Comprehensive annual financial report / Maricopa County, Arizona

              Comprehensive Annual Financial Report
Maricopa County
Phoenix, Arizona
For the Fiscal Year
July 1, 2003 to June 30, 2004
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
Citizens Audit Advisory Committee Letter
Certificate of Achievement for Excellence in Financial Reporting
Comprehensive Annual Financial Report
Table of Contents
For the Fiscal Year Ended June 30, 2004
i
Introductory Section
Page
Table of Contents i
Listing of Maricopa County Officials vi
Organizational Charts vii
Letter of Transmittal viii
Maricopa County Citizens Audit Advisory Committee Letter xi
Certificate of Achievement for Excellence in Financial Reporting xii
Financial Section
Independent Auditors’ Report 1
Management’s Discussion and Analysis (MD&A) 3
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 83
General Fund by Department 84
Jail Operations Fund 85
Table of Contents (Continued)
For the Fiscal Year Ended June 30, 2004
ii
Page
Notes to Budgetary Comparison Schedules 86
Schedule of Agent Retirement Plans’ Funding Progress 88
Modified Approach for Infrastructure Assets 89
Combining and Individual Fund Statements and Schedules
Listing of Nonmajor Governmental Funds 93
Governmental Funds
Combining Balance Sheet – Nonmajor Governmental Funds 100
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances –
Nonmajor Governmental Funds 118
Schedules of Revenues, Expenditures, and Changes in Fund Balances – Budget
and Actual
Special Revenue Funds
Adult Probation Grants Fund 137
Adult Probation Services Fund 138
Animal Care and Control Fund 139
Animal Care and Control Field Services Fund 140
Animal Care and Control Grants and Donations Fund 141
Bank One Ballpark Operations Fund 142
CDBG Housing Trust Fund 143
Child Support Automation Fund 144
Child Support Enhancement Fund 145
Children’s Issues Education Fund 146
Clerk of Court EDMS Fund 147
Clerk of Court Fill the Gap Fund 148
Clerk of Court Grants Fund 149
Clerk of Court Spousal Maintenance Enforcement Fund 150
Conciliation Court Special Fund 151
Correctional Health Grants Fund 152
County Attorney Check Enforcement Program Fund 153
County Attorney Criminal Justice Enhancement Fund 154
County Attorney Drug Diversion Fund 155
County Attorney Fill the Gap Fund 156
County Attorney Grants Fund 157
County Attorney Victim Compensation and Assistance Fund 158
County Attorney Victim Compensation and Restitution Fund 159
Court Automation Fund 160
Document Retrieval Fund 161
Domestic Relations Education Fund 162
Economic Development Fund 163
Emergency Management Fund 164
Environmental Services Fund 165
Environmental Services Environmental Health Fund 166
Environmental Services Grants Fund 167
Table of Contents (Continued)
For the Fiscal Year Ended June 30, 2004
iii
Page
Special Revenue Funds (Continued)
Expedited Child Support Fund 168
Flood Control Fund 169
Flood Control Grants Fund 170
General Government Grants Fund 171
Human Services Grants Fund 172
Juror Improvement Fund 173
Justice Court Enhancement Fund 174
Justice Court Grants Fund 175
Justice Court Judicial Enhancement Fund 176
Juvenile Probation Diversion Fees Fund 177
Juvenile Probation Grants Fund 178
Juvenile Probation Special Fees Fund 179
Juvenile Restitution Fund 180
Law Library Fund 181
Legal Defender Fill the Gap Fund 182
Library Fund 183
Library Grants Fund 184
Medical Examiner Grants Fund 185
Old Courthouse Fund 186
Palo Verde Fund 187
Parks and Recreation Grants Fund 188
Parks Donations Fund 189
Parks Enhancement Fund 190
Parks Lake Pleasant Fund 191
Parks Souvenir Fund 192
Parks Spur Cross Ranch Fund 193
Planning and Development Fund 194
Planning Project Fees Fund 195
Probate Programs Fund 196
Public Defender Fill the Gap Fund 197
Public Defender Grants Fund 198
Public Defender Training Fund 199
Public Health Fund 200
Public Health Pharmacy Fund 201
Recorder’s Surcharge Fund 202
Research and Reporting Fund 203
RICO Fund 204
Sheriff Donations Fund 205
Sheriff Grants Fund 206
Sheriff Inmate Health Services Fund 207
Sheriff Special Funding Fund 208
Stadium District Fund 209
Superior Court Fill the Gap Fund 210
Superior Court Grants Fund 211
Superior Court Judicial Enhancement Fund 212
Superior Court Special Fund 213
Transportation Fund 214
Transportation Grants Fund 215
Victim Location Fund 216
Waste Tire Program Fund 217
Table of Contents (Continued)
For the Fiscal Year Ended June 30, 2004
iv
Page
Debt Service Funds
General Obligation Fund 218
Lease Revenue Fund 219
Stadium District Fund 220
Capital Projects Funds
Bank One Ballpark Project Reserve Fund 221
County Improvement Fund 222
Flood Control Capital Projects Fund 223
General Fund County Improvement Fund 224
Intergovernmental Capital Projects Fund 225
Jail Construction Fund 226
Major League Stadium Fund 227
Transportation Capital Projects Fund 228
Schedule of Capital Projects – Budget and Actual
All Capital Improvement Projects 229
Nonmajor Enterprise Fund
Listing of Nonmajor Enterprise Fund 235
Statement of Net Assets 236
Statement of Revenues, Expenses, and Changes in Fund Net Assets 237
Statement of Cash Flows 238
Internal Service Funds
Listing of Internal Service Funds 241
Combining Statement of Net Assets 242
Combining Statement of Revenues, Expenses, and Changes in Net Assets 244
Combining Statement of Cash Flows 246
Agency Fund
Listing of Agency Fund 251
Statement of Changes in Assets and Liabilities 252
Capital Assets Used in the Operation of Governmental Funds
Comparative Schedules by Source 255
Schedule by Function and Activity 256
Schedule of Changes by Function and Activity 258
Statistical Section
Net Assets by Component 264
Changes in Net Assets 265
Fund Balances, Governmental Funds 267
Changes in Fund Balances, Governmental Funds 268
Tax Revenues by Source, Governmental Funds 270
Assessed Value and Estimated Market Value of Taxable Property 271
Direct and Overlapping Property Tax Rates 272
Principal Property Tax Payers 273
Property Tax Levies and Collections 274
Ratios of Outstanding Debt by Type 275
Table of Contents (Continued)
For the Fiscal Year Ended June 30, 2004
v
Page
Legal Debt Margin Information 276
Pledged Revenue Coverage 277
Demographic and Economic Statistics 278
Principal Employers 279
Budgeted Full-Time Equivalent County Employees by Function/Program 280
Operating Indicators by Function/Program 281
Capital Asset Statistics by Function/Program 282
vi
Maricopa County Officials
BOARD OF SUPERVISORS
Andrew Kunasek, Chairman, District 3
Fulton Brock, Chairman, District 1
Don Stapley, District 2
Max Wilson, District 4
Mary Rose Garrido Wilcox, District 5
♦♦♦
COUNTY MANAGER
David R. Smith
♦♦♦
CHIEF FINANCIAL OFFICER
Tom Manos
Organizational Charts
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
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 CCoonnssttaabbleless ( (2233)) CCoouunnttyy 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
Contract Counsel
Public Defender Maricopa Integrated Health System
Deputy County
Administrator
Management & Budget
Human Resources
Research & Reporting
General Government
Health Care Mandates
Chief Health Services
Officer
Regional Development
Services 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 Care and Control
Transportation
Flood Control District
Emergency
Management
Facilities Management
Equipment Services
Office of the C.I.O
Telecommunications
Office of Communications
Elected/Court
Officials
Elected/Court
Officials Appointed
Stadium District
County Administrative Officer
Internal Audit
Information Technology
Officer
Chief Community
Services Officer
Chief Financial
Officer
Legal Advocacy Integrated Criminal Justice
Information Systems
SShheerirfifff CClleerrkk o off C Coouurrtt
E-Government
Technology
Infrastructure Technology
Center
Customer Support Center
Capital Facilities Dev.
Planning &
Development
Environmental Services
Solid Waste
Real Estate
Maricopa County
County Administrative Office
viii
301 West Jefferson Street
10th Floor
Phoenix, AZ 85003-2143
Phone: 602-506-3571
Fax: 602-506-3328
www.maricopa.gov
December 1, 2005
The Honorable Board of Supervisors
Maricopa County
County Administration Building
301 W. Jefferson Street
Phoenix, AZ 85003
Arizona Revised Statute (ARS) §41-1279.21 requires the Office of the Auditor General to conduct
financial audits of the accounts and records of County governments. Pursuant to the statute, the
Office of the Auditor General audited the Comprehensive Annual Financial Report (CAFR) of
Maricopa County in accordance with generally accepted auditing standards for the year ended
June 30, 2004.
This report consists of management’s representations concerning the finances of Maricopa
County. Consequently, management assumes full responsibility of the completeness and
reliability of all the information presented in this report. To provide a reasonable basis for making
these representations, management of Maricopa County has established a comprehensive
internal control framework that is designed both to protect the government’s asset from loss,
theft, or misuse and to compile sufficient reliable information for preparation of Maricopa County’s
financial statements in conformity to generally accepted accounting principles (GAAP). Because
the cost of internal control should not outweigh their benefits, Maricopa County’s comprehensive
framework of internal controls has been designed to provide reasonable rather than absolute
assurance that the financial statements will be free from material misstatement. As
management, we assert that, to the best of our knowledge and belief, this financial report is
complete and reliable in all material respects.
The goal of the independent audit was to provide reasonable assurance that the financial
statements of Maricopa County for the fiscal year ended June 30, 2004, are free of material
misstatement. The independent audit involved examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements; assessing the
accounting principles used and significant estimates made by management; and evaluating
the overall financial statement presentation. The independent auditor expressed a modified
opinion on the Maricopa County financial statements for fiscal year ended June 30, 2004.
The auditors concluded that the County did not maintain adequate controls for claims
payment processing resulting in a disclaimer of opinion on three major enterprise funds,
administered by the Maricopa Managed Care Systems, and business-type activities. The
financial statements for the remaining opinion units were considered fairly presented in
conformity with U.S. generally accepted accounting principles. The independent auditor’s
report is presented as the first component of the financial section of this report.
The independent audit of the financial statements of Maricopa County was part of a broader,
federally mandated “Single Audit” designed to meet the special needs of federal grantor
agencies. The standards governing Single Audit engagements require the independent auditor
to report not only on the fair presentation of the financial statements, but also on the audited
government’s internal controls and compliance with legal requirements, with special emphasis on
internal controls and legal requirements involving the administration of federal awards. This
report is available in Maricopa County’s separately issued Single Audit Report.
ix
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. This report is available in Maricopa County’s separately issued
Expenditure Limitation Report.
GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the
basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of
transmittal is designed to complement the MD&A, which can be found immediately following the report of the
independent auditors.
County Profile
Maricopa County is located in the south-central portion of the State of Arizona. Maricopa County is considered
to be the top growth area in the state, and one of the top growth areas in the country. Maricopa County
occupies 9,222 square miles of which 1,441 square miles are incorporated.
Maricopa County operates under a five member elected Board of Supervisors who appoints a County Manager.
The County Manager is responsible for the general administration and overall operations of the various County
departments. Maricopa County has several-elected officials including the Assessor, Clerk of the Superior
Court, Constables, County Attorney, Recorder, Sheriff, Superintendent of Schools, and the Treasurer.
Maricopa County includes in its financial statements all activities of the County and its component units.
Component units are legally separate entities for which the County is considered to be financially accountable.
See Note 1 to the Notes to the Financial Statements - Summary of Significant Accounting Policies for
additional information.
Maricopa County offers a wide variety of governmental services, including:
• Justice and Law Enforcement: Clerk of the Superior Court, County Attorney, Superior Court, Juvenile
Court, Justice Court, Sheriff’s Department, Indigent Representation and Public Fiduciary
• Medical Services: Maricopa Medical Center, Health Plans, Public Health, Human Services and
Forensic Science Center
• Community Resources: Superintendent of Schools, Library District and Stadium District
• Public Works: Flood Control District, Transportation Department and Solid Waste
• County Administration: Board of Supervisors, County Administrator, Assessor’s Office, Clerk of the
Board, Elections, Finance, Human Resources, Information Technology, Treasurer and Facilities
Management
The annual budget serves as the foundation for Maricopa County’s financial planning and control. Maricopa
County is required by ARS §§42-17101 et. seq. to annually prepare and adopt a balanced budget. Arizona law
further requires that no expenditure shall be made or liability incurred in excess of the amounts budgeted
except as provided by law. Maricopa County’s annual budget is available on the Internet at the following
address: http://www.maricopa.gov/budget/.
xii
FINANCIAL SECTION
Independent Auditors’ Report
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 Fund
Note 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 Funds and
Schedule of Capital Projects – Budget and Actual
Combining and Individual Fund Statements and Schedules
Nonmajor Governmental Funds
Nonmajor Enterprise Funds
Internal Service Funds
Agency Funds
Capital Assets Schedules
1
Maricopa County
Management’s Discussion and Analysis
3
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
• The total assets of the County exceeded its liabilities at the close of the fiscal year by $2.5 billion (net
assets). Of this amount, $417.3 million (unrestricted net assets) may be used to meet the County’s
ongoing obligations to citizens and creditors.
• The County’s total net assets as reported in the Statement of Activities increased by $220.2 million, a
9.6 percent increase over the prior period. Of this amount, $237.9 million is attributed to
governmental activities and ($17.7) million is attributable to business-type activities.
• The County’s governmental funds reported combined fund balances of $711.3 million, or an increase
in fund balance of $37.3 million over the prior fiscal year. Approximately 95.1 percent of the combined
fund balances or $676.5 million is available to meet the County’s current and future needs
(unreserved fund balance).
• Unreserved fund balance for the General Fund increased by 9.4 percent to $315.9 million;
approximately 49.3 percent 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. In addition, A.R.S. §42-17102 stipulates that the estimated
expenditures may include an amount for unanticipated contingencies or emergencies.
• The County’s proprietary funds reported combined total net assets of $108.4 million of which total
unrestricted net assets were $19.7 million.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the County’s basic financial
statements. The County’s basic financial statements consist of three components 1) Government-wide
financial statements, 2) Fund financial statements, and 3) Notes to the basic financial statements.
Required Supplementary Information is included in addition to the basic financial statements. The
Combining and Individual Fund Statements and Schedules – Nonmajor Funds begin on page 100.
Government-wide Financial Statements are designed to provide readers with a broad overview of the
County’s finances, in a manner similar to private-sector businesses.
• 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).
Maricopa County
Management’s Discussion and Analysis
4
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 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)—Acute Health Care program, AHCCCS—Arizona Long-Term Care
System (ALTCS) program, Non-AHCCCS health care programs (Senior Select and Health Select), and
the other business-type activity (Solid Waste).
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
government-wide financial statements to emphasize they are legally separate from the County. The
reporting entity is 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 Housing Authority of Maricopa County is reported as a discretely presented component unit.
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.
The County reports four 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, Jail Operations, General Obligation,
and Lease Revenue 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 100 of this report.
The governmental funds financial statements can be found on pages 26-29 of this report.
Maricopa County
Management’s Discussion and Analysis
5
• 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 statements. The County uses
enterprise funds to account for the Medical Center, AHCCCS—Acute Health Care program,
AHCCCS—Arizona Long-Term Care System (ALTCS) program, and the Non-AHCCCS health care
programs (Senior Select and Health Select). These four components comprise the Maricopa
Managed Care Systems (MMCS). The County also reports the operations of Solid Waste as an
enterprise fund. 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, AHCCCS—Acute
Health Care program (Maricopa Health Plan Fund), AHCCCS—Arizona Long-Term Care System
(ALTCS) program (ALTCS Fund), and Non-AHCCCS health care programs (Non-AHCCCS Health
Plans Fund) operations are considered to be major funds of the County. Data for the Solid Waste
Fund is reported in the other enterprise fund column. The County’s internal service funds are
combined into a single, aggregated presentation in the proprietary funds financial statements.
Individual fund data for the internal service funds is provided in the form of combining statements,
which begin on page 242 of this report.
The proprietary fund 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 44-79 of this report.
Required Supplementary Information is presented concerning the County’s General Fund and Jail
Operations Fund. A budgetary comparison schedule has been provided for both 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 83-89 of this report.
Government-wide Financial Analysis
This year is the third fiscal year that the County applied Governmental Accounting Standards Board
(GASB) Statement No. 34.
Net Assets
As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position.
The following table reflects the condensed Statement of Net Assets of the County for June 30, 2004, as
compared to the prior year.
Maricopa County
Management’s Discussion and Analysis
6
Statement of Net Assets
As of June 30
(in millions)
Governmental Business-type
Activities Activities Total
2004 2003* 2004 2003 2004 2003 % Chg
Current and other assets $ 915.2 $ 868.7 $ 183.6 $ 144.5 $ 1,098.8 $ 1,013.2 8.4%
Capital assets 1,900.4 1,734.5 96.7 107.0 1,997.1 1,841.5 8.4
Total assets 2,815.6 2,603.2 280.3 251.5 3,095.9 2,854.7 8.4
Current liabilities 140.0 138.0 137.0 85.9 277.0 223.9 23.7
Long-term liabilities 262.2 289.7 34.9 39.5 297.1 329.2 (9.8)
Total liabilities 402.2 427.7 171.9 125.4 574.1 553.1 3.8
Net assets
Invested in capital assets,
net of related debt 1,811.3 1,611.8 72.4 75.7 1,883.7 1,687.5 11.6
Restricted 204.5 168.5 16.3 44.0 220.8 212.5 3.9
Unrestricted 397.6 395.2 19.7 6.4 417.3 401.6 3.9
Total net assets $ 2,413.4 $ 2,175.5 $ 108.4 $ 126.1 $ 2,521.8 $ 2,301.6 9.6
* The governmental activities amounts for fiscal year 2003 were adjusted for a change in the reporting entity (see Note 3 to the
financial statements for clarification). In addition, the classification of net assets for governmental activities for fiscal year 2003 was
adjusted for prior period corrections.
The governmental activities total net assets at June 30, 2004, increased from the adjusted fiscal year
2003 balance by $237.9 or 10.9 percent due primarily to an increase in capital assets. The majority of the
increase in total assets and net assets is attributable to the ongoing construction in the Jail Construction
Fund. The Jail Construction Fund expended over $77.8 million in capital outlay for the fiscal year ended
June 30, 2004. A large portion of the remaining increase can be attributed to the capital projects of the
Flood Control District and the Transportation Department that were expended through the Flood Control
Capital Projects Fund and the Transportation Capital Projects Fund – see pages 134 and 135 of the
nonmajor governmental funds combining statements.
The governmental activities total liabilities at June 30, 2004, experienced a net decrease of $25.5 million
from the adjusted fiscal year 2003 balance. The majority of the decrease is related to the long-term
liabilities, specifically those related to debt service payments for general obligation bonds, lease revenue
bonds, certificates of participation and capital leases. See Note 12 to the financial statements for
additional information.
The business-type activities total net assets decreased from the prior year by $17.7 million. The business-type
activities account for only 4.3 percent of the government-wide total net assets. Business-type
activities total assets increased by $28.8 million and total liabilities increased by $46.5 million resulting in a
decrease of total net assets of $17.7 million. The significant increases in assets were from the Maricopa
Health Plan Fund and the ALTCS Fund that collectively had an increase in accounts receivable of $19.6
million and an increase in prepaid assets of $12.8 million. Accounts receivable increased due to the
receivables from AHCCCS that will be finalized upon correction of data by MMCS. Prepaid assets
increases are the result of prepayment of health care providers due to the inability to properly process
claims. Although total assets increased, cash and investments held by the County Treasurer had
decreased by $20.1 million. Additionally, internal balances for the business-type activities changed from
fiscal year 2003 of ($47.3) million to ($10.6) million as reported in fiscal year 2004. The improvement in
internal balances was primarily from an improved cash position in the Medical Center Fund which had a
cash deficit of $47.3 million in fiscal year 2003 to a $21.9 million deficit in fiscal year 2004 or an improved
Maricopa County
Management’s Discussion and Analysis
7
change of $25.4 million. Total liabilities increased due to significant delays in claims processing for the
Maricopa Health Plan Fund, ALTCS Fund and the Non-AHCCCS Fund. See proprietary funds page 32 for
additional information.
At June 30, 2004, the County’s combined governmental activities and business-type activities assets
exceeded liabilities by $2.5 billion. Total net assets increased over the prior period by $220.2 million or 9.6
percent. The governmental activities comprise 108.0 percent of the increase from the prior year. The
increase for governmental activities can be attributed to the significant increase in the County’s capital
assets, and the reduction of the County’s long-term liabilities, as discussed previously.
Net assets consist of three components. By far, the largest portion - $1.9 billion or 74.7 percent - of the
County’s net assets reflects the investment in capital assets (e.g., land, buildings and improvements,
machinery and equipment, infrastructure and construction in progress), less any related debt used to
acquire those assets that is still outstanding. The governmental activities comprise 96.2 percent of this
component of net assets. 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. This component of net assets for governmental activities increased by $199.5 million due
to the County’s investment in its capital assets, particularly the construction related to the adult and
juvenile facilities (Jail Construction Fund) that were approved by the voters in 1998, and other construction
project expenditures from the County’s Flood Control and Transportation capital project funds.
The second component from the County’s total net assets, $220.8 million or approximately 8.8 percent,
represents resources that are subject to external restrictions on how they may be used. The
governmental activities comprise 92.6 percent of this component of net assets. This component
increased for governmental activities by $36.0 million and business-type activities decreased by $27.7
million, for a net change of $8.3 million.
The final component consists of unrestricted net assets, $417.3 million or 16.5 percent, and may be used
to meet the County’s ongoing obligations. The governmental activities comprise 95.3 percent of this
component. Unrestricted net assets for governmental activities increased from fiscal year 2003 by $2.4
million, or .6 percent.
Changes in Net Assets
As discussed previously, the County’s total net assets of $2.5 billion increased by $220.2 million as
reported in the Statement of Activities. Of this amount, $237.9 million, or 108.0 percent, is attributable to
governmental activities, and ($17.7) million 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 fiscal year. The net assets invested in capital assets increased for
the amount of current year capital expenditures and will decrease in future years as the capital assets are
depreciated over their useful lives. The decrease in total net assets for business-type activities was
primary due to the net operating losses incurred by the Maricopa Health Plan Fund of ($24.9) million,
ALTCS Fund of ($9.1) million and the Non-AHCCCS Health Plans Fund of ($10.0) million. The losses are
primarily attributed to increases in medical expenses for the current fiscal year, processed claims related
to fiscal year 2003, potential payment errors to providers such as duplicate payments and incorrect fee
schedules. Potential payment errors are being reviewed by County officials.
The following table reflects the condensed Statement of Activities of the County for the fiscal year 2004
compared to the prior year and indicates the changes in net assets for Governmental and Business-type
Activities:
Maricopa County
Management’s Discussion and Analysis
8
Statement of Activities
For the Fiscal Year Ended June 30, 2004
(in millions)
Governmental Business-type
Activities Activities Total % Chg
2004 2003* 2004 2003 2004 2003 P/Y
Revenues:
Program revenues:
Charges for services $ 146.1 $ 134.0 $ 813.1 $ 760.9 $ 959.2 $ 894.9 7.2%
Operating grants and contributions 294.3 290.0 6.7 6.9 301.0 296.9 1.4
Capital grants and contributions 18.9 44.3 18.9 44.3 (57.3)
General revenues:
Taxes 1,000.1 915.1 1,000.1 915.1 9.3
Other 14.3 21.3 .8 2.6 15.1 23.9 (36.8)
Total Revenues 1,473.7 1,404.7 820.6 770.4 2,294.3 2,175.1 5.5
Expenses:
General government 185.5 181.3 185.5 181.3 2.3
Public safety 581.4 506.6 581.4 506.6 14.8
Health, welfare and sanitation 332.4 321.7 332.4 321.7 3.3
Other 99.8 107.3 99.8 107.3 (7.0)
Medical Center 372.0 366.4 372.0 366.4 1.5
AHCCCS–-Acute Health Care program 167.4 109.1 167.4 109.1 53.4
AHCCCS–-ALTCS program 273.2 233.0 273.2 233.0 17.3
Non-AHCCCS health care programs 82.7 75.0 82.7 75.0 10.3
Other business-type activities 1.3 1.6 1.3 1.6 (18.8)
Total Expenses 1,199.1 1,116.9 896.6 785.1 2,095.7 1,902.0 10.2
Excess (deficiency) before gain (loss) on
disposal of capital assets and transfers 274.6 287.8 (76.0) (14.7) 198.6 273.1 (27.3)
Gain (loss) on disposal of capital assets 21.6 13.3 21.6 13.3 62.4
Transfers (58.3) (16.5) 58.3 16.5
Change in net assets 237.9 284.6 (17.7) 1.8 220.2 286.4 (23.1)
Net assets – beginning 2,175.5 1,890.9 126.1 124.3 2,301.6 2,015.2 14.2
Net assets – ending $ 2,413.4 $ 2,175.5 $ 108.4 $ 126.1 $ 2,521.8 $ 2,301.6 9.6
* The governmental activities amounts for fiscal year 2003 were adjusted (see Note 3 to the financial statements for clarification).
Maricopa County
Management’s Discussion and Analysis
9
Governmental Activities
In the government-wide statements statement of activities the significant revenues reported included taxes
(County levied, general sales and vehicle license taxes) and operating grants. Taxes represent 67.9
percent of total governmental activities revenues for fiscal year 2004. Taxes revenues increased by $85
million from property taxes levied of $42.9 million, other County levied taxes of $8.8 million and sales
taxes of $27.8 million. The taxes and operating revenues provide the principal support for the functions of
the County that include general government; public safety; highways and streets; health, welfare and
sanitation; culture and recreation; and education. The functions of highways and streets, culture and
recreation, and education are shown in the condensed Statement of Activities as other expenses. In the
current fiscal year, the County’s total net assets increased by $220.2 million. Governmental activities of
the County contributed $237.9 million or 108.0 percent to this increase. The majority of this increase is
attributable to the following:
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 $212.9 million.
Total governmental activities expenses increased by $82.2 million, or 7.4 percent, over the prior period
resulting in an offsetting decrease in net assets. The largest increase is from the public safety function
and includes the Jail Operations Fund of $36.8 million, Sheriff (General Fund) of $5.6, County Attorney
(General Fund) of $7.3 million and the Flood Control Fund (nonmajor special revenue fund) of $5.1
million. Increases in fiscal year 2004 expenditures for the Jail Operations Fund consist of correctional
health of $4.7 million, juvenile probation of $4.2 million, sheriff detention of $17.2 million and other
services of $10.7 million.
Business-Type Activities
As discussed earlier, the business-type activities of the County include the Medical Center, AHCCCS—
Acute Health Care program, AHCCCS—Arizona Long-Term Care System (ALTCS) program, the Non-
AHCCCS health care programs (Senior Select and Health Select) – these four components are the
Maricopa Integrated Health System – and Solid Waste. Business-type activities total net assets
decreased by $17.7 million. The Maricopa Integrated Health System and the Solid Waste Fund
contributes only a small percent to the total County net assets even though it comprises approximately
35.8 percent and 42.8 percent of the County’s revenues and expenses, respectively. 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 94.8 percent of the net assets of the business-type activities.
Business-type revenues increased $50.2 million while expenses increased $111.5 million from the prior
year. The majority of the increase in revenues was for charges for net patient service revenues
attributable to the Medical Center ($45.7 million) that resulted primarily from an increase in patient
population growth of 8 percent and a 10 percent increase in patient charges. The increase in business-type
expenses was applicable to the Maricopa Health Plan Fund and the ALTCS Fund from an increase in
medical expenses for the current fiscal year, prior year claims processed in the current fiscal year,
increase in administrative costs and potential claim payment errors that are being reviewed by County
officials. The overall decrease in business-type net assets of $17.7 million resulted from an increase in
expenses that exceeded revenues.
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.
Maricopa County
Management’s Discussion and Analysis
10
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 of June 30, 2004, the governmental funds reported combined fund balances of $711.3 million and an
increase in fund balance of $37.3 million over the prior fiscal year. Approximately 96.5 percent of the
combined fund balances or $686.5 million is available to meet the County’s current and future needs
(unreserved fund balance). The remaining fund balance is reserved for inventories, advances and debt
service.
The following funds are the County’s major governmental funds:
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 $315.9 million, while total fund balance reached
$318.3. This represents an increase in unreserved fund balance from the prior year of $27.1 million, or
9.4 percent. This increase can be attributed to significant savings in the General Fund for general
government and health, welfare and sanitation expenditures. The savings are due to lower than
anticipated payouts for hospital pre-AHCCCS claims settlements. In addition, spending from contingency
funds was less than anticipated in the General Government Department. 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 49.3 percent of the total fiscal year 2004
General Fund expenditures, while total fund balance represents 49.7 percent of that same amount. These
ratios indicate a strong fund balance position in comparison to expenditures.
The Jail Operations Fund is a special revenue fund that 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 of one-cent sales tax to be used for the construction and
operation of adult and juvenile detention facilities. On November 5, 2002, the voters approved the
extension of the 1/5 of one-cent sales tax in the General Election to be used for jail facility operations.
The extension begins in the month following the expiration of the original tax and may continue for not
more than twenty years after the date the tax collection begins. The Jail Operations Fund accounts for the
jail tax revenue along with transfers from the General Fund for maintenance of effort (MOE). The MOE
transfer from the General Fund is used to support the jail detention operations. Arizona Revised Statutes
require the County to calculate the maintenance of effort transfer on an annual basis. The Jail Operations
Fund transfers monies to the Jail Construction Fund for the construction of the jail facilities. At the end of
the current fiscal year, total fund balance of the Jail Operations Fund was $61.5 million, of which more
than 99 percent is unreserved. This was an increase in total fund balance of $27.6 million, or 81.5
percent, from the prior fiscal year. Although the fund had more expenditures than revenues by $44.5
million, the increase in fund balance can be partially attributed to net transfers of $72.3 million, which was
a net increase of $49.6 million over the prior year. Transfers from the General Fund for maintenance of
effort were $120.9 million while transfers to the Jail Construction Fund were $48.6 million. The amount to
be transferred to the Jail Construction Fund for any given year is determined through the budget planning
process and tied to the jail tax collection projections and construction schedules.
The General Obligation Fund is a debt service fund that 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. On July 1, 2004, the County will pay off the remaining $20.165 million
in general obligation bonds.
Maricopa County
Management’s Discussion and Analysis
11
The Lease Revenue Fund is a debt service fund that accounts for the debt service on the Lease Revenue
Bonds, Series 2001 and the Lease Revenue Refunding Bonds, Series 2003. The fund balance is set
aside for future debt service on the Lease Revenue Bonds, Series 2001 and each year the fund balance
will be reduced by the annual debt service payment until the debt is satisfied. Funding for the Lease
Revenue Refunding Bonds, Series 2003 will be provided by transfers from the General Fund departments
who benefited by the refunding bond issue. At the end of the current fiscal year, unreserved fund balance
of the Lease Revenue Fund was $74.3 million, while total fund balance was $85.0 million.
The following table presents the amount of all governmental funds revenues from various sources as well
as increases or decreases from the prior year.
Revenues Classified by Source
Governmental Funds
(in millions)
2004 2003* Increase/(Decrease)
Percent Percent % Chg
Revenues by Source Amount of Total Amount of Total Amount P/Y
Taxes $ 524.8 36% $ 474.9 34% $ 49.9 10.5%
Intergovernmental 779.0 53 730.8 53 48.2 6.6
Other 173.0 11 173.3 13 (.3) (.2)
Totals $ 1,476.8 100% $ 1,379.0 100% $ 97.8 7.1
* The fiscal year 2003 revenues classified by source for governmental funds were adjusted for a change in the
reporting entity (see Note 3 to the financial statements for clarification).
During fiscal year 2004, the County experienced an increase in governmental revenues from the previous
year of $97.8 million, a 7.1 percent increase. Tax revenues increased primarily from property tax revenue.
Although the County did not increase the property tax levy rate, an increase in the assessed value and
new housing resulted in an additional $43.0 million in revenue. An increase in intergovernmental
revenues was from an increase in the sales tax apportionment of $28 million and vehicle license tax
apportionment of $12.5 million as reported in the General Fund.
The following table presents the amount of all governmental funds expenditures by function compared to
prior year amounts.
Expenditures by Function
Governmental Funds
(in millions)
2004 2003* Increase/(Decrease)
Percent Percent
Expenditures by Function Amount of Total Amount of Total Amount % Chg P/Y
General government $ 118.2 8% $ 114.2 9% $ 4.0 3.5%
Public safety 563.7 41 493.4 36 70.3 14.2
Health, welfare and sanitation 331.0 24 317.8 23 13.2 4.2
Capital outlay 248.5 18 313.9 23 (65.4) (20.8)
Other 124.2 9 125.1 9 (.9) (1.0)
Totals $ 1,385.6 100% $ 1,364.4 100% $ 21.2 1.6
* The fiscal year 2003 expenditures by function for governmental funds were adjusted for a change in the
reporting entity (see Note 3 to the financial statements for clarification).
Maricopa County
Management’s Discussion and Analysis
12
Expenditures from governmental fund types for fiscal year 2004 increased by $21.2 million, a 1.6%
increase from the prior year. The most significant changes were in public safety expenditures that have
increased by $70.3 million, while capital outlay expenditures decreased by $65.4 million from the previous
year. The increase in public safety is related to operating expenditures associated with the jail facilities of
$36.8 million (Jail Operations Fund) that include increases for correctional health services of $4.7 million,
juvenile probation of $4.2 million, health care mandates of $6.1 million and sheriff detention services of
$17.2 million. Additional increases in operating expenditures were related to the Sheriff Department
(General Fund) of $5.6 million and the County Attorney (General Fund) of $7.3 million.
During fiscal year 2004, capital outlay decreased $65.4 million to $248.5 million, or 20.8 percent. The
decrease is primarily related to the County’s capital projects relating to the jail detention facilities that will
be completed in fiscal year 2005.
Proprietary funds. The County’s proprietary funds (enterprise funds) provide the same information found
in the government-wide financial statements (business-type activities), but in more detail. Internal Service
Funds, although proprietary funds, are not included in the following section.
The following funds are the County’s major enterprise funds:
The Medical Center Fund provides quality, cost competitive health care and health professional education
to assure the health security of individuals, families, and the community. During fiscal year 2004, the Fund
had an operating income of $10.9 million, which is an increase of $40.3 million from the prior year.
Operating revenues increased by $46.2 million or 13.8 percent while operating expenses increased by
only 1.6 percent. The increase of $40.3 million in operating income from the last fiscal year resulted
primarily from an approximate 8% patient population growth rate and a 10% rate increase for patient
services. In addition, the Medical Center received approximately $12.7 million and $4.6 million from the
Maricopa County Health Plans and the Correctional Health Department, respectively, for prior years’
patient receivables that had been previously written off as debt expense resulting in a reduction in current
year operating expenses.
The Maricopa Health Plan (MHP) Fund is an acute health care program 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 AHCCCS—Acute Health Care program
enrollment. Operating revenues increased by 19.4 percent due primarily to an increase in membership.
Operating expenses increased 51.6 percent mostly due to a $44.8 million or a 43.3 percent increase in
medical expenses. The increase in medical expenses resulted from increased membership, claims paid
pertaining to the previous fiscal year, and potential payment errors to providers such as duplicate
payments and incorrect fee schedules. Operating expenses were also increased by bad debt costs due to
potentially incorrect claim payments of $9.2 million and increased administrative costs of $2.4 million. The
MHP Fund had a $27.1 million operating loss for fiscal year 2004. During fiscal year 2004, the County
General Fund transferred $3.9 million as a subsidy. The Fund’s fiscal year-end net assets balance
decreased $24.9 million to ($11.3) million from the prior year-end. The reduction in net assets is primarily
attributable to the operating loss.
The Arizona Long-Term Care System (ALTCS) Fund is a managed care, long-term care program
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 ALTCS Fund had a 2.4 percent decrease in operating revenues and a 16
percent increase in operating expenses from the prior year resulting in a $35.4 million operating loss for
fiscal year 2004. During the fiscal year, the County General Fund transferred $29.3 million as a subsidy.
The Fund’s fiscal year-end net assets balance decreased $9.1 million to $17.2 million from the prior year-end.
The reduction in net assets is attributable to a $40.2 million increase in total expenses from the prior
year, primarily medical expenses of $22.9 million, administrative expenses of $3.3 million and bad debt
expenses of $10.1 million due to potentially incorrect claim payments.
Maricopa County
Management’s Discussion and Analysis
13
The Non-AHCCCS Health Plans Fund accounts for two health care programs; Health Select is a managed
health care program offered to employees, spouses and their families and Senior Select is a Medicare
program operating under contract with the Federal government. The Non-AHCCCS operating revenues
decreased by $10.9 million or 14.4 percent from the prior year primarily due to the transfer of the Health
Select program effective January 1, 2004, to the Employee Benefits Trust Fund (Internal Service Fund).
Operating expenses increased $7.7 million or 10.3 percent resulting from the delay and problems
associated with processing claims and the high demand for Senior Select services. This resulted in the
Non-AHCCCS Health Plans Fund operating loss of $23.1 million for fiscal year 2004. During the fiscal
year, the County General Fund transferred $11.7 million as a subsidy. The Fund’s fiscal year-end net
assets balance decreased $10.0 million from the prior year to ($10.0) million at the current year-end.
The following table shows actual revenues, expenses and results of operations for the current fiscal year
for all proprietary funds (enterprise funds).
Statement of Revenues, Expenses and Changes in Fund Net Assets
Proprietary Funds
(in millions)
Increase/(Decrease)
2004 2003 Amount % Chg P/Y
Operating revenues $ 813.1 $ 760.9 $ 52.2 6.9%
Operating expenses 888.9 782.4 106.5 13.6
Operating loss (75.8) (21.5) (54.3) 252.6
Nonoperating revenues (expenses), net (.2) 6.8 (7.0) (102.9)
Loss before transfers (76.0) (14.7) (61.3) 417.0
Transfers, net 58.3 16.5 41.8 253.3
Change in net assets $ (17.7) $ 1.8 $ (19.5) (1,083.3)
At June 30, 2004, the net assets for the proprietary funds (business-type activities) decreased by $19.5
million. The Maricopa Integrated Health System makes up 94.8 percent of the net assets of the business-type
activities. The Maricopa Integrated Health System accounts for only 4.1 percent of the County’s total
net assets even though it comprises approximately 35.5 percent and 39.1 percent of the County’s
revenues and expenses, respectively.
The net loss before transfers for the proprietary funds of $76.0 million resulted primarily from net losses of
more than $28.8 million from the Maricopa Health Plan Fund, $38.4 million from the ALTCS Fund and
$21.7 million from the Non-AHCCCS Health Plans Fund. The losses were attributed to higher expenses
for medical claims related to an increase in membership for the Maricopa Health Plan and Non-AHCCCS
Senior Select Plan, claim processing delays resulting in some prior years claims being paid in the current
year, duplicate payments, and overpayments. The problems with the claims processing resulted in bad
debt expense of approximately $20 million. The losses were partially offset by income from the Medical
Center Fund before transfers of $13.9 million. The County General Fund transferred $60.2 million in
operating subsidies to the Medical Center and the various health care programs.
Subsequent to June 30, 2004, the Medical Center was transferred to the voter approved Special Health
Care District. In addition, effective December 31, 2004, the Senior Select health care program was
discontinued by the County, and effective September 30, 2005, the AHCCCS—Acute Health Care
program and the AHCCCS—ALTCS health care program were discontinued by the County. The County is
liable for the outstanding liabilities prior to the discontinued operations of these health care programs.
Additional information can be found in the notes to the financial statements (Note 21- Subsequent Events).
Maricopa County
Management’s Discussion and Analysis
14
General Fund Budgetary Highlights
The difference between the original budget and the final amended budget for the General Fund resulted in
a negligible change for revenue but a decrease in expenditures of $60.3 million. The expenditures were
mostly reclassified to transfers out in the amount of $47 million and were used to subsidize the County
health care programs.
Significant favorable expenditure variances as compared to the budget were incurred in the General
Government Department (general government function) and the Health Care Mandates Department
(health, welfare and sanitation function) of $105 million. The savings for health, welfare and sanitation
expenditures were due to lower than anticipated payouts for hospital pre-AHCCCS claims settlements and
the General Government Department had less expenditures from amounts set aside for contingencies
and reserves.
Capital Assets and Long-Term Liabilities
Capital Assets
The County’s capital assets balance for its governmental and business-type activities as of June 30, 2004,
amounted to almost $2.0 billion (net of accumulated depreciation). Capital assets include land, buildings
and improvements, infrastructure, machinery and equipment, and construction in progress. The net
increase of $155.5 million in the County’s capital assets balance for the current period was 8.4 percent.
The most significant impact on the increase in capital assets for the fiscal year ended June 30, 2004, was
the ongoing construction of the adult and juvenile detention facilities. For these facilities, current year
expenditures were $77.8 million. During fiscal year 2004, many of the capital projects relating to the jail
facilities and reported in prior years as construction in progress were capitalized as completed capital
assets. This accounts for the majority of the change between buildings net of accumulated depreciation
and construction in progress. The Transportation Department and the Flood Control District provided a net
addition to capital assets including land, construction in progress and completed infrastructure of $47.3
million and $32.0 million, respectively.
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 % Chg
2004 2003* 2004 2003 2004 2003 P/Y
Land $ 268.0 $ 230.6 $ 2.9 $ 2.9 $ 270.9 $ 233.5 16.0%
Infrastructure 456.5 413.0 456.5 413.0 10.5
Buildings and improvements (net
of accumulated depreciation) 950.0 594.7 57.9 63.0 1,007.9 657.7 53.2
Machinery and equipment (net
of accumulated depreciation) 57.3 51.0 27.0 33.7 84.3 84.7 (.5)
Construction in progress 168.5 445.1 8.9 7.4 177.4 452.5 (60.8)
Infrastructure (net of
accumulated depreciation) .1 .1 .1 .1
Totals $ 1,900.4 $ 1,734.5 $ 96.7 $ 107.0 $ 1,997.1 $ 1,841.5 8.4
* The governmental activities capital assets for fiscal year 2003 were adjusted (see Note 3 and Note 10 to the financial statements for
clarification).
The County reported infrastructure assets acquired in the government-wide financial statements, as
required by GASB Statement No. 34. Infrastructure additions are reported in capital outlay expenditures
within the Transportation Capital Projects Fund and the Flood Control Capital Projects Fund. GASB
Statement No. 34 also requires the retroactive reporting of all infrastructure assets acquired prior to July 1,
Maricopa County
Management’s Discussion and Analysis
15
2001, to be reported by the fiscal year ending June 30, 2006. All current and prior years’ infrastructure
assets of the Transportation Department are reported on the government-wide financial statements.
Infrastructure assets acquired prior to July 1, 2001, are reported at estimated historical cost.
Infrastructure assets acquired subsequent to that date are reported at historical cost. For the Flood
Control District, only infrastructure assets acquired after July 1, 2001, are reported and these assets are
reported at historical cost.
The Transportation Department 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 Flood Control District accounts for the remaining infrastructure assets, which consists of drainage
systems, dams, flood channels and canals. Of the total Flood Control District infrastructure assets
reported on the financial statements, $140,511 (net of accumulated depreciation) represents completed
projects as of June 30, 2004.
At June 30, 2004, the County’s infrastructure assets totaled $703.8 million reported on the government-wide
financial statements as infrastructure - $456.6 million, construction in progress - $85.0 million and
land associated with infrastructure assets - $162.2 million. 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 89.
Long-Term Liabilities
At June 30, 2004, the County had total long-term liabilities (noncurrent liabilities due within one year and
more than one year) outstanding of $297.0 million, which represents a $32.1 million decrease from the
restated prior year balance of $329.1 million. The restatement was necessary for governmental activities
to eliminate the activity associated with the Housing Authority of Maricopa County. Effective July 1, 2003,
the Housing Department (nonmajor governmental fund) became the Housing Authority of Maricopa
County and will be reported as a discretely presented component unit. In addition, the Housing Authority
wrote off all amounts applicable to the Authority bonds and loans of $50,811 and $1,641,310, respectively,
in accordance with the Department of Housing and Urban Development (HUD) GAAP Flyer No. 4 which
states that HUD and not the Housing Authority is directly obligated for the debt. See Note 2 – Reporting
Changes, Note 3 – Beginning Balances Restated and Note 12 - Long-Term Liabilities to the Financial
Statements for additional information. The majority of the decrease is attributable to debt service
payments made during fiscal year 2004 for the County’s general obligation bonds ($19.3 million), Stadium
District revenue bonds ($2 million), certificates of participation payable ($10.9 million), and a net decrease
in capital lease agreements ($8.6 million). The largest components of long-term liabilities at June 30,
2004, consisted of General Obligation Bonds - $20,165,000, Lease Revenue Bonds - $110,240,000,
Stadium District Revenue Bonds - $55,225,000, claims and judgments payable - $19,990,000 and
reported claims and incurred but not reported claims - $47,671,763.
On December 3, 2003, the Maricopa County Public Finance Corporation issued $16,880,000 of Lease
Revenue Refunding Bonds to refund various certificates of participation, series 2000, 1996, 1994, and
1993 totaling $10,074,452, and capital leases and an installment purchase contract totaling $11,104,817.
The County contributed $4,461,354 to facilitate the refunding. As a result of the current refunding, the
County reduced its total debt service requirements by $2,692,948, which resulted in an economic gain of
$1,234,420. (See Note 12 – Long Term Liabilities for additional information).
On November 11, 2003, Fitch upgraded the County’s general obligation bond rating to AA+ from AA.
Fitch also upgraded the County’s certificate of participation and lease revenue bond ratings to AA from
AA-. The following has been excerpted from the November 11, 2003, Fitch Press Release:
Maricopa County
Management’s Discussion and Analysis
16
“The upgrades are based on the imminent transfer of the county's health care delivery system to a
separate voter-approved special health district with its own property tax levy. Although they've
improved recently, the health care system's finances represented a potential fiscal liability to the
county's general fund in the event it should require larger operating subsidies to remain
operational. The upgrades also reflect continued financial improvement despite slower growth in
the county's predominant revenue source, a record of continued economic growth and
diversification, successful fiscal reforms, and the county's very modest debt profile.
Although taxes derived from consumer spending have slowed over the last two fiscal years, the
property tax base has still demonstrated healthy increases. Sound fiscal stewardship has enabled
the county to meet the service delivery demands of a burgeoning populace while accumulating
significant financial resources. These reserves provide the county with vast flexibility to maintain
its modest debt profile by financing its capital needs from available resources.”
General obligation bonds are paid from the secondary property tax levy. At June 30, 2004, net general
obligation debt was $20,165,000 (0.07% of taxable property), while the statutory allowable 6 percent limit
was $1,648,679,252 and the voter approved 15 percent limit was $4,121,698,129. On July 1, 2004, the
County will make the final debt service payment on its general obligation bonds.
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 predominantly
unrestricted. At June 30, 2004, the fund balance in the Lease Revenue Fund to pay future liabilities was
$85,005,685. Proceeds from the bonds are currently being used for capital projects.
Stadium District revenue bonds are special obligations of the District. The bonds are payable solely from
pledged revenues, consisting of car rental surcharges levied and collected by the Stadium District
pursuant to A.R.S. §48-4234. On June 5, 2002, the Stadium District issued Revenue Refunding Bonds in
the amount of $58,225,000 (par value) of which $55,225,000 remains outstanding.
Claims and judgments payable of $19.99 million are estimated long-term liabilities for claims pertaining to
environmental liabilities and indigent health care litigation. Claims and judgments payable increased by
$4.0 million from the prior year primarily related to environmental liabilities. Claims are judgments payable
are paid from the General Fund.
Reported and incurred but not reported claims applicable to governmental activities of $47.7 million are
reported in the Risk Management and Employee Benefits Trust funds (internal service funds). This is an
increase of $4.2 million from the prior year primarily related to medical claims from the Health Select
medical and related pharmacy program that was transferred from the Maricopa Integrated Health System
to the Employee Benefits Trust fund. 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. Additional information regarding long-term liabilities can be found in
the notes to the financial statements (Note 12 – Long-Term Liabilities and Note 16 – Risk Management to
the Financial Statements).
Economic Factors and Next Year’s Budget and Rates
• Maricopa County’s economy is improving, and the economic recovery is in place and accelerating,
according to many of the local economists. “The outlook remains promising, both in absolute
terms and relative terms,” according to Elliott D. Pollack & Company, economist for the County.
Maricopa County
Management’s Discussion and Analysis
17
• The population in Maricopa County continues to grow at a rapid pace. The U.S. Census Bureau
reports that Maricopa County’s population increased by 2.9% in 2003. The unemployment rate in
Maricopa County according to www.workforce.az.gov for June 2004 was 4.4 percent, which
remains below both the state (5.0%) and national average (4.6%). The growth in spending and
economic output is strong enough to virtually force the business community to increase hiring to
meet the demand. Many corporate firms that are already based here are growing, which is
contributing thousands more jobs. Forecasts show that Arizona’s economy will add more than
191,000 jobs in the next two years.
• As reported by the U.S. Census Bureau, Maricopa County continued to place second in the nation
in gaining residents from April 2000 to July 2003. According to U.S. Census reports, Maricopa
County’s projected increase in population between 2000 and 2003 is estimated to be 10.3%.
• Benefits to Maricopa County that are contributing factors of improving the economy include quality
of life, cost of living, a skilled work force, good universities and a favorable business climate.
Phoenix, a major city within Maricopa County, was ranked 7th in the 6th annual “America’s 50
Hottest Cities” report, published in the January 2004 issue of Expansion Management magazine.
As part of the annual budget planning process, the County’s Office of Management and Budget developed
a financial forecast to assist in both short and long range financial planning. This forecast provides a
conservative estimate of the County’s fiscal condition through the next five years given a realistic
economic forecast, current Board policies and existing laws. The forecast was instrumental in the
determination of the fiscal year 2005 budget and tax rate. It was based on the following assumptions:
• The Maricopa Integrated Health System (MIHS) will transition to a Special Health Care District.
The voters of Maricopa County approved the new district on November 4, 2003. The transition to
the newly elected Board will take place on January 1, 2005.
• The extension of the Jail Excise Tax (propositions 400 and 401) was approved by the voters in the
general election in November 2002. The tax will fund the operation costs of the new jail and
juvenile detention facilities. Many new jail facilities will be operational in fiscal year 2005.
• The County has absorbed many program costs that had shifted from the State to the County. The
County will work collaboratively with the State to readdress these issues in the 2005 legislative
session. The cost shifts are estimated to be approximately $60 million.
Even though the growth and demand for services is high, the property tax rate for the fiscal year 2005
budget was reduced to 1.4748. This is the second time in the last five budget years that the property tax
overall levy had been reduced.
At the end of the fiscal year, unreserved fund balance for the General Fund was $315.9, or 49.3 percent of
total General Fund expenditures. Unreserved fund balance increased by almost 9.38 percent from the
prior year. This is due to actual revenues in excess of actual expenditures. In accordance with Arizona
Revised Statutes (A.R.S.), the entire amount will be budgeted 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, 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.
18
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
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 of
one-cent sales tax to be used for the construction and operation of adult and juvenile detention facilities.
On November 5, 2002, the voters approved the extension of the 1/5 of one-cent sales tax in the General
Election to be used for jail facility operations. The extension begins in the month following the expiration
of the original tax and may continue for not more than twenty years after the date the tax collection begins.
The Jail Operations Fund accounts for the receipt of tax revenue, jail operations expenditures, and
transfers to the Jail Construction Fund for construction of the 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, and
the Lease Revenue Refunding Bonds, Series 2003. Funding is provided by transfers from the General
Fund.
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 program 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 Acute Health Care program enrollment.
Arizona Long-Term Care System (ALTCS) Fund – is a managed care, long-term care program
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).
Non-AHCCCS Health Plans Fund – The Non-AHCCCS health care programs are primarily:
• Health Select - a managed health care program offered to employees, spouses and their families;
• Senior Select - a Medicare program operating under contract with the Federal government.
Maricopa County
Statement of Net Assets
June 30, 2004
23
COMPONENT
PRIMARY GOVERNMENT UNIT
GOVERNMENTAL BUSINESS-TYPE HOUSING
ACTIVITIES ACTIVITIES TOTAL AUTHORITY
ASSETS
Cash in bank and on hand $ 7,787,468 $ 500 $ 7,787,968 $ 952,175
Cash and investments held by County Treasurer 677,485,873 65,887,632 743,373,505
Receivables (net of allowances for uncollectibles) 14,406,340 86,450,507 100,856,847 4,838,955
Internal balances 10,627,585 (10,627,585)
Due from other governmental units 146,391,429 1,163,164 147,554,593
Inventories 5,273,852 6,523,892 11,797,744 107,129
Prepaids 2,844,385 28,427,025 31,271,410
Deferred costs 4,049,605 4,049,605
Miscellaneous 3,905,746 3,384,459 7,290,205
Advances to other funds 493,243 493,243
Cash and investments held by trustee – restricted 41,878,616 2,392,748 44,271,364
Capital assets:
Land 267,945,344 2,909,679 270,855,023 6,596,777
Buildings and improvements 1,128,530,973 104,732,059 1,233,263,032 38,116,180
Machinery and equipment 171,847,818 95,247,859 267,095,677 505,809
Infrastructure 456,642,003 456,642,003
Construction in progress 168,530,055 8,897,465 177,427,520 2,465,577
(Accumulated depreciation) (293,106,434) (115,113,457) (408,219,891) (22,554,913)
Total assets 2,815,533,901 280,275,947 3,095,809,848 31,027,689
LIABILITIES
Accounts payable 54,465,027 22,291,640 76,756,667 222,188
Accrued liabilities 3,500,879 10,899,420 14,400,299 166,787
Employee compensation payable 52,333,132 8,800,651 61,133,783 20,696
Accrued interest payable 2,977,762 690,063 3,667,825
Medical claims payable 91,424,508 91,424,508
Deferred revenue 16,717,425 16,717,425 3,424
Due to other governmental units 8,945,098 2,852,434 11,797,532
Deposits held for other parties 1,099,026 1,099,026 151,978
Noncurrent liabilities:
Due within one year 58,091,196 2,532,439 60,623,635
Due in more than one year 204,053,504 32,361,965 236,415,469 280,637
Total liabilities 402,183,049 171,853,120 574,036,169 845,710
NET ASSETS
Invested in capital assets, net of related debt 1,811,332,732 72,392,695 1,883,725,427 25,129,430
Restricted for:
General government 8,878,330 8,878,330
Public safety 117,737,265 117,737,265
Highways and streets 44,108,918 44,108,918
Health, welfare and sanitation 7,078,052 13,927,912 21,005,964
Culture and recreation 15,691,288 15,691,288
Debt service 10,969,118 2,392,748 13,361,866
Unrestricted 397,555,149 19,709,472 417,264,621 5,052,549
Total net assets $ 2,413,350,852 $ 108,422,827 $2,521,773,679 $ 30,181,979
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, 2004
24
Program Revenues
Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions
Functions/Programs
Primary government:
Governmental activities:
General government $ 185,518,463 $ 26,589,393 $ 384,090 $ 5,380,697
Public safety 581,443,588 78,288,469 89,186,923
Highways and streets 44,392,614 1,769,524 94,772,833 13,261,238
Health, welfare and sanitation 332,380,442 26,745,928 95,910,780
Culture and recreation 27,963,450 8,546,372 1,566,496 275,818
Education 19,170,903 4,146,571 12,475,576
Interest on long-term debt 8,249,310
Total governmental activities 1,199,118,770 146,086,257 294,296,698 18,917,753
Business-type activities:
Medical Center 371,991,804 380,554,715 5,343,030 9,833
Arizona Health Care Cost Containment System (AHCCCS)-–
Acute Health Care program 167,346,474 138,274,739
AHCCCS–-Arizona Long-Term Care System (ALTCS) program 273,164,762 234,370,191
Non-AHCCCS health care programs (Senior Select and
Health Select) 82,737,548 59,656,677 1,338,868
Other business-type activity 1,336,866 230,389
Total business-type activities 896,577,454 813,086,711 6,681,898 9,833
Total primary government $ 2,095,696,224 $ 959,172,968 $ 300,978,596 $ 18,927,586
Component unit:
Housing Authority $ 16,532,616 $ 1,405,829 $ 14,010,136 $ 502,525
Total component unit $ 16,532,616 $ 1,405,829 $ 14,010,136 $ 502,525
General revenues:
Taxes:
Property taxes, levied for general purposes
Property taxes, levied for Flood Control District
Property taxes, levied for Library District
Property taxes, levied for debt service
Share of state sales taxes
Sales tax – Jail construction and operation
Surcharge tax – Stadium District
Vehicle license tax
Grants and contributions not restricted to specific programs
Unrestricted investment earnings
Gain 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 Component Unit
Governmental Business-Type Housing
Activities Activities Total Authority
$ (153,164,283) $ $ (153,164,283) $
(413,968,196) (413,968,196)
65,410,981 65,410,981
(209,723,734) (209,723,734)
(17,574,764) (17,574,764)
(2,548,756) (2,548,756)
(8,249,310) (8,249,310)
(739,818,062) (739,818,062)
13,915,774 13,915,774
(29,071,735) (29,071,735)
(38,794,571) (38,794,571)
(21,742,003) (21,742,003)
(1,106,477) (1,106,477)
(76,799,012) (76,799,012)
(739,818,062) (76,799,012) (816,617,074)
$ (614,126)
$ (614,126)
328,580,647 328,580,647
50,702,924 50,702,924
14,414,827 14,414,827
19,267,865 19,267,865
358,056,954 358,056,954
107,441,209 107,441,209
5,556,717 5,556,717
116,054,332 116,054,332
1,775,295 1,775,295
8,626,732 796,848 9,423,580
21,601,858 21,601,858
3,915,244 3,915,244
(58,278,148) 58,278,148
977,716,456 59,074,996 1,036,791,452
237,898,394 (17,724,016) 220,174,378 (614,126)
2,175,452,458 126,146,843 2,301,599,301 30,796,105
$ 2,413,350,852 $ 108,422,827 $ 2,521,773,679 $ 30,181,979
Maricopa County
Balance Sheet
Governmental Funds
June 30, 2004
26
JAIL GENERAL
GENERAL OPERATIONS OBLIGATION
ASSETS
Cash in bank and on hand $ 84,395 $ 480,200 $
Cash and investments held by County Treasurer 240,150,824 44,832,430 20,568,300
Receivables 10,894,195 191,013
Due from other funds 30,748,592
Due from other governmental units 78,862,484 22,925,239
Inventories 1,907,537 224,265
Miscellaneous 950,193 3,318
Advances to other funds 493,243
Cash and investments held by trustee - restricted
Total assets $ 364,091,463 $ 68,656,465 $ 20,568,300
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable $ 14,114,344 $ 3,955,269 $
Employee compensation payable 8,887,349 2,957,871
Accrued liabilities 1,111,023 11,673
Due to other funds 14,934,234 273,153
Due to other governmental units 3,391
Interest payable 403,300
Bonds payable 20,165,000
Special assessment debt with governmental commitment
Deferred revenue 6,738,621
Deposits held for other parties
Total liabilities 45,785,571 7,201,357 20,568,300
Fund balances:
Reserved for:
Inventories 1,907,537 224,265
Advances 493,243
Debt service
Unreserved, reported in:
General fund 315,905,112
Special revenue funds 61,230,843
Capital projects funds
Debt service funds
Total fund balances 318,305,892 61,455,108
Total liabilities and fund balances $ 364,091,463 $ 68,656,465 $ 20,568,300
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, 2004, 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
LEASE GOVERNMENTAL GOVERNMENTAL
REVENUE FUNDS FUNDS
$ $ 995,432 $ 1,560,027
58,257,850 272,289,640 636,099,044
241,224 2,896,832 14,223,264
15,833,478 274,458 46,856,528
44,603,706 146,391,429
1,792,575 3,924,377
1,168,016 2,121,527
493,243
20,663,429 21,215,187 41,878,616
$ 94,995,981 $ 345,235,846 $ 893,548,055
$ $ 32,523,502 $ 50,593,115
4,215,013 16,060,233
2,371,766 3,494,462
19,239,870 34,447,257
8,941,707 8,945,098
2,314,990 12,165 2,730,455
7,675,306 27,840,306
31,688 31,688
30,223,145 36,961,766
1,099,026 1,099,026
9,990,296 98,657,882 182,203,406
1,792,575 3,924,377
493,243
10,673,133 9,808,684 20,481,817
315,905,112
126,415,567 187,646,410
108,561,138 108,561,138
74,332,552 74,332,552
85,005,685 246,577,964 711,344,649
$ 94,995,981 $ 345,235,846
1,897,113,009
20,244,341
2,736,185
(218,087,332)
$ 2,413,350,852
Maricopa County
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
For the Fiscal Year Ended June 30, 2004
28
JAIL GENERAL
GENERAL OPERATIONS OBLIGATION
REVENUES
Taxes $ 327,367,793 $ 107,441,209 $ 19,267,865
Licenses and permits 1,306,694
Intergovernmental 481,790,371 22,839,108
Charges for services 26,241,389 5,359
Fines and forfeits 12,858,596
Special assessments
Miscellaneous 9,818,701 346,171 166,217
Total revenues 859,383,544 130,631,847 19,434,082
EXPENDITURES
Current:
General government 115,038,598
Public safety 288,548,167 167,999,472
Highways and streets
Health, welfare and sanitation 211,158,698
Culture and recreation 1,147,991
Education 1,883,863
Debt service:
Principal 20,165,000
Interest 806,600
Other expenditures
Capital outlay 22,919,710 7,179,516
Total expenditures 640,697,027 175,178,988 20,971,600
Excess (deficiency) of revenues over expenditures 218,686,517 (44,547,141) (1,537,518)
OTHER FINANCING SOURCES (USES)
Transfers in 32,539 120,866,924 847,711
Transfers out (197,725,521) (48,585,819) (32,539)
Capital lease agreements 6,333,484
Proceeds from bond issuance
Bond premium
Payment to escrow agent
Total other financing sources (uses) (191,359,498) 72,281,105 815,172
Net change in fund balances 27,327,019 27,733,964 (722,346)
Fund balances at beginning of year (restated) 292,657,135 33,852,162 722,346
Increase (decrease) in reserve for inventories (1,678,262) (131,018)
Fund balances at end of year $ 318,305,892 $ 61,455,108 $
The notes to the financial statements are an integral part of this statement.
29
OTHER TOTAL
LEASE GOVERNMENTAL GOVERNMENTAL
REVENUE FUNDS FUNDS
$ $ 70,674,468 $ 524,751,335
30,322,688 31,629,382
274,334,780 778,964,259
45,436,176 71,682,924
4,307,781 17,166,377
3,584,883 3,584,883
1,004,088 37,639,527 48,974,704
1,004,088 466,300,303 1,476,753,864
3,188,174 118,226,772
107,169,346 563,716,985
41,549,321 41,549,321
119,869,308 331,028,006
18,439,491 19,587,482
16,931,624 18,815,487
11,448,564 3,545,577 35,159,141
4,570,412 3,451,285 8,828,297
260,371 6,386 266,757
218,366,469 248,465,695
16,279,347 532,516,981 1,385,643,943
(15,275,259) (66,216,678) 91,109,921
5,226,039 168,895,430 295,868,643
(111,669,097) (358,012,976)
6,333,484
12,353,671 3,244,591 15,598,262
457,156 457,156
(12,353,671) (12,353,671)
5,683,195 60,470,924 (52,109,102)
(9,592,064) (5,745,754) 39,000,819
94,597,749 252,240,571 674,069,963
83,147 (1,726,133)
$ 85,005,685 $ 246,577,964 $ 711,344,649
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, 2004
30
Net change in fund balances – total governmental funds (page 29) $ 39,000,819
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. 212,868,024
The net effect of various miscellaneous transactions involving capital assets (i.e.,
sales, trade-ins, and donations) is to decrease net assets. (48,154,935)
Revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds. 2,844,616
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. 30,491,770
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. (7,702,218)
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. 8,550,318
Change in net assets of governmental activities (page 25) $ 237,898,394
The notes to the financial statements are an integral part of this statement.
31
Maricopa County
Statement of Net Assets
Proprietary Funds
June 30, 2004
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 9,936,829 40,811,335
Receivables:
Accounts (net of allowances) 48,040,909 20,541,254 17,321,380
Accrued interest
Due from other funds 34,901,911 7,407,830 6,051,523
Due from other governmental units 1,163,164
Inventories 6,523,892
Prepaids 1,418,959 3,610,985 22,496,298
Miscellaneous 807,186 13,260 25,421
Total current assets 92,856,021 41,510,158 86,705,957
Noncurrent assets:
Restricted:
Cash and investments held by trustee 2,358,527
Capital assets:
Land 1,722,193
Buildings and improvements 104,668,497
Machinery and equipment 82,419,846 3,383,336 6,967,447
Construction in progress 8,897,465
Less accumulated depreciation (105,535,317) (3,383,336) (3,654,012)
Total noncurrent assets 94,531,211 3,313,435
Total assets 187,387,232 41,510,158 90,019,392
LIABILITIES
Current liabilities:
Vouchers payable 19,015,918 262,922 1,829,526
Employee compensation payable 8,784,565
Accrued liabilities 3,154,966 1,362,469 2,435,253
Interest payable 606,663
Due to other funds 21,864,994 23,048,091 12,918,379
Due to other governmental units 2,852,434
Medical claims payable 28,171,999 55,594,887
Accrued interest 82,009
Advances from other funds 34,006
Leases payable (current portion)
Installment purchase agreements (current portion) 393,200
Certificates of participation (current portion) 365,000
Lease revenue bonds payable (current portion) 1,386,864
Liability for reported and incurred but not reported claims (current portion)
Liability for closure and postclosure costs (current portion)
Total current liabilities 58,540,619 52,845,481 72,778,045
Noncurrent liabilities:
Leases payable
Advances from other funds 374,071
Installment purchase agreements 858,849
Certificates of participation 5,500,000
Lease revenue bonds payable 15,207,425
Liability for reported and incurred but not reported claims
Liability for closure and postclosure costs
Total noncurrent liabilities 21,940,345
Total liabilities 80,480,964 52,845,481 72,778,045
NET ASSETS
Invested in capital assets, net of related debt 68,053,269 3,313,435
Restricted for debt service 2,358,527
Restricted for health care 13,927,912
Unrestricted (deficit) 36,494,472 (11,335,323)
Total net assets $ 106,906,268 $ (11,335,323) $ 17,241,347
The notes to the financial statements are an integral part of this statement.
33
GOVERNMENTAL
OTHER ACTIVITIES -
NON-AHCCCS ENTERPRISE INTERNAL SERVICE
HEALTH PLANS FUND TOTALS FUNDS
$ $ 500 $ 500 $ 6,227,441
15,139,468 65,887,632 41,386,829
477,490 86,381,033
6,882 62,592 69,474 183,076
15,470,166 63,831,430
1,163,164
6,523,892 1,349,475
900,783 28,427,025 2,844,385
2,534,512 4,080 3,384,459 1,784,219
19,389,833 15,206,640 255,668,609 53,775,425
34,221 2,392,748
1,187,486 2,909,679
63,562 104,732,059 323,649
2,477,230 95,247,859 6,785,800
8,897,465
(2,540,792) (115,113,457) (3,832,699)
1,221,707 99,066,353 3,276,750
19,389,833 16,428,347 354,734,962 57,052,175
1,174,487 8,787 22,291,640 3,871,911
16,086 8,800,651 637,333
3,939,637 7,095 10,899,420 6,417
1,391 608,054
16,627,551 74,459,015 1,781,686
2,852,434
7,657,622 91,424,508
82,009
6,083 40,089
104,707
393,200
365,000
32,830 1,419,694
20,952,699
314,456 314,456
29,399,297 386,728 213,950,170 27,354,753
242,173
79,083 453,154
858,849
5,500,000
43,499 15,250,924
26,719,064
10,299,038 10,299,038
10,421,620 32,361,965 26,961,237
29,399,297 10,808,348 246,312,135 54,315,990
1,025,991 72,392,695 2,929,870
34,221 2,392,748
13,927,912
(10,009,464) 4,559,787 19,709,472 (193,685)
$ (10,009,464) $ 5,619,999 $ 108,422,827 $ 2,736,185
Maricopa County
Statement of Revenues, Expenses, and Changes in Fund Net Assets
Proprietary Funds
For the Fiscal Year Ended June 30, 2004
34
BUSINESS-TYPE ACTIVITIES -
ENTERPRISE FUNDS
MEDICAL MARICOPA
CENTER HEALTH PLAN ALTCS
OPERATING REVENUES
Net patient service revenue $ 352,689,693 $ $
Charges for services 20,823,685 138,274,739 234,370,191
Miscellaneous 7,041,337
Total operating revenues 380,554,715 138,274,739 234,370,191
OPERATING EXPENSES
Personal services 167,788,404 5,684,945 15,081,551
Supplies 55,088,794 901,444 1,869,606
Medical services 25,547,888 148,106,924 238,778,160
Other services 40,136,825 761,677 856,044
Legal
Insurance
Leases and rentals 4,069,154 90,125 822,162
Repairs and maintenance 4,580,632
Travel and transportation
Utilities 4,474,642
Provision for doubtful accounts 35,350,408
Indigent patient direct write-offs 16,938,127
Depreciation 13,311,883 857,174
Miscellaneous 2,347,409 699,116 1,421,123
Bad debt expense 9,171,796 10,110,105
Total operating expenses 369,634,166 165,416,027 269,795,925
Operating income (loss) 10,920,549 (27,141,288) (35,425,734)
NONOPERATING REVENUES (EXPENSES)
Grant revenues 5,343,030
Investment income 9,833 232,698 354,789
Interest expense (1,774,501)
Premium tax (1,930,447) (3,368,837)
Gain (loss) on disposal of capital assets
Other (583,137)
Total nonoperating revenues (expenses) 2,995,225 (1,697,749) (3,014,048)
Income (loss) before contributions and transfers 13,915,774 (28,839,037) (38,439,782)
Capital contributions
Transfers in 15,374,170 3,894,421 29,289,813
Transfers out (818,405)
Change in net assets 28,471,539 (24,944,616) (9,149,969)
Total net assets (deficit) – beginning 78,434,729 13,609,293 26,391,316
Total net assets (deficit) – ending $ 106,906,268 $ (11,335,323) $ 17,241,347
The notes to the financial statements are an integral part of this statement.
35
GOVERNMENTAL
OTHER ACTIVITIES -
NON-AHCCCS ENTERPRISE INTERNAL SERVICE
HEALTH PLANS FUND TOTALS FUNDS
$ $ $ 352,689,693 $
59,656,677 209,145 453,334,437 82,544,424
21,244 7,062,581 359,696
59,656,677 230,389 813,086,711 82,904,120
3,294,320 232,604 192,081,824 7,644,882
516,522 11,475 58,387,841 10,133,470
77,885,503 490,318,475
1,082,962 42,837,508 4,515,832
6,702,686
545,346 545,346 38,650,764
119,554 9,100 5,110,095 1,722,254
4,580,632 2,337,188
64,199
1,888 4,476,530 4,835,014
35,350,408
16,938,127
14,169,057 419,330
376,303 4,843,951
19,281,901
82,737,548 1,338,029 888,921,695 77,025,619
(23,080,871) (1,107,640) (75,834,984) 5,878,501
1,338,868 6,681,898
52,750 156,611 806,681 471,054
(7,633) (1,782,134) (35,710)
(5,299,284)
8,796 8,796 (55,822)
(583,137)
1,391,618 157,774 (167,180) 379,522
(21,689,253) (949,866) (76,002,164) 6,258,023
11,679,789 60,238,193 2,374,000
(1,141,640) (1,960,045) (81,705)
(10,009,464) (2,091,506) (17,724,016) 8,550,318
7,711,505 126,146,843 (5,814,133)
$ (10,009,464) $ 5,619,999 $ 108,422,827 $ 2,736,185
Maricopa County
Statement of Cash Flows
Proprietary Funds
For the Fiscal Year Ended June 30, 2004
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 $ 296,090,501 $ 126,966,405 $ 226,518,816
Charges for services
Other receipts
Payments for goods and services (135,619,023) (121,712,334) (234,491,844)
Payments for personal services (166,850,840) (5,684,946) (14,574,086)
Net cash provided by (used for) operating activities (6,379,362) (430,875) (22,547,114)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Advances from General Fund 21,864,994
Grant receipts 5,039,756
Cash transfers from other funds 34,726,232 1,750,000 27,500,000
Cash transfers to other funds (467,860) (6,333,433) (15,540,587)
Interest payments (507,980)
Loan payments to General Fund (47,285,472)
Premium tax (1,927,658) (3,382,676)
Claims paid for other County Health Plans (2,215,793)
Reimbursements received from other County Health Plans 4,223,002
Net cash provided by (used for) noncapital financing activities 13,369,670 (8,726,884) 12,799,739
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Purchase of capital assets (3,511,612) (757,612)
Capital lease payments
Certificates of participation payments (4,912,000)
Lease revenue bond payments (5,841,955)
Installment purchase contract payments (1,098,475)
Interest payments on long-term debt (1,545,614)
Advances from other funds 408,077
Proceeds from refunding lease revenue bonds 4,450,000
Proceeds from sale of capital assets
Net cash provided by (used for) capital and related financing activities (12,051,579) (757,612)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest and dividends 9,833 294,394 511,542
Net cash provided by investing activities 9,833 294,394 511,542
Net increase (decrease) in cash and cash equivalents (5,051,438) (8,863,365) (9,993,445)
Cash and cash equivalents, July 1, 2003 7,409,965 18,800,194 50,804,780
Cash and cash equivalents, June 30, 2004 $ 2,358,527 $ 9,936,829 $ 40,811,335
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY
(USED FOR) OPERATING ACTIVITIES
Operating income (loss) $ 10,920,549 $ (27,141,288) $ (35,425,734)
Adjustments to reconcile operating income (loss) to net cash
provided by (used for) operating activities
Depreciation expense 13,311,883 857,174
Provision for doubtful accounts 35,350,408
Indigent patient direct write-offs 16,938,127
Liability for reported and incurred but not reported claims – noncurrent
Net change in liability for postclosure costs – noncurrent
Changes in assets [(increase) / decrease] and liabilities [increase / (decrease)]:
Accounts receivable (49,562,303) (10,973,746) (8,580,623)
Due from other funds (34,901,911)
Inventories (284,573)
Prepaids (27,792) 2,562,845 (15,359,889)
Miscellaneous (477,279)
Vouchers payable 5,275,908 (95,467) 1,069,119
Employee compensation payable 937,564
Accrued liabilities (3,602,629) (308,556) 764,412
Due to other funds 20,106,816 5,052,629
Due to other governmental units (257,314)
Medical claims payable 15,418,521 29,075,798
Liability for reported and incurred but not reported claims – current
Liability for closure and postclosure costs – current
Net cash provided by (used for) operating activities $ (6,379,362) $ (430,875) $ (22,547,114)
SCHEDULE OF NONCASH INVESTING, CAPITAL AND NONCAPITAL FINANCING
ACTIVITIES – Debit (Credit)
Allowance for uncollectible accounts $ 53,817,758 $ $
Elimination of uncollectible accounts receivable (53,817,758)
Buildings and improvements (522,781)
Transfers to other funds 350,545
Deletion of accumulated depreciation 172,236
Accumulated depreciation from disposed capital assets
Machinery and equipment disposed
Loss on disposal of capital assets
Machinery and equipment acquired 601,094
Vouchers payable (574,200)
Reclassification of capitalized assets to expense (26,894)
Transfer out capital assets to County-wide capital assets
Accumulated depreciation transferred to County-wide capital assets
Capital assets transferred to County-wide capital assets
Capital assets transferred from County-wide capital assets
Accumulated depreciation transferred from County-wide capital assets
Due from other funds 2,144,421 1,789,813
Transfers from other funds (2,144,421) (1,789,813)
Transfer to Governmental Activities to transfer costs of remedial investigations to the Solid Waste fund
Liability for closure and postclosure costs payable – noncurrent
Expense prepaid pharmacy start-up costs 583,137
Allocated pharmacy prepaid costs (other assets) (583,137)
The notes to the financial statements are an integral part of this statement.
37
GOVERNMENTAL
OTHER ACTIVITIES -
NON-AHCCCS ENTERPRISE INTERNAL SERVICE
HEALTH PLANS FUND TOTALS FUNDS
$ $ $ 649,575,722 $
60,805,895 209,145 61,015,040 81,331,150
21,244 21,244 278,829
(62,927,500) (564,867) (555,315,568) (65,364,083)
(3,294,320) (230,391) (190,634,583) (7,586,304)
(5,415,925) (564,869) (35,338,145) 8,659,592
21,864,994 1,781,686
1,338,868 6,378,624
3,201,747 67,177,979 2,374,000
(22,341,880)
(507,980) (23,647)
(47,285,472) (1,523,038)
(5,310,334)
(2,215,793)
4,223,002
4,540,615 21,983,140 2,609,001
(4,269,224) (1,719,045)
(126,783)
(163,368) (5,075,368)
(5,841,955)
(1,098,475)
(6,242) (1,551,856) (12,063)
85,166 493,243
76,329 4,526,329
8,796 8,796
681 (12,808,510) (1,857,891)
51,104 136,291 1,003,164 387,670
51,104 136,291 1,003,164 387,670
(824,206) (427,897) (25,160,351) 9,798,372
824,206 15,602,086 93,441,231 37,815,898
$ $ 15,174,189 $ 68,280,880 $ 47,614,270
$ (23,080,871) $ (1,107,640) $ (75,834,984) $ 5,878,501
14,169,057 419,330
35,350,408
16,938,127
44,024
1,088,399 1,088,399
1,149,218 (67,967,454)
(4,470,166) (39,372,077)
(284,573) 397,069
3,772,841 (9,051,995) (1,091,840)
(2,534,512) (136) (3,011,927) (962,920)
277,367 4,594 6,531,521 115,538
2,213 939,777 58,578
3,797,720 (746,759) (95,812) (331,752)
16,627,551 41,786,996
(257,314)
(955,073) 43,539,246
4,133,064
194,460 194,460
$ (5,415,925) $ (564,869) $ (35,338,145) $ 8,659,592
$ $ $ 53,817,758 $
(53,817,758)
(522,781)
350,545
172,236
162,116 162,116 169,178
(162,116) (162,116) (225,000)
55,822
601,094
(574,200)
(26,894)
81,705
5,756
(87,461)
16,410
(16,410)
8,478,042 12,412,276
(8,478,042) (12,412,276)
1,141,640 1,141,640
(1,141,640) (1,141,640)
583,137
(583,137)
Maricopa County
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2004
38
INVESTMENT
TRUST FUND
TREASURER’S
INVESTMENT AGENCY
POOL FUND
Assets
Cash in bank and on hand $ $ 29,114,744
Cash and investments held by County Treasurer 1,486,708,300
Accrued interest receivable 5,873,297
Total assets 1,492,581,597 29,114,744
Liabilities
Deposits held for other parties 29,114,744
Total liabilities $ 29,114,744
Net Assets
Held in trust for investment participants $ 1,492,581,597
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, 2004
39
INVESTMENT
TRUST FUND
TREASURER’S
INVESTMENT
POOL
Additions:
Contributions from participants $ 9,745,068,937
Investment income:
Interest income 21,859,899
Net decrease in fair value of investments (11,760,721)
Net investment earnings 10,099,178
Total additions 9,755,168,115
Deductions:
Distributions to participants 9,559,556,953
Total deductions 9,559,556,953
Change in net assets 195,611,162
Net assets – beginning 1,296,970,435
Net assets – ending $ 1,492,581,597
The notes to the financial statements are an integral part of this statement.
40
Financial Section
Basic Financial Statements - Notes
Maricopa County
Notes to the Financial Statements
For the Fiscal Year Ended June 30, 2004
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 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 MUNICIPAL REVOLVING LINE OF CREDIT AND IRREVOCABLE STANDBY
LETTER OF CREDIT
NOTE 15 OPERATING LEASES
NOTE 16 RISK MANAGEMENT
NOTE 17 EMPLOYEE RETIREMENT PLANS
NOTE 18 INTERFUND BALANCES AND ACTIVITY
NOTE 19 DISPROPORTIONATE SHARE SETTLEMENT
NOTE 20 MEDICAL CENTER FUND’S OPERATING REVENUES
NOTE 21 SUBSEQUENT EVENTS
Maricopa County
Notes to the Financial Statements
For the Fiscal Year Ended June 30, 2004
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).
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 and discretely presented component unit discussed below has a June 30 year-end.
The reporting entity is 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, Maricopa County Street Lighting
Districts, and the Housing Authority of Maricopa County.
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 Maricopa County Board of Supervisors serves as the Board of Directors of the Flood Control
District, it is able to significantly influence the programs, projects, activities, or level of services
provided by the District; therefore, the District is considered a blended component unit of the County.
Maricopa County Library District
The Maricopa County Library District is a legally separate entity that provides and maintains library
services for the residents of Maricopa County. As the Maricopa County Board of Supervisors serves
as the Board of Directors of the Library District, it is able to significantly influence the programs,
projects, activities, or level of services provided by the District; therefore, the District is considered a
blended component unit of the County.
Maricopa County Public Finance Corporation
Maricopa County Public Finance Corporation is a nonprofit corporation created by the Maricopa
County Board of Supervisors that exists primarily to assist the County in the acquisition, construction,
and improvement of County facilities, including real property and personal property. The Board of
Directors of the Public Finance Corporation is subject to the approval of the County Board of
Supervisors and the corporation exists primarily for the benefit of the County; therefore, the
corporation is considered a blended 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. Since this debt is in substance the County’s obligation, these
liabilities and resulting assets are reported on the County’s financial statements.
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 Maricopa County Board of Supervisors serves as the Board of
Directors of the Maricopa County Special Assessment Districts, it is able to significantly influence the
activities or level of services provided by the Districts; therefore, the Districts are considered a blended
component unit of the County.
Maricopa County Stadium District
The Maricopa County 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
Maricopa County Board of Supervisors serves as the Board of Directors of the Stadium District, it is
able to significantly influence the programs, projects, activities, or level of services provided by the
District; therefore, the District is considered a blended component unit of the County.
Complete financial statements for 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
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 Maricopa County Board of Supervisors serves
as the Board of Directors of the Maricopa County Street Lighting Districts, the Districts are considered
a blended component unit of the County.
The discretely presented component unit follows:
Housing Authority of Maricopa County
On July 1, 2003, the Housing Authority of Maricopa County became a legally separate entity pursuant
to A.R.S. §36-1404. The Housing Authority provides efficient and affordable rental housing to low-income
households of Maricopa County. Each member of the Maricopa County Board of Supervisors
appoints one member to the Board of Commissioners while the sixth member shall be based on the
recommendation of the County Administrative Officer and the seventh member shall be appointed by
a majority vote of the Maricopa County Board of Supervisors. The County does not have the ability to
impose its will on the Housing Authority. The Housing Authority is a discretely presented component
unit, as the Maricopa County Board of Supervisors may dissolve the Authority at any time at the sole
discretion of the County and therefore, a financial benefit or burden exists.
Complete financial statements for the Housing Authority of Maricopa County may be obtained at the
entity’s administrative office listed below:
Housing Authority of Maricopa County
2024 North Seventh Street, Suite 101
Phoenix, Arizona 85006
Notes to the Financial Statements
(Continued)
46
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 financial
statements. The government-wide statements focus on the County as a whole, while the fund
financial statements focus on major funds. Each presentation provides valuable information that can
be analyzed and compared between years and between governments to enhance the usefulness of
the information.
Government-wide 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 and between the County and its discretely presented component unit. 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.
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, including special assessments.
Revenues that are not classified as program revenues, including internally dedicated resources and all
County levied taxes or taxes not levied by the County that are not restricted to a specific program, 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.
Notes to the Financial Statements
(Continued)
47
Proprietary fund revenues and expenses are classified as either operating or nonoperating. Operating
revenues and expenses generally result from transactions associated with the fund’s principal activity.
Accordingly, revenues, such as user charges and net patient charges, in which each party receives
and gives up essentially equal values, are reported as operating revenues. Nonoperating revenues,
such as subsidies and investment income, result from transactions in which the parties do not
exchange equal values. Revenues generated by ancillary activities are also reported as nonoperating
revenues. Operating expenses include the cost of services, administrative expenses, and
depreciation on capital assets. Other expenses, such as interest expense, are considered to be
nonoperating expenses.
The County reports the following major governmental funds:
The General Fund – is the County’s primary operating fund. It accounts for all financial resources of
the general government, except those required to be accounted for in another fund.
The Jail 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 of one-cent sales tax to be used for the construction and operation of adult and juvenile
detention facilities. On November 5, 2002, the voters approved the extension of the 1/5 of one-cent
sales tax in the General Election. The extension begins in the month following the expiration of the
original tax and may continue for not more than twenty years after the date the tax collection begins.
The Jail Operations Fund accounts for the jail tax revenue and transfers from the General Fund for
maintenance of effort and jail operations expenditures. The Jail Operations Fund transfers monies to
the Jail Construction Fund for the construction of the jail facilities. The amount to be transferred to the
Jail Construction Fund for any given year is determined through the budget planning process and tied
to the jail tax collection projection and construction schedules.
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.
The Lease Revenue Fund – accounts for the debt service on the Lease Revenue Bonds, Series 2001,
and the Lease Revenue Refunding Bonds, Series 2003. Funding is provided by transfers from the
General Fund.
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 program 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 Acute Health Care program
enrollment.
The Arizona Long-Term Care System (ALTCS) Fund – is a managed care, long-term care program
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 Non-AHCCCS Health Plans Fund – accounts for the operations of the Non-AHCCCS health care
programs consisting primarily of the following:
Health Select – a managed health care program offered to employees, spouses and their families and
Senior Select – a Medicare program operating under contract with the Federal government.
Notes to the Financial Statements
(Continued)
48
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 pooled 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 other governments and
individuals.
C. Basis of Accounting
The government-wide, proprietary fund, and fiduciary fund financial statements are presented using
the economic resources measurement focus and the accrual basis of accounting. Revenues are
recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of
when the related cash flows take place. Property taxes are recognized as revenue in the year for
which they are levied. Grants and donations are recognized as revenue as soon as all eligibility
requirements imposed by the provider have been met.
Governmental funds in the fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Under this method, revenues are
recognized when measurable and available. The County considers all revenues reported in the
governmental funds to be available if the revenues are collected within 60 days after year-end.
Expenditures are recorded when the related fund liability is incurred, except for principal and interest
on general long-term debt, claims and judgments and compensated absences, which are recognized
as expenditures to the extent they are due and payable. General capital asset acquisitions are
reported as expenditures in governmental funds. 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, enterprise funds, and the discretely presented component unit
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. The County has chosen the option to not
follow FASB Statements and Interpretations issued after November 30, 1989.
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.
Notes to the Financial Statements
(Continued)
49
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 statement of net assets for the enterprise funds is valued at
cost using the first-in, first-out method. The amount shown on the statement of net assets 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.
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 as assets with an initial,