various public improvements within the City. Highway User Revenue Bond Redemption Fund accumulates monies for the payment of principal and interest requirements of the City’s Highway User Revenue Bonds. Capital Projects Funds Capital Projects Funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and special revenue funds. Fire Construction Fund accounts for the cost of fire prevention facilities and equipment. Storm Sewer Construction Fund accounts for the construction of drains, basins, channels and other storm sewer improvements. Capital Projects Funds (cont.) Streets Construction Fund accounts for the cost of right-of-way acquisitions and street improvements. Parks Construction Fund accounts for the cost of new park site acquisitions as well as improvements. Law Enforcement Construction Fund accounts for the cost of public safety facilities. Library Construction Fund accounts for the cost of improvements to the main library and expansion of branches. Service Center Construction Fund accounts for the cost of improvements to the 6th Street service center. Capital Leases Construction Fund accounts for the cost of acquiring various computer equipment, communications equipment and public improvements within the City. CITY OF MESA, ARIZONA EXHIBIT C-1 NON-MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2009 Special Revenue Funds Capital Projects Funds Debt Service Funds Total Non-major Governmental Funds ASSETS Cash and Cash Equivalents Accounts Receivable Accrued Interest Receivable Due From Other Governments Prepaid Costs Restricted Assets: Cash and Cash Equivalents Special Assessments Receivable $ 25,508,053 61,549 21,241 2,805,526 424 Total Assets LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable Due To Other Funds Customer Deposits Payable From Restricted Assets: Accrued Lease Interest Payable Accrued Bond Interest Payable Deferred Revenue Matured General Obligation Bonds Payable Matured Highway User Revenue Bonds Payable Matured Capital Leases Payable - $ 50,021,915 13,850 - - 28,319,908 6,630,484 - $ 28,396,793 $ 34,950,392 $ 50,035,765 $ 113,382,950 $ $ $ $ 5,519,695 2,641,400 1,241 510,305 2,641,400 1,241 $ - 5,009,390 - $ 75,529,968 75,399 21,241 2,805,526 424 28,319,908 6,630,484 - 12,320 9,406,329 6,630,484 16,392,910 - 12,320 9,406,329 6,630,484 16,392,910 - 2,025,000 483,349 - 2,025,000 483,349 3,152,946 34,950,392 5,009,390 43,112,728 Fund Balances: Reserved For Encumbrances Reserved For Prepaid Costs Unreserved 427,819 424 24,815,604 - 16,583,997 28,442,378 17,011,816 424 53,257,982 Total Fund Balances 25,243,847 - 45,026,375 70,270,222 $ 28,396,793 $ 34,950,392 $ 50,035,765 Total Liabilities Total Liabilities and Fund Balances 84 $ 113,382,950 CITY OF MESA, ARIZONA EXHIBIT C-2 NON-MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Special Revenue Funds Revenues: Special Assessments Licenses and Permits Intergovernmental Charges For Services Fees and Forfeitures Investment Income Miscellaneous Total Revenues Expenditures: Current: Public Safety Cultural - Recreational Community Environment Debt Service: Principal Retirement Interest on Bonds Interest on Leases Service Charges Capital Outlay Total Expenditures Deficiency of Revenues Under Expenditures Other Financing Sources (Uses): Transfers In Transfers Out Face Amount of Bonds Issued Premium on Issuance of Bonds Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending $ 3,202,525 17,359,688 5,030,974 701,940 190,341 293,045 Capital Projects Funds Debt Service Funds $ 1,202,384 - $ Total Non-major Governmental Fund 16,022 $ 1,202,384 3,202,525 17,359,688 5,030,974 701,940 190,341 309,067 26,778,513 1,202,384 16,022 27,996,919 3,653,689 10,000 19,084,531 - - 3,653,689 10,000 19,084,531 4,495,115 36,905,901 18,219,451 625,773 27,738 - 32,574,678 36,905,901 18,219,451 625,773 27,738 37,069,793 27,243,335 55,778,863 32,574,678 115,596,876 (464,822) (54,576,479) (32,558,656) (87,599,957) 4,350,700 (4,054,384) - 54,609,823 (33,344) - (30,405) 61,830,000 436,509 58,960,523 (4,118,133) 61,830,000 436,509 54,576,479 62,236,104 117,108,899 - 29,677,448 29,508,942 - 15,348,927 40,761,280 - $ 45,026,375 296,316 (168,506) 25,412,353 $ 25,243,847 85 $ $ 70,270,222 CITY OF MESA, ARIZONA EXHIBIT C-3 NON-MAJOR SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET JUNE 30, 2009 Local Transportation Assistance Mesa Housing Authority Cemetery Public Art Development Impact Fees ASSETS Cash and Cash Equivalents Accounts Receivable Accrued Interest Receivable Due From Other Governments Prepaid Costs $ 47 127 1,822,724 249 $ 1,366,569 1,480 139,738 - $ 7,343,814 61,549 6,052 175 $ 27,021 142 - $ 9,944,845 8,403 - Total Assets $ 1,823,147 $ 1,507,787 $ 7,411,590 $ 27,163 $ 9,953,248 $ 22,498 1,800,300 - $ $ $ 10,000 - $ 84,445 - LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable Due To Other Funds Customer Deposits Total Liabilities 236,226 - 4,928 1,241 1,822,798 236,226 6,169 10,000 84,445 Fund Balances: Reserved For Encumbrances Reserved For Prepaid Costs Unreserved 43 249 57 1,271,561 213 175 7,405,033 17,163 5,947 9,862,856 Total Fund Balances 349 1,271,561 7,405,421 17,163 9,868,803 1,823,147 $ 1,507,787 $ 7,411,590 Total Liabilities and Fund Balances $ 86 $ 27,163 $ 9,953,248 EXHIBIT C-3 (Continued) Court Construction Fee Mesa Arts Center Restoration Regional Transportation Plan Environmental Compliance Vehicle Replacement Total $ 904,238 673 - $ 891,643 658 - $ 474,697 843,064 - $ 580,551 2,153 - $ 3,974,628 1,553 - $ 25,508,053 61,549 21,241 2,805,526 424 $ 904,911 $ 892,301 $ 1,317,761 $ 582,704 $ 3,976,181 $ 28,396,793 $ - $ - $ 1,681 841,100 - $ 122,302 - $ 28,225 - $ $ 510,305 2,641,400 1,241 $ - - 842,781 122,302 28,225 3,152,946 904,911 892,301 104,315 370,665 1,652 458,750 315,649 3,632,307 427,819 424 24,815,604 904,911 892,301 474,980 460,402 3,947,956 25,243,847 904,911 $ 892,301 $ 1,317,761 $ 87 582,704 $ 3,976,181 $ 28,396,793 CITY OF MESA, ARIZONA EXHIBIT C-4 NON-MAJOR SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Local Transportation Assisistance Revenues: Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Miscellaneous $ 4,581,048 1,709 77,409 Mesa Housing Authority $ 10,957,778 14,139 31,344 Public Art Cemetery $ 1,142,887 54,965 420 $ Development Impact Fees 2,069 - $ 3,202,525 78,021 - Total Revenues 4,660,166 11,003,261 1,198,272 2,069 3,280,546 Expenditures: Current: Public Safety Cultural-Recreational Community Environment Capital Outlay 6,394,921 21,845 11,700,466 - 989,144 117,337 10,000 281,140 189,069 Total Expenditures 6,416,766 11,700,466 1,106,481 291,140 189,069 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,756,600) (697,205) 91,791 Other Financing Sources (Uses): Transfers In Transfers Out 1,789,700 (33,614) (4,000) - - (3,912,770) Total Other Financing Sources (Uses) 1,756,086 (4,000) - - (3,912,770) (701,205) 91,791 Net Change in Fund Balances (514) Fund Balances - Beginning Fund Balances - Ending $ (289,071) (289,071) 863 1,972,766 7,313,630 306,234 349 $ 1,271,561 $ 7,405,421 $ 17,163 88 3,091,477 (821,293) 10,690,096 $ 9,868,803 EXHIBIT C-4 (Continued) Court Construction Fee $ 701,940 10,726 - Mesa Arts Center Restoration $ $ 1,820,862 - Environmental Compliance $ 3,689,975 6,366 - Vehicle Replacement $ 17,066 183,872 Total $ 3,202,525 17,359,688 5,030,974 701,940 190,341 293,045 712,666 203,392 1,820,862 3,696,341 200,938 26,778,513 1,411,043 - 1,244,581 3,653,689 107 1,229,993 3,653,689 10,000 19,084,531 4,495,115 1,411,043 - 1,244,581 3,653,796 1,229,993 27,243,335 203,392 576,281 42,545 (698,377) (1,029,055) (464,822) - - (104,000) - 2,561,000 - - - (104,000) - 2,561,000 296,316 (168,506) (698,377) 1,603,288 $ 198,112 5,280 - Regional Transportation Plan 904,911 $ 203,392 472,281 42,545 1,531,945 688,909 2,699 417,857 2,416,011 892,301 $ 474,980 $ 89 460,402 $ 3,947,956 4,350,700 (4,054,384) 25,412,353 $ 25,243,847 CITY OF MESA, ARIZONA EXHIBIT C-5 NON-MAJOR DEBT SERVICE FUNDS COMBINING BALANCE SHEET JUNE 30, 2009 General Obligation Bond Redemption Special Assessment Bond Redemption Municipal Development Corporation Bond Redemption ASSETS Restricted Assets: Cash and Cash Equivalents Special Assesments Receivable $ 22,189,475 - $ 198,430 6,630,484 $ - Total Assets $ 22,189,475 $ 6,828,914 $ - $ $ 198,430 6,630,484 - $ - LIABILITIES AND FUND BALANCES Liabilities Payable From Restricted Assets: Accrued Lease Interest Payable Accrued Bond Interest Payable Deferred Revenue - Special Assessments Matured General Obligation Bonds Payable Matured Highway User Revenue Bonds Payable Matured Capital Leases Payable Total Liabilities Fund Balances-Reserved For Debt Service Total Liabilities and Fund Balances 5,796,565 16,392,910 22,189,475 6,828,914 - - - - $ 22,189,475 90 $ 6,828,914 $ - EXHIBIT C-5 (Continued) Capital Lease Redemption Highway User Revenue Bond Redemption $ 495,669 - $ 5,436,334 - $ 28,319,908 6,630,484 $ 495,669 $ 5,436,334 $ 34,950,392 $ 12,320 483,349 $ 3,411,334 2,025,000 - $ $ Total 12,320 9,406,329 6,630,484 16,392,910 2,025,000 483,349 495,669 5,436,334 34,950,392 - - - 5,436,334 $ 34,950,392 495,669 $ 91 CITY OF MESA, ARIZONA EXHIBIT C-6 NON-MAJOR DEBT SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2009 General Obligation Bond Redemption Revenues: Special Assessments $ Total Revenues - Special Assessment Bond Redemption $ 1,202,384 Municipal Development Corporation Bond Redemption $ - - 1,202,384 - Expenditures: Debt Service: Principal Retirement Interest on Bonds Interest on Leases Service Charges 16,392,910 10,939,479 6,322 752,000 417,040 - 9,970,000 40,264 15,048 Total Expenditures 27,338,711 1,169,040 10,025,312 Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Transfers In Transfers Out Total Other Financing Sources (Uses) (27,338,711) 33,344 (10,025,312) 27,338,711 27,338,711 (33,344) (33,344) 10,025,312 10,025,312 Net Change In Fund Balances - - - Fund Balances - Beginning - - - Fund Balances - Ending $ 92 - $ - $ - EXHIBIT C-6 (Continued) Capital Lease Redemption Highway User Revenue Bond Redemption $ $ $ - - Total $ 1,202,384 - - 1,202,384 7,765,991 625,773 - 2,025,000 6,822,668 6,368 36,905,901 18,219,451 625,773 27,738 8,391,764 8,854,036 55,778,863 (8,391,764) (8,854,036) (54,576,479) 8,391,764 8,391,764 8,854,036 8,854,036 54,609,823 (33,344) 54,576,479 - - - - - - - $ - $ - 93 CITY OF MESA, ARIZONA EXHIBIT C-7 NON-MAJOR CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET JUNE 30, 2009 Fire Storm Sewer Streets Cash and Cash Equivalents Accounts Receivable $ 14,188,461 - $ 1,523,860 - $ 19,303,385 - $ 16,871 - Total Assets $ 14,188,461 $ 1,523,860 $ 19,303,385 $ 16,871 LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable $ $ $ $ - Parks ASSETS Total Liabilities Fund Balances: Reserved For Encumbrances Unreserved Total Fund Balances Total Liabilities and Fund Balances 191,233 423,804 1,584,246 191,233 423,804 1,584,246 - 4,278,333 9,718,895 229,663 870,393 5,246,168 12,472,971 16,871 13,997,228 1,100,056 17,719,139 16,871 $ 14,188,461 $ 1,523,860 $ 19,303,385 94 $ 16,871 EXHIBIT C-7 (Continued) Law Enforcement Service Center Library Capital Leases Total $ 13,708,517 - $ 895,741 - $ 293 - $ 384,787 13,850 $ 50,021,915 13,850 $ 13,708,517 $ 895,741 $ 293 $ 398,637 $ 50,035,765 $ $ - $ - $ - 2,810,107 $ 5,009,390 2,810,107 - - - 5,009,390 6,827,733 4,070,677 2,100 893,641 293 398,637 16,583,997 28,442,378 10,898,410 895,741 293 398,637 45,026,375 398,637 $ 50,035,765 $ 13,708,517 $ 895,741 $ 293 $ 95 CITY OF MESA, ARIZONA EXHIBIT C-8 NON-MAJOR CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Storm Sewer Fire Revenues: Miscellaneous $ - $ Streets - $ 16,022 Parks $ - Total Revenues - - 16,022 - Expenditures: Capital Outlay 2,770,150 3,694,434 5,669,740 52 Total Expenditures 2,770,150 3,694,434 5,669,740 52 Deficiency of Revenues Under Expenditures (2,770,150) (3,694,434) (5,653,718) (52) Other Financing Sources (Uses): Transfers Out Face Amount of Bonds Issued Premium on Issuance of Bonds 14,769,910 104,267 2,695,000 19,032 22,370,000 157,929 - Total Other Financing Sources (Uses) 14,874,177 2,714,032 22,527,929 - Net Change in Fund Balances 12,104,027 Fund Balances - Beginning Fund Balances - Ending (980,402) 16,874,211 1,893,201 2,080,458 844,928 $ 13,997,228 $ 1,100,056 $ 17,719,139 96 (52) 16,923 $ 16,871 EXHIBIT C-8 (Continued) Law Enforcement $ - Service Center Library $ - $ Capital Leases - $ Total - $ 16,022 - - - - 16,022 19,441,424 47,526 33,771 917,581 32,574,678 19,441,424 47,526 33,771 917,581 32,574,678 (19,441,424) (47,526) (33,771) (917,581) (32,558,656) 21,995,090 155,281 - - (30,405) - (30,405) 61,830,000 436,509 22,150,371 - - (30,405) 62,236,104 (947,986) 29,677,448 2,708,947 (47,526) (33,771) 8,189,463 943,267 34,064 1,346,623 15,348,927 $ 10,898,410 $ 895,741 293 $ 398,637 $ 45,026,375 $ 97 INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government and to other government units, on a cost reimbursement basis. Warehouse, Maintenance and Services Fund was established to finance and account for services and commodities furnished by Fleet Support, Materials and Supply, and Printing and Graphics. Property and Public Liability Self-Insurance Fund was established to account for the cost of claims incurred by the City under a self-insurance program. Workers’ Compensation Self-Insurance Fund was established to account for the costs of maintaining a self-insurance program for industrial insurance at the City. Employee Benefit Self-Insurance Fund was established to account for the costs of maintaining the City’s self-insurance health program. CITY OF MESA, ARIZONA EXHIBIT C-9 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET ASSETS JUNE 30, 2009 Warehouse, Maintenance and Services ASSETS Current Assets: Cash and Cash Equivalents Investments Accounts Receivable Accrued Premiums Receivable Accrued Interest Receivable Due From Other Governments Inventory Prepaid Costs Total Current Assets Capital Assets: Buildings Other Improvements Machinery and Equipment Construction in Progress $ 696,177 38,828 4,462,097 824 5,197,926 Property and Public Liability Self Insurance $ 12,485,024 580,821 9,917 481,861 13,557,623 2,014,156 5,088,624 2,068,032 3,572 9,174,384 (4,790,998) 4,383,386 Less Accumulated Depreciation Net Capital Assets Total Assets - 9,581,312 13,557,623 841,338 603 98,744 940,082 6,025,000 17,450,000 23,475,603 Long-Term Liabilities Compensated Absences Post Employment Benefits Total Long-Term Liabilities Total Liabilities 771,804 2,132,676 2,904,480 3,844,562 23,475,603 Net Assets: Invested in Capital Assets, Net of Related Debt Unrestricted Total Net Assets 4,383,386 1,353,364 5,736,750 (9,917,980) (9,917,980) LIABILITIES AND FUND EQUITY Current Liabilities: Accounts Payable Other Accrued Expenses: Estimated Liability For Claims: Incurred-Not Reported Incurred and Pending Current Portion of Compensated Absences Total Current Liabilities $ 98 $ EXHIBIT C-9 (Continued) Workers' Compensation Self Insurance Employee Benefits Self Insurance Total $ 11,466,848 61,336 9,837 206,351 11,744,372 $ 17,123,384 5,016,050 80,061 676,006 19,444 194 22,915,139 $ 41,771,433 5,016,050 722,218 676,006 39,198 38,828 4,462,097 689,230 53,415,060 - - 11,744,372 22,915,139 57,798,446 211,860 471,508 1,525,309 13,350 6,949,280 7,174,490 3,793,067 4,264,575 9,831,417 24,399,280 98,744 35,854,750 7,174,490 4,264,575 771,804 2,132,676 2,904,480 38,759,230 4,569,882 4,569,882 18,650,564 $ 18,650,564 4,383,386 14,655,830 $ 19,039,216 $ 2,014,156 5,088,624 2,068,032 3,572 9,174,384 (4,790,998) 4,383,386 99 CITY OF MESA, ARIZONA EXHIBIT C-10 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Warehouse, Maintenance and Services Property and Public Liability Self Insurance $ $ Operating Revenues: Charges For Services: Material and Supply Printing and Graphics 1,126,158 - 938,855 - 16,010,543 - Employee - - City - 4,301,000 State Retirement System - - - 580,821 18,075,556 4,881,821 Fleet Support Services Self-Insurance Contributions: Other Total Operating Revenues Operating Expenses: Material and Supply 1,173,595 - Printing and Graphics 1,085,344 - Fleet Support Services 17,002,994 - Administrative Costs - 851,370 Claims Incurred - 8,226,987 Premiums to Insurance Carriers - 1,053,864 Total Operating Expenses 19,261,933 10,132,221 Operating Income (Loss) Before Depreciation (1,186,377) (5,250,400) Depreciation (412,069) Operating Income (Loss) - (1,598,446) (5,250,400) Nonoperating Revenues (Expense): Investment Income - Interest Expense Total Nonoperating Revenues (Expenses) Net Income (Loss) Before Transfers and Capital Contributions 87,509 (151) - (151) 87,509 (1,598,597) Capital Contributions Transfers In Change in Net Assets (5,162,891) 24,642 - 8,000 - (1,565,955) Total Net Assets - Beginning (5,162,891) 7,302,705 Total Net Assets - Ending $ 100 5,736,750 (4,755,089) $ (9,917,980) EXHIBIT C-10 (Continued) Workers' Compensation Self Insurance Employee Benefits Self Insurance $ $ - $ 1,126,158 - - 938,855 - - 16,010,543 - 11,771,598 11,771,598 3,847,080 35,920,708 44,068,788 - 2,969,291 2,969,291 - 40,033 620,854 3,847,080 50,701,630 77,506,087 - - 1,173,595 - - 1,085,344 - - 17,002,994 833,745 4,169,489 5,854,604 2,961,769 44,438,167 55,626,923 368,695 471,551 1,894,110 4,164,209 49,079,207 82,637,570 1,622,423 (5,131,483) - (412,069) 1,622,423 (5,543,552) (317,129) (317,129) 83,067 181,290 - - 83,067 181,290 (234,062) 351,866 (151) 351,715 1,803,713 (5,191,837) - - 24,642 - - 8,000 (234,062) 1,803,713 4,803,944 $ - Total 4,569,882 (5,159,195) 16,846,851 $ 18,650,564 24,198,411 $ 19,039,216 101 CITY OF MESA, ARIZONA EXHIBIT C-11 INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Warehouse, Maintenance and Services Cash Flows From Operating Activities: Cash Received From Users Cash Payments To Suppliers Cash Payments To Employees $ Net Cash Provided By (Used For) Operating Activities 18,071,586 (11,789,633) (6,337,335) (55,382) Cash Flows From Noncapital Financing Activities: Operating Transfers-In From Other Funds 32,642 Net Cash Provided By Noncapital Financing Activities 32,642 Cash Flows From Capital and Related Financing Activities: Acquisition and Construction of Capital Assets Principal Paid on Lease Maturities Interest Paid on Leases 12,443 (6,539) (151) Net Cash Provided By Capital and Related Financing Activities 5,753 Cash Flows From Investing Activities: Purchase of Investment Securities Interest Received on Investments - Net Cash Provided By (Used For) Investing Activities - Net Increase (Decrease) in Cash and Cash Equivalents (16,987) Cash and Cash Equivalents at Beginning of Year 713,164 Cash and Cash Equivalents at End of Year $ 696,177 Reconciliation of Operating Income (Loss) to Net Cash Provided By Operating Activities: Operating Income (Loss) $ Adjustments to Reconcile Operating Income (Loss) to Net Cash Used Provided By Operating Activities: Depreciation Changes in Assets and Liabilities: (Increase) Decrease in Receivables Decrease in Inventory Increase (Decrease) in Prepaid Costs Increase (Decrease) in Accounts Payable Increase (Decrease) in Other Accrued Expenses (1,598,446) 412,069 (3,970) 171,848 776 962,341 - Total Adjustments 1,543,064 Net Cash Provided By (Used For) Operating Activities $ 102 (55,382) EXHIBIT C-11 (Continued) Property and Public Liability Self Insurance enance Services $ 4,301,000 (2,634,744) (827,848) $ 3,802,650 (2,999,474) (347,907) $ Total 50,570,436 (49,676,621) (1,331,845) $ 455,269 - - - 32,642 - - - 32,642 - - - 12,443 (6,539) (151) - - - 5,753 130,838 113,465 (5,016,050) 245,937 (5,016,050) 490,240 130,838 113,465 (4,770,113) (4,525,810) 969,246 568,734 (5,208,143) (3,687,150) 11,515,779 10,898,114 22,331,526 45,458,583 12,485,025 $ $ (5,250,400) $ - 11,466,848 (317,129) (438,030) 76,745,672 (67,100,472) (8,844,935) 838,408 $ $ Employee Benefits Self Insurance Workers' Compensation Self Insurance 800,265 $ 17,123,383 $ 41,771,433 $ 1,622,423 $ (5,543,552) - - 412,069 (580,820) (1,277) (4,095) 9,550,000 44,430 (206,351) 210,792 723,527 (131,193) (4) (71,926) (1,857,330) (671,553) 171,848 (206,856) 1,097,112 8,416,197 8,963,808 772,398 (2,060,453) 9,218,817 3,713,408 $ 455,269 $ (438,030) $ 103 3,675,265 FIDUCIARY FUND The Fiduciary Fund accounts for assets held by the City in a custodial capacity for the benefit of a third party and cannot be used to address activities or obligations of the City. The Payroll Agency Fund accounts for all payroll transactions. CITY OF MESA, ARIZONA EXHIBIT C-12 AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Balance July 1, 2008 PAYROLL AGENCY FUND Assets: Cash and Cash Equivalents Due From Other Funds Additions Balance June 30, 2009 Deductions $ 8,955,584 - $ 591,480,754 14,716,697 $ 591,381,626 14,716,697 $ 9,054,712 - Total Assets $ 8,955,584 $ 606,197,451 $ 606,098,323 $ 9,054,712 Liabilities: Accrued Payroll Payable $ 8,955,584 $ 367,799,920 $ 367,700,792 $ 9,054,712 Total Liabilities $ 8,955,584 $ 367,799,920 $ 367,700,792 $ 9,054,712 104 Supplemental Information CITY OF MESA, ARIZONA EXHIBIT D-1 GENERAL FUND SCHEDULE OF EXPENDITURES BY PROGRAM - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget General Government: Legislative Executive Mesa Gateway Area Town Center Development Judicial Legal Building Maintenance City Clerk Economic Development Engineering Financial Services E-Streets & Cable TV Licensing General Services Planning Capital Improvement Total General Government $ Final Budget 1,730,000 530,000 4,251,000 2,865,000 14,566,448 667,000 1,510,741 1,473,000 1,541,000 4,686,500 13,570,000 1,283,000 5,320,338 4,371,000 1,378,000 $ 1,730,000 819,411 4,409,737 2,865,000 14,566,448 966,736 1,510,741 1,473,000 1,511,831 4,686,500 13,570,000 1,698,426 5,981,104 4,353,007 1,378,000 Actual Amounts Budget Basis $ 1,422,970 819,411 4,409,737 2,102,991 12,673,516 966,736 1,405,207 1,319,425 1,205,307 1,082,528 6,928,971 1,698,426 5,981,104 2,576,750 1,079,655 Variance With Final Budget Positive (Negative) $ 307,030 762,009 1,892,932 105,534 153,575 306,524 3,603,972 6,641,029 1,776,257 298,345 59,743,027 61,519,941 45,672,734 5,429,070 304,126 5,847,242 304,126 5,264,452 970,214 54,009,831 55,368,573 39,438,068 15,930,505 Public Safety: Law Enforcement Fire Prevention Building Safety Code Compliance Environmental Management 189,165,837 75,916,889 8,471,000 2,622,750 370,808 189,154,529 75,745,751 8,471,000 2,622,750 370,808 169,845,643 66,212,884 6,913,896 2,246,156 277,213 19,308,886 9,532,867 1,557,104 376,594 93,595 Total Public Safety 276,547,284 276,364,838 245,495,792 30,869,046 10,469,419 9,712,974 10,412,052 9,712,974 5,805,265 10,266,809 $ 256,364,891 $ 256,239,812 $ 229,423,718 Less: Capital Outlay Expenditures Debt Service Expenditures Total Current Expenditures Less: Capital Outlay Expenditures Debt Service Expenditures Total Current Expenditures 105 15,847,207 582,790 (666,088) 4,606,787 (553,835) $ 26,816,094 CITY OF MESA, ARIZONA EXHIBIT D-1 (Continued) GENERAL FUND SCHEDULE OF EXPENDITURES BY PROGRAM - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Variance With Final Budget Positive (Negative) Original Budget Final Budget Actual Amounts Budget Basis $ 28,231,750 12,970,500 18,455,000 13,078,721 3,106,000 8,738,478 2,626,000 1,749,000 2,733,000 $ 28,231,750 12,947,000 18,455,000 13,078,721 3,106,000 17,985,754 2,626,000 1,749,000 2,732,811 $ 22,623,181 10,564,308 17,208,619 10,307,158 2,922,013 17,985,754 2,013,648 1,438,664 2,427,843 Total Cultural-Recreational 91,688,449 100,912,036 87,491,188 Less: Capital Outlay Expenditures Debt Service Expenditures 18,632,145 7,899,095 18,608,645 7,899,095 15,974,868 8,291,879 Total Current Expenditures 65,157,209 74,404,296 63,224,441 11,179,855 Community Environment: Community Development Streets Storm Sewer Mass Transit Miscellaneous Services 8,289,000 22,758,307 3,749,975 13,135,653 665,000 8,289,000 25,195,945 3,879,658 13,135,653 1,842,887 6,302,382 25,195,945 3,879,658 8,349,839 1,842,887 1,986,618 4,785,814 - Total Community Environment 48,597,935 52,343,143 45,570,711 6,772,432 Less: Capital Outlay Expenditures Debt Service Expenditures 19,732,596 3,629,939 22,170,234 3,759,622 16,324,538 3,897,040 5,845,696 (137,418) Total Current Expenditures 25,235,400 26,413,287 25,349,133 1,064,154 Contingencies 73,858,978 58,879,043 - 58,879,043 $ 550,435,673 $ 550,019,001 $ 424,230,425 Cultural-Recreational: Parks and Recreation Cultural Aquatics Library Community Aid Hohokam Stadium/Fitch Complex Museum of Natural History Museum for Youth Neighborhood & Human Services Total General Fund Expenditures 106 $ 5,608,569 2,382,692 1,246,381 2,771,563 183,987 612,352 310,336 304,968 13,420,848 2,633,777 (392,784) $ 125,788,576 CITY OF MESA, ARIZONA EXHIBIT D-2 HIGHWAY USER REVENUE FUND SCHEDULE OF EXPENDITURES BY PROGRAM - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Final Budget Actual Amounts Budget Basis Variance With Final Budget Positive (Negative) 41,591,998 1,257,271 41,551,412 1,257,271 36,789,913 1,416,022 4,761,499 (158,751) 42,849,269 42,808,683 38,205,935 4,602,748 1,107,821 8,847,668 1,091,225 8,847,668 1,036,465 8,854,036 32,893,780 32,869,790 28,315,434 4,554,356 683,000 723,586 - 723,586 $ 43,532,269 $ 43,532,269 $ 38,205,935 Original Budget Community Environment: Streets Storm Sewer Total Community Environment Less: Capital Outlay Expenditures Debt Service Expenditures Total Current Expenditures Contingencies Total Highway User Revenue Fund Expenditures 107 54,760 (6,368) $ 5,326,334 CITY OF MESA, ARIZONA EXHIBIT D-3 NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget LOCAL TRANSPORTATION ASSISTANCE FUND Revenues: Intergovernmental Investment Income Miscellaneous $ Actual Amounts Budgetary Basis Final Budget 6,207,000 1,000 4,000 $ 6,207,000 1,000 4,000 $ 4,581,048 1,709 77,409 Variance With Final Budget Positive (Negative) $ (1,625,952) 709 73,409 Total Revenues 6,212,000 6,212,000 4,660,166 (1,551,834) Expenditures: Current: Community Environment Capital Outlay 6,862,497 2,542,419 6,862,497 2,542,419 6,428,535 21,845 433,962 2,520,574 Total Expenditures 9,404,916 9,404,916 6,450,380 2,954,536 (3,192,916) (3,192,916) (1,790,214) 1,402,702 3,193,000 3,193,000 1,789,700 1,403,300 84 84 (514) (598) 915 915 863 (51) Deficiency of Revenues Under Expenditures Other Financing Sources: Transfers In Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ 999 108 $ 999 $ 349 $ (649) CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget Final Budget Actual Amounts Budgetary Basis $ 11,401,000 55,000 101,000 $ 11,401,000 55,000 101,000 $ 10,957,778 14,139 31,344 Total Revenues 11,557,000 11,557,000 11,003,261 Expenditures: Current: Community Environment Capital Outlay 11,467,000 - 11,700,466 4,000 11,700,466 4,000 - Total Expenditures 11,467,000 11,704,466 11,704,466 - MESA HOUSING AUTHORITY FUND Revenues: Intergovernmental Investment Income Miscellaneous Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ 90,000 (147,466) 531,961 531,961 621,961 109 $ 384,495 Variance With Final Budget Positive (Negative) $ (553,739) (701,205) (553,739) 1,972,766 $ 1,271,561 (443,222) (40,861) (69,656) 1,440,805 $ 887,066 CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget CEMETERY FUND Revenues: Charges For Services Investment Income Miscellaneous $ Actual Amounts Budgetary Basis Final Budget 1,392,000 301,000 - $ 1,392,000 301,000 - $ 1,142,887 54,965 420 Variance With Final Budget Positive (Negative) $ (249,113) (246,035) 420 Total Revenues 1,693,000 1,693,000 1,198,272 (494,728) Expenditures: Current: Community Environment Capital Outlay Contingencies 1,181,000 343,000 1,181,000 343,000 989,144 117,337 - 191,856 (117,337) 343,000 Total Expenditures 1,524,000 1,524,000 1,106,481 169,000 169,000 91,791 7,205,570 7,205,570 7,313,630 Net Change in Fund Balances Fund Balance - Beginning Fund Balance - Ending $ 7,374,570 110 $ 7,374,570 $ 7,405,421 417,519 (77,209) 108,060 $ 30,851 CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget PUBLIC ART FUND Revenues: Investment Income $ Total Revenues Actual Amounts Budgetary Basis Final Budget 8,000 $ 8,000 $ 2,069 Variance With Final Budget Positive (Negative) $ (5,931) 8,000 8,000 2,069 (5,931) Expenditures: Current: Cultural-Recreational Capital Outlay 304,000 304,000 10,000 281,140 (10,000) 22,860 Total Expenditures 304,000 304,000 291,140 12,860 (296,000) (296,000) (289,071) 6,929 306,577 306,577 306,234 Net Change in Fund Balances Fund Balance - Beginning Fund Balance - Ending $ 10,577 111 $ 10,577 $ 17,163 (343) $ 6,586 CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget DEVELOPMENT IMPACT FEES FUND Revenues: Licenses & Permits Investment Income Total Revenues $ Actual Amounts Budgetary Basis Final Budget 6,672,000 411,000 $ 6,672,000 411,000 $ 3,202,525 78,021 7,083,000 7,083,000 3,280,546 Variance With Final Budget Positive (Negative) $ (3,469,475) (332,979) (3,802,454) Expenditures: Capital Outlay Debt Service: Principal Retirement Interest on Bonds 650,000 650,000 189,069 460,931 2,693,343 3,428,808 2,693,343 3,428,808 1,468,766 2,444,004 1,224,577 984,804 Total Expenditures 6,772,151 6,772,151 4,101,839 2,670,312 310,849 310,849 10,331,246 10,331,246 $ 10,642,095 $ 10,642,095 Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending 112 (821,293) (1,132,142) 10,690,096 $ 9,868,803 358,849 $ (773,293) CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget COURT CONSTRUCTION FUND Revenues: Fines and Forfeitures Investment Income $ Actual Amounts Budgetary Basis Final Budget 707,000 48,000 $ 707,000 48,000 $ 701,940 10,726 Variance With Final Budget Positive (Negative) $ (5,060) (37,274) Total Revenues 755,000 755,000 712,666 Expenditures: Capital Outlay 1,410,552 1,411,043 1,411,043 - Total Expenditures 1,410,552 1,411,043 1,411,043 - Net Change in Fund Balance (655,552) Fund Balance - Beginning Fund Balance - Ending (656,043) 1,605,746 $ 950,194 113 (698,377) 1,605,746 $ 949,703 (42,334) (42,334) 1,603,288 $ 904,911 (2,458) $ (44,792) CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget MESA ARTS CENTER RESTORATION FUND Revenues: Charges For Services Investment Income $ Total Revenues Actual Amounts Budgetary Basis Final Budget 233,000 28,000 $ 233,000 28,000 $ Variance With Final Budget Positive (Negative) 198,112 5,280 $ (34,888) (22,720) 261,000 261,000 203,392 Expenditures: Current: Cultural-Recreational - - - - Total Expenditures - - - - Net Change in Fund Balances 261,000 261,000 203,392 (57,608) Fund Balance - Beginning 686,749 686,749 688,909 2,160 Fund Balance - Ending $ 947,749 114 $ 947,749 $ 892,301 (57,608) $ (55,448) CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget REGIONAL TRANSPORTATION PLAN FUND Revenues: Intergovernmental $ Actual Amounts Budgetary Basis Final Budget 1,578,000 $ 1,578,000 $ 1,820,862 Variance With Final Budget Positive (Negative) $ 242,862 Total Revenues 1,578,000 1,578,000 1,820,862 242,862 Expenditures: Current: Community Environment Capital Outlay 1,578,126 1,578,126 1,244,581 333,545 Total Expenditures 1,578,126 1,578,126 1,244,581 333,545 576,281 576,407 (104,000) (104,000) 472,281 472,407 2,699 43 Excess (Deficiency) of Revenues Over (Under) Expenditures (126) Other Financing Sources: Transfers Out - Net Change in Fund Balance - (126) Fund Balance - Beginning Fund Balance - Ending (126) (126) 2,656 $ 2,530 115 2,656 $ 2,530 $ 474,980 $ 472,450 CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget ENVIRONMENTAL COMPLIANCE FUND Revenues: Charges For Services Investment Income $ 3,200,000 3,000 Actual Amounts Budgetary Basis Final Budget $ 3,200,000 3,000 $ 3,689,975 6,366 Variance With Final Budget Positive (Negative) $ 489,975 3,366 Total Revenues 3,203,000 3,203,000 3,696,341 493,341 Expenditures: Current: Public Safety Capital Outlay Contingencies 3,227,192 415,000 - 3,188,135 415,000 50,661 3,653,689 107 - (465,554) 414,893 50,661 Total Expenditures 3,642,192 3,653,796 3,653,796 - Net Change in Fund Balances Fund Balance - Beginning Fund Balance - Ending $ (439,192) (450,796) 42,545 493,341 498,931 498,931 417,857 (81,074) 59,739 116 $ 48,135 $ 460,402 $ 412,267 CITY OF MESA, ARIZONA EXHIBIT D-3 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget VEHICLE REPLACEMENT FUND Revenues: Intergovernmental Investment Income Miscellaneous $ Actual Amounts Budgetary Basis Final Budget 226,000 180,000 $ 226,000 180,000 $ 17,066 183,872 Variance With Final Budget Positive (Negative) $ (208,934) 3,872 Total Revenues 406,000 406,000 200,938 Expenditures: Capital Outlay Contingencies 3,692,769 - 3,044,769 648,000 1,229,993 - 1,814,776 648,000 Total Expenditures 3,692,769 3,692,769 1,229,993 2,462,776 (Deficiency) of Revenues (Under) Expenditures (3,286,769) (3,286,769) (1,029,055) 2,257,714 Other Financing Sources: Transfers In 2,561,000 2,561,000 2,561,000 - 1,531,945 2,257,714 2,416,011 1,209,705 Net Change in Fund Balance (725,769) Fund Balance - Beginning Fund Balance - Ending (725,769) 1,206,307 $ 480,538 117 1,206,307 $ 480,538 $ 3,947,956 (205,062) $ 3,467,419 CITY OF MESA, ARIZONA EXHIBIT D-3 (Concluded) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget RECAP Revenues: Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Miscellaneous $ Actual Amounts Budgetary Basis Final Budget 6,672,000 19,186,000 4,825,000 707,000 1,081,000 285,000 $ 6,672,000 19,186,000 4,825,000 707,000 1,081,000 285,000 $ 3,202,525 17,359,688 5,030,974 701,940 190,340 293,046 Variance With Final Budget Positive (Negative) $ (3,469,475) (1,826,312) 205,974 (5,060) (890,660) 8,046 Total Revenues 32,756,000 32,756,000 26,778,513 (5,977,487) Expenditures: Current: Public Safety Cultural-Recreational Community Environment Capital Outlay Contingencies Principal Retirement Interest on Notes and Bonds 3,227,192 19,510,497 10,592,866 343,000 2,693,343 3,428,808 3,188,135 19,743,963 9,949,357 1,041,661 2,693,343 3,428,808 3,653,689 10,000 19,118,144 4,499,116 1,468,766 2,444,004 (465,554) (10,000) 625,819 5,450,241 1,041,661 1,224,577 984,804 Total Expenditures 39,795,706 40,045,267 31,193,719 8,851,548 Deficiency of Revenues Under Expenditures (7,039,706) (7,289,267) (4,415,206) 2,874,061 Other Financing Sources: Transfers In Transfers Out Net Change in Fund Balances 5,754,000 (1,285,706) 5,754,000 (1,535,267) 4,350,700 (104,000) (168,506) (1,403,300) (104,000) 1,366,761 Fund Balances - Beginning 22,376,658 22,376,658 25,412,353 $ 21,090,952 $ 20,841,391 $ 25,243,847 Fund Balances - Ending 118 3,035,695 $ 4,402,456 CITY OF MESA, ARIZONA EXHIBIT D-4 NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF EXPENDITURES BY PROGRAM - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget Actual Amounts Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) LOCAL TRANSPORTATION ASSISTANCE FUND Community Environment: Mass Transit $ 9,404,916 $ 9,404,916 $ 6,450,380 $ 2,954,536 Total Community Environment 9,404,916 9,404,916 6,450,380 2,954,536 Less: Capital Outlay Expenditures 2,542,419 2,542,419 21,845 2,520,574 Total Current Expenditures 6,862,497 6,862,497 6,428,535 433,962 Total Local Transportation Assistance Fund Expenditures $ 9,404,916 $ 9,404,916 $ 6,450,380 $ 2,954,536 $ 11,467,000 $ 11,704,466 $ 11,704,466 $ - MESA HOUSING AUTHORITY Community Environment Mesa Housing Authority Total Community Environment Less: Capital Outlay Expenditures Total Current Expenditures 11,467,000 11,704,466 11,704,466 - - 4,000 4,000 - 11,467,000 11,700,466 11,700,466 - Total Mesa Housing Authority Fund Expenditures $ 11,467,000 $ 11,704,466 $ 11,704,466 $ - $ 1,181,000 $ 1,181,000 $ 1,106,481 $ 74,519 CEMETERY FUND Community Environment: Cemetery Less: Capital Outlay Expenditures Total Current Expenditures Contingencies Total Cemetery Fund Expenditures $ - - 117,337 (117,337) 1,181,000 1,181,000 989,144 191,856 343,000 343,000 - 343,000 1,524,000 119 $ 1,524,000 $ 1,106,481 $ 417,519 CITY OF MESA, ARIZONA EXHIBIT D-4 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF EXPENDITURES BY PROGRAM - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget PUBLIC ART FUND Cultural Recreational: Cultural $ Total Cultural-Recreational Less: Capital Outlay Expenditures Total Current Expenditures Total Public Art Fund Expenditures DEVELOPMENT IMPACT FEES FUND Public Safety: Debt Service: Law Enforcement Fire Prevention 304,000 Actual Amounts Budgetary Basis Final Budget $ 304,000 $ 291,140 Variance With Final Budget Positive (Negative) $ 12,860 304,000 304,000 291,140 12,860 304,000 304,000 281,140 22,860 - - 10,000 (10,000) $ 304,000 $ 304,000 $ 291,140 $ 12,860 $ 1,647,007 1,057,111 $ 1,647,007 1,057,111 $ 671,089 447,250 $ 975,918 609,861 Total Public Safety Cultural-Recreational: Capital Outlay: Cultural Facilities Debt Service: Library Parks & Recreation 2,704,118 2,704,118 1,118,339 1,585,779 650,000 650,000 189,069 460,931 1,854,279 1,060,000 1,854,279 1,060,000 1,854,296 668,135 (17) 391,865 Total Cultural-Recreational Community Environment: Debt Service: Storm Sewer 3,564,279 3,564,279 2,711,500 852,779 503,754 503,754 272,000 231,754 503,754 503,754 272,000 231,754 Total Community Environment Total Development Impact Fees Fund Expenditures $ 6,772,151 120 $ 6,772,151 $ 4,101,839 $ 2,670,312 CITY OF MESA, ARIZONA EXHIBIT D-4 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF EXPENDITURES BY PROGRAM - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget Actual Amounts Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) COURT CONSTRUCTION FUND General Government: Capital Outlay: Judicial $ Total General Government Less: Capital Outlay Expenditures Total Current Expenditures Total Court Construction Fund Expenditures 1,410,552 $ 1,411,043 $ 1,411,043 $ - 1,410,552 1,411,043 1,411,043 - 1,410,552 1,411,043 1,411,043 - - - - - $ 1,410,552 $ 1,411,043 $ 1,411,043 $ - $ - $ - $ - $ - MESA ARTS CENTER RESTORATION FUND Cultural-Recreational: Capital Outlay: Cultural Total Cultural-Recreational - - - - Less: Capital Outlay Expenditures - - - - Total Current Expenditures - - - - Total Mesa Arts Center Restoration Fund Expenditures $ - $ - $ - $ - $ 1,578,126 $ 1,578,126 $ 1,244,581 $ 333,545 REGIONAL TRANSPORTATION PLAN FUND Community Environment: Capital Outlay: Streets Total Community Environment 1,578,126 1,578,126 1,244,581 333,545 Less: Capital Outlay Expenditures 1,578,126 1,578,126 1,244,581 333,545 - - - - Total Current Expenditures Total Regional Transportation Plan Fund Expenditures $ 1,578,126 121 $ 1,578,126 $ 1,244,581 $ 333,545 CITY OF MESA, ARIZONA EXHIBIT D-4 (Continued) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF EXPENDITURES BY PROGRAM - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget Final Budget Actual Amounts - Budgetary Basis Variance With Final Budget Positive (Negative) $ $ ENVIRONMENTAL COMPLIANCE FUND Public Safety: Environmental Management $ Total Public Safety 3,642,192 $ 3,642,192 Less: Capital Outlay Expenditures Total Current Expenditures 3,603,135 3,603,135 3,653,796 3,653,796 415,000 415,000 107 3,227,192 3,188,135 3,653,689 - 50,661 - Contingencies (50,661) (50,661) 414,893 (465,554) 50,661 Total Environmental Compliance Fund Expenditures $ 3,642,192 $ 3,653,796 $ 3,653,796 $ - $ 162,259 $ 162,259 $ 65,032 $ 97,227 VEHICLE REPLACEMENT FUND Capital Outlay: General Government Building Maintenance Engineering 100,500 100,500 General Services 123,662 25,420 Fleet Services Total General Government - 100,500 123,662 42,964 80,698 25,420 24,642 778 411,841 411,841 132,638 279,203 631,156 631,156 111,426 519,730 Public Safety Law Enforcement Fire 50,000 50,000 31,858 18,142 Building Inspection 67,000 67,000 - 67,000 Code Compliance 34,250 34,250 - 34,250 Total Public Safety 782,406 782,406 143,284 639,122 Cultural-Recreational Parks and Recreation 168,250 168,250 - 168,250 Cultural 33,500 33,500 - 33,500 Mesa Conv Ctr 34,250 34,250 - 34,250 Hohokam/Fitch 48,522 48,522 - 48,522 284,522 284,522 - 284,522 2,214,000 1,566,000 953,997 612,003 Total Cultural-Recreational Community Environment Streets - - 73 Total Community Environment Mesa Housing Authority 2,214,000 1,566,000 954,070 611,930 Total Capital Outlay 3,692,769 3,044,769 1,229,993 1,814,777 Less: Capital Outlay Expenditures 3,692,769 3,044,769 1,229,993 1,814,777 - - - - Total Current Expenditures Contingencies Total Vehicle Replacement Fund Expenditures $ 3,692,769 122 648,000 $ 3,692,769 (73) $ 1,229,993 648,000 $ 2,462,777 CITY OF MESA, ARIZONA EXHIBIT D-4 (Concluded) NON-MAJOR SPECIAL REVENUE FUNDS SCHEDULE OF EXPENDITURES BY PROGRAM - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget Final Budget Actual Amounts - Budgetary Basis Variance With Final Budget Positive (Negative) RECAP General Government $ 1,822,393 $ 1,822,884 $ 1,543,681 $ 279,203 Public Safety 7,128,716 7,089,659 4,915,419 2,174,240 Cultural-Recreational 4,152,801 4,152,801 3,002,640 1,150,161 26,348,796 25,938,262 21,731,979 4,206,283 343,000 1,041,661 - 1,041,661 Community Environment Contingencies Total Nonmajor Special Revenue Funds Expenditures $ 39,795,706 123 $ 40,045,267 $ 31,193,719 $ 8,851,548 CITY OF MESA, ARIZONA EXHIBIT D-5 NON-MAJOR CAPITAL PROJECT FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget CAPITAL PROJECTS FUNDS Revenues: Intergovernmental Miscellaneous $ Final Budget Actual Variance With Final Budget Positive (Negative) - $ - - $ - 6,948 243,693 6,948 243,693 Total Revenues - - 250,641 250,641 Expenditures: Capital Outlay 208,101,000 208,101,000 113,184,759 94,916,241 Total Expenditures 208,101,000 208,101,000 113,184,759 94,916,241 (208,101,000) (208,101,000) (112,934,118) 95,166,882 200,282,222 5,914,000 200,282,222 5,914,000 121,730,000 843,865 5,639,400 (78,552,222) 843,865 (274,600) Deficiency of Revenues Under Expenditures Other Financing Sources: Face Amount of Bonds Issued Premium on Issuance of Bonds Transfers In Net Change in Fund Balances (1,904,778) (1,904,778) 15,279,147 17,183,925 Fund Balances-Beginning 68,633,033 68,633,031 77,694,192 9,061,161 66,728,255 $ 66,728,253 $ 92,973,339 $ Fund Balances-Ending $ Budget Basis Actual amounts (budgetary basis) "Net Change in Fund Balances" from the budgetary comparison schedule $ Perspective Differences: Proprietary Capital Project Funds 15,279,147 15,346,287 Entity Differences: Non-Budgeted Capital Leases (947,986) GAAP Basis Actual amount (GAAP basis) "Net Change in Fund Balance" as reported on the Statement of Revenues, Expenditures and Changes in Fund Balances - Non-major Capital Project Funds Exhibit C-8 124 $ 29,677,448 26,245,086 CITY OF MESA, ARIZONA EXHIBIT D-6 ENTERPRISE FUND SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - BUDGET AND ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget Final Budget Actual Amounts Budgetary Basis $ 36,400,000 48,079,000 113,271,000 60,114,000 49,019,000 9,355,000 2,503,000 3,792,000 778,000 (1,100,000) $ 36,400,000 48,079,000 113,271,000 60,114,000 49,019,000 9,355,000 2,503,000 3,792,000 778,000 (1,100,000) $ 36,440,435 42,370,093 100,774,252 57,394,010 47,086,307 5,190,067 2,311,121 2,736,663 834,376 (1,167,092) 322,211,000 322,211,000 293,970,232 (28,240,768) 29,919,000 41,141,000 60,245,000 52,191,000 35,040,000 10,011,000 3,444,000 7,168,750 2,198,000 52,700,022 29,894,326 41,028,677 60,183,639 52,148,232 35,040,000 10,011,000 3,394,000 7,094,590 2,198,000 53,065,308 29,408,447 32,831,217 54,499,481 49,815,792 28,806,953 4,807,474 2,765,167 4,413,526 949,074 - 485,879 8,197,460 5,684,158 2,332,440 6,233,047 5,203,526 628,833 2,681,064 1,248,926 53,065,308 294,057,772 294,057,772 208,297,131 85,760,641 Income Before Transfers 28,153,228 28,153,228 85,673,101 57,519,873 Other Operating Uses: Transfers Out 79,595,000 79,595,000 96,599,000 (17,004,000) Change in Net Assets (51,441,772) (51,441,772) (10,925,899) 40,515,873 69,013,462 69,013,462 64,438,818 (4,574,644) (17,571,690) (17,571,690) Revenues: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center District Cooling Less: Bad Debt Expense Total Revenues Expenses: Electric Gas Water Wastewater Solid Waste Airport Golf Course Convention Center District Cooling Contingencies Total Expenses Unappropriated Net Assets - Beginning (Increase) Decrease in Restricted Net Assets Unappropriated Net Assets - Ending $ - 125 $ - Variance With Final Budget Positive (Negative) $ (140,211) $ 53,372,708 40,435 (5,708,907) (12,496,748) (2,719,990) (1,932,693) (4,164,933) (191,879) (1,055,337) 56,376 (67,092) 17,431,479 $ 53,372,708 CITY OF MESA, ARIZONA EXHIBIT D-7 ENTERPRISE FUND RECONCILIATION OF BUDGET TO GAAP CHANGES IN NET ASSETS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Budget Basis Actual Amounts (Budgetary Basis) "Change in Net Assets" from Exhibit D-6 $ (10,925,899) Basis Differences: Compensated Absences Post Employment Benefits Capitalized Interest Contractual Commitments Utility Revenue Accrual Increase of Fair Market Value of Investments (309,472) (9,493,141) 4,086,711 408,457 333,774 50,723 Perspective Differences: Grants and Contributions 24,088,276 Timing Differences: Water Rights Capital Expenditures Depreciation - Amortization Investment in Joint Ventures Non-Cash Loss on Disposal of Capital Assets Bond Principal and Reserves Amortization of Bond Premiums Deferred Amounts on Refundings Accretion of Certificates of Supplemental Interest Deferred Revenue 866,180 8,774,080 (54,688,319) (14,591,141) (1,402,469) 15,786,490 2,120,574 (2,004,283) 12,828 (3,594) GAAP Basis Actual Amount (GAAP Basis) "Change in Net Assets" from Exhibit A-8 $ 126 (36,890,225) CITY OF MESA, ARIZONA EXHIBIT D-8 INTERNAL SERVICE FUNDS SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - BUDGET TO ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget Final Budget Actual Amounts Budgetary Basis Variance With Final Budget Positive (Negative) WAREHOUSE, MAINTENANCE AND SERVICES Revenues: Charges For Services: Materials and Supply Printing and Graphics Fleet Support Services $ 1,181,467 1,402,195 18,825,555 $ 1,181,467 1,402,195 18,825,555 $ 1,126,158 938,854 16,010,543 $ (55,309) (463,341) (2,815,012) Total Revenues 21,409,217 21,409,217 18,075,555 (3,333,662) Expenses: Materials and Supply Printing and Graphics Fleet Support Services Contingencies 1,181,467 1,402,195 18,851,135 - 1,347,814 1,402,959 18,851,135 - 1,292,504 939,619 15,856,711 - 55,310 463,340 2,994,424 - Total Expenses 21,434,797 21,601,908 18,088,834 3,513,074 Loss Before Transfers (25,580) Transfers In - Change in Net Assets Unappropriated Net Assets - Beginning Unappropriated Net Assets - Ending (192,691) $ - (25,580) (192,691) (739) (739) (26,319) 127 (13,279) $ (193,430) 179,412 8,000 8,000 (5,279) 187,412 81 $ (5,198) 820 $ 188,232 CITY OF MESA, ARIZONA EXHIBIT D-8 INTERNAL SERVICE FUNDS SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - BUDGET TO ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget Actual Amounts Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) PROPERTY AND PUBLIC LIABILITY FUND Revenues: Investment Income Contributions Miscellaneous $ 579,000 4,301,000 32,000 $ 579,000 4,301,000 32,000 $ 87,509 4,301,000 633,291 $ (491,491) 601,291 Total Revenues 4,912,000 4,912,000 5,021,800 109,800 Expenses: Administrative and Other Fees Claims Incurred 2,496,978 2,387,022 2,496,978 2,387,022 1,905,233 1,604,458 591,745 782,564 Total Expenses 4,884,000 4,884,000 3,509,691 1,374,309 28,000 28,000 1,512,109 1,484,109 25,508,521 Change in Net Assets Unappropriated Net Assets - Beginning Unappropriated Net Assets - Ending (13,463,609) (13,463,609) 12,044,912 $ (13,435,609) $ (13,435,609) $ 13,557,021 128 $ 26,992,630 CITY OF MESA, ARIZONA EXHIBIT D-8 (Continued) INTERNAL SERVICE FUNDS SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - BUDGET TO ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget Actual Amounts Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) WORKERS' COMPENSATION FUND Revenues: Investment Income Contributions Miscellaneous $ 388,000 4,881,000 116,000 $ 388,000 4,881,000 116,000 $ 83,067 3,847,080 184,960 $ (304,933) (1,033,920) 68,960 Total Revenues 5,385,000 5,385,000 4,115,107 (1,269,893) Expenses: Administrative and Other Fees Claims Incurred 5,447,000 - 5,447,000 - 1,202,440 2,423,429 4,244,560 (2,423,429) Total Expenses 5,447,000 5,447,000 3,625,869 1,821,131 489,238 551,238 618,261 Change in Net Assets Unappropriated Net Assets - Beginning Unappropriated Net Assets - Ending (62,000) (62,000) 10,425,012 10,425,012 11,043,273 $ 10,363,012 $ 10,363,012 $ 11,532,511 129 $ 1,169,499 CITY OF MESA, ARIZONA EXHIBIT D-8 (Continued) INTERNAL SERVICE FUNDS SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - BUDGET TO ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Original Budget Actual Amounts Budgetary Basis Final Budget Variance With Final Budget Positive (Negative) EMPLOYEE BENEFITS FUND Revenues: Investment Income Contributions Miscellaneous $ 851,000 47,195,000 200,000 $ 851,000 47,195,000 200,000 $ 165,240 50,661,597 706,804 $ (685,760) 3,466,597 506,804 Total Revenues 48,246,000 48,246,000 51,533,641 3,287,641 Expenses: Administrative and Other Fees Claims Incurred 5,050,371 42,329,629 5,050,371 42,329,629 4,641,040 46,962,265 (409,331) 4,632,636 Total Expenses 47,380,000 47,380,000 51,603,305 4,223,305 866,000 866,000 22,436,460 22,436,460 22,497,246 $ 23,302,460 $ 23,302,460 $ 22,427,582 Change in Net Assets Unappropriated Net Assets - Beginning Unappropriated Net Assets - Ending 130 (69,664) (935,664) 60,786 $ (874,878) CITY OF MESA, ARIZONA EXHIBIT D-8 (Concluded) INTERNAL SERVICE FUNDS SELF-INSURANCE FUNDS SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - BUDGET TO ACTUAL (BUDGET BASIS) FOR THE FISCAL YEAR JUNE 30, 2009 Original Budget Final Budget Actual Amounts Budgetary Basis Variance With Final Budget Positive (Negative) $ 21,409,217 1,818,000 56,377,000 348,000 $ 21,409,217 1,818,000 56,377,000 348,000 $ 18,075,555 335,816 58,809,677 1,525,055 Total Revenues 79,952,217 79,952,217 78,746,103 (1,206,114) Expenses: Materials and Supply Printing and Graphics Fleet Support Administrative and Other Fees Claims Incurred 1,181,467 1,402,195 18,851,135 12,994,349 44,716,651 1,347,814 1,402,959 18,851,135 12,994,349 44,716,651 1,292,504 939,619 15,856,711 7,748,713 50,990,152 55,310 463,340 2,994,424 5,245,636 (6,273,501) Total Expenses 79,145,797 79,312,908 76,827,699 2,485,209 806,420 639,309 1,918,404 1,279,095 - - 8,000 8,000 806,420 639,309 1,926,404 1,287,095 46,325,820 46,325,820 45,585,510 $ 47,132,240 $ 46,965,129 $ 47,511,914 RECAP Revenues: Charges for Services Investment Income Contributions Miscellaneous Income Before Transfers Transfers In Change in Net Assets Unappropriated Net Assets - Beginning Unappropriated Net Assets - Ending 131 $ (3,333,662) (1,482,184) 2,432,677 1,177,055 (740,310) $ 546,785 CITY OF MESA, ARIZONA EXHIBIT D-9 INTERNAL SERVICE FUND RECONCILIATION OF BUDGET TO GAAP CHANGES IN NET ASSETS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 Budget Basis Actual Amounts (Budgetary Basis) "Change in Net Assets" from Exhibit D-8 $ Basis Differences: Compensated Absences Increase of Fair Market Value of Investments 1,926,404 34,102 16,050 Timing Differences: OPEB Proprietary Funds Capital Expenditures Depreciation - Amortization Capital Contributions Inventory Decrease Increase in Contingent Liability (1,046,084) 10,581 (412,069) 24,642 (171,850) (5,540,971) GAAP Basis Actual Amount (GAAP Basis) "Change in Net Assets" from Exhibit A-8 $ 132 (5,159,195) CITY OF MESA, ARIZONA EXHIBIT D-10 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY SOURCE JUNE 30, 2009 GOVERNMENTAL FUNDS CAPITAL ASSETS Land Buildings Other Improvements Machinery and Equipment Infrastructure Construction in Progress $ 257,858,440 282,795,606 122,711,754 150,017,150 735,085,394 165,526,653 Total Governmental Funds Capital Assets $ 1,713,994,997 INVESTMENTS IN GOVERNMENTAL FUNDS CAPITAL ASSETS Investment in Property Acquired Prior to July 1, 1978: Source Indeterminable $ 1,884,743 Investment in Property Acquired After June 30, 1978 From: General Obligation Bonds Highway User Revenue Bonds Federal Revenue Sharing Federal Aid General Revenue Contributions From Developers Contributions From Property Owners Contributions From Other Gov't Contributions - Indeterminant Funding Total 441,913,242 149,698,304 2,160,440 47,579,318 484,519,848 452,373,524 19,304,591 44,034,741 70,526,246 1,712,110,254 Total Investment in Governmental Funds Capital Assets $ 1,713,994,997 This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in the internal service funds are excluded from the above amounts. Generally, the capital assets of the internal service funds are included as governmental activities in the statement of net assets. 133 Statistical Section STATISTICAL SECTION This part of the City of Mesa’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. 134 Revenue Capacity These schedules contain information to help readers assess the City’s most significant local revenue source, the sales tax. 146 Debt Capacity These schedules present information to help the reader assess the affordability of the City’s current level of outstanding debt and the City’s ability to issue additional debt in the future. 149 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. 157 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs. 159 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB Statement 34 in 2002; schedules presenting governmentwide information include information beginning in that year. CITY OF MESA, ARIZONA TABLE I NET ASSETS BY COMPONENTS LAST EIGHT FISCAL YEARS (accrual basis of accounting) GOVERNMENTAL ACTIVITIES Invested in Capital Assets, Net of Related Debt 2001-02 $ 624,647,011 2002-03 $ 692,576,782 2003-04 $ 781,518,870 $ 2004-05 769,923,509 Restricted 96,006,282 85,299,383 61,749,912 68,486,614 Unrestricted 80,266,214 53,068,738 43,964,946 62,539,346 Total Governmental Activities Net Assets $ 800,919,507 $ 830,944,903 $ 887,233,728 $ 900,949,469 $ 406,180,825 $ 477,877,715 $ 451,550,515 $ 424,820,602 BUSINESS-TYPE ACTIVITIES Invested in Capital Assets, Net of Related Debt Restricted Unrestricted Total Business-type Activities $ 36,822,813 44,402,649 62,692,972 101,565,804 174,986,829 182,390,271 218,266,775 219,103,522 732,510,262 $ 745,489,928 617,990,467 $ 704,670,635 $ PRIMARY GOVERNMENT Invested in Capital Assets, Net of Related Debt $ 1,030,827,836 $ 1,170,454,497 Restricted 132,829,095 129,702,032 124,442,884 170,052,418 Unrestricted 255,253,043 235,459,009 262,231,721 281,642,868 $ 1,418,909,974 $ 1,535,615,538 Total Primary Government 134 $ 1,233,069,385 $ 1,194,744,111 $ 1,619,743,990 $ 1,646,439,397 TABLE I (Continued) 2005-06 $ 765,874,830 $ 2006-07 791,591,633 $ 2007-08 794,720,403 $ 2008-09 791,523,460 84,386,395 95,107,036 86,252,122 92,532,141 85,734,791 128,548,213 125,128,033 91,363,394 $ 935,996,016 $ 1,015,246,882 $ 1,006,100,558 $ 975,418,995 $ 390,100,160 $ 413,943,796 $ 366,497,841 $ 410,073,719 $ 89,383,126 96,756,386 94,133,333 82,697,422 268,388,224 308,374,940 308,215,959 278,891,568 747,871,510 $ 771,629,167 $ 812,423,011 $ 775,532,786 $ 1,155,974,990 $ 1,158,089,474 $ 1,204,794,122 $ 1,205,467,256 173,769,521 191,863,422 180,385,455 175,229,563 354,123,015 436,923,153 433,343,992 370,254,962 $ 1,683,867,526 $ 1,786,876,049 $ 1,818,523,569 $ 1,750,951,781 135 CITY OF MESA, ARIZONA TABLE II CHANGES IN NET ASSETS LAST EIGHT FISCAL YEARS (accrual basis of accounting) EXPENSES 2001-02 2002-03 2003-04 2004-05 GOVERNMENTAL ACTIVITIES: General Government $ Public Safety 41,768,977 $ 48,918,830 $ 44,012,723 $ 48,722,316 164,866,979 169,665,871 181,856,295 204,366,091 Cultural-Recreational 49,917,805 52,778,367 53,201,350 62,870,201 Community Environment 75,331,481 55,886,591 72,984,342 86,363,321 Interest in Long-term Debt 13,482,328 13,891,122 14,490,474 15,503,667 345,367,570 341,140,781 366,545,184 417,825,596 Total Governmental Activities Expenses BUSINESS-TYPE ACTIVITIES: Electric 21,586,810 21,809,560 24,390,551 27,118,590 Gas 20,215,585 22,433,015 25,990,497 33,829,631 Water 49,031,606 46,247,340 49,542,568 54,247,920 Wastewater 30,394,738 36,177,157 39,673,430 47,799,248 Solid Waste 21,430,944 21,737,238 21,826,949 23,863,908 Airport 2,018,408 1,940,735 2,087,395 2,119,795 Golf Course 2,275,182 2,296,550 2,781,273 2,966,147 Convention Center 3,026,657 3,013,443 4,224,151 4,260,510 - - - - 149,979,930 155,655,038 170,516,814 196,205,749 District Cooling Total Business-type Activities Expenses Total Primary Government Expenses $ 495,347,500 $ 136 496,795,819 $ 537,061,998 $ 614,031,345 TABLE II (Continued) 2005-06 $ $ 44,568,148 2006-07 $ 48,200,767 2007-08 $ 63,633,405 2008-09 $ 54,225,566 212,010,952 232,099,968 292,395,865 290,927,716 65,389,229 64,591,583 72,999,346 67,039,000 97,613,466 91,664,096 99,414,870 121,735,796 16,061,123 18,037,348 19,082,936 18,658,530 435,642,918 454,593,762 547,526,422 552,586,608 26,817,051 26,280,947 31,612,431 27,633,642 38,743,370 37,825,634 43,246,724 35,991,817 54,110,525 59,964,524 59,224,757 68,955,827 67,180,688 60,603,399 61,293,453 80,349,057 25,070,150 27,891,495 32,877,483 31,953,188 4,194,272 2,720,953 3,316,536 3,703,129 2,524,364 2,601,521 3,011,883 3,082,522 4,822,347 5,666,507 5,447,050 4,558,208 67,274 1,090,931 768,873 975,687 223,530,041 224,645,911 240,799,190 257,203,077 659,172,959 $ 679,239,673 $ 788,325,612 $ 137 809,789,685 CITY OF MESA, ARIZONA TABLE II (Continued) CHANGES IN NET ASSETS LAST EIGHT FISCAL YEARS (accrual basis of accounting) PROGRAM REVENUES 2001-02 2002-03 2003-04 2004-05 17,441,330 $ 15,436,013 $ GOVERNMENTAL ACTIVITIES: Charges for services: Licenses and Permits 19,819,170 $ 18,817,521 Charges for Services $ 9,492,864 9,639,690 11,152,669 13,047,596 Fines and Forfeitures 7,881,541 8,421,178 8,536,253 9,247,469 52,970 116,882 Other activities 210,368 Operating Grants and Contributions (113,419) 53,382,255 53,256,253 60,346,450 60,813,367 4,817,702 25,473,077 48,400,338 25,513,149 93,226,060 112,112,792 148,307,850 127,555,984 Electric 29,166,639 27,839,896 33,694,077 30,983,581 Gas 26,502,312 25,113,857 29,941,402 35,131,012 Water 74,645,436 74,769,709 80,036,607 79,724,508 Wastewater 39,933,937 41,656,214 43,643,144 46,024,679 Solid Waste 29,605,827 31,833,958 34,460,114 36,638,993 Airport 1,789,167 1,845,693 1,873,185 1,941,001 Golf Course 2,364,190 2,325,121 2,298,163 2,327,788 Convention Center 1,381,874 1,422,276 2,686,799 2,570,569 - - - - 28,161 320,639 248,295 275,024 25,071,546 94,629,677 35,374,484 15,585,679 230,489,089 301,757,040 264,256,270 251,202,834 323,715,149 $ 413,869,832 $ 412,564,120 $ 378,758,818 Capital Grants and Contributions Total Governmental Activities Program Revenues BUSINESS-TYPE ACTIVITIES: Charges for services: District Cooling Operating Grants and Contributions Capital Grants and Contributions Total Business-type Activities Program Revenues Total Primary Government Program Revenues $ NET (EXPENSE)/REVENUE Governmental Activities Business-type Activities Total Primary Government Net Expense (252,141,510) $ (229,027,989) $ (218,237,334) $ 80,509,159 $ (171,632,351) $ 138 146,102,002 93,739,456 (82,925,987) $ (124,497,878) $ (290,269,612) 54,997,085 (235,272,527) TABLE II (Continued) $ $ $ $ 2005-06 2006-07 2007-08 2008-09 23,145,062 $ 20,127,674 $ 23,342,116 $ 13,426,408 17,649,718 22,039,055 23,702,601 24,739,517 9,049,107 10,276,600 10,761,086 10,215,428 282,129 433,359 323,970 78,021 68,784,384 74,498,258 63,787,258 63,054,542 16,777,436 44,858,222 21,916,433 35,436,059 135,687,836 172,233,168 143,833,464 146,949,975 36,112,821 34,518,898 34,148,281 35,312,658 44,088,814 45,250,476 46,539,692 41,707,578 88,497,653 92,007,207 97,558,682 95,994,839 49,618,163 55,398,349 53,950,994 54,719,926 38,898,904 42,894,663 46,167,910 46,762,035 2,086,753 2,953,825 3,192,347 2,958,955 2,522,464 2,456,596 2,448,313 2,309,899 3,727,573 4,745,578 3,658,449 2,686,663 54,678 192,972 229,168 834,376 141,207 146,614 10,545 100,797 27,692,246 20,724,241 80,569,929 31,222,401 293,441,276 301,289,419 368,474,310 314,610,127 429,129,112 473,522,587 512,307,774 461,560,102 (299,955,082) $ (282,360,594) $ 69,911,235 76,643,508 (230,043,847) $ (205,717,086) $ (403,692,958) $ 127,675,120 (276,017,838) $ (405,636,633) 57,407,050 (348,229,583) 139 CITY OF MESA, ARIZONA TABLE II (Concluded) CHANGES IN NET ASSETS LAST EIGHT FISCAL YEARS (accrual basis of accounting) GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS 2001-02 2002-03 2003-04 2004-05 GOVERNMENTAL ACTIVITIES: Sales Taxes $ Occupancy Taxes 101,660,597 $ 98,434,394 $ 105,096,378 $ 112,528,968 1,256,894 1,224,044 1,320,706 1,856,955 89,144,692 89,146,593 85,469,452 90,867,567 Contributions Not Restricted to Specific Programs 5,031,780 5,363,401 8,202,920 10,725,969 Unrestricted Investment Income 4,594,757 2,499,434 1,202,348 1,905,411 - - Unrestricted State Shared Revenues Loss on Investment in Local Government Investment Pool - Miscellaneous Transfers Total Governmental Activities (4,442,638) 5,903,080 7,109,157 5,461,757 9,740,646 96,961,247 59,719,000 67,772,618 76,359,837 304,553,047 259,053,385 274,526,179 303,985,353 1,857,942 1,230,644 947,498 1,579,215 BUSINESS-TYPE ACTIVITIES: Unrestricted Investment Income Loss on Investment in Local Government Investment Pool - Miscellaneous - - 277,039 800,247 925,291 84,910 - - - 32,678,293 Special Item - Gain on Sale of Land Transfers Total Business-type Activities Total Primary Government $ (1,733,725) (96,961,247) (59,719,000) (67,772,618) (76,359,837) (94,826,266) (59,421,834) (65,899,829) (42,017,419) 209,726,781 $ 199,631,551 $ 208,626,350 $ 261,967,934 52,411,537 $ 30,025,396 $ 56,288,845 $ 13,715,741 86,680,168 27,839,627 12,979,666 84,128,472 $ 26,695,407 Change in Net Assets Governmental Activities Business-type Activities Total Primary Government (14,317,107) $ 38,094,430 $ 140 116,705,564 $ TABLE II (Concluded) 2005-06 $ 2006-07 2007-08 2008-09 128,372,155 $ 155,817,051 $ 147,762,866 $ 2,189,830 2,389,528 2,394,765 126,519,701 1,807,601 103,848,818 113,048,782 122,560,731 117,542,894 12,205,647 14,037,707 14,745,722 14,740,889 5,430,860 7,824,612 6,282,425 1,895,561 10,052,208 7,053,840 6,678,633 15,849,424 72,902,111 61,439,940 94,121,492 96,599,000 335,001,629 361,611,460 394,546,634 374,955,070 4,818,652 8,125,127 6,546,254 1,894,369 - - - - - 553,806 428,962 693,962 407,356 - - - - (72,902,111) (61,439,940) (94,121,492) (96,599,000) (67,529,653) (52,885,851) (86,881,276) (94,297,275) $ 267,471,976 $ 308,725,609 $ 307,665,358 $ 280,657,795 $ 35,046,547 $ 2,381,582 $ 37,428,129 $ 79,250,866 $ (9,146,324) $ (30,681,563) 23,757,657 40,793,844 (36,890,225) 31,647,520 $ (67,571,788) 103,008,523 $ 141 CITY OF MESA, ARIZONA TABLE III FUND BALANCE, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 1999-00 2000-01 2001-02 2002-03 GENERAL FUND Reserved (1)(2) $ Unreserved Total General Fund 40,729,716 $ 31,854,206 61,847,049 $ 22,182,897 69,785,175 $ 24,532,385 53,697,322 11,253,612 $ 72,583,922 $ 84,029,946 $ 94,317,560 $ 64,950,934 $ 8,821,348 $ 14,731,211 $ 20,241,119 $ 14,555,545 ALL OTHER GOVERNMENTAL FUNDS Reserved Unreserved, Reported in: Special Revenue Funds 11,516,626 11,958,553 12,119,328 9,211,016 Capital Project Funds 13,210,539 24,492,954 8,559,611 23,676,985 Total All Other Governmental Funds $ 33,548,513 $ 51,182,718 $ 40,920,058 $ 47,443,546 (1) During fiscal Year 1998-99, a voter-approved 1/2 percent increase to sales tax was enacted. This additional tax is restricted to fund improvements to quality of life projects and is reported as reserved fund balance in the General Fund. (2) During FY 2006-07, a quarter percent portion of the sales tax increase described in (1) above to fund capital improvements to quality of life projects expired and was not renewed. Also during FY 2006-07, a voter-approved 1/2 percent increase to sales tax was enacted. This additional tax is restricted to fund street improvements and is reported as restricted fund balance in the General Fund. 142 TABLE III (Continued) 2003-04 $ 30,195,115 2004-05 $ 25,844,445 37,871,632 2005-06 $ 19,310,081 61,257,305 2006-07 $ 77,177,037 27,993,782 2007-08 $ 57,029,523 84,886,350 2008-09 $ 50,283,211 51,862,378 74,711,328 $ 56,039,560 $ 57,181,713 $ 89,251,087 $ 134,206,560 $ 135,169,561 $ 126,573,706 $ 8,542,839 $ 10,335,341 $ 8,391,978 $ 5,885,100 $ 8,643,272 $ 17,012,682 $ 20,215,242 23,498,926 21,745,990 24,627,227 24,921,672 24,815,604 13,773,686 15,681,069 18,611,420 17,567,790 11,142,826 28,442,378 42,531,767 $ 49,515,336 $ 48,749,388 $ 48,080,117 143 $ 44,707,770 $ 70,270,664 CITY OF MESA, ARIZONA TABLE IV CHANGES IN FUND BALANCE, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 1999-00 REVENUES Sales Taxes (1) Occupancy Taxes Special Assessments Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Investment Income Loss on Investment in Local Government Investment Pool Miscellaneous $ 105,353,854 1,469,110 538,211 20,966,327 132,679,952 9,260,179 6,645,488 4,913,109 2000-01 $ 102,710,563 1,449,997 547,069 18,530,634 139,131,708 9,122,804 8,087,106 7,805,680 2001-02 $ 101,660,597 1,256,894 68,388 17,441,330 144,899,946 9,492,864 7,881,541 3,823,765 2002-03 $ 98,434,394 1,227,044 67,313 15,436,013 157,187,256 9,639,690 8,421,178 1,999,483 4,466,611 3,193,930 5,702,529 286,292,841 290,579,491 292,227,854 295,027,870 30,495,284 131,414,608 41,572,154 41,483,266 32,158,977 143,663,306 43,370,223 43,641,860 34,413,634 152,211,510 45,139,625 48,793,335 35,314,279 160,151,434 46,940,164 48,643,271 20,438,129 11,265,739 83,531 94,405,447 13,240,354 20,861,188 91,344 77,341,312 20,844,687 13,482,328 98,891 90,516,208 20,548,390 13,551,752 74,345 106,255,818 Total Expenditures 371,158,158 374,368,564 405,500,218 431,479,453 Excess of Revenues Over (Under) Expenditures (84,865,317) (83,789,073) (113,272,364) (136,451,583) 84,683,534 (36,205,817) 19,436,976 5,076 94,442,234 (40,154,867) 56,500,000 10,935 98,319,124 (38,779,124) 51,175,000 134,318 100,545,246 (40,765,246) 49,370,000 145,133 15,862,000 - 2,021,000 - 2,448,000 26,333,383 (26,333,383) 4,899,000 84,292,722 (84,875,410) 83,781,769 112,819,302 113,297,318 113,611,445 Total Revenues EXPENDITURES General Government Public Safety Cultural-Recreational Community Environment Debt Service Principal Interest Issuance Cost on Refunding Bonds Service Charges Capital Outlay OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Face Amount of Bonds Issued Premium on Issuance of Bonds Proceeds from Obligations of Capital Leases Proceeds From Refunding Issue Payment to Refunded Bond Escrow Agent Total Other Financing Sources (Uses) Net Change in Fund Balances Debt Service as a percentage of Noncapital Expenditures $ (1,083,548) $ 11.49% 29,030,229 11.51% $ 24,954 (3,588,706) 6,204,205 $ (22,840,138) 10.93% (1) During fiscal year 1998-99, a voter approved one-half percent increase to sales tax was enacted. (2) During fiscal year 2006-07, a voter approved one-half percent increase to sales tax was enacted. In addition, a quarter percent portion of the sales tax described in (1) above expired and was not renewed by the voters. 144 10.51% TABLE IV (Continued) 2003-04 $ $ 105,096,378 1,320,706 57,567 19,819,170 149,036,481 11,152,669 8,536,253 885,188 2004-05 $ 112,258,968 1,856,955 4,770 18,817,521 153,369,074 13,047,596 9,247,469 1,353,224 2005-06 $ 128,372,155 2,189,830 4,770 23,145,062 178,553,235 17,649,718 9,049,107 4,376,010 2006-07 $ 155,817,051 2,389,528 416,906 20,127,674 190,825,624 22,039,055 10,276,600 6,463,111 2007-08 $ 147,762,866 2,394,765 1,218,100 23,342,116 193,585,472 23,702,601 10,761,086 5,177,695 2008-09 $ 126,519,701 1,807,601 806,151 13,426,408 191,084,600 24,343,284 10,215,428 2,017,949 5,268,925 9,562,131 9,632,863 6,365,625 6,421,576 14,754,573 301,173,337 319,517,708 372,972,750 414,721,174 414,366,277 384,975,695 36,328,122 166,576,022 47,366,458 51,520,603 38,364,301 182,224,448 54,761,753 56,953,311 36,730,857 190,761,508 56,187,938 60,079,827 40,661,807 210,541,969 54,711,334 65,314,260 48,111,893 233,506,939 57,765,169 66,615,531 36,506,727 230,863,556 53,171,005 72,646,647 7,145,591 14,081,131 62,131 81,823,895 7,692,222 15,369,204 61,994 62,392,135 8,857,085 16,181,484 234,487 55,510 79,316,975 8,357,577 18,150,710 56,768 77,474,595 25,870,624 19,229,682 58,196 77,308,807 36,905,901 18,845,224 404,903,953 417,819,368 448,405,671 475,269,020 528,466,841 526,866,165 (103,730,616) (98,301,660) (75,432,921) (60,547,846) (114,100,564) (141,890,470) 98,213,698 (27,993,698) 9,585,000 - 104,642,640 (28,065,640) 21,930,000 640,258 106,253,593 (32,339,810) 26,410,000 2,003,565 99,900,805 (33,233,233) 30,681,840 573,254 147,477,785 (53,960,459) 15,450,000 195,209 155,696,867 (59,105,867) 61,830,000 436,509 9,322,015 139,441,539 (138,661,071) 6,746,097 26,420,341 (26,156,314) 6,401,832 25,482,000 (27,474,833) 6,911,382 - 2,528,683 - - 89,907,483 106,157,382 106,736,347 104,834,048 111,691,218 158,857,509 (13,823,133) $ 6.59% 7,855,722 6.51% $ 31,303,426 $ 44,286,202 6.86% 6.68% 145 $ (2,409,346) 10.01% 27,738 77,899,367 $ 16,967,039 12.42% CITY OF MESA, ARIZONA TABLE V SALES TAX COLLECTIONS BY CATEGORY LAST TEN FISCAL YEARS 1999-00 Utilities $ 5,554,088 2000-01 (2) $ 5,938,529 2001-02 $ 5,988,972 2002-03 $ 5,912,385 Communications 3,171,604 3,576,769 3,771,511 3,574,953 Publishing 1,552,012 1,576,120 1,594,079 1,530,906 Printing & Advertising 434,722 411,049 418,108 384,241 Contracting 13,639,634 14,415,520 14,146,743 11,333,545 Retail Sales 61,434,089 55,557,307 54,461,048 54,110,533 Restaurants & Bars 6,262,220 6,774,683 7,029,557 7,176,167 932,541 1,027,591 1,005,956 974,633 12,275,886 13,352,281 13,156,005 13,323,813 97,058 80,714 88,618 113,218 Amusements Rentals Miscellaneous Total $ 105,353,854 City Direct Tax Rate 1.50% $ 102,710,563 $ 1.50% 101,660,597 1.50% $ 98,434,394 1.50% Note: Amounts shown include penalties and interest. Occupancy tax not included. (1) Beginning in August 1998, the City enacted a voter-approved 1/2 percent increase in sales tax to fund quality of life projects. (2) Beginning in fiscal year 2001, the City enacted a voter-approved initiative that eliminated sales tax on food items. (3) During FY 2006-07, a quarter percent portion of the sales tax increase described in (1) above to fund capital improvements to quality of life projects expired and was not renewed. Also during FY 2006-07, a voter-approved 1/2 percent increase to sales tax was enacted. This additional tax is restricted to fund street improvements and is reported as restricted fund balance in the General Fund. Source: City of Mesa Tax & Licensing Division 146 TABLE V (Continued) 2003-04 $ $ 6,762,032 2004-05 $ 6,692,042 2005-06 $ 7,539,420 2006-07 (3) $ 9,116,291 2007-08 $ 9,667,778 2008-09 $ 9,654,488 3,164,951 3,241,465 2,839,438 3,939,497 4,312,054 3,748,960 1,470,008 1,564,309 1,792,345 1,963,330 1,922,909 1,402,465 378,322 367,306 453,958 477,939 374,839 280,350 12,454,780 12,073,940 14,580,722 21,424,371 19,300,601 15,263,241 58,588,455 64,266,464 74,420,542 85,014,600 77,307,911 63,230,186 7,749,295 8,483,650 9,417,798 11,725,779 12,038,983 10,956,021 1,029,101 1,071,285 1,210,343 1,456,808 1,348,973 1,362,931 13,399,200 14,380,416 15,786,032 20,533,854 21,369,386 20,514,008 100,234 118,091 331,557 164,582 119,432 107,051 105,096,378 1.50% $ 112,258,968 1.50% $ 128,372,155 $ 155,817,051 1.50% 1.75% 147 $ 147,762,866 1.75% $ 126,519,701 1.75% CITY OF MESA, ARIZONA TABLE VI DIRECT AND OVERLAPPING SALES TAX RATES LAST TEN FISCAL YEARS City Direct Maricopa State of Rate County Arizona 1999-00 1.50 0.70 5.00 2000-01 1.50 0.70 5.60 2001-02 1.50 0.70 5.60 2002-03 1.50 0.70 5.60 2003-04 1.50 0.70 5.60 2004-05 1.50 0.70 5.60 2005-06 1.50 0.70 5.60 2006-07 1.75 0.70 5.60 2007-08 2008-09 1.75 1.75 0.70 0.70 5.60 5.60 Source: City of Mesa Tax & Licensing Division 148 CITY OF MESA, ARIZONA TABLE VII RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Governmental Activities General Obligation Bonds Year 2000 $ Municipal Development Corporation Bonds Highway User Revenue Bonds Special Assessment Bonds Capital Leases Utility System Revenue Bonds 153,040,255 $ 23,450,000 $ 26,900,000 $ 939,000 $ 28,777,965 $ 216,730,000 2001 175,433,951 22,315,000 46,900,000 329,000 25,238,893 285,755,000 2002 181,307,268 11,925,000 72,700,000 217,000 20,845,608 353,875,000 2003 187,839,000 10,970,000 101,190,000 133,000 21,665,644 397,315,000 2004 187,644,270 9,970,000 110,770,000 48,000 25,193,586 458,525,000 2005 198,769,540 9,970,000 120,410,000 36,000 24,968,195 549,415,000 2006 207,859,834 9,970,000 131,950,000 5,049,000 23,273,476 655,085,000 2007 223,115,128 9,970,000 142,460,000 8,797,840 22,988,632 723,185,000 2008 221,625,447 9,970,000 142,290,000 8,046,000 17,502,575 767,445,000 2009 267,062,537 - 140,265,000 7,294,000 9,729,851 817,530,000 (1) Information on personal income and population is presented on Table XII. Personal income information not available for years 1999 & 2001. 149 TABLE VII (Continued) Business-type Activities Municipal Development Corporation Bonds General Obligation Bonds $ 88,523,646 $ 26,500,000 Notes Payable $ 1,607,506 Total Primary Government Capital Leases $ 5,970,804 $ 572,439,176 Percentage of Personal Income (1) 8.98 N/A Per Capita (1) 1,444 69,028,384 24,600,000 1,484,952 14,853,400 665,938,580 1,584 23,072,732 20,600,000 1,355,468 12,140,530 698,038,606 8.34 1,616 13,706,000 19,800,000 1,218,660 10,092,842 763,930,146 8.08 1,758 3,290,730 16,900,000 1,074,110 23,473,486 836,889,182 8.57 1,879 3,290,460 13,500,000 921,377 21,641,099 942,921,671 9.24 2,090 3,290,166 9,600,000 759,993 4,301,174 1,051,138,643 9.97 2,309 3,289,872 5,100,000 589,462 2,869,497 1,142,365,431 10.54 2,483 3,289,553 - 431,565 1,541,281 1,172,141,421 10.68 2,529 2,957,463 - 333,189 158,413 1,245,330,453 11.03 2,677 150 CITY OF MESA, ARIZONA TABLE VIII RATIOS OF GENERAL BONDED DEBT OUTSTANDING (1) LAST TEN FISCAL YEARS General Bonded Debt Outstanding Secondary Assessed Value (2) Year 2000 $ General Obligation Bonds Net General Bonded Debt Less: Current Portion $ 33,615,000 $ Percentage Of Secondary Assessed Value Per Capita (3) 1,726,848,814 $ 232,605,000 198,990,000 11.52 502.02 2001 1,919,915,826 235,490,000 16,765,000 218,725,000 11.39 520.12 2002 2,142,980,665 231,025,000 26,645,000 204,380,000 9.54 473.24 2003 2,272,244,234 226,945,000 25,400,000 201,545,000 8.87 463.76 2004 2,463,878,234 191,130,000 195,000 190,935,000 7.75 428.73 2005 2,648,163,284 202,640,000 580,000 202,060,000 7.63 447.81 2006 2,921,998,915 211,770,000 620,000 211,150,000 7.23 463.91 2007 3,083,070,290 227,065,000 660,000 226,405,000 7.34 492.02 2008 4,114,527,313 241,855,000 16,940,000 224,915,000 5.47 485.36 2009 4,793,081,793 276,620,000 16,725,000 259,895,000 5.42 558.59 (1) General Obligation debt has been supported through non-property tax revenues since the 1944-45 fiscal year. The City of Mesa, Arizona has operated without a property tax levy since that time. Source: (2) Maricopa County Finance Department Assessor's Office. (3) Population figures are found on Table XII. 151 CITY OF MESA, ARIZONA TABLE IX DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT (1) JUNE 30, 2009 Proportion Applicable Debt Governmental Unit to the City of Mesa Outstanding (2) Percent (3) Amount Debt repaid with property taxes Maricopa County $ Maricopa County Community College District - 8.22 % $ - 727,390,000 8.22 59,791,458 Central Arizona Water Conservation District - 8.80 - Flood Control District of Maricopa County - 9.96 - Maricopa County Fire District - 8.80 - Maricopa County Library District - 8.81 - Mesa Unified School District No. 4 316,770,000 85.31 270,236,487 Gilbert Unified School District 216,630,000 25.35 54,915,705 40,505,000 16.37 6,630,669 Queen Creek Unified School District No. 95 Higley Elementary School District No. 60 70,710,000 1.73 1,223,283 Tempe Union High School District No. 213 128,000,000 0.32 409,600 Tempe Elementary School District No. 3 110,975,000 0.75 832,313 - 19.57 - 212,020,000 8.22 17,428,044 East Valley Institute of Technology District No. 401 Other Debt: Maricopa County Subtotal, overlapping debt 411,467,559 City direct debt $ 426,545,044 Total Direct and Overlapping Debt $ 838,012,603 (1) Does not include Salt River Project Agricultural Improvement and Power District debt, which is considered self-supporting from earnings of the district or special assessment debt of the City of Mesa, which is considered a junior lien. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Mesa. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt of each overlapping government. Proportion applicable to the City is computed on the ratio of secondary assessed valuation as calculated for fiscal year 2007/08 for the overlapping jurisdiction to the amount of such valuation which lies within the City. Source: (2) Wedbush Securities (3) Maricopa County Finance Department and Assessor's Office. 152 CITY OF MESA, ARIZONA TABLE X LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS 1999-00 6% Limitation Legal Debt Limitation Equal to 6% of Assessed Valuation $ Total Net Debt Applicable to 6% Limit Margin Available for Future General Obligation Bond Issues for 6% Bonds $ $ $ 345,369,763 $ 210,719,763 $ $ 38.99% $ 249,990,692 115,194,950 $ 128,578,840 29,014,950 $ 428,596,133 132,545,000 116,135,000 280,453,115 $ $ 312,461,133 $ 352,794,973 $ 454,448,977 98,635,000 $ 355,813,977 21.70% $ (1) Under Arizona law, cities can issue General Obligation Bonds for all purposes other than those listed in Note 2 below, up to an amount not exceeding 6 percent of assessed secondary valaution. (2) Under Arizona law, cities can issue General Obligation Bonds for purposes of water, wastewater, artificial light, open space preserves, parks playgrounds and recreational facilities up to an amount not exceeding 20 percent of assessed secondary valuation. 153 33,424,693 75.48% 27.10% $ 136,334,693 102,910,000 68.63% 34.52% $ 40,333,840 383,983,165 $ 251,438,165 2002-03 88,245,000 74.81% 134,650,000 Total Net Debt Applicable to the 20% Limit as a Percentage of the 20% Legal Debt Limitation Total Margin Available 39,270,929 2001-02 86,180,000 62.10% Total Net Debt Applicable to 20% Limit Margin Available for Future General Obligation Bond Issues for 20% Bonds $ 64,340,000 Total Net Debt Applicable to the 6% Limit as a Percentage of the 6% Legal Debt Limitation 20% Limitation Legal Debt Limitation Equal to 20% of Assessed Valuation 103,610,929 2000-01 389,238,670 TABLE X (Continued) Legal Debt Margin Calculation for Fiscal Year 2008-09 $ 4,793,081,793 Secondary Assessed Value 6% Bonds (1) $ Legal Debt Limitation Debt Applicable to Limit: General Obligation Bonds Less: Cash With Fiscal Agents Total Net Debt Applicable to Limit Margin Available for Future General Obligation Bond Issues $ 287,584,908 $ 147,832,694 2004-05 $ 102,715,000 $ 45,117,694 492,775,647 $ 404,555,647 $ 449,673,341 $ 529,632,657 $ 437,657,657 $ 258,932,384 (12,606,706) 13,569,322 246,325,678 274,015,586 486,462,454 184,984,217 59,919,935 $ 162,530,851 584,399,783 $ 488,649,783 616,614,058 $ 412,662,424 548,569,718 $ 575,193,275 154 $ 986,306,267 246,871,639 2008-09 $ 229,184,023 $ 822,905,463 $ 615,678,079 $ 844,862,103 958,616,359 246,325,678 $ 25.18% $ 274,015,586 4.72% 207,227,384 $ 287,584,908 13,569,322 7.16% 33.08% $ 712,290,681 17,687,616 203,951,634 16.38% $ $ 12.14% $ $ 2007-08 22,453,366 95,750,000 17.37% $ $ 65.82% 91,975,000 17.90% $ 48,804,797 175,319,935 2006-07 115,400,000 69.28% 88,220,000 $ $ 110,085,000 69.48% $ 158,889,797 2005-06 958,616,359 17,687,616 (4,118,294) Total Margin Available 2003-04 20% Bonds (2) $ 712,290,681 25.70% $ 986,306,267 CITY OF MESA, ARIZONA TABLE XI PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Utility System Revenue Bonds Operating Revenues (1) 1999-00 $ Net Revenue Available for Debt Service Operating Expenses 176,531,381 $ 106,823,380 $ 69,708,001 $ 2000-01 191,782,485 129,099,163 2001-02 199,854,151 122,151,840 2002-03 201,213,634 2003-04 2004-05 Debt Service Principal Interest Coverage Ratio 175,000 $ 11,669,338 5.89 62,683,322 200,000 14,050,528 4.40 77,702,311 4,650,000 16,301,351 3.71 124,831,571 76,382,063 8,475,000 18,784,114 2.80 221,775,345 132,447,862 89,327,483 14,010,000 20,476,532 2.59 228,502,773 156,577,547 71,925,226 310,000 23,444,519 3.03 2005-06 254,216,355 174,560,598 79,655,757 340,000 25,843,553 3.04 2006-07 270,069,593 175,941,671 94,127,922 340,000 29,304,976 3.18 2007-08 278,365,559 196,129,748 82,235,811 7,960,000 34,658,198 1.93 2008-09 274,497,036 197,991,577 76,505,459 9,815,000 37,224,639 1.63 Highway User Revenue Fund Revenue Bonds Highway User Fund Revenues 1999-00 $ Debt Service Principal Interest 29,515,063 $ - $ 2000-01 30,233,015 2001-02 30,129,033 2002-03 31,384,493 2003-04 2004-05 Coverage Ratio 979,050 30.15 - 1,417,069 21.33 - 2,486,694 12.12 - 3,793,944 8.27 33,640,946 40,000 4,899,880 6.81 35,369,649 135,000 5,400,476 6.39 2005-06 38,285,152 135,000 5,829,910 6.42 2006-07 40,974,923 135,000 6,401,428 6.27 2007-08 38,512,394 170,000 6,828,068 5.50 2008-09 34,259,887 2,025,000 6,822,668 3.87 (1) Includes electric, gas, water, wastewater and solid waste systems. (2) Excise tax revenues include city use and sales taxes, transient occupancy taxes, unrestricted license, fees and permits, state-shared sales tax and state revenue sharing. Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 155 TABLE XI (Continued) Special Assessment Bonds Special Assessment Collections $ Debt Service Principal Interest Coverage Ratio 597,471 $ 577,000 $ 91,375 0.89 583,833 610,000 45,905 0.89 80,040 112,000 16,695 0.62 75,365 84,000 10,535 0.80 60,844 85,000 5,455 0.67 5,807 12,000 2,535 0.40 188,475 12,000 184,771 0.96 850,926 343,000 357,384 1.21 1,709,830 751,840 1.41 1,202,384 752,000 457,396 417,040 1.03 Municipal Development Corporation Bonds Excise Tax Revenues (2) $ Debt Service Principal Interest 99,755 Coverage Ratio 152,316,444 $ 845,000 $ 147,509,279 875,000 82,010 154.14 152,643,664 910,000 126,832 147.22 149,774,369 1,755,000 910,270 56.19 153,456,415 3,900,000 796,250 32.68 162,555,789 3,400,000 625,250 40.38 187,580,165 3,900,000 479,250 42.83 216,896,723 4,500,000 309,000 45.10 226,909,733 5,100,000 108,375 43.57 203,197,847 9,970,000 16,643 20.35 156 161.22 CITY OF MESA, ARIZONA TABLE XII DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Note: Sources: (1) (2) (3) (4) (5) Population (1) 396,375 $ 420,525 431,874 434,585 445,354 451,223 455,151 460,155 463,397 465,272 Personal Income (2) 7,769,346,375 $ N/A 8,368,422,498 9,452,658,335 9,770,176,052 10,203,505,699 10,539,476,556 10,840,791,645 10,977,411,533 11,288,894,536 Per Capita Personal Income (3) Median Age (3) Public School Enrollment (4) Unemployment Rate (5) 32.0 N/A 32.8 31.0 32.3 32.5 32.6 32.9 33.1 33.3 71,813 72,476 72,707 73,211 73,428 74,070 74,626 74,128 73,054 70,297 2.3 3.1 4.7 4.4 4.2 3.6 3.8 2.9 4.3 8.0 19,601 N/A 19,377 21,751 21,938 22,613 23,156 23,559 23,689 24,263 Personal Income and Median age information is not available for Fiscal Year 2001. City of Mesa Development Services Estimate 2000-2004 Census Bureau (estimate), 2005-2009 Claritas (estimate) 2000-2004 Census Bureau, 2005-2009 Claritas Mesa Public Schools AZ Dept of Economic Security. Data is Phoenix - Mesa Metropolitan Area 157 CITY OF MESA, ARIZONA TABLE XIII PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO 2009 Employer Mesa Public Schools Employees Rank 2000 (1) Percentage of Total City Employment Employees Rank Percentage of Total City Employment 10,000 1 5.19 % 10,000 1 5.38 % Banner Health Systems 8,650 2 4.49 6,700 2 3.61 Boeing 4,000 3 2.08 4,100 4 2.21 City of Mesa 3,601 4 1.87 4,480 3 2.41 Mesa Community College 2,150 5 1.12 - Wal-Mart 2,100 6 1.09 1,775 6 0.96 Empire Southwest Machinery 1,500 7 0.78 1,000 8 0.54 Maricopa County Government (2) 1,150 8 0.60 N/A Rural/Metro Ambulance 1,100 9 0.57 Bashas' 1,000 10 0.52 860 9 0.46 0.00 0.00 TRW - 0.00 1,396 7 0.75 AT&T - 0.00 2,600 5 1.40 Target - 0.00 700 10 0.38 Total 35,251 16.80 % (1) Earliest information available (2) Information for Maricopa County Government not available for the year 2000 Source: City of Mesa Office of Economic Development 158 33,611 18.10 % CITY OF MESA, ARIZONA TABLE XIV FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM LAST EIGHT FISCAL YEARS (1) 2001-02 2002-03 2003-04 2004-05 2005-06 Function/Program General Government 891 879 867 882 826 1,247 1,269 1,286 1,325 1,311 Public Safety Police Fire 436 434 440 446 454 Other 116 113 121 123 108 Cultural-Recreational 518 501 478 490 398 Community Environment 175 168 164 170 161 Electric 64 48 51 50 38 Gas 83 82 77 79 77 Water 86 90 97 104 102 Wastewater 40 43 47 44 54 Solid Waste 141 137 135 135 138 Airport 11 9 10 9 11 Convention Center 24 22 21 21 64 3,832 3,795 3,794 3,878 3,742 Total (1) Information from earlier fiscal years not available. Source: City of Mesa Budget and Research Division 159 TABLE XIV (Continued) 2006-07 2007-08 2008-09 857 875 793 1,332 1,306 1,282 468 472 470 122 91 46 426 398 318 183 181 189 44 47 48 81 85 92 113 97 134 64 69 79 132 136 126 10 9 10 19 19 17 3,851 3,785 3,601 160 CITY OF MESA, ARIZONA TABLE XV OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 1999-00 2000-01 2001-02 2002-03 Function/Program Police Major Crimes 30,083 16,362 32,956 29,379 Traffic Accidents 12,419 16,432 16,572 9,593 1,374 1,271 1,459 1,451 33,016 34,405 37,928 37,339 2,173 2,213 2,067 2,073 778 1,199 557 7,980 7,172 206 7,229 131,049 144,773 199,563 184,647 1,059,912 1,054,039 1,187,052 1,202,947 Fire Fires Rescue or Emergency False Alarms Hazardous Conditions Other Calls Libraries Number of Registered Borrowers Total Attendance 679,770 1,977,527 3,392,101 1,027,157 Electric Connections Access to Electronic Resources 15,949 15,901 15,911 15,797 Gas Connections 34,429 36,485 38,629 40,328 116,829 121,656 124,742 127,140 Water Connections Average Daily Consumption (mgd)* 90.4 87.5 91.9 93.5 122.82 127.14 132.32 141.01 98,683 130,699 107,532 110,537 38.7 41.7 42.1 38.7 Customers Served 121,830 129,339 135,517 140,190 Refuse Collected (tons) 227,141 241,921 244,999 245,286 Peak Daily Consumption (mg)** Wastewater Connections Average Daily Sewage Treatment (mgd)* Solid Waste Recyclables Collected (tons) 30,380 31,783 32,924 36,282 Green Waste Collected (tons) 11,658 13,706 13,713 15,373 Falcon Field Average Number of Aircraft Based Aircraft Operations (annual) 893 904 902 930 270,844 270,731 251,702 290,902 * mgd - millions of gallons per day ** mg - millions of gallons 161 TABLE XV (Continued) 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 18,482 6,256 27,933 25,853 24,904 22,437 21,388 9,562 10,121 9,205 12,184 7,578 1,332 1,386 1,605 1,428 1,200 39,489 41,689 43,073 38,003 34,207 1,999 2,021 2,595 2,875 2,456 653 591 676 608 567 7,439 7,738 7,820 11,792 12,976 200,461 193,722 233,836 266,839 275,449 1,183,794 1,208,594 1,195,075 1,161,887 1,165,451 1,365,863 1,835,867 2,307,051 3,029,001 2,910,088 17,945 15,652 15,806 15,723 15,215 306,427 1,348,555 3,661,261 14,546 42,241 45,435 48,622 50,478 51,454 51,911 129,477 131,141 133,105 133,249 133,086 132,771 1,165 32,478 2,125 663 11,923 105.3 93.6 94.5 89.6 85.8 79.7 132.15 137.95 131.28 128.83 125.72 108.68 112,497 114,500 116,282 116,190 116,465 116,721 39.3 38.9 41.8 38.1 38.0 36.0 109,960 114,112 113,146 115,305 112,632 112,832 254,688 248,255 261,369 266,817 243,208 234,709 34,141 36,264 32,869 38,660 39,296 37,841 16,384 16,983 17,500 18,215 17,601 18,936 934 922 924 901 934 873 277,088 255,069 271,295 261,623 337,178 283,336 162 CITY OF MESA, ARIZONA TABLE XVI CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 1999-00 2000-01 2001-02 2002-03 Function/Program Police Stations Stations 4 4 4 4 287 255 270 421 15 15 17 17 3 3 3 3 Developed Parks (acres) 1,082 1,089 1,158 1,202 Undeveloped Acres 1,887 1,971 1,947 1,932 13 13 13 13 6 6 7 6 1,037 1,070 1,094 1,132 Vehicular Patrol Units Fire Stations Libraries Parks and Recreation Swimming Pools Recreation Facilities Community Environment Streets (miles) Paved Unpaved Storm Sewers (miles) Gas Mains (miles) 12 12 12 12 230 238 252 271 880 909 929 954 1,707 1,758 1,809 1,924 97 97 97 97 1,625 1,311 1,356 1,454 42 56 56 56 - - - - 2 2 2 2 Water Mains (miles) Storage Capacity (millions of gallons) Wastewater Mains (miles) Treatment Capacity (millions of gallons per day) Solid Waste Collection Trucks (1) Golf Courses (1) Amounts for fiscal years prior to 2004-05 not available 163 TABLE XVI (Continued) 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 4 4 4 4 4 306 321 285 351 368 17 17 17 17 17 3 3 3 3 3 1,198 1,149 1,184 1,184 1,180 1,228 1,230 1,251 1,251 1,251 13 12 12 12 12 6 6 6 6 6 1,152 1,160 1,162 1,169 1,178 4 330 17 3 1,180 1,251 12 6 12 12 12 12 12 1,182 12 290 296 298 303 308 316 998 1,037 1,121 1,147 1,202 1,223 1,978 2,004 2,022 2,008 2,068 2,104 97 97 117 117 117 125 1,496 1,512 1,522 1,544 1,577 1,598 56 56 56 60 60 60 - 69 78 68 70 69 2 2 2 2 2 2 164