Comprehensive annual financial report / Arizona Department of Economic Security.

              ARIZONA DEPARTMENT OF ECONOMIC SECURITY A DEPARTMENT OF THE STATE OF ARIZONA



COMPREHENSIVE ANNUAL FINANCIAL REPORT



For the Fiscal Year Ended June 30, 1999



Prepared by the Division of Business and Technology Services



ARIZONA DEPARTMENT OF ECONOMIC SECURITY COMPREHENSIVE ANNUAL FINANCIAL REPORT



For the Fiscal Year Ended June 30, 1999



TABLE OF CONTENTS Page Number INTRODUCTORY SECTION Letter of Transmittal ..............................................................................................i List of Principal Officials ................................................................................... xvii Organizational Chart ........................................................................................xviii FINANCIAL SECTION Independent Auditors' Report.............................................................................. 1 Financial Statements: Combined Balance Sheet  All Fund Types and Account Groups.......................................................................... 3 Combined Statement of Revenues, Expenditures and Changes in Fund Balances  All Governmental Fund Types and Expendable Trust Funds .............................................................................. 5 Statement of Expenditures  Budget and Actual (Budget Basis)  General Fund and Other Appropriated Funds .............................................. 6 Statement of Revenues, Expenses and Changes in Fund Equity  Proprietary Fund Type  Enterprise Fund ......................................................................................... 10 Statement of Cash Flows  Proprietary Fund Type  Enterprise Fund ......................................................................................... 11 Notes to Financial Statements ...................................................................... 12 (Continued)



ARIZONA DEPARTMENT OF ECONOMIC SECURITY COMPREHENSIVE ANNUAL FINANCIAL REPORT



For the Fiscal Year Ended June 30, 1999



TABLE OF CONTENTS Page Number Combining and Individual Fund Financial Statements and General Fixed Assets Account Group Schedules: Special Revenue Funds Combining Balance Sheet.................................................................................. 26 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................................................... 28 Trust and Agency Funds Combining Balance Sheet ........................................................................ 31 Expendable Trust Funds Combining Balance Sheet ........................................................................ 33 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ........................................................... 34 Agency Funds Combining Balance Sheet ........................................................................ 36 Combining Statement of Changes in Assets and Liabilities ...................... 37 General Fixed Assets Account Group Schedule of General Fixed Assets by Function and Activity...................... 39 Schedule of Changes in General Fixed Assets by Function and Activity ............................................................................ 40 Schedule of General Fixed Assets by Source........................................... 41 (Continued)



ARIZONA DEPARTMENT OF ECONOMIC SECURITY COMPREHENSIVE ANNUAL FINANCIAL REPORT



For the Fiscal Year Ended June 30, 1999



TABLE OF CONTENTS Page Number STATISTICAL SECTION Statistical Section Introduction .......................................................................... 42 Comparison Between Arizona and United States Population ............................ 43 Comparison Between Arizona and United States Per Capita Income................ 44 Expenditures by Function and Funding Source ................................................. 45 Revenues by Funding Source ........................................................................... 46 Comparison Between Arizona and United States Unemployment ..................... 47 Unemployment Insurance Financial Transaction Summary ............................... 48 Food Stamp Benefits Participants ..................................................................... 49 Temporary Assistance for Needy Families ........................................................ 50 General Assistance ........................................................................................... 51 Jobs ProgramComparison of Participants and Participants Employed to the Percentage Retained ......................................................... 52 Child Support Enforcement Collections ............................................................. 53



ARIZONA DEPARTMENT OF ECONOMIC SECURITY A DEPARTMENT OF THE STATE OF ARIZONA



COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 1999



INTRODUCTORY SECTION LETTER OF TRANSMITTAL LIST OF PRINCIPAL OFFICIALS ORGANIZATIONAL CHART



Arizona Department of Economic Security 1717 West Jefferson  P.O. Box 6123  Phoenix, AZ 85005 Jane Dee Hull John L. Clayton Governor Director December 28, 1999 The Honorable Jane Dee Hull Governor of the State of Arizona; Members of the Arizona Legislature; and the Citizens of the State of Arizona: We are pleased to present the Comprehensive Annual Financial Report for the Arizona Department of Economic Security (Department), a department of the State of Arizona, for the fiscal year ended June 30, 1999. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the management of the Department. To the best of our knowledge and belief, this report is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds and account groups. All disclosures necessary to enable the reader to gain an understanding of the Department's financial activities have been included. This report is presented in three sections: Introductory, Financial and Statistical. The introductory section includes this transmittal letter, a list of the Department's principal officials and the Department's organizational chart. The financial section includes the independent auditors' report, financial statements and notes, and the combining and individual fund and account group financial statements and schedules. The statistical section includes selected schedules that present various financial and demographic data on a multi-year comparative basis relative to the Department's operation as a human service agency. The objective of the Comprehensive Annual Financial Report is to provide data relative to the financial position of the Department in conformity with generally accepted accounting principles. The report includes all funds and account groups used to record the financial activity of the Department. The Department has six district offices and more than 270 locations statewide. District offices are located in Phoenix, Tucson, Flagstaff, Yuma, Casa Grande and Bisbee. Approximately 9,600 people are employed by the Department, which was established by the State Legislature in July 1972 by combining the Employment Security Commission, the State Department of Public Welfare, the Division of Vocational Rehabilitation, the State Office of Economic Opportunity, the Apprenticeship Council and the State Office of Manpower Planning. The State Department of Mental Retardation joined the Department in 1974. The purpose in creating the Department was to provide an integration of direct services to people in such a way as to reduce duplication of administrative efforts, services and expenditures. This purpose has resulted in the Department developing the following mission statement: i



MISSION

The Arizona Department of Economic Security is a human service agency dedicated to working with the people we serve to achieve their self-sufficiency. Organization and Services Provided The Department is organized into three clusters: Protective, Social and Community Services; Employment and Economic Assistance; and Operations. The Protective, Social and Community Services cluster consists of the Division of Aging and Community Services, the Division of Children, Youth and Families and the Division of Developmental Disabilities. The Division of Aging and Community Services (DACS) provides and contracts for services, such as emergency assistance, food distribution information for the hungry, rural food banks, shelter and supportive services to victims of domestic violence, refugee resettlement services, shelter for the homeless and information and referral. Adult services programs include adult protective services, the supplemental payments program, home care, congregate and home-delivered meals, case management and institutional support payments. The Division of Children, Youth and Families (DCYF) provides foster care services for children who are hard to place and other children's services, such as child protective services, adoption services, in-home family services and intensive family services for families whose children are at imminent risk of out-of-home placement. In addition, comprehensive medical and dental coverage is provided for foster children under the jurisdiction of the Department, juvenile probation offices and the Department of Youth Treatment and Rehabilitation. The Division of Developmental Disabilities (DDD) provides services to individuals with developmental disabilities through a 100 percent State-funded program and the Arizona Long-Term Care System (ALTCS), which is funded by the State and the Federal Health Care Financing Administration through the Arizona Health Care Cost Containment System (AHCCCS). Both programs provide foster care, as well as residential, adult day care and children's services. In addition, the ALTCS program provides acute medical care to eligible individuals. The Employment and Economic Assistance cluster consists of the Division of Child Support Enforcement, the Division of Benefits and Medical Eligibility and the Division of Employment and Rehabilitation Services. The Division of Child Support Enforcement (DCSE) administers Arizona's child support enforcement program. The services of the Division include locating absent parents, establishing legal obligations and the amounts of child support payments, payment collections, and investigating and modifying child support payments.



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The Division of Benefits and Medical Eligibility (DBME) administers the Temporary Assistance for Needy Families (TANF), Food Stamps and Statefunded General Assistance programs. In addition, the Division determines eligibility for the State's medical assistance program (AHCCCS), as well as supplemental security income through its Disability Determination Services Administration. The Division of Employment and Rehabilitation Services (DERS) administers Arizona's unemployment insurance and job service programs. In addition, the Division provides job training opportunities through administration of the Job Training Partnership Act (JTPA), Jobs Program, and Vocational Rehabilitation programs. The Division also administers a comprehensive set of child care programs. The Operations cluster consists of the Division of Employee Services and Support and the Division of Business and Technology Services. In addition, the Office of Legislative Services and the Office of Equal Opportunity report directly to the Deputy Director of Operations and Employment and Economic Assistance. The Office of Communications and Legal Services report to the Director. The Division of Employee Services and Support (DESS) provides support services to all employees and programs, including appellate services, audit and management services, special investigations, internal security, research, organization and management development, volunteer services and personnel. The Division of Business and Technology Services (DBTS) is comprised of the Office of Business and Finance (OBF) and the Office of Technology Services (OTS). OBF provides office and general business services to the Department, such as accounting; finance; budget; policy, planning and project control; collections; procurement; facilities management; printing and mail management. OTS provides automation and telecommunication support to the Department, including system design and programming, data base management and technical support. Economic Conditions and Outlook The following economic information has been obtained from the Department's Research Administration. Containing inflation has been Alan Greenspan's lesson throughout the 90's, and the Greenspan-led Federal Open Market Committee has held steady on the course against inflation and toward controlled economic growth. This has allowed the southwestern economy to be especially vibrant. Strong population inflows have provided much of the impetus for job growth, and recent data for 1999 continue to suggest that the inflow has not yet subsided. Arizona continues to offer good job and business prospects, as well as varied amenities for retirees. The Grand Canyon State's economy is projected to grow by more than 127,000 jobs during the 1999-2000 period. With the exception of mining, all other industries are expected to expand their workforces. Generally, this forecast translates into growth iii



of 13,800 jobs in the goods-producing industries and 113,600 jobs in the service industries. Based on this forecast, the decade of the 1990s will have shown Arizona's economy to have grown by nearly 668,000 nonfarm jobsan expansion of almost 50 percent. Arizona's economy for 1999 is forecast to show a 12-month average growth of nearly 73,000 jobs, representing an annual growth of 3.5 percent. Nationally, jobs are forecast to grow 1.9 percent in 1999 and four-tenths of one percentage point in 2000. In an economic environment where interest rates are still at modestly low levels, Arizona's construction activity in recent years has continued at a brisk pace. While permit data show nonresidential activity is slowing, growth in residential construction has continued; however, much of the pent-up demand for housing is assumed by most to be satisfied. Arizona's construction industry is forecast to conclude the 1999 year averaging job growth of slightly more than 12,200, a growth rate of 8.5 percent. While jobs in construction are forecast to shrink in 2000 by roughly one-tenth of one percent, the industry is expected to sustain some continued activity in areas of infrastructure development, renovation and development, and some new housing, before dropping off further in 2001. In January 1992, Arizona's mining industry represented more than 2.1 percent of all nonfarm jobs in the state. With the layoffs occurring this year, the remaining employment in the mining industry represents less than one half of one percent of all jobs. While miningespecially for copperhas represented a valuable industry for the state, clearly the trend over time has been one of declining economic significance. The mining industry is forecast to lose 3,700 jobs over the forecast period, falling to a level representing just around four-tenths of one percent of all nonfarm jobs by 2000. The oversupply of copper is not expected to sharply change, and major mergers are likely as the industry landscape takes on a new, adjusted form. Arizona's manufacturing industry continues to experience some of the lagging effects of the Asian economic crisis. While manufacturing grew nearly five percent in 1998, the industry is forecast to slow in 1999 to 1.2 percent. Only a slight increase to 1.3 percent is expected for the economy in 2000. Manufacturing jobs are forecast to grow by 2,700 in the Tucson Metropolitan Area (MA) and by 3,500 in the PhoenixMesa MA. Arizona's services industry is forecast to grow by more than 48,800 jobs in the 19992000 period. Although the state has experienced slower growth in business services and the hotels and restaurants sectors in recent months, jobs in health services continued to expand in the healthy three percent range. Forecasted growth rates for the two metropolitan areas range between three to four percent and are in the midfive percent range for the balance of the state. Trade jobs are forecast to grow by 3.4 percent in 1999, nearly matching the pace of 1998. Trade industry job growth is expected to slow in 2000 to roughly two percent. Both wholesale and retail are expected to add jobs over the forecast period. The local growth trend coupled with similar economic growth nationwide has been a great benefit to Arizona. While Arizona's trade industry has long catered to winter visitors and recreation seekers, sports arenas and events have expanded to capture a great deal of attention and dollars, fueling a variety of other concession revenues and jobs.



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Arizona's transportation, communications and public utilities (TCPU) group continues to experience the effects of more recent deregulation. Technology is also largely changing the communications sector, and competition has intensified, while Arizona's public utilities are soon to face the forces of outside competition. The TCPU group is forecast to add nearly 8,000 jobs in the two-year period. Further growth in Arizona's finance, insurance, and real estate (FIRE) group is expected over the forecast horizon. Deregulation of the financial industry has continued to present some monumental changes to the components of the industry group, as companies have engaged in huge mergers to remain competitive. As well, a thriving economy has summoned the need for many real estate brokers, stock market traders and analysts, banking and insurance staff. Although some consolidations are expected, Arizona's FIRE group is forecast to average growth of nearly five percent over the 1999-2000 period, growing by more than 14,000 jobs. Arizona's government is forecast to add more than 16,000 jobs, at a growth rate near two percent. A large portion of this growth will be in education due to a fast growing population. Major Initiatives During fiscal year 1998-99, the Department continued, commenced and planned a number of projects aimed at streamlining processes and improving customer service. The most significant projects are outlined below.  Family Builders



Family Builders began January 1, 1998 as a two-and-a-half-year pilot program. This program is an alternative response to potential or low-risk child abuse and neglect reports through the provision of family-centered assessment and services versus a Child Protective Services investigation. The family-centered, community-based providers and collaborators work as partners with families who choose to participate in the program. These providers and collaborators conduct family assessments, perform case management and provide a variety of services to families, including parenting skills training, guidance counseling, assistance with transportation, emergency shelter, etc. The goal of the program is to enhance parents' ability to create safe, stable and nurturing home environments that promote the safety of all family members and healthy child development.  Children's Information Library and Data Source (CHILDS)



CHILDS is a comprehensive statewide automated child welfare information system that supports approximately 1,800 staff providing child protective, foster care, adoption and other related child welfare services. A key feature of CHILDS is dial-up accessibility, allowing case managers equipped with modems in their laptop computers to dial up CHILDS twenty-four hours a day, seven days a week, from any location via a phone line and perform all necessary data recording and recovery tasks. CHILDS has greatly enhanced the ability of DCYF staff to serve families and improve the lives of children. The CHILDS system has been recognized nationally as a premier child welfare automation system supporting case managers. On-line demonstrations of CHILDS using dial-up capabilities have been used at national v



conferences to display the power, functionality and user friendliness to technical and program staff from other states.  Electronic Benefits Transfer (EBT)



The EBT project is a key initiative of the Department. EBT changes the method used to issue food stamps and TANF cash assistance benefits from a paper-based, maildelivered system of issuance to one in which both food stamps and TANF cash assistance are provided via a plastic debit card. The EBT project is being accomplished with the assistance of a contractor, Citibank Services, Inc. The pilot test of the system was initiated in Pima County in July 1998. Statewide implementation was completed on August 1, 1999. The EBT Project Team has added General Assistance and Refugee Assistance as benefits distributed by the EBT system. Jobs Program Training Related Expense payments and the Supplemental Payments Program will be added in fiscal year 2000.  Adult Protective Services Centralized Intake



In fiscal year 1998, legislation was passed to provide Adult Protective Services with funding to develop and implement a centralized intake system. Centralized intake which provides the community and identified professionals the opportunity to report incidents of abuse, neglect or exploitation of vulnerable or incapacitated adults on a 24-hour basis was implemented in April 1999. Adult Protective Services networks with existing emergency systems, such as law enforcement, emergency rooms and paramedics in providing 24-hour intake.  Healthy Families Arizona Program



The Healthy Families Arizona Program is a community-based, multi-disciplinary program serving families of newborns and is designed to reduce stress, enhance parent-child interaction, promote child health and development, and minimize the incidence of abuse and neglect within a multi-cultural environment. This voluntary home visitation program provides a Family Support Specialist (FSS) who assists the family in obtaining services and provides emotional support, informal counseling, role modeling, effective life coping skills, bonding and education on developmental assessments so that any learning disabilities, physical handicaps or behavioral health needs are identified early. The FSS provides education on the importance of preventive health care, assistance and encouragement to assess comprehensive private and public preschool and other school readiness programs, assistance in applying for private and public financial assistance, including employment services, and parent-child interaction. The FSS works closely with the child's pediatrician in monitoring the child's health. Families may be visited anywhere from weekly to quarterly according to the family's level of need. Program services are available until the child reaches five years of age.  Business Initiative Partnerships



The Business Initiative Partnerships is a public-private partnership primarily developed as one method to respond to the expected increased need for child care for the Welfare to Work initiative. The partnership's mission is to formalize recruitment, orientation, training and job placement of Department recipients who vi



have an interest in the child care field. The goals of this project are to provide meaningful employment to individuals currently receiving public assistance and to assist in meeting the on-going and increasing need for qualified child care providers throughout the State. To assist communities in addressing the need for an adequate supply of quality child care, the Department initiated and has maintained the following five projects.       Arizona Early Childhood Business Initiative Partnershipto provide two weeks of training in Early Childhood Education for Department clients and the public; Child Care Supply Expansion Projectto plan and develop new child care spaces throughout Arizona; Home Recruitment Study and Supervision Contractsto assist in meeting the increasing demand for child care in rural and low-income urban areas; Statewide Early Child Care and Education Career Development Systemto form a statewide plan for a child care and education career development system for early childhood caregivers and educators; and Improving the Quality and Supply of Infant/Toddler Carefor initiatives to improve the quality of infant/toddler care.



One-Stop Career Centers



One-Stop Career Centers are a United States Department of Labor initiative to unify the "patchwork" of categorical programs into a single workforce development system. The One-Stop Career Center System (OSCCS) provides access for customers statewide to basic, high quality employment and education services. All counties within the state have One-Stop access. One-Stop Career Centers are access points (including electronic access, satellite offices and full-service centers) to a wide array of employment and training-related information and services. In fiscal year 2000, the Senior Community Service Employment Program (Title V) will be one of the 14 required core partners in OSCCS under the Workforce Investment Act. Core services for older workers under OSCCS will include eligibility determination; intake; orientation; initial assessment of skill levels and aptitudes; job search; and placement assistance.  Subsidized Guardianship



Arizona passed legislation in 1999 which establishes a subsidy program for guardians. The program is available in cases where family reunification and adoption have been ruled out as viable permanency options and where an appropriate adult (e.g., a relative or foster parent) has obtained guardianship of the child. Before receiving benefits from this program, the guardian must have applied for any and all state and federal entitlements which may be available and appropriate. The actual subsidy will consist of a monthly maintenance payment which is offset by other direct benefits the child receives. The availability of this program will directly contribute to the achievement of permanency for children and to a decrease in the number of open Child Protective Services cases.



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Arizona Early Intervention Program for Infants and Toddlers (AzEIP)



AzEIP is a system of programs that identifies children from birth to three years of age who have special needs. The program provides evaluation/assessment, support and services and coordination of the support and services using a comprehensive, familycentered approach. AzEIP was established based on the Individuals with Disabilities Education Act (IDEA), Part C. The law gives primary responsibility for planning and implementation of the program to a single state agency, named by the Governor, which in Arizona is the Department of Economic Security. As required by the law, the Department has obtained interagency agreements to carry out the fiscal and programmatic responsibilities of the program. The Department has entered into interagency agreements with the following agencies: Arizona Department of Health Services, Arizona Department of Education, Arizona Health Care Cost Containment System, and Arizona State Schools for the Deaf and Blind.  Arizona Works



In 1997, legislation was passed which established a Procurement Board to oversee implementation of a welfare reform pilot project. This project was designed to test the validity and cost effectiveness of privatizing the delivery of specific welfare programs to clients. Included in the original plan was the delivery of eligibility determinations for TANF, General Assistance, Food Stamps, Medicaid and TANF child care and the delivery of TANF and Food Stamp-related employment services. On January 11, 1999, the Department entered into a contract with MAXIMUS, Inc. to operate as the Arizona Works Agency and deliver services limited to TANF, General Assistance, and TANF child care eligibility, TANF employment supportive services and the Food Stamps Employment and Training program. The Department provides support to the pilot by providing technical assistance to the Procurement Board and by coordinating service delivery with the Arizona Works Agency.  Welfare Reform



As part of ongoing efforts to enhance the existing welfare program, the Department implemented several programs and services that foster self-sufficiency. Some of these initiatives promote employment, retention and wage progression for TANF Cash Assistance recipients and include the following:  Employment Transition Programprovides direct and intervention services to TANF families with multiple barriers to employment and job retention. The services include family assessments, housing search and relocation, intensive family preservation services, counseling, case management, child care, parenting skills training, transportation, emergency services, parent aide services, shelter services with parental consent and respite services. Post-Employment Educationpays for education or training for current or former Jobs Program participants who are employed in unsubsidized employment. The training provides these individuals with the opportunity to acquire more valuable work skills, enabling them to retain their current jobs and to obtain a better position. Participants may receive training for jobs that are in demand in the local labor market. viii











Wheels to Workmatches donated vehicles with TANF Cash Assistance participants that have a verifiable job, but lack transportation. The goal of the program is to assist TANF Cash Assistance participants who have a transportation barrier to move from welfare dependency into the workforce. A contract has been awarded to a private entity to establish six locations throughout the state. The Wheels to Work program became fully operational, with statewide coverage effective October 1, 1999. Transportation ProjectsArizona provides funding to local communities to expand the availability of transportation services. Transportation assistance also includes a variety of strategies to assist TANF Cash Assistance recipients and recently employed former TANF Cash Assistance recipients with resolving the transportation barrier. These include bus tickets, van routes, car repairs, recycled bicycles and taxi rides.







Automation Initiatives The Department continues to enhance its automation capabilities. Automation can have a positive impact on the way the Department provides services to the public and can enhance the productivity of Department staff. Several major automation initiatives have been completed or are underway in the Department, including the following:  Year 2000 Compliance



The Department began Year 2000 compliance efforts in July 1996, with a comprehensive impact analysis of the automated systems running on the Department's mainframe. Year 2000 activities have since evolved into an agencywide project affecting all Divisions and Program Administrations, encompassing numerous and complex tasks, activities and components. All facets of the Department's operations have been assessed for Year 2000 impacts, including embedded systems, supply management chains and telephone systems. Contingency plans have also been developed to ensure the continuation of the agency's critical business functions.  Finger Imaging Project



Legislation was enacted in 1997 requiring all adult applicants, adult recipients and eligible minor parents to be fingerprint imaged for positive identification as a condition of eligibility for receiving welfare assistance benefits of the TANF, General Assistance and/or Food Stamp programs. The fingerprint imaging of welfare applicants and recipients as a means of positive identification is intended to identify and prevent multiple enrollments in Arizona's welfare programs. In 1999, Senate Bill 1357 appropriated $120,000 to contract for a feasibility study of expanding the Arizona Fingerprint Imaging Program to include clients and applicants of the Arizona Health Care Cost Containment System. Financial Information The Department is responsible for developing and maintaining its internal control structure. Internal accounting controls are designed to provide reasonable, but not absolute, assurance that assets are properly safeguarded from unauthorized use or ix



disposition and that financial records are reliable and properly maintain accountability for assets. The concept of reasonable assurance requires management to make judgments regarding the costs and benefits of a given control feature. The cost of a control should not exceed the benefits expected to be derived. We believe that the Department's internal control structure adequately safeguards assets and provides reasonable assurance that financial transactions are properly recorded. Budgetary control is maintained at the appropriation level. Encumbrance accounting is used to record commitments for expenditures and is a formal extension of budgetary control. Generally, encumbrances lapse at fiscal year-end. The Department can only legally amend or transfer appropriations in accordance with Arizona Revised Statutes 35-173.C.-E. The Department Director, or designee, normally requests such a transfer through the Governor's Office of Strategic Planning and Budgeting and the Department of Administration. Summary information, expressed in thousands, for the General and Special Revenue Funds is outlined below.

Comparison of General and Special Revenue Funds Revenues For the Years Ended June 30, 1999 and 1998 1998-99 Revenue Source State General Fund Appropriations Grants & Reimbursements Other Revenues Total Revenue Amount $ 425,530 1,044,950 54,965 % of Total 27.90% 68.50% 3.60% 100.00% $ 1997-98 Amount 409,641 1,015,554 48,661 % of Total 27.80% 68.90% 3.30% 100.00% Change Increase (Decrease) $ 15,889 29,396 6,304 $ 51,589 % Change Between Fi s c a l Years 3.88% 2.89% 12.95% 3.50%



$ 1,525,445



$ 1,473,856



Ge ner al and Special Revenue Funds Revenues (In thousands)

1,200,000 1,000,000 Dollars 800,000 600,000 400,000 200,000 0 Appropriations Grants & Reimburs ements Re ve nue Source 1998-99 1997-98 Other Revenues



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Comparison of General and Special Revenue Funds Expenditures For the Years Ended June 30, 1999 and 1998 1998-99 Expenditures Aid to Individuals Personal Svcs. & ERE Other Expenditures Total Expenditures Amount $ 1,071,915 312,637 135,366 $ 1,519,918 % of Total 70.52% 20.57% 8.91% 100.00% 1997-98 Amount $ 1,038,234 296,303 126,929 $ 1,461,466 % of Total 71.04% 20.27% 8.69% 100.00% Change Increase (Decrease) $ 33,681 16,334 8,437 58,452 % Change Between Fi s c a l Years 3.24% 5.51% 6.65% 4.00%



$



Ge ner al & Special Revenue Funds Expenditures (In thousands)



1,200,000 1,000,000 Dollars 800,000 600,000 400,000 200,000 0 A id to Individuals Pers onal Svcs. & ERE Other Expenditures Expe nditur e s 1998-99 997-98 1



A comparison of unreserved fund balances, expressed in thousands, for the Department's General and Special Revenue Funds follows:

Change Increase (Decrease) $ (5,560) 1,916



Fund General Special Revenue $



1998-99 34,507 11,436 $



1997-98 40,067 9,520



The above tables present an overview of the primary operating funds of the Department. Between fiscal years, State General Fund appropriations increased by approximately $16 million, while grants and reimbursements revenues and aid to individuals expenditures increased by $29 million and $34 million, respectively. The increase in State General Fund appropriations was due primarily to increases in funding for longterm care, children's services, and additional funding received in support of welfareto-work programs. While food stamps expenditures decreased by $33 million between fiscal years, the increases in grants and reimbursements revenues and aid to individuals expenditures were primarily attributable to increases in health care xi



(AHCCCS) and child care programs of $30 million and $20.2 million, respectively, and an increase in foster care expenditures of $4.3 million. Enterprise Operations The Department's Enterprise Fund is used to account for the activities of Arizona Industries for the Blind (AIB). AIB has the statutory authority to operate training centers, workshops and other programs for training and employment of blind persons. AIB activities are operated in a manner similar to private business enterprises. AIB markets household products, cleaning and janitorial supplies, computer paper, military stretchers and various office supplies. Approximately 85 percent of all sales are to the federal government under the auspices of the Javits-Wagner-O'Day Act. The following summary, expressed in thousands, presents selected AIB financial information.

Comparison of AIB Financial Information For the Years Ended June 30, 1999 and 1998 Change Increase (Decrease) $ (138) (447) 313 (11) 172 2,263 174 (290) (239)



1998-99 Cash & Investments Receivables Inventory for Sale Net Fixed Assets Total Liabilities Sales Operating Loss Net Income (Loss) Fund Equity $ 597 507 2,483 2,832 1,477 11,381 (1,448) (239) 5,202



1997-98 $ 735 954 2,170 2,843 1,305 9,118 (1,274) 51 5,441



AI B Financial Information (In thousands)

12,000 10,000 8,000 Dollars 6,000 4,000 2,000 0 Net Income (Loss) Cash & Investments Receivables Fund Equity Net Fixed Assets Total Liabilities Operating Loss Inventory for Sale Sales 1997-98 - 2,000



998-99 1



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The increase in gross sales in 1998-99 was attributable to an increase of $3.8 million in sales from the military base supply centers. During this same period, sales from the production unit decreased by $1.9 million. The increase in the operating loss in 1998-99 was primarily attributable to the decrease in sales in the production unit as a result of a decline in government purchases of commodities. Fiduciary Operations The Department maintains three agency funds to account for assets held by the Department on behalf of its clients and children of custodial parents. Total assets, expressed in thousands, held by the Department in an agency capacity were as follows:

Change Increase (Decrease) $ 452 12,949 91



1998-99 Client Trust Child Support Enforcement DD Client Investment $ 1,616 20,913 2,677 $



1997-98 1,164 7,964 2,586



The increase in the Child Support Enforcement Fund assets is attributable to the centralization of child support payment processing in December 1998. As a result of centralizing the payment process, all private non Title IV-D child support collections that previously were processed through the county clerks of the court are now processed by DCSE. The Department also maintains two expendable trust funds. The Mesa Land Fund accounts for the proceeds, interest earnings and expenditures from the sale of land gifted to the State. Expenditures from the fund benefit individuals with developmental disabilities. The Unemployment Insurance Benefits Fund accounts for employer contributions to the State's unemployment insurance program, as well as expenditures for unemployment benefits to eligible claimants. The table below, expressed in thousands, outlines summary data for the Unemployment Insurance Benefits Fund.

Comparison of Selected Data of the Unemployment Insurance Benefits Fund For the Years Ended June 30, 1999 and 1998 Change Increase (Decrease) $ 76,578 (32,190) 6,344 11,351 78,205 % Change Between Fiscal Years 8.57% (14.40%) 11.86% 7.10% 9.03%



1998-99 Total Assets Employers' Contributions Other Revenues Aid to Individuals Fund Balance $ 969,918 191,327 59,829 171,292 944,387 $



1997-98 893,340 223,517 53,485 159,941 866,182



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Se l e cte d Data of the Unemployment Insurance Benefits Fund (I n thousands)

1,000,000 800,000



Dollars



600,000 400,000 200,000 Aid to Individuals Fund Balance Employers' Contributions Total Assets Other Revenues 0



1 9 9 8 -9 9



1 9 9 7 -9 8



The Unemployment Insurance Benefits Fund had an increase in total assets and fund balance between years. Although employer contributions decreased by $32.2 million, total employer contributions and interest on investments included in other revenue combined to exceed benefits payments by approximately $77 million. Employer contributions are formula-driven and are necessary to maintain a given level of fund adequacy to pay future benefits. Cash Management Most of the General, Special Revenue and Enterprise Funds' cash is on deposit with the State Treasurer. Some of this cash is pooled and invested, and interest earned is generally deposited in the State General Fund. Certain monies are separately pooled and invested, and the interest earnings are credited to the appropriate fund. Most of the cash in the Expendable Trust Funds is held by the U.S. Treasury in an unemployment insurance trust account. These monies are pooled and invested by the U.S. Treasury. Interest earnings are credited to the trust account. Risk Management The State of Arizona is self-insured through the Risk Management Division of the Arizona Department of Administration. The Risk Management Division maintains the Risk Management Fund which is accounted for as an internal service fund in the State of Arizona financial statements. During the fiscal year ended June 30, 1999, the Department contributed $4,087,000 to the Risk Management Fund. Audit and Management Services The Department's Office of Audit and Management Services (AMS) operates within the Division of Employee Services and Support. AMS staff perform evaluations of internal controls, program compliance and performance. In addition, AMS staff perform compliance and financial reviews of the Department's providers and review single audits submitted by the Department's subrecipients. xiv



Independent Audit The Department receives an annual financial statement audit by the Office of the Auditor General. The independent auditors' report is included in this report. The audit is conducted in accordance with generally accepted auditing standards and includes such tests and other auditing procedures as considered necessary in the circumstances. The results of the Department's audit are included in the State of Arizona Comprehensive Annual Financial Report. The Department also is audited by the Office of the Auditor General in conjunction with the single audit of the State of Arizona. These audit tests are conducted in accordance with Government Auditing Standards issued by the Comptroller General of the United States; and Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and results of this audit are included in the State of Arizona Single Audit Reporting Package. Awards  In December 1999, Arizona was awarded $2,707,663 in High Performance Bonus funds by the federal government for the State's success in moving people from welfare to work during fiscal year 1998. Of the 46 states that competed for the bonus, Arizona placed second in the category of success in the workforce, and placed eighth in the category of most improvement in the success in the workforce rate. The Department's Family Builders program was named one of eight winners of the National Council of State Government's 1999 Innovations Awards. By receiving this national recognition, the Arizona Family Builders program will serve as a model for other states. Spirit of Excellence Award  The Spirit of Excellence awards were established in 1993 by the Governor of the State of Arizona to recognize State agencies, teams and individuals who bring quality and excellence to State of Arizona government. Nominations are evaluated by a panel representing the public and private sectors. The Department received five team awards in the Governor's Award category and four team awards in the Recognition Award category: Governor's Award      Center Against Family Violence  DCYF Hotline Shift Team  DCYF Electronic Benefits Transfer (EBT) Project  DBME Centralized Payment Processing Implementation Team  DCSE Family Assistance Administrative Management Team  DBME











Recognition Award     The DD PAACE Group "Working for Success"  DERS Family Support Pilot Project  DCYF Employer New Hire Reporting/Directory of New Hires  DCSE ADES/ADOA Extended Taxi Lease Program  DBTS xv



Acknowledgments We wish to express our sincere appreciation to the many dedicated individuals who made this report possible. A special thank you is extended to the staff of the Division of Business and Technology Services, Office of Business and Finance whose commitment and professionalism contributed to the preparation of the Fiscal Year 1999 Comprehensive Annual Financial Report. Sincerely,



John L. Clayton



Michael Koppelman, CPA Deputy Director



xvi



ARIZONA DEPARTMENT OF ECONOMIC SECURITY LIST OF PRINCIPAL OFFICIALS June 30, 1999



John L. Clayton Director



Michael Koppelman Deputy Director Operations and Employment and Economic Assistance



Vacant Deputy Director Protective, Social and Community Services



Neal Young Associate Director Division of Business and Technology Services



Vince Wood Assistant Director Division of Benefits and Medical Eligibility



Roger A. Deshaies Assistant Director Division of Developmental Disabilities



Bob Buse Deputy Associate Director Office of Technology



Leona Hodges Assistant Director Division of Employee Services and Support Services Nancy Mendoza Assistant Director Division of Child Support Enforcement



James A. Hart Assistant Director Division of Children, Youth and Families Services Malena Albo Assistant Director Division of Aging and Community Services



Karl S. Matzinger Deputy Associate Director Office of Business and Finance



Bill F. Hernandez Assistant Director Division of Employment and Rehabilitation Services



xvii



ARIZONA DEPARTMENT OF ECONOMIC SECURITY ORGANIZATIONAL CHART

Economic Security Advisory Council Venture Team Board Governor's Advisory Councils



Governor



Director

Communications



* Governor's Advisory Council on Aging * Governor's Council on Developmental Disabilities * Interagency Coordinating Council for Infants and Toddlers



Deputy Director



Deputy Director



Associate Director

* Competitive Government and Assets Management * Policy, Planning and Project Control * Resource Management Services



Office of Administrative Counsel

Regulatory Services

Division of Employment and Rehabilitation Services



Office of Equal Opportunity



Legislative Services

Division of Employee Services and Support



Division of Business and Technology Services



Division of Benefits and Medical Eligibility



Division of Child Support Enforcement



Division of Aging and Community Services



Division of Children, Youth and Families



Division of Developmental Disabilities



Deputy Associate Director

* Office of Business and Finance



Deputy Associate Director

* Office of Technology Services



* Appellate * Child Care * Disabilities Services * Employment Security Determination * Audit and * Jobs Program * Family Assistance Management * Job Training * Program Evaluation Services Partnership Act * Evaluation * Rehabilitation Services * Organization and Management Development * Personnel * Research * Internal Security * Volunteer Services * Special Investigations



* ATLAS * Finance * Policy and Human Resources * Legal Services



* Aging and Adult * Children, Youth * Business Operations * Community and Families * Managed Care Services * Comprehensive * Program Operations * Intergovernmental Medical and Operations Dental Program * Finance and Business Operations * Child Protective Services Training



xviii



FINANCIAL STATEMENTS



2



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Combined Balance Sheet - All Fund Types and Account Groups June 30, 1999 Proprietary Fund Type Fiduciary Fund Types Trust and Agency



Governmental Fund Types Special Revenue



Account Groups General Fixed Assets General Long-Term Debt



Total (Memorandum Only)



General Assets and Other Debits Assets Cash in bank Cash and investments held by the State Treasurer Deposits held by the U.S. Treasury Receivables (net of allowances for uncollectibles): Accounts Interest Employers' unemployment insurance contributions Due from other funds Due from U.S. Government Due from other state agencies Inventory of food stamps Inventory for sale Inventory of supplies, at cost Fixed assets: Land Buildings Accumulated depreciation Improvements Accumulated depreciation Machinery and equipment Accumulated depreciation Other debits Amount to be provided for retirement of general long-term debt Total assets and other debits $ 196,284,450 $



Enterprise



$



269,364 91,633,257



$ $ 11,062,916 $ 597,117



21,364,521 8,704,546 919,819,409 3,684,701 48,723 46,408,066



$



21,633,885 111,997,836 919,819,409 15,510,863 145,181 46,408,066 4,589,321 49,845,452 21,593,202 17,805,028 2,483,050 1,317,357



10,635,295 84,362 4,386,994 49,657,045 20,545,710 17,805,028 1,267,395



683,842 12,096 202,327 1,025,152



507,025



188,407 22,340 2,483,050 49,962 182,041 1,102,524 (547,689) 1,378,422 (430,226) 3,113,219 (1,966,599) $ 3,565,987 34,280,494 4,199,070 62,864,536



3,748,028 35,383,018 (547,689) 5,577,492 (430,226) 65,977,755 (1,966,599)



$ 12,986,333 $ 6,679,593 $ 1,000,029,966 $ 104,910,087 $



18,813,713 18,813,713 $



18,813,713 1,339,704,142



3



Governmental Fund Types Special Revenue



Proprietary Fund Type



Fiduciary Fund Types Trust and Agency



Account Groups General Fixed Assets General Long-Term Debt



Total (Memorandum Only)



General Liabilities, Equity and Other Credits



Enterprise



Liabilities Accounts payable Notes payable Unemployment benefits payable Accrued liabilities Accrued payroll and employee benefits Compensated absences Due to other funds Due to U.S. Government Due to other state agencies Deposits held for others Installment purchase contracts Deferred revenue Total liabilities Equity and other credits Contributed capital Investment in general fixed assets Retained earnings Fund balances: Reserved for inventory Unreserved Total equity and other credits Total liabilities, equity and other credits See Notes to Financial Statements.



$



85,522,763



$



710,299



$



1,101,384 186,938 $ 3,675,540 9,258,186 $ 4,331,100 13,710,028



$



6,183,174 2,176,163 107,750 71,679 20,062,341 119,363 46,266,738 160,509,971



5,342 150,471



61,559 127,339



21,059,288 5,103,685 683,842 1,549,954 1,477,220 12,412,951 50,737,065 18,813,713



87,334,446 186,938 3,675,540 9,258,186 6,250,075 16,013,530 4,589,321 71,679 20,062,341 21,178,651 5,103,685 59,363,531 233,087,923



926,622 $ 4,275,751 1,267,395 34,507,084 35,774,479 $ 196,284,450 $ 104,910,087



926,622 104,910,087 4,275,751 1,267,395 995,236,364



11,436,379 11,436,379 12,986,333 $ 5,202,373 6,679,593 $



949,292,901 949,292,901 1,000,029,966 $ 104,910,087 104,910,087 $ 18,813,713 $



1,106,616,219 1,339,704,142



4



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Combined Statement of Revenues, Expenditures and Changes in Fund Balances All Governmental Fund Types and Expendable Trust Funds Fiscal Year Ended June 30, 1999 Fiduciary Fund Type Expendable Trust $ $ 571,641 191,326,704 57,590,864 1,622,389 315,923 251,427,521



Governmental Fund Types General Revenues State general fund appropriations Grants and reimbursements Employers' unemployment insurance contributions Interest on investments Interest and penalties Fines, forfeits and penalties Other Total revenues Expenditures - Current Health and Welfare: Aid to individuals Personal services Employee-related expenditures Professional and outside services Travel Food Capital outlay Other operating Total expenditures Excess of revenues over (under) expenditures Other financing sources (uses) Operating transfers in Operating transfers out Reversions to State general fund Total other financing sources (uses) Excess of revenues and other sources over (under) expenditures and other uses Fund balances, July 1, 1998 Change in reserve for inventory Fund balances, June 30, 1999 See Notes to Financial Statements. $ $ 425,530,200 1,044,949,533 Special Revenue



Total (Memorandum Only) 425,530,200 1,045,521,174 191,326,704 58,281,429 1,622,389 1,958,082 52,632,417 1,776,872,395



606,387



$



84,178 1,958,082 3,806,535 5,848,795



48,509,959 1,519,596,079



1,067,796,144 253,092,627 59,300,487 29,653,275 8,292,338 770,547 5,497,775 91,018,581 1,515,421,774 4,174,305 1,648,443 (11,382,482) (9,734,039) (5,559,734) 41,409,085 (7 4 , 8 7 2 ) 35,774,479 $



4,118,767 197,261 46,349 66,623 9,748 280 57,207 4,496,235 1,352,560 2,234,280 (1,670,534)



171,292,003



1,243,206,914 253,289,888 59,346,836 29,719,898 8,302,086 770,547 5,498,055 91,075,788 1,691,210,012 85,662,383 3,882,723 (3,882,723) (11,382,482) (11,382,482) 74,279,901 922,298,730 (74,872)



171,292,003 80,135,518



(2,212,189)



563,746 1,916,306 9,520,073



(2,212,189) 77,923,329 871,369,572



11,436,379



$



949,292,901



$



996,503,759



5



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Statement of Expenditures - Budget and Actual (Budget Basis) General Fund and Other Appropriated Funds Fiscal Year Ended June 30, 1999 Non-GAAP Actual



Budget Expenditures - Current Health and Welfare: Administration Operations FMCS modification Lease-purchase equipment EBT Welfare reform Finger imaging Public assistance collections Attorney General legal services Subtotal for special line items Total Administration Developmental Disabilities Operations Case management Home and community based services Institutional services State funded long-term care services Arizona training program at Coolidge Subtotal for special line items Total Developmental Disabilities Long-Term Care Operations Case management Home and community based services Institutional services Medical services Arizona training program at Coolidge Subtotal for special line items Total Long-Term Care See Notes to Financial Statements. 11,964,600 11,506,200 180,153,200 10,359,400 36,705,700 10,604,700 249,329,200 261,293,800 4,814,500 3,557,000 24,607,200 284,900 16,362,000 5,581,500 50,392,600 55,207,100 $ 39,782,600 219,600 4,067,500 294,400 864,000 364,100 754,200 6,563,800 46,346,400 $



Variance



39,782,600 219,600 4,067,500 294,400 864,000 364,100 754,200 6,563,800 46,346,400



$



0 0 0 0 0 0 0 0 0



4,814,500 3,557,000 23,723,000 284,900 16,362,000 5,581,500 49,508,400 54,322,900



0 0 884,200 0 0 0 884,200 884,200



11,964,600 11,506,200 180,153,200 10,359,400 36,705,700 10,604,700 249,329,200 261,293,800



0 0 0 0 0 0 0 0 (Continued)



6



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Statement of Expenditures - Budget and Actual (Budget Basis) General Fund and Other Appropriated Funds Fiscal Year Ended June 30, 1999 Non-GAAP Actual



Budget Benefits and Medical Eligibility Operations TANF cash benefits General assistance Outreach and naturalization Arizona works agency procurement board Tuberculosis control Institutional support payments Subtotal for special line items Total Benefits and Medical Eligibility $ 49,073,000 125,957,200 4,221,700 250,000 330,000 15,600 288,000 131,062,500 180,135,500 $



Variance



47,063,100 118,117,200 3,967,000 250,000 330,000 15,600 288,000 122,967,800 170,030,900



$



2,009,900 7,840,000 254,700 0 0 0 0 8,094,700 10,104,600



Child Support Enforcement Operations Phase II maintenance Automation lease-purchase Genetic testing Central payment processing County participation Paternity establishment Attorney General legal services Subtotal for special line items Total Child Support Enforcement See Notes to Financial Statements. 26,322,400 1,540,000 23,500 688,600 1,948,900 8,595,000 343,500 4,826,500 17,966,000 44,288,400 26,322,400 1,540,000 23,500 688,600 1,948,900 8,595,000 343,500 4,826,500 17,966,000 44,288,400 0 0 0 0 0 0 0 0 0 0 (Continued)



7



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Statement of Expenditures - Budget and Actual (Budget Basis) General Fund and Other Appropriated Funds Fiscal Year Ended June 30, 1999 Non-GAAP Actual



Budget Aging and Community Services Operations Community and emergency services Coordinated homeless program Information and referral Coordinated hunger program Adult services LTC ombudsman W elfare to work Domestic violence prevention Vulnerable adults Respite care Subtotal for special line items Total Aging and Community Services Children, Youth and Families Operations Adoption services Children services High risk infant services Intensive family services Child severance project Child abuse prevention Comprehensive medical and dental program CPS incentive pay program Family builders pilot program Preliminary protective hearings CPS appeals Videotaping Healthy families Attorney General legal services TANF deposit to SSBG Subtotal for special line items Total Children, Youth and Families See Notes to Financial Statements. 35,734,000 15,345,500 55,083,600 686,300 2,435,600 146,500 810,500 2,794,900 240,000 6,378,600 1,012,300 872,900 110,700 3,000,000 3,732,600 22,639,800 115,289,800 151,023,800 $ 4,374,500 2,983,800 1,988,600 115,400 1,086,600 9,199,700 359,500 3,900,000 3,782,900 698,400 435,000 24,549,900 28,924,400 $



Variance



4,374,500 2,983,800 1,988,600 115,400 1,086,600 9,199,700 359,500 3,900,000 3,782,900 698,400 435,000 24,549,900 28,924,400



$



0 0 0 0 0 0 0 0 0 0 0 0 0



35,734,000 15,100,500 54,189,400 686,300 2,435,600 146,500 810,500 2,794,900 240,000 6,312,100 1,012,300 872,900 110,700 3,000,000 3,732,600 15,225,300 106,669,600 142,403,600



0 245,000 894,200 0 0 0 0 0 0 66,500 0 0 0 0 0 7,414,500 8,620,200 8,620,200 (Continued)



8



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Statement of Expenditures - Budget and Actual (Budget Basis) General Fund and Other Appropriated Funds Fiscal Year Ended June 30, 1999 Non-GAAP Actual



Bud g e t Employment and Rehabilitation Services Operations JOBS Job search stipends Day care subsidy Transitional child care Vocational rehabilitation services Developmental disabilities employment support Independent living rehabilitation services UI employer reimbursement Work-related transportation Welfare to work Project intervention Summer youth program Juveniles; Jails; Summer youth TANF transfers to CCDF Subtotal for special line items Total Employment and Rehabilitation Services $ 15,693,200 16,945,100 93,900 68,251,700 24,360,400 3,655,000 7,894,600 575,000 85,000 2,802,200 19,325,900 1,000,000 1,000,000 1,000,000 29,955,700 176,944,500 192,637,700 $



Variance



15,568,200 12,738,400 53,900 68,251,700 23,604,000 3,655,000 7,894,600 575,000 85,000 2,802,200 1,055,300 1,000,000 1,000,000 0 26,398,000 149,113,100 164,681,300



$



125,000 4,206,700 40,000 0 756,400 0 0 0 0 0 18,270,600 0 0 1,000,000 3,557,700 27,831,400 27,956,400



Total General Fund and Other Appropriated Funds



$



959,857,100



$



912,291,700



$



47,565,400 (1)



(1) The variance consists primarily of unexpended federal awards carried forward to future years. See Notes to Financial Statements.



9



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Statement of Revenues, Expenses and Changes in Fund Equity - Proprietary Fund Type Enterprise Fund Fiscal Year Ended June 30, 1999



Operating revenues Sales Other Total operating revenues



$



11,381,371 361,657 11,743,028



Operating expenses Cost of goods sold General and administrative Rehabilitation and production unit Lighting warehouse Davis-Monthan Air Force Base Luke Air Force Base Yuma Marine Corps Air Station Depreciation Other Total operating expenses Operating loss Nonoperating revenues (expenses) Grants and administrative matching funds Interest expense Net nonoperating revenues Net income (loss) Fund equity, July 1, 1998 Fund equity, June 30, 1999 See Notes to Financial Statements. $



8,925,228 509,569 583,486 1,443,597 389,521 463,413 231,459 555,416 88,893 13,190,582 (1,447,554)



1,227,545 (18,607) 1,208,938 (238,616) 5,440,989 5,202,373



10



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Statement of Cash Flows - Proprietary Fund Type Enterprise Fund Fiscal Year Ended June 30, 1999



Cash flows from operating activities Operating loss Adjustments to reconcile operating loss to net cash used for operating activities: Depreciation Changes in assets and liabilities: Decrease in accounts receivable Increase in due from U.S. government Increase in due from other state agencies Increase in inventory for sale Increase in inventory of supplies Increase in accounts payable Increase in accrued payroll and employee benefits Increase in compensated absences Net cash used for operating activities Cash flows from noncapital financing activities Grants and administrative matching funds received Net cash provided by noncapital financing activities Cash flows from capital and related financing activities Acquisition and construction of capital assets Proceeds from notes payable Principal paid on notes payable Interest paid on notes payable Net cash used for capital and related financing activities Net decrease in cash and cash equivalents Cash and cash equivalents, July 1, 1998 Cash and cash equivalents, June 30, 1999 See Notes to Financial Statements.



$



(1 , 4 4 7 , 5 5 4 )



555,416 446,941 (188,407) (2 2 , 3 4 0 ) (312,770) (6 , 6 2 5 ) 101,550 4,294 16,990 $ (8 5 2 , 5 0 5 )



1,227,545 1,227,545



(544,109) 150,000 (1 0 0 , 5 9 3 ) (1 8 , 6 0 7 ) (513,309) (1 3 8 , 2 6 9 ) 735,386 $ 597,117



11



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Notes to Financial Statements June 30, 1999

NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the Arizona Department of Economic Security (Department) conform to generally accepted accounting principles (GAAP) applicable to governmental units as promulgated by the Governmental Accounting Standards Board (GASB). A summary of the Department's more significant accounting policies follows. A. Reporting Entity The Department is an agency of the State of Arizona. The Director of the Department is appointed by the Governor with the advice and consent of the Arizona Senate. For financial reporting purposes, the financial statements of the Department include an Enterprise Fund and those portions of the General Fund, Special Revenue Funds, Expendable Trust Funds, Agency Funds, General Fixed Assets Account Group and General Long-Term Debt Account Group of the State of Arizona for which the Department is financially accountable. Ultimate fiscal responsibility of the Department remains with the State of Arizona. All financial activity of the Department is recorded in the State's general purpose financial statements in the respective funds and account groups. B. Fund Accounting The Department's accounts are maintained in accordance with the principles of fund accounting to ensure that limitations and restrictions on the Department's available resources are observed. The principles of fund accounting require that resources be classified for accounting and reporting purposes into funds or account groups in accordance with the activities or objectives specified for those resources. Each fund is considered a separate accounting entity, and its operations are accounted for in a separate set of self-balancing accounts that comprises its assets, liabilities, fund equity, revenues and expenditures or expenses. Account groups are reporting devices to account for certain assets or liabilities of the governmental funds not recorded directly in those funds. Accounts are separately maintained for each fund and account group; however, in the accompanying financial statements, funds that have similar characteristics have been combined into generic fund types that are further classified into broad fund categories. A description of the Department's fund categories, types and account groups follows. 1. Governmental Funds account for the Department's general government activities using the flow of current financial resources measurement focus and include the following fund types. The General Fund is the Department's primary operating fund. It accounts for all financial resources of the Department, except those required to be accounted for in other funds. The Special Revenue Funds account for specific revenue sources, other than expendable trusts, that are legally restricted to expenditures for specified purposes.



12



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Notes to Financial Statements June 30, 1999

2. Proprietary Funds account for the Department's ongoing activities that are similar to those found in the private sector using the flow of economic resources measurement focus. The Department applies only those applicable Financial Accounting Standards Board Statements and Interpretations, Accounting Principles Board Opinions and Accounting Research Bulletins issued on or before November 30, 1989, to its proprietary activities unless those pronouncements conflict with or contradict GASB pronouncements. The Department's proprietary fund includes the following fund type. The Enterprise Fund accounts for operations that are financed and operated in a manner similar to private business enterprises, in which the intent of the Department is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. 3. Fiduciary Funds account for assets held by the Department on behalf of others and include the following fund types. The Expendable Trust Funds are accounted for in essentially the same manner as the governmental fund types, using the same measurement focus. Expendable trust funds account for assets where both the principal and interest may be spent. The Agency Funds are custodial in nature and do not present results of operations or have a measurement focus. These funds are used to account for assets that the government holds for others in an agency capacity. 4. Account Groups are used to establish control and accountability for certain Department assets and liabilities that are not recorded in the funds and include the following two groups. The General Fixed Assets Account Group accounts for all fixed assets of the Department, except those accounted for in the Enterprise Fund. The General Long-Term Debt Account Group accounts for all long-term obligations of the Department, except those accounted for in the Enterprise Fund. C. Basis of Accounting Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied, and determines when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. The financial statements of the Governmental and Fiduciary Funds are presented on the modified accrual basis of accounting. Revenues are recognized when they become measurable and available to finance expenditures of the current period. Expenditures are recognized when the related fund liability is incurred, except for principal and interest on general long-term debt that are recognized when due.



13



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Notes to Financial Statements June 30, 1999

Revenues susceptible to accrual prior to receipt are State General Fund appropriations, grants and reimbursements, employers' unemployment insurance contributions and interest on investments. Interest and penalties; fines, forfeits and penalties; and other revenues are generally not susceptible to accrual because they are not measurable until received in cash. The financial statements of the Proprietary Fund are presented on the accrual basis of accounting. Revenues are recognized when they are earned, and expenses are recognized when they are incurred. D. Budgeting and Budgetary Control In accordance with State law, the Department prepares an annual operating budget of expenditures for those operations subject to legislative appropriation. The budget is legally enacted as appropriations after approval of the Governor and the Legislature and is prepared essentially on the same modified accrual basis of accounting used to record actual expenditures. The Department receives funding from numerous sources (e.g., state general fund, federal grants, etc.) which form the basis upon which the Department is appropriated; however, the Department also receives funding from federal and other sources that is not appropriated. Budgetary control is maintained at the appropriation level. Expenditures may not legally exceed budgeted appropriations. The Department can only legally amend or transfer appropriations in accordance with Arizona Revised Statues (ARS)  35-173.C.-E. The Department Director, or designee, normally requests such a transfer through the Governor's Office of Strategic Planning and Budgeting and the Department of Administration. Revenues are not budgeted at the agency level. Consequently, a statement of revenues, expenditures and changes in fund balance  budget and actual is not presented, but a statement of budget and actual expenditures is presented since that is the only comparison of the legally adopted budget with actual data that can be made at the agency level. Encumbrance accounting, under which purchase orders, contracts and other commitments to expend monies are recorded to reserve that portion of the applicable fund balance, is employed as an extension of formal budgetary control. Encumbrances outstanding at year-end for goods or services that were not received before fiscal yearend are cancelled. However, the Department of Administration  General Accounting Office is authorized to draw warrants against the available balances of appropriations for one month after the end of the fiscal year for payment of goods or services received but unpaid at the close of the fiscal year. Although, if a claim from the prior year is presented within one year and sufficient prior-year unexpended appropriations remain to pay the claim, the Department of Administration, upon approval of the claim, shall draw a warrant



14



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Notes to Financial Statements June 30, 1999

in payment of the claim, and the warrant shall be paid out of the fund from which the unused appropriations originated. E. Cash Equivalents For purposes of the statement of cash flows, the Department considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. F. Inventories Inventory of food stamps consists of all food stamp coupons held by the Department at fiscal year-end. This inventory is stated at coupon face value and is offset by deferred revenue in the General Fund. Inventories for sale consist of raw materials, work in process and finished goods of the Enterprise Fund. Such inventories are recorded as assets when purchased and expensed when sold. Raw materials are stated at cost using the first-in, first-out or specific identification method. Work in process is stated at cost using the percentage of completion method, and finished goods are stated at cost using the job order costing method. Inventories of supplies of the Governmental Funds are recorded at the time of purchase as expenditures in the funds from which the purchases were made. The Department uses the "purchase method" where 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. These inventories are stated at cost using the first-in, first-out method. Supplies inventories of the Enterprise Fund are recorded as assets when purchased and expensed when consumed. These inventories are stated at cost using the specific identification method. G. Fixed Assets Purchased fixed assets capitalized in the General Fixed Assets Account Group are recorded at the time of purchase as expenditures in the funds from which the expenditures were made. Such assets are capitalized at cost, or estimated cost if historical records are not available. Donated fixed assets are capitalized at their estimated fair market value at the time received. Depreciation on general fixed assets is not recorded. Purchased fixed assets of the Enterprise Fund are capitalized at cost. Donated fixed assets are capitalized at their estimated fair market value at the time received. Depreciation of fixed assets in the Enterprise Fund is charged as an expense against operations.



15



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Notes to Financial Statements June 30, 1999

These assets are depreciated over their estimated useful lives using the straight line method. The estimated useful lives are as follows:

Buildings Improvements Machinery and equipment 10-40 years 10 years 3-10 years



H. Compensated Absences Compensated absences consist of vacation leave earned by employees based on services already rendered. The amount of leave Department employees earn is based on their length of employment with the State of Arizona. This leave vests with the employee. The current portion of the liability that will be liquidated with available expendable financial resources of the General Fund has been accrued in that fund. Included in the accrual are anticipated salary-related benefits payments associated with the accrued leave. The current portion of the liability for the Special Revenue Funds is not significant and, therefore, has not been accrued in those funds. However, that amount and the remaining noncurrent portion of the liability related to governmental funds are recorded in the General Long-Term Debt Account Group. Vested compensated absences of the Enterprise Fund are recorded as an expense and a liability of that fund as the benefits accrue to employees. I. Deferred Revenue



The amounts reported as deferred revenue are receivables, due from U.S. Government and due from other state agencies that are not available to finance expenditures of the current period and food stamp coupons on hand at June 30, 1999. J. Grants and Reimbursements Grants and assistance awards made on the basis of entitlement periods are recorded as due from U.S. Government and revenue when the entitlement occurs. Reimbursement grants are recorded as due from U.S. Government and revenue when the related expenditures are incurred and the monies become available. Food stamp benefits and Temporary Assistance for Needy Families cash assistance benefits are recorded as revenue when the benefits are distributed. When these benefits are distributed electronically, distribution takes place when the recipients use the benefits. K. Memorandum Only Total columns on the combined statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with GAAP and are not comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.



16



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Notes to Financial Statements June 30, 1999

NOTE 2  CASH IN BANK ARS stipulate that collateral is required for demand deposits, certificates of deposit and repurchase agreements at 102 percent of all deposits not covered by federal depository insurance. At June 30, 1999, the carrying amount of the Department's total cash in bank was $21,633,885 and the bank balance was $29,740,228. The bank balance was covered by federal depository insurance or collateralized by securities held by the bank's trust division or agent in the State's name in book-entry form. NOTE 3  CASH AND INVESTMENTS HELD BY THE STATE TREASURER Cash of the various funds on deposit with the State Treasurer is pooled and invested. Interest earned from investments purchased with such pooled monies is generally deposited in the State General Fund. However, if authorized by statute and requested by the depositor, the Treasurer will invest the monies in a separate pool. The Department separately invested monies with the State Treasurer for the Homeless Trust and the Spinal and Head Injuries Special Revenue Funds; the Mesa Land Fund of the Expendable Trust Funds; and certain General and Enterprise Fund accounts. Interest earned from these separately pooled monies is allocated monthly to the participating funds of the Department based on their average daily balances. The fair value of the Department's position in the pool approximates the stated value of the Department's pool shares. NOTE 4  DEPOSITS HELD BY THE U.S. TREASURY ARS  23-703 requires that unemployment insurance contributions from Arizona employers be deposited in an unemployment trust fund account with the Secretary of the Treasury of the United States that is established and maintained pursuant to  1104 of the Social Security Act. Interest earned on these monies is deposited in the Department's Unemployment Insurance Benefits Fund. NOTE 5  RECEIVABLES Receivables at year end, including the applicable allowances for uncollectible accounts, were as follows:



17



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Notes to Financial Statements June 30, 1999

General Fund 32,658,080 84,362 Special Revenue Funds $ 4,189,144 12,096 Enterpris e Fund $ 507,025 Expendable Trust Funds $ 22,230,952 21,527 Agency Funds $ 2 7,196



Accounts receivable $ Interest receivable Employers' UI contributions receivable Less allowances for uncollectibles Net total $



68,743,173 (2 2 , 0 2 2 , 7 8 5 ) 10,719,657 $ (3,505,302) 695,938 $ (40,881,358) 50,114,294 $



507,025



$



2 7,196



NOTE 6  DUE FROM/TO OTHER FUNDS A summary of amounts due from other funds and due to other funds at June 30, 1999, follows.

Fund General Fund Special Revenue Funds: Public Assistance Collections Homeless Trust Spinal and Head Injuries Neighbors Helping Neighbors Special Administration Child Protective Services Training Capital Investment Utility Assistance Agency Funds: Child Support Enforcement Expendable Trust Funds: Unemployment Insurance Benefits Total $ Due From 4,386,994 $ Due To 107,750



18,479 4,598 62,663 509 181,472 34,365 48,624 221



1,867



4,146,546



$



4,589,321



$



184,554 4 ,589,321



18



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Notes to Financial Statements June 30, 1999

NOTE 7  CHANGES IN GENERAL FIXED ASSETS A summary of the changes in general fixed assets follows.

Balance July 1, 1998 Land $ 9,055,987 Buildings 34,061,491 Improvements 4,049,018 Machinery and equipment 59,330,175 Total $ 106,496,671 Additions $ 295,722 150,052 5,988,874 6,434,648 Deletions $ 5 ,490,000 76,719 2,454,513 8,021,232 Balanc e June 30, 1999 $ 3,565,987 34,280,494 4,199,070 62,864,536 $ 104,910,087



$



$



NOTE 8  INSTALLMENT PURCHASE CONTRACTS AND LEASE COMMITMENTS Installment Purchase Contracts  The Department has acquired computer equipment, telephone equipment, copiers and other office equipment under the provisions of various long-term installment purchase contracts. Title passes to the Department at the inception of the contract. Accordingly, assets acquired that meet the Department's capitalization policy are capitalized in the General Fixed Assets Account Group. The obligation for these contracts is recorded in the General Long-Term Debt Account Group. The future minimum payments under the contracts including interest, together with the present value of the net minimum contract payments at June 30, 1999, were as follows:

Year ending June 30, 2000 2001 2002 2003 Net minimum contract payments Less amount representing interest Present value of net minimum contract payments $ 3,732,598 1,205,153 345,339 87,443 5,370,533 (266,848) 5,103,685



$



A summary of the changes in installment purchase contracts follows.

Balance at July 1, 1998 Current-year decrease Balance at June 30, 1999 $ $ 9,024,994 (3 , 9 2 1 , 3 0 9 ) 5,103,685



Operating Leases  The Department leases land and buildings under the provisions of various long-term lease agreements classified as operating leases for accounting purposes. Rental expenditures under the terms of the operating leases were $20,136,118 for the year ended June 30, 1999. The operating leases have remaining noncancelable lease terms of from one to nine years and provide renewal options. The future minimum rental payments required under the operating leases at June 30, 1999, were as follows:



19



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Notes to Financial Statements June 30, 1999

Year ending June 30, 2000 2001 2002 2003 2004 Thereafter Total minimum payments required $ 17,670,267 13,030,541 8,733,130 5,096,641 2,205,373 100,782 46,836,734



$



NOTE 9  COMPENSATED ABSENCES The following is a summary of changes in compensated absences recorded in the General Long-Term Debt Account Group.

Balance at July 1, 1998 Leave earned Leave taken Balance at June 30, 1999 $ 12,780,950 17,677,687 (16,748,609) 13,710,028



$



NOTE 10  ENTERPRISE FUND The Enterprise Fund consists solely of Arizona Industries for the Blind (AIB). Segment information is not presented since the Enterprise Fund columns on the financial statements report the activities and balances of AIB exclusively. NOTE 11  RISK MANAGEMENT The Department is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Department is a participant in the State's self-insurance program, and in the opinion of Department management, any unfavorable outcomes from these claims and actions would be covered by the self-insurance program. Accordingly, the Department has no risk of loss beyond adjustments to future years' premium payments to the State's self-insurance program. All estimated losses for unsettled claims and actions of the State are determined on an actuarial basis and are included in the State of Arizona Comprehensive Annual Financial Report. The Department carries additional insurance for other risks of loss, including workers' compensation. Settled claims resulting from these risks have not exceeded insurance coverage in any of the past three fiscal years.



20



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Notes to Financial Statements June 30, 1999

NOTE 12  COMMITMENTS AND CONTINGENCIES Federal grants administered by the Department are subject to review and audit. In the opinion of the Department, any adjustments or repayments which may be required would not be significant to the overall financial condition of the Department. The State of Arizona has the ultimate fiscal responsibility for the Department. Accordingly, any claims requiring additional material resources would require the Arizona State Legislature to appropriate funds. NOTE 13  BUDGET AND ACTUAL EXPENDITURES RECONCILIATION For financial reporting purposes, the accompanying financial statements present the legally adopted budget for those operations of the Department subject to legislative appropriations in order to provide a meaningful comparison of actual results with the budget. The Department's budget is prepared on a basis consistent with GAAP for those operations budgeted, with certain exceptions. The budget is prepared by division within the Department, and budgeted amounts are not aggregated at the fund level. Adjustments necessary to reconcile expenditures on the GAAP basis to the budgetary basis follow:

Total expenditures reported in the General and Special Revenue Funds GAAP basis of accounting: Adjustments: Basis differences To adjust for appropriation transfers recognized as expenditures for budgetary reporting purposes Timing differences To adjust for budget year 1998 administrative adjustments of legislative appropriations eliminated for budgetary reporting purposes To adjust for budget year 1999 administrative adjustments of legislative appropriations recognized as expenditures for budgetary reporting purposes Entity difference To adjust for expenditures from nonappropriated sources Total expenditures reported in the Statement of Expenditures - Budget and Actual (Budget Basis) - General Fund and Other Appropriated Funds $ 1,519,918,009



41,623,300



(4,979,744)



25,747,300



(6 7 0 , 0 1 7 , 1 6 5 )



$



912,291,700



21



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Notes to Financial Statements June 30, 1999

NOTE 14  RELATED PARTY TRANSACTIONS The Department is a contractor with the Arizona Health Care Cost Containment System (AHCCCS) to provide health care services to eligible enrollees of the AHCCCS Arizona Long-Term Care System and the Comprehensive Medical and Dental Program. In addition, the Department contracts with AHCCCS to perform eligibility determinations for certain categorical members of the AHCCCS program. During the year ended June 30, 1999, the Department recognized revenues from these contracts totaling $219,588,189 that were reported in the General Fund as grants and reimbursements revenues. In addition, state matching funds for the Long Term Care, Title XIX Program, were appropriated through the Department to AHCCCS. These appropriated monies totaling $91,703,028 were included in captitated payments to the Department from AHCCCS during the fiscal year and were reported as State General Fund appropriations revenue. Additional related party transactions, insignificant in amount, resulting from providing services to or receiving services from other State agencies were included in various revenues and expenditures in the financial statements. NOTE 15  RETIREMENT PLAN Plan Description  The Department contributes to a cost-sharing multiple-employer defined benefit pension plan administered by the Arizona State Retirement System. Benefits are established by State statute and generally provide retirement, death, longterm disability, survivor and health insurance premium benefits. The System is governed by the Arizona State Retirement System Board according to the provisions of ARS Title 38, Chapter 5, Article 2. The System issues a comprehensive annual financial report that includes financial statements and required supplementary information. The most recent report may be obtained by writing the System, 3300 North Central Avenue, P.O. Box 33910, Phoenix, AZ 85067-3910 or by calling (602) 240-2000 or (800) 621-3778. Funding Policy  The Arizona State Legislature establishes and may amend active plan members' and the Department's contribution rate. For the year ended June 30, 1999, active plan members and the Department were each required by statute to contribute at the actuarially determined rate of 3.34 percent (2.85 percent retirement and 0.49 percent long-term disability) of the members' annual covered payroll. The Department's contributions to the System for the years ended June 30, 1999, 1998 and 1997 were $6,044,109, $6,159,579, and $6,042,526, respectively, which were equal to the required contributions for those years.



22



COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND GENERAL FIXED ASSETS ACCOUNT GROUP SCHEDULES



23



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Special Revenue Funds Combining Statements Fiscal Year Ended June 30, 1999

Tobacco TaxThis fund consists of monies transferred by the Arizona Health Care Cost Containment System from the medically needy account of the tobacco tax and health care fund to the Department's Aging and Adult Administration (AAA) as required by Arizona Revised Statutes (ARS)  36-2921. All expenditures of the fund must be for services to older Arizonans who meet the low-income eligibility criteria developed by AAA and in accordance with ARS  46-192. Public Assistance CollectionsThis fund receives monies from a portion of the collections of public assistance overpayments. ARS  46-295 requires that 25 percent of the State share of collected overpayments for the Temporary Assistance for Needy Families, Foster Care and General Assistance programs be deposited into this fund. These monies are then restricted to use in enhancing the collection efforts of the Department. Domestic Violence ShelterThis fund was established by ARS  36-3002. This fund is supported by State income tax checkoff, and by marriage and divorce fees. Expenditures of the fund provide shelter and supportive services to victims of domestic violence and their families through a statewide network of private nonprofit shelter facilities and safe houses. Homeless TrustThis fund was established by ARS  41-2021. The fund's revenues consist of monies from unclaimed property and public donations. The fund has a maximum allowable balance of $1,000,000. Expenditures of the fund are for homeless shelter and supportive services. Spinal and Head InjuriesThis fund was established by ARS  41-3203. The fund's revenues are from assessments on speeding violations pursuant to ARS  12-116.02. Expenditures from this fund are for rehabilitation, transitional living and equipment for necessary activities of daily living for disabled individuals with head or spinal injuries. Neighbors Helping NeighborsThis fund was established by ARS  46-741. Taxpayers may voluntarily contribute a portion of their State tax refunds to this fund. The fund provides eligible recipients with assistance in paying utility bills, conserving energy and weatherization costs. Child Abuse PreventionThis fund is authorized by ARS  8-550.01. The revenues in this fund are from contributions through a State income tax checkoff, surcharges on marriage licenses and divorce filings, and private donations. Expenditures of the fund are for financial assistance to community child abuse and neglect prevention programs and family resource programs that offer prevention services and family resources programs to children and their parents or guardians.



24



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Special Revenue Funds Combining Statements Fiscal Year Ended June 30, 1999

Special AdministrationThis fund consists of interest and penalties collected from employers who fail to make timely contributions to the unemployment insurance program. It was established by the Employment Security Act of Arizona, ARS  23705. All expenditures of the fund must be in accordance with ARS  23-706 and be approved by the Department of Administration. Special OlympicsThis fund was established by ARS  41-173. The revenues in this fund are from contributions through a State income tax checkoff and other private gifts and grants. Expenditures are restricted to contracts with not-for-profit entities for the delivery of services essential to programs of the Arizona Special Olympics. Child Protective Service (CPS) TrainingThis fund is authorized by ARS  8-503.01. The fund receives monies from a percentage of the collections of court-ordered parental assessments and assessments on a child or the child's estate of a child in custody of the Department or a county juvenile probation office. The funds are typically expended for the purpose of training public and private child protective service workers. Child Passenger RestraintThis fund was established under ARS  28-907.I. The revenues in this fund are from fines levied against persons violating the child passenger restraint requirements and any public donations for the child passenger restraint program. All expenditures from this fund are solely for the purchase of child passenger restraint systems that must be provided to hospitals, public or private agencies providing shelter services to victims of domestic violence or homeless families, or health clinics. Capital InvestmentThis fund was established under ARS  4-116. The fund receives revenues from liquor club licenses and applications. The expenditures from this fund are for the purchase of buildings, equipment or other capital investments by the Division of Developmental Disabilities. Utility AssistanceThis fund is authorized by ARS  46-731. The revenues in this fund are subscribers' utility deposits that remain unclaimed after two years, plus any interest accrued on the deposits less any lawful deduction ordered to be refunded by a court or administrative agency. These revenues are to be used to assist eligible recipients for the purpose of making utility deposits and owner repairs to utility related appliances or systems. All disbursements from the fund must be to designated community action or other agencies currently providing energy assistance to eligible recipients.



25



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Combining Balance Sheet Special Revenue Funds June 30, 1999 Public Tobacco Tax Assets Cash and investments held by the State Treasurer Receivables (net of allowances for uncollectibles): Accounts Interest Due from other funds Due from other state agencies Total assets Liabilities and Equity Liabilities Accounts payable Accrued payroll and employee benefits Due to other funds Deferred revenue Total liabilities Equity Fund balances: Unreserved Total equity Total liabilities and equity $ Assistance Collections Domestic Violence Shelter Homeless Trust Spinal and Head Injuries Neighbors Helping Neighbors



$



185,008



$



867,407



$



1,037,974



$



864,475



$



2,860,181



$



72,121



532,058 3,453 18,479 $ 185,008 $ 1,417,944 $ 1,037,974 $ 867,928 $ 197,190 3,066,014 $ 8,643 509 72,630



$



133,414



$



1,222 598



$



5,228



$



133,434 4,744 62,663



$



20,823



4,598 532,058 133,414 533,878 9,826



200,841



20,823



51,594 51,594 185,008 $



884,066 884,066 1,417,944



$



1,037,974 1,037,974



858,102 858,102 $ 867,928 $



2,865,173 2,865,173 3,066,014 $



51,807 51,807 72,630



$



1,037,974



26



Child Abuse Prevention Special Administration Special Olympics CPS Training



Child Passenger Restraint Capital Investment Utility Assistance Total



$



1,456,699



$



2,711,974



$



4



$



436,050



$



74,782



$



213,769



$



282,472



$



11,062,916



151,784 181,472 $ 1,456,699 $ 2,893,446 $ 4 $ 587,834 $ 2,230 77,012 $ 7,350 221,119 $ 1,867 818,382 1,102,721



$



683,842 12,096 202,327 1,025,152 12,986,333



$



334,768



$



7,344



$



1,722



$



9,273



$



63,071



$



710,299 5,342 150,471 683,842



34,365



48,624 151,784 202,130 9,273



$



221



334,768



41,709



221



63,071



1,549,954



1,121,931 1,121,931 $ 1,456,699 $



2,851,737 2,851,737 2,893,446



$



4 4



385,704 385,704 $ 587,834 $



67,739 67,739 77,012 $



220,898 220,898 221,119 $



1,039,650 1,039,650 1,102,721 $



11,436,379 11,436,379 12,986,333



$



4



27



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Combining Statement of Revenues, Expenditures and Changes in Fund Balances Special Revenue Funds Fiscal Year Ended June 30, 1999 Tobacco Tax Revenues Interest on investments Fines, forfeits and penalties Other: Fees and surcharges Use tax Unclaimed property Court-ordered assessments Licenses and applications Donations Total revenues Expenditures - Current Health and Welfare: Aid to individuals Personal services Employee-related expenditures Professional and outside services Travel Capital outlay Other operating Total expenditures Public Assistance Collections Domestic Violence Shelter Homeless Trust Spinal and Head Injuries Neighbors Helping Neighbors



$



45,863



$



38,315 1,794,440



$ $ 500,000



1,457,594



137,533 500,000 1,595,127 45,863 1,832,755



$



32,375 32,375



498,199 $ 25,475 5,782 13,852



1,294,931



13,988



918,123 166,939 40,567 3,254 6,785 50,115



44,846



2,808 498,199 47,917 1,294,931 13,988



1,185,783



44,846



Excess of revenues over (under) expenditures Other financing sources (uses) Operating transfers in Operating transfers out Total other financing sources (uses) Excess of revenues and other sources over (under) expenditures and other uses Fund balances, July 1, 1998 Fund balances, June 30, 1999 $



1,801



(47,917)



300,196



31,875



646,972



(12,471)



396,227 (250,944) 145,283



(32,864) (32,864)



127 (165,691) (165,564)



509 (271) 238



1,801 49,793 51,594 $



97,366 786,700 884,066 $



300,196 737,778 1,037,974 $



(989) 859,091 858,102 $



481,408 2,383,765 2,865,173 $



(12,233) 64,040 51,807



28



Child Abuse Prevention



Special Administration



Special Olympics



CPS Training



Child Passenger Restraint



Capital Investment



Utility Assistance



Total



$ $ $ 492,760 $ $ 232,836 725,596 $ 85,378 85,378 1,477 163,642 48,200 818,382 1,477 $ 48,200 818,382 163,642



84,178 1,958,082 1,950,354 500,000 818,382 1,477 48,200 488,122 5,848,795



475,253 4,847 120



$



68,462



85,378



152,355



567,232



40 480,260 68,462 85,378



49,397 2,963 280 4,244 56,884 152,355 567,232



4,118,767 197,261 46,349 66,623 9,748 280 57,207 4,496,235



245,336



(68,462)



0



(55,407)



11,287



48,200



251,150



1,352,560



5,008



1,622,389 (1,120,150) 502,239



150,738 (64,397) 86,341



57,415 (221) 57,194



1,867 (35,996) (34,129)



2,234,280 (1,670,534) 563,746



5,008



250,344 871,587 $ 1,121,931 $



433,777 2,417,960 2,851,737 $



0 4 4 $



30,934 354,770 385,704 $



11,287 56,452 67,739 $



105,394 115,504 220,898 $



217,021 822,629 1,039,650 $



1,916,306 9,520,073 11,436,379



29



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Trust and Agency Funds Combining Statements Fiscal Year Ended June 30, 1999

The Trust and Agency Funds account for assets held by the Department in a trustee or agency capacity for individuals, organizations, other governments or other funds.



30



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Combining Balance Sheet Trust and Agency Funds June 30, 1999 Fiduciary Funds Expendable Trust Assets Cash in bank Cash and investments held by the State Treasurer Deposits held by the U.S. Treasury Receivables (net of allowances for uncollectibles): Accounts Interest Employers' unemployment insurance contributions Total assets Liabilities and Equity Liabilities Unemployment benefits payable Accrued liabilities Due to other funds Deposits held for others Deferred revenue Total liabilities Equity Fund balances: Unreserved Total equity Total liabilities and equity $ $ 6,022 4,884,407 919,819,409 3,684,701 21,527 46,408,066 $ 974,824,132 $ $ 21,358,499 3,820,139 $ 21,364,521 8,704,546 919,819,409 3,684,701 48,723 46,408,066 $ 1,000,029,966 Agency Total



27,196



25,205,834



$



3,675,540 9,258,186 184,554 12,412,951 25,531,231



$ $ 4,146,546 21,059,288



3,675,540 9,258,186 4,331,100 21,059,288 12,412,951 50,737,065



25,205,834



949,292,901 949,292,901 974,824,132 $ 25,205,834 $



949,292,901 949,292,901 1,000,029,966



31



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Expendable Trust Funds Combining Statements Fiscal Year Ended June 30, 1999

Mesa Land--This fund was established when an individual willed land to the State of Arizona with the restriction that the earnings on the land be used to offset costs of care for individuals with developmental disabilities. The land was subsequently sold and the proceeds invested. Interest earnings on the investments are used for the designated purpose. Unemployment Insurance Benefits--This fund is authorized by Arizona Revised Statutes  23-701. The revenues of this fund are employers' unemployment insurance contributions and transfers from the federal government for various unemployment programs. Expenditures are made for the express purpose of providing unemployment benefits to the eligible claimants.



32



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Combining Balance Sheet Expendable Trust Funds June 30, 1999 Mesa Land Assets Cash in bank Cash and investments held by the State Treasurer Deposits held by the U.S. Treasury Receivables (net of allowances for uncollectibles): Accounts Interest Employers' unemployment insurance contributions Total assets Liabilities and Equity Liabilities Unemployment benefits payable Accrued liabilities Due to other funds Deferred revenue Total liabilities Equity Fund balances: Unreserved Total equity Total liabilities and equity $ $ 4,884,407 919,819,409 3,684,701 21,527 46,408,066 $ 4,905,934 $ 969,918,198 $ 6,022 $ 6,022 4,884,407 919,819,409 3,684,701 21,527 46,408,066 974,824,132 Unemployment Insurance Benefits



Total



$



3,675,540 9,258,186 184,554 12,412,951 25,531,231



$



3,675,540 9,258,186 184,554 12,412,951 25,531,231



$ 4,905,934 4,905,934 $ 4,905,934 $



944,386,967 944,386,967 969,918,198 $



949,292,901 949,292,901 974,824,132



33



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Combining Statement of Revenues, Expenditures and Changes in Fund Balances Expendable Trust Funds Fiscal Year Ended June 30, 1999 Unemployment Insurance Benefits $ 571,641 191,326,704 57,319,060 1,622,389 315,923 251,155,717 $



Mesa Land Revenues Grants and reimbursements Employers' unemployment insurance contributions Interest on investments Interest and penalties Other Total revenues Expenditures - Current Health and Welfare: Aid to individuals Total expenditures Excess of revenues over (under) expenditures Other financing sources (uses) Operating transfers out Total other financing sources (uses) Excess of revenues over (under) expenditures and other uses Fund balances, July 1, 1998 Fund balances, June 30, 1999 $ 271,804



Total 571,641 191,326,704 57,590,864 1,622,389 315,923 251,427,521



$



271,804



271,804



171,292,003 171,292,003 79,863,714



171,292,003 171,292,003 80,135,518



(553,821) (553,821)



(1,658,368) (1,658,368)



(2,212,189) (2,212,189)



(282,017) 5,187,951 4,905,934 $



78,205,346 866,181,621 944,386,967 $



77,923,329 871,369,572 949,292,901



34



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Agency Funds Combining Statements Fiscal Year Ended June 30, 1999

Client Trust--This fund was established pursuant to Arizona Revised Statutes (ARS)  41-1954 and contains monies from clients' eligibility for assistance, including Social Security, Supplemental Security Income, Veteran's Assistance, Railroad Retirement benefits, etc. These monies received on behalf of clients are disbursed based on individual spending plans or for reimbursement of services provided by the Division of Developmental Disabilities and for foster care and adoption services provided by the Administration for Children, Youth and Families. Developmental Disabilities (DD) Client Investment--This fund was established by ARS  36-571 and consists of client monies, such as Social Security, Supplemental Security Income, earnings, etc. These monies are used for individual client needs, such as clothing, food, education, etc. Idle monies from this fund are invested with the State Treasurer, with interest earned distributed to individual client account balances. Child Support Enforcement--This fund was established by ARS  46-441 and is a clearing account that contains child support monies collected from noncustodial parents on behalf of their children. The collected amounts remain in this fund until appropriate distributions are determined and disbursement is made to the appropriate parties.



35



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Combining Balance Sheet Agency Funds June 30, 1999 Client Trust Assets Cash in bank Cash and investments held by the State Treasurer Interest receivable Total assets Liabilities Due to other funds Deposits held for others Total liabilities $ $ 1,615,909 $ 1,615,909 $ 2,677,222 $ 2,677,222 4,146,546 16,766,157 $ 4,146,546 21,059,288 $ $ 1,615,909 445,796 2,204,230 27,196 $ 2,677,222 $ 20,912,703 $ 20,912,703 $ 21,358,499 3,820,139 27,196 $ 25,205,834 DD Client Investment Child Support Enforcement



Total



$ 1,615,909



$ 20,912,703



$ 25,205,834



36



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Combining Statement of Changes in Assets and Liabilities - Agency Funds Fiscal Year Ended June 30, 1999 Balance July 1, 1998 Client Trust Assets Cash and investments held by the State Treasurer Liabilities Deposits held for others DD Client Investment Assets Cash in bank Cash and investments held by the State Treasurer Interest receivable Total assets Liabilities Deposits held for others Total liabilities Child Support Enforcement Assets Cash in bank Total assets Liabilities Due to other funds Deposits held for others Total liabilities Total - All Agency Funds Assets Cash in bank Cash and investments held by the State Treasurer Interest receivable Total assets Liabilities Due to other funds Deposits held for others Total liabilities Balance June 30, 1999



Additions



Deductions



$ $



1,164,057 1,164,057



$ $



2,528,370 2,528,370



$ $



2,076,518 2,076,518



$ $



1,615,909 1,615,909



$



612,260 1,954,230 19,907



$



9,596,267 362,270 27,196



$



9,762,731 112,270 19,907



$



445,796 2,204,230 27,196



$



2,586,397



$



9,985,733



$



9,894,908



$



2,677,222



$ $



2,586,397 2,586,397



$ $



9,985,733 9,985,733



$ $



9,894,908 9,894,908



$ $



2,677,222 2,677,222



$ $



7,963,579 7,963,579



$ $



338,965,915 338,965,915



$ $



326,016,791 326,016,791



$ $



20,912,703 20,912,703



$ $



1,688,649 6,274,930 7,963,579



$ $



22,320,597 316,645,318 338,965,915



$ $



19,862,700 306,154,091 326,016,791



$ $



4,146,546 16,766,157 20,912,703



$



8,575,839 3,118,287 19,907



$



348,562,182 2,890,640 27,196



$



335,779,522 2,188,788 19,907



$



21,358,499 3,820,139 27,196



$



11,714,033



$



351,480,018



$



337,988,217



$



25,205,834



$ $



1,688,649 10,025,384 11,714,033



$ $



22,320,597 329,159,421 351,480,018



$ $



19,862,700 318,125,517 337,988,217



$ $



4,146,546 21,059,288 25,205,834



37



ARIZONA DEPARTMENT OF ECONOMIC SECURITY General Fixed Assets Account Group Schedules Fiscal Year Ended June 30, 1999

The General Fixed Assets Account Group accounts for fixed assets of the Department other than those recorded in the Enterprise Fund. Depreciation is not recorded on general fixed assets.



38



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Schedule of General Fixed Assets by Function and Activity June 30, 1999 M achi n ery and Equipment



Function/Activity Health and Welfare: Administration Governor's Advisory Council on Aging Governor's Council on Developmental Disabilities Interagency Coordinating Council for Infants and Toddlers Division of Employee Services and Support Division of Developmental Disabilities Division of Benefits and Medical Eligibility: Family Assistance Administration Office of Program Evaluation Disability Determination Services Administration Division of Children, Youth and Families: Administration for Children, Youth and Families Comprehensive Medical and Dental Program Child Protective Services Training Division of Employment and Rehabilitation Services: Employment Security Administration Rehabilitation Services Administration Child Care Administration Job Training Partnership Act Jobs Program Division of Aging and Community Services: Aging and Adult Administration Community Services Administration Division of Child Support Enforcement Total general fixed assets



Land



Buildings



Improvements



Total



$



780,799 2,859 3,337 2,959 140,286 941,725 650,904



$



4,464,939 32,311 37,707 33,441 642,225 19,506,861 3,732,718



$



19,435



$



30,324,420 14,375 9,266 43,985 1,206,253 4,590,083 7,232,105 206,766 1,429,611 4,854,436 166,638 39,192 4,161,114 2,875,615 702,214 637,046 638,650 437,802 465,020 2,829,945



$



35,589,593 49,545 50,310 80,385 1,988,764 28,951,014 11,760,299 206,766 1,429,611 6,118,519 166,638 39,192 8,869,564 3,156,214 1,009,191 643,895 850,665 640,069 479,908 2,829,945



3,912,345 144,572



203,752



1,037,689



22,642



680,887 19,444 68,684 6,849 26,499 22,115 14,888



3,960,571 25 5,153 223,034 177,672 176,173



66,992 6,002 15,259 7,844 3,979



$ 3,565,987

39



$



34,280,494



$



4,199,070



$



62,864,536



$



104,910,087



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Schedule of Changes in General Fixed Assets by Function and Activity For the Fiscal Year Ended June 30, 1999 General Fixed Assets July 1, 1998 General Fixed Assets June 30, 1999



Function/Activity Health and Welfare: Administration Governor's Advisory Council on Aging Governor's Council on Developmental Disabilities Interagency Coordinating Council for Infants and Toddlers Division of Employee Services and Support Division of Developmental Disabilities Division of Benefits and Medical Eligibility: Family Assistance Administration Office of Program Evaluation Disability Determination Services Administration Division of Children, Youth and Families: Administration for Children, Youth and Families Comprehensive Medical and Dental Program Child Protective Services Training Division of Employment and Rehabilitation Services: Employment Security Administration Rehabilitation Services Administration Child Care Administration Job Training Partnership Act Jobs Program Division of Aging and Community Services: Aging and Adult Administration Community Services Administration Division of Child Support Enforcement Total general fixed assets



Additions



Deletions



Transfers



$



35,103,557 49,545 49,057 88,708 1,915,748 35,602,968 9,996,746 201,762 1,411,449 5,530,696 148,978 16,737 8,748,075 1,578,431 676,000 600,726 842,352 542,882 491,274 2,900,980



$



2,271,725 9,266 7,655 109,237 583,031 609,225 70,661 275,727 17,660



$



942,582 8,013 8,386 5,921,342 321,291 46,193 111,147



$



(843,107)



$



35,589,593 49,545 50,310 80,385 1,988,764 28,951,014 11,760,299 206,766 1,429,611 6,118,519 166,638 39,192 8,869,564 3,156,214 1,009,191 643,895 850,665 640,069 479,908 2,829,945



(7,592) (36,221) (1,313,643) 1,475,619 5,004 (6,306) 423,243 22,455



617,358 1,598,196 39,052 10,990 56,270 114,529 44,066 $ 6,434,648 $



373,847 69,513



7,491 32,083 179,344 8,021,232 $



(122,022) 49,100 294,139 32,179 (40,466) 14,741 (11,366) 64,243 0 $



$



106,496,671

40



104,910,087



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Schedule of General Fixed Assets by Source June 30, 1999



General Fixed Assets: Land Buildings Improvements Machinery and equipment Total general fixed assets $ 3,565,987 34,280,494 4,199,070 62,864,536 104,910,087



$



Investment in General Fixed Assets by Source: General Fund Special Revenue Funds Trust and Agency Funds Fixed assets - initial inventory Total investment in general fixed assets by source $ 63,575,001 173,207 280,564 40,881,315 104,910,087



$



41



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Statistical Section June 30, 1999

The Department of Economic Security (Department) presents statistical tables in its Comprehensive Annual Financial Report (CAFR) that are relative to its operations as a human services agency of the State of Arizona. Those tables are as follows:            Comparison Between Arizona and United States Population--Last Ten Calendar Years Comparison Between Arizona and United States Per Capita Income--Last Ten Calendar Years Expenditures by Function and Funding Source (Governmental and Expendable Trust Funds)--Last Ten Fiscal Years Revenues by Funding Source (Governmental and Expendable Trust Funds)-- Last Ten Fiscal Years Comparison Between Arizona and United States Unemployment--Last Ten Calendar Years Unemployment Insurance Financial Transaction Summary--Last Ten Fiscal Years Food Stamp Benefits Participants--Last Ten Fiscal Years Temporary Assistance for Needy Families--Last Ten Fiscal Years General Assistance--Last Ten Fiscal Years Jobs Program--Comparison of Participants and Participants Employed to the Percentage Retained--Last Nine Fiscal Years Child Support Enforcement Collections--Last Ten Fiscal Years



Certain statistical tables typical to a CAFR are not presented in the Department's CAFR as such tables do not apply to the Department. For information regarding data applicable to the State of Arizona, please refer to the State of Arizona CAFR for the year ended June 30, 1999.



42



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Comparison Between Arizona and United States Population For the Calendar Years Ended December 31

P erc e ntag e C ha ng e in Arizona Po pulation 2.23 % 1.76 % 2.34 % 2.44 % 2.59 % 2.85 % 3.86 % 5.52 % 3.09 % 3.56 % P erc e ntag e C h ang e in U.S. P o p u l a ti o n 0 .9 3 % 1 .0 5 % 1 .0 9 % 1 .1 5 % 1 .0 8 % 0 .9 9 % 0 .9 3 % 0 .9 6 % 0 .8 9 % 0 .9 9 %



Y e ar 1 98 9 1 99 0 1 99 1 1 99 2 1 99 3 1 99 4 1 99 5 1 99 6 1 99 7 1 99 8



Arizo na P o p u l a t io n 3,6 17,30 0 3,6 80,80 0 3,7 67,00 0 3,8 58,90 0 3,9 58,87 5 4,0 71,65 0 4,2 28,90 0 4,4 62,30 0 4,6 00,27 5 4,7 64,02 5



United States P o p u l a ti o n 2 4 6 ,8 2 0 , 2 0 0 2 4 9 ,4 0 2 , 0 0 0 2 5 2 ,1 3 1 , 0 0 0 2 5 5 ,0 2 8 , 0 0 0 2 5 7 ,7 8 3 , 0 0 0 2 6 0 ,3 4 1 , 0 0 0 2 6 2 ,7 5 5 , 0 0 0 2 6 5 ,2 8 4 , 0 0 0 2 6 7 ,6 3 6 , 1 0 0 2 7 0 ,2 9 9 , 0 0 0



Source: Note:



The United States Bureau of Economic Analysis; and the Arizona Department of Economic Security, Research Administration. The information contained in the sources used for this table is revised on a continuing basis and, accordingly, the amounts in the above table have been revised. Therefore, amounts presented for some years may not match the amounts presented in the Department's CAFR for the prior years.



P opul a ti on Growth

6% 5%

% Change



4% 3% 2% 1% 0% 1 98 9 19 9 0 1 9 9 1 1 9 92 1 9 93 1 99 4 19 9 5 19 9 6 1 9 9 7 1 9 98 Ca le nda r Year



Arizona



United States



43



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Comparison Between Arizona and United States Per Capita Income For the Calendar Years Ended December 31

Percentage Change in Arizona Per Capita Income 3.84% 4.00% 3.01% 4.40% 4.01% 5.27% 6.62% 2.78% 4.79% 5.27% Percentage Change in U.S. Per Capita Income 6.50% 5.52% 2.87% 4.92% 3.29% 4.28% 5.02% 6.33% 4.40% 4.68%



Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Source: Note:



Arizona Per Capita Income $ 15,639 16,265 16,755 17,492 18,194 19,153 20,421 20,989 21,994 23,152



U.S. Per Capita Income $ 17,690 18,666 19,201 20,146 20,809 21,699 22,788 24,231 25,298 26,482



The United States Bureau of Economic Analysis. The information contained in the sources used for this table is revised on a continuing basis and, accordingly, the amounts in the above table have been revised. Therefore, amounts presented for some years may not match the amounts presented in the Department's CAFR for the prior years.

Change in Per Capita Income



7% 6% 5% 4% 3% 2% 1% 0%



% Change



1989 1990 1991 1992 1993 1994 1995 1996 1997 1998



Calendar Year Arizona United States



44



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Expenditures by Function and Funding Source (Governmental and Expendable Trust Funds) For the Fiscal Years Ended June 30

HEALTH AND WELFARE: State Year Funds 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 $ 275,996,200 316,315,000 343,758,700 360,053,000 353,782,600 372,114,400 386,169,400 370,757,400 400,340,700 425,235,500 $



Federal Funds 587,861,220 737,106,621 888,109,515 1,097,998,692 1,111,025,346 1,129,460,885 1,092,763,240 1,072,660,950 1,018,548,228 1,045,925,462 $



Other Funds 143,559,128 189,889,787 306,811,857 258,209,249 238,523,964 240,231,124 225,288,163 216,699,361 202,518,001 220,049,050 $



Total Funds 1,007,416,548 1,243,311,408 1,538,680,072 1,716,260,941 1,703,331,910 1,741,806,409 1,704,220,803 1,660,117,711 1,621,406,929 1,691,210,012



Source:



The Arizona Department of Economic Security, Office of the Budget, Unaudited, 1990 - 1992; Audited Annual Financial Report, 1993; and Audited Comprehensive Annual Financial Report, 1994, 1995, 1996, 1997, 1998 and 1999. The Federal Funds amounts include amounts for food stamp benefits distributed.



Note:



Expe nditure s by Function and Funding Source (In millions)

1,8 0 0 1,6 0 0 1,4 0 0 1,2 0 0 1,0 0 0 800 600 400 200 1 9 90 1 9 9 1 19 9 2 1 99 3 1 9 9 4 19 9 5 1 99 6 1 9 97 1 9 9 8 19 9 9



Dollars



Fisca l Year State Funds Federal Funds Other Funds



45



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Revenues by Funding Source (Governmental and Expendable Trust Funds) For the Fiscal Years Ended June 30

State General Fund A p p ro p r i a t i o n s $ Federal Financial Assistance 582,724,562 749,433,305 972,447,084 1,148,257,103 1,121,879,899 1,142,831,235 1,110,112,146 1,078,901,892 1,016,492,399 1,045,521,174



Year



Employers U I Contributions $ 120,052,136 118,497,757 128,042,602 124,081,164 201,229,020 235,800,076 239,480,340 225,101,956 223,517,434 191,326,704



Interest on Investments $ 43,466,615 43,182,744 36,066,284 29,012,139 26,681,446 30,346,709 38,861,761 43,414,155 51,591,704 58,281,429



Other $ 13,200,766 14,345,396 14,136,310 32,186,623 37,330,662 45,731,486 48,154,973 47,406,581 49,907,366 56,212,888



Total $ 1,047,776,360 1,257,623,463 1,508,150,080 1,700,900,529 1,743,922,127 1,834,290,606 1,833,826,520 1,768,493,984 1,751,149,803 1,776,872,395



1990 $ 288,332,281 1991 332,164,261 1992 357,457,800 1993 367,363,500 1994 356,801,100 1995 379,581,100 1996 397,217,300 1997 373,669,400 1998 409,640,900 1999 425,530,200



Source:



The Arizona Department of Economic Security, Office of Finance, Unaudited, 1990 - 1992; Audited Annual Financial Report, 1993; and Audited Comprehensive Annual Financial Report, 1994, 1995, 1996, 1997, 1998 and 1999. The Federal Financial Assistance amounts include amounts for food stamp benefits distributed.



Note:



Re v e nue s by Funding Source (In millions)

2,0 0 0 1,8 0 0 1,6 0 0 1,4 0 0 1,2 0 0 1,0 0 0 800 600 400 200 0 1 99 0 1 9 9 1 19 9 2 1 9 93 19 9 4 1 99 5 1 9 9 6 19 9 7 1 9 98 19 9 9



Dollars



Fisca l Year State General Fund Appropriations Employ ers U I Contributions Other Federal Financial Assistance Interes t on Investments



46



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Comparison Between Arizona and United States Unemployment For the Calendar Years Ended December 31

Number of Unemployed Arizona 89,000 96,000 100,000 135,000 113,000 126,000 107,700 123,900 110,600 94,000 Number of Unemployed U.S. 6,528,000 6,874,000 8,426,000 9,384,000 8,734,000 7,996,000 7,404,000 7,236,000 6,739,000 6,210,000 Unemployment Rate Arizona 5.20% 5.30% 5.60% 7.50% 6.20% 6.30% 5.10% 5.50% 4.70% 4.10% Unemployment Rate U.S. 5.30% 5.50% 6.70% 7.40% 6.80% 6.10% 5.60% 5.40% 4.90% 4.50%



Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Source: Note:



The Arizona Department of Economic Security, Research Administration, Economic Analysis; the WEFA Group; and the United States Department of Labor, Monthly Labor Review. The information contained in the sources used for this table is revised on a continuing basis and, accordingly, the amounts in the above table have been revised. Therefore, amounts presented for some years may not match the amounts presented in the Department's CAFR for the prior years.



Une m ploym e nt Rate



8% 6%



Rate



4% 2% 0% 1 98 9 19 9 0 19 9 1 1 9 9 2 1 9 9 3 1 9 94 1 99 5 1 99 6 19 9 7 1 9 9 8



Ca le nda r Year Ariz ona United States



47



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Unemployment Insurance Financial Transaction Summary For the Fiscal Years Ended June 30

Total Employer Contributions $ 121,797,545 118,315,651 178,838,516 247,003,400 253,105,103 236,679,799 240,046,970 227,644,491 228,236,334 200,221,238 To t a l Benefits Paid $ 138,711,820 186,322,241 284,087,630 311,482,824 238,666,989 173,317,247 177,755,864 172,336,147 159,930,580 169,265,609 Trust Fu n d Balance $ 498,579,399 473,972,183 406,935,508 372,205,292 412,794,159 504,536,522 613,437,439 711,845,399 831,262,488 919,819,409



Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999



Source: Note:



The Arizona Department of Economic Security, Unemployment Insurance Transaction Summary Report. The total benefits paid amount for all fiscal years has been adjusted to include interstate benefits.



Une m ploym e nt Insurance Contribution to Benefits and Fund Balance (In millions)



1 0 00 8 00



Dollars



6 00 4 00 2 00 0 1 9 90 1 99 1 19 9 2 1 9 9 3 1 9 94 1 99 5 19 9 6 1 9 9 7 1 9 98 1 99 9



Fisca l Year

Employer Contributions Benefits Paid Fund Balance



48



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Food Stamp Benefits Participants For the Fiscal Years Ended June 30

Average Monthly Number of Households 104,550 129,922 160,498 175,686 186,714 182,782 161,415 141,981 112,345 95,938 Average Monthly Number of Persons 301,744 369,392 443,310 480,865 510,477 494,637 434,542 385,061 311,142 260,736 Average Monthly Allotment Per Household $ 176.34 186.53 187.12 186.92 190.10 195.05 200.91 199.34 201.11 207.73 Average Monthly Allotment Per Person $ 61.10 65.61 67.75 68.29 69.53 72.08 74.63 73.50 72.61 76.43 $ Average Monthly Coupon Issuance 18,436,629 24,234,784 30,032,306 32,838,478 35,494,355 35,651,359 32,429,993 28,302,483 22,593,553 19,929,511



Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999



Source:



The Arizona Department of Economic Security, Family Assistance Administration.



Food Stamps Benefit Participation

2 00 ,0 00 1 80 ,0 00 1 60 ,0 00 1 40 ,0 00 1 20 ,0 00 1 00 ,0 00 80 ,0 00 60 ,0 00 40 ,0 00 20 ,0 00 0 1 9 90 1 9 9 1 19 9 2 1 99 3 1 9 94 1 9 9 5 19 9 6 1 99 7 1 9 98 1 9 9 9 $250 $200 $150 $100 $50 $0



Fisca l Year



Average Monthly Number of Households Average Monthly Allotment per Household



49



Per Household



Households



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Temporary Assistance for Needy Families For the Fiscal Years Ended June 30

Average Monthly Number of Cases 43,075 51,997 63,015 70,452 73,470 73,277 67,784 57,526 43,601 35,730 Average Monthly Number of Recipients 123,965 148,258 178,900 197,543 205,203 201,019 183,274 155,037 119,011 95,556 $ Average Monthly Payment Per Case 255.92 257.96 304.63 315.48 300.32 296.57 292.15 296.30 290.35 282.66 Average Monthly Payment Per Recipient $ 88.93 90.47 107.30 112.51 107.52 108.11 108.05 109.94 106.37 105.69



Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999



Average Monthly Payments $ 11,023,778 13,413,246 19,196,299 22,226,198 22,064,301 21,731,910 19,803,335 17,045,065 12,659,966 10,099,685



Source:



The Arizona Department of Economic Security, Family Assistance Administration.



TANF Cases

80 ,0 00 70 ,0 00 60 ,0 00 50 ,0 00 $350 $300



Cases



$200 $150 $100 $50 $0 1 9 90 1 9 9 1 19 9 2 1 99 3 1 9 9 4 1 9 9 5 19 9 6 1 99 7 1 9 98 1 9 9 9



40 ,0 00 30 ,0 00 20 ,0 00 10 ,0 00 0



Fi sca l Year

Average Monthly Cases Average Monthly Payment Per Case



50



Dollars Per Case



$250



ARIZONA DEPARTMENT OF ECONOMIC SECURITY General Assistance For the Fiscal Years Ended June 30

Average Monthly Number of Recipients 6,232 7,171 9,116 9,109 9,855 7,618 6,655 3,631 2,883 2,627 Average Monthly Payment Per Recipient $ 154.51 159.00 148.36 146.78 147.63 143.73 141.97 147.25 146.87 146.67 $



Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999



Average Monthly Payments 962,918 1,140,123 1,352,449 1,337,067 1,455,003 1,094,888 944,841 534,679 423,430 385,315



Source:



The Arizona Department of Economic Security, Family Assistance Administration.



Re cipie nt to Payment Comparison

1 2,0 0 0 1 0,0 0 0 Recipients 8,0 0 0 6,0 0 0 4,0 0 0 2,0 0 0 0 1 9 90 1 99 1 19 9 2 1 9 9 3 1 9 94 1 99 5 19 9 6 1 9 9 7 1 9 98 1 99 9 Fis c a l Year Average Monthly Number of Recipients Average Monthly Payment Per Recipient $ 18 0 $ 16 0 $ 14 0 $ 12 0 $ 10 0 $ 80 $ 60 $ 40 $ 20 $0

Average Monthly Payment



51



ARIZONA DEPARTMENT OF ECONOMIC SECURITY Jobs Program Comparison of Participants and Participants Employed to the Percentage Retained For the Fiscal Years Ended June 30

Percentage Retained After 90 Days Retained After 90 Days

N/A



Year 1991 1992 1993 1994 1995 1996 1997 1998 1999 Source: Note:



Number of Participants Number of Participants 3,507 9,390 9,905 11,446 19,544 21,263 21,734 30,520 25,209



Total Employed Employed 606 1,489 1,880 2,445 3,984 5,905 7,433 10,930 9,604



67% 65% 75% 66% 72% 57%

N/A N/A N/A



The Arizona Department of Economic Security, Jobs/JTPA Administration. The Jobs Program started in fiscal year 1991. In fiscal years 1991, 1998 and the first half of 1999, percentage retained after 90 days was not tracked as a performance measure.



Jobs Program Participants Employed to the Percentage Retained

3 5,0 0 0 3 0,0 0 0 80% 70% 60% 50% 40% 30% 20% 10% 0% 19 9 1 1 9 9 2 1 9 93 19 9 4 1 9 9 5 1 9 96 19 9 7 1 9 9 8 1 9 99



Number of Participants



2 0,0 0 0 1 5,0 0 0 1 0,0 0 0 5,0 0 0 0



Fisca l Year Number of Participants Retained After 90 Days Employed



52



Percentage Retained



2 5,0 0 0



ARIZONA DEPARTM