Financial Statements
Arizona Department of Transportation
Highway Expansion and Extension Loan
Program Fund
Fiscal Years Ended June 30, 2010 and 2009

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Financial Statements
Fiscal years ended June 30, 2010 and 2009

TABLE OF CONTENTS
Page

Independent Auditors’ Report ......................................................................................................1
Management’s Discussion and Analysis ......................................................................................3
Basic Financial Statements:
Statements of Net Assets ........................................................................................................7
Statements of Activities ..........................................................................................................8
Statements of Cash Flows.......................................................................................................9
Notes to Financial Statements...............................................................................................10

2010 Financial Statements

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Management’s Discussion and Analysis
June 30, 2010 and 2009

As management of the Arizona Department of Transportation, Highway Expansion and
Extension Loan Program Fund (Fund), we offer readers of the Fund’s financial statements this
narrative overview and analysis of the financial activities of the Fund for the fiscal years ended
June 30, 2010 and 2009. We encourage readers to consider the information presented here in
conjunction with the Fund’s financial statements and the accompanying notes to the basic
financial statements.
Financial Highlights





The assets of the Fund exceeded its liabilities by $75,619,251 at the end of fiscal year 2010
as compared to $74,702,986 at fiscal year end 2009 and $74,115,046 at fiscal year end 2008.
All of this amount may be used to meet the Fund’s operational needs for loans or other
financial assistance.
The Fund’s total net assets increased by $916,265 and $587,940 for fiscal years 2010 and
2009, respectively.
Total loan amounts of $23.4 thousand were disbursed from July 1, 2009, to June 30, 2010,
and $4.0 million from July 1, 2008, to June 30, 2009. The $23.4 thousand disbursed in fiscal
year 2010 was disbursed to the City of Goodyear for the I-10 widening project. Of the $4.0
million disbursed in fiscal year 2009, $3.2 million was disbursed to the City of Eloy for the
Sunshine Boulevard project and $0.8 million was disbursed to the City of Goodyear for the I10 widening project.

Fund Financial Statements
Fund accounting The operations of the Fund are accounted for with a separate set of selfbalancing accounts that comprise its assets, liabilities, fund balance, revenues, and expenses.
Government resources are allocated and accounted for based upon the purposes for which they
are to be spent and the means by which spending activities are controlled. The various
transactions are accounted for in one fund type as follows:
Proprietary funds Enterprise funds, which are part of the Proprietary funds, are used to report
the same functions presented as business-type activities in the government-wide financial
statements. An enterprise fund is used by the Arizona Department of Transportation to account
for the Fund’s operations.
The Department’s proprietary funds provide the same type of information found in the
government-wide financial statements, but in more detail.

2010 Financial Statements
3

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Management’s Discussion and Analysis (continued)
June 30, 2010 and 2009

Financial Analysis
In governmental financial statements, net assets may serve over time as a useful indicator of a
government’s financial position. The Fund’s net assets increased by $916,265 and $587,940 by
the end of fiscal years 2010 and 2009, respectively.

Table 1
Highway Expansion and Extension Loan Program Fund's Net Assets
as of June 30, 2010, 2009, and 2008

Current assets
Non-current assets
Total assets

Business-type Activities
2010
2009
2008
$ 71,340,854 $ 59,092,856 $ 126,032,237
4,314,483
15,660,000
20,273,156
75,655,337
74,752,856
146,305,393

Current liabilities
Non-current liabilities
Total liabilities

36,086
36,086

49,870
49,870

70,019,991
2,170,356
72,190,347

Net assets
Restricted
Total net assets

75,619,251
$ 75,619,251

74,702,986
$ 74,702,986

74,115,046
74,115,046

$

All of the Fund’s net assets are restricted for loans and other financial assistance.
Changes in current assets for fiscal year 2010 primarily related to the repayment of Fund loans
and a reduction in disbursements made by the Fund. Changes in current assets for fiscal year
2009 primarily related to the repayment of $50,000,000 in principal and accrued interest for the
Series 2007 Board Funding Obligations (BFOs).
In fiscal year 2010, non-current assets decreased by 72.5 percent. In fiscal year 2009, noncurrent assets decreased by 22.8 percent. Because of the State’s economic condition and other
factors, amounts were disbursed on only one loan in fiscal year 2010 and two new loans in fiscal
year 2009. As a result, loan receivables declined as loan repayments were received from
borrowers, but were not offset by new loan activity.

2010 Financial Statements
4

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Management’s Discussion and Analysis (continued)
June 30, 2010 and 2009

In fiscal year 2009, current liabilities decreased due to the repayment of $50,000,000 principal
amount and accrued interest of the Series 2007 BFOs and to the repayment of $20,000,000 to the
State Highway Fund.
At the end of fiscal years 2010 and 2009, the Fund is able to report a positive balance of net
assets. The net assets of the Fund are restricted for loans and other financial assistance, and are
available for future loan activity.

Table 2
Highway Expansion and Extension Loan Program Fund's Changes in Net Assets
for fiscal years ended June 30, 2010, 2009, and 2008

2010
Revenues:
Operating revenues
Interest on loans receivables
Non-operating revenues
Income from investments
Total revenues

$

Expenses:
Operating expenses:
Interest on Board Funding Obligations
Other
Non-operating expenses:
Investment expense
Other
Total expenses
Increase in net assets
Net assets - July 1
Net assets - June 30

Business-type Activities
2009

2008

566,186

$ 1,127,759

$ 1,755,395

497,119
1,063,305

1,572,256
2,700,015

4,705,331
6,460,726

115,615

1,877,425
173,865

3,795,890
175,250

31,425
147,040

58,785
2,000
2,112,075

80,251
2,000
4,053,391

916,265
74,702,986
$ 75,619,251

587,940
74,115,046
$ 74,702,986

2,407,335
71,707,711
$ 74,115,046

The Fund’s interest on loans receivable revenues decreased by 49.8 percent in fiscal year 2010
and by 35.8 percent in fiscal year 2009. Lower average principal balances outstanding accounted
for the decrease in interest on loans in fiscal years 2010 and 2009.

2010 Financial Statements
5

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Management’s Discussion and Analysis (continued)
June 30, 2010 and 2009

In fiscal years 2010 and 2009, income from investments decreased by $1,075,137 and
$3,133,075, respectively, due to the Fund maintaining lower average cash balances during the
year and by lower average interest rates on invested cash due to prevailing market conditions
during those fiscal years.
The Fund’s interest expense on BFOs for fiscal year 2009 declined due to the fact that
$50,000,000 of BFOs were outstanding for only part of the fiscal year. During the prior fiscal
year, $50,000,000 of BFOs were outstanding for the entire year. All BFOs were paid off in fiscal
year 2009. In addition, the interest rate on the Series 2007 BFOs was higher than the average
interest rate on the Series 2003 BFOs.
Other operating expenses decreased by 33.5 percent in fiscal year 2010 and by .8 percent in
fiscal year 2009. Non-operating expenses decreased by 48.3 percent in fiscal year 2010 and by
26.1 percent in fiscal year 2009. All of these decreases are consistent with the budget constraints
that have been implemented throughout the Department. The one exception was in fiscal year
2009 when professional and outside services increased due to outside auditors’ fees.
Notes to the financial statements The notes provide additional information that is essential to a
full understanding of the data provided in the fund financial statements. The notes to the
financial statements can be found beginning on page 10 of this report.
Requests for information This financial report is designed to provide our citizens, taxpayers,
customers, investors, and creditors with an overview of the Fund’s finances. Questions
concerning any of the information provided in this report or requests for additional financial
information should be addressed to the Controller, Arizona Department of Transportation,
206 S. 17th Avenue, Phoenix, Arizona, 85007, or by visiting our website at
http://www.azdot.gov/Inside_ADOT/FMS/PDF/helprprt10.pdf.

2010 Financial Statements
6

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Statements of Net Assets
June 30, 2010 and 2009

Assets
Current assets:
Restricted cash on deposit with the State Treasurer (Note 1C)
Receivables:
Accrued interest
Loans (Note 3A)
Total current assets
Non-current assets:
Receivables:
Loans (Note 3A)
Total non-current assets
Total assets
Liabilities
Current liabilities:
Accrued payroll and other accrued expenses
Compensated absences
Due to Arizona counties and cities
Total current liabilities
Total liabilities
Net assets
Restricted for loans and other financial assistance
Total net assets

2010

2009

$ 66,819,124

$ 50,220,090

31,730
4,490,000
71,340,854

481,944
8,390,822
59,092,856

4,314,483
4,314,483
75,655,337

15,660,000
15,660,000
74,752,856

2,355
3,141
30,590
36,086

6,951
12,329
30,590
49,870

36,086

49,870

75,619,251
$ 75,619,251

74,702,986
$ 74,702,986

The notes to the financial statements are an integral part of this statement.

2010 Financial Statements
7

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Statements of Activities
For the fiscal years ended June 30, 2010 and 2009

2010
Operating revenues:
Interest on loans receivables
Total operating revenues

$

566,186
566,186

2009
$

1,127,759
1,127,759

Operating expenses:
Salaries and related benefits
Supplies
Professional and outside services
Interest on Board Funding Obligations
Other
Total operating expenses
Operating income <loss>

83,211
204
32,200
115,615
450,571

141,207
197
32,000
1,877,425
461
2,051,290
<923,531>

Non-operating revenues <expenses>:
Income from investments
Investment expense
Distributions to other state agencies
Total non-operating revenues <expenses>

497,119
<31,425>
465,694

1,572,256
<58,785>
<2,000>
1,511,471

Change in net assets
Total net assets - July 1
Total net assets - June 30

916,265
74,702,986
$ 75,619,251

The notes to the financial statements are an integral part of this statement.

2010 Financial Statements
8

587,940
74,115,046
$ 74,702,986

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Statements of Cash Flows
For the fiscal years ended June 30, 2010 and 2009

2010
Cash flows from operating activities:
Receipts from customers
Receipts from other funds
Receipts from Arizona counties and cities
Payments to suppliers
Payments to employees
Payments to other funds
Payments to Arizona counties and cities
Other receipts <payments>
Net cash provided <used> by operating activities

$

2009

843,804 $ 1,144,879
33,900,000
15,269,699
14,067,252
<32,601>
<32,000>
<96,797>
<142,115>
<20,000,000>
<23,360>
<3,982,077>
<461>
24,955,478
15,960,745

Cash flows from non-capital financing activities:
Distributions to other state agencies
Repayment of Board Funding Obligations
Net cash provided <used> by non-capital financing activities

-

Cash flows from investing activities:
Income from investments
Investment expense
Net cash provided <used> by investing activities

<2,000>
<54,047,781>
<54,049,781>

669,715
<31,426>
638,289

Net increase <decrease> in cash

1,743,070
<58,785>
1,684,285

16,599,034

Cash - July 1
Cash - June 30
Reconciliation of operating income <loss> to net cash
provided <used> by operating activities:
Operating income <loss>
Net changes in assets and liabilities:
Receivables
Accrued payroll and other accrued expenses
Compensated absences
Due to Arizona counties and cities
Advance from other Arizona Department of
Transportation funds
Accrued interest payable
Net cash provided <used> by operating activities

50,220,090
$ 66,819,124

77,630,108
$ 50,220,090

$

$

450,571
15,523,958
<4,596>
<9,188>
-

$ 15,960,745

The notes to the financial statements are an integral part of this statement.

2010 Financial Statements
9

<27,410,018>

<923,531>
43,971,705
781
<1,492>
30,590

<20,000,000>
1,877,425
$ 24,955,478

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements
June 30, 2010 and 2009

NOTE 1–SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The Arizona Department of Transportation (Department) was authorized in 1996 to administer a
State Infrastructure Bank under a cooperative agreement with the Federal Highway
Administration (FHWA), pursuant to Section 350 of the National Highway System Designation
Act of 1995. The Highway Expansion and Extension Loan Program (HELP) was established as
Arizona’s State Infrastructure Bank under Arizona Revised Statutes, Title 28, Chapter 21. The
HELP Fund (Fund) was initially capitalized with grants from the FHWA and state matching
funds.
The Fund is administered by a seven-member advisory committee. The members serve
staggered, four-year terms and serve no more than two consecutive terms. The committee is
charged with reviewing requests for loans and financial assistance, making recommendations to
the Transportation Board of the State of Arizona Department of Transportation (Transportation
Board) and submitting an annual report to the Governor and State Legislature.
The Transportation Board may make loans or provide other financial assistance to qualified
borrowers, including the Department, from monies in the Fund for eligible projects; enter into
loan repayment agreements with recipients; and apply for, accept, and administer grants and
other financial assistance from the United States and from other public and private sources that
are made for deposit in the Fund. Qualified borrowers, which include any political subdivision,
the State or its agencies, and Indian tribes, may submit loan applications to HELP for eligible
projects. HELP does not increase the Transportation Board’s bonding authority.
The Department is a department of the State of Arizona and is not a legally separate entity. The
Department has no component units. The Director of the Department serves as the Chief
Administrative Officer and is directly responsible to the Governor. The Governor appoints a
seven-member Transportation Board, which has responsibility for establishing a complete
system of state highway routes and distributing monies for local airport facilities’ projects
through a grant program.
The financial statements present only the funds comprising the Fund and are not intended to
present fairly the financial position or results of operations of the Department. The accounting
policies of the Department conform to generally accepted accounting principles in the United
States of America (GAAP) as applicable to governmental units.

2010 Financial Statements
10

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements (continued)
June 30, 2010 and 2009

NOTE 1–SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
B. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The economic resources measurement focus and the accrual basis of accounting are followed for
reporting purposes. Under the accrual basis of accounting, revenues are recorded when earned
and expenses are recorded when a liability is incurred, regardless of the timing of related cash
flows. Federal grants and reimbursements are recognized as revenues as soon as all eligibility
requirements imposed by the provider have been met.
The Department uses an enterprise fund to account for the Fund and for its loan distribution
operation. The Fund can receive monies from the FHWA along with applicable state matching
funds, State Transportation Board Funding Obligations, direct state appropriations, and other
lawfully available sources. The Transportation Board may use monies in the Fund to make
eligible project loans or provide other financial assistance to qualified borrowers, subsidize
interest rates, provide other forms and methods of financial assistance, and pay the costs to
administer the Fund.
The preparation of these financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
As allowed by the Governmental Accounting Standards Board (GASB) Statement No. 20,
Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities
that Use Proprietary Fund Accounting, the Department’s enterprise funds follow GASB
pronouncements and those Financial Accounting Standard Board (FASB) Statements and
Interpretations, Accounting Principle Board Opinions, and Accounting Research Bulletins that
were issued on or before November 30, 1989, except those that conflict with a GASB
pronouncement. The enterprise funds do not follow any FASB Statements and Interpretations
issued after November 30, 1989.
C. Assets, Liabilities, and Net Assets
Deposits and Investments
The cash balance is on deposit with the State Treasurer for pooled investment purposes and is
not evidenced by securities that exist in physical or book entry form in the Fund’s name. All
investments are carried in the name of the State of Arizona. State statutes require the State
Treasurer to invest these pooled funds in collateralized time certificates of deposit, repurchase
agreements, obligations of the U.S. Government, and other permitted investments. All
investments are carried at fair value. These balances are not subject to GASB Statement No. 3,

2010 Financial Statements
11

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements (continued)
June 30, 2010 and 2009

NOTE 1–SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Deposits with Financial Institutions, Investments (including Repurchase Agreements), and
Reverse Repurchase Agreements, and GASB Statement No. 40, Deposit and Investment Risk
Disclosures – an amendment of GASB Statement No. 3, classification because they are included
in the state’s investment pool.
The investment pool is not required to register (and is not registered) with the Securities and
Exchange Commission under the 1940 Investment Advisors Act. The activity and performance
of the pool is reviewed monthly by the State Board of Investment in accordance with ARS §35311. The fair value of investments is measured on a monthly basis. Participant shares are
purchased and sold based on the Net Asset Value (NAV) of the shares. The NAV is determined
by dividing the fair value of the portfolio by the total shares outstanding. The State Treasurer
does not contract with an outside insurer in order to guarantee the value of the portfolio or the
price of shares redeemed. As of June 30, 2010 and 2009, the state’s investment pool was not
rated.
The Fund’s investments are included in the state investment pool and these investments are not
shown in the Fund’s name. From the perspective of the Fund, the pool functions as both a cash
management pool and a demand deposit account. Therefore, the Fund presents its equity in the
internal pool as required in GASB Statement No. 31, Accounting and Financial Reporting for
Certain Investments and for External Investment Pools, and carries the investments at amortized
cost, which approximates fair value.
Receivables and Payables
Activities between Departmental funds that are representative of lending/borrowing
arrangements outstanding at the end of the fiscal year are referred to as due to/due from. All
other outstanding balances between the Fund and Arizona counties and cities are reported as
loans receivable.
Restricted Assets
Resources of the Fund are classified as restricted assets on the balance sheet because their use is
limited by state statutes.
Compensated Absences
It is the Department’s policy to permit employees to accumulate earned but unused sick leave
and vacation benefits. There is no liability for unpaid accumulated sick leave. All vacation pay is
accrued when incurred in the proprietary fund financial statements. A liability for these amounts
is reported as current liabilities.

2010 Financial Statements
12

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements (continued)
June 30, 2010 and 2009

NOTE 1–SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Effective July 1, 1998, state employees are eligible to receive payment for an accumulated sick
leave balance of 500 hours or more with a maximum of 1,500 hours, upon retirement directly
from state service. The benefit value is calculated by taking the state hourly rate of pay at the
retirement date, multiplied by the number of sick hours at the retirement date, times the
eligibility percentage. The eligibility percentage varies based upon the number of accumulated
sick hours from 25 percent for 500 hours to a maximum of 50 percent for 1,500 hours. The
maximum benefit value is $30,000. The benefit is paid out in annual installments over three
years. The Retiree Accumulated Sick Leave Fund is accounted for on the State’s financial
statements as an Internal Service Fund.
Employees are allowed to accumulate up to 240 hours of vacation leave (320 hours for
uncovered employees) which is paid when vacation is taken or upon termination of employment
at the individual’s then-current rate of pay. For the proprietary funds, all of the outstanding
vacation at June 30 is recorded as a current liability.
Net Assets
The difference between assets and liabilities is reported as “Net Assets” on the proprietary fund
statements.
D. Revenues and Expenses
Revenues and expenses of proprietary funds are classified as operating and non-operating and
are sub-classified by object (e.g., salaries, travel, interest on Board Funding Obligations, etc).
Operating revenues and expenses generally result from providing services and producing and
delivering goods. All other revenues and expenses are reported as non-operating.
NOTE 2–STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
The expenses of the Fund are not governed by appropriations of the state legislature and
therefore are not subject to the limitations of a legally adopted budget.

2010 Financial Statements
13

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements (continued)
June 30, 2010 and 2009

NOTE 3–DETAILED NOTES
A. Loans Receivables
Loans receivables represent loans made pursuant to Loan Repayment Agreements. Twelve loans
have balances outstanding or are pending as of June 30, 2010, as follows:
PROJECT SPONSOR

LOAN DATE

INTEREST
RATE*
2.51%
3.11%
To be determined
To be determined
3.13%
To be determined
1.97%
3.20%
To be determined
1.49%
2.35%
To be determined
To be determined
To be determined

TOWN OF MARANA
11/19/2004
CITY OF KINGMAN
9/23/2005
CITY OF PHOENIX
11/18/2005
CITY OF TOMBSTONE
11/18/2005
CITY OF GOODYEAR
4/21/2006
MOHAVE COUNTY
4/21/2006
CITY OF TUCSON
3/16/2007
TOWN OF ORO VALLEY
7/20/2007
CITY OF BISBEE
9/21/2007
CITY OF ELOY
11/16/2007
PINAL COUNTY
12/21/2007
TOWN OF PAYSON
3/21/2008
MARICOPA COUNTY
3/21/2008
CITY OF PEORIA
5/16/2008
TOTAL
* Interest Rate will be determined on the date of the first draw.

AUTHORIZED
FINAL
DRAWS TO
OUTSTANDING
DUE WITHIN
LOAN AMOUNT MATURITY
DATE
LOAN BALANCE
ONE YEAR
7,000,000
Mar-10
7,000,000
2,000,000
Nov-11
2,000,000
700,000
350,000
11,900,000
Jun-10
Withdrawn
150,000
Nov-10
7,369,000
Jun-10
6,783,964
8,700,000
Jun-10
14,000,000
May-11
13,400,000
8,000,000
Aug-12
8,000,000
5,513,133
3,000,000
2,400,000
Oct-10
3,200,000
Mar-14
3,200,000
1,591,350
640,000
2,000,000
May-12
2,000,000
1,000,000
500,000
1,200,000
May-13
25,700,000
Jul-13
9,910,000
Apr-12
Withdrawn
$
103,529,000
$
42,383,964 $
8,804,483 $
4,490,000

The activity for the fiscal year ended June 30, 2010, was as follows:

Loans receivable

Beginning
Balance
July 1, 2009
$ 24,050,822

Additions
$
23,360

Ending
Balance
Reductions
June 30, 2010
$ <15,269,699> $
8,804,483

2010 Financial Statements
14

Due Within
One Year
$ 4,490,000

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements (continued)
June 30, 2010 and 2009

NOTE 3–DETAILED NOTES (continued)
Seventeen loans had balances outstanding or were pending as of June 30, 2009, as follows:
PROJECT SPONSOR

LOAN DATE

INTEREST
RATE*
1.43%
1.44%
2.51%
3.06%
3.11%
To be determined
To be determined
3.13%
To be determined
1.97%
3.20%
To be determined
1.49%
2.35%
To be determined
To be determined
To be determined

GILA COUNTY
4/19/2002
REGIONAL FREEWAY SYSTEM
11/21/2003
TOWN OF MARANA
11/19/2004
PIMA COUNTY
5/20/2005
CITY OF KINGMAN
9/23/2005
CITY OF PHOENIX
11/18/2005
CITY OF TOMBSTONE
11/18/2005
CITY OF GOODYEAR
4/21/2006
MOHAVE COUNTY
4/21/2006
CITY OF TUCSON
3/16/2007
TOWN OF ORO VALLEY
7/20/2007
CITY OF BISBEE
9/21/2007
CITY OF ELOY
11/16/2007
PINAL COUNTY
12/21/2007
TOWN OF PAYSON
3/21/2008
MARICOPA COUNTY
3/21/2008
CITY OF PEORIA
5/16/2008
TOTAL
* Interest Rate will be determined on the date of the first draw.

AUTHORIZED
FINAL
DRAWS TO
OUTSTANDING
DUE WITHIN
LOAN AMOUNT MATURITY
DATE
LOAN BALANCE
ONE YEAR
1,237,500
Mar-09
1,237,500
80,500,000
Aug-08
80,500,000
7,000,000
Mar-10
7,000,000
900,000
900,000
4,836,000
Jun-09
4,836,000
2,000,000
Nov-11
2,000,000
1,100,000
400,000
11,900,000
Jun-10
150,000
Nov-10
7,369,000
Jun-10
6,760,604
3,450,822
3,450,822
8,700,000
Jun-10
14,000,000
May-11
13,400,000
5,900,000
2,500,000
8,000,000
Aug-12
8,000,000
8,000,000
2,400,000
Oct-10
3,200,000
Mar-14
3,200,000
3,200,000
640,000
2,000,000
May-12
2,000,000
1,500,000
500,000
1,200,000
May-13
25,700,000
Jul-13
9,910,000
Apr-12
$
190,102,500
$
128,934,104 $
24,050,822 $
8,390,822

The activity for the fiscal year ended June 30, 2009, was as follows:

Loans receivable

Beginning
Balance
July 1, 2008
$ 68,005,408

Additions
$
4,012,666

Ending
Balance
Reductions
June 30, 2009
$ <47,967,252> $ 24,050,822

Due Within
One Year
$ 8,390,822

B. Short-term Debt – Board Funding Obligations
The Transportation Board had issued Board Funding Obligations (BFOs) to the State Treasurer
in accordance with Arizona Revised Statutes §28-7678. The BFOs are nonnegotiable and are
authorized by Transportation Board resolution specifying the rate(s) of interest, the date(s) of
maturity, the terms of redemption, the form and manner of execution of the funding obligation,
any terms necessary to secure credit enhancement or other sources of payment or security, and
any other item the Transportation Board determines is necessary. The total principal amount of
BFOs at any one time shall not be more than $200 million and shall mature no later than four
calendar years after the delivery. Up to $60 million of the proceeds shall be deposited into the
General Fund (State Highway Fund) and up to $140 million shall be deposited into the Highway
Expansion and Extension Loan Program Fund.
The BFOs are special obligations of the Transportation Board; are not obligations that are
general, special or otherwise of the State; are not a legal debt of the State; and are payable and

2010 Financial Statements
15

Arizona Department of Transportation
Highway Expansion and Extension Loan Program Fund
Notes to Financial Statements (continued)
June 30, 2010 and 2009

NOTE 3–DETAILED NOTES (continued)
enforceable only from the monies pledged and assigned in the authorizing resolutions of the
Transportation Board.
The State Treasurer must provide written notice to the Transportation Board and the Department
when the operating monies fall below $400 million. If operating monies fall below $200 million,
the State Treasurer may call the investment in the BFOs in $25 million increments up to the
amount that the operating monies are below $200 million. The State Treasurer must give the
Transportation Board and the Department at least fifteen days’ notice of the call.
There was no activity for fiscal year 2010; the activity for the fiscal year ended June 30, 2009,
was as follows:

Board Funding Obligations

Beginning
Balance
July 1, 2008
$ 50,000,000

Additions
$

-

Ending
Balance
Reductions
June 30, 2009
$ <50,000,000> $
-

During fiscal year 2009, the State Treasurer called and the Department repaid $50,000,000 in
principal and $4,047,781 in accrued interest for the Series 2007 BFOs which were called by the
State Treasurer as required by Arizona Revised Statutes §35-313(D)(3).

NOTE 4–OTHER INFORMATION
Contingent Liabilities
Amounts received or receivable from grant agencies are subject to audit and adjustment by
grantor agencies, principally the federal government. Any disallowed claims, including amounts
already collected, may constitute a liability of the applicable funds. The amount, if any, of
expenses which may be disallowed by the grantor cannot be determined at this time although the
Fund expects any such amounts to be immaterial.

2010 Financial Statements
16