State of Arizona: statement of federal land payments

              Financial Audit
A REPORT
TO THE
ARIZONA LEGISLATURE
State of Arizona
Statement of Federal Land Payments
October 1, 2001 through September 30, 2002
Financial Audit Division
Debra K. Davenport
Auditor General
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five
senators and five representatives. Her mission is to provide independent and impartial information and specific
recommendations to improve the operations of state and local government entities. To this end, she provides financial
audits and accounting services to the State and political subdivisions, investigates possible misuse of public monies, and
conducts performance audits of school districts, state agencies, and the programs they administer.
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.auditorgen.state.az.us
State of Arizona
Statement of Federal Land Payments
October 1, 2001 through September 30, 2002
Table of Contents Page
Independent Auditors' Report 1
Statement of Federal Land Payments 2
Notes to Statement of Federal Land Payments 3
Attachment to Notes to Statement of Federal
Land Payments—Arizona Revised Statutes 6
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553 -0333 • FAX (602) 553-0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
Independent Auditors' Report
Members of the Arizona State Legislature
State of Arizona, Department of Administration
We have audited the accompanying Statement of Federal Land Payments of the State of Arizona for the
period October 1, 2001 through September 30, 2002. This statement is the responsibility of the State of
Arizona. Our responsibility is to express an opinion on this statement based on our audit.
We conducted our audit in accordance with U.S. generally accepted auditing standards and the Audit
Guide for Bureau of Land Management Payments in Lieu of Taxes Program, prepared by the Office of the
Inspector General, U.S. Department of the Interior. Those standards and the cited audit guide require that
we plan and perform the audit to obtain reasonable assurance about whether the Statement of Federal
Land Payments is free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis for our
opinion.
As described in Note 1, this Statement of Federal Land Payments was prepared on the cash basis, which
is a comprehensive basis of accounting other than U.S. generally accepted accounting principles.
In our opinion, the Statement of Federal Land Payments referred to above presents fairly, in all material
respects, the payments that the State of Arizona made to qualified local governmental subdivisions under
31 U.S.C. 6901 et seq, for the period October 1, 2001 through September 30, 2002, in accordance with
the regulatory requirements and on the basis of accounting described in Note 1.
This report is intended solely for the information and use of the addressees and for filing with the U.S.
Department of the Interior, Bureau of Land Management, and is not intended to be and should not be
used by anyone other than these specified parties. However, this report is a matter of public record, and
its distribution is not limited.
Dennis L. Mattheisen, CPA
Financial Audit Director
January 16, 2003
USFS/MMS
Timber and BLM/MMS BLM FERC
USFS Mineral Sale of Power FWS
Title I Secure USFS Leasing §3 §15 BLM Materials Sales Refuge
(A.R.S.
§11-497)
Schools
Title III
Bankhead-
Jones
(A.R.S.
§37.741.b)
(A.R.S
§37-725)
(A.R.S.
§37-724)
Bankhead-
Jones
(A.R.S.
§37-521 to 525)
(A.R.S.
§35.142.A)
Revenue
Sharing
Total
Retained
- -
$ 92,386 $ 92,386
1,832,635 $ 636,957 2,469,592
30,886 30,886
37,380 37,380
376,963 376,963
- -
138,882 138,882
1,227 1,227
25,000 25,000
72,328 72,328
46,497 46,497
5,000 5,000
543,993 138,157 682,150
- - -
$ 3,203,177 $ 775,114 $ 3,978,291
2
See accompanying notes to statement.
Santa Cruz County
Yavapai County
Yuma County
Total
Abbrevations Used:
USFS - U.S. Forest Service
MMS - Mineral Management Service
A.R.S. - Arizona Revised Statutes
BLM - Bureau of Land Management
FWS - Federal Wildlife Service
FERC - Federal Energy Regulatory Commission
Mohave County
Navajo County
Pima County
Pinal County
Graham County
Greenlee County
La Paz County
Maricopa County
Apache County
Cochise County
Coconino County
Gila County
Federal Agency Making Payment and Type of Payment
BLM
Taylor Grazing
Local Unit
Secure Schools
STATE OF ARIZONA
Statement of Federal Land Payments
October 1, 2001 through September 30, 2002
State of Arizona
Notes to Statement of Federal Land Payments
October 1, 2001 through September 30, 2002
3
Note 1 -Basis of Accounting
The Statement of Federal Land Payments was prepared on the basis of cash
disbursements that the State of Arizona made to qualified local governmental
subdivisions during the period October 1, 2001 through September 30, 2002, under 31
U.S.C. 6901 et seq, which is a comprehensive basis of accounting other than U.S.
generally accepted accounting principles. This basis of reporting federal land
payments is prescribed by the U.S. Department of the Interior Rules and Regulations
(43 CFR Part 1881.12), and is in accordance with the provisions of the October 16,
1978, Comptroller General of the United States Decision (B-167553).
Note 2 -Reconciliation of Federal Land Payments
The following presents a reconciliation of the amounts presented on the Statement of
Federal Land Payments to the Bureau of Land Management’s (BLM) Schedule of Prior
Year Payments Received By State and Local Governments During the Period October 1,
2001 Through September 30, 2002:
Timber and Secure Schools, Title I and III
The State received $7,002,295 of Timber and Secure Schools receipts, which were
disbursed to the counties. Subsequently, the counties distributed $3,024,004 to the
benefit of the school districts and retained $3,978,291. However, as of January 16,
2003, Maricopa County had not yet distributed any of its $138,882 in receipts to school
districts.
Bankhead-Jones
Monies received from the Bankhead-Jones Act are credited to the University of Arizona
in compliance with the Enabling Act. The State received no amounts under this
program.
Mineral Leasing
The State received and retained $128,907, of which 50 percent was used for secondary
roads and the other 50 percent was transferred to the permanent state school fund.
State of Arizona
Notes to Statement of Federal Land Payments
October 1, 2001 through September 30, 2002
4
Taylor Grazing, Sections 3 and 15
The State received $1,906 and $635, respectively, of Taylor Grazing, Sections 3 and 15
monies from October 1, 2001 through September 30, 2002. During the period the State
disbursed $68,772 and $84,366 to the counties from current and prior year’s receipts of
Taylor Grazing, Sections 3 and 15, respectively.
Section 3 Section 15
Payments received by the State $ 1,906 $ 635
Add:
Amounts received from BLM prior to, but
disbursed to the counties after,
October 1, 2001 66,866 83,731
Total amounts disbursed to the counties 68,772 84,366
Less:
Amounts distributed by the counties as prescribed
by the Arizona Revised Statutes §§35-725 and
35-724, respectively 68,772 84,366
Amounts retained by counties $ 0 $ 0
Sale of Materials
The State received $4,251, which was retained in the State’s permanent land funds
to be applied in accordance with their respective purposes.
Power Sales
The State received $10,810, which was retained in the State’s General Fund.
Refuge Revenue Sharing
Federal Wildlife Service Refuge receipts are paid directly to the counties. There are
no statutes governing the counties’ use of these receipts. The State received no
amounts under this program.
State of Arizona
Attachment to Notes to Statement
of Federal Land Payments—Arizona Revised Statutes
October 1, 2001 through September 30, 2002
Attachment to Notes to Statement
of Federal Land Payments—
Arizona Revised Statutes
State of Arizona
Attachment to Notes to Statement
of Federal Land Payments—Arizona Revised Statutes
October 1, 2001 through September 30, 2002
6
A.R.S. §11-497. Disbursement of forest reserve monies
The treasurer shall notify the clerk of the board of supervisors and the county school
superintendent of the amount received from the state treasurer as the county share of pass
through monies from the United States from forest reserves, as provided in §41-736, and
thereafter the money shall be disbursed for the benefit of public schools and public roads of the
county as the board of supervisors may direct.
A.R.S. §35-142. Monies kept in funds separate from general fund; receipt and
withdrawal
A. All monies received for and belonging to the state shall be deposited in the state treasury
and credited to the state general fund except the following, which shall be placed and
retained in separate funds:
1. The unexpendable principal of monies received from federal land grants shall be placed
in separate funds and the account of each such separate fund shall bear a title indicating
the source and the institution or purpose to which such fund belongs.
2. The interest, rentals, and other expendable money received as income from federal land
grants shall be placed in separate accounts, each account bearing a title indicating the
source and the institution or purpose to which the fund belongs. Such expendable
monies shall be expended only as authorized, regulated, and controlled by the general
appropriation act or other act of the legislation.
3. All private or quasi-private monies authorized by law to be paid to or held by the state
treasurer shall be placed in separate accounts, each account bearing a title indicating the
source and purpose of such fund.
4. All monies legally pledged to retirement of building indebtedness or bonds issued by
those institutions authorized to incur such indebtedness or to issue such bonds shall be
placed in separate accounts.
5. Monies of a multi-county water conservation district authorized by law to be paid to or
held by the state treasurer shall be placed in separate accounts, each account bearing a
title indicating the source and purpose of such fund.
State of Arizona
Attachment to Notes to Statement
of Federal Land Payments—Arizona Revised Statutes
October 1, 2001 through September 30, 2002
7
A.R.S. §35-142. Monies kept in funds separate from general fund; receipt and
withdrawal (Cont’d)
6. All monies collected by Arizona game and fish department shall be deposited in a special
fund known as the state game and fish protection fund for the use of the Arizona game
and fish commission in carrying out the provisions of title 17.
7. All federal monies that are received by the department of economic security for family
assistance benefits and medical eligibility as a result of efficiencies developed by the
department of economic security and that would otherwise revert to the state general
fund pursuant to §35-190 shall be retained for use by the department of economic
security in accordance with the terms and conditions imposed by the federal funding
source.
8. Monies designated by law as special state funds shall not be considered a part of the
general fund. Unless otherwise prescribed by law, the state treasurer shall be the
custodian of all such funds.
B. No money shall be received or held by the state treasurer except as authorized by law, and in
every instance the treasurer shall issue a receipt for money received and shall record the
transaction in the statewide accounting system. No money shall be withdrawn from the
treasury except upon the warrant or electronic funds transfer voucher of the department of
administration.
C. All federal monies granted and paid to the state by the federal government shall be
accounted for in the accounts or funds of the state in the necessary detail to meet federal
and state accounting, budgetary and auditing requirements, and all appropriations for
matching such federal monies shall be transferred from the general fund to such separate
funds as needed, except as otherwise required by the federal government.
D. Nothing in this section requires the establishment of separate accounts or funds for such
federal monies unless otherwise required by federal or state law. The department of
administration has the authority to use the most efficient system of accounts and records,
consistent with legal requirements and standard and necessary fiscal safeguards.
State of Arizona
Attachment to Notes to Statement
of Federal Land Payments—Arizona Revised Statutes
October 1, 2001 through September 30, 2002
8
A.R.S. §35-142. Monies kept in funds separate from general fund; receipt and
withdrawal (Cont’d)
E. Nothing in this section precludes the creation by the department of administration of a
clearing account or other acceptable accounting method to effect prompt payment of claims
from an approved budget or appropriation. The department of administration shall report
each account or fund established or cancelled to the directors of the joint legislative budget
committee and the governor’s office of strategic planning and budgeting.
F. Nothing in this section or any other section precludes the use of monies kept in funds
separate from the general fund, the interest from which accrues to the general fund, for
payment of claims against the general fund, provided sufficient monies remain available for
payment of claims against such funds.
G. The department of administration may issue warrants for qualified expenditures of federal
program monies before they are deposited in the state treasury. The receipt of federal
monies shall be timed to coincide, as closely as administratively feasible, with the
redemption of warrants by the state treasurer. The department of administration shall limit
expenditures to the amount that has been made available for the use under the grant award
by the federal government. The state agency initiating the expenditures is responsible for
ensuring that expenditures qualify for coverage under the guidelines of the federal grant
award.
H. The department of administration shall establish the policies and procedures for all state
agencies for drawing federal monies. When the established method results in federal monies
being held by this state, the department of administration may use the interest earned on the
monies to pay the federal government for any related interest liability. If an interest liability is
incurred due to a state agency varying from the established policies and procedures, the
department of administration shall charge the appropriate agency account or fund. Interest
payment charges to agencies shall be reported by the department of administration to the
joint legislative budget committee on or before March 1. Any federal interest liability owed to
this state as a result of the delayed federal disbursements shall be used to offset this state’s
interest liability to the federal government. Any remaining interest earnings shall be
deposited in the state general fund.
I. Any state agency or authorized agent of a state agency may accept credit cards pursuant to
an agreement entered into by the state treasurer pursuant to §35-315 for the payment of any
amount due to that agency or agent or this state.
State of Arizona
Attachment to Notes to Statement
of Federal Land Payments—Arizona Revised Statutes
October 1, 2001 through September 30, 2002
9
A.R.S. §35-142. Monies kept in funds separate from general fund; receipt and
withdrawal (Cont’d)
J. Except for the department of revenue for tax payments, agencies or authorized agents on
behalf of state agencies that accept credit cards shall deduct any applicable discount fee
associated with the transaction amount before depositing the net amount in the appropriate
state fund. The net amount deposited in the appropriate state fund shall be considered as
the full deposit required by law of monies received by the agency. Payment of any
applicable discount fee shall be accounted for in the annual report submitted to the
governor’s office of strategic planning and budgeting in accordance with §41-1273.
K. Any state agency that contracts with an authorized agent for the electronic processing of
transactions pursuant to title 41, chapter 23 may include a provision in the contract to allow
the authorized agent to impose a convenience fee. If allowed, the convenience fee shall be
charged to the cardholder in addition to the transaction amount, except for the following:
1. Any permits, licenses, or other authorizations needed to pursue a trade or occupation in
this state.
2. Any permits, licenses, or other authorizations needed to establish, expand, or operate a
business in this state.
3. Any permits, licenses, or other authorizations needed to register and license a motor
vehicle or driver in this state.
L. Any state agency or its authorized agent may deduct the convenience fee associated with
electronic transactions listed in this subsection before depositing the net amount in the
appropriate state fund. The net amount deposited in the appropriate state fund pursuant to
subsection K, paragraphs 1, 2, and 3 shall be considered as the full deposit of monies that is
required by law and that is received by the agency.
M. When the percentage of electronic transactions first exceeds at least 30 percent of a state
agency’s total transactions, the state agency shall perform a cost benefit report, including
costs of convenience fees, the amount of revenue generated and any realized cost savings.
The state agency shall submit the cost benefit report to the joint legislative budget committee
within 6 months after reaching the 30 percent threshold.
State of Arizona
Attachment to Notes to Statement
of Federal Land Payments—Arizona Revised Statutes
October 1, 2001 through September 30, 2002
10
A.R.S. §37-142. Monies kept in funds separate from general fund; Receipt and
withdrawal (Concl’d)
N. State agencies shall report the number of transactions, the total dollar amount of transactions
processed, the total dollar amount of any discount fee, and the total dollar amount of any
convenience fee charged, deducted, or paid pursuant to subsections J and K of this section
quarterly to the governor, the government information technology agency, and the joint
legislative budget committee.
A.R.S. §37-521. Permanent state school fund; composition; use
A. The permanent state school fund shall consist of:
1. The proceeds of all lands granted to the state by the United States for the support of
common schools.
2. All property which accrues to the state by escheat or forfeiture.
3. All property donated for the benefit of the common schools, unless the terms of the
donation otherwise provide.
4. All unclaimed shares and dividends of any corporation incorporated under the laws of
this state.
5. The proceeds of the sale of timber, mineral, gravel, or other natural products or property
from school lands and state lands other than those granted for specific purposes.
6. The residue of the lands granted for the payment of the bonds and accrued interest
issued by Maricopa, Pima, Yavapai, and Coconino counties, after the purpose of the
grant has been satisfied, and the 5 percent of the proceeds of sales of public lands lying
within this state sold by the United States subsequent to admission of this state into the
union, as granted by the enabling act.
B. The fund shall be and remain a perpetual fund and distributions from the fund pursuant to
article X, section 7, Constitution of Arizona, plus monies derived from the rental of the lands
and property, interest and accrued rent for that year credited pursuant to §37-295 and
interest paid on installment sales, shall be used as follows:
State of Arizona
Attachment to Notes to Statement
of Federal Land Payments—Arizona Revised Statutes
October 1, 2001 through September 30, 2002
11
A.R.S. §37-521. Permanent state school fund; composition; use (Concl’d)
1. If there are outstanding state school facilities revenue bonds pursuant to title 15, chapter
16, article 6, or outstanding qualified zone academy bonds pursuant to title 15, chapter
16, article 7, the state treasurer and the state land department shall annually transfer to
the state school facilities revenue bond debt service fund established in §15-2054 the
amount that is necessary to pay that fiscal year’s debt service on outstanding state
school facilities revenue bonds or qualified zone academy bonds.
2. If there are no outstanding state school facilities revenue bonds pursuant to title 15,
chapter 16, article 6, or if the amount of monies available under this subsection exceeds
the amount required under paragraph 1 of this subsection, the monies are subject to
legislative appropriation to the new school facilities fund established by §15-2041.
3. If the amount of monies available under this subsection exceeds the amount required
under paragraphs 1 and 2 of this subsection, the legislature may annually appropriate an
amount to be used as provided in §15-971, subsection H, except that the amount
appropriated may not exceed the amount appropriated from the permanent state school
fund and from the rent and interest paid on installment sales for this purpose in fiscal
year 2000-2001.
4. Notwithstanding paragraphs 1, 2, and 3 of this subsection, from and after June 30, 2001,
any expendable earnings under this subsection that exceed the fiscal year 2000-2001
expendable earnings shall be deposited in the classroom site fund established by §15-977.
A.R.S. §37-522. Universities land fund; composition; use
A. The universities land fund shall consist of:
1. The proceeds of all lands granted to the state by the United States for university
purposes.
2. All property donated by individuals for university purposes, unless the terms of the
donation otherwise provide.
3. The sale of timber, mineral, gravel, or other natural products or property from lands
granted or given for university purposes.
State of Arizona
Attachment to Notes to Statement
of Federal Land Payments—Arizona Revised Statutes
October 1, 2001 through September 30, 2002
12
A.R.S. §37-522. Universities land fund; composition; use (Concl’d)
B. The fund is and shall remain a perpetual fund for the benefit and support of the universities of
this state and distributions from the fund pursuant to article X, section 7, Constitution of
Arizona together with the monies derived from the sales of timber or timber products and the
rental of the lands and property, including interest and accrued rent for that year credited
pursuant to §37-295, shall be used.
A.R.S. §37-523. Normal schools land fund; composition; use
A. The normal schools land fund shall consist of:
1. The proceeds of all lands granted to the state by the United States for normal schools for
the purpose of training teachers.
2. All property donated for normal schools, teacher colleges, or colleges of education for
the purpose of training teachers, unless the terms of the donation otherwise provide.
3. The sale of timber, mineral, gravel or other natural products of property granted or
donated for such purposes.
B. The fund shall be and remain a perpetual fund for the benefit and support equally of the
universities for the purpose of training teachers and distributions from the fund pursuant to
article X, section 7, Constitution of Arizona together with the monies derived from the rental of
the lands and property, including interest and accrued rent for that year credited pursuant to
§37-295, shall be used.
A.R.S. §37-524. Agricultural and mechanical colleges land fund and school of
mines land fund; composition; use
A. The agricultural and mechanical colleges land fund, and the school of mines land fund, shall
separately consist of the proceeds of:
1. All lands granted to the state by the United States for the respective purposes named.
2. All property donated by individuals for like purposes, unless the terms of the donation
otherwise provide.
State of Arizona
Attachment to Notes to Statement
of Federal Land Payments—Arizona Revised Statutes
October 1, 2001 through September 30, 2002
13
A.R.S. §37-524. Agricultural and mechanical colleges land fund and school of
mines land fund; composition; use (Concl’d)
3. The sale of timber, mineral, gravel, or other natural products or property from lands
granted or donated for such purposes.
B. The funds provided for in this section shall be and remain perpetual funds for the benefit and
support of the agricultural and mechanical colleges and the schools of mines at the
universities and distributions from the funds pursuant to article X, section 7, Constitution of
Arizona together with the money derived from the rental of lands and property, including
interest and accrued rent for that year credited pursuant to §37-295, shall be used.
A.R.S. §37-525. Other land fund; composition; use
A. The legislative, executive, and judicial public buildings land fund, the penitentiary land fund,
the Arizona state hospital land fund, the state charitable, penal and reformatory institutions
land fund, the schools and asylum for the deaf, dumb and blind land fund, the miners’
hospital for disabled miners land fund, and the military institutes land fund shall separately
consist of:
1. The proceeds of all lands granted to this state by the United States for the respective
purposes named.
2. All property donated by individuals for like purposes, unless the terms of the donation
otherwise provide.
3. The sale of timber, mineral, gravel, or other natural products or property from lands
granted or donated for such purposes.
B. The funds shall be and remain perpetual funds for the benefit and support of institutions
corresponding to the purposes for which the funds are established, except as otherwise
provided in the enabling act and §37-295 and distributions from the funds pursuant to article
X, section 7, Constitution of Arizona together with the monies derived from the rental of the
lands and property, shall be used. Monies in the state charitable, penal and reformatory
institutions land fund are subject to legislative appropriation.
State of Arizona
Attachment to Notes to Statement
of Federal Land Payments—Arizona Revised Statutes
October 1, 2001 through September 30, 2002
14
A.R.S. §37-724. Receipts from lease of public lands
All monies received from leases of public lands within any county shall be placed to the credit of
the school district within the county in which the land lies. If the lands do not lie within a school
district, the monies shall be placed to the credit of the general school fund of the county.
A.R.S. §37-725. Receipts from grazing district fees; district treasurer; duties
A. All monies received from grazing fees of a grazing district regularly established and including
public lands within the county shall be placed to the credit of a special fund designated the
range improvement fund of the grazing district which shall be given a number.
B. The county treasurer of the county in which such public lands are located shall be the ex-officio
district treasurer of any federal grazing district located wholly or in part within the
county, and shall be liable upon his official bond for the proper care and distribution of the
monies. He shall collect, receive, receipt, and account for all monies from such source, and
shall pay it upon the warrant of the grazing district signed by the chairman of the board of
district advisors and countersigned by the vice chairman thereof and the regional grazier in
administrative charge of the district.
A.R.S. §37-741. Public roads and public education fund; purposes; approval of
expenditures by legislature; distribution
A. There is created a special fund known as the state public roads and public education fund.
There shall be deposited in the fund all monies received by the state as its distributive shares
of the amounts collected by the Unites States government under the provisions of the act of
Congress of February 25, 1920, chapter 85 (41 Stat. 437) and acts amendatory thereof,
entitled, “an act to promote the mining of coal, phosphate, oil, oil shale, gas and sodium on
the public domain.”
B. No monies shall be expended from the fund created by subsection A of this section without
prior approval therefore by an act of the legislature. The legislature may authorize
expenditures from the fund for any of the following purposes:
1. The construction and maintenance of public roads.
2. The support of public schools or other public educational institutions.
State of Arizona
Attachment to Notes to Statement
of Federal Land Payments—Arizona Revised Statutes
October 1, 2001 through September 30, 2002
15
A.R.S. §37-741. Public roads and public education fund; purposes; approval of
expenditures by legislature; distribution (Concl’d)
C. At the beginning of each fiscal year, one-half of the balance in the state public roads and the
public education fund shall be transferred to the state highway fund to be expended for
secondary roads and one-half shall be transferred to the permanent state school fund and
shall be administered as provided by §37-521.