Pinal County, Arizona comprehensive annual financial report for the fiscal year ended ...

              PINAL
COUNTY,
ARIZONA
Comprehensive
Annual
Financial
Report
For the Fiscal
Year Ended
June 30, 2003
Cover photos provided by Pinal County employees
Pinal County, Arizona
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2003
Prepared by:
Pinal County Finance Department
Maureen Arnold, CPA, CGFM, CPFO,
Chief Financial Officer
PINAL COUNTY
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2003
Table of Contents
Page
ii
INTRODUCTORY SECTION
Letter of Transmittal ................................................................................................................................ v
GFOA Certificate of Achievement ............................................................................................................ x
Organizational Chart ...............................................................................................................................xi
List of Elected and Appointed Officials ...................................................................................................xii
FINANCIAL SECTION
Independent Auditors’ Report .............................................................................................................. 1
Management’s Discussion and Analysis ............................................................................................. 3
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Assets ................................................................................................................ 15
Statement of Activities.................................................................................................................... 16
Fund Financial Statements:
Balance Sheet – Governmental Funds.......................................................................................... 17
Reconciliation of the Governmental Funds Balance Sheet to the
Statement of Net Assets............................................................................................................ 18
Statement of Revenues, Expenditures, and Changes in
Fund Balances – Governmental Funds..................................................................................... 19
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities ..................................... 20
Statement of Net Assets– Proprietary Funds................................................................................. 21
Statement of Revenues, Expenses, and Changes in
Fund Net Assets – Proprietary Funds ...................................................................................... 22
Statement of Cash Flows – Proprietary Funds .............................................................................. 23
Statement of Fiduciary Net Assets – Fiduciary Funds................................................................... 25
Statement of Changes in Fiduciary Net Assets – Fiduciary Funds ............................................... 26
Notes to the Financial Statements:
(1) Summary of Significant Accounting Policies..................................................................... 27
(2) Stewardship, Compliance, and Accountability.................................................................. 32
(3) Deposits and Investments................................................................................................. 33
(4) Capital Assets ................................................................................................................... 35
(5) Long-term Liabilities......................................................................................................... 36
(6) Risk Management ............................................................................................................. 39
(7) Retirement Plans............................................................................................................... 40
(8) Interfund Balances and Activity......................................................................................... 43
(9) Beginning Cash and Cash Equivalents Restated ............................................................. 44
PINAL COUNTY
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2003
Table of Contents
Page
iii
(10) Condensed Financial Statements of County Treasurer’s Investment Pool.......................44
(11) Related Party Transactions ...............................................................................................45
Required Supplementary Information (other than MD&A):
Schedule of Agent Retirement Plans’ Funding Progress .............................................................. 47
Budgetary Comparison Schedule – General Fund.........................................................................48
Budgetary Comparison Schedule by Department – General Fund................................................49
Budgetary Comparison Schedule – Public Works Highway Fund .................................................52
Required Supplementary Information – Notes to Budgetary Comparison Schedules ...................53
Combining Statements and Individual Fund Schedules:
Nonmajor Governmental Funds:
Combining Balance Sheet – Nonmajor Governmental Funds...................................................55
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances - Nonmajor Governmental Funds..............................................56
Combining Balance Sheet – Nonmajor Special Revenue Funds ..............................................58
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances –
Nonmajor Special Revenue Funds........................................................................................60
Combining Balance Sheet – Nonmajor Capital Projects Fund ................................................. 62
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances –
Nonmajor Capital Projects Fund............................................................................................63
Schedule of Revenues, Expenditures, and Changes in Fund Balances –
Budget and Actual
Major Funds:
Superior Court/Sheriff’s Construction..................................................................................64
Debt Service ........................................................................................................................65
Nonmajor Special Revenue Funds:
Culture and Recreation........................................................................................................66
General Government ...........................................................................................................67
Health..................................................................................................................................77
Highways and Streets..........................................................................................................83
Public Safety........................................................................................................................88
Sanitation..........................................................................................................................121
Welfare..............................................................................................................................122
Flood Control District .........................................................................................................123
Library District....................................................................................................................124
Nonmajor Enterprise Funds:
Combining Statement of Net Assets – Nonmajor Enterprise Funds....................................... 125
Combining Statement of Revenues, Expenses, and Changes in Net Assets –
Nonmajor Enterprise Funds.................................................................................................126
PINAL COUNTY
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2003
Table of Contents
Page
iv
Combining Statement of Cash Flows – Nonmajor Enterprise Funds...................................... 127
Trust and Agency Funds:
Combining Statement of Fiduciary Net Assets – Investment Trust Funds.............................. 129
Combining Statement of Fiduciary Net Assets – Agency Funds............................................. 130
Combining Statement of Changes in Fiduciary Net Assets – Investment Trust Funds........... 131
Combining Statement of Changes in Assets and Liabilities – Agency Funds......................... 132
Capital Assets Used in the Operations of Governmental Funds:
Comparative Schedules by Source ......................................................................................... 133
Schedule by Function and Activity........................................................................................... 134
Schedule of Changes by Function and Activity ....................................................................... 136
STATISTICAL SECTION
General Governmental Expenditures by Function ........................................................................... 139
General Governmental Revenues by Source .................................................................................. 140
Property Tax Levies and Collections................................................................................................ 141
Assessed and Estimated Actual Value of Taxable Property............................................................ 142
Property Tax Rates – Direct and Overlapping Governments........................................................... 143
Principal Taxpayers......................................................................................................................... 144
Special Assessment Billings and Collections................................................................................... 145
Computation of Legal Debt Margin................................................................................................... 146
Ratio of Net General Bonded Debt to Assessed Value and
Net Bonded Debt Per Capita ....................................................................................................... 147
Ratio of Annual Debt Service Expenditures for General Bonded Debt to
Total General Governmental Expenditures.................................................................................. 148
Computation of Overlapping Debt.................................................................................................... 149
Demographic Statistics..................................................................................................................... 150
Construction, Bank Deposits, and Property Value Statistics............................................................ 151
Major Employers.............................................................................................................................. 152
Non-Agriculture Employment Structure............................................................................................ 153
Introductory Section
v
PINAL COUNTY FINANCE DEPARTMENT
31 N. PINAL ST. BLDG A P.O. BOX 1348 FLORENCE, ARIZONA 85232 Phone (520) 866-6250 Fax (520) 866-6944
November, 15, 2003
Board of Supervisors and Citizens
Pinal County, Arizona
I am pleased to submit the County's Comprehensive Annual Financial Report for the fiscal year ended
June 30, 2003. Responsibility for both the accuracy of the data and the completeness and fairness of
the presentation, including all disclosures, rests with the management of the County. To the best of my
knowledge and belief, this report is accurate in all material respects and is reported in a manner
designed to present fairly the financial position, changes in financial position, and cash flows of the
County. All disclosures necessary to enable the reader to gain an understanding of the County's
financial activities have been included. All dollar amounts are expressed in thousands unless otherwise
stated.
The Comprehensive Annual Financial Report is presented in three sections: Introductory, Financial,
and Statistical.
• The Introductory Section includes a list of principal officials, the County's organization chart, the
Certificate of Achievement for Excellence in Financial Reporting, and this transmittal letter.
• The Financial Section includes the audited basic financial statements, notes to the financial
statements, required supplemental information, supporting statements and schedules
necessary to fairly present the financial position and the results of operations of the County in
conformity with U.S. generally accepted accounting principles, and the independent auditors
report on the basic financial statements. Also, included is the narrative introduction, overview
and analysis found in management’s discussion and analysis (MD&A). The MD&A can be
found immediately following the independent auditors’ report (page 3).
• The Statistical Section includes selected financial and demographic information, generally
presented on a multi-year basis.
This report includes all funds of the County. The County provides a full range of services, including law
enforcement and public safety, health care, sanitation, welfare programs, construction and maintenance
of highways, streets and related infrastructure, recreational services and cultural activities, and
education.
Profile of Pinal County
Pinal County was founded in 1875 and is located in the south-central part of the State of Arizona,
bordered on the north by Maricopa County and on the south by Pima County. This location,
approximately halfway between Phoenix to the north and Tucson to the south, the two largest cities in
Arizona, presents some unique problems to Pinal County. Generally rural in nature, Pinal County has a
smaller tax base than either Maricopa or Pima counties, yet proximity to these major metropolitan areas
keeps labor and supply costs high.
Pinal County encompasses approximately 5,344 square miles. Privately owned land represents 26
percent of the total land while 74 percent is under governmental control. The principal geographic
features consist of mountains with elevations to 6,000 feet in the eastern portion and low desert valleys
in the western portion of the County.
vi
The June 30, 2003, population of the County was estimated to be 192,395. Located within Pinal County
are the towns of Florence, Superior, Mammoth, and Kearny, and the cities of Casa Grande, Apache
Junction, Coolidge and Eloy. Florence is the County seat. Apache Junction and Casa Grande are the
two largest cities. Apache Junction borders on Maricopa County in the northeastern part of Pinal
County. Casa Grande is located approximately halfway between Phoenix and Tucson on Interstate
Highway 10 on the western side of Pinal County. Interstate 8 from California intersects Interstate 10
southeast of Casa Grande. Maricopa Road, linking Interstate 10 with Interstate 8, provides a quicker
route for travelers going to and from California on Interstate 8 by bypassing the Casa Grande area.
Maricopa Road runs from State Route 84 near Interstate 8 at Stanfield to the Queen Creek exit off
Interstate 10, a distance of almost 29 miles. No interstate highways run through the middle and eastern
portions of the County. Growth in these areas has been much slower than in the more accessible
western portions of the County.
The major economic activities within Pinal County include mining, farming, and tourism. Copper
mining is the chief economic activity in the eastern portion of Pinal County. BHP Copper Inc.,
headquartered in Tucson, has mines located in San Manuel and Superior (Pinal County) and in Miami
and Pinto Valley (Gila County). ASARCO Inc., headquartered in Hayden (Gila County), has a mine in
Ray (Pinal County), as well as one in Hayden at the headquarters.
Together, BHP and ASARCO represent 2.42% of the County's total secondary assessed valuation. The
valuation of these mines for property tax purposes is out of the control of the County. Mines, along with
gas, water and electric utilities, pipelines, local and long distance telephone companies and airline flight
property, are included in the centrally assessed properties whose valuations are set by the State
Department of Revenue. All of these centrally assessed properties represent 16.48% of the County’s
total secondary assessed valuation. Both ASARCO and BHP have ceased much of their mining
operations due to the low price of copper.
Irrigated farming is prevalent in the low desert valleys of the western portion of Pinal County. Principal
crops grown in the area include cotton, alfalfa and grain while plantings of specialty crops, including
pecans, almonds, pistachio nuts and vineyards, have been increasing. Cattle comprise the major
livestock population, with sheep being the second-largest livestock population. In addition, horses and
horse-related events are popular activities in the western-oriented life style of the County.
Tourism also impacts the local economy as a mild climate and several points of interest attract tourists
and winter visitors. Attractions include the Casa Grande Valley Historical Museum, the Lost Dutchman
State Park, the Casa Grande Ruins National Monument near Coolidge, and the Boyce Thompson
Southwestern Arboretum, located just outside Superior. Additional tourist spots include the Superstition
Mountains Wilderness Area, which offers hiking and exploring for visitors in search of the Lost
Dutchman's gold mine; Picacho Peak State Park, offering hiking, camping and picnic areas; and the
Pinal Pioneer Parkway and the Apache Trail, two scenic drives with a variety of desert vegetation. For
those tourists with a desire for more action, Eloy is an international location for skydiving. These
attractions together generated more than 294,930 visitors in the fiscal year ended June 30, 2003.
A major factor in employment in the County is the prisons, both governmental and private. The State
of Arizona operates three prison locations in Pinal County, including the State's maximum-security
prison in Florence. Corrections Corporation of America (CCA) operates two private prisons, one in
Florence and one in Eloy. Also, there is a Federal Immigration Services facility in Florence. The State
is the County's largest employer, with 2,950 employees. CCA now employs approximately 1,300
employees at its two locations.
Population growth increases the demand for County services in such key areas as transportation, law
enforcement, and health and human services. Trying to minimize the tax burden on Pinal County
residents is hard, however, as the County is a political subdivision of the State and therefore cannot
completely control its own destiny. State legislative action such as unfunded mandates in the area of
health care and reductions in centrally assessed property values and assessment ratios continues to
vii
negatively impact the County’s budget. Increases in assessed value due to population growth in recent
years has kept the property tax rate stable.
Major Initiatives
County officials continue to work with the State Legislature to reduce the County’s cost of State
mandated payments to the State-wide low income health and long-term care systems. The County’s
long-term care contributions have increased by $1,018 in the last year.
The new Sheriff’s Administration Facility was opened in August of 2003, and the new Superior Court
Judicial Facility will be opened in March of 2004. The new buildings are located next to the County jail
facility. Having the buildings close together will cut down on the cost of transporting prisoners between
the jail and the court building.
Financial Management
Management of the County is responsible for establishing and maintaining an internal control structure
designed to ensure that the assets of the County are protected from loss, theft, or misuse, and for
ensuring that adequate accounting data are compiled to allow for the preparation of financial statements
in conformity with generally accepted accounting principles. The internal control structure is designed
to provide reasonable, but not absolute, assurance that these objectives are met. The concept of
reasonable assurance recognizes that: 1) the cost of a control should not exceed the benefits likely to
be derived; and 2) the valuation of costs and benefits requires estimates and judgements by
management.
Single Audit: The State Auditor General, as provided by state law, audits the County annually. Also, as
a recipient of federal and state financial assistance, the County is required to have an annual audit
under the Office of Management and Budget (OMB) Circular A-133, Audits of State and Local
Governments and Non-Profit Organizations. OMB requirements also address the establishment and
maintenance of an adequate internal control structure to ensure compliance with applicable laws and
regulations related to those programs. Tests are made to determine the adequacy of the internal
control structure, including that portion related to federal financial assistance programs, as well as
determining that the County has materially complied with applicable laws and regulations.
Budgeting Controls: In addition, the County maintains budgetary controls, the objective of which is to
ensure compliance with legal provisions embodied in the annual appropriated budget approved by the
Board of Supervisors. Activities of the General Fund, certain Special Revenue Funds, Debt Service
Fund, and Capital Projects Funds are included in the annual appropriated budget. The level of
budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated
amount) is the department level within each fund. Management further controls budgets by not allowing
personnel savings to be reprogrammed to supplies and services within a department. Budgets for the
Enterprise Funds and Internal Service Fund are set for management purposes only.
Financial Information
General Government Functions
The major revenue increase in the General Fund was in taxes. An increase in taxes was budgeted
based on an increase in assessed property value; however, the tax rate remained the same. The
increase in assessed property values was the result of continued residential development in such areas
as Gold Canyon, near Apache Junction, Saddlebrook outside of Tucson, and Johnson Ranch near
Queen Creek.
viii
Employee Pension Plans
The County participates in three employee pension plans and a pension plan for elected officials. The
general employee plan is administered through the Arizona State Retirement System and the Arizona
Public Safety Personnel Retirement System administers the elected officials' plan, the public safety
employee plan, and the CORP plan. Both employees and the County make contributions directly to
these organizations. Financial information about three of these plans can be found in Note 7 in the
notes to financial statements. The Elected Officials Retirement System is not described due to its
relative insignificance to the County's financial statements.
Debt Administration
As of June 30, 2003, the County had a number of outstanding issues. These issues included $4,405 of
special assessment bonds and $38,675 of certificates of participation. Of the $38,675 of certificates of
participation, $29,710 was outstanding on an issue to finance the new Superior Court Judicial Facility
and Sheriff’s Administration Facility.
Under current State Statutes, the County's General Obligation Bonded Debt issuances are subject to a
legal limitation based on 6 percent of assessed value of real property. As of June 30, 2003, the legal
limit was $61,303. However, there was no General Obligation debt outstanding.
The County's Special Improvement Debt is subject to a legal limitation based on 20 percent of assessed
value of real property. As of June 30, 2003, the County's Special Improvement Debt of $5,405 was well
below the legal limit of $204,344.
Cash Management
Temporarily idle cash during the year was invested in the Arizona State Treasurer Local Government
Investment Pool, repurchase agreements, and money market accounts collateralized by U.S.
Government securities. Arizona Revised Statutes authorize the County to invest public monies in the
State Treasurer's investment pool, interest-bearing savings accounts, certificates of deposit and
repurchase agreements in eligible depositories, bonds or other obligations of the U.S. Government that
are guaranteed as to principal and interest by the U.S. Government, bonds of the State of Arizona, and
bonds of Arizona counties, cities, towns, school districts, and special districts as specified by statute.
Collateral is required by statute for demand deposits, certificates of deposit, and repurchase
agreements at 101 percent of all deposits not covered by federal depository insurance.
Risk Management
The County participates in an intergovernmental agreement with other Arizona counties to form a risk
retention pool, the Arizona Counties Insurance Pool (ACIP), which covers property, liability,
automobiles, errors and omissions and workers' compensation occurrences. The ACIP has a $10
deductible for property and a $50 deductible for liability claims but covers claims up to $10,000 for each
property, liability, automobiles, and errors and omissions occurrence. The County retains the liability for
each covered loss that exceeds $10,000. For workers’ compensation, the ACIP has no deductible and
retains all liability for each claim. The County also has two full-time risk management employees who
work closely with ACIP in developing programs to reduce risks and the expenses associated with
accidents and other liabilities.
The County has established the Pinal County Employee Benefit Trust (PCEBT), which covers medical,
dental, vision, short-term disability, employee life and accidental disability, and dependent life claims.
The County is not liable for medical, dental, vision, short-term disability, employee life and accidental
liability, and dependent life insurance coverage in the PCEBT. However, the PCEBT and its insurance
company are liable for up to $1,000 total for each covered employee or dependent.
ix
Awards and Acknowledgements
Awards
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to Pinal County for its comprehensive
annual financial report for the fiscal year ended June 30, 2002. [This was the 7th consecutive year that
the government has achieved this prestigious award]. In order to be awarded a Certificate of
Achievement, a government must publish an easily readable and efficiently organized comprehensive
annual financial report. This report must satisfy both U.S. 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.
Acknowledgments
This Comprehensive Annual Financial Report is always a team project for the Finance Department. The
many hours of work by the staff on this task is greatly appreciated. In addition, the staff of the Office of
the State Auditor General provided excellent support and technical advice. I would also like to thank the
members of the Board of Supervisors, the County Manager, and the Deputy County Manager for their
interest and support in planning and conducting the financial affairs of the County in a responsible and
progressive manner.
Sincerely,
Maureen Arnold, CPA, CGFM, CPFO
Chief Financial Officer
x
PINAL COUNTY
Organizational Chart
Assessor
L. Paul Larkin
PINAL COUNTY VOTERS
Treasurer
Jim Turnbull
Attorney
R. Carter Olson
Sheriff
Roger L.
Vanderpool
County Manager
Stan Griffis, Ph.D.
Recorder
Laura Dean-Lytle Clerk of the Court
Kristi Youtsey Ruiz
Justices of
the Peace (8)
Superior Court
Honorable William J. O'Neil, Division I
Honorable Boyd T. Johnson, Division II
Honorable Kelly Marie Robertson, Division III
Honorable Gilbert V. Figueroa, Division IV
Honorable Stephen McCarville, Division V
Honorable Janna L. Vanderpool, Division VI
Constables
(8)
School
Superintendent
Jack Harmon
Court Administrator
Paul O'Connell
Board of Supervisors
Lionel D. Ruiz, District 1
Sandie Smith, District 2
Jimmie B. Kerr, District 3
Law Library
Adult Probation
David Storie
Deputy County
Manager
Terry Doolittle
Air Quality
Don Gabrielson
Building Safety
Steve Brown
Elections
Gilberto Hoyos
Fairgrounds
Terry Haifley
Long-Term Care
Barbara Zwiener
Special Services
Gary Medina
Grants
Ernie Feliz
Chief Financial Officer
Maureen Arnold, CPA,
CGFM, CPFO
Budget
James Throop
Human Resources
Michael S. Arnold
Management
Information Services
Genene Walker
Risk Management
Isabel Mathieson
Animal Control
Jane Decker
Home Health
Donna Simpson Housing
Adeline Allen
Assistant County Manager of Health
and Human Services
Donna Stanley Robb
Public Fiduciary
Medical Examiner
Behavioral Health
Mary Espinoza
Public Health
Susie Straussner
Library District
Denise Keller
Public Works
Director
Robert Davis
Public Defender
Michael Beers
Planning &
Development
David Kuhl
Facilities
Mark Tucker
Juvenile Probation
Paul O'Connell
Elected
Officials
Appointed
Officials
Conciliation Court
Clarence Cramer
xi
PINAL COUNTY
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2003
County Officials
xii
Elected Officials
Supervisor, District 1
Supervisor, District 2
Supervisor, District 3
Assessor
Attorney
Clerk of Superior Court
Recorder
School Superintendent
Sheriff
Superior Court Judge, Division I
Superior Court Judge, Division II
Superior Court Judge, Division III
Superior Court Judge, Division IV
Superior Court Judge, Division V
Superior Court Judge, Division VI
Treasurer
Justices of the Peace (8) and Constables (8)
Lionel D. Ruiz
Sandie Smith
Jimmie B. Kerr
L. Paul Larkin
R. Carter Olson
Kristi Youtsey Ruiz
Laura Dean-Lytle
Jack Harmon
Roger L. Vanderpool
Honorable William J. O’Neil
Honorable Boyd T. Johnson
Honorable Kelly Marie Robertson
Honorable Gilberto V. Figueroa
Honorable Stephen McCarville
Honorable Janna L. Vanderpool
Jim Turnbull
Various
Appointed Officials
County Manager
Deputy County Manager
Assistant County Manager, Health & Human Services
Chief Financial Officer
Facilities Management
Public Works Director
Planning & Development Director
Public Defender
Library District
Budget Director
Building Safety
Elections
Fairgrounds and Parks
Human Resources Director
Management Information Services
Long-Term Care
Risk Management
Air Quality Control
Animal Control
Horizon Home Care
Housing
Public Fiduciary, Medical Examiner, Behavioral Health
Public Health
Stan Griffis
Terry Doolittle
Donna Robb
Maureen Arnold
Mark Tucker
Robert Davis
David Kuhl
Michael Beers
Denise Keller
James Throop
Steve Brown
Giberto Hoyos
Terry Haifley
Michael Arnold
Genene Walker
Barbara Zwiener
Isabel Mathieson
Donald Gabrielson
Jane Decker
Donna Simpson
Adeline Allen
Mary Espinoza
Susie Straussner
Financial Section
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
Independent Auditors' Report
Members of the Arizona State Legislature
The Board of Supervisors of
Pinal County, Arizona
We have audited the accompanying financial statements of the governmental activities, business-type
activities, each major fund, and aggregate remaining fund information of Pinal County as of and for the
year ended June 30, 2003, as listed in the table of contents, which collectively comprise the County’s
basic financial statements. These financial statements are the responsibility of the County’s management.
Our responsibility is to express opinions on these financial statements based on our audit. We did not
audit the financial statements of the Long Term Care Enterprise Fund. The Fund also represents 90
percent and 91 percent, respectively, of the assets and revenues of the County’s business-type activities.
Those financial statements were audited by other auditors whose report thereon has been furnished to us,
and our opinion, insofar as it relates to the amounts included for the Long Term Care Enterprise Fund, is
based solely on the report of the other auditors.
We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that
our audit and the report of the other auditors provide a reasonable basis for our opinions.
In our opinion, based on our audit and the report of the other auditors, the financial statements referred to
above present fairly, in all material respects, the financial position of the governmental activities, business-type
activities, each major fund, and aggregate remaining fund information of Pinal County as of June 30,
2003, and the respective changes in financial position and cash flows, where applicable, thereof for the
year then ended in conformity with U.S. generally accepted accounting principles.
The Management’s Discussion and Analysis on pages 3 through 14, the Schedule of Agent Retirement
Plans’ Funding Progress on page 47, and the Budgetary Comparison Schedules on pages 48 through 53
are not a required part of the basic financial statements but are supplementary information required by the
Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted
principally of inquiries of management regarding the methods of measurement and presentation of the
required supplementary information. However, we did not audit the information and express no opinion on
it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the County’s basic financial statements. The combining and individual fund statements and
schedules listed in the table of contents are presented for purposes of additional analysis and are not a
required part of the basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a whole.
The information included in the introductory and statistical sections listed in the table of contents has not
been subjected to the auditing procedures applied in our audit of the basic financial statements and,
accordingly, we express no opinion on such information.
In accordance with Government Auditing Standards, we will also issue our report on our consideration of
the County’s internal control over financial reporting and our tests of its compliance with certain provisions
of laws, regulations, contracts, and grants at a future date. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in conjunction with this
report in considering the results of our audit.
Debbie Davenport
Auditor General
November 14, 2003
Management’s Discussion and Analysis
- 3 -
This section of Pinal County’s (County) comprehensive annual financial report presents a
discussion and analysis of the County’s financial performance during the fiscal year ended June
30, 2003. Please read it in conjunction with the transmittal letter at the front of this report and the
County’s basic financial statements following this section. All dollar amounts are expressed in
thousands unless otherwise indicated.
FINANCIAL HIGHLIGHTS
• The assets of the County exceeded liabilities at the close of the 2002-2003 fiscal year by
$64,290 (net assets). Of this amount, $7,457 (unrestricted net assets) may be used to
meet ongoing obligations to citizens and creditors, $23,125 is restricted for specific
purposes (restricted net assets), and $33,708 is invested in capital assets, net of related
debt.
• The County’s total net assets increased by $13,112. Approximately 60% of this increase
is attributable to an increase in the County’s investment in capital assets.
• As of June 30, 2003, the County governmental funds reported combined fund balances of
$48,503, a decrease of $11,790 in comparison with the prior year. Approximately 70% of
the combined fund balances, or $33,738, is available to meet the County’s current and
future needs (unreserved fund balance).
• At the end of the fiscal year, unreserved fund balance for the general fund was $13,301,
or 17% of total general fund expenditures. This entire amount is budgeted to be spent in
the next fiscal year.
• The County’s total long-term debt as of June 30, 2003, was $60,783. Special
assessment bonds and certificates of participation represent 71% of the total. The final
payments on the bonds and certificates of participation are due in fiscal years 2007 and
2021, respectively.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the County’s basic
financial statements. The County’s basic financial statements consist of three components: 1)
Government-wide financial statements; 2) Fund financial statements and 3) Notes to the basic
financial statements. Required Supplementary Information is included in addition to the basic
financial statements.
Government-wide Financial Statements are designed to provide readers with a broad overview
of County finances, in a manner similar to a private-sector business.
The statement of net assets presents information on all County 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 the County is improving
or deteriorating.
The statement of activities presents information showing how 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 result in cash flows in future fiscal
periods (e.g., uncollected taxes and earned but unused vacation leave).
Both of these government-wide financial statements distinguish functions of the County that are
principally supported by taxes and intergovernmental revenues (governmental activities) from
other functions that are intended to recover all or part of their costs through user fees and
Management’s Discussion and Analysis
- 4 -
charges (business-type activities). The governmental activities of the County include general
government, public safety, highways and streets, sanitation, health, welfare, culture and
recreation, and education. The business-type activities of the County include the Sheriff Inmate
Services, Horizon Home Care (Home Health), Long Term Care, and the Fairgrounds.
The government-wide financial statements can be found on pages 15-16 of this report.
Fund Financial Statements. Funds are groupings of related accounts that are used to maintain
control over resources that have been segregated for specific activities or objectives. The County,
like other state and local governments, uses fund accounting to ensure and demonstrate finance-related
legal compliance. All of the funds of the County can be divided into three categories:
governmental funds, proprietary funds, and fiduciary funds.
Governmental funds are used to account for essentially the same functions reported as
governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental 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 county’s
near-term financing 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 funds
statement of revenues, expenditures, and changes in fund balances include a reconciliation to
facilitate this comparison between governmental funds and governmental activities.
The County maintains 20 individual governmental funds. Information is presented separately in
the governmental funds balance sheet and in the governmental funds statement of revenues,
expenditures, and changes in fund balances for the General Fund, Public Works Highway Fund,
Superior Court/Sheriff Construction Fund, and the Debt Service Fund. Data from the other
governmental funds are combined into a single, aggregated presentation. Individual fund data for
each of these nonmajor 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 17-20 of this
report.
Proprietary funds include two types. Enterprise funds are used to report the same functions
presented as business-type activities in the government-wide financial statements. The County
uses enterprise funds to account for the Sheriff Inmate Services, Horizon Home Care (Home
Health), Long Term Care, and the Fairgrounds. Internal service funds are an accounting device
used to accumulate and allocate costs internally among the County’s various functions. The
County uses an internal service fund to account for its central services. Because these services
predominantly benefit governmental rather than business-type activities, they have been included
within governmental activities in the government-wide financial statements.
Proprietary fund financial statements provide the same type of information as the government-wide
financial statements, only in more detail. Pinal County Long Term Care operations are
considered to be a major fund of the County. The County’s internal service fund is presented
separately in the proprietary fund financial statements.
The proprietary funds financial statements can be found on pages 21-24 of this report.
Management’s Discussion and Analysis
- 5 -
Fiduciary funds are used to account for resources held for the benefit of parties outside the
government. Fiduciary funds are not reflected in the government-wide financial statements
because the resources of those funds are not available to support the County's own programs.
The accounting used for fiduciary funds is much like that used for proprietary funds.
The fiduciary fund financial statements can be found on pages 25-26 of this report.
Notes to the Basic Financial Statements provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. The
notes can be found on pages 27-45 of this report.
Required Supplementary Information presents schedules of revenues and expenditures,
budget and actual, for the General Fund and major Special Revenue Funds of the County. It also
includes a schedule of agent retirement plans’ funding progress. Required supplementary
information can be found on pages 47-53 of this report.
The combining statements and individual fund schedules referred to earlier provide information
for nonmajor governmental, enterprise, and fiduciary funds and are presented immediately
following the required supplementary information. Combining and individual fund statements and
schedules can be found on pages 55-137 of this report.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net assets may serve over time as a useful indicator of a government’s financial
position. The County’s assets exceeded liabilities by $64,290 at the close of the fiscal year.
Governmental Business-type
Activities Activities Total
2003 2002 2003 2002 2003 2002
Current and other assets $ 60,117 $ 68,365 $ 7,872 $ 6,805 $ 67,989 $ 75,170
Capital assets 65,026 45,268 93 81 65,119 45,349
Total assets 125,143 113,633 7,965 6,886 133,108 120,519
Current and other liabilities 7,742 4,664 293 215 8,035 4,879
Long-term liabilities 56,674 60,768 4,109 3,694 60,783 64,462
Total liabilities 64,416 65,432 4,402 3,909 68,818 69,341
Net assets:
Invested in capital assets,
net of related debt 33,615 25,732 93 81 33,708 25,813
Restricted net assets 20,917 18,547 2,208 1,912 23,125 20,459
Unrestricted net assets 6,195 3,922 1,262 984 7,457 4,906
Total net assets $ 60,727 $ 48,201 $ 3,563 $ 2,977 $ 64,290 $ 51,178
Statement of Net Assets
June 30, 2003 and 2002
Management’s Discussion and Analysis
- 6 -
The largest portion of the County’s net assets represents its investment in capital assets (i.e.
land, buildings, infrastructure, and equipment) less any related outstanding debt used to acquire
those assets. The County uses these assets to provide services to citizens; consequently, these
assets are not available for future spending. Although the 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.
An additional portion of the County’s net assets (i.e., 34%) represents resources that are subject
to external restrictions on how they may be used. The remaining balance of unrestricted net
assets (i.e., $7,457) may be used to meet the government’s ongoing obligations to citizens and
creditors.
At the end of the current fiscal year, the County reported positive balances in all three categories
of net assets, both for the County as a whole, as well as for its separate governmental activities
and business-type activities.
The County’s net assets increased by $13,112 during the current fiscal year. Sixty percent of this
increase is attributable to the increase in the County’s investment in capital assets. The
remainder of this growth reflects increases in tax, licenses and permits, and fines and forfeits
revenues which were unspent as of fiscal year end.
The County’s capital assets increased by forty four percent over the prior fiscal year mainly due to
increases in infrastructure assets and construction in progress on the new Superior Court
building.
Current assets decreased by ten percent due to a decrease in the County’s investments. This is
attributable to a decrease in the fair value of an investment held in the State Treasurer’s
investment pool.
Governmental activities increased the County’s net assets by $12,526, thereby accounting for 96
percent of the total growth in net assets of the County.
Management’s Discussion and Analysis
- 7 -
The following table summarizes the changes in net assets for governmental and business-type
activities:
Governmental Business-Type
Activities Activities Total
2003 2002 2003 2002 2003 2002
Revenues
Program revenues:
Charges for services $ 1 9,354 $ 1 2,117 $ 3 6,797 $ 2 9,153 $ 5 6,151 $ 4 1,270
Operating grants and contributions 3 6,668 21,833 3 3 33 3 6,701 21,866
Capital grants and contributions 1 ,265 14,597 - - 1,265 14,597
General revenues:
Property taxes 5 2,533 48,321 - - 52,533 48,321
Other taxes 1 8,742 17,068 - - 18,742 17,068
Investment income 101 1,267 9 1 128 1 92 1,395
Miscellaneous 3 ,747 7,199 1 77 243 3,924 7,442
Total revenues 1 32,410 1 22,402 3 7,098 2 9,557 169,508 1 51,959
Expenses
General government 3 6,822 34,188 - - 36,822 34,188
Public safety 3 7,732 32,487 - - 37,732 32,487
Highways and streets 1 3,398 11,627 - - 13,398 11,627
Sanitation 673 481 - - 673 481
Health 1 9,574 19,146 - - 19,574 19,146
Welfare 4 ,880 4,413 - - 4,880 4,413
Culture and recreation 552 576 - - 552 576
Education 6 ,327 6,395 - - 6,327 6,395
Interest on long-term debt 221 253 - - 221 253
Sheriff/Inmate Services - - 1 30 83 1 30 83
Home Health - - 2 ,961 2,772 2,961 2,772
Long Term Care - - 32,570 26,466 3 2,570 26,466
Fairgrounds - - 5 56 514 5 56 514
Total expenses 1 20,179 109,566 3 6,217 29,835 1 56,396 139,401
Change in net assets before transfers 1 2,231 12,836 8 81 (278) 13,112 12,558
Transfers 295 413 ( 295) (413) - -
Change in net assets 1 2,526 13,249 5 86 (691) 13,112 12,558
Net assets - beginning 4 8,201 34,952 2 ,977 3,668 5 1,178 38,620
Net assets - ending $ 6 0,727 $ 4 8,201 $ 3 ,563 $ 2 ,977 $ 64,290 $ 5 1,178
Statement of Activities
Years Ended June 30, 2003 and 2002
Governmental Activities. Key elements of the increase in net assets of $12,526 are as follows:
• Property taxes increased by $4,212 (9 percent) during the year. This increase is due to
increases in assessed property values and not a raise in tax rates.
• License and permits increased $2,174 (53 percent), due to increased building caused by
the rapid growth in Pinal County.
Management’s Discussion and Analysis
- 8 -
For the most part, increases in expenses closely paralleled inflation and growth in the demand for
services. One noteworthy exception however, was the County’s public safety function. The
increase in expenses of $5,245 (16%) relates to an increase in personal services expenditures.
This was due to cost of living and market adjustment pay increases.
Expenses and Program Revenues – Governmental Activities
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
General
government
Public
safety
Highw ays
and streets
Sanitation Health Welfare Culture and
recreation
Education Interest on
long-term
debt
Expenses
Program Revenues
Revenues by Source – Governmental Activities
Other taxes
14%
Property taxes
39%
Capital grants and
contributions
1%
Miscellaneous
3%
Charges for
services
15%
Operating grants
and contributions
28%
Management’s Discussion and Analysis
- 9 -
Business-type activities. Business-type activities increased the County’s net assets by $586.
The largest portion of the increase ($472) was due to an increase in Long Term Care capitation
revenues from the State to compensate for a loss from the prior year.
Expenses and Program Revenues – Business-type Activities
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
Sheriff/Inmate
Services
Home Health Long Term Care Fairgrounds
Expenses
Program Revenues
Revenues by Source – Business-type Activities
Charges for services
99.2%
Miscellaneous
0.5%
Investment income
Operating grants and 0.2%
contributions
0.1%
Management’s Discussion and Analysis
- 10 -
FINANCIAL ANALYSIS OF THE COUNTY’S FUNDS
As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements.
Governmental funds. The governmental activities are accounted for in the General, Special
Revenue, Debt Service, and Capital Projects Funds. Included in these funds are the special
districts governed by the Board of Supervisors. The focus of the County’s governmental funds is
to provide information on near-term inflows, outflows, and balances of spendable resources. Such
information is useful in assessing the 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.
At June 30, 2003, the County’s governmental funds reported combined fund balances of $48,503,
a decrease of $11,790 in comparison with the prior year. Approximately 70% of the combined
fund balances, $33,738, constitutes unreserved fund balance, which is available to meet the
County’s current and future needs. The remainder of fund balance is reserved, indicating that it is
not available for new spending because it has been committed: 1) to pay debt service ($1,295); 2)
to reflect inventories and prepaid items that do not represent available spendable resources
($730); and 3) for construction of the new Superior Court and Sheriff’s building ($12,740).
The General Fund is the chief operating fund of the County. At June 30, 2003, the unreserved
fund balance of the General Fund was $13,301 while total fund balance was $14,914. As a
measure of the General Fund’s liquidity, it may be useful to compare both unreserved fund
balance and total fund balance to total fund expenditures. Unreserved fund balance represents
17 percent of total General Fund expenditures, while total fund balance represents 19 percent of
that same amount.
The fund balance of the County’s General Fund increased by $2,001 during the fiscal year. A key
factor in this growth was an increase in property tax revenue of $5,738 which was due to
increased assessed property values.
Revenues for the Public Works Highway Fund increased by $1,436 over the prior year due to
increased funding from the State for highway construction and maintenance projects.
Expenditures also increased by $2,889 due in part to the increase in funding available. The
decrease in fund balance of $259 was insignificant in comparison to total expenditures.
The fund balance of the Superior Court/Sheriff Construction Fund decreased by $16,584 or 57
percent during the fiscal year. This was mainly due to expenditures totaling $16,281 for the
construction of the new Superior Court and Sheriff Administration buildings. As of fiscal year end,
the project was approximately 62 percent complete.
The Debt Service Fund has a fund balance of $107 which is reserved for the debt service
payments on the County’s special assessment bonds. Fund balance decreased by $73 due to
the debt service payment exceeding property tax revenues collected.
Revenues for governmental funds totaled approximately $131,955 in fiscal year 2002-2003,
which represents an increase of 11% from fiscal year 2001-2002.
The following table presents the amount of revenues from various sources as well as increases or
decreases from the prior year.
Management’s Discussion and Analysis
- 11 -
Governmental Funds
Revenues Classified by Source
FY 2003 FY 2002 Increase/(Decrease)
Percent of Percent of Percent of
Revenues by Source Amount Total Amount Total Amount Change
Taxes $ 53,217 40.33% $ 45,983 38.62% $ 7,234 15.73%
License and permits 6,313 4.78% 4,139 3.48% 2,174 52.52%
Intergovernmental 55,536 42.09% 52,491 44.09% 3,045 5.80%
Charges for services 10,400 7.88% 9,889 8.31% 511 5.17%
Fines and forfeits 2,641 2.00% 2,228 1.87% 413 18.54%
Investment income 101 0.08% 1,267 1.06% ( 1,166) (92.03%)
Rental and miscellaneous 3,747 2.84% 3,060 2.57% 687 22.45%
Total $ 131,955 100.00% $ 119,057 100.00% $ 12,898 10.83%
The following provides an explanation of revenues by source that changed significantly over the
prior year.
• Taxes – the increase of $7,234 was primarily due to an increase in property tax revenue
collected. This increase resulted from an increase in assessed property values of 17% or
$292,778 more than the previous year.
• Licenses and permits – licenses and permits increased in the Other Governmental Funds
by $959 or 91% over fiscal year 2001-2002 due to an increase in the number of right-of-way
use permits sold. General Fund licenses and permits revenue increased by $1,213
or 39% due to an increase in the number of building permits sold.
• Investment income – Investment income decreased mostly due to a decrease in the fair
value of an investment held in the State Treasurer’s investment pool.
• Rental and miscellaneous – the increase in rental and miscellaneous is primarily from
private contributions to the County. Private contributions increased from $1,450 to
$2,386 during the year. These contributions came from developers for road construction
in new subdivisions.
Management’s Discussion and Analysis
- 12 -
The following table presents expenditures by function compared to prior year amounts.
Governmental Funds
Expenditures Classified by Function
FY 2003 FY 2002 Increase/(Decrease)
Percent of Percent of Percent of
Expenditures by Function Amount Total Amount Total Amount Change
General government $ 39,187 27.17% $ 32,064 27.72% $ 7,123 22.21%
Public safety 37,071 25.70% 32,449 28.05% 4,622 14.24%
Highways and streets 18,246 12.65% 16,125 13.94% 2,121 13.15%
Sanitation 805 0.56% 495 0.43% 310 62.63%
Health 19,477 13.51% 18,558 16.04% 919 4.95%
Welfare 4,877 3.38% 4,400 3.80% 477 10.84%
Culture and recreation 547 0.38% 526 0.46% 2 1 3.99%
Education 6,324 4.39% 6,391 5.53% ( 67) (1.05%)
Capital outlay 16,472 11.42% 3,576 3.09% 12,896 360.63%
Principal retirement 1,000 0.69% 835 0.72% 165 19.76%
Interest and fiscal charges 221 0.15% 253 0.22% ( 32) (12.65%)
Total $ 144,227 100.00% $ 115,672 100.00% $ 28,555 24.69%
The following provides an explanation of the expenditures by function that changed significantly
over the prior year.
• General government – expenditures for general government increased primarily due to a
budget increase of approximately 12 percent for the fiscal year. Additionally, actual
expenditures for the prior fiscal year were less than budgeted.
• Public safety – expenditures for public safety increased primarily due to an increase in
personal services expenditures resulting from market adjustment and cost of living pay
increases.
• Highways and streets – the increase in highways and streets expenditures is related to
an overall increase in revenues of approximately 13% that was used for highway
construction and maintenance projects.
• Capital outlay – capital outlay expenditures increased due to continuing construction on
the Superior Court and Sheriff Administration buildings. Expenditures for these projects
totaled $16,281 for the fiscal year
Proprietary funds. The County’s proprietary funds provide the same type of information found in
the government-wide financial statements, but in more detail.
Unrestricted net assets of the Long Term Care Fund at the end of the year totaled $741, and
those for the other nonmajor enterprise funds (Sheriff Inmate Services, Home Health, and
Fairgrounds) totaled $521. Other factors concerning the finances of these funds have already
been addressed in the discussion of the County’s business-type activities.
Management’s Discussion and Analysis
- 13 -
The following table shows actual revenues, expenses, and changes in net assets for the
enterprise funds for the current fiscal year:
Major Fund Nonmajor Funds
Long Term Sheriff Inmate Home
Care Services Health Fairgrounds Total
Operating revenues $ 33,359 $ 162 $ 3,150 $ 302 $ 36,973
Operating expenses 32,570 130 2,961 556 36,217
Operating income (loss) 789 32 189 ( 254) 756
Non-operating revenues
(expenses), net 84 4 4 33 125
Net income (loss) before
contributions and transfers 873 36 193 ( 221) 881
Transfers ( 401) ( 12) ( 17) 135 ( 295)
Net income (loss) $ 472 $ 24 $ 176 $ ( 86) $ 586
The net income before transfers of enterprise funds of $881 resulted primarily from a net income
of $873 of the Long Term Care program. This was due to an increase in capitation revenue from
the State to compensate for a loss from the prior year.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital assets
The County’s investment in capital assets for its governmental and business-type activities as of
June 30, 2003, amounted to $33,708 (net of related debt and accumulated depreciation). This
investment in capital assets includes land and easements, infrastructure, buildings and
improvements, equipment, and construction in progress. The increase in the County’s investment
in capital assets for the current period was 31 percent. Major capital asset events during the
current fiscal year included the following:
• Construction in progress increased by $18,907 mainly due to the construction of the new
Superior Court and Sheriff Administration buildings ($15,861) and infrastructure assets
($2,408).
• Infrastructure assets of $4,289 were added during the year, all of which were part of the
road network.
Capital assets for the governmental and business-type activities are presented below to illustrate
changes from the prior year:
Capital Assets
(net of accumulated depreciation)
Governmental Activities Business-type Activities Total
2003 2002 2003 2002 2003 2002
Land $ 2,592 $ 2,401 $ - $ - $ 2,592 $ 2,401
Buildings and improvements 25,836 27,466 - - 25,836 27,466
Equipment 7,652 8,217 93 81 7,745 8,298
Infrastructure 7,899 3,728 - - 7,899 3,728
Construction in progress 21,047 3,456 - - 21,047 3,456
Total $ 65,026 $ 45,268 $ 93 $ 81 $ 65,119 $ 45,349
Management’s Discussion and Analysis
- 14 -
The County’s infrastructure assets are recorded at historical cost in the government-wide financial
statements as required by GASB Statement No. 34. The Statement also requires the retroactive
reporting of all infrastructure assets acquired prior to July 1, 2001, to be reported by the fiscal
year ended June 30, 2006. The acquisition of new infrastructure assets is reported as capital
outlay expenditures within the Public Works Highway, Highways and Streets, and Flood Control
Funds.
Additional information on the County’s capital assets can be found in note 4 on page 35 of this
report.
Long-term debt
At June 30, 2003, the County had total long-term debt outstanding of $43,080 as compared to
$46,310 in the prior year. This amount was comprised of $38,675 of certificates of participation
and $4,405 of special assessment bonds. The decrease from the prior year is due entirely to
debt service payments.
Outstanding Debt
Percentage
Governmental Activities Change
2003 2002 2002-2003
Special assessment bonds with
governmental commitment $ 4,405 $ 5,405 (18.5%)
Certificates of participation 38,675 40,905 (5.45%)
Total $ 43,080 $ 46,310 (6.98%)
Additional information on the County’s long-term debt can be found in note 5 on page 36 of this
report.
Economic Factors
• The County’s economic outlook is being affected by the budget deficit at the state level.
State-shared revenues are expected to be less than the prior year and the County is
expecting cost shifts from the State of $1.5 million or more.
• The State’s employee retirement contribution rate doubled as of July 1, 2003, and the
County’s contribution (match) is estimated to be $2.3 million more than the prior year.
• The County’s portion of the medical insurance that it provides to County employees is
expected to increase by $1.4 million.
• The unemployment rate in the County is currently at 7.3 percent, up 2.2 percent from the
prior year and is not expected to decrease in the immediate future.
• Sales tax revenue is expected to increase at a slower rate because of a reduction in
consumer confidence caused by the slowing economy. Licenses and permits related to
new construction and expansion are expected to increase by approximately 50% due to
the continued increase in the County’s population.
Request for Information
This financial report is designed to provide a general overview of the County’s finances.
Questions concerning any of the information provided in this report or requests for additional
financial information should be addressed to the Pinal County Finance Department, P.O. Box
1348, Florence, AZ, 85232.
Basic Financial Statements
PINAL COUNTY
Statement of Net Assets
June 30, 2003
(Amounts expressed in thousands)
Governmental Business-type
Activities Activities Total
Assets
Cash and cash equivalents $ 36,580 $ 6,103 $ 42,683
Cash and investments held by trustees 16,343 - 16,343
Receivables (net):
Property taxes 3,360 - 3,360
Accounts 584 10 594
Due from other governments 2,402 665 3,067
Internal balances 93 (93) -
Inventories 479 31 510
Prepaid items 276 - 276
Restricted assets:
Cash and cash equivalents - 1,156 1,156
Capital assets:
Nondepreciable 23,639 - 23,639
Depreciable (net) 41,387 93 41,480
Total assets 125,143 7,965 133,108
Liabilities
Accounts payable 4,567 18 4,585
Due to other governments 153 - 153
Accrued payroll and employee benefits 1,611 234 1,845
Deposits held for others 296 41 337
Deferred revenue 5 - 5
Matured special assessment bonds with governmental
commitment payable 1,000 - 1,000
Bond interest payable 110 - 110
Noncurrent liabilities:
Due within one year 6,892 - 6,892
Due beyond one year 49,782 4,109 53,891
Total liabilities 64,416 4,402 68,818
Net Assets
Invested in capital assets, net of related debt 33,615 93 33,708
Restricted for:
Highways and streets 13,861 - 13,861
Education 1,778 - 1,778
Debt service 193 - 193
Public safety 2,293 - 2,293
Other purposes 1,441 - 1,441
Health 1,351 2,208 3,559
Unrestricted 6,195 1,262 7,457
Total net assets $ 60,727 $ 3,563 $ 64,290
- 15 -
The notes to the financial statements are an integral part of this statement
PINAL COUNTY
Statement of Activities
Year Ended June 30, 2003
(Amounts expressed in thousands)
Net (Expense) Revenues and
Program Revenues Changes in Net Assets
Operating Capital Business-
Charges for Grants and Grants and Governmental type
Expenses Services Contributions Contributions Activities Activities Total
Functions/Programs
Governmental activities
General government $ 36,822 $ 8,066 $ 3,636 $ - $ (25,120) $ - $ (25,120)
Public safety 37,732 7,783 5,504 - (24,445) - (24,445)
Highways and streets 13,398 1,785 14,382 1,139 3,908 - 3,908
Sanitation 673 11 433 - (229) - (229)
Health 19,574 1,332 4,073 - (14,169) - (14,169)
Welfare 4,880 145 3,958 - (777) - (777)
Culture and recreation 552 - 39 126 (387) - (387)
Education 6,327 232 4,643 - (1,452) - (1,452)
Interest on long-term debt 221 - - - (221) - (221)
Total governmental activities 120,179 19,354 36,668 1,265 (62,892) - (62,892)
Business-type activities
Long Term Care 32,570 33,347 - - - 777 777
Sheriff/Inmate Services 130 - - - - (130) (130)
Home Health 2,961 3,148 - - - 187 187
Fairgrounds 556 302 33 - - (221) (221)
Total business-type activities 36,217 36,797 33 - - 613 613
Total primary government $ 156,396 $ 56,151 $ 36,701 $ 1,265 (62,892) 613 (62,279)
General revenues:
Taxes:
Property taxes 52,533 - 52,533
Share of State sales taxes 13,374 - 13,374
Payments in lieu of taxes 5,368 - 5,368
Investment income:
Interest on investments 1,009 91 1,100
Net decrease in the fair value
of investments (908) - (908)
Rental and miscellaneous 3,747 177 3,924
Transfers 295 (295) -
Total general revenues and transfers 75,418 (27) 75,391
Changes in net assets 12,526 586 13,112
Net assets - July 1, 2002 48,201 2,977 51,178
Net assets - June 30, 2003 $ 60,727 $ 3,563 $ 64,290
- 16 -
The notes to the financial statements are an integral part of this statement
PINAL COUNTY
Balance Sheet
Governmental Funds
June 30, 2003
(Amounts expressed in thousands)
Major Funds
Superior Other
General Public Works Court/Sheriff Governmental
Fund Highway Construction Debt Service Funds Total
Assets
Cash and cash equivalents $ 13,310 $ 1,491 $ 967 $ 1,198 $ 19,557 $ 36,523
Cash and investments held by trustees 1,088 - 15,255 - - 16,343
Receivables (net of allowances for uncollectible):
Property taxes 3,109 - - 105 146 3,360
Accounts 435 - - - 149 584
Due from other funds 1,266 - - - 122 1,388
Due from other governments 374 1,211 - - 817 2,402
Inventories 172 171 - - 111 454
Prepaid items 253 3 - - 20 276
Total assets $ 20,007 $ 2,876 $ 16,222 $ 1,303 $ 20,922 $ 61,330
Liabilities and Fund Balances
Liabilities:
Accounts payable $ 606 $ 140 $ 3,479 $ - $ 334 $ 4,559
Accrued payroll and employee benefits 1,045 213 3 - 348 1,609
Due to other funds 4 - - - 1,291 1,295
Due to other governments - - - - 153 153
Deposits held for others 261 - - - 35 296
Special assessment bonds with governmental
commitment payable - - - 1,000 - 1,000
Bond interest payable - - - 110 - 110
Deferred revenue 3,177 - - 86 542 3,805
Total liabilities 5,093 353 3,482 1,196 2,703 12,827
Fund Balances:
Reserved for:
Inventories 172 171 - - 111 454
Prepaid items 253 3 - - 20 276
Debt service 1,188 - - 107 - 1,295
Construction - - 12,740 - - 12,740
Unreserved, reported in:
General fund:
Designated 2,520 - - - - 2,520
Undesignated 10,781 - - - 10,781
Special Revenue funds - 2,349 - - 18,028 20,377
Capital Projects funds - - - - 60 60
Total fund balances 14,914 2,523 12,740 107 18,219 48,503
Total liabilities and fund balances $ 20,007 $ 2,876 $ 16,222 $ 1,303 $ 20,922 $ 61,330
- 17 -
The notes to the financial statements are an integral part of this statement
PINAL COUNTY
Reconciliation of the Governmental Funds Balance Sheet
to the Statement of Net Assets
June 30, 2003
(Amounts expressed in thousands)
Total fund balances - governmental funds (page 17) $ 48,503
Amounts reported for governmental activities in the statement
of net assets are different because:
Capital assets used in governmental activities are not financial
resources and, therefore, are not reported in the funds. The
cost of the assets is $108,916 and the accumulated
depreciation is $43,899. 65,017
Other long-term assets are not available to pay for current
period expenditures and, therefore, are deferred in the
governmental funds. 3,800
Internal Service Funds are used by management to charge the
costs of central services. The assets and liabilities of the Internal
Service Fund are included in governmental activities in the
statement of net assets. 62
Long-term liabilities are not due and payable in the current period
and therefore are not reported in the governmental funds.
Obligations under capital leases $ (1,631)
Compensated absences (7,905)
Special Assessment bonds with
governmental commitment (4,405)
Certificates of participation (38,675)
Estimated liabilities for claims
and judgments (4,039) (56,655)
Net assets of governmental activities (page 15) $ 60,727
- 18 -
The notes to the financial statements are an integral part of this statement
PINAL COUNTY
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
Year Ended June 30, 2003
(Amounts expressed in thousands)
Major Funds
Superior Other
General Public Works Court/Sheriff Governmental
Fund Highway Construction Debt Service Funds Total
Revenues
Taxes $ 45,285 $ - $ - $ 1,139 $ 6,793 $ 53,217
Licenses and permits 4,293 2 - - 2,018 6,313
Intergovernmental 20,549 13,800 - - 21,187 55,536
Charges for services 7,700 - - - 2,700 10,400
Fines and forfeits 1,337 - - - 1,304 2,641
Investment income:
Interest on investments 223 26 532 9 219 1,009
Net decrease in the fair value of
investments - - (908) - - (908)
Rental and miscellaneous 887 174 12 - 2,674 3,747
Total revenues 80,274 14,002 (364) 1,148 36,895 131,955
Expenditures
Current:
General government 35,982 - - - 3,205 39,187
Public safety 28,807 - - - 8,264 37,071
Highways and streets - 13,183 - 5,063 18,246
Sanitation 240 - - - 565 805
Health 13,981 - - - 5,496 19,477
Welfare 681 - - - 4,196 4,877
Culture and recreation 105 - - - 442 547
Education - - - - 6,324 6,324
Capital outlay - - 16,281 - 191 16,472
Debt service:
Principal retirement - - - 1,000 - 1,000
Interest and fiscal charges - - - 221 - 221
Total expenditures 79,796 13,183 16,281 1,221 33,746 144,227
Excess (deficiency) of revenues
over expenditures 478 819 (16,645) (73) 3,149 (12,272)
Other financing sources (uses):
Transfers in 2,804 29 685 - 2,368 5,886
Transfers out (1,317) (1,207) (624) - (2,443) (5,591)
Proceeds from sale of capital assets 36 100 - - 51 187
Total other financing sources (uses) 1,523 (1,078) 61 - (24) 482
Net change in fund balances 2,001 (259) (16,584) (73) 3,125 (11,790)
Fund balances, July 1, 2002 12,913 2,782 29,324 180 15,094 60,293
Fund balances, June 30, 2003 $ 14,914 $ 2,523 $ 12,740 $ 107 $ 18,219 $ 48,503
- 19 -
The notes to the financial statements are an integral part of this statement
PINAL 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, 2003
(Amounts expressed in thousands)
Net change in fund balances - total governmental funds (page 19) $ (11,790)
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.
Expenditures for general capital assets, infrastructure, and
other related capital assets. $ 25,549
Less: current year depreciation (5,781) 19,768
Some expenses in the statement of activities do not require the use of current financial
resources and, therefore, are not reported as expenditures in the governmental funds.
Change in compensated absences (1,173)
Change in estimated liabilities for claims and judgments 858 (315)
Repayment of debt principal is an expenditure in the governmental funds, but the repayment
reduces long-term liabilities in the statement of net assets.
Principal repayments:
Certificates of participation 2,230
Special assessment bonds with governmental commitment 1,000
Obligations under capital leases 1,176 4,406
Revenues in the statement of activities that do not provide current financial resources are
not reported as revenues in the funds. 455
Internal service funds are used by the County to charge the costs of central services. The net
revenue of the internal service funds is reported with governmental activities. 2
Change in net assets of governmental activities (page 16) $ 12,526
- 20 -
The notes to the financial statements are an integral part of this statement
PINAL COUNTY
Statement of Net Assets
Proprietary Funds
June 30, 2003
(Amounts expressed in thousands)
Business-type Activities - Enterprise Funds Governmental
Other Activities-
Long Term Enterprise Internal
Care Funds Total Service Fund
Assets
Current Assets:
Cash and cash equivalents $ 5,280 $ 823 $ 6,103 $ 57
Receivables (net):
Accounts - 10 10 -
Due from other funds 10 - 10 -
Due from other governments 665 - 665 -
Inventories - 31 31 25
Total current assets 5,955 864 6,819 82
Noncurrent Assets:
Restricted cash and cash equivalents 1,156 - 1,156
Capital assets:
Buildings and improvements 376 376 -
Equipment 184 280 464 195
Less accumulated depreciation (129) (618) (747) (186)
Net capital assets 55 38 93 9
Total noncurrent assets 1,211 38 1,249 9
Total assets 7,166 902 8,068 91
Liabilities
Current liabilities:
Accounts payable - 18 18 8
Accrued payroll and employee benefits 162 72 234 2
Due to other funds - 103 103 -
Deposits held for others - 41 41 -
Total current liabilities 162 234 396 10
Noncurrent liabilities:
Compensated absences - 109 109 16
Estimated liabilities for claims and judgments 4,000 - 4,000 -
Obligations under capital leases - - - 3
Total noncurrent liabilities 4,000 109 4,109 19
Total liabilities 4,162 343 4,505 29
Net Assets
Invested in capital assets, net of related debt 55 38 93 9
Restricted for health 2,208 - 2,208 -
Unrestricted 741 521 1,262 53
Total net assets $ 3,004 $ 559 $ 3,563 $ 62
- 21 -
The notes to the financial statements are an integral part of this statement
PINAL COUNTY
Statement of Revenues, Expenses, and Changes in Net Assets
Proprietary Funds
Year Ended June 30, 2003
(Amounts expressed in thousands)
Business-type Activities - Enterprise Funds Governmental
Other Activities-
Long Term Enterprise Internal
Care Funds Total Service Fund
Operating revenues
Charges for services $ 33,347 $ 3,450 $ 36,797 $ 415
Rental and miscellaneous 12 164 176 -
Total operating revenues 33,359 3,614 36,973 415
Operating expenses
Long-term health care 29,460 - 29,460 -
Personal services 2,407 3,046 5,453 111
Supplies 70 127 197 255
Depreciation 25 19 44 12
Insurance 4 28 32 -
Repairs and maintenance 6 39 45 32
Communication 50 28 78 -
Professional services 292 168 460 3
Public utility service 5 80 85 -
Miscellaneous 251 112 363 -
Total operating expenses 32,570 3,647 36,217 413
Operating income (loss) 789 (33) 756 2
Nonoperating revenues
Intergovernmental - 33 33 -
Interest on investments 84 7 91 -
Gain on sale of capital assets - 1 1 -
Total nonoperating revenues 84 41 125 -
Income before contributions
and transfers 873 8 881 2
Transfers in - 135 135 -
Transfers out (401) (29) (430) -
Change in net assets 472 114 586 2
Net assets, July 1, 2002 2,532 445 2,977 60
Net assets, June 30, 2003 $ 3,004 $ 559 $ 3,563 $ 62
- 22 -
The notes to the financial statements are an integral part of this statement
PINAL COUNTY
Statement of Cash Flows
Proprietary Funds
Year Ended June 30, 2003
(Amounts expressed in thousands)
Business-type Activities - Enterprise Funds Governmental
Other Activities-
Long Term Enterprise Internal
Care Funds Total Service Fund
Cash flows from operating activities
Receipts from customers $ 33,359 $ 3,604 $ 36,963 $ 15
Receipts from interfund services provided - - - 400
Receipts from other funds 101 - 101 -
Other receipts - 41 41 -
Payments to suppliers (29,747) (585) (30,332) (279)
Payments to employees (2,393) (2,999) (5,392) (110)
Payments to other funds - 103 103 -
Net cash provided by operating activities 1,320 164 1,484 26
Cash flows from noncapital financing activities
Receipts from federal and local agencies - 33 33 -
Transfers from other funds - 135 135 -
Transfer to other funds (401) (29) (430) -
Net cash provided by (used for)
noncapital financing activities (401) 139 (262) -
Cash flows from capital and related financing activities
Proceeds from the sale of capital assets - 1 1 -
Acquisition of capital assets (20) (36) (56) (2)
Payments on capital leases - - - (4)
Net cash used for capital and related financing
activities (20) (35) (55) (6)
Cash flows from investing activities
Investment income received 92 7 99 -
Net cash provided by investing activities 92 7 99 -
Net increase in cash and cash equivalents 991 275 1,266 20
Cash and cash equivalents, July 1, 2002, as restated 5,445 548 5,993 37
Cash and cash equivalents, June 30, 2003 $ 6,436 $ 823 $ 7,259 $ 57
(Continued)
- 23 -
The notes to the financial statements are an integral part of this statement
PINAL COUNTY
Statement of Cash Flows
Proprietary Funds
Year Ended June 30, 2003
(Continued)
(Amounts expressed in thousands)
Business-type Activities - Enterprise Funds Governmental
Other Activities-
Long Term Enterprise Internal
Care Funds Total Service Fund
Reconciliation of operating income (loss) to net cash provided
by operating activities:
Operating income (loss) $ 789 $ (33) $ 756 $ 2
Adjustments to reconcile operating income (loss) to
net cash provided by operating activities:
Depreciation expense 25 19 44 12
Changes in:
Accounts receivable - (10) (10) -
Due from other funds (10) - (10) -
Due from other governments 111 - 111 -
Inventories - (3) (3) 10
Accounts payable - - - 1
Accrued payroll and employee benefits 14 23 37 -
Compensated absences - 24 24 1
Due to other funds - 103 103 -
Deposits held for others 41 41
Estimated liabilities for claims and judgments 391 - 391 -
Total adjustments 531 197 728 24
Net cash provided by operating activities $ 1,320 $ 164 $ 1,484 $ 26
Noncash investing, capital, and financing activities:
Sale of equipment $ - $ (2) $ (2) $ -
Elimination of accumulated depreciation related
to sold equipment - 2 2 -
Proceeds from sale of equipment - 1 1 -
Gain on sale of equipment - (1) (1) -
- 24 -
The notes to the financial statements are an integral part of this statement
PINAL COUNTY
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2003
(Amounts expressed in thousands)
Investment Agency
Trust Funds Funds
Assets
Cash and cash equivalents $ 81,763 $ 3,765
Cash and investments held by trustees 3,557
Interest receivable 62
Total assets 81,825 $ 7,322
Liabilities
Due to other governments 7 $ -
Deposits held for others 7,322
Total liabilities 7 $ 7,322
Net Assets
Held in trust for investment trust participants $ 81,818
- 25 -
The notes to the financial statements are an integral part of this statement
PINAL COUNTY
Statement of Changes in Fiduciary Net Assets
Fiduciary Funds
Year Ended June 30, 2003
(Amounts expressed in thousands)
Investment
Trust Funds
Additions
Contributions by participants $ 356,818
Interest on investments 1,550
Total additions 358,368
Deductions
Distributions to participants 365,683
Total deductions 365,683
Change in net assets (7,315)
Net assets, July 1, 2002 89,133
Net assets, June 30, 2003 $ 81,818
- 26 -
The notes to the financial statements are an integral part of this statement
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 27 -
Note 1 - Summary of Significant Accounting Policies
The accounting policies of Pinal County conform to generally accepted accounting principles
applicable to governmental units adopted by the Governmental Accounting Standards Board (GASB).
A summary of the County’s more significant accounting policies follows.
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:
Component Unit
Description; Criteria
for Inclusion
Reporting
Method
For Separate
Financial
Statements
Pinal County Flood
Control District
A tax-levying district that provides
flood control systems; County board
of supervisors serves as board of
directors
Blended Not available
Pinal County Library
District
Provides and maintains library
services for County’s residents;
County board of supervisors serves
as board of directors
Blended Not available
Various Street
Lighting Districts
Operates and maintains street
lighting in areas outside local city
jurisdictions; County board of
supervisors serves as board of
directors
Blended Not available
Desert Vista
Sanitary District
Operates and maintains sanitation
services in areas outside local city
jurisdictions; County Board of
Supervisors serves as board of
directors
Blended Not available
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 28 -
Component Unit
Description; Criteria
for Inclusion
Reporting
Method
For Separate
Financial
Statements
Queen Creek
Domestic Water
Improvement
District
Formed to construct a domestic
water system; County Board of
Supervisors serves as board of
directors
Blended Not available
Pinal County
Municipal Property
Corporation
Formed to finance the construction
of the Apache Junction County
Complex, Superior Court Judicial
Facility, and the Sheriff’s
Administration Facility
Blended Not available
Central Arizona
Public Facility
Corporation
Formed to finance the construction
of the Pinal County adult detention
center
Blended Not available
Maricopa Road
Public Improvement
Corporation
Formed to finance completion of
improvements to Maricopa Road
Blended Not available
Related Organizations
The Pinal County Municipal Property Corporation, the Central Arizona Public Facility Corporation, and
the Maricopa Road Public Improvement Corporation were formed to finance various construction
projects including the new Superior Court facility and Sheriff’s Administration facility. Because the
County Board of Supervisors serves as the Board of Directors of each of these corporations, they are
reported as blended component units of the County. These corporations issue certificates of
participation that evidence undivided proportionate interests in rent payments to be made under a
lease agreement, with an option to purchase, between Pinal County and the corporations. The
corporations have no assets or operating activities to report and no individual financial statements
have been issued. The corporations’ liabilities resulting from these certificates of participation are
reported in the government-wide statement of net assets.
B. Basis of Presentation
The basic financial statements include both government-wide statements and fund financial
statements. The government-wide statements focus on the County as a whole, while the fund
financial statements focus on major funds. Each presentation provides valuable information that can
be analyzed and compared between years and between governments to enhance the 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.
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 29 -
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 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 goods, 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 operating revenues, such as charges for services, result from transactions
associated with the fund’s principal activity in which each party receives and gives up essentially
equal values. Nonoperating revenues, such as subsidies and investment earnings, result from
transactions in which the parties do not exchange equal values. Revenues generated by ancillary
activities are also reported as nonoperating revenues.
The County reports the following major governmental funds:
The General Fund—is the County’s primary operating fund. It accounts for all financial resources of
the general government, except those required to be accounted for in another fund.
The Public Works Highway Fund—accounts for monies from specific revenue sources that are
restricted for road maintenance and operations, pavement preservation, and fleet services.
The Superior Court/Sheriff Construction Fund—accounts for construction of the new Superior Court
Facility and Sheriff’s Administration Facility.
The Debt Service Fund—accounts for resources accumulated and used for the payment of general
long-term debt principal, interest, and related costs of borrowing used for the Maricopa Road Project.
The County reports the following major enterprise fund:
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 30 -
The Long-Term Care Fund—accounts for health services to elderly and physically disabled clients
enrolled in the State’s AHCCCS (Arizona Health Care Cost Containment System) Long-Term Care
program.
The County reports the following fund types:
The internal service fund—accounts for print shop operations provided to County departments or to
other governments on a cost-reimbursement basis.
The investment trust funds—account for pooled assets held and invested by the County Treasurer on
behalf of County departments and other governmental entities.
The agency funds—account for assets held by the County as an agent for the State and various local
governments, and for property taxes collected and distributed to the State, cities, local school
districts, community college districts, and special districts.
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. 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 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, and compensated absences, which
are recognized as expenditures to the extent they are due and payable. General capital asset
acquisitions are reported as expenditures in governmental funds. Issuances of general long-term debt
and acquisitions under capital lease agreements are reported as other financing sources.
Under the terms of grant agreements, the County funds certain programs by a combination of grants
and general revenues. Therefore, when program expenses are incurred, there are both restricted and
unrestricted 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.
D. Cash and Investments
For purposes of its statement of cash flows, the County considers only those highly liquid investments
with a maturity of 3 months or less when purchased to be cash equivalents.
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 31 -
Nonparticipating interest-earning investment contracts are stated at cost. Money market investments
and participating interest-earning investment contracts with a remaining maturity of 1 year or less at
time of purchase are stated at amortized cost. All other investments are stated at fair value.
E. Inventories
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.
Inventories of the proprietary funds are recorded as assets when purchased and expensed when
consumed. These inventories are stated at cost using the lower of cost (first-in, first-out method) or
market.
F. Property Tax Calendar
The County levies real 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.
During the year, the County also levies various personal property taxes that are due the second
Monday of the month following receipt of the tax notice and become delinquent 30 days later.
A lien assessed against real and personal property attaches on the first day of January preceding
assessment and levy.
G. Capital Assets
Capital assets are reported at actual cost. 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
Depreciation
Method
Estimated
Useful Life
Land All N/A N/A
Buildings $ 5 Straight line 10-40 years
Equipment $ 1 Straight line 3-21 years
Infrastructure $ 5 Straight line 50 years
The County currently has one network of infrastructure assets made up of the County’s roads. Only
infrastructure assets acquired since July 1, 2001, are reported on the government-wide financial
statements.
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 32 -
H. Investment Income
Investment income is composed of interest, dividends, and net changes in the fair value of applicable
investments.
I. Compensated Absences
Compensated absences consist of vacation leave and a calculated amount of sick leave earned by
employees based on services already rendered.
Employees may accumulate up to 360 hours of vacation, but any vacation hours in excess of the
maximum amount that are unused at September 30 are forfeited. Upon termination of employment,
all unused and unforfeited vacation benefits are paid to employees. Accordingly, vacation benefits are
accrued as a liability in the financial statements.
Employees may accumulate an unlimited number of sick leave hours. Generally, sick leave benefits
provide for ordinary sick pay and are cumulative but are forfeited upon termination of employment.
Because sick leave benefits do not vest with employees, a liability for sick leave benefits is not
accrued in the financial statements. However, a certain percentage of sick leave can be converted to
terminal vacation leave upon retirement after an employee has worked 5 years, and is accrued as a
long-term liability.
Note 2 – Stewardship, Compliance, and Accountability
At June 30, 2003, the following funds reported deficits in fund balances or net assets.
Fund Deficit
Governmental Funds:
Attorney/IV-D Child Support $ 422
Clerk of the Court/IV-D Child Support 214
Airport Economic Development 102
Air Quality Grants 2
Sheriff/Drug Task Force 3
Sheriff/Drug Smuggling 18
Attorney/Drug Prosecution 39
Adult Probation/State Enhancement 6
Adult Probation/Support 1
Sheriff/COPS Grants 37
Juvenile Probation/Miscellaneous Sources 4
Juvenile Probation/Juvenile Justice Program 15
Community Development Block Grant 9
Proprietary Funds:
Fairgrounds 83
These deficits resulted from operations during the year, but are expected to be corrected through
normal operations in fiscal year 2003-2004.
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 33 -
Note 3 – Deposits and Investments
Arizona Revised Statutes authorize the County to invest public monies in the State Treasurer’s
investment pool; U.S. Treasury obligations; specified state and local government bonds; and interest-earning
investments such as savings accounts, certificates of deposit, and repurchase agreements in
eligible depositories. The statutes require collateral for demand deposits, certificates of deposit, and
repurchase agreements at 101 percent of all deposits not covered by federal depository insurance.
County Treasurer’s Investment Pool—Arizona Revised Statutes (A.R.S.) require community
colleges, school districts, and other local governments to deposit certain public monies with the
County Treasurer. Those monies are pooled with County monies for investment purposes.
Deposits—At June 30, 2003, the investment pool had cash on hand of $7. The carrying amount of
the investment pool’s total cash in bank was $10,245, and the bank balance was $14,871. Of the
bank balance, $100 was covered by federal depository insurance or by collateral held by the County
or its agent in the County’s name and $14,771 was covered by collateral held by the pledging
financial institution’s trust department or agent in the County’s name.
Investments —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.
The investment pool’s investments at June 30, 2003, are categorized below to give an indication of
the level of risk the County assumed at year-end.
Category 1—insured or registered in the County’s name, or securities held by the County or its agent
in the County’s name.
Category 2—uninsured and unregistered with securities held by the counterparty’s trust department
or agent in the County’s name.
Category 3—uninsured and unregistered with securities held by the counterparty, or by its trust
department or agent but not in the County’s name.
Category
1 2 3
Fair
Value
Repurchase agreements $ 69,757 $ 45,849 $ 115,606
Other deposits—At June 30, 2003, the total non-pooled cash on hand was $4. The carrying amount
of the County’s total nonpooled cash in bank was $5,468, and the bank balance was $6,071. Of the
bank balance, $6,002 was covered by federal depository insurance or by collateral held by the
County or its agent in the County’s name and $69 was uninsured and uncollateralized.
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 34 -
Other investments—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. The County’s nonpooled investments at June 30, 2003, are categorized
below to give an indication of the level of risk assumed by the County at year end.
Category
1 2 3
Fair
Value
U.S. government securities $ 1,088 $ 1,088
Investments not subject to categorization:
State Treasurer’s investment pool 16,849
Total $ 17,937
A reconciliation of cash and investments to amounts shown on the Statement of Net Assets follows:
Cash and investments:
County
Treasurer's
Investment Pool Other Total
Cash on hand $ 7 $ 4 $ 11
Carrying amount of deposits 10,245 5,468 15,713
Reported amount of investments 115,606 17,937 133,543
Total $ 125,858 $ 23,409 $ 149,267
Statement of Net Assets:
Total Total
Primary Fiduciary
Government Funds Total
Cash and cash equivalents $ 43,839 $ 85,528 $ 129,367
Cash and investments held by trustees 16,343 3,557 19,900
Total $ 60,182 $ 89,085 $ 149,267
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 35 -
Note 4 – Capital Assets
Capital asset activity for the year ended June 30, 2003, was as follows:
Balance Balance
July 1, 2002 Increases Decreases June 30, 2003
Governmental activities:
Capital assets not being depreciated:
Land $ 2,401 $ 191 $ - $ 2,592
Construction in progress (estimated cost to
complete $13,233) 3,456 18,907 1,316 21,047
Total capital assets not being depreciated 5,857 19,098 1,316 23,639
Capital assets being depreciated:
Buildings 40,219 120 - 40,339
Equipment 34,841 3,360 1,123 37,078
Infrastructure 3,766 4,289 - 8,055
Total capital assets being depreciated 78,826 7,769 1,123 85,472
Less accumulated depreciation for:
Buildings 12,753 1,750 - 14,503
Equipment 26,624 3,925 1,123 29,426
Infrastructure 38 118 - 156
Total 39,415 5,793 1,123 44,085
Total capital assets being depreciated, net 39,411 1,976 - 41,387
Governmental activities capital assets, net $ 45,268 $ 21,074 $ 1,316 $ 65,026
Business-type activities:
Capital assets being depreciated:
Buildings $ 376 $ - $ - $ 376
Equipment 423 43 2 464
Total 799 43 2 840
Less accumulated depreciation for:
Buildings 376 - - 376
Equipment 342 31 2 371
Total 718 31 2 747
Total capital assets being depreciated, net 81 12 - 93
Business-type activities capital assets, net $ 81 $ 12 $ - $ 93
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 36 -
Depreciation expense was charged to functions as follows:
Governmental activities:
General government
Public safety
Highways and streets
Sanitation
Health
Welfare
Culture and recreation
Education
Internal service fund
$ 2,856
927
1,622
40
289
27
17
3
12
Total governmental activities depreciation expense $ 5,793
Business-type activities:
Long Term Care
Home Health
Fairgrounds
$ 25
14
5
Total business-type activities depreciation expense $ 44
Note 5 – Long-term Liabilities
The following schedule details the County’s long-term liability and obligation activity for the year
ended June 30, 2003.
Balance
July 1, 2002 Additions Reductions
Balance
June 30, 2003
Due
within
1 year
Governmental activities
Obligations under capital leases $ 2,814 $ - $ 1,180 $ 1,634 $ 204
Compensated absences 6,747 1,174 - 7,921 3,348
Special assessment bonds with
governmental commitment 5,405 - 1,000 4,405 1,040
Certificates of participation 40,905 - 2,230 38,675 2,300
Estimated liabilities for
claims and judgments 4,897 - 858 4,039 -
Governmental activities long-term
liabilities $ 60,768 $ 1,174 $ 5,268 $ 56,674 $ 6,892
Business-type activities
Compensated absences $ 85 $ 24 $ - $ 109 $ -
Estimated liabilities for
claims and judgments 3,609 391 - 4,000 -
Business-type activities long-term
liabilities $ 3,694 $ 415 $ - $ 4,109 $ -
For the governmental activities, claims and judgments and compensated absences are generally
liquidated by the General Fund.
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 37 -
Bonds
The County's bonded debt consists of one issue of special assessment bonds with governmental
commitment.
Special assessment bonds are secured by pledges of revenues from special assessments levied
against the benefiting property owners. The proceeds of the 1999 bond issue were used to refund
portions of the 1990 and 1994 bond issues, which have been defeased. These bonds are generally
callable with interest payable semiannually. All originally authorized bonds have been issued. The
County is not legally liable for the payment of the bonds, however, the bonds are payable from an
unlimited tax that is levied against the property within the boundaries of the district. The County
raises the tax levy in the district to cover any delinquencies from the prior year if necessary.
The following special assessment district had bonds outstanding at June 30, 2003:
Description
Original
Amount
Maturity
Ranges
Interest
Rates
Outstanding
Principal
Maricopa Rural Road Improvement
District Refunding Bonds Series 1999
$ 7,780
2004-
2007
4%-
4.25%
$ 4,405
The following schedule details debt service requirements to maturity for the County’s bonds payable
at June 30, 2003.
Year
Ending Governmental Activities
June 30 Principal Interest
2004 $ 1,040 $ 182
2005 1,075 140
2006 1,125 96
2007 1,165 49
Total $ 4,405 $ 467
Certificates of Participation
On December 1, 1998, the Pinal County Municipal Property Corporation issued certificates of
participation totaling $11,640. The certificates evidence undivided proportionate interests in lease
payments to be made under a lease agreement, with an option to purchase, between Pinal County
and the Pinal County Municipal Property Corporation. The proceeds of the certificates were used by
the County for the refinancing of the Series 1994 certificates of participation. The refunded debt is
considered defeased and related liabilities are not included in the County’s financial statements. The
indenture provides for the establishment and maintenance of a Reserve Fund. The County has
deposited the required monies, which shall be used only for the purpose of making up deficiencies in
the Rent Payment Fund for principal and interest payments. The certificates are generally
noncallable with interest rates from 4 to 4.5 percent, payable semiannually on June 1 and December
1 of each year through the year 2009.
On August 1, 2001, the Pinal County Municipal Property Corporation issued certificates of
participation totaling $30,800. The certificates evidence undivided proportionate interests in lease
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 38 -
payments to be made under a lease agreement, with an option to purchase, between Pinal County
and the Pinal County Municipal Property Corporation. The proceeds of the certificates are being
used by the County to serve as the primary source of funding for construction of the buildings and
improvements which consist of a Superior Court Judicial Facility and a Sheriff’s Administration
Facility. The certificates are generally noncallable with interest rates from 3.4 to 5.125 percent,
payable semiannually on June 1 and December 1 of each year through 2021.
Certificates outstanding at June 30, 2003, were as follows:
Description
Original
Amount
Maturity
Ranges
Interest
Rates
Outstanding
Principal
Pinal County Municipal
Property Corporation 1998 $ 11,640 2004-2009
4%
to 4.5% $ 8,965
Pinal County Municipal
Property Corporation 2001
30,800
2004-2021
3.4%-
5.125%
29,710
$ 38,675
The following schedule details debt service requirements to maturity for the County’s certificates of
participation payable at June 30, 2003.
Governmental
Activities
Year Ending June 30 Principal Interest
2004 $ 2,300 $ 1,743
2005 2,400 1,656
2006 2,495 1,562
2007 2,595 1,461
2008 2,695 1,353
2009-13 9,960 5,166
2014-18 9,365 3,119
2019-21 6,865 629
Total $ 38,675 $ 16,689
Capital leases
The County has acquired land, buildings, heavy machinery, and other machinery and equipment
under the provisions of various long-term lease agreements classified as capital leases for accounting
purposes because they provide for a bargain purchase option or a transfer of ownership by the end of
the lease term.
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 39 -
The assets acquired through capital leases are as follows:
Governmental
Activities
Land $ 80
Buildings 1,170
Equipment 3,006
Subtotal 4,256
Less: accumulated depreciation 1,038
Carrying value $ 3,218
The following schedule details debt service requirements to maturity for the County’s capital leases
payable at June 30, 2003.
Year Ending June 30
Governmental
Activities
2004 $ 304
2005 301
2006 302
2007 293
2008 286
2009-14 543
Total minimum lease payments 2,029
Less amount representing
interest 395
Present value of net minimum
lease payments $ 1,634
Landfill closure and postclosure care costs
The County has contracted with an outside agency to provide operations for its solid waste facilities.
The contract requires the outside agency to reserve funds in accordance with the closure plan for
closure and postclosure care costs. In the event of termination of the contract, the required reserve
funds are to be remitted to the Arizona Department of Environmental Quality. Consequently, no
liability for landfill closure and postclosure care costs has been recorded on the basic financial
statements.
Note 6 – 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, the
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 40 -
Arizona Counties Workers’ Compensation Pool, and the Arizona Local Government Employee Benefit
Trust, which are described below.
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 a deductible of $10 per
occurrence for property claims and $50 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 $15 million per occurrence for liability claims. A county must participate in the
pool at least 3 years after becoming a member; however, it may withdraw after the initial 3-year
period. 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.
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.
Pursuant to A.R.S. §11–952, the County has established the Pinal County Employee Benefit Trust,
which covers medical, dental, vision, short-term disability, employee life and accidental disability, and
dependent life claims. The County is not liable for medical, dental, vision, short-term disability,
employee life and accidental liability, and dependent life insurance claims in the Trust. However, the
County is responsible for paying a premium to the Trust. The Trust and its insurance company are
liable for claims up to $1,000 for each covered employee. Settled claims have not exceeded
coverage provided in any of the past three fiscal years.
As provided by A.R.S. §23-750, the State, its political subdivisions, and any instrumentality, agency,
or board of the State or political subdivision, have two options for satisfying unemployment
compensation obligations: 1) direct quarterly payments to the unemployment fund administered by
the Arizona Department of Economic Security (ADES) based on a computed contribution rate
assigned to the employer by ADES or 2) the government may elect to be liable for any unemployment
compensation obligations.
Pinal County has elected to be responsible for its unemployment obligations. The County does not
accumulate and reserve monies for its workforce.
Note 7 – 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
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 41 -
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 multiple-employer defined
benefit pension plan that covers general employees of the County. 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 one of its 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 financial report that includes its financial statements and
required supplementary information. A report may be obtained by writing or calling the applicable
plan.
ASRS PSPRS and CORP
3300 N. Central Ave. 1020 E. Missouri Ave.
P.O. Box 33910 Phoenix, AZ 85014
Phoenix, AZ 85067-3910 (602) 255-5575
(602) 240-2000 or (800) 621-3778
Funding Policy—The Arizona State Legislature establishes and may amend active plan members’
and the County’s contribution rates.
Cost-sharing plans—For the year ended June 30, 2003, active ASRS members and the County were
each required by statute to contribute at the actuarially determined rate of 2.49 percent (2.00 percent
retirement and 0.49 percent long-term disability) of the members’ annual covered payroll. The
County’s contributions to ASRS for the years ended June 30, 2003, 2002, and 2001, were $1,144,
$901, and $914, respectively, which were equal to the required contributions for the year.
Agent plans—For the year ended June 30, 2003, 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 4.39 percent. Active CORP members (detention
officers) 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 7.7 percent prior to
January 24, 2003, and 2.76 percent thereafter. Active CORP members (dispatchers) 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 12.7 percent prior to January 24, 2003, and
5.55 percent thereafter.
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 42 -
Annual Pension Cost—The County’s pension cost for the two agent plans for the year ended June
30, 2003, and related information follows.
PSPRS CORP
Detention Officers Dispatchers
Contribution rates:
County 4.39% 7.7% 12.7%
After Jan. 24, 2003 2.76% After Jan. 24, 2003 5.55%
Plan members 7.65% 8.5% 8.5%
Annual pension cost $267 $128 $28
Contributions made $267 $128 $28
The current-year annual required contributions for the PSPRS and CORP were determined as part of
their June 30, 2001, actuarial valuations using the entry-age 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 a 4-year period. 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,
2001, was 20 years.
Trend Information—Annual pension cost information for the current and two preceding years follows
for each of the agent plans.
Plan
Year
Ended
June 30
Annual Pension
Cost (APC)
Percentage
of APC
Contributed
Net Pension
Obligation
PSPRS 2003 $ 267 100% $ 0
2002 228 100% 0
2001 276 100% 0
CORP
Detention officers 2003 $ 128 100% $ 0
Dispatchers 2003 $ 28 100% $ 0
Employees first became members of the CORP during fiscal year 2003, therefore, only data for the
current fiscal year is presented.
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 43 -
Note 8 – Interfund Balances and Activity
Interfund receivables and payables—interfund balances at June 30, 2003, were as follows:
Due to/from other funds:
Receivable Fund Payable Fund Amount
General Fund Nonmajor Governmental Funds $ 1,163
Nonmajor Enterprise Funds 103
1,266
Long Term Care Fund Nonmajor Governmental Funds 10
Nonmajor Governmental Funds General Fund 4
Nonmajor Governmental Funds 118
122
Total $ 1,398
All interfund balances are expected to be repaid within one year from the date of the financial
statements.
Interfund transfers—interfund transfers for the year ended June 30, 2003, were as follows:
Transfer From Transfer To Amount
General Fund Public Works Highway Fund $ 6
Superior Court/Sheriff Construction Fund 623
Nonmajor Governmental Funds 553
Nonmajor Enterprise Funds 135
1,317
Public Works Highway Fund General Fund 975
Nonmajor Governmental Funds 232
1,207
Superior Court/Sheriff Construction Fund General Fund 624
Nonmajor Governmental Funds General Fund 965
Public Works Highway Fund 23
Superior Court/Sheriff Construction Fund 62
Nonmajor Governmental Funds 1,393
2,443
Long-Term Care Fund General Fund 211
Nonmajor Governmental Funds 190
401
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 44 -
Transfer From Transfer To Amount
Nonmajor Enterprise Funds General Fund 29
Total $ 6,021
The principal purpose of interfund transfers was to provide funds to cover debt service payments,
provide grant matches, provide subsidies to cover operating expenses, and to provide funds to pay
for capital outlay. All significant interfund transfers were routine and consistent with the activities of
the fund making the transfer.
Note 9 – Beginning Cash and Cash Equivalents Restated
The Long Term Care fund cash and cash equivalents balance at July 1, 2002, required adjustment to
correct the omission of restricted cash and cash equivalents on the Statement of Cash Flows.
Note 10 – Condensed Financial Statements of 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.
The County Treasurer’s investment pool is not registered with the Securities and Exchange
Commission as an investment company and there is no regulatory oversight of its operations. The
pool’s structure does not provide for shares and the County has not provided or obtained any legally
binding guarantees to support the value of the participants’ investments.
Details of each major investment classification follow.
Investment Type Principal
Interest
Rates Maturities
Fair
Value
Repurchase agreements $115,606 0.9 - 3.0% Daily $115,606
A condensed statement of the investment pool’s net assets and changes in net assets follows.
Statement of Net Assets
Assets $ 125,915
Liabilities 7
Net assets $ 125,908
Net assets held in trust for:
Internal participants
External participants
$ 45,689
80,219
Total net assets held in trust $ 125,908
PINAL COUNTY
Notes to the Financial Statements
June 30, 2003
(Amounts expressed in thousands)
- 45 -
Statement of Changes in Net Assets
Total additions $ 554,910
Total deductions 554,852
Net increase 58
Net assets held in trust:
July 1, 2002
125,850
June 30, 2003 $ 125,908
Note 11 – Related Party Transactions
Due to a lack of providers within Pinal County, the Pinal County Long-Term Care Health Plan (Plan)
contracts for services with other County operations. These operations providing medically-related
services include the Pinal County Horizon Home Care and Palm Villa Day Care, which provide adult
day health care. For the year ended June 30, 2003, the Division paid these operations $2,875 for
services and has claims payable to them of $369.
In addition to medical and medically-related services, the Plan contracts with Pinal County for certain
other services. During the year, the Plan paid the County $202 for rent, legal, finance, and other
administrative services. The Plan’s employees are employees of the County and are subject to all
rules and regulations of Pinal County. The Plan’s liability insurance is provided as part of the
County’s coverage.
Required Supplementary Information
Pinal County
Required Supplementary Information
Schedule of Agent Retirement Plans’ Funding Progress
June 30, 2003
(Amounts expressed in thousands)
- 47 -
Public Safety Personnel Retirement System
Actuarial
Valuation
Date
Actuarial
Value of
Plan
Assets
(a)
Actuarial
Accrued
Liability
(b)
Funding
(Liability)
Excess
(a-b)
Funded
Ratio
(a/b)
Annual
Covered
Payroll
(c)
Unfunded
Liability as
Percentage
of Covered
Payroll
([a-b]/c)
6/30/02 $ 22,226 $ 18,310 $ 3,916 121% $ 5,296 N/A
6/30/01 21,947 16,155 5,792 136% 4,687 N/A
6/30/00 20,336 15,573 4,763 131% 4,587 N/A
Corrections Officer Retirement Plan
Actuarial
Valuation
Date
Actuarial
Value of
Plan
Assets
(a)
Actuarial
Accrued
Liability
(b)
Funding
(Liability)
Excess
(a-b)
Funded
Ratio
(a/b)
Annual
Covered
Payroll
(c)
Unfunded
Liability as
Percentage
of Covered
Payroll
([a-b]/c)
Detention
Officers
6/30/02 $ - $ 2,985 $ (2,985) 0% $ 3,259 (92%)
6/30/01 N/A N/A N/A N/A N/A N/A
6/30/00 N/A N/A N/A N/A N/A N/A
Dispatchers
6/30/02 $ - $ 756 $ (756) 0% $ 399 (189%)
6/30/01 N/A N/A N/A N/A N/A N/A
6/30/00 N/A N/A N/A N/A N/A N/A
PINAL COUNTY
Required Supplementary Information
Budgetary Comparison Schedule
General Fund
Year Ended June 30, 2003
(Amounts expressed in thousands)
Variance with
Original and Final Budget-
Final Budgeted Actual Over
Amounts Amounts (Under)
Revenues
Taxes $ 43,600 $ 45,285 $ 1,685
Licenses and permits 2,817 4,293 1,476
Intergovernmental 18,989 20,549 1,560
Charges for services 6,063 7,700 1,637
Fines and forfeits 1,478 1,337 (141)
Investment income 328 223 (105)
Rental and miscellaneous 747 887 140
Total revenues 74,022 80,274 6,252
Expenditures
Current:
General government 34,079 35,982 (1,903)
Public safety 27,410 28,807 (1,397)
Sanitation 140 240 (100)
Health 14,013 13,981 32
Welfare 667 681 (14)
Culture and recreation 103 105 (2)
Total expenditures 76,412 79,796 (3,384)
Excess (deficiency) of revenues
over expenditures (2,390) 478 2,868
Other financing sources (uses):
Transfers in 2,262 2,804 542
Transfers out (580) (1,317) (737)
Proceeds from sale of capital assets 150 36 (114)
Total other financing sources (uses) 1,832 1,523 (309)
Net change in fund balances (558) 2,001 2,559
Fund balances, July 1, 2002 558 12,913 12,355
Fund balances, June 30, 2003 $ - $ 14,914 $ 14,914
- 48 -
The n