Comprehensive annual financial report / Maricopa County, Arizona

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Fiscal Year Ended June 30, 2002
Comprehensive Annual
Financial Report
Maricopa County, Arizona
www.maricopa.gov
Comprehensive Annual Financial Report
Maricopa County
Phoenix, Arizona
For the Fiscal Year
July 1, 2001 to June 30, 2002
Prepared By
Department of Finance
Tom Manos, Chief Financial Officer
INTRODUCTORY SECTION
Table of Contents
Listing of Maricopa County Officials
Organizational Charts
Letter of Transmittal
Certificate of Achievement for Excellence in Financial Reporting
Comprehensive Annual Financial Report
Table of Contents
For the Fiscal Year Ended June 30, 2002
i
Introductory Section
Page
Table of Contents i
Listing of Maricopa County Officials v
Organizational Charts vi
Letter of Transmittal viii
Certificate of Achievement for Excellence in Financial Reporting xi
Financial Section
Independent Auditors’ Report 1
Maricopa County Citizens Audit Advisory Committee Letter 3
Management’s Discussion and Analysis (MD&A) 4
Basic Financial Statements
Definitions of Government-wide Financial Statements and Listing of Major Funds 21
Government-wide Financial Statements
Statement of Net Assets 23
Statement of Activities 24
Fund Financial Statements
Governmental Funds Financial Statements
Balance Sheet 26
Statement of Revenues, Expenditures, and Changes in Fund Balances 28
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
Balances of Governmental Funds to the Statement of Activities 30
Proprietary Funds Financial Statements
Statement of Net Assets 32
Statement of Revenues, Expenses, and Changes in Fund Net Assets 34
Statement of Cash Flows 36
Fiduciary Funds Financial Statements
Statement of Fiduciary Net Assets 38
Statement of Changes in Fiduciary Net Assets 39
Basic Financial Statements - Notes 43
Required Supplementary Information
Budgetary Comparison Schedules – General Fund and Major Special Revenue Funds
General Fund 79
General Fund by Department 80
Transportation Fund – Special Revenue Fund 81
Flood Control Fund – Special Revenue Fund 82
Jail Operations Fund – Special Revenue Fund 83
Table of Contents (Continued)
For the Fiscal Year Ended June 30, 2002
ii
Page
Notes to Budgetary Comparison Schedules 84
Schedule of Agent Retirement Plans’ Funding Progress 85
Modified Approach for Infrastructure Assets 86
Other Supplementary Information
Budgetary Comparison Schedules - Major Debt Service and Capital Projects Funds
General Obligation Fund – Debt Service Fund 89
Lease Revenue Fund – Debt Service Fund 90
Jail Construction Fund – Capital Projects Fund 91
County Improvement Fund – Capital Projects Fund 92
Schedule of Capital Projects – Budget and Actual All Capital Improvement Projects 93
Combining and Individual Fund Statements and Schedules – Nonmajor Funds
Listing of Nonmajor Governmental Funds 99
Governmental Funds
Combining Balance Sheet 104
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 118
Schedules of Revenues, Expenditures, and Changes in Fund Balances – Budget
and Actual
Special Revenue Funds
Adult Probation Grants Fund 132
Adult Probation Services Fund 133
Animal Control Fund 134
Bank One Ballpark Operations Fund 135
CDBG Housing Trust Fund 136
Child Support Automation Fund 137
Child Support Enhancement Fund 138
Children’s Issues Education Fund 139
Clerk of Court EDMS Fund 140
Clerk of Court Grants Fund 141
Conciliation Court Special Fund 142
Correctional Health Grants Fund 143
County Attorney Grants Fund 144
County Attorney Special Fund 145
Court Automation Fund 146
Document Retrieval Fund 147
Domestic Relations Education Fund 148
Economic Development Fund 149
Emergency Management Fund 150
Environmental Services Fund 151
Expedited Child Support Fund 152
Table of Contents (Continued)
For the Fiscal Year Ended June 30, 2002
iii
Page
Special Revenue Funds (Continued)
Housing Department Fund 153
Human Services Grants Fund 154
Justice Court Enhancement Fund 155
Justice Court Grants Fund 156
Justice Court Judicial Enhancement Fund 157
Juvenile Court Grants Fund 158
Juvenile Probation Fund 159
Juvenile Restitution Fund 160
Law Library Fund 161
Library Fund 162
Old Courthouse Fund 163
Palo Verde Fund 164
Parks & Recreation Grants Fund 165
Parks Donations Fund 166
Parks Enhancement Fund 167
Parks Lake Pleasant Fund 168
Parks Souvenir Fund 169
Parks Spur Cross Ranch Fund 170
Planning and Development Fund 171
Planning Grants Fund 172
Probate Programs Fund 173
Public Defender Grants Fund 174
Public Defender Training Fund 175
Public Health Fund 176
Public Health Pharmacy Fund 177
Recorder’s Surcharge Fund 178
Research and Reporting Fund 179
RICO Fund 180
Sheriff Donations Fund 181
Sheriff Grants Fund 182
Sheriff Inmate Health Services Fund 183
Sheriff Special Funding Fund 184
Stadium District Fund 185
Superior Court Grants Fund 186
Superior Court Judicial Enhancement Fund 187
Superior Court Special Fund 188
Victim Location Fund 189
Waste Tire Program Fund 190
Debt Service Funds
Stadium District Fund 191
Capital Projects Funds
Bank One Ballpark Project Reserve Fund 192
Major League Stadium Fund 193
Nonmajor Enterprise Funds
Listing of Nonmajor Enterprise Funds 197
Combining Statement of Net Assets 198
Table of Contents (Continued)
For the Fiscal Year Ended June 30, 2002
iv
Page
Nonmajor Enterprise Funds (Continued)
Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets 199
Combining Statement of Cash Flows 200
Internal Service Funds
Listing of Internal Service Funds 203
Combining Statement of Net Assets 204
Combining Statement of Revenues, Expenses, and Changes in Net Assets 206
Combining Statement of Cash Flows 208
Trust and Agency Funds
Listing of Trust and Agency Funds 213
Combining Statement of Fiduciary Net Assets – Investment Trust Funds 214
Combining Statement of Fiduciary Net Assets – Agency Funds 215
Combining Statement of Changes in Fiduciary Net Assets – Investment Trust Funds 216
Combining Statement of Changes in Assets and Liabilities – Agency Funds 217
Capital Assets Schedules
Capital Assets Used in the Operation of Governmental Funds
Comparative Schedules by Source 221
Schedule by Function and Activity 222
Schedule of Changes by Function and Activity 224
Statistical Section
Listing of Statistical Information 227
v
Maricopa County Officials
BOARD OF SUPERVISORS
Don Stapley, Chairman, District 2
Fulton Brock, District 1
Andrew Kunasek, District 3
Max Wilson, District 4
Mary Rose Garrido Wilcox, District 5
♦♦♦
COUNTY ADMINISTRATIVE OFFICER
David R. Smith
♦♦♦
CHIEF FINANCIAL OFFICER
Tom Manos
Organizational Charts
vi
Board of Supervisors/Board of
Directors for Flood Control,
Library and Stadium Districts
Board of Supervisors/Board of
Directors for Flood Control,
Library and Stadium Districts
Superintendent of
Schools
Superintendent of
Schools CCoonnssttaabblleess ( (2233)) CCoouunntyty A Attttoorrnneeyy AAsssseessssoorr TTrereaasusurererr RReeccoorrddeerr
Clerk of the Board
Deputy County Administrator
S.T.A.R. Call Center Elections
Maricopa County Citizens
Legal Defender
Indigent Representation
Court Appointed Counsel
Public Defender Maricopa Integrated Health System
Deputy County
Administrator
Management & Budget
Human Resources
Organizational Planning
& Training
Research & Reporting
General Government
Health Care Mandates
Medical Eligibility
Chief Health Services
Officer
Chief Public Works
Officer
Finance
Risk Management
Materials Management
Recreation Services
Library District
Public Fiduciary
Planning & Development
Community
Development
Public Health
Human Services
Medical Examiner
Correctional Health
Animal Control Services
Transportation
Flood Control District
Emergency
Management
Facilities Management
Equipment Services
Office of the C.I.O
Telecommunications
Criminal Justice Facilities
Elected/Court
Officials
Elected/Court
Officials Appointed
Housing
County Administrative Officer
Internal Audit
Chief Information
Officer
Chief Community
Services Officer
Chief Financial
Officer
Legal Advocacy Integrated Criminal Justice
Information Systems
SShheerirfifff CClleerrkk o off C Coouurrtt
Organizational Charts (Continued)
vii
Arizona Judicial Branch in Maricopa County
TTrriaial lC Coouurrtst,s ,M Maarricicooppaa C Coouunntyty
JJuuvveenniliele C Coouurrtt
CClelerrkk o of ft hthee S Suuppeerrioiorr C Coouurrtt
Superior Court Judges and
Commissioners
Superior Court Judges and
Commissioners
Juvenile Court Center Adult Probation Superior Court
Administration
Justice Court
Administration
MMaarricicooppaa C Coouunntyty J Juustsitcicee C Coouurrtsts
Maricopa County
County Administrative Office
viii
301 West Jefferson Street
10th Floor
Phoenix, AZ 85003-2143
Phone: 602-506-3571
Fax: 602-506-6338
www.maricopa.gov January 21, 2003
The Honorable Board of Supervisors
Maricopa County
County Administration Building
301 W. Jefferson Street
Phoenix, AZ 85003
It is our pleasure to submit to you the Comprehensive Annual Financial Report of
Maricopa County for the year ended June 30, 2002. This report has been prepared in
conformity with generally accepted accounting principles (GAAP) as prescribed in
pronouncements of the Governmental Accounting Standards Board (GASB).
Responsibility for both the accuracy of the data and the completeness and fairness of
the presentation, including all disclosures, rests with the management of Maricopa
County. We believe the data, as presented, is accurate in all material aspects and
shown in a manner designed to present fairly the financial position and results of
operations.
With these statements, the County is implementing the requirements of Governmental
Accounting Standards Board (GASB) Statement 34, as required. This statement
represents a dramatic change in governmental financial reporting. The format and
purpose of these changes are addressed in the Management’s Discussion and
Analysis, which can be found immediately following the Independent Auditors’ Report.
We trust you will find this new presentation helpful in understanding the financial status
of Maricopa County.
Internal Controls
The management of Maricopa County is responsible for establishing and maintaining a
system of internal control. Internal accounting controls are designed to provide
reasonable, but not absolute assurance regarding: 1) the safeguarding of assets against
loss from unauthorized use or disposition; and 2) the reliability of financial records for
preparing financial statements and maintaining accountability for assets. 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 evaluation of costs and benefits requires
estimates and judgments by management.
All internal control evaluations occur within the above framework. We believe that
Maricopa County’s accounting controls adequately safeguard assets and provide
reasonable assurance that financial transactions are properly recorded.
ix
Independent Audit
State law requires the State Auditor General to conduct financial audits of the accounts and records
of County and State agencies. The examination is conducted in accordance with generally accepted
governmental auditing standards, and the Auditor’s Opinion is presented as the first component of
the financial section of this report.
Single Audit
Maricopa County receives both federal and state financial assistance and is responsible for ensuring
that an adequate internal control structure is in place to ensure compliance with applicable laws and
regulations related to those programs. Management and the accounting staff periodically evaluate
this internal control structure. As part of the government’s single audit, tests are made to determine
the adequacy of the internal control structure, including that portion related to federal and state
financial assistance programs, and County compliance with applicable laws and regulations. The
Federal Single Audit Report is issued separately from this report.
Expenditure Limitation
On June 30, 1980, Arizona voters approved general propositions amending the Arizona Constitution
to establish expenditure and revenue limitations for local governments. The purpose of the
expenditure limitation is to control expenditures and to limit future increases in spending to
adjustments for inflation, deflation and population growth of the County. The Constitution also limits
the amount of revenues that may be generated from property taxes. A two-percent plus new
construction annual increase is the maximum allowed by law unless special voter approval is
obtained.
The Reporting Entity
The financial reporting entity includes all the funds of the primary government (Maricopa County), as
well as its component units. Component units are legally separate entities for which the primary
government is financially accountable. Blended component units, although legally separate entities,
are, in substance, part of the primary government’s operations and are included as part of the
primary government. Accordingly, the Maricopa County Flood Control District, Stadium District,
Library District and various improvement districts are reported as part of the governmental fund
types of the primary government.
There are various school districts, irrigation districts, and fire districts within Maricopa County
governed by independently elected boards. The financial statements of such districts are not
included in this report except to reflect amounts held in an agency capacity by the County Treasurer.
The reporting entity is further described in the Notes to the Financial Statements. (Note 1 - Summary
of Significant Accounting Policies)
Cash Management and Investment
The Maricopa County Treasurer is responsible for investing cash from the county, schools, and
special districts. The Arizona Revised Statutes for investment of public monies provides guidance to
the Treasurer. The investment practice is to minimize credit and market risks while maintaining a
competitive yield on its portfolio. The effective annual yield on investments for fiscal year 2002 was
4.35%. Interest earned by County funds is apportioned quarterly based on the average daily cash
balance.
x
Risk Management
The County is exposed to various risks of loss related to general and auto liability, property, aviation
liability, medical malpractice, and workers compensation. The County is self-insured for the first
$2,000,000 per occurrence of general and auto liability, $2,000,000 per occurrence of medical
malpractice, and $1,000,000 per occurrence of workers compensation. Coverage in excess of these
respective amounts is provided through the purchase of commercial insurance. The County has not
had any claims that have exceeded the commercial coverage in the last three years. Maricopa
County has a safety program that promotes employee safety on the job and focuses on risk control
techniques designed to minimize accident-related losses. In addition to the safety program’s
preventative measures, the Risk Management Department investigates every claim and arbitrates
each loss in order to minimize the County’s liability exposure.
Awards
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to Maricopa County, Arizona for its
comprehensive annual financial report for the fiscal year ended June 30, 2001. This was the
thirteenth 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 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.
Acknowledgment
The preparation of this report could not be accomplished without the efficient and dedicated services
of the Department of Finance staff, the assistance of administrative personnel in the various
departments, and the competent service of the State Auditor General’s Office. We appreciate all of
those who assisted in and contributed to the preparation of this report. We also wish to express our
sincere appreciation to the Board of Supervisors for their support in planning and overseeing the
financial operations of the County in a responsible and progressive manner.
Respectfully submitted,
David R. Smith Tom Manos
County Administrative Officer Chief Financial Officer
xi
xii
FINANCIAL SECTION
Independent Auditors’ Report
Citizens Audit Advisory Committee
Management’s Discussion and Analysis (MD&A)
Basic Financial Statements
Basic Financial Statements - Notes
Required Supplementary Information
Budgetary Comparison Schedules – General Fund and Major
Special Revenue Funds
Notes to Budgetary Comparison Schedules
Schedule of Agent Retirement Plans’ Funding Progress
Modified Approach for Infrastructure Assets
Other Supplementary Information
Budgetary Comparison Schedules – Major Debt Service and
Capital Projects Funds
Combining and Individual Fund Statements and Schedules
Nonmajor Governmental Funds
Nonmajor Enterprise Funds
Internal Service Funds
Trust and Agency Funds
Capital Assets Schedules
Maricopa County
Management’s Discussion and Analysis
4
This discussion and analysis is intended to be an easily readable analysis of Maricopa County’s (County)
financial activities based on currently known facts, decisions or conditions. This analysis focuses on
current year activities and should be read in conjunction with the Transmittal Letter that begins on Page
viii and with the County’s basic financial statements following this section.
Financial Highlights
• At June 30, 2002, the assets of the County (primary government) exceeded liabilities by
$1,930,834,143 (net assets). Of this amount, $214,823,899 (unrestricted net assets) may be used to
meet ongoing obligations to citizens and creditors, $375,721,923 is restricted for specific purposes
(restricted net assets), and $1,340,288,321 is invested in capital assets, net of related debt.
• The County’s total net assets as reported in the Statement of Activities increased by $300,097,722.
Of this amount, $294,021,377 is attributable to governmental activities and $6,076,345 is attributable
to business-type activities.
• At June 30, 2002, the governmental funds reported combined fund balances of $673,536,272 (as
restated), or an increase in fund balance of $16,188,563 in comparison with the prior year.
Approximately 96% of the combined fund balances or $644,937,689 are available to meet the
County’s current and future needs (unreserved fund balance).
• The net assets for the proprietary funds (business-type activities) as of June 30, 2002, increased by
$6,076,345. However, the proprietary funds, which mainly consist of the Maricopa County Integrated
Health System (Medical Center, Maricopa Health Plan, ALTCS, and Non-AHCCCS), showed a loss
before transfers of over $19.6 million. The increase in net assets is attributable to the net transfers of
more than $25.7 million.
• At June 30, 2002, unreserved fund balance for the General Fund was $249,039,062, approximately
46% of total General Fund expenditures. In accordance with Arizona Revised Statutes (A.R.S.), this
entire amount is budgeted to be spent in the next fiscal year. A.R.S. 42-17151 requires that total
estimated sources of revenue must equal the total estimated expenditures in the budget for the
current fiscal year. The estimated expenditures may include an amount for unanticipated
contingencies or emergencies, per A.R.S. 42-17102.
• At June 30, 2002, the County’s total long-term debt related to governmental activities for bonds,
loans, and other payables was $445,435,800. General obligation bonds, lease revenue bonds and
Stadium District revenue bonds represent 50% of the governmental activities long-term debt. The
final payments on the general obligation bonds, lease revenue bonds and Stadium District revenue
bonds are due in fiscal years 2005, 2016, and 2019, 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 comprise 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. In addition,
the comprehensive annual financial report includes the budget and actual schedules for the major Debt
Service and Capital Projects Funds beginning on page 89. The Combining and Individual Fund
Statements and Schedules – Nonmajor Funds begin on page 104.
Government-wide Financial Statements are designed to provide readers with a broad overview of the
County finances, in a manner similar to private-sector businesses.
Maricopa County
Management’s Discussion and Analysis
5
• 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 in part a portion of their costs through user fees and charges
(business-type activities). The governmental activities of the County include general government; public
safety; highways and streets; health, welfare and sanitation; culture and recreation; education; and
interest on long-term debt. The business-type activities of the County include the Medical Center,
Arizona Health Care Cost Containment System (AHCCCS) Plan, Arizona Long-Term Care System
(ALTCS) Plan, and other business-type activities (Non-AHCCCS Health Plans and Solid Waste).
Component units are included in our basic financial statements and consist of legally separate entities for
which the County is financially accountable and that have substantially the same board as the County or
provide services entirely to the County. The blended component units included are the Maricopa County
Flood Control District, Maricopa County Library District, Maricopa County Public Finance Corporation,
Maricopa County Special Assessment Districts, Maricopa County Stadium District, and the Maricopa
County Street Lighting Districts. The County has no discretely presented component units.
The Government-wide Financial Statements can be found on pages 23-25 of this report.
Fund Financial Statements 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. Governmental funds include the general, special revenue, debt service,
and capital projects funds.
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 provide a reconciliation to
facilitate this comparison between governmental funds and governmental activities.
Maricopa County
Management’s Discussion and Analysis
6
The County reports eight major 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, Transportation, Flood Control, Jail
Operations, General Obligation, Lease Revenue, Jail Construction and County Improvement funds.
Data from the other governmental funds (nonmajor) 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, which begin on page 104 of this report.
The governmental funds financial statements can be found on pages 26-30 of this report.
• Proprietary funds are maintained two ways. Enterprise funds are used to report the same functions
presented as business-type activities in the government-wide financial statement. The County uses
enterprise funds to account for the Medical Center, Maricopa Health Plan, Arizona Long-Term Care
System (ALTCS), and the Non-AHCCCS Health Plans – these four components comprise the
Maricopa Integrated Health System - and Solid Waste operations. Internal service funds are an
accounting device used to accumulate and allocate costs internally among the County’s various
functions. The County uses internal service funds to account for its equipment services,
telecommunications, reprographics, risk management, employee benefits trust and sheriff warehouse
functions. Because these services predominantly benefit governmental rather than business-type
functions, they have been included within governmental activities in the government-wide financial
statements.
Fund financial statements for the proprietary funds provide the same type of information as the
government-wide financial statements, only in more detail. The Medical Center, Maricopa Health
Plan and Arizona Long-Term Care System (ALTCS) operations are considered to be major funds of
the County. Data from the other enterprise funds are combined into a single, aggregated
presentation. The County’s internal service funds are combined into a single, aggregated
presentation in the proprietary funds financial statements. Individual fund data for each of these
nonmajor enterprise and internal service funds is provided in the form of combining statements,
which begin on page 198 of this report.
The proprietary funds financial statements can be found on pages 32-37 of this report.
• 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 funds financial statements can be found on pages 38-39 of this report.
Notes to the 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 44-76 of this report.
Required Supplementary Information is presented concerning the County’s General Fund,
Transportation, Flood Control and Jail Operations funds. A budgetary comparison schedule has been
provided for each of these funds to demonstrate compliance with budget and additional information is
provided by the Notes to Budgetary Comparison Schedules. Also presented is the schedule of funding
progress for the County’s two agent retirement plans and infrastructure assets reported using the
modified approach. Required supplementary information can be found on pages 79-86 of this report.
Maricopa County
Management’s Discussion and Analysis
7
Other Supplementary Information follows the Required Supplementary Information. Budgetary
comparison schedules for the major Debt Service and Capital Projects Funds begin on page 89 of this
report. The combining and individual fund statements and schedules referred to earlier provide
information for nonmajor governmental funds and enterprise funds as well as the County’s internal
service funds, investment trust and agency funds. Combining and individual fund statements and
schedules for nonmajor funds begin on page 104 of this report.
Government-wide Financial Analysis
This year is the first fiscal year that the County applied Governmental Accounting Standards Board
(GASB) Statement No. 34. The County has not restated prior periods for purposes of providing the
comparative data for the Management’s Discussion and Analysis (MD&A) because certain prior-year
information is unavailable. However, in future years, when prior-year information is available, a
comparative analysis of government-wide data will be presented.
Net Assets
As noted earlier, net assets may serve over time as a useful indicator of a government’s financial
position. In the case of the County, at June 30, 2002, assets exceeded liabilities by $1,930,834,143.
By far the largest portion ($1,340,288,321 or 69%) of the County’s net assets reflects the investment in
capital assets (e.g. land, buildings, machinery and equipment, infrastructure and construction in
progress), less any related debt used to acquire those assets that is still outstanding. The County uses
these capital assets to provide services to its 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.
Statement of Net Assets
June 30, 2002
Governmental
Activities
Business-type
Activities Total
Current and other assets $ 877,153,552 $ 134,025,729 $ 1,011,179,281
Capital assets 1,528,821,391 116,608,599 1,645,429,990
Total assets 2,405,974,943 250,634,328 2,656,609,271
Current and other liabilities 224,763,575 88,334,147 313,097,722
Long-term liabilities 377,118,115 35,559,291 412,677,406
Total liabilities 601,881,690 123,893,438 725,775,128
Net assets
Invested in capital assets, net of related debt 1,259,210,540 81,077,781 1,340,288,321
Restricted net assets 321,969,019 53,752,904 375,721,923
Unrestricted net assets 222,913,694 (8,089,795) 214,823,899
Total net assets $ 1,804,093,253 $ 126,740,890 $ 1,930,834,143
From the County’s total net assets, $375,721,923 or approximately 20% represents resources that are
subject to external restrictions on how they may be used. The remaining balance of unrestricted net
assets ($214,823,899 or 11%) may be used to meet the government’s ongoing obligations to the citizens
and creditors.
Maricopa County
Management’s Discussion and Analysis
8
At the end of the current fiscal year, the County is able to report positive balances in all three categories
of net assets for the governmental activities. However, the business-type activities are reporting a deficit
in the unrestricted net assets category of $8,089,795. The majority of the net assets reported for the
business-type activities, $126,740,890, are either invested in capital assets, $81,077,781, or restricted
to meet the reserve requirements set forth by the Arizona Health Care Cost Containment System
(AHCCCS), the Arizona Long-Term Care System (ALTCS) and other debt related reserve restrictions,
$53,752,904. The main contributor to the deficit in the unrestricted net assets would be the Medical
Center, which has historically reported operating deficits due in part to providing services to the indigent.
The County continues its efforts to address the vision and strategic goals of the Medical Center
operations as well as the Maricopa Integrated Health System as a whole.
The County’s total net assets of $1,930,834,143 increased by $300,097,722 as reported in the Statement
of Activities below. Of this amount, $294,021,377 is attributable to governmental activities, and
$6,076,345 is related to business-type activities. The increase in total net assets for governmental
activities resulted primarily from an increase in net capital assets due to significant capital projects during
the current fiscal year. The net assets invested in capital assets balance increases as a result of capital
expenditures and decreases as capital assets are depreciated over their useful lives.
Changes in Net Assets
The following table indicates the changes in net assets for governmental and business-type activities:
Statement of Activities
For the Year Ended June 30, 2002
Governmental
Activities
Business-type
Activities Total
Revenues:
Program revenues:
Charges for services $ 141,930,301 $ 708,608,852 $ 850,539,153
Operating grants and contributions 202,885,094 6,272,958 209,158,052
Capital grants and contributions 2,712,908 2,712,908
General revenues:
Property taxes 344,469,999 344,469,999
Other taxes 613,714,621 613,714,621
Grants and contributions not restricted to specific programs 8,700,138 8,700,138
Unrestricted interest and investment earnings 29,404,833 6,359,401 35,764,234
Miscellaneous 10,627,773 1,972,145 12,599,918
Total Revenues 1,354,445,667 723,213,356 2,077,659,023
Expenses:
General government 124,501,063 124,501,063
Public safety 490,943,644 490,943,644
Highways and streets 52,464,778 52,464,778
Health, welfare and sanitation 304,220,867 304,220,867
Culture and recreation 25,453,164 25,453,164
Education 16,675,171 16,675,171
Interest on long-term debt 11,557,524 11,557,524
Medical Center 340,556,596 340,556,596
Arizona Health Care Cost Containment System (AHCCCS) Plan 93,168,287 93,168,287
Arizona Long Term Care System (ALTCS) Plan 241,654,207 241,654,207
Other business-type activities 67,406,686 67,406,686
Total Expenses 1,025,816,211 742,785,776 1,768,601,987
Excess (deficiency) before loss on disposal of
capital assets and transfers 328,629,456 (19,572,420) 309,057,036
Loss on assets (8,856,034) (103,280) (8,959,314)
Transfers (25,752,045) 25,752,045
Change in net assets 294,021,377 6,076,345 300,097,722
Net assets – beginning 1,510,071,876 120,664,545 1,630,736,421
Net assets – ending $ 1,804,093,253 $ 126,740,890 $ 1,930,834,143
Maricopa County
Management’s Discussion and Analysis
9
Governmental Activities
As stated earlier, the functions of the County that are principally supported by taxes and
intergovernmental revenues (governmental activities) include general government; public safety;
highways and streets; health, welfare and sanitation; culture and recreation; and education. The
County’s total net assets increased by $300,097,722 during the current fiscal year. Governmental
activities of the County contributed $294,021,377 or 98% to this increase. The majority of this increase is
attributable to an increase in net capital assets.
For the most part, revenues and expenses grew 5% to 10% in line with the budget which anticipated a
slower than normal economy. One of the main differences a reader will see between the governmental
funds reported in the fund financial statements and the Statement of Activities is that governmental funds
in the fund financial statements 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. Capital outlay expenditures exceeded depreciation expense in the current period
by $261,655,774. The increase in net assets in governmental activities of $294,021,377 was primarily
the result of reporting depreciation expense in the Statement of Activities.
Business-Type Activities
As discussed earlier, the business-type activities of the County include the Medical Center, Arizona
Health Care Cost Containment System (AHCCCS) Plan, Arizona Long-Term Care System (ALTCS) Plan,
the Non-AHCCCS Health Plans – these four components are the Maricopa Integrated Health System -
and Solid Waste. Business-type activities increased the County’s net assets by only $6,076,345,
accounting for 2% of the total growth in the County’s net assets. The change in net assets is a significant
indicator to the profitability of the County’s business-type activities. The Maricopa Integrated Health
System makes up 93% of the net assets of the business-type activities. As alluded to above, the
Maricopa Integrated Health System contributes only a small percent to the increase in net assets even
though it comprises approximately 35% and 42% of the County’s revenues and expenses, respectively.
The County continues its efforts to address the vision and strategic goals of the Medical Center
operations as well as the Maricopa Integrated Health System as a whole.
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. Governmental activities are contained in the general, special revenue, debt
service, and capital projects funds. 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.
As discussed earlier, as of June 30, 2002, the governmental funds reported combined fund balances of
$673,536,272, and an increase in fund balance of $16,188,563 in comparison with the prior year.
Approximately 96% of the combined fund balances or $644,937,689 is available to meet the County’s
current and future needs (unreserved fund balance). The remaining fund balance is reserved for
inventories, capital lease expenditures and debt service.
Maricopa County
Management’s Discussion and Analysis
10
The General Fund is the County’s primary operating fund. At the end of the current fiscal year,
unreserved fund balance of the General Fund was $249,039,062, while total fund balance reached
$254,122,264. As a measure of the General Fund’s liquidity, it may be useful to compare both
unreserved fund balance and total fund balance to the total fund expenditures. Unreserved fund balance
represents 45.6% of total General Fund expenditures, while total fund balance represents 46.5% of that
same amount. These ratios indicate a strong fund balance position in comparison to expenditures.
The following table presents the amount of governmental revenues from various sources as well as
increases or decreases from the prior year.
Revenues Classified by Source
Governmental Funds
(in millions)
FY 2000-01 FY 2001-02 Increase/(Decrease)
Revenues by Source Amount
Percent
of Total Amount
Percent
of Total Amount
Percent
of Total
Taxes $ 316.6 25% $ 343.0 25% $ 26.4 41%
Licenses and permits 23.7 2 26.1 2 2.4 4
Intergovernmental 803.7 62 831.6 62 27.9 43
Charges for services 65.8 5 68.8 5 3.0 5
Fines and forfeits 14.9 1 15.8 1 .9 1
Miscellaneous 65.7 5 69.9 5 4.2 6
Totals $ 1,290.4 100% $ 1,355.2 100% $ 64.8 100%
During fiscal year 2002, the County experienced an increase in governmental revenues from the previous
year of $64.8 million, a 5% increase. This increase is very close to the increase experienced in fiscal
year 2001 of 5.1%. The main sources of this increase are taxes and intergovernmental revenue. The
following narrative will provide information regarding the year to year change for these two revenue
sources.
Taxes
Assessed Valuations:
The primary valuation in fiscal year 2002 increased by 10.3% to $21.4 billion and the secondary
valuation increased by 9.7% to $22.9 billion when compared to the previous year. The
secondary valuation is a more accurate indicator of market conditions since increases in the
primary valuation are controlled by State statute. The increase in fiscal year 2002 of 9.7% is less
than the increase in fiscal year 2001 of 11.8%, which reflects the current slowing in the economy.
Property Tax Collections:
Current tax collections were 96.6% of the levy, down 0.3% from the previous year. Total property
tax collections were $323.1 million, approximately $24.4 million more than the previous year, due
to an increase of $25.1 million in the levy. Historically, collections against the year’s levy have
been approximately 96.7%, based on the last 10 years. The balance of the tax revenue source is
comprised of in-lieu taxes, penalties, and interest on past due taxes. In-lieu taxes include the
Salt River Project contributions and in-lieu taxes from various governmental entities. In-lieu taxes
increased $1.7 million from the previous year to $9.5 million. Penalties and interest remained the
same from the previous year at $9.9 million.
Maricopa County
Management’s Discussion and Analysis
11
Intergovernmental
Major items included in intergovernmental revenue during fiscal year 2002 are Sales Tax ($325.7
million), Jail Tax ($98.2 million), Vehicle License Tax ($106.1 million), Highway User Fuel Tax ($78.3
million), and Federal and State grants. The major items causing the increase in intergovernmental
revenues ($27.9 million), are increases of about $18.5 million in Federal and State Grants and other
miscellaneous intergovernmental revenue, plus an increase of about $6.1 and $3.3 million in Vehicle
License Tax and Sales Tax, respectively.
Sales Tax:
The State collects transaction privilege taxes (Sales Tax) on nearly 20 types of business
activities. A portion of each of these taxes is allocated to a pool for distribution to cities, counties
and the State. Of this pool, 40.51% is allocated to Arizona counties. This allocation is based on
a statutory formula that utilizes a county's population, assessed value and location of actual sales
tax receipts compared to the total of all of these for all counties. Sales Tax of $325,728,202
increased $3,298,609 or 1% over the previous year. This is a significant drop from the prior year
increase of 4%.
Jail Tax:
The County assesses a 0.2% Jail Tax on all transactions subject to the State transaction privilege
tax to fund the construction and operation of adult and juvenile detention facilities. This tax
became effective January 1, 1999. Total collections of Jail Tax of $98,177,716 increased only
$425,341 from the prior fiscal year, or 0.4%.
Vehicle License Tax:
The State assesses Vehicle License Tax annually on all vehicles and distributes the tax to the
cities and towns based upon relative population. The County General Fund receives the
proceeds from the tax. In addition, the Transportation Fund receives a small portion of Vehicle
License Tax directly from the State. Combined General Fund and Transportation Fund Vehicle
License Tax of $106,115,829 increased $6,096,375 or 6% over the previous fiscal year. This tax
held strong for the County as this increase was 0.2% greater than the prior year’s increase.
Highway User Fuel Tax:
The State levies a gas tax (Highway User Fuel Tax) on motor fuel sold within the State. The
primary purpose of the gas tax is to fund the construction and maintenance of streets and
highways. Of the gas tax revenues collected, 19% is allocated to counties based upon State
statute. Highway User Fuel Tax of $78,285,210 increased $41,941 from the prior fiscal year.
The following table presents governmental expenditures by function compared to prior year amounts.
Expenditures by Function
Governmental Funds
FY 2000-01 FY 2001-02 Increase/(Decrease)
Expenditures by Function
Amount
(millions)
Percent
of Total
Amount
(millions)
Percent
of Total
Amount
(millions)
Percent
of Total
General government $ 101.7 8% $ 99.3 8% $ (2.4) (2)%
Public safety 459.5 38 481.8 36 22.3 19
Highways and streets 59.8 5 55.2 4 (4.6) (4)
Health, welfare and sanitation 295.2 25 311.5 24 16.3 14
Culture and recreation 16.3 1 17.6 1 1.3 1
Education 16.5 1 16.6 1 .1 0
Capital outlay 229.7 19 294.0 22 64.3 55
Debt service 31.8 3 51.1 4 19.3 17
Totals $ 1,210.5 100% $ 1,327.1 100% $ 116.6 100%
Maricopa County
Management’s Discussion and Analysis
12
Expenditures for governmental fund types for fiscal year 2002 increased by $116.6 million or 9.6% from
the prior year. The percentage increase in expenditures during fiscal year 2001 was almost 1% higher.
The increase in fiscal year 2002 is primarily attributed to capital outlay. The following narrative will
provide information regarding the year to year change for the significant expenditure functions that
experienced an increase from the prior year.
Public Safety
The major areas in Public Safety ($481.8 million) include the Jail Operations Fund ($120.6 million),
the Court System ($101.8 million), the County Attorney’s Office ($50.2 million), the Sheriff’s Office
($48.4 million), Indigent Representation ($42.3 million) and Probation Services ($63.2 million).
The major areas of increase in Public Safety expenditures ($22.3 million) during fiscal year 2002,
were predominately related to Jail Operations ($6.5 million), Court System ($6.1 million) and Indigent
Representation ($9.2 million). The remaining increase in Public Safety expenditures related to other
various departments.
Health, Welfare and Sanitation
Expenditures in Health, Welfare and Sanitation increased by $16.3 million from the prior year or
5.5%. The increase occurred primarily in the Health Care Mandates expenditures, with an offset in
the Medical Assistance Program. The increase is attributable to state-mandated increases in our
ALTCS, AHCCCS and restoration to competency shared revenue withholdings. The decrease in the
Medical Assistance Program is the result of Proposition 204, which transferred this program to the
State of Arizona effective October 1, 2001.
Capital Outlay
Capital Outlay increased $64.3 million to $294 million during fiscal year 2002. The most significant
increase occurred in the Jail Construction Fund (in excess of $103.8 million), due to the costs related
to the new juvenile and adult detention facilities. However, there was a decrease in general capital
spending for the county due to management’s strategic planning and the impact of the unstable
economic condition. The spending increase for jail construction was partially offset by reductions in
spending in other funds including the County Improvement Fund ($13.9 million), and the Flood
Control and Transportation funds ($28 million).
Debt Service
The increase of $19.3 million in Debt Service expenditures compared to the previous fiscal year is
primarily due to the debt service due on the Lease Revenue Bonds, Series 2001. See Long-Term
Debt discussion on page 15 for further information.
Proprietary funds. The County’s proprietary funds provide the same information found in the
government-wide financial statements, but in more detail.
The following table shows actual revenues, expenses and results of operations for the current fiscal year
for proprietary funds.
Maricopa County
Management’s Discussion and Analysis
13
Statement of Revenues, Expenses and Changes in Fund Net Assets
Proprietary Funds
Medical Center Other Major Funds Nonmajor Funds Total
Operating revenues $ 293,833,568 $ 352,448,361 $ 64,299,068 $ 710,580,997
Operating expenses 335,428,872 334,822,494 67,392,550 737,643,916
Operating income (loss) (41,595,304) 17,625,867 (3,093,482) (27,062,919)
Nonoperating revenues (expenses), net 71,320 5,079,079 2,236,820 7,387,219
Income (loss) before transfers (41,523,984) 22,704,946 (856,662) (19,675,700)
Transfers, net 65,275,502 (44,013,094) 4,489,637 25,752,045
Change in net assets $ 23,751,518 $ (21,308,148) $ 3,632,975 $ 6,076,345
The net assets for the proprietary funds (business type activities) as of June 30, 2002, increased by
$6,076,345. However, total unrestricted net assets for the proprietary funds totaled a deficit of
$8,089,795. The majority of this deficit is attributable to the Medical Center deficit unrestricted net assets
of $15,827,761 which is offset by the Solid Waste unrestricted net assets balance.
The net loss before transfers for the proprietary funds of $19,675,700 resulted primarily from a net loss of
$41,523,984 from the Medical Center, which is offset in part by the income in the other Major Funds of
$22,704,946. The loss before transfers in the Medical Center more than doubled from the prior fiscal
year. The Medical Center received transfers from the General Fund of over $66 million. Of these
transfers over $39 million were funded through the Maricopa Integrated Health System (AHCCCS and
ALTCS). Some of the factors that impact the Medical Center’s operations are the costs of
pharmaceuticals, medical supplies and equipment that continue to rise and the challenge of providing
services to the indigent.
Major Funds (General and Special Revenue Funds) Budgetary Highlights
The difference between the original budget and the final amended budget for the General Fund resulted
in a $5 million decrease of revenues and a $27 million increase in expenditures. The increase in
expenditures were primarily from a reduction in general government departments of $9.8 million, and an
increase in public safety departments of $5.3 million, and a $31.3 million increase in health, welfare and
sanitation departments. The remaining $.2 million is from culture and recreation and education
departments.
The Transportation Fund had no changes from its original budget. Even though actual revenues and
expenditures were below budget (22% and 12%, respectively), Transportation reported an ending fund
balance in line with the budget. This was due to the fact that the actual beginning fund balance at July 1,
2001, exceeded the budgeted beginning fund balance offset by the difference between actual and
budgeted revenues and expenditures of the current fiscal year.
The Flood Control District had minor budget adjustments to expenditures from its original budget. Actual
revenues were below budget by about 7%, but expenditures were below by over 15%. Thus, ending fund
balance exceeded budget estimates.
The Jail Operations Fund had minor adjustments to expenditures and transfers in between the original
and final amended budget. The operations in the Jail Operations Fund are for the most part covered by a
transfer in of Maintenance of Effort funds from the General Fund. So, when expenditures are increased,
there will also be an increase in transfers.
Maricopa County
Management’s Discussion and Analysis
14
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,
2002, amounted to $1,645,429,990 (net of accumulated depreciation). This investment in capital assets
includes land, buildings, infrastructure, machinery and equipment, and construction in progress. The total
increase in the County’s investment in capital assets for the current period was 17.4%.
The most significant impact on the increase in capital assets for the fiscal year ended June 30, 2002, was
the ongoing construction of the adult and juvenile detention facilities. This accounted for approximately
60% of the increase in capital assets.
Capital assets for the governmental and business-type activities are presented below (in millions) to
illustrate changes from the prior year:
Governmental activities Business-type activities Total
Increase/
(Decrease)
FY 2002
FY 2001
Restated FY 2002 FY 2001 FY 2002
FY 2001
Restated
Percent of
change
Land $ 177.4 $ 146.5 $ 2.9 $ 1.5 $ 180.3 $ 148.0 13%
Infrastructure 357.0 355.1 357.0 355.1 1
Buildings (net of accumulated
depreciation) 571.6 552.9 47.5 38.9 619.1 591.8
11
Machinery and equipment (net
of accumulated depreciation) 57.7 61.6 40.5 30.2 98.2 91.8
3
Construction in progress 365.1 181.2 25.7 33.3 390.8 214.5 72
Totals $ 1,528.8 $ 1,297.3 $ 116.6 $ 103.9 $ 1,645.4 $ 1,401.2 100%
The County reported infrastructure assets acquired during the fiscal year 2002 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. Infrastructure assets are reported in capital outlay expenditures within the
Transportation and the Flood Control funds. All current and prior years infrastructure assets of the
Transportation Fund are reported on the government-wide financial statements. For Flood Control, only
infrastructure assets acquired in fiscal year 2002 are reported. Infrastructure assets acquired prior to July
1, 2001, are reported at estimated historical cost. Infrastructure assets acquired during the current fiscal
year are reported at historical cost.
The Transportation Fund infrastructure assets consist of a roadway system and a bridge system. Both
systems are reported under the modified approach, which means the County will maintain the assets
using an asset management system and will document that the infrastructure assets are being preserved
at the established condition level.
The roadway system is measured using the Road Management System (RMS), which is based on the
weighted average of nine distress factors for the pavement surface. The RMS system uses a
measurement scale to evaluate the pavement condition rating ranging from 0 for a failed pavement to 100
for a pavement in perfect condition.
The County’s policy is to maintain at least 90% of the roadway system as very good to excellent. The
County measures the pavement condition assessments annually for arterial roads and every other year
for local roads. At June 30, 2002, 95% of the roadways were considered very good to excellent.
The bridge system is measured using the bridge inspection program, which follows Federal mandates
and regulations. A bridge sufficiency rating is determined using a weighted average based on an
assessment of the ability of individual bridge components to meet necessary performance requirements
on a condition scale from 0 to 100.
Maricopa County
Management’s Discussion and Analysis
15
The County’s policy is to maintain at least 90% of the bridges with a sufficiency rating of greater than or
equal to 70. The County measures the bridge’s sufficiency rating every two years. At June 30, 2002,
97% of the bridge system had a sufficiency rating greater than 70.
The Flood Control Fund accounts for the remaining infrastructure assets, which consists of drainage
systems, dams, flood channels and canals. No depreciation expense was reported for Flood Control for
the current fiscal year as all infrastructure assets were reported as construction in progress.
At June 30, 2002, the County’s infrastructure assets totaled $524,192,909 reported on the government-wide
financial statements as infrastructure - $357,036,458, construction in progress - $92,166,431 and
land - $74,990,020. Additional information regarding infrastructure assets can be found in the Notes to
the Financial Statements (Note 1 - Summary of Significant Accounting Policies and Note 10 - Capital
Assets), and in the Required Supplementary Information Modified Approach for Infrastructure Assets
page 86.
Long-Term Debt
At June 30, 2002, the County had total long-term debt outstanding of $538,655,287. The largest
components of debt consists of General Obligation Bonds $58,370,000, Lease Revenue Bonds
$124,855,000, Stadium District Revenue Bonds $58,225,000, claims and judgements payable
$133,353,486 and reported and incurred but not reported claims $92,697,476.
General obligation bonds are paid from the secondary property tax levy. At June 30, 2002, net general
obligation debt was $57,596,083 (0.25% of taxable property), while the 6 percent limit was
$1,374,788,069 and the 15 percent limit was $3,436,970,172.
On December 1, 2001, the County issued $20,165,000 (par value) in refunding general obligation bonds
to current refund term bonds with a par value of $20,000,000. The result of the refunding was an
economic gain of $708,166.
Lease revenue bonds applicable to governmental activities are paid from the Lease Revenue Fund (debt
service fund) that was funded in prior years by transfers from the General Fund and is predominately
unrestricted. At June 30, 2002, fund balance to pay future liabilities was $110,233,780. Proceeds from
the bonds are currently being used for capital projects.
Stadium District revenue bonds are paid from car rental surcharges per State statute. On June 5, 2002,
the Stadium District issued $58,225,000 (par value) in revenue refunding bonds. Proceeds in the amount
of $57,390,570 plus an additional $750,000 of Stadium District monies were used to redeem all
outstanding bonds and debt with governmental commitment. The bonds were issued at a premium of
$3,115,977.
Claims and judgements payables of $133,353,486 are estimated long-term liabilities for lawsuits and
claims pertaining to indigent health care and environmental hazards that are paid from the General Fund.
Reported and incurred but not reported claims applicable to governmental activities of $42,471,463 are
reported in the Risk Management and Employee Benefits Trust funds (internal service funds). The claims
are actuarial estimates for the County’s self-insured portion of future claims for general litigation related to
torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; natural
disasters; and certain health benefits that are paid through the operations of the funds. Reported and
incurred but not reported claims applicable to business-type activities of $50,226,013 are reported in the
Maricopa Health Plan, ALTCS, and Non-AHCCCS Health Plans funds (enterprise funds). The claims are
actuarial estimates for future claims that are paid through the operation of the funds.
Additional information regarding long-term liabilities can be found in the Notes to the Financial
Statements (Note 12 – Long-Term Liabilities and Note 15 – Risk Management).
Maricopa County
Management’s Discussion and Analysis
16
Economic Factors and Next Year’s Budget and Rates
• The post September 11, 2001, events continue to impact Maricopa County’s recessionary economy.
The major areas hit hardest by the recession include manufacturing, transportation, tourism,
construction and retail sales. Sales tax revenue decreased from the sustained market decline in the
technology sector, higher unemployment, the bottoming out of the stock markets, far fewer visitors to
the area, and a lack of consumer confidence. Unemployment reached 5% at year-end; the year
began at 3.7%.
• According to the Economic Outlook 2003, a publication by the University of Arizona, nearly 10,000
manufacturing jobs were lost Countywide since the beginning of the recession, in March 2001. Major
airlines, such as America West Airlines, have suffered significant revenue losses. Private industry
continues to suffer from unprecedented drops in corporate profits necessitating continued layoffs,
cost-control programs and deep reductions in capital spending. Businesses resort to slashing prices
in order to attract customers. These business decisions negatively impact profits.
• Substantial State budget cuts have been passed onto the County for budget year 2003 and more are
anticipated for 2004.
• A positive factor on the economic outlook is that Maricopa County is still one of the fastest growing
counties in the Nation with a population of over 3 million. It is the 4th most populous county in the
United States and is larger than 21 states. We continue to be the fastest growing, large County in the
United States. Our annual population growth is projected at 2.8%, and according to 2000 census
information, our County had 44.8% growth in the last decade. More than half of the state of Arizona’s
population resides in Maricopa County.
• When will the economy improve? The following is an excerpt from a December 2, 2002 news release
from the Western Blue Chip Economic Forecast.
While the U.S. economic recovery still seems fragile, Western states are likely to outperform the
nation when the recovery begins to hit its stride, according to an analysis in December’s Western
Blue Chip Economic Forecast. “Western economy-watchers project Nevada and Arizona will be
stronger in 2003, and Oregon will begin to create jobs again,” reported Lee McPheters, contributing
editor of the Western Blue Chip. “Washington will continue to be sub par, but all Western states will
return to positive growth.” Economic analysts in the West will be happy to see 2002 drawing to a
close, McPheters said. Last year at this time, the consensus was that 2002 would bring slow
economic growth with recovery in the second half of the year. “But now it appears the final figures for
key performance indicators such as unemployment, job growth, and personal income in 2002 will be
weaker than expected throughout the Western region. Analysts are looking to 2003 to bring a
reversal in job losses and rising unemployment rates.”
Even though the growth and demand for services is high and coupled with a considerably slowing
economy, continued fiscal discipline has allowed for the property rate to be held flat for the fiscal year
2003 budget, versus an undesirable increase in the tax rate. This is the first year in three budget years
that the property tax overall rate has not decreased in line with the Board of Supervisor’s County
Strategic Plan to reduce the overall property tax rate for Maricopa County property owners. For fiscal
year 2003, the tax rate will be held flat at $1.5448.
In addition, the financial position of the Medical Center continued to decline during fiscal year 2002 and it
is not expected to improve in the upcoming year. Subsidies from the General Fund for fiscal year 2003
are likely to recur.
Maricopa County
Management’s Discussion and Analysis
17
At the end of the fiscal year, unreserved fund balance for the General Fund was $249,039,062, or 46% of
total General Fund expenditures. Unreserved fund balance increased by more than 51%. In accordance
with Arizona Revised Statutes (A.R.S.), this entire amount is budgeted to be spent in the next fiscal year.
A.R.S. 42-17151 requires that total estimated sources of revenue must equal the total estimated
expenditures in the budget for the current fiscal year. The estimated expenditures may include an
amount for unanticipated contingencies or emergencies, per A.R.S. 42-17102.
Request for Information
This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors
with a general overview of the County’s finances and to demonstrate the County’s accountability for the
money it receives. If you have any questions about this report or need additional financial information,
please contact Maricopa County Department of Finance, 301 W. Jefferson, Suite 960, Phoenix, AZ
85003, or at www.maricopa.gov.
Financial Section
Basic Financial Statements
Maricopa County
Definitions of Government-wide Financial Statements and
Listing of Major Funds
21
Government-wide Financial Statements
The Statement of Net Assets presents information on all of Maricopa County’s assets and liabilities, with
the difference between the two reported as net assets.
The Statement of Activities presents information showing how the government’s net assets changed
during the most recent fiscal year. All changes in net assets are reported as soon as the underlying
event giving rise to the change occurs, regardless of the timing of related cash flows.
The above two statements are presented utilizing the following types of activities:
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.
Major Funds
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.
Special Revenue Funds
Transportation Fund – plans and implements an environmentally balanced multi-model transportation
system. Operations are funded through highway user taxes.
Flood Control Fund – provides flood control facilities and regulates floodplains and drainage to prevent
flooding of property and endangering the lives of people in Maricopa County. Operations are funded by a
secondary tax levy.
Jail Operations Fund – was established under the authority of propositions 400 and 401, which were
passed in the General Election of November 3, 1998. These propositions authorized a temporary 1/5
cent sales tax to be used for the construction and operation of adult and juvenile detention facilities.
Debt Service Funds
General Obligation Fund – accounts for debt service on all various purpose general obligation bonds.
Funding is provided by the County’s secondary property tax revenues, which may be used only for debt
service.
Lease Revenue Fund – accounts for the debt service on the Lease Revenue Bonds, Series 2001.
Funding is provided by transfers from the General Fund.
Capital Projects Funds
Jail Construction Fund – accounts for the proceeds associated with the temporary 1/5 of one-cent sales
tax approved by voters in the General Election on November 3, 1998. The proceeds are for the
construction and operation of adult and juvenile detention facilities. The voters approved the extension of
the 1/5 of one-cent sales tax in the General Election on November 5, 2002. The extension shall be levied
beginning in the month following the expiration of the previous tax as approved by the voters in 1998.
County Improvement Fund – accounts for capital projects funded through the issuance of the Lease
Revenue Bonds, Series 2001.
Maricopa County
Definitions of Government-wide Financial Statements and
Listing of Major Funds (Continued)
22
Enterprise Funds
Medical Center Fund – provides quality, cost competitive health care and health professional education
to assure the health security of individuals, families, and the community.
Maricopa Health Plan Fund – is an ambulatory health care plan operated by Maricopa Managed Care
Systems (MMCS). MMCS contracts with the Arizona Health Care Cost Containment System (AHCCCS)
which provides monthly capitation revenues based on Maricopa County Health Plan enrollment.
Arizona Long-Term Care System (ALTCS) Fund – is a managed care, long term care plan operated by
Maricopa Managed Care Systems (MMCS). Chronically ill and physically disabled patients receive
medical services as a result of an annual contract with the Arizona Health Care Cost Containment
System (AHCCCS).
Maricopa County
Statement of Net Assets
June 30, 2002
23
PRIMARY GOVERNMENT
GOVERNMENTAL BUSINESS-TYPE
ACTIVITIES ACTIVITIES TOTAL
ASSETS
Cash in bank and on hand $ 13,056,056 $ 1,275 $ 13,057,331
Cash and investments held by County Treasurer 583,944,411 105,072,063 689,016,474
Receivables (net of allowances for uncollectibles) 16,781,280 62,107,978 78,889,258
Internal balances 54,796,650 (54,796,650) 0
Due from other governmental units 146,309,982 1,897,909 148,207,891
Inventories 7,319,949 6,436,921 13,756,870
Prepaids 2,502,283 4,231,654 6,733,937
Deferred costs 4,632,046 4,632,046
Miscellaneous 1,545,145 770,789 2,315,934
Cash and investments held by trustee - restricted 46,265,750 8,303,790 54,569,540
Capital assets:
Land 177,378,461 2,909,679 180,288,140
Buildings 736,205,447 86,435,206 822,640,653
Machinery and equipment 158,398,268 99,374,324 257,772,592
Infrastructure 357,036,458 357,036,458
Construction in progress 365,055,919 25,650,364 390,706,283
(Accumulated depreciation) (265,253,162) (97,760,974) (363,014,136)
Total assets 2,405,974,943 250,634,328 2,656,609,271
LIABILITIES
Accounts payable and other current liabilities 72,815,049 22,469,499 95,284,548
Employee compensation payable 41,954,717 6,853,931 48,808,648
Accrued interest payable 4,832,721 575,473 5,408,194
Deferred revenue 17,527,440 17,527,440
Due to other governmental units 18,330,905 775,048 19,105,953
Deposits held for other parties 985,058 985,058
Noncurrent liabilities:
Due within one year 68,317,685 57,660,196 125,977,881
Due in more than one year 377,118,115 35,559,291 412,677,406
Total liabilities 601,881,690 123,893,438 725,775,128
NET ASSETS
Invested in capital assets, net of related debt 1,259,210,540 81,077,781 1,340,288,321
Restricted for:
General government 4,181,180 4,181,180
Public safety 86,900,666 86,900,666
Highways and streets 30,524,593 30,524,593
Health, welfare and sanitation 11,182,883 43,903,370 55,086,253
Culture and recreation 15,457,160 15,457,160
Education 245,330 245,330
Capital projects 144,878,624 4,709,201 149,587,825
Debt service 20,896,981 3,594,589 24,491,570
Other purposes 7,701,602 1,545,744 9,247,346
Unrestricted (deficit) 222,913,694 (8,089,795) 214,823,899
Total net assets $ 1,804,093,253 $ 126,740,890 $ 1,930,834,143
The notes to the financial statements are an integral part of this statement.
Maricopa County
Statement of Activities
For the Fiscal Year Ended June 30, 2002
24
Program Revenues
Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions
Functions/Programs
Primary government:
Governmental activities:
General government $ 124,501,063 $ 24,457,239 $ 2,734,152 $
Public safety 490,943,644 81,687,973 103,867,884
Highways and streets 52,464,778 1,451,293 24,038 2,712,908
Health, welfare and sanitation 304,220,867 22,917,356 85,969,620
Culture and recreation 25,453,164 8,358,894 160,263
Education 16,675,171 3,057,546 10,129,137
Interest on long-term debt 11,557,524
Total governmental activities 1,025,816,211 141,930,301 202,885,094 2,712,908
Business-type activities:
Medical Center 340,556,596 291,946,393 5,014,958
Arizona Health Care Cost Containment System (AHCCCS) Plan 93,168,287 100,104,747
Arizona Long-Term Care System (ALTCS) Plan 241,654,207 252,343,614
Other business-type activities 67,406,686 64,214,098 1,258,000
Total business-type activities 742,785,776 708,608,852 6,272,958
Total primary government $ 1,768,601,987 $ 850,539,153 $ 209,158,052 $ 2,712,908
General revenues:
Taxes:
Property taxes, levied for general purposes
Property taxes, levied for debt service
Share of state sales taxes
Sales tax – Highway user revenue fund
Sales tax – Jail construction and operation
Surcharge tax - Stadium District
Vehicle license tax
Grants and contributions not restricted to specific programs
Unrestricted investment earnings
Loss on disposal of capital assets
Miscellaneous
Transfers
Total general revenues and transfers
Change in net assets
Net assets, beginning, as restated
Net assets, ending
The notes to the financial statements are an integral part of this statement.
25
Net (Expense) Revenue and
Changes in Net Assets
Primary Government
Governmental Business-Type
Activities Activities Total
$ (97,309,672) $ $ (97,309,672)
(305,387,787) (305,387,787)
(48,276,539) (48,276,539)
(195,333,891) (195,333,891)
(16,934,007) (16,934,007)
(3,488,488) (3,488,488)
(11,557,524) (11,557,524)
(678,287,908) (678,287,908)
(43,595,245) (43,595,245)
6,936,460 6,936,460
10,689,407 10,689,407
(1,934,588) (1,934,588)
(27,903,966) (27,903,966)
(678,287,908) (27,903,966) (706,191,874)
324,219,284 324,219,284
20,250,715 20,250,715
325,728,202 325,728,202
78,285,210 78,285,210
98,177,716 98,177,716
5,407,664 5,407,664
106,115,829 106,115,829
8,700,138 8,700,138
29,404,833 6,359,401 35,764,234
(8,856,034) (103,280) (8,959,314)
10,627,773 1,972,145 12,599,918
(25,752,045) 25,752,045
972,309,285 33,980,311 1,006,289,596
294,021,377 6,076,345 300,097,722
1,510,071,876 120,664,545 1,630,736,421
$ 1,804,093,253 $ 126,740,890 $ 1,930,834,143
Maricopa County
Balance Sheet
Governmental Funds
June 30, 2002
26
TRANS- FLOOD JAIL
GENERAL PORTATION CONTROL OPERATIONS
ASSETS
Cash in bank and on hand $ 106,400 $ 1,800 $ 450 $
Cash and investments held by County Treasurer 134,889,907 22,472,899 17,545,026 10,771,552
Receivables 8,784,286 128,530 1,259,475 627,156
Due from other funds 62,078,143 110
Due from other governmental units 74,619,308 17,213,649 12,532,054 19,693,225
Inventories 3,088,425 529,128 98,432 263,675
Miscellaneous 379,715
Cash and investments held by trustee - restricted 5,644,842 112,672
Total assets $ 289,591,026 $ 40,346,116 $ 31,548,109 $ 31,355,608
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable $ 13,038,583 $ 7,382,876 $ 11,628,783 $ 2,517,294
Employee compensation payable 4,699,965 381,568 213,491 1,356,307
Accrued liabilities 874,436 294,903 580 1,980
Due to other funds 1,858,623 110 250,000
Due to other governmental units 9,342,751 3,391
Interest payable
Bonds payable
Special assessment debt with governmental commitment
Deferred revenue 5,654,404 247,990 782,155
Deposits held for other parties 985,058
Total liabilities 35,468,762 9,292,395 12,625,119 4,128,972
Fund balances:
Reserved for:
Inventories 3,088,425 529,128 98,432 263,675
Capital lease expenditures 1,994,777
Debt service
Unreserved, reported in:
General fund 249,039,062
Special revenue funds 30,524,593 18,824,558 26,962,961
Capital projects funds
Debt service funds
Total fund balances 254,122,264 31,053,721 18,922,990 27,226,636
Total liabilities and fund balances $ 289,591,026 $ 40,346,116 $ 31,548,109 $ 31,355,608
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.
Other assets are not available to pay for current period expenditures and therefore, are deferred in the funds.
Internal service funds are used by management to charge the costs of equipment services, telecommunications, reprographics, risk
management, employee benefits, and the sheriff warehouse to individual funds. The assets and liabilities of the internal service funds
are included in governmental activities in the Statement of Net Assets.
Some long-term liabilities and compensated absences are not due and payable shortly after June 30, 2002, therefore, are not reported in the funds.
Net assets of governmental activities
The notes to the financial statements are an integral part of this statement.
27
OTHER TOTAL
GOVERN- GOVERN-GENERAL
LEASE JAIL COUNTY MENTAL MENTAL
OBLIGATION REVENUE CONSTRUCTION IMPROVEMENT FUNDS FUNDS
$ $ $ $ $ 12,595,528 $ 12,704,178
21,074,114 96,506,401 99,416,687 57,142,193 90,980,188 550,798,967
628,100 541,372 317,840 1,316,977 13,603,736
2,765 62,081,018
22,251,746 146,309,982
1,727,165 5,706,825
1,165,486 1,545,201
28,621,115 11,887,121 46,265,750
$ 21,702,214 $ 125,668,888 $ 99,416,687 $ 57,460,033 $ 141,926,976 $ 839,015,657
$ $ $ 16,211,514 $ 2,154,282 $ 10,277,076 $ 63,210,408
13,370 2,234,034 8,898,735
1,212,465 2,384,364
3,619,585 5,728,318
8,984,763 18,330,905
1,635,534 2,638,864 56,449 4,330,847
18,855,000 12,796,244 31,651,244
55,956 55,956
437,763 22,781,238 29,903,550
985,058
20,928,297 15,435,108 16,224,884 2,154,282 49,221,566 165,479,385
1,727,165 5,706,825
1,994,777
773,917 12,889,507 7,233,557 20,896,981
249,039,062
76,896,774 153,208,886
83,191,803 55,305,751 6,847,914 145,345,468
97,344,273 97,344,273
773,917 110,233,780 83,191,803 55,305,751 92,705,410 673,536,272
$ 21,702,214 $ 125,668,888 $ 99,416,687 $ 57,460,033 $ 141,926,976
1,526,250,718
15,376,110
(11,507,860)
(399,561,987)
$ 1,804,093,253
Maricopa County
Statement of Revenues, Expenditures,
and Changes in Fund Balances
Governmental Funds
For the Fiscal Year Ended June 30, 2002
28
TRANS- FLOOD JAIL
GENERAL PORTATION CONTROL OPERATIONS
REVENUES
Taxes $ 268,320,391 $ $ 44,775,297 $
Licenses and permits 415,821 1,451,293 1,760,324
Intergovernmental 431,826,951 96,201,503 17,183,885 115,527,725
Charges for services 23,072,200 16,170
Fines and forfeits 12,886,925
Miscellaneous 16,382,542 3,919,394 9,962,424 5,350,778
Total revenues 752,904,830 101,572,190 73,681,930 120,894,673
EXPENDITURES
Current:
General government 95,104,978
Public safety 228,487,529 30,284,353 120,655,352
Highways and streets 55,240,772
Health, welfare and sanitation 197,887,228
Culture and recreation 1,589,168
Education 1,428,979
Debt service:
Principal
Interest
Other
Capital outlay 22,211,820 36,495,606 35,889,488 3,999,815
Total expenditures 546,709,702 91,736,378 66,173,841 124,655,167
Excess (deficiency) of revenues over expenditures 206,195,128 9,835,812 7,508,089 (3,760,494)
OTHER FINANCING SOURCES (USES)
Transfers in 40,606,186 101,186,962
Transfers out (168,270,894) (344,392) (84,726,011)
Capital lease agreements 9,843,870
Proceeds from bond issuance
Premium on refunding bonds
Payment to escrow agent
Total other financing sources (uses) (117,820,838) (344,392) 16,460,951
Net changes in fund balances 88,374,290 9,491,420 7,508,089 12,700,457
Fund balances (deficit) at beginning of year, as restated 164,951,389 21,592,123 11,413,501 14,456,478
Increase (decrease) in reserve for inventories 796,585 (29,822) 1,400 69,701
Fund balances at end of year $ 254,122,264 $ 31,053,721 $ 18,922,990 $ 27,226,636
The notes to the financial statements are an integral part of this statement.
29
OTHER TOTAL
GOVERN- GOVERN-GENERAL
LEASE JAIL COUNTY MENTAL MENTAL
OBLIGATION REVENUE CONSTRUCTION IMPROVEMENT FUNDS FUNDS
$ 20,250,715 $ $ $ $ 9,690,800 $ 343,037,203
22,478,873 26,106,311
170,928,037 831,668,101
45,682,016 68,770,386
2,889,174 15,776,099
536,705 5,363,800 2,540,022 25,823,652 69,879,317
20,787,420 5,363,800 2,540,022 277,492,552 1,355,237,417
4,160,487 99,265,465
102,415,889 481,843,123
55,240,772
113,623,704 311,510,932
16,062,396 17,651,564
15,131,284 16,560,263
18,855,000 12,796,244 7,966,893 39,618,137
2,800,552 5,717,538 1,753,537 10,271,627
64,594 1,114,508 1,179,102
154,960,736 25,651,703 14,801,603 294,010,771
21,720,146 18,513,782 154,960,736 25,651,703 277,030,301 1,327,151,756
(932,726) (13,149,982) (154,960,736) (23,111,681) 462,251 28,085,661
1,706,643 84,726,011 15,424,873 243,650,675
(16,061,423) (269,402,720)
9,843,870
20,165,000 58,285,670 78,450,670
425,280 3,115,977 3,541,257
(20,590,280) (57,390,570) (77,980,850)
1,706,643 84,726,011 3,374,527 (11,897,098)
773,917 (13,149,982) (70,234,725) (23,111,681) 3,836,778 16,188,563
123,383,762 153,426,528 78,417,432 87,348,992 654,990,205
1,519,640 2,357,504
$ 773,917 $ 110,233,780 $ 83,191,803 $ 55,305,751 $ 92,705,410 $ 673,536,272
Maricopa County
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmental Funds to the
Statement of Activities
For the Fiscal Year Ended June 30, 2002
30
Net change in fund balances – total governmental funds (page 29) $ 16,188,563
Amounts reported for governmental activities in the Statement of Activities
pages 24 – 25 are different because:
Governmental funds report capital outlays as expenditures. However, in the
Statement of Activities the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount by which
capital outlays exceeded depreciation in the current period. 261,655,774
The net effect of various miscellaneous transactions involving capital assets (i.e.,
sales, trade-ins, and donations) is to decrease net assets. (28,178,294)
Revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds. 9,722,831
The issuance of long-term debt (e.g., bonds, leases) provides current financial
resources to governmental funds, while the repayment of the principal of long-term
debt consumes the current financial resources of governmental funds. Neither
transaction, however, has any effect on net assets. Also, governmental funds report
the effect of issuance costs, premiums, discounts, and similar items when debt is first
issued, whereas these amounts are deferred and amortized in the Statement of
Activities. This amount is the net effect of these differences in the treatment of long-term
debt and related items. 35,465,237
Some expenses reported in the Statement of Activities do not require the use of
current financial resources and, therefore, are not reported as expenditures in
governmental funds. (220,479)
Internal service funds are used by management to charge the costs of equipment
services, telecommunications, reprographics, risk management, employee benefits,
and the sheriff warehouse to individual funds. The net revenue of internal service
funds is reported with governmental activities. (612,255)
Change in net assets of governmental activities (page 25) $ 294,021,377
The notes to the financial statements are an integral part of this statement.
Maricopa County
Statement of Net Assets
Proprietary Funds
June 30, 2002
32
BUSINESS-TYPE ACTIVITIES -
ENTERPRISE FUNDS
MEDICAL MARICOPA
CENTER HEALTH PLAN ALTCS
ASSETS
Current assets:
Cash in bank and on hand $ $ $
Cash and investments held by County Treasurer 21,875,613 57,160,434
Receivables:
Accounts (net of allowance) 50,226,660 6,733,151 3,765,459
Accrued interest 87,446 620,326
Due from other funds 2,108,623
Due from other governmental units 1,897,909
Inventories 6,436,921
Prepaids 3,164,533 1,067,121
Miscellaneous 766,845
Total current assets 64,601,491 29,763,331 61,546,219
Noncurrent assets:
Restricted:
Cash and investments held by trustee 8,303,790
Capital assets:
Land 1,722,193
Buildings 86,371,644
Machinery and equipment 86,310,183 4,965,782 5,270,509
Construction in progress 25,650,364
Less accumulated depreciation (86,912,768) (4,958,243) (3,072,417)
Total noncurrent assets 121,445,406 7,539 2,198,092
Total assets 186,046,897 29,770,870 63,744,311
LIABILITIES
Current liabilities:
Vouchers payable 12,722,390 278,818 2,420,105
Employee compensation payable 6,841,186
Accrued liabilities 1,718,622 2,560,357 866,699
Interest payable 311,832
Due to other funds 56,905,273
Due to other governmental units 775,048
Accrued interest 263,641
Leases payable (current portion)
Installment purchase agreements (current portion) 436,342
Certificates of participation (current portion) 769,000
Lease revenue bonds payable (current portion) 2,513,756
Liability for reported and incurred but not reported claims (current portion) 14,139,373 27,140,828
Liability for closure and postclosure costs (current portion)
Total current liabilities 83,257,090 16,978,548 30,427,632
Noncurrent liabilities:
Leases payable
Installment purchase agreements 2,171,473
Certificates of participation 10,777,000
Lease revenue bonds payable 17,986,244
Liability for reported and incurred but not reported claims
Liability for postclosure costs
Total noncurrent liabilities 30,934,717
Total liabilities 114,191,807 16,978,548 30,427,632
NET ASSETS
Invested in capital assets, net of related debt 77,833,317 7,539 2,198,092
Restricted for debt service 3,594,589
Restricted for construction 4,709,201
Restricted for health care 12,784,783 31,118,587
Restricted for self-insurance
Restricted for other purposes 1,545,744
Unrestricted (deficit) (15,827,761)
Total net assets $ 71,855,090 $ 12,792,322 $ 33,316,679
The notes to the financial statements are an integral part of this statement.
33
GOVERNMENTAL
OTHER ACTIVITIES -
ENTERPRISE INTERNAL SERVICE
FUNDS TOTALS FUNDS
$ 1,275 $ 1,275 $ 351,878
26,036,016 105,072,063 33,145,444
444,287 61,169,557
230,649 938,421 187,856
2,108,623
1,897,909
6,436,921 1,613,124
4,231,654 2,502,283
3,944 770,789
26,716,171 182,627,212 37,800,585
8,303,790
1,187,486 2,909,679
63,562 86,435,206 323,649
2,827,850 99,374,324
25,650,364 5,952,864
(2,817,546) (97,760,974) (3,705,840)
1,261,352 124,912,389 2,570,673
27,977,523 307,539,601 40,371,258
1,470,070 16,891,383 6,993,559
12,745 6,853,931 524,300
432,438 5,578,116 234,936
311,832
56,905,273 1,556,050
775,048
263,641
34,172
436,342
59,151 828,151
2,513,756
8,945,812 50,226,013 12,243,524
3,655,934 3,655,934
14,576,150 145,239,420 21,586,541
64,638
2,171,473
163,368 10,940,368
17,986,244
30,227,939
4,461,206 4,461,206
4,624,574 35,559,291 30,292,577
19,200,724 180,798,711 51,879,118
1,038,833 81,077,781 2,471,863
3,594,589
4,709,201
43,903,370
(14,267,164)
1,545,744
7,737,966 (8,089,795) 287,441
$ 8,776,799 $ 126,740,890 $ (11,507,860)
Maricopa County
Statement of Revenues, Expenses, and Changes in
Fund Net Assets
Proprietary Funds
For the Fiscal Year Ended June 30, 2002
34
BUSINESS-TYPE ACTIVITIES -
ENTERPRISE FUNDS
MEDICAL MARICOPA
CENTER HEALTH PLAN ALTCS
OPERATING REVENUES
Net patient service revenue $ 274,814,011 $ $
Charges for services 17,132,382 100,104,747 252,343,614
Miscellaneous 1,887,175
Total operating revenues 293,833,568 100,104,747 252,343,614
OPERATING EXPENSES
Personal services 137,447,729 3,160,863 11,821,193
Supplies 43,690,978 427,083 948,351
Medical services 25,765,835 88,315,722 224,281,606
Other services 32,177,172 264,157 1,148,935
Legal
Insurance 68,157
Leases and rentals 2,197,884 86,680 746,193
Repairs and maintenance 3,921,775
Travel and transportation
Utilities 4,277,090
Provision for doubtful accounts 56,856,455
Indigent patient direct write-offs 16,301,482
Depreciation 10,541,914 13,773 99,966
Miscellaneous 2,182,401 900,009 2,607,963
Total operating expenses 335,428,872 93,168,287 241,654,207
Operating income (loss) (41,595,304) 6,936,460 10,689,407
NONOPERATING REVENUES (EXPENSES)
Grant revenues 5,014,958
Investment income 184,086 1,121,474 3,957,605
Interest expense (5,127,724)
Loss on disposal of capital assets
Total nonoperating revenues (expenses) 71,320 1,121,474 3,957,605
Income (loss) before contributions and transfers (41,523,984) 8,057,934 14,647,012
Capital contributions
Transfers in 66,217,416
Transfers out (941,914) (17,293,718) (26,719,376)
Change in net assets 23,751,518 (9,235,784) (12,072,364)
Total net assets (deficit) – beginning 48,103,572 22,028,106 45,389,043
Total net assets (deficit) – ending $ 71,855,090 $ 12,792,322 $ 33,316,679
The notes to the financial statements are an integral part of this statement.
35
GOVERNMENTAL
OTHER ACTIVITIES -
ENTERPRISE INTERNAL SERVICE
FUNDS TOTALS FUNDS
$ $ 274,814,011 $
64,214,098 433,794,841 50,767,198
84,970 1,972,145 1,054,325
64,299,068 710,580,997 51,821,523
3,041,014 155,470,799 6,610,401
433,778 45,500,190 8,137,936
62,133,147 400,496,310
310,601 33,900,865 3,083,934
4,564,323
587,201 655,358 18,660,467
142,639 3,173,396 1,774,765
3,921,775 2,554,487
666 666 81,979
14,893 4,291,983 5,469,687
56,856,455
16,301,482
141,981 10,797,634 716,394
586,630 6,277,003 20,295
67,392,550 737,643,916 51,674,668
(3,093,482) (27,062,919) 146,855
1,258,000 6,272,958 873,340
1,096,236 6,359,401 1,176,174
(14,136) (5,141,860) (93,003)
(103,280) (103,280) (309,729)
2,236,820 7,387,219 1,646,782
(856,662) (19,675,700) 1,793,637
260,110
4,737,499 70,954,915
(247,862) (45,202,870) (2,666,002)
3,632,975 6,076,345 (612,255)
5,143,824 120,664,545 (10,895,605)
$ 8,776,799 $ 126,740,890 $ (11,507,860)
Maricopa County
Statement of Cash Flows
Proprietary Funds
For the Fiscal Year Ended June 30, 2002
36
BUSINESS-TYPE ACTIVITIES -
ENTERPRISE FUNDS
MEDICAL MARICOPA
CENTER HEALTH PLAN ALTCS
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from contractors, patients and other payors $ 219,908,386 $ $
Charges for services 97,620,758 253,688,549
Other receipts
Payments for goods and services (115,185,800) (92,217,255) (237,582,520)
Payments for personal services (136,243,015) (3,160,863) (11,874,530)
Net cash provided (used) by operating activities (31,520,429) 2,242,640 4,231,499
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Advances from other funds 56,905,273
Grant receipts 5,304,728
Cash transfers from other funds 64,358,793
Cash transfers to other funds (941,914) (17,293,718) (41,751,082)
Interest payments (4,440,367)
Loan payments to County General Fund (76,228,477)
Net cash provided (used) by noncapital financing activities 44,958,036 (17,293,718) (41,751,082)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Purchase of capital assets (28,289,491) (1,168,961)
Capital lease payments (229,159)
Certificates of participation payments
Installment purchase contract payments (415,296)
Interest payments on long-term debt (1,145,187)
Proceeds from sale of capital assets
Net cash used by capital and related financing activities (30,079,133) (1,168,961)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest and dividends 184,086 1,524,929 4,942,689
Proceeds from the sale of investments
Net cash provided by investing activities 184,086 1,524,929 4,942,689
Net increase (decrease) in cash and cash equivalents (16,457,440) (13,526,149) (33,745,855)
Cash and cash equivalents, July 1, 2001 24,761,230 35,401,762 90,906,289
Cash and cash equivalents, June 30, 2002 $ 8,303,790 $ 21,875,613 $ 57,160,434
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED
(USED) BY OPERATING ACTIVITIES
Operating income (loss) (41,595,304) 6,936,460 10,689,407
Adjustments to reconcile operating income to net cash
provided (used) by operating activities
Depreciation expense 10,541,914 13,773 99,966
Provision for doubtful accounts 56,856,455
Indigent patient direct write-offs 16,301,482
Liability for reported and incurred but not reported claims – noncurrent
Liability for postclosure costs - noncurrent
Changes in assets and liabilities:
Accounts receivable (73,675,182) (1,036,625) 1,512,925
Due from other funds (250,000)
Due from other governmental units 299,773 39,764
Inventories (789,217)
Prepaids 858,887 (1,067,121)
Miscellaneous (766,845)
Vouchers payable 333,200 202,443 (1,269,921)
Employee compensation payable 1,204,714
Accrued liabilities (71,137) 1,112,993 (747,945)
Due to other governmental units (769,169) (271,368) (15,248)
Liability for reported and incurred but not reported claims – current (3,647,915) (6,077,449)
Liability for closure and postclosure costs - current
Net cash provided (used) for operating activities $ (31,520,429) $ 2,242,640 $ 4,231,499
SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES
Allowance for uncollectible accounts $ 50,167,887
Accounts receivable write-offs (50,167,887)
Buildings 12,033,695
Construction in progress completed (12,033,695)
Accumulated depreciation from disposed capital assets 233,544
Machinery and equipment disposed (233,544)
Loss on disposal of equipment
Building included in vouchers payable 28,613
Machinery and equipment included in vouchers payable 897,319
Vouchers payable (925,932)
Machinery and equipment acquired under a capital lease
Borrowing under a capital lease
Transfer capital assets to County-wide capital assets
Deletion of equipment
The notes to the financial statements are an integral part of this statement.
37
GOVERNMENTAL
OTHER ACTIVITIES -
ENTERPRISE INTERNAL SERVICE
FUNDS TOTALS FUNDS
$ $ 219,908,386 $
64,212,828 415,522,135 50,767,198
88,582 88,582 1,057,640
(60,103,601) (505,089,176) (40,078,131)
(3,038,482) (154,316,890) (6,612,356)
1,159,327 (23,886,963) 5,134,351
56,905,273 1,556,050
1,258,000 6,562,728 873,340
4,737,499 69,096,292
(247,862) (60,234,576)
(4,440,367) (90,007)
(76,228,477) (1,316,784)
5,747,637 (8,339,127) 1,022,599
(29,458,452) (1,429,486)
(229,159) (26,480)
(56,334) (56,334)
(415,296)
(14,136) (1,159,323) (3,224)
80,930
(70,470) (31,318,564) (1,378,260)
1,107,539 7,759,243 1,248,449
2,429,908
1,107,539 7,759,243 3,678,357
7,944,033 (55,785,411) 8,457,047
18,093,258 169,162,539 25,040,275
$ 26,037,291 $ 113,377,128 $ 33,497,322
(3,093,482) (27,062,919) 146,855
141,981 10,797,634 716,394
56,856,455
16,301,482
11,953,924
4,461,206 4,461,206
(1,270) (73,200,152)
(250,000)
339,537
(789,217) 316,954
68,494 (139,740) (1,802,360)
3,612 (763,233)
153,769 (580,509) 4,222,514
2,532 1,207,246 (1,955)
(8,237,652) (7,943,741) (226,583)
(1,055,785)
4,004,203 (5,721,161) (10,191,392)
3,655,934 3,655,934
$ 1,159,327 $ (23,886,963) $ 5,134,351
$ $ 50,167,887 $
(50,167,887)
12,033,695
(12,033,695)
2,219,582 2,453,126 2,192,146
(2,322,862) (2,556,406) (2,582,805)
103,280 103,280 390,659
28,613
897,319
(925,932)
125,290
(125,290)
2,666,002
(2,666,002)
Maricopa County
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2002
38
INVESTMENT AGENCY
TRUST FUNDS FUNDS
Assets
Cash in bank and on hand $ $ 26,258,920
Cash and investments held by County Treasurer 1,181,576,123 53,450,366
Accrued interest receivable 6,602,839
Total assets 1,188,178,962 79,709,286
Liabilities
Due to other governmental units 11,302,559
Deposits held for other parties 68,406,727
Total liabilities $ 79,709,286
Net Assets
Held in trust for investment participants $ 1,188,178,962
The notes to the financial statements are an integral part of this statement.
Maricopa County
Statement of Changes in Fiduciary Net Assets
Fiduciary Funds
For the Fiscal Year Ended June 30, 2002
39
INVESTMENT
TRUST FUNDS
Additions:
Contributions from participants $ 8,731,655,895
Investment income:
Interest income 37,411,360
Net decrease in fair value of investments (2,240,525)
Net investment earnings 35,170,835
Total additions 8,766,826,730
Deductions:
Distributions to participants 8,900,638,636
Total deductions 8,900,638,636
Change in net assets (133,811,906)
Net assets – beginning 1,321,990,868
Net assets – ending $ 1,188,178,962
The notes to the financial statements are an integral part of this statement.
40
Financial Section
Basic Financial Statements - Notes
Maricopa County
Listing of Basic Financial Statement Notes
43
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NOTE 2 REPORTING CHANGES
NOTE 3 BEGINNING BALANCES RESTATED
NOTE 4 RECONCILIATION OF GOVERNMENT-WIDE AND FUND-BASED FINANCIAL
STATEMENTS
NOTE 5 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
NOTE 6 DEPOSITS AND INVESTMENTS
NOTE 7 CONDENSED FINANCIAL STATEMENTS OF COUNTY TREASURER’S
INVESTMENT POOL
NOTE 8 RECEIVABLES
NOTE 9 DUE FROM OTHER GOVERNMENTAL UNITS
NOTE 10 CAPITAL ASSETS
NOTE 11 CONSTRUCTION AND OTHER SIGNIFICANT COMMITMENTS
NOTE 12 LONG-TERM LIABILITIES
NOTE 13 MUNICIPAL LANDFILL CLOSURE AND POSTCLOSURE CARE COSTS
NOTE 14 OPERATING LEASES
NOTE 15 RISK MANAGEMENT
NOTE 16 EMPLOYEE RETIREMENT PLANS
NOTE 17 INTERFUND BALANCES AND ACTIVITY
NOTE 18 DISPROPORTIONATE SHARE SETTLEMENT
NOTE 19 MEDICAL CENTER OPERATING REVENUE
Maricopa County
Notes to the Financial Statements
For the Fiscal Year Ended June 30, 2002
44
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of Maricopa County conform to generally accepted accounting principles
applicable to governmental units adopted by the Governmental Accounting Standards Board (GASB).
During the year ended June 30, 2002, the County implemented GASB Statement No. 34, as amended by
GASB Statement No. 37, which prescribes a new reporting model consisting of both government-wide
and fund financial statements. The County also implemented GASB Statement No. 38, which prescribes
new and revised note disclosures.
A. Reporting Entity
Maricopa County is a general purpose local government governed by a separately elected board of
five 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 reporting entity is thus comprised of the primary government, Maricopa County Flood Control
District, Maricopa County Library District, Maricopa County Public Finance Corporation, Maricopa
County Special Assessment Districts, Maricopa County Stadium District, and the Maricopa County
Street Lighting Districts.
The blended component units are as follows:
Maricopa County Flood Control District
The Maricopa County Flood Control District is a legally separate entity that provides flood control
facilities and regulates floodplains and drainage to prevent flooding of property in Maricopa County.
As the County Board of Supervisors serves as the Board of Directors of the Flood Control District, the
District is considered a component unit of the County.
Maricopa County Library District
The Library District is a legally separate entity that provides and maintains library services for the
residents of Maricopa County. As the County Board of Supervisors serves as the Board of Directors
of the Library District, the District is considered a component unit of the County.
Maricopa County Public Finance Corporation
The Maricopa County Public Finance Corporation is a nonprofit corporation created by the Maricopa
County Board of Supervisors to assist in the acquisition, construction and improvement of County
facilities, including real property and personal property. As the County Board of Supervisors serves
as the Board of Directors of the Public Finance Corporation, the Corporation is considered a
component unit of the County. The corporation issued certificates of participation and lease revenue
bonds that evidence undivided proportionate interests in rent payments to be made under the lease
agreements, with an option to purchase, between Maricopa County and the Corporation. The
Corporation has no assets or operating activities to report.
Notes to the Financial Statements
(Continued)
45
Maricopa County Special Assessment Districts
The Special Assessment Districts are legally separate entities that provide improvements to various
properties within the County. As the County Board of Supervisors serves as the Board of Directors of
the Maricopa County Special Assessment Districts, the Districts are considered a component unit of
the County.
Maricopa County Stadium District
The Stadium District is a legally separate entity that provides regional leadership and fiscal resources
to assure the presence of Major League Baseball in Maricopa County. As the County Board of
Supervisors serves as the Board of Directors of the Maricopa County Stadium District, the District is
considered a component unit of the County.
Maricopa County Street Lighting Districts
The Street Lighting Districts are legally separate entities that provide street lighting in areas of the
County that are not under local city jurisdictions. As the County Board of Supervisors serves as the
Board of Directors of the Maricopa County Street Lighting Districts, the Districts are considered a
component unit of the County.
Complete financial statements of the Maricopa County Stadium District may be obtained at the
entity’s administrative office listed below:
Maricopa County Stadium District
Bank One Ballpark
401 East Jefferson
Phoenix, Arizona 85004
Separate financial statements of the remaining blended component units are not prepared.
Related Organization
The Industrial Development Authority of Maricopa County (Authority) is a legally separate entity that
was created to assist in the financing of commercial and industrial enterprises; safe, sanitary, and
affordable housing; and healthcare facilities. The Authority fulfills its function through the issuance of
tax exempt or taxable revenue bonds. The County Board of Supervisors appoints the Authority’s
Board of Directors. The Authority’s operations are completely separate from the County and the
County is not financially accountable for the Authority. Therefore, the financial activities of the
Authority have not been included in the accompanying financial statements.
B. Basis of Presentation
The basic financial statements include both government-wide statements and fund-based financial
statements. The government-wide statements focus on the County as a whole, while the fund-based
financial statements focus on major funds. Each presentation provides valuable information that can
be analyzed and compared between years and between governments to enhance the usefulness of
the information.
Government-wide financial 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.
Notes to the Financial Statements
(Continued)
46
The 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 allocates 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.
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 doing so would distort the direct costs and program
revenues reported by the departments concerned.
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 Transportation Fund – plans and implements an environmentally balanced multi-model
transportation system. Operations are funded through highway user taxes.
The Flood Control Fund – provides flood control facilities and regulates floodplains and drainage to
prevent flooding of property and endangering the lives of people in Maricopa County. Operations are
funded by a secondary tax levy.
The Jail Operations Fund – was established under the authority of propositions 400 and 401, which
were passed in the General Election of November 3, 1998. These propositions authorized a
temporary 1/5 cent sales tax to be used for the construction and operation of adult and juvenile
detention facilities.
The General Obligation Fund – accounts for debt service on all various purpose general obligation
bonds. Funding is provided by the County’s secondary property tax revenues, which may be used
only for debt service.
Notes to the Financial Statements
(Continued)
47
The Lease Revenue Fund – accounts for the debt service on the Lease Revenue Bonds, Series
2001. Funding is provided by transfers from the General Fund.
The Jail Construction Fund – accounts for the proceeds associated with the temporary 1/5 of one-cent
Sales Tax approved by voters in the General Election on November 3, 1998. The proceeds are
for the construction and operation of adult and juvenile detention facilities. The voters approved the
extension of the 1/5 of one-cent sales tax in the General Election on November 5, 2002. The
extension shall be levied beginning in the month following the expiration of the previous tax as
approved by the voters in 1998.
The County Improvement Fund – accounts for capital projects funded through the issuance of the
Lease Revenue Bonds, Series 2001.
The County reports the following major enterprise funds:
The Medical Center Fund – accounts for the operations of the Maricopa Medical Center which
provides quality, cost competitive health care and health professional education to assure the health
security of individuals, families, and the community.
The Maricopa Health Plan Fund – is an ambulatory health care plan operated by Maricopa Managed
Care System (MMCS). MMCS contracts with the Arizona Health Care Cost Containment System
(AHCCCS) which provides monthly capitation revenues based on Maricopa Health Plan (MHP)
enrollment.
The Arizona Long-Term Care System (ALTCS) Fund – is a managed care, long term care plan
operated by Maricopa Managed Care Systems (MMCS). Chronically ill and physically disabled
patients receive medical services as a result of an annual contract with the Arizona Health Care Cost
Containment System (AHCCCS).
The County reports the following fund types:
The internal service funds – account for automotive maintenance and service, telecommunications
services, printing and duplicating services, insurance services, self insured employee benefits, and
warehouse services provided to County departments or to other governments on a cost
reimbursement basis.
The investment trust funds – account for assets held and invested by the County Treasurer on behalf
of 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 the property taxes collected and distributed to the State, local school districts,
community college districts and special districts.
C. Basis of Accounting
The government-wide, proprietary, and fiduciary fund financial statements are reported using the
economic resources measurement focus and the accrual basis of accounting. Revenues are
recorded when earned and expenses are recorded 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 imposed by the provider have been met.
Notes to the Financial Statements
(Continued)
48
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, compensated absences, and landfill
closure and postclosure care costs, which are recognized as expenditures to the extent they are due
and payable. General capital asset acquisitions are reported as expenditures in governmental
funds.
Proceeds of 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 of the County 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 statements of cash flows, the County considers only those highly liquid
investments with a maturity of three months or less when purchased to be cash equivalents.
Nonparticipating interest-earning investment contracts are stated at cost. Money market investments
and participating interest-earning investment contracts with a remaining maturity of one year or less
at time of purchase are stated at amortized cost. All other investments are stated at fair value.
E. Inventories
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
weighted-average cost.
Inventories of the proprietary funds are recorded as assets when purchased and expensed when
consumed. The amount shown on the balance sheet for the enterprise funds is valued at cost using
the first-in, first-out method. The amount shown on the balance sheet for the internal service funds is
valued at cost using the moving average method.
F. Property Tax Calendar
The County levies real property taxes and commercial personal property taxes on or before the third
Monday in August that become due and payable in two equal installments. The first installment is
due on the first day of October and becomes delinquent after the first business day of November.
The second installment is due on the first day of March of the next year and becomes delinquent after
the first business day of May.
During the year, the County also levies mobile home personal property taxes that are due the second
Monday of the month following receipt of the tax notice and become delinquent 30 days later.
Notes to the Financial Statements
(Continued)
49
A lien assessed against real and personal property attaches on the first day of January preceding
assessment and levy.
G. Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads,
bridges, sidewalks, and similar items), are reported in the government-wide statements and the
proprietary funds. Capital assets are defined by the County as assets with an initial, individual cost of
more than $5,000. The Maricopa Health Plan, Medical Center, Arizona Long Term Care System and
Non-AHCCCS Health Plans (Enterprise Funds) capitalize assets with a cost of $1,000 or more. Such
assets are recorded at historical cost or estimated historical cost if purchased or constructed.
Donated capital assets are recorded at estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend assets lives are not capitalized.
Property, plant, and equipment of the primary government is depreciated using the straight-line
method over the following estimated useful lives:
TYPE OF ASSETS
ESTIMATED USEFUL LIFE
IN YEARS
Buildings 20 - 50
Infrastructure 20 - 50
Autos and trucks 3 - 10
Other equipment 3 - 20
All infrastructure assets maintained by the County Department of Transportation, consisting of
roadways, bridges and related assets, are reported on the government-wide financial statements.
These assets will not be depreciated as they are maintained using the modified approach. The Flood
Control District accounts for the County’s remaining infrastructure assets consisting of drainage
systems, dams, flood channels and canals. For the Flood Control District, only infrastructure assets
acquired during fiscal year 2002 are reported on the government-wide financial statements. No
depreciation expense was reported for the Flood Control District for the current fiscal year as all
infrastructure assets were reported as construction in progress.
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 240 hours of vacation leave, but any vacation hours in excess of
the maximum amount that are unused at calendar year-end convert to sick leave. Upon termination
of employment, all unused 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, upon retirement, County employees with accumulated
sick leave in excess of 1,000 hours are entitled to a $3,000 bonus. The amount of such bonuses is
accrued as a liability.
Notes to the Financial Statements
(Continued)
50
NOTE 2 – REPORTING CHANGES
During the fiscal year 2001-02, Maricopa County established the Intergovernmental Capital Projects Fund
as a capital projects fund and the Clerk of Court EDMS as a special revenue fund. The County also
retitled the County Improvement Fund to the Lease Revenue Fund (debt service fund). As a result of the
implementation of GASB Statement No. 34, restricted donation activities were reclassified from the
Expendable Trust Fund to the Animal Control Donations Fund and the Parks Donations Fund (special
revenue funds).
NOTE 3 – BEGINNING BALANCES RESTATED
As a result of implementing GASB Statement No. 34, the County’s governmental fund-type fund balances
as of June 30, 2001, have been restated as net assets as of July 1, 2001, on the government-wide
Statement of Activities and its Proprietary Funds fund equity have been relabeled net assets as of July 1,
2001, on the Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Assets.
The reconciliation below summarizes the differences between governmental fund-type fund balances as
of June 30, 2001, as previously reported, to net assets as of July 1, 2001, reported on the government-wide
Statement of Activities.
Aggregate fund balances of governmental fund types as of June 30, 2001 $ 647,525,749
Add: Capital assets, net of accumulated depreciation 1,292,773,238
Revenues earned but not yet available 5,704,084
Reclassify Expendable Trust Fund to Special Revenue Funds 415,456
Less: Long-term liabilities (425,451,046)
Internal Service Funds net assets deficit (10,895,605)
Net assets of governmental activities as of July 1, 2001 $ 1,510,071,876
The net capital assets balance of $1,292,773,238 represents the beginning restated net capital assets
balance of $1,297,302,080 for governmental activities reported in Note 10 less the June 30, 2001,
Internal Service Funds net capital assets balance of $4,528,842. The long-term liabilities balance of
$425,451,046 represents the beginning restated long-term liabilities balance of $463,028,750 for
governmental activities reported in Note 12 less the long-term liabilities balances at June 30, 2001, for the
Internal Service Funds - $40,708,931 and the Debt Service Funds - $23,198,871 plus the previously
reported long-term employee compensation liability at June 30, 2001, of $26,330,098.
The aggregate fund balances of governmental fund types was restated at July 1, 2001, from
$647,525,749 to $654,990,205, on the fund financial statements as a result of implementing GASB
Interpretation No. 6 to remove compensated absences payable from the fund financial statements for the
governmental funds. The restatement increased beginning fund balances for the following governmental
funds: General Fund - $3,749,000, Transportation Fund - $327,000, Flood Control Fund - $184,000, Jail
Operations Fund - $1,111,000, Jail Construction Fund - $6,000 and Other Nonmajor Governmental
Funds - $1,672,000. In addition, as a result of implementing GASB Statement No. 34, the Expendable
Trust Fund’s prior year ending balance of $415,456 was reclassified to governmental funds (see Note 2).
Notes to the Financial Statements
(Continued)
51
NOTE 4 – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL
STATEMENTS
The governmental fund Balance Sheet includes a reconciliation between fund balances – total
governmental funds and net assets – governmental activities as reported in the government-wide
Statement of Net Assets. The details of this reconciliation follows:
Fund balances – total governmental funds $ 673,536,272
Capital assets used in governmental activities are not financial resources and therefore, are not
reported in the funds.
Land $ 177,378,461
Buildings 735,881,798
Equipment 152,445,404
Infrastructure 357,036,458
Construction in progress 365,055,919
Accumulated depreciation (261,547,322)
Net governmental funds capital assets at June 30, 2002 $1,526,250,718
Other assets are not available to pay for current period expenditures and therefore, are deferred in
the funds.
Deferred revenue for property taxes receivable at June 30, 2002 $ 7,086,075
Deferred revenue for grant revenues receivable at June 30, 2002 5,290,035
Housing long-term note receivable at June 30, 2002 3,000,000
$ 15,376,110
Internal service funds are used by management to charge the costs of equipment services,
telecommunications, reprographics, risk management, employee benefits, and the sheriff
warehouse to individual funds. The assets and liabilities of the internal service funds are included
in governmental activities in the Statement of Net Assets. $ (11,507,860)
Some long-term liabilities and compensated absences are not due and payable shortly after June
30, 2002, and therefore, are not reported in the funds.
Noncurrent general obligation bonds due in more than one year at June 30, 2002 $ (39,515,000)
Noncurrent lease revenue bonds due in more than one year at June 30, 2002 (91,558,756)
Stadium District revenue bonds payable at June 30, 2002 (58,225,000)
Stadium District contractual obligations payable at June 30, 2002 (7,888,888)
Special assessment debt with governmental commitment payable at June 30, 2002 (403,021)
Housing bonds and loans payable at June 30, 2002 (1,819,847)
Deferred issuance cost at June 30, 2002 4,632,046
Bond premium payable at June 30, 2002 (9,246,448)
Certificates of participation payable at June 30, 2002 (9,804,315)
Governmental funds capital leases payable at June 30, 2002 (19,343,566)
Claims and judgements payable at June 30, 2002 (133,353,486)
Governmental funds compensated absences payable at June 30, 2002 (32,531,682)
Accrued bond interest payable at June 30, 2002 (504,024)
$ (399,561,987)
Net assets of governmental activities $1,804,093,253
Notes to the Financial Statements
(Continued)
52
The governmental fund reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
Balances is a reconciliation between net changes in fund balances – total governmental funds and
changes in net assets of governmental activities as reported in the government-wide Statement of
Activities. The details of this reconciliation follows:
Net change in fund balances – total governmental funds $ 16,188,563
Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of
those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the
amount by which capital outlays exceeded depreciation in the current period.
Governmental funds capital outlay $ 294,010,771
Government-wide depreciation expense for the year ended June 30, 2002 (33,071,391)
Add: Internal service funds depreciation expense for the year ended June 30, 2002 716,394
$ 261,655,774
The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and
donations) is to decrease net assets.
Disposed capital assets for the year ended June 30, 2002 $ (74,313,592)
Accumulated depreciation associated with disposed capital assets 46,135,298
$ (28,178,294)
Revenues in the Statement of Activities that do not provide current financial resources are not reported as
revenues in the funds.
Housing long-term notes receivable at June 30, 2002 $ 3,000,000
Grant revenues earned during the year ended June 30, 2002 5,290,035
Property taxes earned during the year ended June 30, 2002 1,432,796
$ 9,722,831
The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental
funds, while the repayment of the principal of long-term debt consumes the current financial resources of
governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds
report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas
these amounts are deferred and amortized in the Statement of Activities. This amount is the net effect of these
differences in the treatment of long-term debt and related items.
Principal payments on bonds $ 39,618,137
Proceeds from capital leases (9,843,870)
Proceeds from bond issuance (78,450,670)
Premium on refunding bonds (3,541,257)
Payment to escrow agent 77,980,850
Principal payments on certificates of participation 3,770,803
Principal payments on capital leases 4,752,140
Other debt service payments 1,179,104
$ 35,465,237
Some expenses reported in the Statement of Activities do not require the use of current financial resources and
therefore, are not reported as expenditures in governmental funds.
Employee compensation payable incurred during the year ended June 30, 2002 $ 1,061,498
Increase in reserve for inventories 2,357,504
Increase in claims and judgements payable (2,046,804)
Accrued interest (1,592,677)
$ (220,479)
Internal service funds are used by management to charge the costs of equipment services,
telecommunications, reprographics, risk management, employee benefits, and the sheriff warehouse to
individual funds. The net revenue of internal service funds is reported with governmental activities. $ (612,255)
Change in net assets of governmental activities $ 294,021,377
Notes to the Financial Statements
(Continued)
53
NOTE 5 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
At June 30, 2002, the following funds reported deficits in fund balances or net assets.
FUND DEFICIT
Governmental Funds:
Accommodation Schools $ 265,943
Adult Probation Grants 40,421
Animal Control 517,245
Clerk of Court Grants 423,890
Correctional Health Grants 41,675
County Attorney Grants 310,373
Human Service Grants 2,245,722
Juvenile Court Grants 91,267
Public Defender Training 78,623
Proprietary Funds:
Equipment Services $ 374,013
Non-AHCCCS Health Plans 182,869
Risk Management 18,020,030
The deficits in fund balances or net assets for Adult Probation Grants, Clerk of Court Grants, Correctional
Health Grants, County Attorney Grants, Human Service Grants and Juvenile Court Grants Funds were
attributed to the deferring of certain grant revenues. The County accrues grant revenue received within
60 days after year-end, as it is available and measurable. Revenues received after 60 days are
considered not available and are therefore deferred.
The Non-AHCCCS Health Plans deficit of $182,869 was partially corrected from the prior fiscal year by
transfers in from other funds. The deficit is not expected to be corrected through normal operations in
fiscal year 2002-03.
The Risk Management Fund deficit is the result of the County Board of Supervisors electing to not fund
the Risk Management Fund’s unpaid claims. Consequently, the Risk Management Fund only billed user
departments for operating costs and administrative expenses from fiscal year 1995-96 to fiscal year
1998-99, resulting in a fund deficit of $23,321,519 at June 30, 1999. On July 1, 1999, Risk Management
began billing user depar