Comprehensive annual financial report / Maricopa County, Arizona

              Comprehensive Annual
Financial Report
Board of Supervisors
Fulton Brock
Member
Don Stapley
Member
Max Wilson
Chairman
Andrew Kunasek
Member
Mary Rose Garrido Wilcox
Member
Comprehensive Annual Financial Report
Maricopa County
Phoenix, Arizona
For the Fiscal Year
July 1, 2004 to June 30, 2005
Prepared By
Department of Finance
Tom Manos, Chief Financial Officer
INTRODUCTORY SECTION
Table of Contents
Listing of Maricopa County Officials
Organizational Chart
Letter of Transmittal
Citizens Audit Advisory Committee Letter
Comprehensive Annual Financial Report
Table of Contents
For the Fiscal Year Ended June 30, 2005
i
Introductory Section
Page
Table of Contents i
Listing of Maricopa County Officials v
Organizational Chart vi
Letter of Transmittal vii
Maricopa County Citizens Audit Advisory Committee Letter x
Financial Section
Independent Auditors’ Report 1
Management’s Discussion and Analysis 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
Notes to Budgetary Comparison Schedules 86
Table of Contents (Continued)
For the Fiscal Year Ended June 30, 2005
ii
Page
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 Enhancement Fund 144
Children’s Issues Education Fund 145
Clerk of Court EDMS Fund 146
Clerk of Court Fill the Gap Fund 147
Clerk of Court Grants Fund 148
Clerk of Court Spousal Maintenance Enforcement Fund 149
Conciliation Court Special Fund 150
Correctional Health Grants Fund 151
County Attorney Check Enforcement Program Fund 152
County Attorney Criminal Justice Enhancement Fund 153
County Attorney Drug Diversion Fund 154
County Attorney Fill the Gap Fund 155
County Attorney Grants Fund 156
County Attorney Victim Compensation and Assistance Fund 157
County Attorney Victim Compensation and Restitution Fund 158
Court Automation Fund 159
Document Retrieval Fund 160
Domestic Relations Education Fund 161
Economic Development Fund 162
Emergency Management Fund 163
Environmental Services Fund 164
Environmental Services Environmental Health Fund 165
Environmental Services Grants Fund 166
Expedited Child Support Health Fund 167
Flood Control Fund 168
Flood Control Grants Fund 169
Table of Contents (Continued)
For the Fiscal Year Ended June 30, 2005
iii
Page
Special Revenue Funds (Continued)
General Government Grants Fund 170
Human Services Grants Fund 171
Juror Improvement Fund 172
Justice Court Enhancement Fund 173
Justice Court Grants Fund 174
Justice Court Judicial Enhancement Fund 175
Juvenile Probation Diversion Fees Fund 176
Juvenile Probation Grants Fund 177
Juvenile Probation Special Fees Fund 178
Juvenile Restitution Fund 179
Law Library Fund 180
Legal Defender Fill the Gap Fund 181
Library Fund 182
Library Grants Fund 183
Medical Examiner Grants Fund 184
Old Courthouse Fund 185
Palo Verde Fund 186
Parks and Recreation Grants Fund 187
Parks Donations Fund 188
Parks Enhancement Fund 189
Parks Lake Pleasant Fund 190
Parks Souvenir Fund 191
Parks Spur Cross Ranch Fund 192
Planning and Development Fund 193
Planning Project Fees Fund 194
Probate Programs Fund 195
Public Defender Fill the Gap Fund 196
Public Defender Grants Fund 197
Public Defender Training Fund 198
Public Health Fund 199
Public Health Pharmacy Fund 200
Recorder’s Surcharge Fund 201
Research and Reporting Fund 202
RICO Fund 203
Sheriff Donations Fund 204
Sheriff Grants Fund 205
Sheriff Inmate Health Services Fund 206
Sheriff Jail Enhancement Fund 207
Sheriff RICO Fund 208
Sheriff Special Funding Fund 209
Stadium District Fund 210
Superior Court Fill the Gap Fund 211
Superior Court Grants Fund 212
Superior Court Judicial Enhancement Fund 213
Superior Court Special Fund 214
Transportation Fund 215
Transportation Grants Fund 216
Trip Reduction Fund 217
Victim Location Fund 218
Waste Tire Program Fund 219
Table of Contents (Continued)
For the Fiscal Year Ended June 30, 2005
iv
Page
Debt Service Funds
Lease Revenue Fund 220
Stadium District Fund 221
Capital Projects Funds
Bank One Ballpark Project Reserve Fund 222
County Improvement Fund 223
Flood Control Capital Projects Fund 224
General Fund County Improvement Fund 225
Intergovernmental Capital Projects Fund 226
Jail Construction Fund 227
Transportation Capital Projects Fund 228
Schedule of Capital Projects – Budget and Actual
All Capital Improvement Projects 229
Nonmajor Enterprise Funds
Listing of Nonmajor Enterprise Funds 235
Combining Statement of Net Assets 236
Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets 237
Combining 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
Statistical Section
Listing of Statistical Information 255
Net Assets by Component 256
Changes in Net Assets 257
Fund Balances, Governmental Funds 259
Changes in Fund Balances, Governmental Funds 260
Tax Revenues by Source, Governmental Funds 262
Assessed Value and Estimated Market Value of Taxable Property 263
Direct and Overlapping Property Tax Rates 264
Principal Property Taxpayers 265
Property Tax Levies and Collections 266
Ratios of Outstanding Debt by Type 267
Legal Debt Margin Information 268
Pledged Revenue Coverage 269
Demographic and Economic Statistics 270
Principal Employers 271
Budgeted Full-time Equivalent County Employees by Function/Program 272
Operating Indicators by Function/Program 273
Capital Asset Statistics by Function/Program 274
v
Maricopa County Officials
BOARD OF SUPERVISORS
Fulton Brock, District 1
Don Stapley, District 2
Andrew Kunasek, District 3
Max Wilson, Chairman, District 4
Mary Rose Garrido Wilcox, District 5
♦♦♦
COUNTY MANAGER
David R. Smith
♦♦♦
CHIEF FINANCIAL OFFICER
Tom Manos
Organizational Chart
vi
Arizona Judicial Branch in Maricopa County
Trial Courts, Trial Courts, 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 CCoonnssttaabblleess ( (2233)) CCoouunnttyy A Attttoorrnneeyy
AAsssseessssoorr TTrereaasusurererr RReeccoorrddeerr
Clerk of the Board
Deputy County Manager
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 Manager
Internal Audit
Information Technology
Officer
Chief Community
Services Officer
Chief Financial
Officer
Legal Advocacy Integrated Criminal Justice
Information Systems
SShheerirfifff
CClleerkrk 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
vii
301 West Jefferson Street
10th Floor
Phoenix, AZ 85003-2143
Phone: 602-506-3571
Fax: 602-506-3328
www.maricopa.gov
December 18, 2006
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, 2005.
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 assets from loss,
theft, or misuse and to compile sufficient reliable information for preparation of Maricopa County’s
financial statements in conformity with U.S. 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, 2005, are free of material
misstatement. The independent audit involved examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements; assessing the
accounting principles used and significant estimates made by management; and evaluating
the overall financial statement presentation. The independent auditor expressed a modified
opinion on the Maricopa County financial statements for the fiscal year ended June 30,
2005. The auditors concluded that the County did not maintain adequate controls for claims
payment processing resulting in a disclaimer of opinion on two 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 GAAP. 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.
viii
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/.
Maricopa County
Citizens Audit Advisory Committee
x
301 West Jefferson Street
Suite 1090
Phoenix, AZ 85003-2143
Victoria L. Prins, CPA
Ralph W. Lamoreaux, CPA
Jill J. Rissi, MPA
Ryan T. Brownsberger
Richard J. Lozar
FINANCIAL SECTION
Independent Auditors’ Report
Management’s Discussion and Analysis
Basic Financial Statements
Basic Financial Statements – Notes
Required Supplementary Information
Budgetary Comparison Schedules – General Fund and Major
Special Revenue Fund
Notes to Budgetary Comparison Schedules
Schedule of Agent Retirement Plans’ Funding Progress
Modified Approach for Infrastructure Assets
Combining and Individual Fund Statements and Schedules
Nonmajor Governmental Funds
Nonmajor Enterprise Funds
Internal Service Funds
Agency Fund
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 vii 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 $3,038.3 million
(net assets), an increase of 3.3 percent from the prior year. Of this amount, $430.5 million
(unrestricted net assets) may be used to meet the County’s ongoing obligations to citizens and
creditors.
Composition of Net Assets
(in millions)
Unrestricted,
$430.5
Restricted, $260.5
Invested in capital
assets, net of
related debt,
$2,347.3
• The County’s total net assets as reported in the Statement of Activities increased by $96.5 million, a
56.2 percent decrease over the prior period’s increase in net assets. Of this amount, $229.7 million is
attributed to governmental activities and ($133.2) million is attributable to business-type activities. The
significant decrease in business-type activities is due to the loss on closure of the Medical Center
when it was transitioned to the Maricopa County Special Health Care District, a separate legal entity.
See page 13 for additional information.
Net Assets by Activity
(in millions)
2005
2004
2005 2004
$(500.0)
$-
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
$3,000.0
$3,500.0
Governmental Activities Business-type Activities
• The County’s governmental funds reported combined fund balances of $813.3 million, an increase in
fund balance of $102.0 million over the prior fiscal year. Approximately 96.7 percent of the combined
fund balances or $786.4 million is unreserved and available to meet the County’s current and future
needs.
Management’s Discussion and Analysis (Continued)
4
• Unreserved fund balance for the General Fund increased by 35.5 percent to $428.0 million;
approximately 54.7 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 ($24.8) million, of which total
unrestricted net assets were ($26.2) million.
• The County restated beginning balances for Flood Control District infrastructure assets for the period
July 1, 1980 through June 30, 2001, as required by GASB Statement No. 34. The total restatement
amount of $372.5 million, net of accumulated depreciation, was based on estimated historical cost.
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).
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, and other business-type activities (Non-AHCCCS Health
Plans and 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, which includes 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.
Management’s Discussion and Analysis (Continued)
5
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 three 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, 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 26-30 of this report.
• Proprietary funds are maintained two ways. Enterprise funds are used to report the same functions
presented as business-type activities in the government-wide financial 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
program (Senior Select). These four components comprise the Maricopa Integrated Health System.
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), and AHCCCS—Arizona Long-Term Care System
(ALTCS) program (ALTCS Fund) operations are considered to be major funds of the County. Data for
the Non-AHCCCS Health Care program (Non-AHCCCS Health Plans Fund) and the Solid Waste
Fund are 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.
Management’s Discussion and Analysis (Continued)
6
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 fourth 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, 2005, as
compared to the prior year.
Statement of Net Assets
As of June 30
(in millions)
Governmental Business-type
Activities Activities Total
2005 2004* 2005 2004 2005 2004*
% Chg
P/Y
Current and other assets $ 1,080.4 $ 915.2 $ 55.5 $ 183.6 $ 1,135.9 $ 1,098.8 3.4%
Capital assets 2,442.0 2,320.4 1.5 96.7 2,443.5 2,417.1 1.1
Total assets 3,522.4 3,235.6 57.0 280.3 3,579.4 3,515.9 1.8
Current liabilities 197.8 140.0 71.9 137.0 269.7 277.0 (2.6)
Long-term liabilities 261.5 262.2 9.9 34.9 271.4 297.1 (8.7)
Total liabilities 459.3 402.2 81.8 171.9 541.1 574.1 (5.7)
Net assets
Invested in capital assets,
Net of related debt 2,345.9 2,231.3 1.4 72.4 2,347.3 2,303.7 1.9
Restricted 260.5 204.5 0.0 16.3 260.5 220.8 18.0
Unrestricted 456.7 397.6 (26.2) 19.7 430.5 417.3 3.2
Total net assets $ 3,063.1 $ 2,833.4 $ (24.8) $ 108.4 $ 3,038.3 $ 2,941.8 3.3
* The governmental activities and total columns’ total net asset amounts for fiscal year 2004 were restated to $2,833.4 and $2,941.8,
respectively, for the retroactive reporting of Flood Control infrastructure assets as part of the phased implementation requirements of
GASB Statement No. 34 and prior period corrections for Flood Control and Transportation infrastructure assets (see Note 3 to the
financial statements for additional information).
Management’s Discussion and Analysis (Continued)
7
At June 30, 2005, the County’s combined governmental activities and business-type activities assets
exceeded liabilities by approximately $3.0 billion. The governmental activities comprise 238.0 percent of
the increase from the prior year, with an increase in net assets as reported in the statement of activities of
$229.7 million. The increase for governmental activities is attributed to the significant increase in the
County’s capital assets and tax revenue, as discussed below. The decrease in business-type activities
net assets of ($133.2) million from the prior year is mainly attributed to the loss on closure of the Medical
Center when it was transitioned to the Maricopa County Special Health Care District. This loss affected
all three components of net assets, and thus, will not be addressed separately below. See page 13 for
additional information.
By far, the largest portion - $2.3 billion or 77.3 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
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. The
governmental activities comprise 99.9 percent of this component of net assets.
This component of net assets for governmental activities increased by $114.6 million due to the County’s
investment in its capital assets, particularly the construction related to the jail, justice and administrative
facilities, for which a total of $68.9 million was expended and included $29.3 million in the County
Improvement Fund, $19.8 million in the General Fund County Improvement Fund, $15.5 million in the Jail
Construction Fund, and $4.3 million in the Intergovernmental Capital Projects Fund. A large portion of the
remaining increase can be attributed to the infrastructure capital projects of the Flood Control District and
the Transportation Department. These projects are accounted for in the Flood Control Capital Projects
Fund and the Transportation Capital Projects Fund, which had capital outlay expenditures of $42.7 and
$50.7 million, respectively. Further, the County received $24.8 million in Transportation infrastructure
capital asset donations that were received from other jurisdictions.
The second component of the County’s total net assets, $260.5 million or approximately 8.5 percent,
represents resources that are subject to external restrictions on how they may be used. The
governmental activities comprise 100 percent of this component of net assets. This component increased
for governmental activities by $56.0 million and business-type activities decreased by $16.3 million, for a
net change of $39.7 million. The increase in governmental activities restricted net assets is mainly
attributable to the public safety and highways and streets functions, with fund balance increases of $24.6
and $10.9 million, respectively, from the prior fiscal year. The net asset increases in these functions is
partially attributable to increases in sales taxes for jail operations and highway user revenues of $11.7
and $4.3 million, respectively.
The final component consists of unrestricted net assets, $430.5 million or 14.2 percent, and may be used
to meet the County’s ongoing obligations. The governmental activities comprise 106.1 percent of this
component. Unrestricted net assets for governmental activities increased from fiscal year 2004 by $59.1
million, or 14.9 percent. The increase in unrestricted net assets can be attributed to increase in taxes
revenue recorded in the General Fund. Unrestricted property tax, sales tax and vehicle license tax
increased $16.6, $39.7, and $6.6 million, respectively, from the prior fiscal year.
Changes in Net Assets
As discussed previously, the County’s total net assets of $3.0 billion increased by $96.5 million as
reported in the Statement of Activities. Of this amount, $229.7 million, or 238.0 percent, is attributable to
governmental activities, and ($133.2) million is related to business-type activities. A discussion of each is
presented below.
Management’s Discussion and Analysis (Continued)
8
The following table reflects the condensed Statement of Activities of the County for the fiscal year 2005
compared to the prior year and indicates the changes in net assets for Governmental and Business-type
Activities:
Statement of Activities
For the Fiscal Years Ended June 30, 2005 and June 30, 2004
(in millions)
Governmental Business-type
Activities Activities Total % Chg
2005 2004* 2005 2004 2005 2004* P/Y
Revenues:
Program revenues:
Charges for services $ 167.4 $ 146.1 $ 518.3 $ 813.1 $ 685.7 $ 959.2 (28.5)%
Operating grants and contributions 382.4 294.3 2.5 6.7 384.9 301.0 27.9
Capital grants and contributions 39.0 18.9 .1 39.1 18.9 106.9
General revenues:
Taxes 1,075.1 1,000.1 1,075.1 1,000.1 7.5
Other 27.2 14.3 1.0 .8 28.2 15.1 86.8
Total Revenues 1,691.1 1,473.7 521.9 820.6 2,213.0 2,294.3 (3.5)
Expenses:
General government 157.8 185.5 157.8 185.5 (14.9)
Public safety 685.8 581.4 685.8 581.4 18.0
Health, welfare and sanitation 439.8 332.4 439.8 332.4 32.3
Other** 122.3 99.8 122.3 99.8 22.5
Medical Center 169.0 372.0 169.0 372.0 (54.6)
AHCCCS–Acute Health Care program 132.3 167.4 132.3 167.4 (21.0)
AHCCCS–ALTCS program 252.2 273.2 252.2 273.2 (7.7)
Other business-type activities 29.9 84.0 29.9 84.0 (64.4)
Total Expenses 1,405.7 1,199.1 583.4 896.6 1,989.1 2,095.7 (5.1)
Excess (deficiency) before gain (loss) on
disposal of capital assets and transfers 285.4 274.6 (61.5) (76.0) 223.9 198.6 12.7
Gain (loss) on disposal of capital assets (18.7) 21.6 (18.7) 21.6 (186.6)
Special item – loss on closure of
business activity (108.7) (108.7) (100.0)
Transfers (37.0) (58.3) 37.0 58.3
Change in net assets 229.7 237.9 (133.2) (17.7) 96.5 220.2 (56.2)
Net assets – beginning 2,833.4 2,595.5 108.4 126.1 2,941.8 2,721.6 8.1
Net assets – ending $ 3,063.1 $ 2,833.4 $ (24.8) $ 108.4 $ 3,038.3 $ 2,941.8 3.3
* The governmental activities and total columns’ total net asset amounts for fiscal year 2004 were restated by $420.0 million for the
retroactive reporting of Flood Control infrastructure assets as part of the phased implementation requirements of GASB Statement No.
34 and prior period corrections for infrastructure assets (see Note 3 to the financial statements for additional information).
** The functions of highways and streets, culture and recreation, and education are shown in the condensed statement of activities above
as other expenses.
Governmental Activities
As previously mentioned, governmental activities contributed $229.7 million, or 238.0 percent, of the
$96.5 million increase in net assets of the County. This increase can be attributed to the treatment of
capital outlay and depreciation expense in the government-wide statements and to the increase in tax
and operating grant revenues.
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 reported as a capital asset and the expense 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 $118.8 million. As a result, net capital assets increased by
this amount, resulting in a net positive change to net assets.
Management’s Discussion and Analysis (Continued)
9
In the government-wide statement of activities, the significant revenues reported for governmental
activities included taxes (County-levied, general sales and vehicle license taxes) and operating grants.
Taxes and operating grants represent 63.6 and 22.6 percent, respectively, of total governmental activities
revenues for fiscal year 2005. Tax revenues increased by $75.0 million from sales taxes of $39.7 million,
property taxes levied of $16.6 million, other County-levied taxes of $12.1 million, and vehicle license
taxes of $6.6 million. The increase in tax revenues can be attributed to a strong economy, increasing
County population, and higher property values. Operating grants increased $88.1 million, which is
attributable to the $83.5 million in disproportionate share revenue for fiscal year 2005. See page 12 for
additional information. Tax and other operating revenues provide the principal support for the functions of
the County, which include general government; public safety; highways and streets; health, welfare and
sanitation; culture and recreation; and education.
Although governmental activities revenues increased by $217.4 million, or 14.8 percent, over the prior
period, this increase was offset by an increase in expenses. Governmental activities expenses increased
by $206.6 million, or 17.2 percent, over the prior period. The largest increase is from the health, welfare
and sanitation function of $107.4 million and includes Health Care Mandates (General Fund) increases of
$103.8 million. The increase in the Health Care Mandates consists mainly of disproportionate share of
$83.5 million that is withheld from the County’s share of state sales taxes for indigent patient care. The
General Fund recorded an expense for the state sales taxes that were withheld. The Maricopa County
Special Health Care District, which is a separate legal entity that is not part of the County’s reporting
entity, remitted disproportionate share to the County for these expenses. In prior fiscal years, the
revenue was transferred from the Medical Center, which was part of the County’s reporting entity before
its transition to the Maricopa County Special Health Care District on January 1, 2005. See page 13.
Thus, in prior fiscal years, interfund activity was eliminated for reporting purposes. Therefore, there is a
significant increase in expenses for fiscal year 2005 compared to the prior year. In addition, public safety
function expenses increased by $104.4 million and includes increases in personnel and payroll expenses
of $50.7 million, depreciation expense of $13.0 million and Flood Control District general expenses of
$19.9 million. The increases in the personnel and payroll expenses and depreciation expense can both
be attributable to the completion of the jail and justice facilities during the fiscal year and the related
operations of those facilities. The increase in Flood Control District general expenses of $19.9 million can
be attributed to infrastructure capital projects that were discontinued (i.e., surveys, studies, cancelled
projects) or projects that were annexed to other jurisdictions.
Business-Type Activities
As discussed earlier, 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, the Non-AHCCCS Health Care program (Senior Select) –
these four components are the Maricopa Integrated Health System – and Solid Waste. Business-type
activities total net assets decreased by $133.2 million from the prior fiscal year. The Maricopa Integrated
Health System comprised ($133.7) million, or 100.3 percent, of the total decrease in business-type
activities. Solid Waste comprised $.5 million or (.3) percent. The decrease in net assets is mainly
attributed to the loss on closure of business activity of $108.7 million for the transfer of the Medical Center
to the Maricopa County Special Health Care District, a separate legal entity that is not part of the County’s
reporting entity. Without the loss on closure, the decrease in net assets would have been $24.5 million
and is predominately from the Maricopa Health Plan of $9.3 million and ALTCS of $24.0 million. For
additional information on the transfer of the Medical Center see page 13.
The primary revenue source for business-type activities is charges for services, which comprise $518.3
million or 99.3 percent of total business-type revenues. This component consists mainly of patient service
revenues and charges for services revenues from the Maricopa Integrated Health System, which include
inpatient and outpatient medical and nursing services; attendant care services; and managed institutional,
home, and community-based long-term care services. The primary expense for business-type activities
consists of medical and personal services costs that account for $508.7 million of the $574.9 million in
operating expenses.
Management’s Discussion and Analysis (Continued)
10
Charges for services revenues for business-type activities decreased $294.8 million or 36.3 percent from
the previous fiscal year. This includes revenue decreases for the Medical Center of $219.1 million,
AHCCCS – Acute Health Care program of $20.6 million, AHCCCS – ALTCS program of $13.6 million,
and Non-AHCCCS Health Care program of $38.9 million. Although charges for services revenues
decreased by $294.8 million or 36.3 percent, expenses also decreased $313.2 million or 34.9 percent for
a net change of ($18.4) million from the prior year. This includes decreases in the Medical Center of
$203.0 million, AHCCCS – Acute Health Care program of $35.1 million, AHCCCS – ALTCS program of
$21.0 million, and Non-AHCCCS Health Care program of $53.4 million. The decreases in revenues and
expenses can be attributed to the transition of the Medical Center to the Maricopa County Special Health
Care District on January 1, 2005, and the transfer of the Health Select program (Non-AHCCCS Health
Care program) to the Employee Benefits Trust Fund (internal service trust fund) on January 1, 2004. The
remaining decreases in revenues and expenses can be attributed to a decrease in membership for the
AHCCCS – Acute Health Care program and AHCCCCS – ALTCS Health Care program. Effective
September 30, 2005, the AHCCCS—Acute Health Care program and the AHCCCS—ALTCS Health Care
program were discontinued by the County. These programs experienced decreasing membership prior to
the actual discontinuation in September 2005.
Financial Analysis of the County’s Funds
As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements.
Governmental Funds. Governmental activities are contained in the general, special revenue, debt
service, and capital projects funds. The focus of the County’s governmental funds is to provide
information on near-term inflows, outflows, and balances of spendable resources. Such information is
useful in assessing the County’s financing requirements. In particular, unreserved fund balance may
serve as a useful measure of a government’s net resources available for spending at the end of the fiscal
year.
As of June 30, 2005, the governmental funds reported combined fund balances of $813.3 million and an
increase in fund balance of $102.0 million over the prior fiscal year. Approximately 96.7 percent of the
combined fund balances or $786.4 million is available to meet the County’s current and future needs
(unreserved fund balance). The remaining fund balance is reserved for inventories, intergovernmental
loans, 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 $428.0 million, while total fund balance reached
$431.3 million. This represents an increase in unreserved fund balance from the prior year of $112.1
million, or 35.5 percent. This increase can be attributed to increases in tax revenue of $32.7 million,
intergovernmental revenue of $133.5 million, and operating transfers in of $40.6 million. These increases
are offset by increases in public safety and health, welfare and sanitation expenditures of $28.9 and
$106.2 million respectively. See page 12 for additional information. 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 54.7 percent of the total fiscal year 2005 General
Fund expenditures, while total fund balance represents 55.1 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.
Management’s Discussion and Analysis (Continued)
11
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 $76.7 million, of which more
than 99 percent is unreserved. This was an increase in total fund balance of $15.3 million, or 24.9
percent, from the prior fiscal year. Although the fund had more expenditures than revenues by $70.2
million, the increase in fund balance can be partially attributed to net transfers of $85.6 million, which was
a net increase of $13.3 million over the prior year. Transfers from the General Fund for maintenance of
effort were $133.2 million while transfers to the Jail Construction Fund were $47.6 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 Lease Revenue Fund is a debt service fund that accounts for the debt service on the Lease Revenue
Bonds, Series 2001; Lease Revenue Refunding Bonds, Series 2003; Lease Trust Certificates, Series
2004; and other long-term obligations. 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, is
provided by transfers from the departments who benefited by the refunding bond issue and
intergovernmental revenue from the Maricopa County Special Health Care District. Funding for the Lease
Trust Certificates, Series 2004, is provided by pledged contributions from various donors that are used to
repay Maricopa County for long-term financing pertaining to the Human Services Campus improvements.
At the end of the current fiscal year, unreserved fund balance of the Lease Revenue Fund was $36.6
million, while total fund balance was $47.3 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)
2005 2004 Increase/(Decrease)
Percent Percent % Chg
Revenues by Source Amount of Total Amount of Total Amount P/Y
Taxes $556.8 34% $524.8 36% $32.0 6.1%
Intergovernmental 904.2 55 779.0 53 125.2 16.1
Other 191.6 11 173.0 11 18.6 10.8
Totals $1,652.6 100% $1,476.8 100% $175.8 11.9
During fiscal year 2005, the County experienced an increase in governmental revenues from the previous
year of $175.8 million, an 11.9 percent increase. This increase is attributable to increases in taxes
revenue and intergovernmental revenue of $32.0 and $125.2 million respectively. Intergovernmental and
taxes revenues comprises 89 percent of total governmental funds revenue. A discussion of each increase
follows.
Tax revenues increased primarily from property tax revenue of $18.0 million and jail excise tax revenue of
$12.6 million. Although the County did not increase the property tax levy rate, an increase in the
assessed value and new housing resulted in an additional $18.0 million in revenue. Property tax revenue
increases were counterbalanced by the elimination of the debt service property tax levy, as the voter
approved General Obligation bonds were fully repaid on July 1, 2004. In fiscal year 2004, the County
collected $18.9 million in debt service property tax revenue. Jail excise tax revenue consists of a special
sales tax levy created by voter approval for the construction and operation of juvenile and adult detention
facilities. See page 10 for additional information. As the revenues generated are contingent on the
Management’s Discussion and Analysis (Continued)
12
amount of sales revenue generated in the County, increases in this revenue are the result of a strong
economic environment.
The increase in intergovernmental revenues was primarily due to disproportionate share revenues of
$83.5 million, which are reported in the General Fund. For fiscal year 2005, disproportionate share
revenue was withheld from the County’s portion of state sales taxes for indigent patient care. The General
Fund recorded revenue for the disproportionate share when remitted from the Maricopa County Special
Health Care District. In prior fiscal years, this activity was eliminated in the General Fund as the
disproportionate share was transferred from the Medical Center, which also recorded the disproportionate
share revenue. The elimination of revenue in the General Fund prevented the same revenue from being
double-counted within the same reporting entity. On January 1, 2005, the Medical Center was
transitioned to the Maricopa County Special Health Care District, a separate legal entity that is not part of
the County’s reporting entity. See page 13. As a result of the transition, disproportionate share revenues
are no longer eliminated and are reported in the General Fund as intergovernmental revenues. The
intergovernmental revenues increase was also attributable to an increase in the sales tax apportionment
of $39.7 million and vehicle license tax apportionment of $7.0 million, as reported in the General Fund.
The increases of sales and vehicle license tax apportionment can be attributed to the County’s increasing
economic vitality.
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)
2005 2004 Increase/(Decrease)
Percent Percent
Expenditures by Function Amount of Total Amount of Total Amount
% Chg
P/Y
General government $ 130.1 9% $ 118.2 8% $ 11.9 10.1%
Public safety 636.9 41 563.7 41 73.2 13.0
Health, welfare and
sanitation 437.8 29 331.0 24 106.8 32.3
Capital outlay 205.9 14 248.5 18 (42.6) (17.1)
Other 113.3 7 124.2 9 (10.9) (8.8)
Totals $ 1,524.0 100% $ 1,385.6 100% $ 138.4 10.0
Expenditures from governmental fund types for fiscal year 2005 increased by $138.4 million, a 10.0
percent increase from the prior year. The most significant changes were in public safety and health,
welfare, and sanitation expenditures with increases of $73.2 and $106.8 million, respectively. The
increase in public safety was attributed to $54.3 million in additional payroll and personnel expenditures,
which are the result of the completion of the jail and justice facilities during the fiscal year and the related
staffing costs. Health, welfare and sanitation expenditures increased due to the $83.5 million in
disproportionate share monies remitted to the Maricopa County Special Health Care District. In addition,
during fiscal year 2005, capital outlay decreased $42.6 million or 17.1 percent. The decrease is primarily
related to the County’s capital projects for the jail and justice facilities that were completed during the
fiscal year.
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.
As of June 30, 2005, the proprietary funds reported combined net assets of ($24.8) million and a
decrease in fund balance of ($133.2) million over the prior fiscal year. A majority of the decrease in fund
balance, ($108.7) million or 81.6 percent, is attributable to the loss on closure of the Medical Center Fund,
as explained below. Of the total fund balance, $1.4 million is invested in capital assets, net of related
debt, $7.3 thousand is restricted for debt service, and the remainder is unrestricted.
Management’s Discussion and Analysis (Continued)
13
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. On January 1, 2005, the Medical
Center was transitioned to the Maricopa County Special Health Care District, as approved by voters in the
November 2003 general election. The Maricopa County Special Health Care District is a separate legal
entity that is not part of the County’s reporting entity. As a part of the intergovernmental agreement for the
transfer of the Medical Center’s assets and liabilities, $25.7 million in capital assets and $21.8 million in
long-term debt were transferred to governmental activities. The remaining assets and liabilities were
transitioned to the Maricopa County Special Health Care District, which resulted in a net loss on the
closure of the Medical Center of $108.7 million. Additional information regarding the transition of the
Medical Center can be found in the Notes to the Financial Statements (Note 11 – Capital Assets, Note 13
– Long-term Liabilities, and Note 22 – Other Matters). The Medical Center Fund operating revenue
decreased $221.9 million or 58.3 percent and operating expenses decreased $201.5 million or 54.2
percent from the previous fiscal year. These decreases are attributable to the transition of the Medical
Center to the Maricopa County Special Health Care District, as only the financial activity for the six month
period until December 31, 2004 was reported by the County. After December 31, 2004, all financial
activity related to the Medical Center was reported by the District.
The Maricopa Health Plan 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 decreased by $20.6 million or 14.9 percent and consists entirely of charges for
services revenue. Expenses also decreased $35.9 million or 21.7 percent and includes a decrease in
medical services of $31.5 million. The decrease in revenues and expenses is primarily due to a decrease
in membership. On September 30, 2005, the AHCCCS—Acute Health Care program and the AHCCCS—
ALTCS Health Care program were discontinued by the County. These programs experienced decreasing
membership prior to the actual discontinuation in September 2005. The Maricopa Health Plan Fund had a
net operating loss of $14.5 million. During fiscal year 2005, the County General Fund transferred $5.2
million as a subsidy. The Fund’s fiscal year-end net assets balance decreased $9.3 million to ($20.7)
million from the prior fiscal year-end. The reduction in net assets is primarily attributable to the operating
loss of $14.5 million.
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 $13.6 million or 5.8 percent decrease in operating revenues
and a $22.2 million or 8.2 percent decrease in operating expenses from the prior year, resulting in a $26.8
million operating loss for fiscal year 2005. During the fiscal year, the County General Fund transferred
$6.9 million as a subsidy. The Fund’s fiscal year-end net assets balance decreased $24.0 million to ($6.8)
million from the prior year-end. The reduction in net assets is attributable to operating expenses of $247.6
million that exceed the benefit realized of providing those services (charges for services revenues) of
$220.8 million. Operating expenses consists primarily of medical and personal services of $225.3 and
$13.9 million, respectively.
The following table shows actual revenues, expenses and results of operations for the current fiscal year
for all proprietary funds (enterprise funds):
Management’s Discussion and Analysis (Continued)
14
Statement of Revenues, Expenses and Changes in Fund Net Assets
Proprietary Funds
(in millions)
Increase/(Decrease)
2005 2004 Amount % Chg P/Y
Operating revenues $ 518.3
$ 813.1 $ (294.8) (36.3)%
Operating expenses 574.9 888.9 (314.0) (35.3)
Operating loss (56.6) (75.8) 19.2 (25.3)
Nonoperating revenues (expenses), net (4.9) (.2) (4.7) 2,350.0
Loss before transfers and special item (61.5) (76.0) 14.5 (19.1)
Special item – loss on closure of business activity (108.7) (108.7) (100.0)
Transfers, net 37.0 58.3 (21.3) (36.5)
Change in net assets $ (133.2) $ (17.7) $ (115.5) 652.5
At June 30, 2005, revenues and expenses for business-type activities accounted for 23.9 and 50.4
percent of the County’s total fund-based revenues and expenses, respectively. The Maricopa Integrated
Health System comprises 99.9 percent of the proprietary funds operating revenues and expenses.
The net loss before transfers and special item of $61.5 million resulted primarily from net losses of $7.8
million from the Medical Center Fund, $14.5 million from the Maricopa Health Plan Fund, $30.9 million
from the ALTCS Fund and $8.8 million from the Non-AHCCCS Health Plans Fund. The losses are
attributed to capitated revenues that have precluded the Health Plans from increasing their billing rates
for services provided. Over the past several years, medical expenses have increased at a faster pace
than operating revenues (capitated) resulting in the operating loss. As discussed earlier, the special item
resulted from the closure of the Medical Center Fund from the transition of the Medical Center to the
Maricopa County Special Health Care District on January 1, 2005. During the fiscal year, the County
General Fund transferred $62.8 million in operating subsidies to the Medical Center and the various
health care programs.
General Fund Budgetary Highlights
The difference between the original budget and the final amended budget for the General Fund resulted
in an increase in revenue of $83.5 million and a decrease in expenditures of $44.0 million. The revenue
increase was a result of the budgeting of disproportionate share revenue received. Disproportionate
share revenue was originally budgeted as a transfer in and was re-budgeted as revenue. See page 12
for additional information. The decrease in budgeted expenditures is due to amounts that were originally
budgeted as expenditures, but were reclassified as transfers out for subsidies to the County health care
programs.
Significant favorable expenditure variances, as compared to the budget, were incurred in the General
Government Department (general government function) of $150.6 million. The savings were a result of
spending from contingency and reserve funds that was less than anticipated.
Capital Assets and Long-Term Liabilities
Capital Assets
The County’s capital assets increased significantly as a result of the retroactive reporting of the Flood
Control District’s infrastructure, as required by GASB Statement No. 34. On July 1, 2004, the County
restated beginning balances for Flood Control District assets for the period July 1, 1980 through June 30,
2001 for a total restatement of $372.5 million, net of accumulated depreciation. See Note 3 – Beginning
Balances Restated for additional information. Infrastructure assets for the Transportation Department
were retroactively reported in fiscal year 2002. Thus, all of the County’s infrastructure assets, which
consist of the Flood Control District and Transportation Department, are retroactively reported in
accordance with GASB Statement No. 34, as of the current fiscal year. Additional information regarding
Management’s Discussion and Analysis (Continued)
15
infrastructure assets can be found in the Notes to the Financial Statements (Note 1 – Summary of
Significant Accounting Policies and Note 11 – Capital Assets).
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. During fiscal year 2005, the condition level of both systems
was within the established condition level. Further, there were no significant differences of the actual
maintenance/preservation costs from the estimated costs. See Required Supplementary Information on
page 89 for additional information.
The County’s capital assets balance for its governmental and business-type activities as of June 30,
2005, were $2.4 billion (net of accumulated depreciation). Capital assets include land, buildings and
improvements, infrastructure, machinery and equipment, and construction in progress. Capital assets, net
of accumulated depreciation, increased by $26.4 million, or 1.1 percent, from the prior year. Of this
amount, $121.6 million, or 460.0 percent, is attributable to governmental activities, and ($95.2) million is
related to business-type activities.
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
2005 2004* 2005 2004 2005 2004* P/Y
Land 482.1 461.2 1.2 2.9 483.3 464.1 4.1%
Infrastructure 534.8 496.1 0.0 0.0 534.8 496.1 7.8
Buildings and improvements (net of
accumulated depreciation) 1,019.9 950.0 0.0 57.9 1,019.9 1,007.9 1.2
Machinery and equipment
(net of accumulated depreciation) 66.1 57.3 0.3 27.0 66.4 84.3 (21.2)
Construction in progress 163.3 175.5 0.0 8.9 163.3 184.4 (11.4)
Infrastructure (net of accumulated
depreciation) 175.8 180.3 0.0 0.0 175.8 180.3 (2.5)
Totals 2,442.0 2,320.4 1.5 96.7 2,443.5 2,417.1 1.1
∗ The governmental activities and total columns’ capital asset amounts for fiscal year 2004 were restated for the retroactive
reporting of Flood Control infrastructure assets as part of the phased implementation requirements of GASB Statement No. 34
and prior period corrections for Flood Control and Transportation infrastructure assets (see Note 3 and Note 11 to the financial
statements for additional information).
The most significant impact on the increase in governmental activities capital assets for the fiscal year
ended June 30, 2005, was the ongoing construction of the administrative, justice, and adult and juvenile
detention facilities. For these facilities, current year expenditures were $68.9 million. Further, during fiscal
year 2005, 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. The total completed projects
capitalized as buildings for the fiscal year was $80.2 million. Infrastructure assets also significantly
impacted the total net capital assets of governmental activities. The Transportation Department and the
Flood Control District infrastructure-related asset additions for land, infrastructure, and construction in
progress, were $22.1, $47.4, and $56.2 million, respectively.
Capital assets for business-type activities decreased $95.2 million, which can be attributed to the transfer
of the Medical Center to the Maricopa County Special Health Care District, a separate legal entity that is
not part of the County’s reporting entity. On January 1, 2005, the Medical Center, a major enterprise fund,
was transferred to the Maricopa County Special Health Care District. Total assets for the Medical Center
prior to the transfer were $89.9 million. Of this amount, $64.2 million was transitioned to the Maricopa
County Special Health Care District and $25.7 million was transferred to County-wide capital assets
(governmental activities), pursuant to the intergovernmental agreement between the County and the
Maricopa County Special Health Care District. Additional information regarding the transfer of the Medical
Center assets can be found in the Notes to the Financial Statements (Note 11 – Capital Assets and Note
22 – Other Matters).
Management’s Discussion and Analysis (Continued)
16
Long-Term Liabilities
At June 30, 2005, the County had total long-term liabilities (noncurrent liabilities due within one year and
more than one year) outstanding of $271.4 million, which represents a $25.6 million decrease from the
restated prior year balance of $297.0 million. The majority of the decrease is attributable to debt service
payments made during the fiscal year 2005 for the County’s general obligation bonds ($20.2 million),
Stadium District revenue bonds ($2.5 million), and Stadium District contractual obligations ($2 million).
The largest components of long-term liabilities at June 30, 2005, consisted of lease revenue bonds -
$101,101,501, Stadium District revenue bonds - $52,735,000, and reported claims and incurred but not
reported claims - $54,571,486.
Maricopa County’s most current bond rating is from Fitch Ratings and dated November 11, 2003. At that
time, Fitch Ratings upgraded the County’s certificate of participation and lease revenue bond ratings to
AA from AA-. At June 30, 2005, the County does not have any general obligation bonds outstanding.
Lease revenue bonds applicable to governmental activities are paid from the Lease Revenue Fund (debt
service fund) that was funded in prior years by transfers from the General Fund and is predominately
unrestricted. At June 20, 3005, the fund balance in the Lease Revenue Fund to pay future liabilities was
$47,296,035. 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 $52,735,000 remains outstanding.
Claims and judgments payable of $10.5 million are estimated long-term liabilities for claims pertaining to
environmental liabilities. Claims and judgments payable decreased by $9.5 million from the prior year
primarily related to environmental liabilities. Claims and judgments payable are paid from the General
Fund.
Reported and incurred but not reported claims applicable to governmental activities of $54.6 million are
reported in the Risk Management and Employee Benefits Trust funds (internal service funds). This is an
increase of $6.9 million from the prior year primarily related to actuarial estimates for the County’s self-insured
portion of future claims for general litigation related to torts; thefts 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 Financial Statements (Note 13 – Long-Term Liabilities and Note 17 – Risk
Management).
Economic Factors and Next Year’s Budget and Rates
• Arizona’s economy is projected to grow at a faster rate than the nation in 2006 and 2007,
according to the Arizona Department of Economic Security. The State of Arizona expects payroll
jobs to grow at 4.5 percent during the forecast period (www.workforce.az.gov).
• 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 3.9 percent from fiscal year 2004 to 2005
(www.census.gov). The unemployment rate in Maricopa County, according to Arizona’s
Workforce, in September 2006 was 3.2 percent, which remains below both the state average of
3.7 percent and national average of 4.6 percent (www.workforce.az.gov). The job outlook is
promising and Arizona is on track to add an additional 125,000 new jobs this year
(www.workforce.az.gov).
Management’s Discussion and Analysis (Continued)
17
• As reported by the U.S. Census Bureau, Maricopa County’s population increased 15.8 percent
from April 1, 2000 to July 1, 2005, which is higher than the United States overall population
increase of 5.3 percent for the same time period. This suggests that more people are migrating to
Arizona than to most other states (www.quickfacts.census.gov).
• The City of Phoenix (within Maricopa County) was rated number 10 in terms of the best “metros”
for future business locations by Expansion Management. The site location was based upon the
likelihood of a company’s success in any given metro location. Determinates included
demographics, financial, taxes, cultural, etc. (www.expansionmanagement.com).
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 2006 budget and tax rate. It was based on the following assumptions:
• On January 1, 2005, the Medical Center was transitioned to a Maricopa County Special Health
Care District, a separate legal entity. The voters of Maricopa County approved the new district on
November 4, 2003. After fiscal year 2005, the Medical Center will no longer be included in the
County’s reporting entity.
• 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 of the jail facilities were completed in fiscal year 2005 and will
be fully operational in fiscal year 2006.
• In prior years, the County had absorbed many program costs from the State of Arizona as a result
of State budget deficits. In fiscal year 2006, it is anticipated that the State of Arizona will be
returning approximately $20.5 million of the prior year program costs that were passed onto the
County.
Even though the growth and demand for services is high, the property tax rate for the fiscal year 2006
budget was reduced to 1.4611 from the fiscal year 2005 tax levy rate of 1.4748.
At the end of the fiscal year, unreserved fund balance for the General Fund was $428.0, or 54.7 percent
of total General Fund expenditures. Unreserved fund balance increased by almost 35.5 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. 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.
Debt Service Funds
Lease Revenue Fund – accounts for the debt service on the Lease Revenue Bonds, Series 2001; the
Lease Revenue Refunding Bonds, Series 2003; Lease Trust Certificates, Series 2004; and other long-term
obligations. Funding is provided by transfers from the General Fund, intergovernmental revenue
from the Maricopa County Special Health Care District, a separate legal entity, and pledged contributions
from various donors for the Human Services Campus.
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).
Maricopa County
Statement of Net Assets
June 30, 2005
23
COMPONENT
PRIMARY GOVERNMENT UNIT
GOVERNMENTAL BUSINESS-TYPE HOUSING
ACTIVITIES ACTIVITIES TOTAL AUTHORITY
ASSETS
Cash in bank and on hand $ 2,085,023 $ 500 $ 2,085,523 $ 1,061,527
Cash and investments held by County Treasurer 790,590,879 27,644,949 818,235,828
Receivables 20,242,491 27,180,519 47,423,010 6,654,436
Internal balances 15,341,348 (15,341,348)
Due from other governmental units 190,282,099 190,282,099
Inventories 7,156,614 7,156,614 104,040
Prepaids 2,978,624 16,015,685 18,994,309 6,093
Deferred costs 3,644,801 3,644,801
Miscellaneous 4,132,511 11,694 4,144,205
Intergovernmental loans 340,064 340,064
Advances to other funds 73,000 73,000
Cash and investments held by trustee – restricted 43,531,742 7,277 43,539,019
Capital assets:
Land 482,071,568 1,187,486 483,259,054 4,830,082
Buildings and improvements 1,242,586,482 63,562 1,242,650,044 38,332,221
Machinery and equipment 191,839,946 12,856,432 204,696,378 577,262
Infrastructure – nondepreciable 534,834,243 534,834,243
Infrastructure – depreciable 224,835,151 224,835,151
Construction in progress 163,344,073 163,344,073 2,394,539
(Accumulated depreciation) (397,537,528) (12,602,623) (410,140,151) (23,728,817)
Total assets 3,522,373,131 57,024,133 3,579,397,264 30,231,383
LIABILITIES
Accounts payable 72,111,735 9,958,484 82,070,219 228,775
Accrued liabilities 5,841,179 1,675,462 7,516,641
Employee compensation payable 60,155,739 22,411 60,178,150 114,096
Accrued interest payable 2,936,034 711 2,936,745
Medical claims payable 60,229,660 60,229,660
Deferred revenue 45,039,538 45,039,538
Due to other governmental units 10,377,647 10,377,647
Deposits held for other parties 1,334,556 1,334,556 151,608
Noncurrent liabilities:
Due within one year 45,480,771 351,539 45,832,310
Due in more than one year 215,975,315 9,627,949 225,603,264 361,015
Total liabilities 459,252,514 81,866,216 541,118,730 855,494
NET ASSETS
Invested in capital assets, net of related debt 2,345,910,917 1,388,358 2,347,299,275 22,405,287
Restricted for:
General government 10,476,044 10,476,044
Public safety 142,384,026 142,384,026
Highways and streets 55,048,755 55,048,755
Health, welfare and sanitation 4,061,822 4,061,822
Culture and recreation 27,358,303 27,358,303
Debt service 21,166,090 7,277 21,173,367
Unrestricted 456,714,660 (26,237,718) 430,476,942 6,970,602
Total net assets $ 3,063,120,617 $ (24,842,083) $3,038,278,534 $ 29,375,889
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, 2005
24
Program Revenues
Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions
Functions/Programs
Primary government:
Governmental activities:
General government $ 157,764,168 $ 37,213,997 $ 5,240,299 $ 5,216,799
Public safety 685,762,001 84,213,640 82,607,908 171,116
Highways and streets 63,014,453 6,550,179 99,354,804 33,629,384
Health, welfare and sanitation 439,784,002 28,100,481 178,886,790
Culture and recreation 33,068,497 8,954,896 1,233,132
Education 18,397,229 2,383,943 15,093,525
Interest on long-term debt 7,827,876
Total governmental activities 1,405,618,226 167,417,136 382,416,458 39,017,299
Business-type activities:
Medical Center 168,986,980 158,640,394 2,501,372 19,944
Arizona Health Care Cost Containment System
(AHCCCS) – Acute Health Care program 132,314,013 117,680,705
AHCCCS – Arizona Long-Term Care System (ALTCS)
program 252,178,102 220,784,342
Other business-type activities 29,911,332 21,213,776
Total business-type activities 583,390,427 518,319,217 2,501,372 19,944
Total primary government $ 1,989,008,653 $ 685,736,353 $ 384,917,830 $ 39,037,243
Component unit:
Housing Authority $ 16,919,411 $ 1,451,297 $ 14,879,110 $ 446,964
Total component unit $ 16,919,411 $ 1,451,297 $ 14,879,110 $ 446,964
General revenues:
Taxes:
Property taxes, levied for general purposes
Property taxes, levied for Flood Control District
Property taxes, levied for Library District
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
Loss on disposal of capital assets
Miscellaneous
Special item – loss on closure of business activity
Transfers
Total general revenues, special item, 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
$ (110,093,073) $ (110,093,073) $
(518,769,337) (518,769,337)
76,519,914 76,519,914
(232,796,731) (232,796,731)
(22,880,469) (22,880,469)
(919,761) (919,761)
(7,827,876) (7,827,876)
(816,767,333) (816,767,333)
(7,825,270) (7,825,270)
(14,633,308) (14,633,308)
(31,393,760) (31,393,760)
(8,697,556) (8,697,556)
(62,549,894) (62,549,894)
(816,767,333) (62,549,894) (879,317,227)
$ (142,040)
$ (142,040)
357,712,304 357,712,304
56,093,885 56,093,885
15,796,618 15,796,618
397,712,843 397,712,843
119,143,064 119,143,064
6,024,355 6,024,355
122,637,827 122,637,827
1,813,162 1,813,162
20,995,575 1,002,779 21,998,354
(18,666,719) (18,666,719)
4,262,227 4,262,227
(108,765,405) (108,765,405)
(37,047,610) 37,047,610
1,046,477,531 (70,715,016) 975,762,515
229,710,198 (133,264,910) 96,445,288 (142,040)
2,833,410,419 108,422,827 2,941,833,246 29,517,929
$ 3,063,120,617 $ (24,842,083) $ 3,038,278,534 $ 29,375,889
Maricopa County
Balance Sheet
Governmental Funds
June 30, 2005
26
JAIL LEASE
GENERAL OPERATIONS REVENUE
ASSETS
Cash in bank and on hand $ 88,800 $ 480,550 $
Cash and investments held by County Treasurer 340,566,410 61,408,724 34,453,989
Receivables 11,190,389 358,771 5,014,498
Due from other funds 22,932,309
Due from other governmental units 86,078,240 24,851,967 25,398,791
Inventories 2,914,660 108,406
Miscellaneous 524,649
Intergovernmental loans 340,064
Advances to other funds 73,000
Cash and investments held by trustee - restricted 23,030,717
Total assets $ 464,708,521 $ 87,208,418 $ 87,897,995
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable $ 14,991,879 $ 6,054,362 $
Employee compensation payable 11,152,634 4,403,258
Accrued liabilities 1,049,976 662
Due to other funds
Due to other governmental units 3,391
Interest payable 2,684,735
Bonds payable 9,693,434
Special assessment debt with governmental commitment
Deferred revenue 6,236,578 28,223,791
Deposits held for other parties
Total liabilities 33,431,067 10,461,673 40,601,960
Fund balances:
Reserved for:
Inventories 2,914,660 108,406
Intergovernmental loans 306,058
Advances 60,834
Debt service 10,652,548
Unreserved, reported in:
General fund 427,995,902
Special revenue funds 76,638,339
Capital projects funds
Debt service funds 36,643,487
Total fund balances 431,277,454 76,746,745 47,296,035
Total liabilities and fund balances $ 464,708,521 $ 87,208,418 $ 87,897,995
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, 2005, and, 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
GOVERNMENTAL GOVERNMENTAL
FUNDS FUNDS
$ 1,514,373 $ 2,083,723
289,119,371 725,548,494
3,435,983 19,999,641
65,399 22,997,708
53,953,101 190,282,099
2,328,218 5,351,284
887,058 1,411,707
340,064
73,000
20,501,025 43,531,742
$ 371,804,528 $ 1,011,619,462
$ 47,647,311 $ 68,693,552
5,065,684 20,621,576
4,789,277 5,839,915
5,062,153 5,062,153
10,374,256 10,377,647
9,468 2,694,203
9,693,434
28,533 28,533
39,489,797 73,950,166
1,334,556 1,334,556
113,801,035 198,295,735
2,328,218 5,351,284
306,058
60,834
10,513,542 21,166,090
427,995,902
115,549,187 192,187,526
129,612,546 129,612,546
36,643,487
258,003,493 813,323,727
$ 371,804,528
2,437,909,561
28,910,628
15,400,001
(232,423,300)
$ 3,063,120,617
Maricopa County
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
For the Fiscal Year Ended June 30, 2005
28
JAIL LEASE
GENERAL OPERATIONS REVENUE
REVENUES
Taxes $ 360,027,509 $ 119,143,064 $
Licenses and permits 1,494,042
Intergovernmental 615,339,839 21,163,928 2,036,361
Charges for services 26,032,203
Fines and forfeits 15,719,102
Special assessments
Miscellaneous 15,191,288 965,652 5,583,061
Total revenues 1,033,803,983 141,272,644 7,619,422
EXPENDITURES
Current:
General government 124,790,210
Public safety 317,499,237 200,538,280
Highways and streets
Health, welfare and sanitation 316,750,316
Culture and recreation 1,245,500
Education 1,920,743
Debt service:
Principal 11,079,415
Interest 5,373,924
Other expenditures
Capital outlay 20,373,536 10,912,221
Total expenditures 782,579,542 211,450,501 16,453,339
Excess (deficiency) of revenues over expenditures 251,224,441 (70,177,857) (8,833,917)
OTHER FINANCING SOURCES (USES)
Transfers in 40,673,453 133,176,891 4,132,719
Transfers out (188,318,110) (47,591,538) (33,008,452)
Capital lease agreements 8,384,655
Proceeds from bond issuance
Total other financing sources (uses) (139,260,002) 85,585,353 (28,875,733)
Net change in fund balances 111,964,439 15,407,496 (37,709,650)
Fund balances at beginning of year 318,305,892 61,455,108 85,005,685
Increase (decrease) in reserve for inventories 1,007,123 (115,859)
Fund balances at end of year $ 431,277,454 $ 76,746,745 $ 47,296,035
The notes to the financial statements are an integral part of this statement.
29
OTHER TOTAL
GOVERNMENTAL GOVERNMENTAL
FUNDS FUNDS
$ 77,581,237 $ 556,751,810
33,271,590 34,765,632
265,616,038 904,156,166
48,703,554 74,735,757
6,136,275 21,855,377
3,536,133 3,536,133
35,098,887 56,838,888
469,943,714 1,652,639,763
5,274,501 130,064,711
118,831,166 636,868,683
48,811,843 48,811,843
121,095,489 437,845,805
20,901,413 22,146,913
16,093,878 18,014,621
4,597,644 15,677,059
3,218,601 8,592,525
11,870 11,870
174,644,028 205,929,785
513,480,433 1,523,963,815
(43,536,719) 128,675,948
168,566,684 346,549,747
(126,140,079) (395,058,179)
8,384,655
12,000,000 12,000,000
54,426,605 (28,123,777)
10,889,886 100,552,171
246,577,964 711,344,649
535,643 1,426,907
$ 258,003,493 $ 813,323,727
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, 2005
30
Net change in fund balances – total governmental funds (page 29) $ 100,552,171
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. 118,759,739
The net effect of various miscellaneous transactions involving capital assets (i.e.,
sales, trade-ins, and donations) is to decrease net assets. 1,977,246
Revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds. 8,666,288
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. (20,563,448)
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. This amount is the net effect of differences in recognition of
expenses and expenditures. 7,654,386
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. 12,663,816
Change in net assets of governmental activities (page 25) $ 229,710,198
The notes to the financial statements are an integral part of this statement.
31
Maricopa County
Statement of Net Assets
Proprietary Funds
June 30, 2005
32
BUSINESS-TYPE ACTIVITIES -
ENTERPRISE FUNDS
OTHER
MARICOPA ENTERPRISE
HEALTH PLAN ALTCS FUNDS
ASSETS
Current assets:
Cash in bank and on hand $ $ $ 500
Cash and investments held by County Treasurer 12,692,616 14,952,333
Receivables:
Accounts 15,031,280 12,079,962
Accrued interest 69,277
Inventories
Prepaids 9,838,220 5,520,005 657,460
Miscellaneous 11,694
Total current assets 24,869,500 30,292,583 15,691,264
Noncurrent assets:
Restricted:
Investments held by trustee 7,277
Capital assets:
Land 1,187,486
Buildings and improvements 63,562
Machinery and equipment 3,383,332 6,967,447 2,505,653
Less accumulated depreciation (3,383,332) (6,818,285) (2,401,006)
Total noncurrent assets 149,162 1,362,972
Total assets 24,869,500 30,441,745 17,054,236
LIABILITIES
Current liabilities:
Vouchers payable 1,200,544 8,137,784 620,156
Employee compensation payable 22,411
Accrued liabilities 1,113,200 555,167 7,095
Interest payable 711
Due to other funds 14,324,346 1,017,002
Medical claims payable 28,900,000 28,509,403 2,820,257
Leases payable (current portion)
Lease revenue bonds payable (current portion) 6,566
Advances from other funds (current portion) 12,166
Liability for reported and incurred but not reported claims (current portion)
Liability for closure and postclosure costs (current portion) 332,807
Total current liabilities 45,538,090 37,202,354 4,839,171
Noncurrent liabilities:
Leases payable
Lease revenue bonds payable 36,933
Advances from other funds 60,834
Liability for reported and incurred but not reported claims
Liability for closure and postclosure costs 9,530,182
Total noncurrent liabilities 9,627,949
Total liabilities 45,538,090 37,202,354 14,467,120
NET ASSETS
Invested in capital assets, net of related debt 149,162 1,239,196
Restricted for debt service 7,277
Unrestricted (deficit) (20,668,590) (6,909,771) 1,340,643
Total net assets $ (20,668,590) $ (6,760,609) $ 2,587,116
The notes to the financial statements are an integral part of this statement.
33
GOVERNMENTAL
ACTIVITIES -
INTERNAL SERVICE
TOTALS FUNDS
$ 500 $ 1,300
27,644,949 65,042,385
27,111,242
69,277 242,850
1,805,330
16,015,685 2,978,624
11,694 2,720,804
70,853,347 72,791,293
7,277
1,187,486
63,562 323,649
12,856,432 8,216,739
(12,602,623) (4,476,014)
1,512,134 4,064,374
72,365,481 76,855,667
9,958,484 3,418,183
22,411 635,656
1,675,462 1,264
711
15,341,348 2,594,207
60,229,660
81,440
6,566
12,166
24,230,882
332,807
87,579,615 30,961,632
153,430
36,933
60,834
30,340,604
9,530,182
9,627,949 30,494,034
97,207,564 61,455,666
1,388,358
7,277 3,829,504
(26,237,718) 11,570,497
$ (24,842,083) $ 15,400,001
Maricopa County
Statement of Revenues, Expenses, and Changes in Fund Net Assets
Proprietary Funds
For the Fiscal Year Ended June 30, 2005
34
BUSINESS-TYPE ACTIVITIES -
ENTERPRISE FUNDS
MEDICAL MARICOPA
CENTER HEALTH PLAN ALTCS
OPERATING REVENUES
Net patient service revenue $ 154,393,451 $ $
Charges for services 117,680,705 220,784,342
Intergovernmental charges
Miscellaneous 4,246,943
Total operating revenues 158,640,394 117,680,705 220,784,342
OPERATING EXPENSES
Personal services 99,950,291 10,576,500 13,902,390
Supplies 29,066,131 645,721 1,063,062
Medical services 14,367,731 116,637,153 225,330,673
Other services 6,504,367 26,516 2,874,521
Legal
Insurance
Leases and rentals 2,264,361 645,565 840,647
Repairs and maintenance 2,631,568
Travel and transportation
Utilities 2,205,906
Depreciation 6,491,561 3,164,273
Miscellaneous 4,643,242 986,427 398,030
Total operating expenses 168,125,158 129,517,882 247,573,596
Operating income (loss) (9,484,764) (11,837,177) (26,789,254)
NONOPERATING REVENUES (EXPENSES)
Grant revenues 2,501,372
Investment income 19,944 112,626 489,636
Interest expense (861,822)
Premium tax (2,796,131) (4,604,506)
Gain (loss) on disposal of capital assets
Total nonoperating revenues (expenses) 1,659,494 (2,683,505) (4,114,870)
Income (loss) before contributions, special item,
and transfers (7,825,270) (14,520,682) (30,904,124)
Capital contributions
Special item – loss on closure of business activity (108,765,405)
Transfers in 35,397,881 5,187,415 6,902,168
Transfers out (25,713,474)
Change in net assets (106,906,268) (9,333,267) (24,001,956)
Total net assets (deficit) – beginning 106,906,268 (11,335,323) 17,241,347
Total net assets (deficit) – ending $ $ (20,668,590) $ (6,760,609)
The notes to the financial statements are an integral part of this statement.
35
GOVERNMENTAL
OTHER ACTIVITIES -
ENTERPRISE INTERNAL SERVICE
FUNDS TOTALS FUNDS
$ $ 154,393,451 $
21,099,712 359,564,759 89,214,963
9,983,003
114,064 4,361,007 114,975
21,213,776 518,319,217 99,312,941
1,005,986 125,435,167 7,101,364
1,625,893 32,400,807 11,099,342
26,917,004 383,252,561
46,559 9,451,963 5,140,939
6,845,582
54,285,008
27,693 3,778,266 1,890,671
2,631,568 2,786,431
35,218
1,904 2,207,810 5,420,899
51,669 9,707,503 854,708
27,298 6,054,997
29,704,006 574,920,642 95,460,162
(8,490,230) (56,601,425) 3,852,779
2,501,372
400,517 1,022,723 1,234,812
(207,326) (1,069,148) (72,464)
(7,400,637)
(43,282)
193,191 (4,945,690) 1,119,066
(8,297,039) (61,547,115) 4,971,845
156,572
(108,765,405)
15,273,620 62,761,084 7,545,007
(25,713,474) (9,608)
6,976,581 (133,264,910) 12,663,816
(4,389,465) 108,422,827 2,736,185
$ 2,587,116 $ (24,842,083) $ 15,400,001
Maricopa County
Statement of Cash Flows
Proprietary Funds
For the Fiscal Year Ended June 30, 2005
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 $ 176,111,537 $ 123,164,797 $ 225,970,348
Charges for services
Receipts from other governments for services provided
Payments for goods and services (74,048,055) (126,139,448) (243,540,889)
Payments for personal services (86,724,671) (9,722,158) (13,233,695)
Other receipts and payments (22,453)
Net cash provided by (used for) operating activities 15,316,358 (12,696,809) (30,804,236)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Advances from General Fund
Grant receipts 2,501,372
Cash transfers from other funds 13,600,222 5,187,415 6,902,168
Interest payments
Loan payments to General Fund (21,864,991)
Premium tax (2,540,061) (4,704,196)
Cash transferred to Maricopa County Special Health Care District (6,336,001)
Net cash provided by (used for) noncapital financing activities (12,099,398) 2,647,354 2,197,972
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Purchase of capital assets (2,495,434)
Capital lease payments
Principal payments on long-term debt (1,995,113)
Interest payments on long-term debt (1,104,884)
Net cash used for capital and related financing activities (5,595,431)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest and dividends 19,944 112,626 487,545
Net cash provided by investing activities 19,944 112,626 487,545
Net increase (decrease) in cash and cash equivalents (2,358,527) (9,936,829) (28,118,719)
Cash and cash equivalents, July 1, 2004 2,358,527 9,936,829 40,811,335
Cash and cash equivalents, June 30, 2005 $ $ $ 12,692,616
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH
PROVIDED BY
PROVIDED BY (USED FOR) OPERATING ACTIVITIES
Operating income (loss) $ (9,484,764) $ (11,837,177) $ (26,789,254)
Adjustments to reconcile operating income (loss) to net cash
provided by (used for) operating activities
Depreciation expense 6,491,561 3,164,273
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 22,050,040 5,509,974 5,243,509
Due from other funds 7,407,830 6,051,523
Inventories 191,056
Prepaids (6,227,235) 16,976,293
Miscellaneous 13,260 25,421
Vouchers payable 295,899 937,622 6,308,258
Employee compensation payable
Accrued liabilities (508,127) (1,766,558)
Due to other funds (8,720,957) (12,932,217)
Due to other governmental units (4,227,434)
Medical claims payable 728,001 (27,085,484)
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 $ 15,316,358 $ (12,696,809) $ (30,804,236)
SCHEDULE OF NONCASH INVESTING, CAPITAL AND NONCAPITAL
FINANCING
ACTIVITIES – Debit (Credit)
Accumulated depreciation from disposed capital assets $ $ $
Machinery and equipment disposed
Loss on disposal of capital assets
Capital assets acquired 1,731,368
Capital leases payable (390,884)
Vouchers payable (1,340,484)
Capital contributions
Capital assets transferred from governmental activities
Accumulated depreciation transferred to governmental activities 18,950,951
Capital assets transferred to governmental activities (44,664,425)
Transfer out capital assets to governmental activities 25,713,474
Transfer in long-term debt to governmental activities (21,797,659)
Current portion of long-term debt transferred to governmental activities 2,041,917
Long-term debt transferred to governmental activities 19,755,742
The notes to the financial statements are an integral part of this statement.
37
GOVERNMENTAL
OTHER ACTIVITIES -
ENTERPRISE INTERNAL SERVICE
FUNDS TOTALS FUNDS
$ $ 525,246,682 $
21,577,202 21,577,202 88,276,550
10,361,534
(47,107,138) (490,835,530) (81,961,461)
(999,661) (110,680,185) (7,103,041)
114,064 91,611 46,391
(26,415,533) (54,600,220) 9,619,973
2,594,207
2,501,372
26,273,620 51,963,425 7,545,007
(205,903) (205,903) (63,762)
(12,166) (21,877,157) (1,781,686)
(7,244,257)
(6,336,001)
26,055,551 18,801,479 8,293,766
(219,878) (2,715,312) (1,538,650)
(112,010)
(32,830) (2,027,943)
(2,103) (1,106,987) (8,702)
(254,811) (5,850,242) (1,659,362)
400,714 1,020,829 1,175,038
400,714 1,020,829 1,175,038
(214,079) (40,628,154) 17,429,415
15,174,189 68,280,880 47,614,270
$ 14,960,110 $ 27,652,726 $ 65,043,685
$ (8,490,230) $ (56,601,425) $ 3,852,779
51,669 9,707,503 854,708
3,621,540
(768,856) (768,856)
477,490 33,281,013
4,470,166 17,929,519
191,056 (455,855)
243,323 10,992,381 (134,239)
2,526,898 2,565,579 (936,585)
(563,118) 6,978,661 (453,728)
6,325 6,325 (1,677)
(3,939,637) (6,214,322) (5,153)
(15,610,549) (37,263,723)
(4,227,434)
(4,837,365) (31,194,848)
3,278,183
18,351 18,351
$ (26,415,533) $ (54,600,220) $ 9,619,973
$ 191,455 $ 191,455 $ 138,727
(191,455) (191,455) (182,009)
43,282
1,731,368
(390,884)
(1,340,484)
(156,572)
156,572
18,950,951 72,666
(44,664,425) (82,274)
25,713,474 9,608
(21,797,660)
2,041,918
19,755,742
Maricopa County
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2005
38
INVESTMENT
TRUST FUND
TREASURER’S
INVESTMENT AGENCY
POOL FUND
Assets
Cash in bank and on hand $ $ 35,901,326
Cash and investments held by County Treasurer 1,842,248,762
Accrued interest receivable 8,137,599
Total assets 1,850,386,361 35,901,326
Liabilities
Deposits held for other parties 35,901,326
Total liabilities $ 35,901,326
Net Assets
Held in trust for investment participants $ 1,850,386,361
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, 2005
39
INVESTMENT
TRUST FUND
TREASURER’S
INVESTMENT
POOL
Additions:
Contributions from participants $ 10,833,818,276
Investment income:
Interest income 37,238,947
Net decrease in fair value of investments (5,102,138)
Net investment earnings 32,136,809
Total additions 10,865,955,085
Deductions:
Distributions to participants 10,508,150,321
Total deductions 10,508,150,321
Change in net assets 357,804,764
Net assets – beginning 1,492,581,597
Net assets – ending $ 1,850,386,361
The notes to the financial statements are an integral part of this statement.
40
Financial Section
Basic Financial Statements - Notes
Maricopa County
Basic Financial Statements – Notes
43
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NOTE 2 REPORTING CHANGES
NOTE 3 BEGINNING BALANCES RESTATED
NOTE 4 RECONCILIATION OF GOVERNMENT-WIDE AND FUND 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 INTERGOVERNMENTAL LOANS
NOTE 11 CAPITAL ASSETS
NOTE 12 CONSTRUCTION AND OTHER SIGNIFICANT COMMITMENTS
NOTE 13 LONG-TERM LIABILITIES
NOTE 14 MUNICIPAL LANDFILL CLOSURE AND POSTCLOSURE CARE COSTS
NOTE 15 MUNICIPAL REVOLVING LINE OF CREDIT AND IRREVOCABLE STANDBY
LETTER OF CREDIT
NOTE 16 OPERATING LEASES
NOTE 17 RISK MANAGEMENT
NOTE 18 EMPLOYEE RETIREMENT PLANS
NOTE 19 INTERFUND BALANCES AND ACTIVITY
NOTE 20 DISPROPORTIONATE SHARE SETTLEMENT
NOTE 21 MEDICAL CENTER FUND’S OPERATING REVENUES
NOTE 22 OTHER MATTERS
NOTE 23 SUBSEQUENT EVENTS
Maricopa County
Notes to the Financial Statements
For the Fiscal Year Ended June 30, 2005
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).
For the year ended June 30, 2005, the County implemented the provisions of GASB Statement No. 34,
Basic Financial Statements─Management’s Discussion and Analysis─for State and Local Governments
that requires at the applicable transition date the retroactive capitalization and reporting of all major
general infrastructure assets. Also, during the year ended June 30, 2005, the County implemented the
provisions of GASB Statement No. 40, Deposit and Investment Risk Disclosures. GASB Statement No.
40 establishes and modifies the risk disclosures about the County’s deposits and investments. The
implementation of GASB Statement No. 40 requires only additional disclosures, and had no effect on
reported amounts for deposits, investments, net assets, or changes in net assets.
A. Reporting Entity
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, tax-levying 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, tax-levying 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.
Notes to the Financial Statements
(Continued)
45
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 has issued
certificates of participation, lease revenue bonds, and lease trust certificates 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.
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
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
Notes to the Financial Statements
(Continued)
46
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
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,
unrestricted grant revenues, 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.
Notes to the Financial Statements
(Continued)
47
Fund financial statements – provide information about the County’s funds, including fiduciary funds
and blended component units. Separate statements are presented for the governmental, proprietary,
and fiduciary fund categories. The emphasis of fund financial statements is on major governmental
and enterprise funds, each displayed in a separate column. All remaining governmental and
enterprise funds are aggregated and reported as nonmajor funds. Fiduciary funds are aggregated
and reported by fund type.
Proprietary fund revenues 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 service revenues, 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 Lease Revenue Fund – accounts for the debt service on the Lease Revenue Bonds, Series
2001; the Lease Revenue Refunding Bonds, Series 2003; Lease Trust Certificates, Series 2004; and
other long-term obligations. Funding is provided by transfers from the General Fund,
intergovernmental revenue from the Maricopa County Special Health Care District, a separate legal
entity, and pledged contributions from various donors for the Human Services Campus.
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).
Notes to the Financial Statements
(Continued)
48
The County also 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 fund – accounts for pooled assets held and invested by the County Treasurer on
behalf of other governmental entities.
The agency fund – accounts 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
The County accounts for its inventories in the governmental funds using the purchase method.
Inventories of the governmental funds consist of expendable supplies held for consumption and are
recorded as expenditures at the time of purchase. Amounts on hand at year-end are shown on the
balance sheet as an asset for informational purposes only and are offset by a fund balance reserve to
indicate that they do not constitute “available spendable resources.” These inventories are stated at
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, individual cost of more than
$5,000. Such assets are recorded at historical cost or estimated historical cost if purchased or
constructed. Donated capital assets are recorded at estimated fair m