Yavapai County, Arizona comprehensive annual financial report fiscal year ended June 30, 2005 |
Previous | 1 of 4 | Next |
|
This page
All
Subset |
Yavapai County, Arizona
Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2005
Yavapai County, Arizona Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2005
Board of Supervisors
Carol Springer, District 1 A.G. "Chip" Davis, District 3 Thomas Thurman, District 2
Prepared by Yavapai County Finance Department
YAVAPAI COUNTY Comprehensive Annual Financial Report Year Ended June 30, 2005 TABLE OF CONTENTS
INTRODUCTORY SECTION Letter of Transmittal ................................................................................................................................... 1 Certificate of Achievement for Excellence in Financial Reporting ............................................................. 6 Organizational Chart .................................................................................................................................. 7 Yavapai County Officials ............................................................................................................................ 8 FINANCIAL SECTION Independent Auditors' Report..................................................................................................................... 9 Management's Discussion and Analysis (Required Supplementary Information) ................................................................................................. 11 BASIC FINANCIAL STATEMENTS: Government-Wide Financial Statements: Statement of Net Assets..................................................................................................................... 21 Statement of Activities ........................................................................................................................ 22 Fund Financial Statements: Balance Sheet-Governmental Funds ................................................................................................. 24 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets ............................................................................................. 26 Statement of Revenues, Expenditures, and Changes in Fund Balances-Governmental Funds.......................................................................................... 28 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ........................................................................................................... 30 Statement of Net Assets-Proprietary Funds....................................................................................... 31 Statement of Revenues, Expenses and Changes in Fund Net Assets -Proprietary Funds........................................................................................................................... 32 Statement of Cash Flows-Proprietary Funds ..................................................................................... 33 Statement of Fiduciary Net Assets-Fiduciary Funds .......................................................................... 34 Statement of Changes in Fiduciary Net Assets-Fiduciary Funds....................................................... 35 Notes to the Financial Statements: Note 1 - Summary of Significant Accounting Policies..................................................................... 36 Note 2 - Deposits and Investments................................................................................................. 42 Note 3 - Due From Other Governments ......................................................................................... 44 Note 4 - Capital Assets ................................................................................................................... 45 Note 5 - Long-term Liabilities .......................................................................................................... 47 Note 6 - Special Assessment Debt Payable ................................................................................... 47 Note 7 - Bonds ................................................................................................................................ 48 Note 8 - Notes Payable................................................................................................................... 49 Note 9 - Compensated Absences and Claims and Judgments ...................................................... 49 Note 10 - Capital Leases .................................................................................................................. 49 Note 11 - Landfill Closure and Postclosure Care Costs ................................................................... 50 Note 12 - Insurance Claims .............................................................................................................. 51 Note 13 - Risk Management ............................................................................................................. 51 Note 14 - Line of Credit Arrangement............................................................................................... 52 Note 15 - Retirement Plans...............................................................................................................52 Note 16 - Interfund Balances and Activity......................................................................................... 54 Note 17 - Condensed Financial Statements of the County Treasurer's Investment Pool ................................................................................................................ 55
i
YAVAPAI COUNTY Comprehensive Annual Financial Report Year Ended June 30, 2005
Required Supplementary Information: Schedule of Agent Retirement Plans' Funding Progress...................................................................... 57 Budgetary Comparison Schedules: General Fund...................................................................................................................................... 58 Jail District Fund ................................................................................................................................. 60 Regional Road Fund .......................................................................................................................... 61 HURF Road Fund............................................................................................................................... 62 Notes to Budgetary Comparison Schedules ...................................................................................... 63 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet-Nonmajor Governmental Funds .............................................................. 66 Combining Statement of Revenues, Expenditures and Changes in Fund Balances-Nonmajor Governmental Funds ......................................................................... 74 Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual: Jail Construction ......................................................................................................................... 82 Capital Projects........................................................................................................................... 83 Health Care................................................................................................................................. 84 Recorder's Surcharge ................................................................................................................. 85 Assessor's Surcharge ................................................................................................................. 86 Public Library .............................................................................................................................. 87 School ......................................................................................................................................... 88 Parks & Recreation ..................................................................................................................... 89 Water Advisory Committee ......................................................................................................... 90 Landfill / Environment ................................................................................................................. 91 Public Works ............................................................................................................................... 92 CDBG.......................................................................................................................................... 93 Improvement Districts ................................................................................................................. 94 Clerk of Superior Court ............................................................................................................... 95 County Attorney .......................................................................................................................... 96 Law Enforcement ........................................................................................................................ 97 Emergency Management............................................................................................................ 98 Probation..................................................................................................................................... 99 Courts ....................................................................................................................................... 100 Public Defender ........................................................................................................................ 101 Jail District Debt Service........................................................................................................... 102 Coyote Springs ......................................................................................................................... 103 Prescott East............................................................................................................................. 104 Granite Gardens ....................................................................................................................... 105 Pine Valley ................................................................................................................................ 106 HELP......................................................................................................................................... 107 Capital Assets Used in the Operation of Governmental Funds: Comparative Schedules By Source............................................................................................... 109 Schedule By Function and Activity ................................................................................................ 110 Schedule of Changes By Function and Activity............................................................................. 111 Statement of Changes in Assets and Liabilities-Agency Funds ...................................................... 112
ii
YAVAPAI COUNTY Comprehensive Annual Financial Report Year Ended June 30, 2005
STATISTICAL SECTION General History: General Government Expenditures by Function ................................................................................. 113 General Government Revenues by Source ........................................................................................ 114 Assessed and Estimated Actual Value of Taxable Property............................................................... 115 Taxes and Assessments: Property Tax Levies and Collections................................................................................................... 116 Property Tax Rates-All Direct and Overlapping Governments ........................................................... 117 Special Assessment Billings and Collections...................................................................................... 118 Long-Term Debt: Computation of Legal Debt Margin ..................................................................................................... 119 Computation of Direct and Overlapping Debt ..................................................................................... 120 Miscellaneous: Principal Taxpayers............................................................................................................................. 121 Salaries of Elected County Officials .................................................................................................... 122 Schedule of Insurance in Force .......................................................................................................... 123 Demographic and Other Statistical Data............................................................................................. 124
iii
This page is left blank intentionally.
iv
INTRODUCTORY SECTION
Yavapai County Finance Department
MICHAEL S. DANOWSKI, CPA FINANCE DIRECTOR
November 3, 2005
To the Board of Supervisors, and Citizens of Yavapai County: State law requires that counties prepare a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by the Arizona State Auditor General's Office or by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of Yavapai County for the fiscal year ended June 30, 2005. This report consists of management's representations concerning the finances of Yavapai County. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the County has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the County's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the County's Comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. Walker & Armstrong LLP, a firm of licensed certified public accountants, have audited the County's financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the County for the fiscal year ended June 30, 2005, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit; that there was a reasonable basis for rendering an unqualified opinion that the Yavapai County financial statements for the fiscal year ended June 30, 2005, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report.
1
The independent audit of the financial statements of the County was part of a broader, federally mandated "Single Audit" designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government's internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the County's separately issued Single Audit report. GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The County's MD&A can be found immediately following the report of the independent auditors. Profile of the Government Yavapai County was formed in 1864; one year after the Arizona Territory was established. The County was named after the Yavapai tribe, whose name means "people of the sun". The County is located in the central portion of the state encompassing approximately 8,125 square miles. The County is empowered to levy a property tax on both real and personal properties within its boundaries. The County operates under the supervisor-administrator form of government. Policymaking and legislative authority are vested in a board of supervisors (Board) consisting of three members. The Board appoints an Administrator, who is responsible for overseeing the day-today operations of the government. The Board consists of three members elected to four-year terms representing three supervisorial districts. The Board is responsible for the financing and administration of County government, has final approval over County departmental budgets and sets property tax rates. As part of its administrative duties, the Board is responsible for appointing department heads, and members of County boards and commissions dealing with planning and zoning, building codes, health, employees and employee benefits, private industry and agriculture. The Board acts as the board of directors for special districts within the County such as jail, water, sanitation, lighting, library and flood control. The County Administrator develops and presents the County budget, oversees countywide administrative departments, assists elected officials, and coordinates with other governments in intergovernmental relations. In addition to the Board, other elected officers representing the County include the Assessor, Clerk of the Superior Court, County Attorney, Recorder, School Superintendent and the Treasurer. There are six elected Superior Court Judges, and five Justices of the Peace. Yavapai County provides a full range of services, including police protection, courts, health services, the construction and maintenance of highways, streets, other infrastructure and parks.
2
The financial reporting entity includes all the funds of the primary government (Yavapai County), as well as its' component units. Component units are legally separate entities for which the primary government is financially accountable. The Board acts as the Board of Directors of these component units. Accordingly, the Yavapai County Flood Control District, Library District and various special assessment districts are reported as a part of the governmental fund types of the primary government. There are various school districts, special districts, and fire districts within Yavapai County governed by independently elected boards. The financial statements of such districts are not included in this report except to reflect amounts held in an agency capacity by the County Treasurer. The reporting entity is further described in Note 1 to the financial statements. The annual budget serves as the foundation for the County's financial planning and control. All departments of the County are required to submit requests for appropriation to the County Administrator annually. These requests are used as the starting point for developing a proposed budget. The County Administrator then presents this proposed budget to the Board of Supervisors for review on or before the third Monday in July. On or before the seventh day before the day in August when the Board sets tax levy rates, the Board must hold a public hearing and a special meeting of the Board, at which time the final budget must be adopted. The final budget is adopted by fund and department. Transfers of appropriations between funds or departments require approval of the Board. Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund and major special revenue funds this comparison is presented beginning on page 58 as part of the required supplemental information. For governmental funds, other than the general fund and major special revenue funds with appropriated annual budgets, this comparison is presented in the governmental fund subsection of this report, which starts on page 82. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the County operates. Local Economy. Yavapai County has experienced rapid population growth in recent years, increasing 55% to a total of 167,517, from the 1990 to the 2000 census. This rate makes Yavapai County one of the fastest growing counties in the State of Arizona. This is exemplified by Yavapai County's strong residential construction activity. The unemployment rate is 3.3% compared to the statewide average of 5.6%. Yavapai County Government is the single largest employer in Yavapai County. Retail trade, tourism, utilities, healthcare, warehouse and distribution centers, mining, light industry and government all contribute to the economy.
3
Long-term financial planning. In November of 1999, the Yavapai County Jail District was formed when the citizens approved a dedicated excise tax of up to 1/4 cent for the purpose of constructing, operating, maintaining and financing County jail facilities. In December of 1999, the Board adopted Resolution No.1999-1 establishing the initial excise tax of 1/5 cent. On March 26, 2003, the excise tax was raised to the voter approved rate of 1/4 cent. The excise tax has been used to construct new, efficient jail facilities and to pay for additional staff and other operating costs of the jail system. The first phase of the jail construction was to increase the size of the Camp Verde Jail Facility by 480 beds. Construction of this phase began in January of 2002 and was completed in the fall of 2003. Total cost was approximately $20 million. Pledged revenue obligations in the amount of $15,260,000 were issued to finance the majority of the construction costs. Phase two of the construction program, which should begin within the next two years, anticipates the construction of a new jail facility in western Yavapai County. Upon its completion, the current Prescott Facility would be taken out of service and converted to other uses due to its outmoded design and poor location. Cash management policies and practices. Cash temporarily idle during the year was invested in obligations of the U.S. Treasury, the Arizona State Treasurer's investment pool, specified state and local government bonds, and interest-earning investments such as savings accounts, certificates of deposit and repurchase agreements in eligible depositories. The average yield on investments for the fiscal year ended 2005 was 2.25 percent. Risk management. The County is covered by three public entity risk pools: the Arizona Counties Property and Casualty Pool: the Arizona Counties Worker's Compensation Pool, and the Yavapai Combined Trust. Additional information on the County's risk management activity can be found in Note 13 of the notes to the financial statements. Pension. The County participates in four retirement plans: The Arizona State Retirement System, the Public Safety Personnel Retirement System, the Correctional Officer Retirement Plan and the Elected Officials Retirement Plan. Note 15 of the notes to financial statements contain Information about the types of employees covered, the County's liability, and general information about the individual plans. Government Finance Officers Association The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Yavapai County for its comprehensive annual financial report for the fiscal year ended June 30, 2004. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.
4
Acknowledgements The preparation of this report could only be accomplished through the efforts of the staff of the Finance Department, and the assistance of Walker & Armstrong LLP, Certified Public Accountants and the Arizona State Auditor General's Office. I also wish to thank the Board of Supervisors for their dedicated oversight of the financial condition of the County and their support for our efforts to improve its financial operations. Respectfully submitted, ___________________________ Michael S. Danowski Chief Financial Officer
5
6
YAVAPAI COUNTY
Organizational Chart
CITIZENS OF YAVAPAI COUNTY
TREASURER
RECORDER
ASSESSOR
JUSTICE COURTS
SCHOOL SUPERINTENDENT
BOARD OF SUPERVISORS
SHERIFF
CLERK OF SUPERIOR COURT
ATTORNEY
SUPERIOR COURT
CONSTABLES
ELECTIONS ADULT PROBATION JUVENILE PROBATION
PUBLIC FIDUCIARY
LIBRARY
PUBLIC DEFENDER
PUBLIC WORKS
COUNTY ADMINISTRATOR
CLERK OF BOARD
DEVELOPMENT SERVICES
HEALTH
MEDICAL ASSISTANCE
FLEET
MANAGEMENT INFORMATION SYSTEMS
FINANCE
HUMAN RESOURCES
FACILITIES
7
Yavapai County Officials
BOARD OF SUPERVISORS
Carol Springer, Chairman, District 1 Thomas C. Thurman, Member, District 2 A.G. "Chip" Davis, Member, District 3
CLERK OF THE BOARD
Bev Staddon
COUNTY ADMINISTRATOR
James M. Holst
FINANCE DIRECTOR
Michael S. Danowski
8
FINANCIAL SECTION
Yavapai County Management's Discussion and Analysis
As management of Yavapai County, we offer readers of Yavapai County's financial statements this narrative overview and analysis of the financial activities of Yavapai County for the fiscal year ended June 30, 2005. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 1 5. Financial Highlights The assets of Yavapai County exceeded its liabilities at the close of the most recent fiscal year by $129,181,492 (net assets). Of this amount, $27,543,026 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. As of the close of the current fiscal year, Yavapai County's governmental funds reported combined ending fund balances of $36,929,165 a increase of $8,071,358 in comparison with the prior year. At the end of the current fiscal year, unreserved fund balance for the general fund was $3,595,788 or 5.8% of total general fund expenditures. Yavapai County's total long-term liabilities decreased by $6,609,709 during the current fiscal year. The key factors in this decrease were the scheduled repayment of notes payable and the retirement of special assessment and jail revenue bond debt.
Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to Yavapai County's basic financial statements. Yavapai County's basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Governmentwide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of Yavapai County's finances, in a manner similar to a private sector business. The statement of net assets presents information on all of Yavapai County's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of Yavapai County is improving or deteriorating. The statement of activities presents information showing how the government's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused and paid-time-off leave). Both of the government-wide financial statements distinguish functions of Yavapai County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of Yavapai County include general government, public safety, highways and streets, health, welfare and sanitation, culture and recreation, and education. The Yavapai Long-Term Care Division comprises the business-type activities of Yavapai County.
11
Yavapai County Management's Discussion and Analysis
The government-wide financial statements not only include Yavapai County itself (known as the primary government), but also a legally separate Jail District, Flood Control District, Library District and various Special Assessment Districts. These districts function for all practical purposes as departments of Yavapai County, and therefore have been included as an integral part of the primary government. The government-wide financial statements can be found on pages 21 - 22 of this report. 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. Yavapai County, like other state and local governments uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. All of the funds of Yavapai County can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. 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 governmentwide financial statements, the governmental funds financial statements 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 may be useful in evaluating a government's near-term financial requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near term financing decisions. Both the governmental funds balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Yavapai County maintains numerous individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for six funds considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. The basic governmental fund financial statements can be found on pages 24 - 30 of this report. Proprietary funds. Yavapai County maintains one type of proprietary fund. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Yavapai County uses an enterprise fund to account for its Arizona Long-Term Health Care Division. The basic proprietary fund financial statements can be found on pages 31 - 33 of this report. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support Yavapai County's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary funds financial statements can be found on pages 34 - 35 of this report.
12
Yavapai County Management's Discussion and Analysis
Notes to the financial statements. The notes provide additional information that is essential to the full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 36 - 56 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning Yavapai County's progress in funding its obligation to provide pension benefits to its employees and budgetary comparison schedules for the general fund and major special revenue funds. Other required supplementary information can be found on pages 57 - 63 of this report. The combining statements referred to earlier in connection with non-major governmental funds are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 66 - 107 of this report. Government-wide Financial Analysis Statement of Net Assets. As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of Yavapai County, assets exceeded liabilities by $126 million at the close of the most recent fiscal year.
Net Assets (in millions) Governmental Activities 2004 Current and other assets Restricted assets Capital assets Total assets Long-term liabilities outstanding Other liabilities Total liabilities Net assets: Invest in capital assets, net of related debt Restricted Unrestricted Total net assets 2005 $ 48.6 1.6 112.3 162.5 24.0 12.4 36.4 98.0 .6 27.5 $ 126.1
As Restated
Business-type Activities
Total 2004
$ 40.0 1.9 110.7 152.6 30.0 12.1 42.1 89.9 .5 20.1 $ 110.5
2005 $ 6.7 .1 6.8 3.7 3.7 .2 2.9 $ 3.1
2004 $ 6.9 .2 7.1 4.2 4.2 .2 2.7 $ 2.9
2005 $ 55.3 1.6 112.4 169.3 24.0 16.1 40.1 98.2 3.5 27.5 $ 129.2
As Restated
$
46.9 1.9 110.9 159.7 30.0 16.3 46.3
90.1 3.2 20.1 $ 113.4
By far the largest portion of Yavapai County's net assets (76%) reflects its investment in capital assets (e.g. land, buildings, machinery and equipment), less any related debt and accumulated depreciation used to acquire those assets that is still outstanding. Yavapai County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although Yavapai County'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. Approximately 3% of Yavapai County's net assets represent resources that are subject to external 13
Yavapai County Management's Discussion and Analysis
restrictions on how they may be used. The remaining balance of unrestricted net assets ($27.5 million) may be used to meet the government's ongoing obligations to citizens and creditors. At the end of the current fiscal year Yavapai County is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. The increase in total net assets, related to governmental activities, is primarily due to increases in program revenues. Restricted net assets increased by $.3 million, primarily due to moderate revenue increases in the business-type activities. The increase in unrestricted net assets of $7.4 million is due to increases in both program and general revenues. Governmental activities capital assets have been restated due to the recording of previously unrecorded infrastructure. Statement of Activities. Already noted was the statement of activities purpose in presenting information in how the government's net assets changed during the most recent fiscal year. A chart of changes in net assets follows. For the fiscal year, net assets increased $15.8 million, primarily coming from governmental activities. The increase in assets in governmental activities is related to the construction of assets, rather than accumulation of cash or other liquid assets. The basis of accounting used in the government-wide statement of activities excludes capital expenditures while its revenues include taxes that are used, in part, for the construction of those assets. Beginning net assets have been restated due to the recording of previously unrecorded infrastructure. Additional information on this restatement can be found on page 46.
Changes in Net Assets (in millions) Governmental Activities 2005 Revenues Program revenues: Charges for services $ 16.8 Operating grants and contributions 27.0 Capital grants 2.6 General revenues: Property taxes 34.9 Sales taxes 41.1 Vehicle license tax 10.1 Miscellaneous 7.1 Total revenues 139.6 Expenses General government 53.0 Public safety 34.2 Highways and streets 14.5 Sanitation 1.6 Health 9.0 Welfare 9.0 Culture and recreation .7 Education 2.3 Long-term care Total expenses 124.3 Increase (decrease) in net assets before transfers 15.3 Transfers .3 Increase (decrease) in net assets 15.6 Net assets, beginning restated 110.5 Net assets, ending $ 126.1 2004 Business-type Activities 2005 2004 2005
Total 2004
$ 13.8 26.7 .1 31.9 35.7 9.5 5.3 123.0 38.2 31.7 18.5 1.6 8.8 7.8 .5 2.5 109.6 13.4 1.0 14.4 96.1 $ 110.5
$ 34.9
$ 31.5
$ 51.7 27.0 2.6 34.9 41.1 10.1 7.4 174.8 53.0 34.2 14.5 1.6 9.0 9.0 .7 2.3 34.7 159.0 15.8 15.8 113.4 $ 129.2
$ 45.3 26.7 .1 31.9 35.7 9.5 5.5 154.7 38.2 31.7 18.5 1.6 8.8 7.8 .5 2.5 31.8 141.4 13.3 13.3 100.1 $ 113.4
.3 35.2
.2 31.7
34.7 34.7 .5 (.3) .2 2.9 $ 3.1
31.8 31.8 (.1) (1.0) (1.1) 4.0 $ 2.9
14
Yavapai County Management's Discussion and Analysis
Governmental activities. Governmental activities revenues totaled $139.6 million for fiscal year 2005. The following are highlights of County revenues: Sales taxes are comprised of state shared-sales tax, a 0.5% County excise tax and a 0.25% Jail District tax. Overall sales tax increased by $5.4 million approximately (15%) in the current fiscal year due to a general increase in sales activity, fueled by an improving local economy and continued population growth. The County excise tax and the Jail District tax increased by $1.5 million and .8 million respectively, and the state-shared sales tax, the largest component of sales tax, increased by over $2 million, although actual collections exceeded the prior year by $3 million, however Arizona law requires actual sales taxes collected above the budgeted amount to be recognized in fiscal year 2005/06. Based upon the Arizona State Department of Revenue projections, it is expected that State-shared sales tax will show a similar increase in fiscal year 2005/06. Property taxes increased by $3 million (9.3%) during the year. This increase is attributable to increased property values, new construction and a 1.2% increase in the property tax rate. Charges for services increased by $3 million primarily from increases in building and related permits, County Recorder and Assessor fees, which is indicative of increased building and real estate sales activity.
Revenues by Source - Governmental Activities
Property taxes 25%
Charges for services 12%
Operating grants and contributions 21%
Vehicle license tax 7% Miscellaneous 5%
Sales taxes 30%
15
Yavapai County Management's Discussion and Analysis
Expenses For the most part, increases in expenses closely paralleled inflation and growth in the demand for services. The general government function experienced significant growth in the Assessor, Public Defender, Management Information Services, Development Services and Elections departments. Increases, over the prior year, in public safety are the result of increasing demands on law enforcement and detention within the Sheriff's office. The decrease in highways and streets is the result of the payment to the State of Arizona in the prior year for the County's share of a major road project.
Expenses and Program Revenues - Governmental Activities
60.0
50.0
40.0
$ In Millions
30.0
20.0
10.0
General government Public safety Highways and streets Sanitation Health W elfare Culture and recreation Education
Expenses
Program Revenues
Business-type activities Business-type activities consist solely of the Yavapai County Department of Medical Assistance, Long-Term Health Care Division ("Division"). The Division operates a prepaid health program for qualified persons of Yavapai County within the State of Arizona. The Program provides hospitalization, medical care, managed institutional care, and home and community based long-term care for physically disabled and elderly persons. The funds used to carry out the Division's program are provided by the State of Arizona under its Arizona Long-Term Care System administered by the Arizona Health Care Cost Containment System (AHCCCS). The funding sources include federal, state and county monies that are paid to the Division on a capitation basis.
16
Yavapai County Management's Discussion and Analysis
Capitation revenues increased by $3.4 million, or 11%, for fiscal year 2005 over the prior fiscal year. Operating expenses increased $2.9 million representing a 9% change from the prior year. These increases are the direct result of an increase in client membership and an increase in provider service costs. Expenses and Program Revenues-Business-type Activities
40.00 35.00 $ In Millions 30.00 25.00 20.00 15.00 10.00 5.00 -
Expenses
Program Revenues
Financial Analysis of the Government's Funds As noted earlier, Yavapai County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of Yavapai County's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing Yavapai County's financing requirements. In particular, 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. As of the end of the current fiscal year, Yavapai County's governmental funds reported combined ending fund balances of $36,929,165, an increase of $8,071,358 in comparison with the prior year. This change is primarily attributable to the increases in the fund balances of the general, capital projects and the regional road funds. The fund balance is unreserved other than the reserves for inventories of $257,723 and debt service of $546,806. The general fund is the chief operating fund of Yavapai County. At the end of the current fiscal year, unreserved fund balance of the general fund was $3,595,788, which was $1,732,383 more than the previous fiscal year. Otherwise both revenues and expenditures for the current fiscal year closely followed estimates.
17
Yavapai County Management's Discussion and Analysis
Proprietary fund. Yavapai County's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Restricted net assets of the Long-Term Care Division at the end of the year amounted to $2,921,417, an increase of $218,336 over the prior fiscal year. This increase is primarily due to the fixed capitation amount received from the AHCCCS, which was slightly more than what was expected. Other factors concerning the finances of this fund have already been addressed in the discussion of Yavapai County's business-type activities. General Fund Budgetary Highlights Certain departments received supplemental appropriations as follows:
Public Defender Treasurer Management Information System County Attorney Development Services Human Resources School Superintendent Bagdad / Yarnell Justice Court $ 103,484 20,916 12,204 6,200 6,035 5,377 3,263 2,433
These increases in appropriations were transferred from a general fund department with unused budget capacity to subsidize the above adopted budgets. Actual general fund expenditures were under budget by $2,297,051. The Public Defender office exceeded its adopted budget due to an increased case load and higher than expected expenditures related to capital cases. During the year, actual revenue exceeded estimates by $1,260.255 or 1.8%. Capital Asset and Debt Administration Capital Assets. Yavapai County's investment in capital assets for its governmental and business-type activities as of June 30, 2005, amounts to $98.2 million (net of accumulated depreciation and related debt). This investment in capital assets includes land, buildings, machinery and equipment. In addition, roads and highways constructed in the fiscal year ended June 30, 2005, or in progress at that date, are included in capital assets. In accordance with GASB Statement No. 34, the County will retroactively value all infrastructure assets back to fiscal year 1981 by June 30, 2006. The total increase in Yavapai County's investment in capital assets for the current fiscal year was 9.2%, nearly all of which is attributed to governmental activities.
Yavapai County's Capital Assets (net of depreciation) (in millions) Governmental Activities 2005 Land Buildings Machinery and Equipment Infrastructure Construction in Progress Total $ 11.9 46.2 10.0 41.7 2.4 $ 112.2 2004 $ 11.7 47.2 10.2 29.4 12.1 $ 110.6 Business-type Activities 2005 $ .2 $ .2 $ 2004 $ .2 .2 2005 Total 2004
$ 11.9 $ 11.7 46.2 47.2 10.2 10.4 41.7 29.4 2.4 12.1 $ 112.4 $ 110.8
Additional information on Yavapai County's capital assets can be found in Note 4 on pages 45 - 46 of this report. 18
Yavapai County Management's Discussion and Analysis
Long-term debt. At the end of the current fiscal year, Yavapai County had total bonded debt outstanding of $12,787,867. Of this amount, $11,200,000 represents pledged revenue obligations of the Yavapai County Jail District, which are secured by a dedicated excise tax of cent, and $1,587,867 represents debt of various special assessment districts which is secured by pledges of revenues from special assessments levied against benefiting property owners. Yavapai County also had notes payable of $2,250,000 which are secured by the County's highway user revenue. The remainder of Yavapai County's debt is a longterm capital lease of $791,367 road equipment.
Yavapai County's Outstanding Debt (in millions) 2005 Jail District Pledged Revenue Obligations Special Assessment Debt Payable Notes Payable Capital Leases Total $ 11.2 1.6 2.3 0.8 $ 15.9 2004 $ 12.6 1.7 6.4 1.8 $ 22.5
Yavapai County's debt decreased by a net $6,609,709 during the current fiscal year. The pledged revenue obligations are being used to construct new jail facilities, also mentioned above. Moody's Investor Service and Standard & Poor's Rating services have assigned the ratings of "Aaa" and "AAA", respectively, on these obligations, which are insured for the payment of principal and interest with Ambac Assurance, Ambac Financial Group, Inc. State statutes limit the amount of general obligation debt a county may issue to 6 percent of its total assessed valuation. The current debt limitation for the County is $112,670,846. Since the County has no general obligation debt, this amount equals the debt capacity. Additional information on long-term debt can be found in the Notes to the Financial Statements on pages 47-49 of this report. Economic Factors and Next Year's Budgets and Rates The unemployment rate for Yavapai County is currently 3.3 percent, which is unchanged from a year ago. This compares favorably to the state's average unemployment rate of 5.6 percent. Inflationary trends in the region compare favorably to national indices.
These factors were considered in preparing Yavapai County's budget for the 2005/06 fiscal year. The unreserved ending fund balance in the general fund of $3,595,788 was appropriated for spending in the 2005/06 fiscal year budget. Although the County is experiencing an ever greater demand for services, conservative budgeting and increased revenues avoided the need for any increase in the general fund property tax rate for the 2005/06 fiscal year. Requests for Information This financial report is designed to provide a greater overview of Yavapai County'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 the Finance Department, 1015 Fair Street, Prescott, Arizona 86305.
19
This page is left blank intentionally.
20
BASIC FINANCIAL STATEMENTS
Yavapai County Statement of Net Assets June 30, 2005
Primary Government Business-type Activities $ 4,581,775 2,071,809 159,457 6,813,041
Assets Cash and investments held by treasurer Receivables: Property taxes Special assessments Accounts Due from other governments Inventories Prepaid items Deferred charges Cash equivalents - restricted Capital assets, not being depreciated Capital assets, being depreciated, net Total assets Liabilities Accounts payable Accrued payroll and employee benefits Bonds payable Interest payable Due to other governments Medical claims payable Unearned revenue 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: Health and welfare Debt service Unrestricted Total net assets
Governmental Activities $ 36,025,933 1,387,091 1,448,931 1,396,111 7,873,475 257,723 83,601 131,794 1,632,595 14,554,476 97,697,677 162,489,407
$
Total 40,607,708 1,387,091 1,448,931 1,396,111 9,945,284 257,723 83,601 131,794 1,632,595 14,554,476 97,857,134 169,302,448
3,816,316 2,555,519 1,395,000 237,595 4,403,311 9,633,551 14,347,497 36,388,789
11,810 213,133 550,613 2,956,611 3,732,167
3,828,126 2,768,652 1,395,000 237,595 550,613 2,956,611 4,403,311 9,633,551 14,347,497 40,120,956
98,010,786 546,806 27,543,026 126,100,618
159,457 2,921,417 3,080,874
98,170,243 2,921,417 546,806 27,543,026 129,181,492
$
$
$
See accompanying notes to financial statements. 21
Yavapai County Statement of Activities Year Ended June 30, 2005
Program Revenues Charges for Functions/Programs Primary Government: Governmental activities: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education Aid to other governments Interest on long-term debt Total governmental activities Business-type activities: Long term care Total business-type activities Total primary government $ 34,660,511 34,660,511 158,860,804 $ 34,931,830 34,931,830 51,715,608 $ 27,024,916 $ 2,586,829 (77,804,770) 271,319 271,319 271,319 271,319 271,319 (77,533,451) $ 49,606,233 34,241,112 14,468,350 1,589,708 8,958,399 8,978,907 667,306 2,326,146 2,690,577 673,555 124,200,293 $ 7,507,861 3,548,886 2,058,209 523,207 2,799,419 346,196 16,783,778 $ 3,690,429 5,054,092 11,554,211 652,016 5,141,965 51,720 880,483 27,024,916 $ 2,586,829 2,586,829 $ (38,407,943) (25,638,134) (855,930) (414,485) (1,017,015) (8,978,907) (615,586) (1,099,467) (103,748) (673,555) (77,804,770) $ $ (38,407,943) (25,638,134) (855,930) (414,485) (1,017,015) (8,978,907) (615,586) (1,099,467) (103,748) (673,555) (77,804,770) Expenses Services Operating Grants & Contributions Capital Grants & Contributions Governmental Activities Net (Expenses) Revenue & Changes in Net Assets Primary Government Business-type Activities Total
General revenues: Property taxes Sales taxes Vehicle license taxes Franchise taxes Lottery Interest on investments Gain of sale of capital assets Miscellaneous Transfers Total general revenues and transfers Changes in net assets Net assets beginning, as restated Net assets - ending $ 34,912,400 41,077,470 10,060,798 511,205 550,035 554,886 1,353,975 4,123,119 297,046 93,440,934 15,636,164 110,464,454 126,100,618 $ 114,608 129,455 (297,046) (52,983) 218,336 2,862,538 3,080,874 $ 34,912,400 41,077,470 10,060,798 511,205 550,035 669,494 1,353,975 4,252,574 93,387,951 15,854,500 113,326,992 129,181,492
See accompanying notes to financial statements. 22
This page is left blank intentionally.
23
Yavapai County Balance Sheet Governmental Funds June 30, 2005
Jail District Debt Service $ 26 1,632,595 1,632,621 Regional Road $ 11,786,502 86,993 970,234 12,843,729
Assets Cash and cash equivalents Receivables: Property taxes Special assessments Accounts Due from: Other funds Other governments Inventories Prepaid items Cash equivalents - restricted Total assets
$
General 3,091,710 1,159,568 615,120 1,352,700 3,134,001 99,748 75,532 9,528,379
Jail District $ 2,983,117 26,037 1,976 692,395 3,703,525
$
$
$
$
Liabilities and Fund Balances Liabilities: Accounts payable Accrued payroll and employee benefits Due to other funds Interest payable Principal payable Unearned revenue Total liabilities Fund balances: Reserved for: Debt service Inventory Unreserved, reported in General fund Special revenue funds Capital project funds Total fund balances Total liabilities and fund balances
$
804,217 1,433,897 774 3,593,955 5,832,843
$
257,122 303,838 560,960
$
237,595 1,395,000 1,632,595
$
796,702 8,176 1,365 806,243
99,748 3,595,788 3,695,536 9,528,379
3,142,565 3,142,565 3,703,525
26 26 1,632,621
12,037,486 12,037,486 12,843,729
$
$
$
$
See accompanying notes to financial statements. 24
HURF Road $ 13,911 35,404 1,636,532 157,975 1,843,822 $
Capital Projects 6,345,615 9,376 6,354,991
Other Governmental Funds $ 11,818,963 227,523 1,448,931 484,481 448,154 1,440,313 8,069 15,876,434
Total Governmental Funds $ 36,025,933 1,387,091 1,448,931 1,235,918 1,838,234 7,873,475 257,723 83,601 1,632,595 51,783,501
$
$
$
$
$
654,085 231,693 890,048 1,775,826
$
79,900 79,900
$
1,224,290 577,915 785,854 1,577,910 4,165,969
$
3,816,316 2,555,519 1,678,041 237,595 1,395,000 5,171,865 14,854,336
157,975 (89,979) 67,996 1,843,822
6,275,091 6,275,091 6,354,991
546,780 11,172,192 (8,507) 11,710,465 15,876,434
546,806 257,723 3,595,788 26,262,264 6,266,584 36,929,165 51,783,501
$
$
$
$
25
Yavapai County Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets June 30, 2005
Amounts reported for governmental activities in the statement of net assets are different because: Total fund balances - governmental funds Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Some receivables are not available to pay for current-period expenditures and, therefore, are deferred in the funds. Bond issuance costs are recorded as deferred charges, and are not reported in the funds. Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds. Net assets of governmental activities $ $ 36,929,165
112,252,153
768,554
131,794
(23,981,048) 126,100,618
See accompanying notes to financial statements. 26
This page is left blank intentionally.
27
Yavapai County Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2005
Jail District Debt Service $ $ Regional Road 9,166,581 2,056,735 139,515 21,993 11,384,824
General Revenues: Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment income Miscellaneous Total Revenues Expenditures: Current: General government Public safety Highways and streets Sanitation Health Welfare Education Culture and recreation Capital expenditures Debt service: Principal retirement Interest and fiscal charges Total Expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Sale of capital assets Total other financing sources (uses) Net changes in fund balances Fund Balances, July 1, 2004 Increase (decrease) in reserve for inventories Fund Balances, June 30, 2005 $ 34,689,252 4,006,141 28,548,998 1,634,201 2,159,669 52,821 721,790 71,812,872 $
Jail District 7,045,465 382,936 75,353 46,813 7,550,567
39,277,350 13,576,276 8,975,900 560,563 62,390,089
12,001,473 12,001,473
1,395,000 477,093 1,872,093
3,973,203 3,973,203
9,422,783
(4,450,906)
(1,872,093)
7,411,621
1,655,617 (9,371,500) 25,483 (7,690,400) 1,732,383 1,955,129 8,024 3,695,536
5,290,807 (2,104,326) 3,186,481 (1,264,425) 4,406,990 3,142,565
1,872,119 1,872,119 26 26
(4,203,045) 1,367,270 (2,835,775) 4,575,846 7,461,640 12,037,486
$
$
$
$
See accompanying notes to financial statements. 28
HURF Road $ 14,945,143 2,111 331,532 15,278,786 $
Capital Projects 79,074 1,348 80,422 $
Other Governmental Funds 5,798,101 308,532 399,261 16,353,793 5,298,784 351,106 206,013 3,490,275 32,205,865 $
Total Governmental Funds 56,699,399 308,532 6,462,137 59,847,934 7,315,921 2,510,775 554,887 4,613,751 138,313,336
15,174,025 15,174,025
599,753 599,753
7,514,223 8,118,873 207,417 1,492,577 8,833,788 1,859,931 561,582 2,875,346 4,252,287 196,463 35,912,487
46,791,573 33,696,622 19,354,645 1,492,577 8,833,788 8,975,900 2,420,494 561,582 3,475,099 5,647,287 673,556 131,923,123
104,761
(519,331)
(3,706,622)
6,390,213
10,000 (600,000) (590,000) (485,239) 569,913 (16,678) 67,996
2,100,000 (13,242) 2,086,758 1,567,427 4,707,664 6,275,091
6,701,193 (1,040,577) 5,660,616 1,953,994 9,756,471 11,710,465
17,629,736 (17,332,690) 1,392,753 1,689,799 8,080,012 28,857,807 (8,654) 36,929,165
$
$
$
$
29
Yavapai County Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2005
Net change in fund balances - total governmental funds Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Capital outlay 7,058,667 Depreciation (5,397,713) Debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Assets. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces longterm liabilities in the Statement of Net Assets. Long-term lease principal payments 962,422 Principal repaid on bonds and notes 5,647,287 Deferred tax revenues are recognized in the governmental funds only when available, but are recognized in the Statement of Activities when earned. Under the modified accrual basis of accounting used in the governmental funds, expenditures are not recognized for transactions that are not normally paid with expendable available resources. In the Statement of Activities, however, which is presented on the accrual basis of accounting, expenses and liabilities are reported regardless of when the financial resources are available. Increase in compensated absences (501,207) Decrease in bond amortization (18,827) Increase in claims and judgements (17,265) Increase in landfill closure and post closure care costs (1,884) Some cash outlays, such as purchases of inventories, are reported as expenditures in the governmental funds when purchased. In the Statement of Activities, however, they are reported as expenses when consumed. Decrease in inventories (8,654) In the Statement of Activities, only the gain/loss on the sale of capital assets is reported whereas in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balance by the book value of the capital assets sold. Changes in net assets of governmental activities $ 8,080,012
1,660,954
6,609,709 (127,896)
(539,183)
(8,654)
(38,778) $ 15,636,164
See accompanying notes to financial statements. 30
Yavapai County Statement of Net Assets Proprietary Funds June 30, 2005
Business-type ActivitiesEnterprise Fund Long-term Care Assets Current assets: Cash and cash equivalents Due from other governments Total current assets Noncurrent assets: Capital assets, net of accumulated depreciation Total noncurrent assets Total Assets 159,457 159,457 6,813,041 $ 4,581,775 2,071,809 6,653,584
Liabilities Current liabilities : Accounts payable Accrued payroll and employee benefits Medical claims payable Due to other funds Due to other governments Total current liabilities Total Liabilities 11,810 213,133 2,956,611 160,193 390,420 3,732,167 3,732,167
Net Assets Invested in capital assets Restricted - health and welfare Total Net Assets $ 159,457 2,921,417 3,080,874
See accompanying notes to financial statements. 31
Yavapai County Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds Year Ended June 30, 2005
Business-type ActivitiesEnterprise Fund Long-term Care Operating revenues: AHCCCS revenues Miscellaneous Total operating revenues Operating Expenses: Medical costs Administrative costs Depreciation Total operating expenses Operating income Nonoperating revenues: Interest income Income before transfers Transfers out Increase in net assets Net assets, July 1, 2004 Net assets, June 30, 2005 $ 31,781,491 2,827,573 51,447 34,660,511 400,774 $ 34,931,830 129,455 35,061,285
114,608 515,382 (297,046) 218,336 2,862,538 3,080,874
See accompanying notes to financial statements. 32
Yavapai County Statement of Cash Flows Proprietary Funds Year Ended June 30, 2005
Business-type ActivitiesEnterprise Fund Long-term Care Cash flows from operating activities: Cash received from AHCCCS Cash payments for medical services Cash payments for personal services Cash payments to other County funds for goods and services Cash payments for operating activities Net cash used for operating activities Cash flows from noncapital financing activities: Cash transferred to general fund Cash flows from capital and related financing activities: Purchase of capital assets Cash flows from investing activities: Interest on investments Net decrease in cash and cash equivalents Cash and cash equivalents, July 1, 2004 Cash and cash equivalents, June 30, 2005 Reconciliation of net income to net cash used for operating activities: Operating income Adjustments to reconcile net income to net cash used for operating activities: Depreciation Changes in assets and liabilities: Decrease in due from other funds Increase in due from other governments Decrease in accounts payable Decrease in accrued payroll and employee benefits Decrease in medical claims payable Increase in due to other funds Increase in due to other governments Net cash used for operating activities $ 52,530 (721,065) (136,093) (3,782) (602,403) 67,624 212,710 (678,258) 51,447 $ 400,774 $ 114,608 (897,472) 5,479,247 4,581,775 (36,776) (297,046) $ 34,850,794 (31,321,656) (1,654,499) (1,050,051) (1,502,846) (678,258)
See accompanying notes to financial statements. 33
Yavapai County Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2005
Investment Trust Fund Assets Cash and cash equivalents Total Assets $ 62,635,727 62,635,727 $ $
Agency Fund 1,564,006 1,564,006
Liabilities Due to other governments Total Liabilities
-
$ $
1,564,006 1,564,006
Net Assets Held in trust for investment trust participants
$
62,635,727
See accompanying notes to financial statements. 34
Yavapai County Statement of Changes in Fiduciary Net Assets Fiduciary Funds Year Ended June 30, 2005
Investment Trust Fund Additions: Contributions from participants Investment income Total additions $ 327,166,805 1,018,855 328,185,660
Deductions: Distributions to participants Total deductions
307,013,649 307,013,649
Changes in net assets
21,172,011
Net assets, July 1, 2004 Net assets, June 30, 2005
$
41,463,716 62,635,727
See accompanying notes to financial statements. 35
Yavapai County Notes to Financial Statements June 30, 2005 Note 1 Summary of Significant Accounting Policies The accounting policies of Yavapai County conform to generally accepted accounting principles applicable to governmental units adopted by the Governmental Accounting Standards Board (GASB). During the year ended June 30, 2005, the County implemented the provisions of GASB Statement No. 40, Deposit and Investment Risk Disclosures. GASB Statement No. 40 establishes and modifies the risk disclosures about the County's deposits and investments. The implementation of GASB Statement No. 40 requires only additional disclosures, and had no effect on reported amounts for deposits, investments, net assets, or changes in net assets. A. Reporting Entity
The County is a general purpose local government that is governed by a separately elected board of three county supervisors. The accompanying financial statements present the activities of the County (the primary government) and its component units. Component units are legally separate entities for which the County is considered to be financially accountable. Blended component units, although legally separate entities, are in substance part of the County's operations. Therefore, data from these units is combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the combined financial statements to emphasize they are legally separate from the County. Each blended component unit discussed below has a June 30 year-end. The County has no discretely presented component units. The following table describes the County's component units: Description: Criteria for Inclusion A tax-levying district that provides flood control systems; County board of supervisors serves as board of directors Provides and maintains library services for County's residents; County board of supervisors serves as board of directors Reporting Method Blended For Separate Financial Statements Not available
Component Unit Yavapai County Flood Control District
Yavapai County Library District
Blended
Not available
36
Yavapai County Notes to Financial Statements June 30, 2005 Yavapai County Special Assessment District Constructs or improves sidewalks, curbs and gutters, irrigation systems, and street lighting within the County; County board of supervisors serves as board of directors A tax-levying district that acquires, constructs, operates, maintains, and finances county jails and jail systems; county board of supervisors serves as governing board Blended Not available
Yavapai County Jail District
Blended
Not available
Related Organization - The Sedona-Oak Creek Airport Authority (Authority) was created for the purpose of developing and promoting transportation and commerce by air in the State of Arizona, and in particular the development, promotion, and operation of air transportation facilities and air commerce in and around the Sedona area. In 1971, the Authority entered into a 60-year lease with Yavapai County to manage and operate the Sedona Airport facility, which is owned by the County. The Authority is governed by a 13 member Board of Directors approved by the County's Board of Supervisors. However, the Authority's operations are completely separate from the County, and the County is not financially accountable for the Authority. Therefore, based on the criteria of GASB Statement No. 14, the financial activities of the Authority have not been included in the accompanying financial statements. B. Basis of Presentation
The basic financial statements include both government-wide statements and fund-based financial statements. The government-wide statements focus on the County as a whole, while the fund-based financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the usefulness of the information. Government-wide statements-provide information about the primary government (the County) and its component units. The statements include a statement of net assets and a statement of activities. These statements report the financial activities of the overall government, except for fiduciary activities. They also distinguish between the governmental and business-type activities of the County. Governmental activities generally are financed through taxes and intergovernmental revenues. Business-type activities are financed in whole or in part by fees charged to external parties. A statement of activities presents a comparison between direct expenses and program revenues for each function of the County's governmental activities and segment of its business-type activities. Direct expenses are those that are specifically associated with a
37
Yavapai County Notes to Financial Statements June 30, 2005 program or function and, therefore, are clearly identifiable to a particular function. The County does not allocate indirect expenses to programs or functions. Program revenues include: charges to customers or applicants for good, services, or privileges provided, operating grants and contributions, and capital grants and contributions, including special assessments. Revenues that are not classified as program revenues, including internally dedicated resources and all taxes, are reported as general revenues. Generally, the effect of interfund activity has been eliminated from the government-wide financial statements to minimize the double counting of internal activities. However, charges for interfund services provided and used are not eliminated if the prices approximate their external exchange values. Fund financial statements-provide information about the County's funds, including fiduciary funds and blended component units. Separate statements are presented for the governmental, proprietary, and fiduciary fund categories. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Fiduciary funds are aggregated and reported by fund type. Proprietary fund revenues are classified as either operating or nonoperating. Operating revenues and expenses generally result from transactions associated with the fund's principal activity. Accordingly, revenues, such as AHCCCS revenues and user charges, in which each party receives and gives up essentially equal values, are operating revenues. Other revenues such as subsidies and investment income, result from transactions in which the parties do not exchange equal values are reported as nonoperating revenues. Operating expenses include the cost of services, administrative expenses, and depreciation on capital assets. The County reports the following major governmental funds: The General Fund is the County's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Jail District Fund is used to account for County jail operations. Although the criteria for classification as a major fund was not met, the County has elected to disclose this fund as a major fund due to its importance to financial statement users. The Jail District Debt Service Fund is used to account for the resources accumulated and payments made for principal and interest on the revenue bonds issued for the construction and remodel of the County jail. The Regional Road Fund is used to account for road construction and maintenance of major regional roads, and is funded by a cent County sales tax and impact fees.
38
Yavapai County Notes to Financial Statements June 30, 2005 The HURF Road Fund is used to account for road maintenance and construction of nonmajor roads, and is funded primarily by highway users revenue. The Capital Projects Fund is used to account for major capital projects and is funded by transfers from the general fund. The County reports the following major proprietary fund: The Long-term Care Fund is used to account for the activities of the Yavapai County Department of Medical Assistance Long-term Care Division. The Long-Term Care Division operates a prepaid health program for qualified persons of the County. The County reports the following fund types: The investment trust fund accounts for pooled assets held and invested by the County Treasurer on behalf of County departments and other governmental entities. The agency fund accounts for assets held by the County as an agent for the State, various local governments, and other parties, and for property taxes collected and distributed to the State, local school districts, community college districts, and special districts in a fiduciary capacity. C. Basis of Accounting
The government-wide, proprietary fund and fiduciary fund financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Agency funds have no measurement focus. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Property taxes are recognized as revenue in the year for which they are levied. Grants and donations are recognized as revenue as soon as all eligibility requirements the provider imposed have been met. Governmental funds in the fund-based financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The County considers all revenues reported in the governmental funds to be available if the revenues are collected within 60 days after year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, compensated absences, and landfill closure and postclosure care costs, which are recognized as expenditures to the extent they are due and payable. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of long-term debt and acquisitions under capital lease agreements are reported as other financing sources. Property taxes, sales taxes, vehicle license taxes, charges for services and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be
39
Yavapai County Notes to Financial Statements June 30, 2005 susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. Under the terms of grant agreements, the County funds certain programs by a combination of grants and general revenues. Therefore, when program expense is incurred, there are both restricted and unrestricted net assets available to finance the program. The County applies grant resources to such programs before using general revenues. The County's business-type activities and enterprise funds follow FASB Statements and Interpretations issued on or before November 30, 1989; Accounting Principles Board Opinions; and Accounting Research Bulletins, unless those pronouncements conflict with GASB pronouncements. The County has applied the option not to follow those FASB pronouncements issued after November 30, 1989. D. Cash and Investments
For purposes of the statement of cash flows, the County considers cash on hand, demand deposits, cash on deposit with the County Treasurer, and only those highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Money market investments with a remaining maturity of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. E. Inventories and Prepaid Items
The County accounts for its inventories in the governmental funds using the purchase method. Inventories of the governmental funds consist of expendable supplies held for consumption and are recorded as expenditures at the time of purchase. Amounts on hand at year-end are shown on the balance sheet as an asset for informational purposes only and are offset by a fund balance reserve to indicate that they do not constitute "available spendable resources." These inventories are stated at cost using the first-in, first-out method. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. F. Property Tax Calendar
The County levies real and personal property taxes on or before the third Monday in August that become due and payable in two equal installments. The first installment is due on the first day of October and becomes delinquent after the first business day of November. The second installment is due on the first day of March of the next year and becomes delinquent after the first business day of May. A lien assessed against real and personal property attaches on the first day of January preceding assessment and levy.
40
Yavapai County Notes to Financial Statements June 30, 2005 G. Restricted Assets
Certain resources set aside for repayment of the jail construction revenue bonds are classified as restricted assets on the balance sheet because they are maintained in separate accounts and their use is limited by applicable bond covenants. The "payment fund" account is used to segregate resources accumulated for debt service payments over the next twelve months. In addition, certain proceeds of a capital lease financing are maintained in a separate account for the acquisition of capital assets, and are classified as restricted. H. Capital Assets
Capital assets are reported at actual cost. Donated assets are reported at estimated fair value at the time received. Capitalization thresholds (the dollar values above which asset acquisitions are added to the capital asset accounts), depreciation methods, and estimated useful lives of capital assets reported in the government-wide statements and proprietary funds are as follows:
Capitalization Threshold $10,000 Depreciation Method Buildings Machinery and Equipment Infrastructure $10,000 $5,000 $10,000 Straight-line Straight-line Straight-line Estimated Useful Life 20-40 years 5 -10 years 12-40 years
Land
I.
Investment Income
Investment income is composed of interest, dividends, and net changes in the fair value of applicable investments. J. Compensated Absences
Compensated absences consist of paid time off (PTO) leave earned by employees based on services already rendered. Employees may accumulate up to 764 hours of PTO, at various accrual rates, depending on years of service. PTO hours in excess of the maximum amount are forfeited. Upon termination of employment, all unused and unforfeited PTO benefits are paid to employees. Accordingly, PTO benefits are accrued as a liability in the financial statements. Employees may also accumulate up to 520 hours of catastrophic time (CAT) leave. CAT leave may be used in the case of illness or injury suffered by an employee or employee's immediate family, but only after using at least forty hours of consecutive PTO leave. CAT leave benefits are cumulative but are forfeited upon termination of employment, and therefore are not accrued.
41
Yavapai County Notes to Financial Statements June 30, 2005 Note 2 Deposits and Investments Arizona Revised Statutes (A.R.S.) authorize the County to invest public monies in the State Treasurer's investment pool; obligations issued or guaranteed by the United States or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations, or instrumentalities; specified state and local government bonds; interest earning investments such as savings accounts, certificates of deposit, and repurchase agreements in eligible depositories; and specified commercial paper, bonds, debentures, and notes issued by corporations organized and doing business in the United States. In addition, the County Treasurer may invest trust funds in fixed income securities of corporations doing business in the United States or District of Columbia. Credit risk Statutes have the following requirements for credit risk: 1. Commercial paper must be rated P1 by Moody's investors service or A1 or better by Standard and Poor's rating service. 2. Corporate bonds, debentures, and notes must be rated A or better by Moody's investors service or Standard and Poor's rating service. 3. Fixed income securities must carry one of the two highest ratings by Moody's investors service and Standard and Poor's rating service. If only one of the above-mentioned services rates the security, it must carry the highest rating of that service. Custodial credit risk Statutes require collateral for demand deposits, certificates of deposit, and repurchase agreements at 101 percent of all deposits not covered by federal depository insurance. Concentration of credit risk Statutes do not include any requirements for concentration of credit risk. Interest rate risk Statutes require that public monies invested in securities and deposits have a maximum maturity of 5 years and that public operating fund monies invested in securities and deposits have a maximum maturity of 3 years. Investments in repurchase agreements just have a maximum maturity of 180 days. Foreign currency risk Statutes do not allow foreign investments. Deposits--At June 30, 2005, the carrying amount of the County's deposits was $1,675,951, and the bank balance was $5,582,945. The County requires collateral on all deposits not covered by federal depository insurance.
42
Yavapai County Notes to Financial Statements June 30, 2005
Investments--The County's investments at June 30, 2005, were as follows:
Investment Type U.S. Treasury securities U.S. agency securities State Treasurer's investment pools Total $ Amount 14,835,244 25,583,398 63,199,000 $ 103,617,642
The State Board of Investment provides oversight for the State Treasurer's pools, and the Local Government Investment Pool Advisory Committee provides consultation and advice to the Treasurer. The fair value of a participant's position in the pool approximates the value of that participant's pool shares and the participant's shares are not identified with specific investments.
Credit risk-- The County does not have a formal investment policy with respect to credit risk. At June 30, 2005, credit risk for the County's investments was as follows:
Investment Type U.S. agency securities State Treasurer's investment pools Total Rating AAA Unrated Rating Agency Moody's Not applicable $ $ Amount 25,583,398 63,199,000 88,782,398
Custodial credit risk--For an investment, custodial credit risk is the risk that, in the event of the counterparty's failure, the County will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The County does not have a formal investment policy with respect to custodial credit risk. Concentration of credit risk--More than 5 percent of the County's investments as June 30, 2005, were in Federal National Mortgage Association and Federal Home Loan Bank. These investments were 5.7 percent and 18.1 percent, respectively, of the County's total investments. Interest rate risk--The County does not have a formal policy regarding interest rate risk. At June 30, 2005, the County had the following investments in debt securities:
Amount $ 14,835,244 25,583,398 63,199,000 $ 103,617,642 Weighted Average Maturity in Years 1.20 1.20 0.41
Investment Type U.S. Treasury securities U.S. agency securities State Treasurer's investment pool 7 Total
43
Yavapai County Notes to Financial Statements June 30, 2005 A reconciliation of cash, deposits, and investments to amounts shown on the Statements of Net Assets follows:
Cash, deposits, and investments: Cash on hand Amount of deposits Amount of investments Total $ 1,146,443 1,675,951 103,617,642 $ 106,440,036
Statement of Net Assets: Cash, cash equivalents and investments Total
Governmental Activities $ 37,658,528 $ 37,658,528
Business-Type Activities $ $ 4,581,775 4,581,775
Investment Trust Funds $ 62,635,727 $ 62,635,727
Agency Funds $ 1,564,006 $ 1,564,006
Total $ 106,440,036 $ 106,440,036
Note 3 -
Due From Other Governments Amounts due from other governments at June 30, 2005, include $1,703,063 in stateshared revenue from sales tax, $449,310 in county excise tax distributions due from the State Treasurer, $640,018 in state motor vehicle license taxes from the Arizona Department of Transportation and $341,610 in other fees from federal, state, and local governments recorded in the General Fund; $1,089,055 in state-shared revenue from highway user taxes, and $377,580 in state motor vehicle license tax and $169,897 in other fees from federal, state, and local governments recorded in the HURF Road Fund; $1,440,313 in grants and other fees from federal, state grants and local governments recorded in the Other Governmental Funds; $834,434 in county excise tax distributions due from the State Treasurer and $135,800 in other fees from local governments recorded in the Regional Road Fund; $641,326 in sales tax collections and $51,069 in other fees from the federal, state and local governments recorded in the Jail District Fund.
44
Yavapai County Notes to Financial Statements June 30, 2005 Note 4 Capital Assets Capital assets activity for the year ended June 30, 2005, was as follows:
Balance July 1 ,2004, as restated Governmental activities: Capital assets not being depreciated: Land Infrastructure Construction in progress (estimated cost to complete $1,477,000) Total capital assets not being Depreciated Capital assets being depreciated: Buildings Machinery and equipment Infrastructure Total Less accumulated depreciation for: Buildings Machinery and equipment Infrastructure Total Total capital assets, being depreciated, net Governmental activities capital assets, net Business-type activities: Capital assets being depreciated: Machinery and equipment Total capital assets being depreciated Less accumulated depreciation for: Machinery and equipment Total Business-type activities capital Assets, net Balance June 30, 2005
Increases
Decreases
$ 11,705,056 265,870 12,111,609 24,082,535
$
152,929 19,657 4,381,822 4,554,408
$
-
$ 11,857,985 285,527 2,410,964 14,554,476
(14,082,467) (14,082,467)
57,717,730 26,158,522 31,517,017 115,393,269 (10,530,205) (15,939,873) (2,375,749) (28,845,827)
561,652 2,417,176 13,607,898 16,586,726 (1,518,287) (2,577,341) (1,302,084) (5,397,712)
(723,209) (723,209) 684,430 684,430
58,279,382 27,852,489 45,124,915 131,256,786 (12,048,492) (17,832,784) (3,677,833) (33,559,109)
86,547,442
11,189,014
(38,779)
97,697,677
$110,629,977
$ 15,743,422
$(14,121,246) $112,252,153
$
567,511
$
36,776
$
-
$
604,287
567,511
36,776
-
604,287
(393,383) (393,383)
(51,447) (51,447)
-
(444,830) (444,830)
$
174,128
$
(14,671)
$
-
$
159,457
45
Yavapai County Notes to Financial Statements June 30, 2005 Depreciation expense was charged to functions as follows:
Governmental Activities: General government Public safety Highway and streets Sanitation Health Welfare Education Culture and Recreation Total governmental activities depreciation expense Business-type activities: Long-term care Total business-type activities depreciation expense $ 1,576,000 1,216,460 2,224,063 84,011 145,632 617 18,089 132,840 5,397,712 51,447 51,447
$ $ $
Construction Commitments The County has active construction projects as of June 30, 2005. At June 30, 2005 the County's commitments with contractors are as follows:
Project Old Black Canyon Highway Total Spent-to-date $ 893,795 $ 893,795 Remaining Commitment $ 399,767 $ 399,767
The road improvement projects are being funded by sales taxes out of the regional road fund. Restatement of Beginning Capital Assets Governmental activities net capital assets of $110,364,107 at June 30, 2004 have been restated for the recording of certain capital assets on hand as of that date. This adjustment results in an increase of $265,870 in beginning net assets at July 1, 2004.
46
Yavapai County Notes to Financial Statements June 30, 2005 Note 5 Long-term Liabilities The following schedule details the County's long-term liability and obligation activity for the year ended June 30, 2005.
Balance July 1, 2004 Governmental Activities: Special assessment debt payable Revenue bonds Total special assessment debt payable and revenue bonds payable Notes payable Compensated absences payable Obligations under capital leases Landfill closure and postclosure care costs payable Claims and judgments payable Governmental activities long-term liabilities $ 1,715,154 12,595,000 $ Additions $ Reductions Balance June 30, 2005 1,587,867 11,200,000 12,787,867 2.250,000 6,476,891 791,367 1,361,961 312,962 23,981,048 $ Due within 1 year 130,699 1,435,000
(127,287) $ (1,395,000)
14,310,154 6,375,000 5,975,682 1,753,789 1,360,077 295,697 $ 30,070,399
4,823,394 69,057 399,639 $ 5,292,090
(1,522,287) (4,125,000) (4,322,185) (962,422) (67,173) (382,374) $ (11,381,441) $
1,565,699 2,250,000 4,788,148 716,742 312,962 $ 9,633,551
Note 6 -
Special Assessment Debt Payable As described in the "Blended Component Units" section of Note 1, the Yavapai County Board of Supervisors acts as the Board of Directors of various special districts, therefore the bonded debt of these districts is included as part of the Yavapai County reporting entity. Special assessment bonds are secured by pledges of revenues from special assessments levied against the benefiting property owners. The proceeds of the bond issues were used to finance construction in these districts. These bonds are generally callable with interest payable semiannually. However, in accordance with the bond indenture for each special assessment bond issue, and in the opinion of the County Attorney, the County is not legally obligated in any way for the special assessment bonded indebtedness. The following special assessment districts had debt outstanding at June 30, 2005.
Interest Rates 6.13 % 6.45 % 6.40 % 4.82 % Maturity Ranges 7 /1/90-7/1/ 2007 7/ 1 / 9 7 - 7 / 1 / 2 0 0 7 1/1/03-1/1/ 2022 7/ 1 / 0 2 - 7 / 1 / 2 0 1 0 $ Outstanding Principal July 1, 2004 $ 43,000 30,000 1,405,000 237,154 1,715,154 Outstanding Principal June 30, 2005 $ 30,000 20,000 1,330,000 207,867 $ 1,587,867
District Bonds Granite Gardens 1989 Pine Valley Street Imp. Coyote Springs Road Imp. Note Payable Prescott East Sanitary Dist. Total
Retirements $ (13,000) (10,000) (75,000) (29,287) $ (127,287)
47
Yavapai County Notes to Financial Statements June 30, 2005 Special assessment debt service requirements to maturity are as follows:
Year ending June 30, 2006 2007 2008 2009 2010 2011-2015 2016-2020 2021-2022 Total Principal 130,699 132,179 108,730 110,355 112,059 433,845 400,000 160,000 $ 1,587,867 $ $ Interest 95,546 87,702 80,109 73,683 67,179 244,912 115,200 10,240 774,571
$
Note 7 -
Bonds The County's bonded debt consists of $15,260,000 revenue bonds issued by the Yavapai County Jail District on February 13, 2002. As described in the "Blended Component Units" section of Note 1, the Yavapai County Board of Supervisors acts as the Board of Directors of various special districts, therefore the bonded debt of these districts is included as part of the Yavapai County reporting entity. The bond proceeds were used to construct a new jail and to remodel an existing jail. The bonds will be repaid from maintenance of effort payments from the County's general fund to the District and a voter approved excise tax. The total budgeted and actual maintenance of effort payments transferred to the District in the fiscal year ended June 30, 2005 was $5,290,807. Excise taxes received for the same period were $7,045,465, which was 6.7% greater than the budgeted amount of $6,600,000. Bonds outstanding at June 30, 2005, were as follows:
Interest Rates 3-4.3 % Maturity Ranges 7/1/20057/1/2012 Outstanding Principal July 1, 2004 $ 12,595,000 $ 12,595,000 Outstanding Principal June 30, 2005 $11,200,000 $11,200,000
Jail District Revenue bonds Total
Retirements $ (1,395,000) $ (1,395,000)
The following schedule details debt service requirements to maturity for the County's revenue bonds payable at June 30, 2005.
Governmental Activities Principal Interest $ 1,435,000 $ 433,340 1,480,000 387,420 1,530,000 335,620 1,590,000 279,010 1,655,000 215,410 3,510,000 226,180 $ 11,200,000 $ 1,876,980
Year ending June 30, 2006 2007 2008 2009 2010 2011-2012 Total
48
Yavapai County Notes to Financial Statements June 30, 2005 Note 8 Notes Payable Yavapai County entered into two loan agreements with the Arizona State Department of Transportation, through its Highway Expansion and Extension Loan Program (HELP) for funds needed to complete the construction of a major road project. The County's notes payable at June 30, 2005 are as follows:
HELP loan dated July 15, 2002, principal amount of $4,500,000, payable monthly over 24 months beginning July 15, 2004, interest rate of 2.25.%, secured by the County's highway user revenues. Total Notes Payable Less Current Maturities Long-term portion of Notes Payable
$ 2,250,000 2,250,000 (2,250,000) $ 0
The following schedule details debt service requirements to maturity for the County's notes payable at June 30, 2005.
Governmental Activities Principal Interest 2,250,000 $ 27,422 2,250,000 $ 27,422
Year ending June 30, 2006 Total
$ $
Note 9 -
Compensated Absences and Claims and Judgments Compensated absences are paid from various funds in the same proportion that those funds pay payroll costs. Claims and judgments are generally paid from the fund that accounts for the activity that gave rise to the claim. During fiscal year 2005, the County paid for compensated absences as follows: 55 percent from the General Fund, 26 percent from other major funds, and 19 percent from other funds. The County paid for claims and judgments from the General Fund.
Note 10 - Capital Leases The County has acquired equipment items under the provisions of various long-term lease agreements classified as capital leases for accounting purposes because they provide for a transfer of ownership by the end of the lease term. The assets acquired through capital leases are as follows:
Governmental Activities $ 3,534,942 (1,260,572) $ 2,274,370
Machinery and equipment Less: accumulated depreciation Carrying value
49
Yavapai County Notes to Financial Statements June 30, 2005 The following schedule details debt service requirements to maturity for the County's capital leases payable at June 30, 2005.
Governmental Activities $ 726,630 74,842 801,472 10,105 $ 791,367
Year ending June 30, 2006 2007 Total minimum lease payments Less amount representing interest Present value of net minimum capital lease payments
Note 11 - Landfill Closure and Postclosure Care Costs State and federal laws and regulations require the County to place final covers on its 7 landfill sites when they stop accepting waste and to perform certain maintenance and monitoring functions at the sites for 30 years after closure. Although closure and postclosure care costs will not be paid until near or after the dates that the landfills stop accepting waste, the County reports a portion of these closure and postclosure care costs in each operating period even though actual payouts will not occur until the landfills are closed. These costs will be paid from the Landfill/Environment special revenue fund. The amount recognized each year is based on landfill capacity used at the end of each fiscal year. All 7 landfills stopped accepting waste and were closed prior to June 30, 2005. As of June 30, 2005, the landfill closure and postclosure care liability of $1,361,961 represents the cumulative amount of cost remaining on these closed landfills, which is net of expenditures incurred to date. These cumulative amounts are based on what it would cost to perform all closure and postclosure care in fiscal year 2005 and have been adjusted for changes in estimates during the fiscal year. The actual cost may be higher due to inflation, changes in technology, or changes in regulations. According to state and federal laws and regulations, the County must comply with the local government financial test requirements that assure the County can meet the costs of landfill closure, postclosure, and corrective action when needed. The County is in compliance with these requirements.
50
Yavapai County Notes to Financial Statements June 30, 2005 Note 12 - Insurance Claims The County provides health benefits to its employees and their dependents through the Yavapai Combined Trust, currently composed of three members. The Trust provides benefits up to $100,000 per individual per calendar year through a self-funding agreement with its participants and purchases commercial insurance to cover claims in excess of this limit. An independent administrator provides the trust with claim and recordkeeping services. The County is responsible for paying the premiums and requires its employees to contribute for dependent coverage. The County is not liable for claims in excess of coverage limits and cannot be assessed retroactive premium adjustments. If it withdraws from the Trust, the County would be responsible for its proportional share of any claims run-out costs, which exceed Trust Fund reserves established for the incurred but not reported claims liability. If the Trust were to terminate, the County would be responsible for its proportional share of any Trust deficit. Note 13 - Risk Management The County is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters; but was unable to obtain insurance at a cost it considered to be economically justifiable. Therefore, the County joined and is covered by three public entity risk pools: the Arizona Counties Property and Casualty Pool, and the Arizona Counties Workers' Compensation Pool which are described below, and the Yavapai Combined Trust, which is described above. The Arizona Counties Property and Casualty Pool is a public entity risk pool currently composed of 11 member counties. The pool provides member counties catastrophic loss coverage for risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters; and provides risk management services. Such coverage includes all defense costs as well as the amount of any judgment or settlement. The County is responsible for paying a premium, based on its exposure in relation to the exposure of the other participants, and deductibles of $25,000 per occurrence for property claims and $50,000 per occurrence for liability claims. The County is also responsible for any payments in excess of the maximum coverage of $100 million per occurrence for property claims and $10 million per occurrence for liability claims. A County must participate in the pool at least three years after becoming a member; however, it may withdraw after the initial three-year period. If the pool were to become insolvent, the County would be assessed an additional contribution. The Arizona Counties Workers' Compensation Pool is a public entity risk pool currently composed of 11 member counties. The pool provides member counties with workers' compensation coverage, as required by law, and risk management services. The County is responsible for paying a premium, based on an experience rating formula, that allocates pool expenditures and liabilities among the members.
51
Yavapai County Notes to Financial Statements June 30, 2005 The Arizona Counties Property and Casualty Pool and the Arizona Counties Workers' Compensation Pool receive independent audits annually and an audit by the Arizona Department of Insurance triennially. Both pools accrue liabilities for losses that have been incurred but not reported. These liabilities are determined annually based on an independent actuarial valuation. Note 14 - Line of Credit Arrangement The County has a $6,500,000 line of credit arrangement with a bank. The line of credit matures on June 30, 2006, and is collateralized by U.S. Government-backed securities. At June 30, 2005, no portion of this amount was utilized. Note 15 - Retirement Plans Plan Descriptions - The County contributes to four plans, three of which are described below. The Elected Officials Retirement Plan is not described due to its relative insignificance to the County's financial statements. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. The Arizona State Retirement System (ASRS) administers a cost-sharing multipleemployer defined benefit pension plan that covers employees of the State of Arizona and employees of participating political subdivisions and school districts. The ASRS is governed by the Arizona State Retirement System Board according to the provisions of A.R.S. Title 38, Chapter 5, Article 2. The Public Safety Personnel Retirement System (PSPRS) is an agent multiple-employer defined benefit pension plan that covers public safety personnel who are regularly assigned hazardous duty as employees of the State of Arizona or participating political subdivisions. The PSPRS, acting as a common investment and administrative agent, is governed by a five-member board, known as The Fund Manager, and the participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. The Corrections Officer Retirement Plan (CORP) is an agent multiple-employer defined benefit pension plan that covers certain employees of the State of Arizona, Departments of Corrections and Juvenile Corrections, and County employees whose primary duties require direct inmate contact. The CORP is governed by The Fund Manager of PSPRS and the participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 6. Each plan issues a publicly available annual financial report that includes its financial statements and required supplementary information. A report may be obtained by writing or calling the applicable plan.
ASRS 3300 N. Central Ave. P.O. Box 33910 Phoenix, AZ 85067-3910 (602) 240-2000 or (800) 621-3778 PSPRS and CORP 3010 East Cambelback Rd, Suite 200 Phoenix, AZ 85016-4416 (602) 255-5575
52
Yavapai County Notes to Financial Statements June 30, 2005 Funding Policy - The Arizona State Legislature establishes and may amend active plan members' and the County's contribution rates. Cost-sharing plan - For the year ended June 30, 2005, active ASRS members and the County were each required by statute to contribute at the actuarially determined rate of 5.70 percent (5.20 percent retirement and 0.50 percent long-term disability) of the members' annual covered payroll. The County's contributions to ASRS for the years ended June 30, 2005, 2004, and 2003 were $2,496,445, $2,266,529 and $960,807 respectively, which were equal to the required contributions for the year. Agent plans - For the year ended June 30, 2005, active PSPRS members were required by statute to contribute 7.65 percent of the members' annual covered payroll, and the County was required to contribute at the actuarially determined rate of 13.04 percent. Active CORP members were required by statute to contribute 8.5 percent of the members' annual covered payroll, and the County was required to contribute at the actuarially determined rate of 5.38 percent. Annual Pension Cost - The County's pension cost for the two agent plans for the year ended June 30, 2005, and related information follow.
Contribution rates: County Plan members Annual pension cost Contributions made PSPRS 13.04% 7.65% $730,814 $730,814 CORP 5.38% 8.50% $333,401 $333,401
The current-year annual required contributions for both the PSPRS and the CORP were determined as part of their June 30, 2003, actuarial valuations using the individual entryage actuarial cost method. The actuarial assumptions included (a) 9 percent investment rate of return and (b) projected salary increases ranging from 6.5 percent to 9.5 percent per year. Both (a) and (b) included an inflation component of 5.5 percent. The assumptions did not include cost-of-living adjustments. The actuarial value of assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over time. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2003, was 20 years.
53
Yavapai County Notes to Financial Statements June 30, 2005 Trend Information - Annual pension cost information for the current and two preceding years follows for each of the agent plans.
Contributions Required and Contributions Made Year Ended June 30 2005 2004 2003 2005 2004 2003 Annual Pension Cost (APC)_ $730,814 648,780 465,783 333,401 288,947 126,031 Percentage of APC Contributed 100% 100% 100% 100% 100% 100% Net Pension Obligation $ -0-0-0-0-0-0-
Plan PSPRS
CORP
Note 16 - Interfund Balances and Activity Interfund receivables and payables-interfund balances at June 30, 2005, were as follows:
Payable To General Fund Payable from General Fund Regional Road HURF Road Nonmajor Funds Enterprise Fund Total governmental $ $ 889,954 462,746 1,352,700 $ $ 1,976 1,976 $ $ 145 1,365 33,894 35,404 $ $ 629 94 287,238 160,193 448,154 $ $ 774 1,365 890,048 785,854 160,193 1,838,234 Jail District HURF Road Nonmajor Funds Total
The interfund balances resulted from time lags between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. All interfund balances are expected to be paid in one year.
54
Yavapai County Notes to Financial Statements June 30, 2005 Interfund transfers-interfund transfers for the year ended June 30, 2005, were as follows:
Transfer To HURF Road
General Fund Transfer from General Fund Jail District Regional Road HURF Road Capital Projects Nonmajor funds Long-term Care Total primary government $ 600,000 13,242 745,329 297,046 $1,655,617
Jail District
Jail District Debt Service
Capital Projects
Nonmajor Funds
Total
$ 5,290,807 $ 5,290,807
$
-
$
10,000 -
$2,100,000 $2,100,000
$ 1,980,693 232,207 4,203,045 285,248 $ 6,701,193
$ 9,371,500 2,104,326 4,203,045 600,000 13,242 1,040,577 297,046 $17,629,736
1,872,119 $1,872,119
$ 10,000
Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due, (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations, and (4) move amounts in excess of required minimum balances, as approved by AHCCCS. Note 17 - Condensed Financial Statements of the County Treasurer's Investment Pool Arizona Revised Statutes require community colleges, school districts, and other local governments to deposit certain public monies with the County Treasurer. The Treasurer has a fiduciary responsibility to administer those and the County monies under his stewardship. The Treasurer invests, on a pool basis, all idle monies not specifically invested for a fund or program. In addition, the Treasurer determines the fair value of those pooled investments annually at June 30.
55
Yavapai County Notes to Financial Statements June 30, 2005 The County Treasurer's investment pool is not registered with the Securities and Exchange Commission as an investment company and there is no regulatory oversight of its operations. The pool's structure does not provide for shares and the County has not provided or obtained any legally binding guarantees to support the values of the participants' investments. The Treasurer allocates interest earnings to each of the pool's participants. However, for the County's monies in the pool the Board of Supervisors authorized $17,107 of interest earned in certain other funds to be transferred to the General Fund. Substantially, all deposits and investments of the County's primary government are included in the County Treasurer's investment pool; therefore, the deposit and investment risks of the Treasurer's investment pool are the same as the County's deposit and investment risks, see Note 2 for disclosure of the County's deposit and investment risks. Details of each major investment classification follow.
Investment Type U.S. government securities Investment in State Treasurer's investment pool Principal $39,000,000 63,199,000 Interest Rates 2.75-5.0 % 2.7222% Maturities 8 / 1 3 / 0 4 - 1 0/ 2 9 / 0 7 None stated Fair Value $38,786,045 63,199,000
A condensed statement of the investment pool's net assets and changes in net assets follows.
Statement of Net Assets Assets Liabilities Net assets Net assets held in trust for: Internal participants External participants Total net assets held in trust Statement of Changes in Net Assets Total additions Total deductions Net decrease Net assets held in trust: July 1, 2004 June 30, 2005 $ 466,075,588 (439,647,427) 26,428,161 76,309,892 102,738,053 $ $ $ $ 102,738,053 102,738,053 40,102,326 62,635,727 102,738,053
$
56
REQUIRED SUPPLEMENTARY INFORMATION
Yavapai County Required Supplementary Information Schedule of Agent Retirement Plans' Funding Progress June 30, 2005
Public Safety Personnel Retirement System
Unfunded Liability as Percentage Of Covered Payroll ([a-b]/c) 150.3% 86.9% 62.8%
Actuarial Valuation Date 6/30/05 6/30/04 6/30/03
Actuarial Value of Plan Assets (a) $14,211,964 13,692,093 13,059,119
Actuarial Accrued Liability (b) $22,316,937 18,169,579 15,833,057
Funding (Liability) Excess (a-b) $ (8,104,973) (4,477,486) (2,773,938)
Funded Ratio (a/b) 63.7% 75.4% 82.5%
Annual Covered Payroll (c) $5,393,063 5,153,004 4,419,330
Corrections Officer Retirement Plan
Unfunded Liability as Percentage Of Covered Payroll ([a-b]/c) 12.8% 1.9% -
Actuarial Valuation Date 6/30/05 6/30/04 6/30/03
Actuarial Value of Plan Assets (a) $7,472,922 6,696,956 6,286,600
Actuarial Accrued Liability (b) $8,305,724 6,813,658 5,835,586
Funding (Liability) Excess (a-b) $(832,802) (116,702) 451,014
Funded Ratio (a/b) 90.0% 98.3% 107.7%
Annual Covered Payroll (c) $6,519,542 6,030,637 4,073,025
57
Yavapai County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2005
Budgeted Amounts Original Final Revenues: Taxes Licenses and Permits Intergovernmental Charges For Services Fines and Forfeits Investment Income Miscellaneous Total Revenues Expenditures: General Government: Board of Supervisors Human Resources General Services Emergency Management Elections Facilities Development Services Fleet Finance Assessor Attorney Voter Registration Recorder Management Information System Clerk of the Court Treasurer Records Management Superior Courts Public Defender Prescott Justice of the Peace Prescott Constable Bagdad/Yarnell Justice of the Peace Verde Valley justice of the Peace Mayer Justice of the Peace Verde Constable Seligman Justice of the Peace Total General Government $ 34,273,000 2,850,000 28,812,942 1,784,000 1,950,000 150,000 732,675 70,552,617 $ 34,273,000 2,850,000 28,812,942 1,784,000 1,950,000 150,000 732,675 70,552,617
Actual Amounts $ 34,689,252 4,006,141 28,548,998 1,634,201 2,159,669 52,821 721,790 71,812,872
Variance with Final Budget $ 416,252 1,156,141 (263,944) (149,799) 209,669 (97,179) (10,885) 1,260,255
665,510 618,455 5,608,609 105,808 751,909 3,791,172 3,567,164 1,900,151 563,592 3,068,816 4,073,423 321,536 720,435 4,567,383 1,989,628 673,431 246,409 3,102,458 3,255,718 486,457 62,113 253,982 408,107 331,403 61,593 242,834 41,438,096
665,510 623,832 5,429,206 105,808 751,909 3,791,172 3,573,199 1,900,151 563,592 3,068,816 4,079,623 336,536 613,320 4,579,587 1,989,628 694,347 338,524 3,102,458 3,359,202 486,457 62,113 256,415 408,107 331,403 61,593 242,834 41,415,342
635,485 611,575 4,253,149 97,086 602,925 3,608,950 3,476,455 1,866,009 559,061 2,961,615 4,079,597 334,075 596,838 4,448,465 1,951,710 667,000 332,722 3,086,231 3,359,199 441,505 61,325 256,415 407,792 292,314 56,300 233,552 39,277,350
30,025 12,257 1,176,057 8,722 148,984 182,222 96,744 34,142 4,531 107,201 26 2,461 16,482 131,122 37,918 27,347 5,802 16,227 3 44,952 788 315 39,089 5,293 9,282 2,137,992 (Continued)
See accompanying notes to budgetary comparison schedules. 58
Yavapai County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2005
Budgeted Amounts Original Final Public Safety: Sheriff Adult Probation Juvenile Probation Total Public Safety Welfare: Medical Assistance Public Fiduciary Total Welfare Education: School Superintendent Total Education Total Expenditures Excess of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Transfer In Transfer Out Loan Proceeds Sale of General Fixed Assets Total Other Financing Source (Use) Net change in fund balances Fund Balance, July 1, 2004 Increase in reserve for inventories Fund Balance, June 30, 2005 $ 9,787,792 1,829,172 2,090,259 13,707,223 9,787,792 1,829,172 2,090,259 13,707,223
Actual Amounts 9,773,780 1,749,000 2,053,496 13,576,276
Variance with Final Budget 14,012 80,172 36,762 130,947
8,625,772 360,257 8,986,029
8,643,754 360,257 9,004,011
8,643,753 332,147 8,975,900
1 28,110 28,111
557,301 557,301 64,688,649
560,564 560,564 64,687,140
560,563 560,563 62,390,089
1 1 2,297,051
5,863,968
5,865,477
9,422,783
3,557,306
1,685,000 (9,371,500) (7,686,500) (1,822,532) 1,822,532 $
1,685,000 (9,371,500) (7,686,500) (1,821,023) 1,821,023 $
1,655,617 (9,371,500) 25,483 (7,690,400) 1,732,383 1,955,129 8,024 3,695,536 $
(29,383) 25,483 (3,900) 3,553,406 134,106 8,024 3,695,536
See accompanying notes to budgetary comparison schedules. 59
Yavapai County Required Supplementary Information Budgetary Comparison Schedule Jail District Fund Year Ended June 30, 2005
Budgeted Amounts Original Revenues: Taxes Charges for services Investment income Miscellaneous Total revenues Expenditures: Public safety: Sheriff Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfer in Transfer out Total other financing sources (uses) Net changes in fund balances Fund balances, July 1, 2004 Fund balances, June 30, 2005 $ 5,290,807 (1,865,000) 3,425,807 (2,153,459) 2,153,459 $ 5,290,807 (1,865,000) 3,425,807 (2,153,459) 2,153,459 $ (5,579,266) (5,579,266) 12,549,057 12,549,057 12,549,057 12,549,057 $ 6,600,000 369,791 6,969,791 $ 6,600,000 369,791 6,969,791 $ Final
Actual Amounts 7,045,465 382,936 75,353 46,813 7,550,567
Variance with Final Budget $ 445,465 382,936 75,353 (322,978) 580,776
12,001,473 12,001,473
547,584 547,584
(4,450,906)
1,128,360
5,290,807 (2,104,326) 3,186,481 (1,264,425) 4,406,990 3,142,565 $
(239,326) (239,326) 889,034 2,253,531 3,142,565
See accompanying notes to budgetary comparison schedules. 60
Yavapai County Required Supplementary Information Budgetary Comparison Schedule Regional Road Fund Year Ended June 30, 2005
Budgeted Amounts Original Revenues: Taxes Licenses and permits Investment income Miscellaneous Total revenues Expenditures: Highways and streets: Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfer out Sale of fixed assets Total other financing sources (uses) Net changes in fund balances Fund balances, July 1, 2004 Fund balances, June 30, 2005 $ (4,214,000) (4,214,000) (6,163,049) 6,163,049 $ (4,214,000) (4,214,000) (6,163,049) 6,163,049 $ (1,949,049) (1,949,049) 12,213,139 12,213,139 12,213,139 12,213,139 $ 8,666,666 1,500,000 97,424 10,264,090 $ 8,666,666 1,500,000 97,424 10,264,090 $ Final
Actual Amounts 9,166,581 2,056,735 139,515 21,993 11,384,824
Variance with Final Budget $ 499,915 556,735 42,091 21,993 1,120,734
3,973,203 3,973,203
8,239,936 8,239,936
7,411,621
9,360,670
(4,203,045) 1,367,270 (2,835,775) 4,575,846 7,461,640 12,037,486 $
10,955 1,367,270 1,378,225 10,738,895 1,298,591 12,037,486
See accompanying notes to budgetary comparison schedules. 61
Yavapai County Required Supplementary Information Budgetary Comparison Schedule HURF Road Fund Year Ended June 30, 2005
Budgeted Amounts Original Revenues: Intergovernmental Investment income Miscellaneous Total revenues Expenditues Highways and streets: Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfer in Transfer out Total other financing sources (uses) Net changes in fund balances Fund balances, July 1, 2004 Decrease in reserve for inventories Fund balances, June 30, 2005 $ (600,000) (600,000) (506,098) 506,098 $ (600,000) (600,000) (507,607) 507,607 $ 93,902 92,393 15,086,118 15,086,118 15,087,627 15,087,627 $ 14,700,000 480,020 15,180,020 $ 14,700,000 480,020 15,180,020 $ Final
Actual Amounts 14,945,143 2,111 331,532 15,278,786
Variance with Final Budget $ 245,143 2,111 (148,488) 98,766
15,174,025 15,174,025
(86,398) (86,398)
104,761
12,368
10,000 (600,000) (590,000) (485,239) 569,913 (16,678) 67,996 $
10,000 10,000 22,368 62,306 (16,678) 67,996
See accompanying notes to budgetary comparison schedules. 62
Yavapai County Required Supplementary Information Notes to Budgetary Comparison Schedules Year Ended June 30, 2005
Note 1 Budgeting and Budgetary Control Arizona Revised Statutes (ARS) requires the County to prepare and adopt a balanced budget annually for each governmental fund. The Board of Supervisors must approve such operating budgets on or before the third Monday in July to allow sufficient time for the legal announcements and hearings required for the adoption of the property tax level on the third Monday in August. A.R.S. prohibits expenditures or liabilities in excess of the amounts budgeted. Expenditures may not legally exceed appropriations at the department level. In certain instances, transfers of appropriations between departments or from the contingency account to a department maybe made upon the Board of Supervisors' approval.
63
Nonmajor Governmental Funds
SPECIAL REVENUE FUNDS Health Care Accounts for a variety of health service programs funded by federal and state grant funds, appropriations, fees and local government contributions. Accounts for the collection of a special recording surcharge, not to exceed four dollars, to be used to defray the cost of converting the County Recorder's document storage and retrieval system to micrographics or computer automation as established by A.R.S. 11-475.01. Accounts for the collection of a special recording surcharge, not to exceed four dollars, to be used to defray the cost of converting the County Assessor's document storage and retrieval system to micrographics or computer automation as established by A.R.S. 11-269.06. Provides and maintains library services for the residents of Yavapai County. Operations are funded by a secondary tax levy. Educational services and programs administered by the County School Superintendent. Accounts for fees and grants used for construction, maintenance and operation of parks. Accounts for local government contributions used to assess the current and future supply of water. Used to fund operations of transfer stations, waste tire operations and closure costs of County landfills. Accounts for highway user fees restricted to construction, repair and maintenance of County roads. Community Development Block Grant is a federal grant for construction of facilities and acquisition of equipment for local non-profit and public entities. Administration of special districts for Street Lighting, Road and Sewer improvements. Accounts for statutory fees collected and used for document storage and retrieval. Also fees used for "fill-the gap" purposes. Accounts for various programs administered by the County Attorney including Anti-Racketeering, Victim Witness and Bad Check. Used for various law enforcement services and programs. Funding sources include federal and state grants. Accounts for programs administered by the Emergency Management department used to provide services, equipment and supplies for law enforcement or other agencies dealing with emergency response.
Recorder's Surcharge
Assessor's Surcharge
Public Library School Parks & Recreation Water Advisory Committee Landfill / Environment Public Works
C.D.B.G.
Improvement Districts
Clerk of Superior Court
County Attorney
Law Enforcement
Emergency Management
64
Probation
Accounts for Adult and Juvenile Probation programs and services provided in coordination with the Superior Court System. Accounts for statutory fees and surcharges related to the courts, and is used for the processing of criminal cases as well as court enhancement and records improvement. Provides training related seminars, books and materials for staff and attorneys. Includes a state grant for indigent defense costs. Airport enhancement projects for Seligman, Bagdad and Sedona funded by State grants.
Courts
Public Defender Airport Development
CAPITAL PROJECTS FUNDS Juvenile Jail Improvement Jail Construction Accounts for state funded improvements for a new remanded juvenile jail facility.
Accounts for the construction costs for the Verde Valley jail facility.
DEBT SERVICE FUNDS The Debt Service Funds account for the accumulation of resources for the payment of principal and interest on the revenue bonds issued for special assessment bonds for the Coyote Springs, Granite Gardens and Pine Valley special assessment districts and the notes payable for the HELP loan and the Prescott East special assessment district. Funding for the special assessment debt is provided by assessme
Object Description
| Rating | |
| TITLE | Yavapai County, Arizona comprehensive annual financial report fiscal year ended June 30,... |
| CREATOR | Yavapai County (Ariz.). Finance Department. |
| SUBJECT | Finance, Public--Arizona--Yavapai County; Yavapai County (Ariz.)--Appropriations and expenditures; |
| Browse Topic |
Business and industry Government and politics |
| DESCRIPTION | This title contains one or more publications. |
| Language | English; |
| Publisher | Yavapai County (Ariz.). Finance Department. |
| Material Collection |
Annual Reports County Documents |
| Geographic Coverage | Yavapai County (Ariz.) |
| Source Identifier | new?-ocm56774110?? |
| REPOSITORY | Arizona State Library, Archives and Public Records. |
Description
| TITLE | Yavapai County, Arizona comprehensive annual financial report fiscal year ended June 30, 2005 |
| DESCRIPTION | 138 pages (PDF version). File size: 2928.512 KB. Prepared by Yavapai County Finance Department. Includes independed auditors' report by Walker & Armstrong LLP dated October 7, 2005. |
| Contributor | Walker & Armstrong. |
| TYPE |
Text |
| Material Collection |
Senate Received Reports |
| Acquisition Note | Received in paper form from Senate Research Staff via Susan Blixt on 1/16/2007. Cataloger located digital version. http://www.co.yavapai.az.us/WorkArea/showcontent.aspx?id=18786 |
| RIGHTS MANAGEMENT | Copyright to this resource is held by the creating agency and is provided here for educational purposes only. It may not be downloaded, reproduced or distributed in any format without written permission of the creating agency. Any attempt to circumvent the access controls placed on this file is a violation of United States and international copyright laws, and is subject to criminal prosecution. |
| DATE ORIGINAL | [2005-11-03] |
| Time Period | 2000s (2000-2009) |
| ORIGINAL FORMAT | Paper |
| DIGITAL IDENTIFIER | Yavapai_County_CAFR_2005.pdf |
| DIGITAL FORMAT |
PDF (Portable Document Format) |
| REPOSITORY | Arizona State Library, Archives and Public Records. |
| Full Text | Yavapai County, Arizona Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2005 Yavapai County, Arizona Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2005 Board of Supervisors Carol Springer, District 1 A.G. "Chip" Davis, District 3 Thomas Thurman, District 2 Prepared by Yavapai County Finance Department YAVAPAI COUNTY Comprehensive Annual Financial Report Year Ended June 30, 2005 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal ................................................................................................................................... 1 Certificate of Achievement for Excellence in Financial Reporting ............................................................. 6 Organizational Chart .................................................................................................................................. 7 Yavapai County Officials ............................................................................................................................ 8 FINANCIAL SECTION Independent Auditors' Report..................................................................................................................... 9 Management's Discussion and Analysis (Required Supplementary Information) ................................................................................................. 11 BASIC FINANCIAL STATEMENTS: Government-Wide Financial Statements: Statement of Net Assets..................................................................................................................... 21 Statement of Activities ........................................................................................................................ 22 Fund Financial Statements: Balance Sheet-Governmental Funds ................................................................................................. 24 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets ............................................................................................. 26 Statement of Revenues, Expenditures, and Changes in Fund Balances-Governmental Funds.......................................................................................... 28 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ........................................................................................................... 30 Statement of Net Assets-Proprietary Funds....................................................................................... 31 Statement of Revenues, Expenses and Changes in Fund Net Assets -Proprietary Funds........................................................................................................................... 32 Statement of Cash Flows-Proprietary Funds ..................................................................................... 33 Statement of Fiduciary Net Assets-Fiduciary Funds .......................................................................... 34 Statement of Changes in Fiduciary Net Assets-Fiduciary Funds....................................................... 35 Notes to the Financial Statements: Note 1 - Summary of Significant Accounting Policies..................................................................... 36 Note 2 - Deposits and Investments................................................................................................. 42 Note 3 - Due From Other Governments ......................................................................................... 44 Note 4 - Capital Assets ................................................................................................................... 45 Note 5 - Long-term Liabilities .......................................................................................................... 47 Note 6 - Special Assessment Debt Payable ................................................................................... 47 Note 7 - Bonds ................................................................................................................................ 48 Note 8 - Notes Payable................................................................................................................... 49 Note 9 - Compensated Absences and Claims and Judgments ...................................................... 49 Note 10 - Capital Leases .................................................................................................................. 49 Note 11 - Landfill Closure and Postclosure Care Costs ................................................................... 50 Note 12 - Insurance Claims .............................................................................................................. 51 Note 13 - Risk Management ............................................................................................................. 51 Note 14 - Line of Credit Arrangement............................................................................................... 52 Note 15 - Retirement Plans...............................................................................................................52 Note 16 - Interfund Balances and Activity......................................................................................... 54 Note 17 - Condensed Financial Statements of the County Treasurer's Investment Pool ................................................................................................................ 55 i YAVAPAI COUNTY Comprehensive Annual Financial Report Year Ended June 30, 2005 Required Supplementary Information: Schedule of Agent Retirement Plans' Funding Progress...................................................................... 57 Budgetary Comparison Schedules: General Fund...................................................................................................................................... 58 Jail District Fund ................................................................................................................................. 60 Regional Road Fund .......................................................................................................................... 61 HURF Road Fund............................................................................................................................... 62 Notes to Budgetary Comparison Schedules ...................................................................................... 63 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet-Nonmajor Governmental Funds .............................................................. 66 Combining Statement of Revenues, Expenditures and Changes in Fund Balances-Nonmajor Governmental Funds ......................................................................... 74 Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual: Jail Construction ......................................................................................................................... 82 Capital Projects........................................................................................................................... 83 Health Care................................................................................................................................. 84 Recorder's Surcharge ................................................................................................................. 85 Assessor's Surcharge ................................................................................................................. 86 Public Library .............................................................................................................................. 87 School ......................................................................................................................................... 88 Parks & Recreation ..................................................................................................................... 89 Water Advisory Committee ......................................................................................................... 90 Landfill / Environment ................................................................................................................. 91 Public Works ............................................................................................................................... 92 CDBG.......................................................................................................................................... 93 Improvement Districts ................................................................................................................. 94 Clerk of Superior Court ............................................................................................................... 95 County Attorney .......................................................................................................................... 96 Law Enforcement ........................................................................................................................ 97 Emergency Management............................................................................................................ 98 Probation..................................................................................................................................... 99 Courts ....................................................................................................................................... 100 Public Defender ........................................................................................................................ 101 Jail District Debt Service........................................................................................................... 102 Coyote Springs ......................................................................................................................... 103 Prescott East............................................................................................................................. 104 Granite Gardens ....................................................................................................................... 105 Pine Valley ................................................................................................................................ 106 HELP......................................................................................................................................... 107 Capital Assets Used in the Operation of Governmental Funds: Comparative Schedules By Source............................................................................................... 109 Schedule By Function and Activity ................................................................................................ 110 Schedule of Changes By Function and Activity............................................................................. 111 Statement of Changes in Assets and Liabilities-Agency Funds ...................................................... 112 ii YAVAPAI COUNTY Comprehensive Annual Financial Report Year Ended June 30, 2005 STATISTICAL SECTION General History: General Government Expenditures by Function ................................................................................. 113 General Government Revenues by Source ........................................................................................ 114 Assessed and Estimated Actual Value of Taxable Property............................................................... 115 Taxes and Assessments: Property Tax Levies and Collections................................................................................................... 116 Property Tax Rates-All Direct and Overlapping Governments ........................................................... 117 Special Assessment Billings and Collections...................................................................................... 118 Long-Term Debt: Computation of Legal Debt Margin ..................................................................................................... 119 Computation of Direct and Overlapping Debt ..................................................................................... 120 Miscellaneous: Principal Taxpayers............................................................................................................................. 121 Salaries of Elected County Officials .................................................................................................... 122 Schedule of Insurance in Force .......................................................................................................... 123 Demographic and Other Statistical Data............................................................................................. 124 iii This page is left blank intentionally. iv INTRODUCTORY SECTION Yavapai County Finance Department MICHAEL S. DANOWSKI, CPA FINANCE DIRECTOR November 3, 2005 To the Board of Supervisors, and Citizens of Yavapai County: State law requires that counties prepare a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by the Arizona State Auditor General's Office or by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of Yavapai County for the fiscal year ended June 30, 2005. This report consists of management's representations concerning the finances of Yavapai County. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the County has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the County's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the County's Comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. Walker & Armstrong LLP, a firm of licensed certified public accountants, have audited the County's financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the County for the fiscal year ended June 30, 2005, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit; that there was a reasonable basis for rendering an unqualified opinion that the Yavapai County financial statements for the fiscal year ended June 30, 2005, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. 1 The independent audit of the financial statements of the County was part of a broader, federally mandated "Single Audit" designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government's internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the County's separately issued Single Audit report. GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The County's MD&A can be found immediately following the report of the independent auditors. Profile of the Government Yavapai County was formed in 1864; one year after the Arizona Territory was established. The County was named after the Yavapai tribe, whose name means "people of the sun". The County is located in the central portion of the state encompassing approximately 8,125 square miles. The County is empowered to levy a property tax on both real and personal properties within its boundaries. The County operates under the supervisor-administrator form of government. Policymaking and legislative authority are vested in a board of supervisors (Board) consisting of three members. The Board appoints an Administrator, who is responsible for overseeing the day-today operations of the government. The Board consists of three members elected to four-year terms representing three supervisorial districts. The Board is responsible for the financing and administration of County government, has final approval over County departmental budgets and sets property tax rates. As part of its administrative duties, the Board is responsible for appointing department heads, and members of County boards and commissions dealing with planning and zoning, building codes, health, employees and employee benefits, private industry and agriculture. The Board acts as the board of directors for special districts within the County such as jail, water, sanitation, lighting, library and flood control. The County Administrator develops and presents the County budget, oversees countywide administrative departments, assists elected officials, and coordinates with other governments in intergovernmental relations. In addition to the Board, other elected officers representing the County include the Assessor, Clerk of the Superior Court, County Attorney, Recorder, School Superintendent and the Treasurer. There are six elected Superior Court Judges, and five Justices of the Peace. Yavapai County provides a full range of services, including police protection, courts, health services, the construction and maintenance of highways, streets, other infrastructure and parks. 2 The financial reporting entity includes all the funds of the primary government (Yavapai County), as well as its' component units. Component units are legally separate entities for which the primary government is financially accountable. The Board acts as the Board of Directors of these component units. Accordingly, the Yavapai County Flood Control District, Library District and various special assessment districts are reported as a part of the governmental fund types of the primary government. There are various school districts, special districts, and fire districts within Yavapai County governed by independently elected boards. The financial statements of such districts are not included in this report except to reflect amounts held in an agency capacity by the County Treasurer. The reporting entity is further described in Note 1 to the financial statements. The annual budget serves as the foundation for the County's financial planning and control. All departments of the County are required to submit requests for appropriation to the County Administrator annually. These requests are used as the starting point for developing a proposed budget. The County Administrator then presents this proposed budget to the Board of Supervisors for review on or before the third Monday in July. On or before the seventh day before the day in August when the Board sets tax levy rates, the Board must hold a public hearing and a special meeting of the Board, at which time the final budget must be adopted. The final budget is adopted by fund and department. Transfers of appropriations between funds or departments require approval of the Board. Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund and major special revenue funds this comparison is presented beginning on page 58 as part of the required supplemental information. For governmental funds, other than the general fund and major special revenue funds with appropriated annual budgets, this comparison is presented in the governmental fund subsection of this report, which starts on page 82. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the County operates. Local Economy. Yavapai County has experienced rapid population growth in recent years, increasing 55% to a total of 167,517, from the 1990 to the 2000 census. This rate makes Yavapai County one of the fastest growing counties in the State of Arizona. This is exemplified by Yavapai County's strong residential construction activity. The unemployment rate is 3.3% compared to the statewide average of 5.6%. Yavapai County Government is the single largest employer in Yavapai County. Retail trade, tourism, utilities, healthcare, warehouse and distribution centers, mining, light industry and government all contribute to the economy. 3 Long-term financial planning. In November of 1999, the Yavapai County Jail District was formed when the citizens approved a dedicated excise tax of up to 1/4 cent for the purpose of constructing, operating, maintaining and financing County jail facilities. In December of 1999, the Board adopted Resolution No.1999-1 establishing the initial excise tax of 1/5 cent. On March 26, 2003, the excise tax was raised to the voter approved rate of 1/4 cent. The excise tax has been used to construct new, efficient jail facilities and to pay for additional staff and other operating costs of the jail system. The first phase of the jail construction was to increase the size of the Camp Verde Jail Facility by 480 beds. Construction of this phase began in January of 2002 and was completed in the fall of 2003. Total cost was approximately $20 million. Pledged revenue obligations in the amount of $15,260,000 were issued to finance the majority of the construction costs. Phase two of the construction program, which should begin within the next two years, anticipates the construction of a new jail facility in western Yavapai County. Upon its completion, the current Prescott Facility would be taken out of service and converted to other uses due to its outmoded design and poor location. Cash management policies and practices. Cash temporarily idle during the year was invested in obligations of the U.S. Treasury, the Arizona State Treasurer's investment pool, specified state and local government bonds, and interest-earning investments such as savings accounts, certificates of deposit and repurchase agreements in eligible depositories. The average yield on investments for the fiscal year ended 2005 was 2.25 percent. Risk management. The County is covered by three public entity risk pools: the Arizona Counties Property and Casualty Pool: the Arizona Counties Worker's Compensation Pool, and the Yavapai Combined Trust. Additional information on the County's risk management activity can be found in Note 13 of the notes to the financial statements. Pension. The County participates in four retirement plans: The Arizona State Retirement System, the Public Safety Personnel Retirement System, the Correctional Officer Retirement Plan and the Elected Officials Retirement Plan. Note 15 of the notes to financial statements contain Information about the types of employees covered, the County's liability, and general information about the individual plans. Government Finance Officers Association The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Yavapai County for its comprehensive annual financial report for the fiscal year ended June 30, 2004. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. 4 Acknowledgements The preparation of this report could only be accomplished through the efforts of the staff of the Finance Department, and the assistance of Walker & Armstrong LLP, Certified Public Accountants and the Arizona State Auditor General's Office. I also wish to thank the Board of Supervisors for their dedicated oversight of the financial condition of the County and their support for our efforts to improve its financial operations. Respectfully submitted, ___________________________ Michael S. Danowski Chief Financial Officer 5 6 YAVAPAI COUNTY Organizational Chart CITIZENS OF YAVAPAI COUNTY TREASURER RECORDER ASSESSOR JUSTICE COURTS SCHOOL SUPERINTENDENT BOARD OF SUPERVISORS SHERIFF CLERK OF SUPERIOR COURT ATTORNEY SUPERIOR COURT CONSTABLES ELECTIONS ADULT PROBATION JUVENILE PROBATION PUBLIC FIDUCIARY LIBRARY PUBLIC DEFENDER PUBLIC WORKS COUNTY ADMINISTRATOR CLERK OF BOARD DEVELOPMENT SERVICES HEALTH MEDICAL ASSISTANCE FLEET MANAGEMENT INFORMATION SYSTEMS FINANCE HUMAN RESOURCES FACILITIES 7 Yavapai County Officials BOARD OF SUPERVISORS Carol Springer, Chairman, District 1 Thomas C. Thurman, Member, District 2 A.G. "Chip" Davis, Member, District 3 CLERK OF THE BOARD Bev Staddon COUNTY ADMINISTRATOR James M. Holst FINANCE DIRECTOR Michael S. Danowski 8 FINANCIAL SECTION Yavapai County Management's Discussion and Analysis As management of Yavapai County, we offer readers of Yavapai County's financial statements this narrative overview and analysis of the financial activities of Yavapai County for the fiscal year ended June 30, 2005. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 1 5. Financial Highlights The assets of Yavapai County exceeded its liabilities at the close of the most recent fiscal year by $129,181,492 (net assets). Of this amount, $27,543,026 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. As of the close of the current fiscal year, Yavapai County's governmental funds reported combined ending fund balances of $36,929,165 a increase of $8,071,358 in comparison with the prior year. At the end of the current fiscal year, unreserved fund balance for the general fund was $3,595,788 or 5.8% of total general fund expenditures. Yavapai County's total long-term liabilities decreased by $6,609,709 during the current fiscal year. The key factors in this decrease were the scheduled repayment of notes payable and the retirement of special assessment and jail revenue bond debt. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to Yavapai County's basic financial statements. Yavapai County's basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Governmentwide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of Yavapai County's finances, in a manner similar to a private sector business. The statement of net assets presents information on all of Yavapai County's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of Yavapai County is improving or deteriorating. The statement of activities presents information showing how the government's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused and paid-time-off leave). Both of the government-wide financial statements distinguish functions of Yavapai County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of Yavapai County include general government, public safety, highways and streets, health, welfare and sanitation, culture and recreation, and education. The Yavapai Long-Term Care Division comprises the business-type activities of Yavapai County. 11 Yavapai County Management's Discussion and Analysis The government-wide financial statements not only include Yavapai County itself (known as the primary government), but also a legally separate Jail District, Flood Control District, Library District and various Special Assessment Districts. These districts function for all practical purposes as departments of Yavapai County, and therefore have been included as an integral part of the primary government. The government-wide financial statements can be found on pages 21 - 22 of this report. 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. Yavapai County, like other state and local governments uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. All of the funds of Yavapai County can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. 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 governmentwide financial statements, the governmental funds financial statements 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 may be useful in evaluating a government's near-term financial requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near term financing decisions. Both the governmental funds balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Yavapai County maintains numerous individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for six funds considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. The basic governmental fund financial statements can be found on pages 24 - 30 of this report. Proprietary funds. Yavapai County maintains one type of proprietary fund. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Yavapai County uses an enterprise fund to account for its Arizona Long-Term Health Care Division. The basic proprietary fund financial statements can be found on pages 31 - 33 of this report. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support Yavapai County's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary funds financial statements can be found on pages 34 - 35 of this report. 12 Yavapai County Management's Discussion and Analysis Notes to the financial statements. The notes provide additional information that is essential to the full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 36 - 56 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning Yavapai County's progress in funding its obligation to provide pension benefits to its employees and budgetary comparison schedules for the general fund and major special revenue funds. Other required supplementary information can be found on pages 57 - 63 of this report. The combining statements referred to earlier in connection with non-major governmental funds are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 66 - 107 of this report. Government-wide Financial Analysis Statement of Net Assets. As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of Yavapai County, assets exceeded liabilities by $126 million at the close of the most recent fiscal year. Net Assets (in millions) Governmental Activities 2004 Current and other assets Restricted assets Capital assets Total assets Long-term liabilities outstanding Other liabilities Total liabilities Net assets: Invest in capital assets, net of related debt Restricted Unrestricted Total net assets 2005 $ 48.6 1.6 112.3 162.5 24.0 12.4 36.4 98.0 .6 27.5 $ 126.1 As Restated Business-type Activities Total 2004 $ 40.0 1.9 110.7 152.6 30.0 12.1 42.1 89.9 .5 20.1 $ 110.5 2005 $ 6.7 .1 6.8 3.7 3.7 .2 2.9 $ 3.1 2004 $ 6.9 .2 7.1 4.2 4.2 .2 2.7 $ 2.9 2005 $ 55.3 1.6 112.4 169.3 24.0 16.1 40.1 98.2 3.5 27.5 $ 129.2 As Restated $ 46.9 1.9 110.9 159.7 30.0 16.3 46.3 90.1 3.2 20.1 $ 113.4 By far the largest portion of Yavapai County's net assets (76%) reflects its investment in capital assets (e.g. land, buildings, machinery and equipment), less any related debt and accumulated depreciation used to acquire those assets that is still outstanding. Yavapai County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although Yavapai County'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. Approximately 3% of Yavapai County's net assets represent resources that are subject to external 13 Yavapai County Management's Discussion and Analysis restrictions on how they may be used. The remaining balance of unrestricted net assets ($27.5 million) may be used to meet the government's ongoing obligations to citizens and creditors. At the end of the current fiscal year Yavapai County is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. The increase in total net assets, related to governmental activities, is primarily due to increases in program revenues. Restricted net assets increased by $.3 million, primarily due to moderate revenue increases in the business-type activities. The increase in unrestricted net assets of $7.4 million is due to increases in both program and general revenues. Governmental activities capital assets have been restated due to the recording of previously unrecorded infrastructure. Statement of Activities. Already noted was the statement of activities purpose in presenting information in how the government's net assets changed during the most recent fiscal year. A chart of changes in net assets follows. For the fiscal year, net assets increased $15.8 million, primarily coming from governmental activities. The increase in assets in governmental activities is related to the construction of assets, rather than accumulation of cash or other liquid assets. The basis of accounting used in the government-wide statement of activities excludes capital expenditures while its revenues include taxes that are used, in part, for the construction of those assets. Beginning net assets have been restated due to the recording of previously unrecorded infrastructure. Additional information on this restatement can be found on page 46. Changes in Net Assets (in millions) Governmental Activities 2005 Revenues Program revenues: Charges for services $ 16.8 Operating grants and contributions 27.0 Capital grants 2.6 General revenues: Property taxes 34.9 Sales taxes 41.1 Vehicle license tax 10.1 Miscellaneous 7.1 Total revenues 139.6 Expenses General government 53.0 Public safety 34.2 Highways and streets 14.5 Sanitation 1.6 Health 9.0 Welfare 9.0 Culture and recreation .7 Education 2.3 Long-term care Total expenses 124.3 Increase (decrease) in net assets before transfers 15.3 Transfers .3 Increase (decrease) in net assets 15.6 Net assets, beginning restated 110.5 Net assets, ending $ 126.1 2004 Business-type Activities 2005 2004 2005 Total 2004 $ 13.8 26.7 .1 31.9 35.7 9.5 5.3 123.0 38.2 31.7 18.5 1.6 8.8 7.8 .5 2.5 109.6 13.4 1.0 14.4 96.1 $ 110.5 $ 34.9 $ 31.5 $ 51.7 27.0 2.6 34.9 41.1 10.1 7.4 174.8 53.0 34.2 14.5 1.6 9.0 9.0 .7 2.3 34.7 159.0 15.8 15.8 113.4 $ 129.2 $ 45.3 26.7 .1 31.9 35.7 9.5 5.5 154.7 38.2 31.7 18.5 1.6 8.8 7.8 .5 2.5 31.8 141.4 13.3 13.3 100.1 $ 113.4 .3 35.2 .2 31.7 34.7 34.7 .5 (.3) .2 2.9 $ 3.1 31.8 31.8 (.1) (1.0) (1.1) 4.0 $ 2.9 14 Yavapai County Management's Discussion and Analysis Governmental activities. Governmental activities revenues totaled $139.6 million for fiscal year 2005. The following are highlights of County revenues: Sales taxes are comprised of state shared-sales tax, a 0.5% County excise tax and a 0.25% Jail District tax. Overall sales tax increased by $5.4 million approximately (15%) in the current fiscal year due to a general increase in sales activity, fueled by an improving local economy and continued population growth. The County excise tax and the Jail District tax increased by $1.5 million and .8 million respectively, and the state-shared sales tax, the largest component of sales tax, increased by over $2 million, although actual collections exceeded the prior year by $3 million, however Arizona law requires actual sales taxes collected above the budgeted amount to be recognized in fiscal year 2005/06. Based upon the Arizona State Department of Revenue projections, it is expected that State-shared sales tax will show a similar increase in fiscal year 2005/06. Property taxes increased by $3 million (9.3%) during the year. This increase is attributable to increased property values, new construction and a 1.2% increase in the property tax rate. Charges for services increased by $3 million primarily from increases in building and related permits, County Recorder and Assessor fees, which is indicative of increased building and real estate sales activity. Revenues by Source - Governmental Activities Property taxes 25% Charges for services 12% Operating grants and contributions 21% Vehicle license tax 7% Miscellaneous 5% Sales taxes 30% 15 Yavapai County Management's Discussion and Analysis Expenses For the most part, increases in expenses closely paralleled inflation and growth in the demand for services. The general government function experienced significant growth in the Assessor, Public Defender, Management Information Services, Development Services and Elections departments. Increases, over the prior year, in public safety are the result of increasing demands on law enforcement and detention within the Sheriff's office. The decrease in highways and streets is the result of the payment to the State of Arizona in the prior year for the County's share of a major road project. Expenses and Program Revenues - Governmental Activities 60.0 50.0 40.0 $ In Millions 30.0 20.0 10.0 General government Public safety Highways and streets Sanitation Health W elfare Culture and recreation Education Expenses Program Revenues Business-type activities Business-type activities consist solely of the Yavapai County Department of Medical Assistance, Long-Term Health Care Division ("Division"). The Division operates a prepaid health program for qualified persons of Yavapai County within the State of Arizona. The Program provides hospitalization, medical care, managed institutional care, and home and community based long-term care for physically disabled and elderly persons. The funds used to carry out the Division's program are provided by the State of Arizona under its Arizona Long-Term Care System administered by the Arizona Health Care Cost Containment System (AHCCCS). The funding sources include federal, state and county monies that are paid to the Division on a capitation basis. 16 Yavapai County Management's Discussion and Analysis Capitation revenues increased by $3.4 million, or 11%, for fiscal year 2005 over the prior fiscal year. Operating expenses increased $2.9 million representing a 9% change from the prior year. These increases are the direct result of an increase in client membership and an increase in provider service costs. Expenses and Program Revenues-Business-type Activities 40.00 35.00 $ In Millions 30.00 25.00 20.00 15.00 10.00 5.00 - Expenses Program Revenues Financial Analysis of the Government's Funds As noted earlier, Yavapai County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of Yavapai County's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing Yavapai County's financing requirements. In particular, 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. As of the end of the current fiscal year, Yavapai County's governmental funds reported combined ending fund balances of $36,929,165, an increase of $8,071,358 in comparison with the prior year. This change is primarily attributable to the increases in the fund balances of the general, capital projects and the regional road funds. The fund balance is unreserved other than the reserves for inventories of $257,723 and debt service of $546,806. The general fund is the chief operating fund of Yavapai County. At the end of the current fiscal year, unreserved fund balance of the general fund was $3,595,788, which was $1,732,383 more than the previous fiscal year. Otherwise both revenues and expenditures for the current fiscal year closely followed estimates. 17 Yavapai County Management's Discussion and Analysis Proprietary fund. Yavapai County's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Restricted net assets of the Long-Term Care Division at the end of the year amounted to $2,921,417, an increase of $218,336 over the prior fiscal year. This increase is primarily due to the fixed capitation amount received from the AHCCCS, which was slightly more than what was expected. Other factors concerning the finances of this fund have already been addressed in the discussion of Yavapai County's business-type activities. General Fund Budgetary Highlights Certain departments received supplemental appropriations as follows: Public Defender Treasurer Management Information System County Attorney Development Services Human Resources School Superintendent Bagdad / Yarnell Justice Court $ 103,484 20,916 12,204 6,200 6,035 5,377 3,263 2,433 These increases in appropriations were transferred from a general fund department with unused budget capacity to subsidize the above adopted budgets. Actual general fund expenditures were under budget by $2,297,051. The Public Defender office exceeded its adopted budget due to an increased case load and higher than expected expenditures related to capital cases. During the year, actual revenue exceeded estimates by $1,260.255 or 1.8%. Capital Asset and Debt Administration Capital Assets. Yavapai County's investment in capital assets for its governmental and business-type activities as of June 30, 2005, amounts to $98.2 million (net of accumulated depreciation and related debt). This investment in capital assets includes land, buildings, machinery and equipment. In addition, roads and highways constructed in the fiscal year ended June 30, 2005, or in progress at that date, are included in capital assets. In accordance with GASB Statement No. 34, the County will retroactively value all infrastructure assets back to fiscal year 1981 by June 30, 2006. The total increase in Yavapai County's investment in capital assets for the current fiscal year was 9.2%, nearly all of which is attributed to governmental activities. Yavapai County's Capital Assets (net of depreciation) (in millions) Governmental Activities 2005 Land Buildings Machinery and Equipment Infrastructure Construction in Progress Total $ 11.9 46.2 10.0 41.7 2.4 $ 112.2 2004 $ 11.7 47.2 10.2 29.4 12.1 $ 110.6 Business-type Activities 2005 $ .2 $ .2 $ 2004 $ .2 .2 2005 Total 2004 $ 11.9 $ 11.7 46.2 47.2 10.2 10.4 41.7 29.4 2.4 12.1 $ 112.4 $ 110.8 Additional information on Yavapai County's capital assets can be found in Note 4 on pages 45 - 46 of this report. 18 Yavapai County Management's Discussion and Analysis Long-term debt. At the end of the current fiscal year, Yavapai County had total bonded debt outstanding of $12,787,867. Of this amount, $11,200,000 represents pledged revenue obligations of the Yavapai County Jail District, which are secured by a dedicated excise tax of cent, and $1,587,867 represents debt of various special assessment districts which is secured by pledges of revenues from special assessments levied against benefiting property owners. Yavapai County also had notes payable of $2,250,000 which are secured by the County's highway user revenue. The remainder of Yavapai County's debt is a longterm capital lease of $791,367 road equipment. Yavapai County's Outstanding Debt (in millions) 2005 Jail District Pledged Revenue Obligations Special Assessment Debt Payable Notes Payable Capital Leases Total $ 11.2 1.6 2.3 0.8 $ 15.9 2004 $ 12.6 1.7 6.4 1.8 $ 22.5 Yavapai County's debt decreased by a net $6,609,709 during the current fiscal year. The pledged revenue obligations are being used to construct new jail facilities, also mentioned above. Moody's Investor Service and Standard & Poor's Rating services have assigned the ratings of "Aaa" and "AAA", respectively, on these obligations, which are insured for the payment of principal and interest with Ambac Assurance, Ambac Financial Group, Inc. State statutes limit the amount of general obligation debt a county may issue to 6 percent of its total assessed valuation. The current debt limitation for the County is $112,670,846. Since the County has no general obligation debt, this amount equals the debt capacity. Additional information on long-term debt can be found in the Notes to the Financial Statements on pages 47-49 of this report. Economic Factors and Next Year's Budgets and Rates The unemployment rate for Yavapai County is currently 3.3 percent, which is unchanged from a year ago. This compares favorably to the state's average unemployment rate of 5.6 percent. Inflationary trends in the region compare favorably to national indices. These factors were considered in preparing Yavapai County's budget for the 2005/06 fiscal year. The unreserved ending fund balance in the general fund of $3,595,788 was appropriated for spending in the 2005/06 fiscal year budget. Although the County is experiencing an ever greater demand for services, conservative budgeting and increased revenues avoided the need for any increase in the general fund property tax rate for the 2005/06 fiscal year. Requests for Information This financial report is designed to provide a greater overview of Yavapai County'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 the Finance Department, 1015 Fair Street, Prescott, Arizona 86305. 19 This page is left blank intentionally. 20 BASIC FINANCIAL STATEMENTS Yavapai County Statement of Net Assets June 30, 2005 Primary Government Business-type Activities $ 4,581,775 2,071,809 159,457 6,813,041 Assets Cash and investments held by treasurer Receivables: Property taxes Special assessments Accounts Due from other governments Inventories Prepaid items Deferred charges Cash equivalents - restricted Capital assets, not being depreciated Capital assets, being depreciated, net Total assets Liabilities Accounts payable Accrued payroll and employee benefits Bonds payable Interest payable Due to other governments Medical claims payable Unearned revenue 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: Health and welfare Debt service Unrestricted Total net assets Governmental Activities $ 36,025,933 1,387,091 1,448,931 1,396,111 7,873,475 257,723 83,601 131,794 1,632,595 14,554,476 97,697,677 162,489,407 $ Total 40,607,708 1,387,091 1,448,931 1,396,111 9,945,284 257,723 83,601 131,794 1,632,595 14,554,476 97,857,134 169,302,448 3,816,316 2,555,519 1,395,000 237,595 4,403,311 9,633,551 14,347,497 36,388,789 11,810 213,133 550,613 2,956,611 3,732,167 3,828,126 2,768,652 1,395,000 237,595 550,613 2,956,611 4,403,311 9,633,551 14,347,497 40,120,956 98,010,786 546,806 27,543,026 126,100,618 159,457 2,921,417 3,080,874 98,170,243 2,921,417 546,806 27,543,026 129,181,492 $ $ $ See accompanying notes to financial statements. 21 Yavapai County Statement of Activities Year Ended June 30, 2005 Program Revenues Charges for Functions/Programs Primary Government: Governmental activities: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education Aid to other governments Interest on long-term debt Total governmental activities Business-type activities: Long term care Total business-type activities Total primary government $ 34,660,511 34,660,511 158,860,804 $ 34,931,830 34,931,830 51,715,608 $ 27,024,916 $ 2,586,829 (77,804,770) 271,319 271,319 271,319 271,319 271,319 (77,533,451) $ 49,606,233 34,241,112 14,468,350 1,589,708 8,958,399 8,978,907 667,306 2,326,146 2,690,577 673,555 124,200,293 $ 7,507,861 3,548,886 2,058,209 523,207 2,799,419 346,196 16,783,778 $ 3,690,429 5,054,092 11,554,211 652,016 5,141,965 51,720 880,483 27,024,916 $ 2,586,829 2,586,829 $ (38,407,943) (25,638,134) (855,930) (414,485) (1,017,015) (8,978,907) (615,586) (1,099,467) (103,748) (673,555) (77,804,770) $ $ (38,407,943) (25,638,134) (855,930) (414,485) (1,017,015) (8,978,907) (615,586) (1,099,467) (103,748) (673,555) (77,804,770) Expenses Services Operating Grants & Contributions Capital Grants & Contributions Governmental Activities Net (Expenses) Revenue & Changes in Net Assets Primary Government Business-type Activities Total General revenues: Property taxes Sales taxes Vehicle license taxes Franchise taxes Lottery Interest on investments Gain of sale of capital assets Miscellaneous Transfers Total general revenues and transfers Changes in net assets Net assets beginning, as restated Net assets - ending $ 34,912,400 41,077,470 10,060,798 511,205 550,035 554,886 1,353,975 4,123,119 297,046 93,440,934 15,636,164 110,464,454 126,100,618 $ 114,608 129,455 (297,046) (52,983) 218,336 2,862,538 3,080,874 $ 34,912,400 41,077,470 10,060,798 511,205 550,035 669,494 1,353,975 4,252,574 93,387,951 15,854,500 113,326,992 129,181,492 See accompanying notes to financial statements. 22 This page is left blank intentionally. 23 Yavapai County Balance Sheet Governmental Funds June 30, 2005 Jail District Debt Service $ 26 1,632,595 1,632,621 Regional Road $ 11,786,502 86,993 970,234 12,843,729 Assets Cash and cash equivalents Receivables: Property taxes Special assessments Accounts Due from: Other funds Other governments Inventories Prepaid items Cash equivalents - restricted Total assets $ General 3,091,710 1,159,568 615,120 1,352,700 3,134,001 99,748 75,532 9,528,379 Jail District $ 2,983,117 26,037 1,976 692,395 3,703,525 $ $ $ $ Liabilities and Fund Balances Liabilities: Accounts payable Accrued payroll and employee benefits Due to other funds Interest payable Principal payable Unearned revenue Total liabilities Fund balances: Reserved for: Debt service Inventory Unreserved, reported in General fund Special revenue funds Capital project funds Total fund balances Total liabilities and fund balances $ 804,217 1,433,897 774 3,593,955 5,832,843 $ 257,122 303,838 560,960 $ 237,595 1,395,000 1,632,595 $ 796,702 8,176 1,365 806,243 99,748 3,595,788 3,695,536 9,528,379 3,142,565 3,142,565 3,703,525 26 26 1,632,621 12,037,486 12,037,486 12,843,729 $ $ $ $ See accompanying notes to financial statements. 24 HURF Road $ 13,911 35,404 1,636,532 157,975 1,843,822 $ Capital Projects 6,345,615 9,376 6,354,991 Other Governmental Funds $ 11,818,963 227,523 1,448,931 484,481 448,154 1,440,313 8,069 15,876,434 Total Governmental Funds $ 36,025,933 1,387,091 1,448,931 1,235,918 1,838,234 7,873,475 257,723 83,601 1,632,595 51,783,501 $ $ $ $ $ 654,085 231,693 890,048 1,775,826 $ 79,900 79,900 $ 1,224,290 577,915 785,854 1,577,910 4,165,969 $ 3,816,316 2,555,519 1,678,041 237,595 1,395,000 5,171,865 14,854,336 157,975 (89,979) 67,996 1,843,822 6,275,091 6,275,091 6,354,991 546,780 11,172,192 (8,507) 11,710,465 15,876,434 546,806 257,723 3,595,788 26,262,264 6,266,584 36,929,165 51,783,501 $ $ $ $ 25 Yavapai County Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets June 30, 2005 Amounts reported for governmental activities in the statement of net assets are different because: Total fund balances - governmental funds Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Some receivables are not available to pay for current-period expenditures and, therefore, are deferred in the funds. Bond issuance costs are recorded as deferred charges, and are not reported in the funds. Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds. Net assets of governmental activities $ $ 36,929,165 112,252,153 768,554 131,794 (23,981,048) 126,100,618 See accompanying notes to financial statements. 26 This page is left blank intentionally. 27 Yavapai County Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2005 Jail District Debt Service $ $ Regional Road 9,166,581 2,056,735 139,515 21,993 11,384,824 General Revenues: Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment income Miscellaneous Total Revenues Expenditures: Current: General government Public safety Highways and streets Sanitation Health Welfare Education Culture and recreation Capital expenditures Debt service: Principal retirement Interest and fiscal charges Total Expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers out Sale of capital assets Total other financing sources (uses) Net changes in fund balances Fund Balances, July 1, 2004 Increase (decrease) in reserve for inventories Fund Balances, June 30, 2005 $ 34,689,252 4,006,141 28,548,998 1,634,201 2,159,669 52,821 721,790 71,812,872 $ Jail District 7,045,465 382,936 75,353 46,813 7,550,567 39,277,350 13,576,276 8,975,900 560,563 62,390,089 12,001,473 12,001,473 1,395,000 477,093 1,872,093 3,973,203 3,973,203 9,422,783 (4,450,906) (1,872,093) 7,411,621 1,655,617 (9,371,500) 25,483 (7,690,400) 1,732,383 1,955,129 8,024 3,695,536 5,290,807 (2,104,326) 3,186,481 (1,264,425) 4,406,990 3,142,565 1,872,119 1,872,119 26 26 (4,203,045) 1,367,270 (2,835,775) 4,575,846 7,461,640 12,037,486 $ $ $ $ See accompanying notes to financial statements. 28 HURF Road $ 14,945,143 2,111 331,532 15,278,786 $ Capital Projects 79,074 1,348 80,422 $ Other Governmental Funds 5,798,101 308,532 399,261 16,353,793 5,298,784 351,106 206,013 3,490,275 32,205,865 $ Total Governmental Funds 56,699,399 308,532 6,462,137 59,847,934 7,315,921 2,510,775 554,887 4,613,751 138,313,336 15,174,025 15,174,025 599,753 599,753 7,514,223 8,118,873 207,417 1,492,577 8,833,788 1,859,931 561,582 2,875,346 4,252,287 196,463 35,912,487 46,791,573 33,696,622 19,354,645 1,492,577 8,833,788 8,975,900 2,420,494 561,582 3,475,099 5,647,287 673,556 131,923,123 104,761 (519,331) (3,706,622) 6,390,213 10,000 (600,000) (590,000) (485,239) 569,913 (16,678) 67,996 2,100,000 (13,242) 2,086,758 1,567,427 4,707,664 6,275,091 6,701,193 (1,040,577) 5,660,616 1,953,994 9,756,471 11,710,465 17,629,736 (17,332,690) 1,392,753 1,689,799 8,080,012 28,857,807 (8,654) 36,929,165 $ $ $ $ 29 Yavapai County Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2005 Net change in fund balances - total governmental funds Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Capital outlay 7,058,667 Depreciation (5,397,713) Debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Assets. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces longterm liabilities in the Statement of Net Assets. Long-term lease principal payments 962,422 Principal repaid on bonds and notes 5,647,287 Deferred tax revenues are recognized in the governmental funds only when available, but are recognized in the Statement of Activities when earned. Under the modified accrual basis of accounting used in the governmental funds, expenditures are not recognized for transactions that are not normally paid with expendable available resources. In the Statement of Activities, however, which is presented on the accrual basis of accounting, expenses and liabilities are reported regardless of when the financial resources are available. Increase in compensated absences (501,207) Decrease in bond amortization (18,827) Increase in claims and judgements (17,265) Increase in landfill closure and post closure care costs (1,884) Some cash outlays, such as purchases of inventories, are reported as expenditures in the governmental funds when purchased. In the Statement of Activities, however, they are reported as expenses when consumed. Decrease in inventories (8,654) In the Statement of Activities, only the gain/loss on the sale of capital assets is reported whereas in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balance by the book value of the capital assets sold. Changes in net assets of governmental activities $ 8,080,012 1,660,954 6,609,709 (127,896) (539,183) (8,654) (38,778) $ 15,636,164 See accompanying notes to financial statements. 30 Yavapai County Statement of Net Assets Proprietary Funds June 30, 2005 Business-type ActivitiesEnterprise Fund Long-term Care Assets Current assets: Cash and cash equivalents Due from other governments Total current assets Noncurrent assets: Capital assets, net of accumulated depreciation Total noncurrent assets Total Assets 159,457 159,457 6,813,041 $ 4,581,775 2,071,809 6,653,584 Liabilities Current liabilities : Accounts payable Accrued payroll and employee benefits Medical claims payable Due to other funds Due to other governments Total current liabilities Total Liabilities 11,810 213,133 2,956,611 160,193 390,420 3,732,167 3,732,167 Net Assets Invested in capital assets Restricted - health and welfare Total Net Assets $ 159,457 2,921,417 3,080,874 See accompanying notes to financial statements. 31 Yavapai County Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds Year Ended June 30, 2005 Business-type ActivitiesEnterprise Fund Long-term Care Operating revenues: AHCCCS revenues Miscellaneous Total operating revenues Operating Expenses: Medical costs Administrative costs Depreciation Total operating expenses Operating income Nonoperating revenues: Interest income Income before transfers Transfers out Increase in net assets Net assets, July 1, 2004 Net assets, June 30, 2005 $ 31,781,491 2,827,573 51,447 34,660,511 400,774 $ 34,931,830 129,455 35,061,285 114,608 515,382 (297,046) 218,336 2,862,538 3,080,874 See accompanying notes to financial statements. 32 Yavapai County Statement of Cash Flows Proprietary Funds Year Ended June 30, 2005 Business-type ActivitiesEnterprise Fund Long-term Care Cash flows from operating activities: Cash received from AHCCCS Cash payments for medical services Cash payments for personal services Cash payments to other County funds for goods and services Cash payments for operating activities Net cash used for operating activities Cash flows from noncapital financing activities: Cash transferred to general fund Cash flows from capital and related financing activities: Purchase of capital assets Cash flows from investing activities: Interest on investments Net decrease in cash and cash equivalents Cash and cash equivalents, July 1, 2004 Cash and cash equivalents, June 30, 2005 Reconciliation of net income to net cash used for operating activities: Operating income Adjustments to reconcile net income to net cash used for operating activities: Depreciation Changes in assets and liabilities: Decrease in due from other funds Increase in due from other governments Decrease in accounts payable Decrease in accrued payroll and employee benefits Decrease in medical claims payable Increase in due to other funds Increase in due to other governments Net cash used for operating activities $ 52,530 (721,065) (136,093) (3,782) (602,403) 67,624 212,710 (678,258) 51,447 $ 400,774 $ 114,608 (897,472) 5,479,247 4,581,775 (36,776) (297,046) $ 34,850,794 (31,321,656) (1,654,499) (1,050,051) (1,502,846) (678,258) See accompanying notes to financial statements. 33 Yavapai County Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2005 Investment Trust Fund Assets Cash and cash equivalents Total Assets $ 62,635,727 62,635,727 $ $ Agency Fund 1,564,006 1,564,006 Liabilities Due to other governments Total Liabilities - $ $ 1,564,006 1,564,006 Net Assets Held in trust for investment trust participants $ 62,635,727 See accompanying notes to financial statements. 34 Yavapai County Statement of Changes in Fiduciary Net Assets Fiduciary Funds Year Ended June 30, 2005 Investment Trust Fund Additions: Contributions from participants Investment income Total additions $ 327,166,805 1,018,855 328,185,660 Deductions: Distributions to participants Total deductions 307,013,649 307,013,649 Changes in net assets 21,172,011 Net assets, July 1, 2004 Net assets, June 30, 2005 $ 41,463,716 62,635,727 See accompanying notes to financial statements. 35 Yavapai County Notes to Financial Statements June 30, 2005 Note 1 Summary of Significant Accounting Policies The accounting policies of Yavapai County conform to generally accepted accounting principles applicable to governmental units adopted by the Governmental Accounting Standards Board (GASB). During the year ended June 30, 2005, the County implemented the provisions of GASB Statement No. 40, Deposit and Investment Risk Disclosures. GASB Statement No. 40 establishes and modifies the risk disclosures about the County's deposits and investments. The implementation of GASB Statement No. 40 requires only additional disclosures, and had no effect on reported amounts for deposits, investments, net assets, or changes in net assets. A. Reporting Entity The County is a general purpose local government that is governed by a separately elected board of three county supervisors. The accompanying financial statements present the activities of the County (the primary government) and its component units. Component units are legally separate entities for which the County is considered to be financially accountable. Blended component units, although legally separate entities, are in substance part of the County's operations. Therefore, data from these units is combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the combined financial statements to emphasize they are legally separate from the County. Each blended component unit discussed below has a June 30 year-end. The County has no discretely presented component units. The following table describes the County's component units: Description: Criteria for Inclusion A tax-levying district that provides flood control systems; County board of supervisors serves as board of directors Provides and maintains library services for County's residents; County board of supervisors serves as board of directors Reporting Method Blended For Separate Financial Statements Not available Component Unit Yavapai County Flood Control District Yavapai County Library District Blended Not available 36 Yavapai County Notes to Financial Statements June 30, 2005 Yavapai County Special Assessment District Constructs or improves sidewalks, curbs and gutters, irrigation systems, and street lighting within the County; County board of supervisors serves as board of directors A tax-levying district that acquires, constructs, operates, maintains, and finances county jails and jail systems; county board of supervisors serves as governing board Blended Not available Yavapai County Jail District Blended Not available Related Organization - The Sedona-Oak Creek Airport Authority (Authority) was created for the purpose of developing and promoting transportation and commerce by air in the State of Arizona, and in particular the development, promotion, and operation of air transportation facilities and air commerce in and around the Sedona area. In 1971, the Authority entered into a 60-year lease with Yavapai County to manage and operate the Sedona Airport facility, which is owned by the County. The Authority is governed by a 13 member Board of Directors approved by the County's Board of Supervisors. However, the Authority's operations are completely separate from the County, and the County is not financially accountable for the Authority. Therefore, based on the criteria of GASB Statement No. 14, the financial activities of the Authority have not been included in the accompanying financial statements. B. Basis of Presentation The basic financial statements include both government-wide statements and fund-based financial statements. The government-wide statements focus on the County as a whole, while the fund-based financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the usefulness of the information. Government-wide statements-provide information about the primary government (the County) and its component units. The statements include a statement of net assets and a statement of activities. These statements report the financial activities of the overall government, except for fiduciary activities. They also distinguish between the governmental and business-type activities of the County. Governmental activities generally are financed through taxes and intergovernmental revenues. Business-type activities are financed in whole or in part by fees charged to external parties. A statement of activities presents a comparison between direct expenses and program revenues for each function of the County's governmental activities and segment of its business-type activities. Direct expenses are those that are specifically associated with a 37 Yavapai County Notes to Financial Statements June 30, 2005 program or function and, therefore, are clearly identifiable to a particular function. The County does not allocate indirect expenses to programs or functions. Program revenues include: charges to customers or applicants for good, services, or privileges provided, operating grants and contributions, and capital grants and contributions, including special assessments. Revenues that are not classified as program revenues, including internally dedicated resources and all taxes, are reported as general revenues. Generally, the effect of interfund activity has been eliminated from the government-wide financial statements to minimize the double counting of internal activities. However, charges for interfund services provided and used are not eliminated if the prices approximate their external exchange values. Fund financial statements-provide information about the County's funds, including fiduciary funds and blended component units. Separate statements are presented for the governmental, proprietary, and fiduciary fund categories. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Fiduciary funds are aggregated and reported by fund type. Proprietary fund revenues are classified as either operating or nonoperating. Operating revenues and expenses generally result from transactions associated with the fund's principal activity. Accordingly, revenues, such as AHCCCS revenues and user charges, in which each party receives and gives up essentially equal values, are operating revenues. Other revenues such as subsidies and investment income, result from transactions in which the parties do not exchange equal values are reported as nonoperating revenues. Operating expenses include the cost of services, administrative expenses, and depreciation on capital assets. The County reports the following major governmental funds: The General Fund is the County's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Jail District Fund is used to account for County jail operations. Although the criteria for classification as a major fund was not met, the County has elected to disclose this fund as a major fund due to its importance to financial statement users. The Jail District Debt Service Fund is used to account for the resources accumulated and payments made for principal and interest on the revenue bonds issued for the construction and remodel of the County jail. The Regional Road Fund is used to account for road construction and maintenance of major regional roads, and is funded by a cent County sales tax and impact fees. 38 Yavapai County Notes to Financial Statements June 30, 2005 The HURF Road Fund is used to account for road maintenance and construction of nonmajor roads, and is funded primarily by highway users revenue. The Capital Projects Fund is used to account for major capital projects and is funded by transfers from the general fund. The County reports the following major proprietary fund: The Long-term Care Fund is used to account for the activities of the Yavapai County Department of Medical Assistance Long-term Care Division. The Long-Term Care Division operates a prepaid health program for qualified persons of the County. The County reports the following fund types: The investment trust fund accounts for pooled assets held and invested by the County Treasurer on behalf of County departments and other governmental entities. The agency fund accounts for assets held by the County as an agent for the State, various local governments, and other parties, and for property taxes collected and distributed to the State, local school districts, community college districts, and special districts in a fiduciary capacity. C. Basis of Accounting The government-wide, proprietary fund and fiduciary fund financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Agency funds have no measurement focus. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Property taxes are recognized as revenue in the year for which they are levied. Grants and donations are recognized as revenue as soon as all eligibility requirements the provider imposed have been met. Governmental funds in the fund-based financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The County considers all revenues reported in the governmental funds to be available if the revenues are collected within 60 days after year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, compensated absences, and landfill closure and postclosure care costs, which are recognized as expenditures to the extent they are due and payable. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of long-term debt and acquisitions under capital lease agreements are reported as other financing sources. Property taxes, sales taxes, vehicle license taxes, charges for services and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be 39 Yavapai County Notes to Financial Statements June 30, 2005 susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. Under the terms of grant agreements, the County funds certain programs by a combination of grants and general revenues. Therefore, when program expense is incurred, there are both restricted and unrestricted net assets available to finance the program. The County applies grant resources to such programs before using general revenues. The County's business-type activities and enterprise funds follow FASB Statements and Interpretations issued on or before November 30, 1989; Accounting Principles Board Opinions; and Accounting Research Bulletins, unless those pronouncements conflict with GASB pronouncements. The County has applied the option not to follow those FASB pronouncements issued after November 30, 1989. D. Cash and Investments For purposes of the statement of cash flows, the County considers cash on hand, demand deposits, cash on deposit with the County Treasurer, and only those highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Money market investments with a remaining maturity of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. E. Inventories and Prepaid Items The County accounts for its inventories in the governmental funds using the purchase method. Inventories of the governmental funds consist of expendable supplies held for consumption and are recorded as expenditures at the time of purchase. Amounts on hand at year-end are shown on the balance sheet as an asset for informational purposes only and are offset by a fund balance reserve to indicate that they do not constitute "available spendable resources." These inventories are stated at cost using the first-in, first-out method. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. F. Property Tax Calendar The County levies real and personal property taxes on or before the third Monday in August that become due and payable in two equal installments. The first installment is due on the first day of October and becomes delinquent after the first business day of November. The second installment is due on the first day of March of the next year and becomes delinquent after the first business day of May. A lien assessed against real and personal property attaches on the first day of January preceding assessment and levy. 40 Yavapai County Notes to Financial Statements June 30, 2005 G. Restricted Assets Certain resources set aside for repayment of the jail construction revenue bonds are classified as restricted assets on the balance sheet because they are maintained in separate accounts and their use is limited by applicable bond covenants. The "payment fund" account is used to segregate resources accumulated for debt service payments over the next twelve months. In addition, certain proceeds of a capital lease financing are maintained in a separate account for the acquisition of capital assets, and are classified as restricted. H. Capital Assets Capital assets are reported at actual cost. Donated assets are reported at estimated fair value at the time received. Capitalization thresholds (the dollar values above which asset acquisitions are added to the capital asset accounts), depreciation methods, and estimated useful lives of capital assets reported in the government-wide statements and proprietary funds are as follows: Capitalization Threshold $10,000 Depreciation Method Buildings Machinery and Equipment Infrastructure $10,000 $5,000 $10,000 Straight-line Straight-line Straight-line Estimated Useful Life 20-40 years 5 -10 years 12-40 years Land I. Investment Income Investment income is composed of interest, dividends, and net changes in the fair value of applicable investments. J. Compensated Absences Compensated absences consist of paid time off (PTO) leave earned by employees based on services already rendered. Employees may accumulate up to 764 hours of PTO, at various accrual rates, depending on years of service. PTO hours in excess of the maximum amount are forfeited. Upon termination of employment, all unused and unforfeited PTO benefits are paid to employees. Accordingly, PTO benefits are accrued as a liability in the financial statements. Employees may also accumulate up to 520 hours of catastrophic time (CAT) leave. CAT leave may be used in the case of illness or injury suffered by an employee or employee's immediate family, but only after using at least forty hours of consecutive PTO leave. CAT leave benefits are cumulative but are forfeited upon termination of employment, and therefore are not accrued. 41 Yavapai County Notes to Financial Statements June 30, 2005 Note 2 Deposits and Investments Arizona Revised Statutes (A.R.S.) authorize the County to invest public monies in the State Treasurer's investment pool; obligations issued or guaranteed by the United States or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations, or instrumentalities; specified state and local government bonds; interest earning investments such as savings accounts, certificates of deposit, and repurchase agreements in eligible depositories; and specified commercial paper, bonds, debentures, and notes issued by corporations organized and doing business in the United States. In addition, the County Treasurer may invest trust funds in fixed income securities of corporations doing business in the United States or District of Columbia. Credit risk Statutes have the following requirements for credit risk: 1. Commercial paper must be rated P1 by Moody's investors service or A1 or better by Standard and Poor's rating service. 2. Corporate bonds, debentures, and notes must be rated A or better by Moody's investors service or Standard and Poor's rating service. 3. Fixed income securities must carry one of the two highest ratings by Moody's investors service and Standard and Poor's rating service. If only one of the above-mentioned services rates the security, it must carry the highest rating of that service. Custodial credit risk Statutes require collateral for demand deposits, certificates of deposit, and repurchase agreements at 101 percent of all deposits not covered by federal depository insurance. Concentration of credit risk Statutes do not include any requirements for concentration of credit risk. Interest rate risk Statutes require that public monies invested in securities and deposits have a maximum maturity of 5 years and that public operating fund monies invested in securities and deposits have a maximum maturity of 3 years. Investments in repurchase agreements just have a maximum maturity of 180 days. Foreign currency risk Statutes do not allow foreign investments. Deposits--At June 30, 2005, the carrying amount of the County's deposits was $1,675,951, and the bank balance was $5,582,945. The County requires collateral on all deposits not covered by federal depository insurance. 42 Yavapai County Notes to Financial Statements June 30, 2005 Investments--The County's investments at June 30, 2005, were as follows: Investment Type U.S. Treasury securities U.S. agency securities State Treasurer's investment pools Total $ Amount 14,835,244 25,583,398 63,199,000 $ 103,617,642 The State Board of Investment provides oversight for the State Treasurer's pools, and the Local Government Investment Pool Advisory Committee provides consultation and advice to the Treasurer. The fair value of a participant's position in the pool approximates the value of that participant's pool shares and the participant's shares are not identified with specific investments. Credit risk-- The County does not have a formal investment policy with respect to credit risk. At June 30, 2005, credit risk for the County's investments was as follows: Investment Type U.S. agency securities State Treasurer's investment pools Total Rating AAA Unrated Rating Agency Moody's Not applicable $ $ Amount 25,583,398 63,199,000 88,782,398 Custodial credit risk--For an investment, custodial credit risk is the risk that, in the event of the counterparty's failure, the County will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The County does not have a formal investment policy with respect to custodial credit risk. Concentration of credit risk--More than 5 percent of the County's investments as June 30, 2005, were in Federal National Mortgage Association and Federal Home Loan Bank. These investments were 5.7 percent and 18.1 percent, respectively, of the County's total investments. Interest rate risk--The County does not have a formal policy regarding interest rate risk. At June 30, 2005, the County had the following investments in debt securities: Amount $ 14,835,244 25,583,398 63,199,000 $ 103,617,642 Weighted Average Maturity in Years 1.20 1.20 0.41 Investment Type U.S. Treasury securities U.S. agency securities State Treasurer's investment pool 7 Total 43 Yavapai County Notes to Financial Statements June 30, 2005 A reconciliation of cash, deposits, and investments to amounts shown on the Statements of Net Assets follows: Cash, deposits, and investments: Cash on hand Amount of deposits Amount of investments Total $ 1,146,443 1,675,951 103,617,642 $ 106,440,036 Statement of Net Assets: Cash, cash equivalents and investments Total Governmental Activities $ 37,658,528 $ 37,658,528 Business-Type Activities $ $ 4,581,775 4,581,775 Investment Trust Funds $ 62,635,727 $ 62,635,727 Agency Funds $ 1,564,006 $ 1,564,006 Total $ 106,440,036 $ 106,440,036 Note 3 - Due From Other Governments Amounts due from other governments at June 30, 2005, include $1,703,063 in stateshared revenue from sales tax, $449,310 in county excise tax distributions due from the State Treasurer, $640,018 in state motor vehicle license taxes from the Arizona Department of Transportation and $341,610 in other fees from federal, state, and local governments recorded in the General Fund; $1,089,055 in state-shared revenue from highway user taxes, and $377,580 in state motor vehicle license tax and $169,897 in other fees from federal, state, and local governments recorded in the HURF Road Fund; $1,440,313 in grants and other fees from federal, state grants and local governments recorded in the Other Governmental Funds; $834,434 in county excise tax distributions due from the State Treasurer and $135,800 in other fees from local governments recorded in the Regional Road Fund; $641,326 in sales tax collections and $51,069 in other fees from the federal, state and local governments recorded in the Jail District Fund. 44 Yavapai County Notes to Financial Statements June 30, 2005 Note 4 Capital Assets Capital assets activity for the year ended June 30, 2005, was as follows: Balance July 1 ,2004, as restated Governmental activities: Capital assets not being depreciated: Land Infrastructure Construction in progress (estimated cost to complete $1,477,000) Total capital assets not being Depreciated Capital assets being depreciated: Buildings Machinery and equipment Infrastructure Total Less accumulated depreciation for: Buildings Machinery and equipment Infrastructure Total Total capital assets, being depreciated, net Governmental activities capital assets, net Business-type activities: Capital assets being depreciated: Machinery and equipment Total capital assets being depreciated Less accumulated depreciation for: Machinery and equipment Total Business-type activities capital Assets, net Balance June 30, 2005 Increases Decreases $ 11,705,056 265,870 12,111,609 24,082,535 $ 152,929 19,657 4,381,822 4,554,408 $ - $ 11,857,985 285,527 2,410,964 14,554,476 (14,082,467) (14,082,467) 57,717,730 26,158,522 31,517,017 115,393,269 (10,530,205) (15,939,873) (2,375,749) (28,845,827) 561,652 2,417,176 13,607,898 16,586,726 (1,518,287) (2,577,341) (1,302,084) (5,397,712) (723,209) (723,209) 684,430 684,430 58,279,382 27,852,489 45,124,915 131,256,786 (12,048,492) (17,832,784) (3,677,833) (33,559,109) 86,547,442 11,189,014 (38,779) 97,697,677 $110,629,977 $ 15,743,422 $(14,121,246) $112,252,153 $ 567,511 $ 36,776 $ - $ 604,287 567,511 36,776 - 604,287 (393,383) (393,383) (51,447) (51,447) - (444,830) (444,830) $ 174,128 $ (14,671) $ - $ 159,457 45 Yavapai County Notes to Financial Statements June 30, 2005 Depreciation expense was charged to functions as follows: Governmental Activities: General government Public safety Highway and streets Sanitation Health Welfare Education Culture and Recreation Total governmental activities depreciation expense Business-type activities: Long-term care Total business-type activities depreciation expense $ 1,576,000 1,216,460 2,224,063 84,011 145,632 617 18,089 132,840 5,397,712 51,447 51,447 $ $ $ Construction Commitments The County has active construction projects as of June 30, 2005. At June 30, 2005 the County's commitments with contractors are as follows: Project Old Black Canyon Highway Total Spent-to-date $ 893,795 $ 893,795 Remaining Commitment $ 399,767 $ 399,767 The road improvement projects are being funded by sales taxes out of the regional road fund. Restatement of Beginning Capital Assets Governmental activities net capital assets of $110,364,107 at June 30, 2004 have been restated for the recording of certain capital assets on hand as of that date. This adjustment results in an increase of $265,870 in beginning net assets at July 1, 2004. 46 Yavapai County Notes to Financial Statements June 30, 2005 Note 5 Long-term Liabilities The following schedule details the County's long-term liability and obligation activity for the year ended June 30, 2005. Balance July 1, 2004 Governmental Activities: Special assessment debt payable Revenue bonds Total special assessment debt payable and revenue bonds payable Notes payable Compensated absences payable Obligations under capital leases Landfill closure and postclosure care costs payable Claims and judgments payable Governmental activities long-term liabilities $ 1,715,154 12,595,000 $ Additions $ Reductions Balance June 30, 2005 1,587,867 11,200,000 12,787,867 2.250,000 6,476,891 791,367 1,361,961 312,962 23,981,048 $ Due within 1 year 130,699 1,435,000 (127,287) $ (1,395,000) 14,310,154 6,375,000 5,975,682 1,753,789 1,360,077 295,697 $ 30,070,399 4,823,394 69,057 399,639 $ 5,292,090 (1,522,287) (4,125,000) (4,322,185) (962,422) (67,173) (382,374) $ (11,381,441) $ 1,565,699 2,250,000 4,788,148 716,742 312,962 $ 9,633,551 Note 6 - Special Assessment Debt Payable As described in the "Blended Component Units" section of Note 1, the Yavapai County Board of Supervisors acts as the Board of Directors of various special districts, therefore the bonded debt of these districts is included as part of the Yavapai County reporting entity. Special assessment bonds are secured by pledges of revenues from special assessments levied against the benefiting property owners. The proceeds of the bond issues were used to finance construction in these districts. These bonds are generally callable with interest payable semiannually. However, in accordance with the bond indenture for each special assessment bond issue, and in the opinion of the County Attorney, the County is not legally obligated in any way for the special assessment bonded indebtedness. The following special assessment districts had debt outstanding at June 30, 2005. Interest Rates 6.13 % 6.45 % 6.40 % 4.82 % Maturity Ranges 7 /1/90-7/1/ 2007 7/ 1 / 9 7 - 7 / 1 / 2 0 0 7 1/1/03-1/1/ 2022 7/ 1 / 0 2 - 7 / 1 / 2 0 1 0 $ Outstanding Principal July 1, 2004 $ 43,000 30,000 1,405,000 237,154 1,715,154 Outstanding Principal June 30, 2005 $ 30,000 20,000 1,330,000 207,867 $ 1,587,867 District Bonds Granite Gardens 1989 Pine Valley Street Imp. Coyote Springs Road Imp. Note Payable Prescott East Sanitary Dist. Total Retirements $ (13,000) (10,000) (75,000) (29,287) $ (127,287) 47 Yavapai County Notes to Financial Statements June 30, 2005 Special assessment debt service requirements to maturity are as follows: Year ending June 30, 2006 2007 2008 2009 2010 2011-2015 2016-2020 2021-2022 Total Principal 130,699 132,179 108,730 110,355 112,059 433,845 400,000 160,000 $ 1,587,867 $ $ Interest 95,546 87,702 80,109 73,683 67,179 244,912 115,200 10,240 774,571 $ Note 7 - Bonds The County's bonded debt consists of $15,260,000 revenue bonds issued by the Yavapai County Jail District on February 13, 2002. As described in the "Blended Component Units" section of Note 1, the Yavapai County Board of Supervisors acts as the Board of Directors of various special districts, therefore the bonded debt of these districts is included as part of the Yavapai County reporting entity. The bond proceeds were used to construct a new jail and to remodel an existing jail. The bonds will be repaid from maintenance of effort payments from the County's general fund to the District and a voter approved excise tax. The total budgeted and actual maintenance of effort payments transferred to the District in the fiscal year ended June 30, 2005 was $5,290,807. Excise taxes received for the same period were $7,045,465, which was 6.7% greater than the budgeted amount of $6,600,000. Bonds outstanding at June 30, 2005, were as follows: Interest Rates 3-4.3 % Maturity Ranges 7/1/20057/1/2012 Outstanding Principal July 1, 2004 $ 12,595,000 $ 12,595,000 Outstanding Principal June 30, 2005 $11,200,000 $11,200,000 Jail District Revenue bonds Total Retirements $ (1,395,000) $ (1,395,000) The following schedule details debt service requirements to maturity for the County's revenue bonds payable at June 30, 2005. Governmental Activities Principal Interest $ 1,435,000 $ 433,340 1,480,000 387,420 1,530,000 335,620 1,590,000 279,010 1,655,000 215,410 3,510,000 226,180 $ 11,200,000 $ 1,876,980 Year ending June 30, 2006 2007 2008 2009 2010 2011-2012 Total 48 Yavapai County Notes to Financial Statements June 30, 2005 Note 8 Notes Payable Yavapai County entered into two loan agreements with the Arizona State Department of Transportation, through its Highway Expansion and Extension Loan Program (HELP) for funds needed to complete the construction of a major road project. The County's notes payable at June 30, 2005 are as follows: HELP loan dated July 15, 2002, principal amount of $4,500,000, payable monthly over 24 months beginning July 15, 2004, interest rate of 2.25.%, secured by the County's highway user revenues. Total Notes Payable Less Current Maturities Long-term portion of Notes Payable $ 2,250,000 2,250,000 (2,250,000) $ 0 The following schedule details debt service requirements to maturity for the County's notes payable at June 30, 2005. Governmental Activities Principal Interest 2,250,000 $ 27,422 2,250,000 $ 27,422 Year ending June 30, 2006 Total $ $ Note 9 - Compensated Absences and Claims and Judgments Compensated absences are paid from various funds in the same proportion that those funds pay payroll costs. Claims and judgments are generally paid from the fund that accounts for the activity that gave rise to the claim. During fiscal year 2005, the County paid for compensated absences as follows: 55 percent from the General Fund, 26 percent from other major funds, and 19 percent from other funds. The County paid for claims and judgments from the General Fund. Note 10 - Capital Leases The County has acquired equipment items under the provisions of various long-term lease agreements classified as capital leases for accounting purposes because they provide for a transfer of ownership by the end of the lease term. The assets acquired through capital leases are as follows: Governmental Activities $ 3,534,942 (1,260,572) $ 2,274,370 Machinery and equipment Less: accumulated depreciation Carrying value 49 Yavapai County Notes to Financial Statements June 30, 2005 The following schedule details debt service requirements to maturity for the County's capital leases payable at June 30, 2005. Governmental Activities $ 726,630 74,842 801,472 10,105 $ 791,367 Year ending June 30, 2006 2007 Total minimum lease payments Less amount representing interest Present value of net minimum capital lease payments Note 11 - Landfill Closure and Postclosure Care Costs State and federal laws and regulations require the County to place final covers on its 7 landfill sites when they stop accepting waste and to perform certain maintenance and monitoring functions at the sites for 30 years after closure. Although closure and postclosure care costs will not be paid until near or after the dates that the landfills stop accepting waste, the County reports a portion of these closure and postclosure care costs in each operating period even though actual payouts will not occur until the landfills are closed. These costs will be paid from the Landfill/Environment special revenue fund. The amount recognized each year is based on landfill capacity used at the end of each fiscal year. All 7 landfills stopped accepting waste and were closed prior to June 30, 2005. As of June 30, 2005, the landfill closure and postclosure care liability of $1,361,961 represents the cumulative amount of cost remaining on these closed landfills, which is net of expenditures incurred to date. These cumulative amounts are based on what it would cost to perform all closure and postclosure care in fiscal year 2005 and have been adjusted for changes in estimates during the fiscal year. The actual cost may be higher due to inflation, changes in technology, or changes in regulations. According to state and federal laws and regulations, the County must comply with the local government financial test requirements that assure the County can meet the costs of landfill closure, postclosure, and corrective action when needed. The County is in compliance with these requirements. 50 Yavapai County Notes to Financial Statements June 30, 2005 Note 12 - Insurance Claims The County provides health benefits to its employees and their dependents through the Yavapai Combined Trust, currently composed of three members. The Trust provides benefits up to $100,000 per individual per calendar year through a self-funding agreement with its participants and purchases commercial insurance to cover claims in excess of this limit. An independent administrator provides the trust with claim and recordkeeping services. The County is responsible for paying the premiums and requires its employees to contribute for dependent coverage. The County is not liable for claims in excess of coverage limits and cannot be assessed retroactive premium adjustments. If it withdraws from the Trust, the County would be responsible for its proportional share of any claims run-out costs, which exceed Trust Fund reserves established for the incurred but not reported claims liability. If the Trust were to terminate, the County would be responsible for its proportional share of any Trust deficit. Note 13 - Risk Management The County is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters; but was unable to obtain insurance at a cost it considered to be economically justifiable. Therefore, the County joined and is covered by three public entity risk pools: the Arizona Counties Property and Casualty Pool, and the Arizona Counties Workers' Compensation Pool which are described below, and the Yavapai Combined Trust, which is described above. The Arizona Counties Property and Casualty Pool is a public entity risk pool currently composed of 11 member counties. The pool provides member counties catastrophic loss coverage for risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters; and provides risk management services. Such coverage includes all defense costs as well as the amount of any judgment or settlement. The County is responsible for paying a premium, based on its exposure in relation to the exposure of the other participants, and deductibles of $25,000 per occurrence for property claims and $50,000 per occurrence for liability claims. The County is also responsible for any payments in excess of the maximum coverage of $100 million per occurrence for property claims and $10 million per occurrence for liability claims. A County must participate in the pool at least three years after becoming a member; however, it may withdraw after the initial three-year period. If the pool were to become insolvent, the County would be assessed an additional contribution. The Arizona Counties Workers' Compensation Pool is a public entity risk pool currently composed of 11 member counties. The pool provides member counties with workers' compensation coverage, as required by law, and risk management services. The County is responsible for paying a premium, based on an experience rating formula, that allocates pool expenditures and liabilities among the members. 51 Yavapai County Notes to Financial Statements June 30, 2005 The Arizona Counties Property and Casualty Pool and the Arizona Counties Workers' Compensation Pool receive independent audits annually and an audit by the Arizona Department of Insurance triennially. Both pools accrue liabilities for losses that have been incurred but not reported. These liabilities are determined annually based on an independent actuarial valuation. Note 14 - Line of Credit Arrangement The County has a $6,500,000 line of credit arrangement with a bank. The line of credit matures on June 30, 2006, and is collateralized by U.S. Government-backed securities. At June 30, 2005, no portion of this amount was utilized. Note 15 - Retirement Plans Plan Descriptions - The County contributes to four plans, three of which are described below. The Elected Officials Retirement Plan is not described due to its relative insignificance to the County's financial statements. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. The Arizona State Retirement System (ASRS) administers a cost-sharing multipleemployer defined benefit pension plan that covers employees of the State of Arizona and employees of participating political subdivisions and school districts. The ASRS is governed by the Arizona State Retirement System Board according to the provisions of A.R.S. Title 38, Chapter 5, Article 2. The Public Safety Personnel Retirement System (PSPRS) is an agent multiple-employer defined benefit pension plan that covers public safety personnel who are regularly assigned hazardous duty as employees of the State of Arizona or participating political subdivisions. The PSPRS, acting as a common investment and administrative agent, is governed by a five-member board, known as The Fund Manager, and the participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. The Corrections Officer Retirement Plan (CORP) is an agent multiple-employer defined benefit pension plan that covers certain employees of the State of Arizona, Departments of Corrections and Juvenile Corrections, and County employees whose primary duties require direct inmate contact. The CORP is governed by The Fund Manager of PSPRS and the participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 6. Each plan issues a publicly available annual financial report that includes its financial statements and required supplementary information. A report may be obtained by writing or calling the applicable plan. ASRS 3300 N. Central Ave. P.O. Box 33910 Phoenix, AZ 85067-3910 (602) 240-2000 or (800) 621-3778 PSPRS and CORP 3010 East Cambelback Rd, Suite 200 Phoenix, AZ 85016-4416 (602) 255-5575 52 Yavapai County Notes to Financial Statements June 30, 2005 Funding Policy - The Arizona State Legislature establishes and may amend active plan members' and the County's contribution rates. Cost-sharing plan - For the year ended June 30, 2005, active ASRS members and the County were each required by statute to contribute at the actuarially determined rate of 5.70 percent (5.20 percent retirement and 0.50 percent long-term disability) of the members' annual covered payroll. The County's contributions to ASRS for the years ended June 30, 2005, 2004, and 2003 were $2,496,445, $2,266,529 and $960,807 respectively, which were equal to the required contributions for the year. Agent plans - For the year ended June 30, 2005, active PSPRS members were required by statute to contribute 7.65 percent of the members' annual covered payroll, and the County was required to contribute at the actuarially determined rate of 13.04 percent. Active CORP members were required by statute to contribute 8.5 percent of the members' annual covered payroll, and the County was required to contribute at the actuarially determined rate of 5.38 percent. Annual Pension Cost - The County's pension cost for the two agent plans for the year ended June 30, 2005, and related information follow. Contribution rates: County Plan members Annual pension cost Contributions made PSPRS 13.04% 7.65% $730,814 $730,814 CORP 5.38% 8.50% $333,401 $333,401 The current-year annual required contributions for both the PSPRS and the CORP were determined as part of their June 30, 2003, actuarial valuations using the individual entryage actuarial cost method. The actuarial assumptions included (a) 9 percent investment rate of return and (b) projected salary increases ranging from 6.5 percent to 9.5 percent per year. Both (a) and (b) included an inflation component of 5.5 percent. The assumptions did not include cost-of-living adjustments. The actuarial value of assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over time. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2003, was 20 years. 53 Yavapai County Notes to Financial Statements June 30, 2005 Trend Information - Annual pension cost information for the current and two preceding years follows for each of the agent plans. Contributions Required and Contributions Made Year Ended June 30 2005 2004 2003 2005 2004 2003 Annual Pension Cost (APC)_ $730,814 648,780 465,783 333,401 288,947 126,031 Percentage of APC Contributed 100% 100% 100% 100% 100% 100% Net Pension Obligation $ -0-0-0-0-0-0- Plan PSPRS CORP Note 16 - Interfund Balances and Activity Interfund receivables and payables-interfund balances at June 30, 2005, were as follows: Payable To General Fund Payable from General Fund Regional Road HURF Road Nonmajor Funds Enterprise Fund Total governmental $ $ 889,954 462,746 1,352,700 $ $ 1,976 1,976 $ $ 145 1,365 33,894 35,404 $ $ 629 94 287,238 160,193 448,154 $ $ 774 1,365 890,048 785,854 160,193 1,838,234 Jail District HURF Road Nonmajor Funds Total The interfund balances resulted from time lags between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. All interfund balances are expected to be paid in one year. 54 Yavapai County Notes to Financial Statements June 30, 2005 Interfund transfers-interfund transfers for the year ended June 30, 2005, were as follows: Transfer To HURF Road General Fund Transfer from General Fund Jail District Regional Road HURF Road Capital Projects Nonmajor funds Long-term Care Total primary government $ 600,000 13,242 745,329 297,046 $1,655,617 Jail District Jail District Debt Service Capital Projects Nonmajor Funds Total $ 5,290,807 $ 5,290,807 $ - $ 10,000 - $2,100,000 $2,100,000 $ 1,980,693 232,207 4,203,045 285,248 $ 6,701,193 $ 9,371,500 2,104,326 4,203,045 600,000 13,242 1,040,577 297,046 $17,629,736 1,872,119 $1,872,119 $ 10,000 Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due, (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations, and (4) move amounts in excess of required minimum balances, as approved by AHCCCS. Note 17 - Condensed Financial Statements of the County Treasurer's Investment Pool Arizona Revised Statutes require community colleges, school districts, and other local governments to deposit certain public monies with the County Treasurer. The Treasurer has a fiduciary responsibility to administer those and the County monies under his stewardship. The Treasurer invests, on a pool basis, all idle monies not specifically invested for a fund or program. In addition, the Treasurer determines the fair value of those pooled investments annually at June 30. 55 Yavapai County Notes to Financial Statements June 30, 2005 The County Treasurer's investment pool is not registered with the Securities and Exchange Commission as an investment company and there is no regulatory oversight of its operations. The pool's structure does not provide for shares and the County has not provided or obtained any legally binding guarantees to support the values of the participants' investments. The Treasurer allocates interest earnings to each of the pool's participants. However, for the County's monies in the pool the Board of Supervisors authorized $17,107 of interest earned in certain other funds to be transferred to the General Fund. Substantially, all deposits and investments of the County's primary government are included in the County Treasurer's investment pool; therefore, the deposit and investment risks of the Treasurer's investment pool are the same as the County's deposit and investment risks, see Note 2 for disclosure of the County's deposit and investment risks. Details of each major investment classification follow. Investment Type U.S. government securities Investment in State Treasurer's investment pool Principal $39,000,000 63,199,000 Interest Rates 2.75-5.0 % 2.7222% Maturities 8 / 1 3 / 0 4 - 1 0/ 2 9 / 0 7 None stated Fair Value $38,786,045 63,199,000 A condensed statement of the investment pool's net assets and changes in net assets follows. Statement of Net Assets Assets Liabilities Net assets Net assets held in trust for: Internal participants External participants Total net assets held in trust Statement of Changes in Net Assets Total additions Total deductions Net decrease Net assets held in trust: July 1, 2004 June 30, 2005 $ 466,075,588 (439,647,427) 26,428,161 76,309,892 102,738,053 $ $ $ $ 102,738,053 102,738,053 40,102,326 62,635,727 102,738,053 $ 56 REQUIRED SUPPLEMENTARY INFORMATION Yavapai County Required Supplementary Information Schedule of Agent Retirement Plans' Funding Progress June 30, 2005 Public Safety Personnel Retirement System Unfunded Liability as Percentage Of Covered Payroll ([a-b]/c) 150.3% 86.9% 62.8% Actuarial Valuation Date 6/30/05 6/30/04 6/30/03 Actuarial Value of Plan Assets (a) $14,211,964 13,692,093 13,059,119 Actuarial Accrued Liability (b) $22,316,937 18,169,579 15,833,057 Funding (Liability) Excess (a-b) $ (8,104,973) (4,477,486) (2,773,938) Funded Ratio (a/b) 63.7% 75.4% 82.5% Annual Covered Payroll (c) $5,393,063 5,153,004 4,419,330 Corrections Officer Retirement Plan Unfunded Liability as Percentage Of Covered Payroll ([a-b]/c) 12.8% 1.9% - Actuarial Valuation Date 6/30/05 6/30/04 6/30/03 Actuarial Value of Plan Assets (a) $7,472,922 6,696,956 6,286,600 Actuarial Accrued Liability (b) $8,305,724 6,813,658 5,835,586 Funding (Liability) Excess (a-b) $(832,802) (116,702) 451,014 Funded Ratio (a/b) 90.0% 98.3% 107.7% Annual Covered Payroll (c) $6,519,542 6,030,637 4,073,025 57 Yavapai County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2005 Budgeted Amounts Original Final Revenues: Taxes Licenses and Permits Intergovernmental Charges For Services Fines and Forfeits Investment Income Miscellaneous Total Revenues Expenditures: General Government: Board of Supervisors Human Resources General Services Emergency Management Elections Facilities Development Services Fleet Finance Assessor Attorney Voter Registration Recorder Management Information System Clerk of the Court Treasurer Records Management Superior Courts Public Defender Prescott Justice of the Peace Prescott Constable Bagdad/Yarnell Justice of the Peace Verde Valley justice of the Peace Mayer Justice of the Peace Verde Constable Seligman Justice of the Peace Total General Government $ 34,273,000 2,850,000 28,812,942 1,784,000 1,950,000 150,000 732,675 70,552,617 $ 34,273,000 2,850,000 28,812,942 1,784,000 1,950,000 150,000 732,675 70,552,617 Actual Amounts $ 34,689,252 4,006,141 28,548,998 1,634,201 2,159,669 52,821 721,790 71,812,872 Variance with Final Budget $ 416,252 1,156,141 (263,944) (149,799) 209,669 (97,179) (10,885) 1,260,255 665,510 618,455 5,608,609 105,808 751,909 3,791,172 3,567,164 1,900,151 563,592 3,068,816 4,073,423 321,536 720,435 4,567,383 1,989,628 673,431 246,409 3,102,458 3,255,718 486,457 62,113 253,982 408,107 331,403 61,593 242,834 41,438,096 665,510 623,832 5,429,206 105,808 751,909 3,791,172 3,573,199 1,900,151 563,592 3,068,816 4,079,623 336,536 613,320 4,579,587 1,989,628 694,347 338,524 3,102,458 3,359,202 486,457 62,113 256,415 408,107 331,403 61,593 242,834 41,415,342 635,485 611,575 4,253,149 97,086 602,925 3,608,950 3,476,455 1,866,009 559,061 2,961,615 4,079,597 334,075 596,838 4,448,465 1,951,710 667,000 332,722 3,086,231 3,359,199 441,505 61,325 256,415 407,792 292,314 56,300 233,552 39,277,350 30,025 12,257 1,176,057 8,722 148,984 182,222 96,744 34,142 4,531 107,201 26 2,461 16,482 131,122 37,918 27,347 5,802 16,227 3 44,952 788 315 39,089 5,293 9,282 2,137,992 (Continued) See accompanying notes to budgetary comparison schedules. 58 Yavapai County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2005 Budgeted Amounts Original Final Public Safety: Sheriff Adult Probation Juvenile Probation Total Public Safety Welfare: Medical Assistance Public Fiduciary Total Welfare Education: School Superintendent Total Education Total Expenditures Excess of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Transfer In Transfer Out Loan Proceeds Sale of General Fixed Assets Total Other Financing Source (Use) Net change in fund balances Fund Balance, July 1, 2004 Increase in reserve for inventories Fund Balance, June 30, 2005 $ 9,787,792 1,829,172 2,090,259 13,707,223 9,787,792 1,829,172 2,090,259 13,707,223 Actual Amounts 9,773,780 1,749,000 2,053,496 13,576,276 Variance with Final Budget 14,012 80,172 36,762 130,947 8,625,772 360,257 8,986,029 8,643,754 360,257 9,004,011 8,643,753 332,147 8,975,900 1 28,110 28,111 557,301 557,301 64,688,649 560,564 560,564 64,687,140 560,563 560,563 62,390,089 1 1 2,297,051 5,863,968 5,865,477 9,422,783 3,557,306 1,685,000 (9,371,500) (7,686,500) (1,822,532) 1,822,532 $ 1,685,000 (9,371,500) (7,686,500) (1,821,023) 1,821,023 $ 1,655,617 (9,371,500) 25,483 (7,690,400) 1,732,383 1,955,129 8,024 3,695,536 $ (29,383) 25,483 (3,900) 3,553,406 134,106 8,024 3,695,536 See accompanying notes to budgetary comparison schedules. 59 Yavapai County Required Supplementary Information Budgetary Comparison Schedule Jail District Fund Year Ended June 30, 2005 Budgeted Amounts Original Revenues: Taxes Charges for services Investment income Miscellaneous Total revenues Expenditures: Public safety: Sheriff Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfer in Transfer out Total other financing sources (uses) Net changes in fund balances Fund balances, July 1, 2004 Fund balances, June 30, 2005 $ 5,290,807 (1,865,000) 3,425,807 (2,153,459) 2,153,459 $ 5,290,807 (1,865,000) 3,425,807 (2,153,459) 2,153,459 $ (5,579,266) (5,579,266) 12,549,057 12,549,057 12,549,057 12,549,057 $ 6,600,000 369,791 6,969,791 $ 6,600,000 369,791 6,969,791 $ Final Actual Amounts 7,045,465 382,936 75,353 46,813 7,550,567 Variance with Final Budget $ 445,465 382,936 75,353 (322,978) 580,776 12,001,473 12,001,473 547,584 547,584 (4,450,906) 1,128,360 5,290,807 (2,104,326) 3,186,481 (1,264,425) 4,406,990 3,142,565 $ (239,326) (239,326) 889,034 2,253,531 3,142,565 See accompanying notes to budgetary comparison schedules. 60 Yavapai County Required Supplementary Information Budgetary Comparison Schedule Regional Road Fund Year Ended June 30, 2005 Budgeted Amounts Original Revenues: Taxes Licenses and permits Investment income Miscellaneous Total revenues Expenditures: Highways and streets: Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfer out Sale of fixed assets Total other financing sources (uses) Net changes in fund balances Fund balances, July 1, 2004 Fund balances, June 30, 2005 $ (4,214,000) (4,214,000) (6,163,049) 6,163,049 $ (4,214,000) (4,214,000) (6,163,049) 6,163,049 $ (1,949,049) (1,949,049) 12,213,139 12,213,139 12,213,139 12,213,139 $ 8,666,666 1,500,000 97,424 10,264,090 $ 8,666,666 1,500,000 97,424 10,264,090 $ Final Actual Amounts 9,166,581 2,056,735 139,515 21,993 11,384,824 Variance with Final Budget $ 499,915 556,735 42,091 21,993 1,120,734 3,973,203 3,973,203 8,239,936 8,239,936 7,411,621 9,360,670 (4,203,045) 1,367,270 (2,835,775) 4,575,846 7,461,640 12,037,486 $ 10,955 1,367,270 1,378,225 10,738,895 1,298,591 12,037,486 See accompanying notes to budgetary comparison schedules. 61 Yavapai County Required Supplementary Information Budgetary Comparison Schedule HURF Road Fund Year Ended June 30, 2005 Budgeted Amounts Original Revenues: Intergovernmental Investment income Miscellaneous Total revenues Expenditues Highways and streets: Public works Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfer in Transfer out Total other financing sources (uses) Net changes in fund balances Fund balances, July 1, 2004 Decrease in reserve for inventories Fund balances, June 30, 2005 $ (600,000) (600,000) (506,098) 506,098 $ (600,000) (600,000) (507,607) 507,607 $ 93,902 92,393 15,086,118 15,086,118 15,087,627 15,087,627 $ 14,700,000 480,020 15,180,020 $ 14,700,000 480,020 15,180,020 $ Final Actual Amounts 14,945,143 2,111 331,532 15,278,786 Variance with Final Budget $ 245,143 2,111 (148,488) 98,766 15,174,025 15,174,025 (86,398) (86,398) 104,761 12,368 10,000 (600,000) (590,000) (485,239) 569,913 (16,678) 67,996 $ 10,000 10,000 22,368 62,306 (16,678) 67,996 See accompanying notes to budgetary comparison schedules. 62 Yavapai County Required Supplementary Information Notes to Budgetary Comparison Schedules Year Ended June 30, 2005 Note 1 Budgeting and Budgetary Control Arizona Revised Statutes (ARS) requires the County to prepare and adopt a balanced budget annually for each governmental fund. The Board of Supervisors must approve such operating budgets on or before the third Monday in July to allow sufficient time for the legal announcements and hearings required for the adoption of the property tax level on the third Monday in August. A.R.S. prohibits expenditures or liabilities in excess of the amounts budgeted. Expenditures may not legally exceed appropriations at the department level. In certain instances, transfers of appropriations between departments or from the contingency account to a department maybe made upon the Board of Supervisors' approval. 63 Nonmajor Governmental Funds SPECIAL REVENUE FUNDS Health Care Accounts for a variety of health service programs funded by federal and state grant funds, appropriations, fees and local government contributions. Accounts for the collection of a special recording surcharge, not to exceed four dollars, to be used to defray the cost of converting the County Recorder's document storage and retrieval system to micrographics or computer automation as established by A.R.S. 11-475.01. Accounts for the collection of a special recording surcharge, not to exceed four dollars, to be used to defray the cost of converting the County Assessor's document storage and retrieval system to micrographics or computer automation as established by A.R.S. 11-269.06. Provides and maintains library services for the residents of Yavapai County. Operations are funded by a secondary tax levy. Educational services and programs administered by the County School Superintendent. Accounts for fees and grants used for construction, maintenance and operation of parks. Accounts for local government contributions used to assess the current and future supply of water. Used to fund operations of transfer stations, waste tire operations and closure costs of County landfills. Accounts for highway user fees restricted to construction, repair and maintenance of County roads. Community Development Block Grant is a federal grant for construction of facilities and acquisition of equipment for local non-profit and public entities. Administration of special districts for Street Lighting, Road and Sewer improvements. Accounts for statutory fees collected and used for document storage and retrieval. Also fees used for "fill-the gap" purposes. Accounts for various programs administered by the County Attorney including Anti-Racketeering, Victim Witness and Bad Check. Used for various law enforcement services and programs. Funding sources include federal and state grants. Accounts for programs administered by the Emergency Management department used to provide services, equipment and supplies for law enforcement or other agencies dealing with emergency response. Recorder's Surcharge Assessor's Surcharge Public Library School Parks & Recreation Water Advisory Committee Landfill / Environment Public Works C.D.B.G. Improvement Districts Clerk of Superior Court County Attorney Law Enforcement Emergency Management 64 Probation Accounts for Adult and Juvenile Probation programs and services provided in coordination with the Superior Court System. Accounts for statutory fees and surcharges related to the courts, and is used for the processing of criminal cases as well as court enhancement and records improvement. Provides training related seminars, books and materials for staff and attorneys. Includes a state grant for indigent defense costs. Airport enhancement projects for Seligman, Bagdad and Sedona funded by State grants. Courts Public Defender Airport Development CAPITAL PROJECTS FUNDS Juvenile Jail Improvement Jail Construction Accounts for state funded improvements for a new remanded juvenile jail facility. Accounts for the construction costs for the Verde Valley jail facility. DEBT SERVICE FUNDS The Debt Service Funds account for the accumulation of resources for the payment of principal and interest on the revenue bonds issued for special assessment bonds for the Coyote Springs, Granite Gardens and Pine Valley special assessment districts and the notes payable for the HELP loan and the Prescott East special assessment district. Funding for the special assessment debt is provided by assessme |
