Single audit reporting package: year ended June 30,.../ Yuma /La Paz Counties Community College District (Arizona Western College)

              Yuma/La Paz Counties
Community College District
(Arizona Western College)
Single Audit Reporting Package
June 30, 2002
Yuma/La Paz Counties Community College District
(Arizona Western College)
Single Audit Reporting Package
June 30, 2002
Table of Contents
Financial Section
Independent Auditor's Report
Management’s Discussion and Analysis........................................................................... i
Statement of Net Assets .................................................................................................... 1
Statement of Revenues, Expenses, and Changes in Net Assets..................................... 2
Statement of Cash Flows................................................................................................... 3
Notes to Financial Statements........................................................................................... 5
Supplementary Information
Schedule of Expenditures of Federal Awards ........................................................ 15
Single Audit Section
Report on Compliance and on Internal Control over Financial
Reporting Based on an Audit of Financial Statements Performed
in Accordance with Government Auditing Standards..............................................18
Report on Compliance with Requirements Applicable to Each
Major Program and on Internal Control over Compliance in
Accordance with OMB Circular A-133 .....................................................................20
Schedule of Findings and Questioned Costs
Summary of Auditor's Results................................................................................. 22
Financial Statement Findings.................................................................................. 23
Federal Award Findings and Questioned Costs..................................................... 24
i
November 14, 2002
Management’s Discussion and Analysis
This discussion and analysis introduces the basic financial statements and provides an
overview of the District’s financial activities for the year ended June 30, 2002. Please read it in
conjunction with the financial statements, which immediately follow.
Basic Financial Statements:
Beginning with fiscal year 2001-02, the District is required to present annual financial
statements in accordance with newly effective pronouncements issued by the Governmental
Accounting Standards Board (GASB), the authoritative body for establishing generally accepted
accounting principles (GAAP) for state and local governments, including public institutions of
higher education. These new pronouncements permit public colleges and universities to use the
guidance for special-purpose governments engaged only in business-type activities, in their
separately issued financial statements. As such, the reader will observe that the presentation
format has shifted from a columnar fund group format to a consolidated, single-column, entity-wide
format – similar to the type of financial statements one might encounter from a typical
business enterprise or a not-for-profit organization. The basic financial statements consist of the
following:
The Statement of Net Assets reflects the financial position of the District at June 30, 2002. It
shows the various assets owned or controlled, related liabilities and other obligations, and the
various categories of net assets. Net assets is an accounting concept defined as total assets
less total liabilities, and as such, represents institutional equity or ownership in the total assets
of the District.
The Statement of Revenues, Expenses, and Changes in Net Assets reflects the results of
operations and other changes for the year ended June 30, 2002. It shows the various revenues
and expenses, both operating and nonoperating, reconciling the beginning net assets amount to
the ending net assets amount – which is shown on the Statement of Net Assets described
above.
The Statement of Cash Flows presents the inflows and outflows of cash and cash equivalents
for the year ended June 30, 2002. It shows the various cash activities by type, reconciling the
beginning cash and cash equivalents amount to the ending cash and cash equivalents amount,
which is shown on the Statement of Net Assets described above. In addition, this statement
reconciles cash flows from operating activities to operating income/loss on the Statement of
Revenues, Expenses, and Changes in Net Assets described above.
ii
Financial Highlights and Analysis:
Consistent with its mission the District offers educational, career, and lifelong learning
opportunities through innovative partnerships which enhance the lives of people in Yuma and La
Paz Counties. Major funding sources supporting all functions include property taxes, state
appropriations, and tuition and fees. The District exercises primary and secondary property tax
levy authority for generation of funds for operating, capital equipment, and debt retirement
purposes.
The District has elected to not restate prior periods for purposes of providing the comparative
data for this Management’s Discussion and Analysis (MD&A). However, in future years, when
prior-period information is available, a comparative analysis will be presented. The condensed
financial information below highlights the main categories of the Statement of Net Assets. Over
time, increases or decreases in net assets may serve as a useful indicator of whether the
financial position of the District is improving or deteriorating. During FY2002, the State of
Arizona experienced a shortfall in revenue projections, and therefore all entities receiving state
appropriations underwent a budget rescission. The District’s cut in state appropriations was 4.8
%. The District reduced its operating budget to reflect this shortfall. During this year the District’s
full-time student equivalents increased 4.4% in response to District objectives. The District’s
overall financial position improved when compared to last year.
Condensed Financial Information
Condensed Statement of Net Assets as of June 30, 2002
Assets:
Current assets $ 20,261,058
Noncurrent assets, other than capital assets 936,510
Capital assets, net 20,642,915
Total assets $ 41,840,483
Liabilities:
Current liabilities $ 6,075,347
Noncurrent liabilities 12,267,149
Total liabilities $ 18,342,496
Net assets:
Invested in capital assets, net of related debt $ 7,047,915
Restricted net assets 3,662,722
Unrestricted net assets 12,787,350
Total net assets $ 23,497,987
The condensed financial information below highlights the main categories of the Statement of
Revenues, Expenses, and Changes in Net Assets. Operating revenues include tuition and fees
– net of scholarship discounts and allowances. In compliance with the new reporting
pronouncements issued by GASB, scholarship discounts and allowances are now recorded as
an offset to revenue, instead of as an expense. Depreciation expense is recorded for the first
time this fiscal year, in accordance with the adoption of the full accrual basis of accounting. The
construction and acquisition of capital assets, although budgeted and tracked as an expenditure
in the accounting system, are not reflected as an expense in these statements. Rather, such
transactions are reported as an asset – with the systematic allocation of such costs expensed
iii
over the useful life of the asset constructed or acquired. The District shows an operating loss,
reflective of the fact that two of the three main revenue sources – property taxes and state
appropriations – are considered nonoperating revenues. For a description of the difference
between operating and nonoperating, please refer to the Summary of Significant Accounting
Policies, Note 1 to the basic financial statements.
Condensed Statement of Revenues, Expenses, and Changes in Net Assets
For the Year Ended June 30, 2002
Revenues
Operating
Tuition and fees $ 2,348,563
Government grants and contracts 9,215,585
Other 2,160,441
Nonoperating
Property taxes 13,777,997
State appropriations 5,433,200
Investment income 442,131
Share of state sales taxes 465,523
Total revenues 33,843,440
Expenses
Operating 32,136,183
Nonoperating 709,998
Total expenses 32,846,181
Income before other revenues, expenses, gains 997,259
Capital appropriations, grants, and gifts 741,900
Increase in net assets 1,739,159
Total net assets, July 1, 2001 21,758,828
Total net assets, June 30, 2002 $ 23,497,987
Capital Assets and Debt Administration:
This fiscal year represents the second year of the District’s Facility Master Plan begun in 2000
to increase available classroom and support space throughout the District. The plan also
includes provisions for major renovation and deferred maintenance projects, energy
conservation improvements, and new construction. During this year one major renovation
project was partially completed, the south entrance roadway project was also completed, the
first phase of the energy management system was completed and construction was begun on a
new District services building. Funding for these projects was primarily from primary property
taxes and capital appropriations from the state.
For moveable fixed assets (equipment) a new capitalization minimum was established as of
July 1, 2001, raising the minimum to $5,000 from $1,000. This change resulted in a write off of
$4,197,347. As mentioned previously, equipment and all other capital assets (except land) is
reported net of accumulated depreciation for the first time this year in accordance with the new
iv
reporting standards issued by GASB. This has the effect of reducing the book value of overall
assets. Depreciation totaled $ 2,298,402 for the year, and is now shown as an operating
expense on the Statement of Revenues, Expenses, and Changes in Net Assets. Additional
information on the District’s capital assets can be found in Note 5 to the basic financial
statements.
At June 30, 2002, the District had four debt issues outstanding - one general obligation bond
issue for $12,405,000 that is funded from secondary property taxes, two revenue bond issues
for $605,000, that are funded from gross revenues of operations for various facilities, and one
pledged revenue obligation issue for $585,000 that is funded primarily from tuition and fees. No
additional long-term debt was issued during the fiscal year ended June 30, 2002. Additional
information on the District’s long-term debt can be found in Note 6 to the basic financial
statements.
Current Factors Having Probable Future Financial Significance:
The State of Arizona continues to experience revenue shortfalls that may have an impact on
state appropriations to the District in future years. During the 2001/2002 fiscal year, state
appropriations to the District was reduced mid-year by $313,400, or approximately 4.83%.
Future reductions are expected, but the precise amount is not known at this time. Contingency
plans are being developed to prepare for the effect of future funding reductions.
Proposition 301 was passed by the voters at the general election on November 7, 2000. The
proposition increased the state transaction privilege tax rate six-tenths of one per cent for twenty
years. This increase was to be used for education from K-12 through higher education.
Community colleges are to use the funds for Workforce Development activities. Fiscal year
2001/2002 was the first year of this funding and the District received $465,523. It is anticipated
that the District will continue to receive at least this amount for the next nineteen years.
Request for Information
This discussion and analysis is designed to provide a general overview of the Yuma/La Paz
Counties Community College District’s finances for all those with an interest in such matters.
Questions concerning any of the information provided in this Single Audit Reporting Package or
requests for additional financial information should be addressed to Business and Administrative
Services, P.O. Box 929, Yuma, Arizona 85366.
Yuma/La Paz Counties Community College District
(Arizona Western College)
Statement of Net Assets
June 30, 2002
Assets
Current assets:
Cash and cash equivalents $ 17,674,235
Investments 2,914
Receivables (net of allowances for uncollectibles)
Property taxes 889,580
Government grants and contracts 799,510
Student loans, current portion 16,874
Interest 17,372
Other 693,109
Prepaid items 167,464
Total current assets 20,261,058
Noncurrent assets:
Restricted assets:
Cash and cash equivalents held by trustees 773,520
Property taxes receivable 144,107
Student loans receivable (net of allowances) 18,883
Capital assets, not being depreciated 1,051,775
Capital assets, being depreciated, net 19,591,140
Total noncurrent assets 21,579,425
Total assets 41,840,483
Liabilities
Current liabilities:
Accounts payable 842,150
Accrued payroll and employee benefits 916,812
Interest payable 350,482
Deposits held in custody for others 1,914,636
Deferred revenues 140,104
Current portion of compensated absences payable 99,163
Current portion of long-term debt 1,812,000
Total current liabilities 6,075,347
Noncurrent liabilities:
Compensated absences payable 484,149
Long-term debt 11,783,000
Total noncurrent liabilities 12,267,149
Total liabilities 18,342,496
Net Assets
Invested in capital assets, net of related debt 7,047,915
Restricted:
Expendable:
Grants and contracts 326,727
Loans 126,497
Debt service 1,586,453
Capital projects 1,623,045
Unrestricted 12,787,350
Total net assets $ 23,497,987
See accompanying notes to financial statements.
1
Yuma/La Paz Counties Community College District
(Arizona Western College)
Year Ended June, 2002
Operating revenues:
Government grants and contracts $ 9,215,585
Private grants and contracts 268,020
Pledged for revenue bonds and other obligations:
Tuition and fees (net of scholarship allowances of $2,498,692) 2,348,563
Bookstore income 145,996
Food service income 525,921
Dormitory rentals and fees 411,732
Other 808,772
Total operating revenues 13,724,589
Operating expenses:
Educational and general:
Instruction 11,817,273
Public service 195,348
Academic support 2,218,609
Student services 2,996,549
Institutional support 3,785,664
Operation and maintenance of plant 2,773,405
Scholarships 3,407,920
Auxiliary enterprises 2,643,013
Depreciation 2,298,402
Total operating expenses 32,136,183
Operating loss (18,411,594)
Nonoperating revenues (expenses):
Property taxes 13,777,997
State appropriations 5,433,200
Share of state sales taxes 465,523
Investment income 442,131
Interest expense on debt (700,965)
Other nonoperating expenses (9,033)
Total nonoperating revenues (expenses) 19,408,853
Income before other revenues, expenses, gains, or losses 997,259
Capital appropriations 741,900
Increase in net assets 1,739,159
Total net assets, July 1, 2001, as restated 21,758,828
Total net assets, June 30, 2002 $ 23,497,987
See accompanying notes to financial statements.
2
Yuma/La Paz Counties Community College District
(Arizona Western College)
Statement of Cash Flows
Year Ended June 30, 2002
See accompanying notes to financial statements.
3
Cash flows from operating activities:
Tuition and fees $ 2,120,027
Grants and contracts 9,655,735
Bookstore receipts 130,652
Food services receipts 525,921
Dormitory rentals and fees 461,920
Collection of loans to students 40,220
Other receipts 1,122,227
Payments to suppliers and providers of goods and services (11,288,747)
Payments to employees (18,232,371)
Net cash used for operating activities (15,464,416)
Cash flows from noncapital financing activities:
Property taxes 13,751,909
State appropriations 5,433,200
Share of state sales taxes 465,523
Other nonoperating expenses (9,033)
Agency transactions, net (1,114,486)
Net cash provided by noncapital financing activities 18,527,113
Cash flows from capital and related financing activities:
Capital appropriations 741,900
Principal paid on capital debt (1,595,000)
Interest paid on capital debt (740,694)
Purchases of capital assets (1,496,286)
Net cash used for capital and related financing activities (3,090,080)
Cash flows from investing activities:
Interest received on investments 479,241
Net cash provided by investing activities 479,241
Net increase in cash and cash equivalents 451,858
Cash and cash equivalents, July 1, 2001 17,995,897
Cash and cash equivalents, June 30, 2002 $ 18,447,755
Yuma/La Paz Counties Community College District
(Arizona Western College)
Statement of Cash Flows
Year Ended June 30, 2002
See accompanying notes to financial statements.
4
Reconciliation of operating loss to net cash
used for operating activities:
Operating loss $(18,411,594)
Adjustments to reconcile operating loss to net cash
used for operating activities:
Depreciation 2,298,402
Changes in assets and liabilities:
Increase in:
Other receivables (272,867)
Prepaid items (99,280)
Accounts payable 248,172
Deferred revenues 140,104
Compensated absences 583,312
Decrease in:
Government grants and contracts receivable 424,656
Student loans receivable 40,220
Accrued payroll and employee benefits (415,541)
Net cash used for operating activities $(15,464,416)
Yuma/La Paz Counties Community College District
(Arizona Western College)
Notes to Financial Statements
June 30, 2002
5
Note 1 - Summary of Significant Accounting Policies
The accounting policies of the Yuma/La Paz Counties Community College District
conform to generally accepted accounting principles applicable to public institutions
engaged only in business-type activities adopted by the Governmental Accounting
Standards Board (GASB). During the year ended June 30, 2002, the District
implemented GASB Statement No. 35, which prescribes a new reporting model for
public colleges within the reporting guidelines of GASB Statement No. 34, as amended
by GASB Statement No. 37. The District also implemented GASB Statement No. 38,
which prescribes new and revised note disclosures.
A. Reporting Entity
The District is a special-purpose government that is governed by a separately elected
governing body. It is legally separate and fiscally independent of other state and local
governments. Furthermore, there are no component units combined with the District
for financial statement presentation purposes, and it is not included in any other
governmental reporting entity.
The financial activities of the Arizona Western College Foundation and the El Toro
Foundation are not included in the District's financial statements. The Foundations are
nonprofit corporations controlled by separate boards of directors. The goals of the
Foundations are to promote educational programs and District objectives.
B. Basis of Presentation and Accounting
The financial statements include a statement of net assets; a statement of revenues,
expenses, and changes in net assets; and a statement of cash flows.
A statement of net assets provides information about the assets, liabilities, and net
assets of the District at the end of the year. Assets and liabilities are classified as
either current or noncurrent. Net assets are classified according to external donor
restrictions or availability of assets to satisfy District obligations. Invested in capital
assets net of related debt represents the net value of capital assets less the debt
incurred to acquire or construct the asset. Nonexpendable restricted net assets are
gifts that have been received for endowment purposes, the corpus of which cannot be
expended. Expendable restricted net assets represent grants, contracts, gifts, and
other resources that have been externally restricted for specific purposes. Unrestricted
net assets include all other net assets, including those that have been designated by
management to be used for other than general operating purposes.
A statement of revenues, expenses, and changes in net assets provides information
about the District’s financial activities during the year. Revenues and expenses are
classified as either operating or nonoperating, and all changes in net assets are
reported, including capital contributions. Generally, revenues generated by the District
Yuma/La Paz Counties Community College District
(Arizona Western College)
Notes to Financial Statements
June 30, 2002
6
for instruction and public service are considered to be operating revenues. Other
revenues used for instruction and public service, such as property taxes and state
appropriations, are not generated from operations and are considered to be
nonoperating revenues.
A statement of cash flows provides information about the District’s sources and uses of
cash and cash equivalents during the year. Increases and decreases in cash and cash
equivalents are classified as either operating, noncapital financing, capital financing, or
investing.
The financial statements are reported using the economic resources measurement
focus and the accrual basis of accounting. Revenues are recorded when earned and
expenses are recorded at the time liabilities are incurred, regardless of when the
related cash flows take place. Property taxes are recognized in the year for which they
are levied. State appropriations are recognized as revenue in the year in which the
appropriation is first made available for use. Grants and donations are recognized as
revenue as soon as all eligibility requirements imposed by the provider have been met.
The effect of internal activity has been eliminated from the financial statements.
When both restricted and unrestricted resources are available for use, it is the District’s
policy to use restricted resources first, then unrestricted resources as they are needed.
The District follows FASB Statements and Interpretations issued on or before
November 30, 1989; Accounting Principles Board Opinions; and Accounting Research
Bulletins, unless those pronouncements conflict with GASB pronouncements.
C. Cash and Investments
The District’s cash and cash equivalents are considered to be cash on hand, demand
deposits, cash and investments held by the County Treasurer, investments in the State
Treasurer’s Local Government Investment Pool, and highly liquid investments.
Nonparticipating interest-earning investment contracts are stated at cost. Money
market investments and participating interest-earning investment contracts with a
remaining maturity of one year or less at time of purchase are stated at amortized cost.
All other investments are stated at fair value.
D. Capital Assets
Capital assets are reported at actual cost. Donated assets are reported at estimated
fair value at the time received.
Capitalization thresholds (the dollar values above which asset acquisitions are added
to the capital asset accounts), depreciation methods, and estimated useful lives of
capital assets reported in the financial statements are as follows:
Yuma/La Paz Counties Community College District
(Arizona Western College)
Notes to Financial Statements
June 30, 2002
7
Capitalization
Threshold
Land $5,000
Land improvements 5,000
Depreciation Estimated
Method Useful Life
Buildings 5,000 Straight line 40 years
Other improvements 5,000 Straight line 15 years
Equipment 5,000 Straight line 5 years
Library books 5,000 Straight line 10 years
E. Compensated Absences
Compensated absences consist of vacation leave earned by employees based on
services already rendered. Employees may accumulate up to 330 hours of vacation
depending on years of service, but any vacation hours in excess of the maximum
amount that are unused at year-end are forfeited. Generally, sick leave benefits
provide for ordinary sick pay and are cumulative but do not vest with employees and,
therefore, are not accrued.
F. Investment Income
Investment income is composed of interest, dividends, and net changes in the fair
value of applicable investments.
G. Scholarship Allowances
A scholarship allowance is the difference between the stated charge for goods and
services provided by the District and the amount that is paid by the student or third
parties making payments on behalf of the student. Accordingly, some types of student
financial aid such as Pell grants and scholarships awarded by the District are
considered to be scholarship allowances. These allowances are netted against tuition
and fees revenues in the statement of revenues, expenses, and changes in net
assets.
Note 2 - Beginning Balances Restated
The District’s aggregate fund balances reported as of June 30, 2001, totaling
$51,135,309, have been restated as beginning net assets of $21,758,828. The
restatement is attributable to the following items:
Yuma/La Paz Counties Community College District
(Arizona Western College)
Notes to Financial Statements
June 30, 2002
8
Aggregate fund balances as of June 30, 2001, as previously reported $ 51,135,309
1. Cumulative effect of change in capital asset
capitalization threshold (4,197,347)
2. Cumulative effect of implementing GASB Statement
No. 35 – recording accumulated depreciation on
capital assets (25,179,134)
Net assets as of July 1, 2001, as restated $ 21,758,828
Note 3 - Deposits and Investments
Arizona Revised Statutes (A.R.S.) require the District to deposit special tax levies for
the District’s maintenance or capital outlay with the County Treasurer. The statutes do
not require the District to deposit other public monies in its custody with the County
Treasurer; however, the District must act as a prudent person dealing with the property
of another when making investment decisions about those monies.
Deposits - At June 30, 2002, cash on hand was $2,000, the carrying amount of the
District’s deposits was $609,033 and the bank balance was $2,322,930. Of the bank
balance, $163,463 was covered by federal depository insurance and $2,159,467 was
covered by collateral held by the pledging financial institution’s trust department or
agent in the District’s name in book entry form.
Investments - The District’s investments at June 30, 2002 consisted of the following:
Fair
Value
Common stock $ 2,914
Money market mutual funds 715,845
State Treasurer’s investment pool 11,023,294
Cash and investments held by the County Treasurer 6,097,583
Total $ 17,839,636
The District’s investment in the State or County Treasurer’s investment pools
represents a proportionate interest in those pools’ portfolios; however, the District’s
portion is not identified with specific investments and is not subject to custodial credit
risk. The same is true for the District’s investments in U.S. government securities
money market accounts. The common stock was registered in the District’s name, or
was held by the District or its agent in the District’s name.
The State Board of Deposit provides oversight for the State Treasurer’s pools, and the
Local Government Investment Pool Advisory Committee provides consultation and
advice to the Treasurer. The fair value of a participant’s position in the pool
approximates the value of that participant’s pool shares. No comparable oversight is
provided for the County Treasurer’s investment pool, and that pool’s structure does not
provide for shares.
Yuma/La Paz Counties Community College District
(Arizona Western College)
Notes to Financial Statements
June 30, 2002
9
A reconciliation of cash and investments to amounts shown on the Statement of Net
Assets follows:
Cash and investments: Statement of Net Assets:
Cash on hand $ 2,000 Cash and cash equivalents $ 17,674,235
Carrying amount of deposits 609,033 Current investments 2,914
Reported amount of investments 17,839,636 Restricted assets:
Cash and cash equivalents held by trustees 773,520
Total $ 18,450,669 Total $ 18,450,669
Note 4 - Student Loan Receivables
A summary of student loan receivables and the related allowance for uncollectibles
follows:
Gross Allowance for Net
Receivables Receivable Uncollectibles Receivable
Student loans:
Current $ 71,156 $ (54,282) $ 16,874
Noncurrent 77,084 (58,201) 18,883
Total $ 148,240 $ (112,483) $ 35,757
Note 5 - Capital Assets
Capital asset activity for the year ended June 30, 2002, was as follows:
Balance
July 1, 2001, Balance
As restated Increases Decreases June 30, 2002
Capital assets not being depreciated:
Land $ 543,607 $ 543,607
Construction in progress, (estimated cost to
complete $1,721,940) 17,178 $ 508,168 $ 17,178 508,168
Total capital assets not being depreciated 560,785 508,168 17,178 1,051,775
Capital assets being depreciated:
Buildings 31,278,441 157,668 31,436,109
Equipment 4,998,963 252,425 355,270 4,896,118
Other improvements 8,410,333 506,083 330,119 8,586,297
Library books 1,375,643 89,120 1,464,763
Total capital assets being depreciated 46,063,380 1,005,296 685,389 46,383,287
Less accumulated depreciation for:
Buildings 14,474,688 1,294,228 15,768,916
Equipment 4,316,915 293,239 355,270 4,254,884
Other improvements 5,490,121 618,798 330,119 5,778,800
Library books 897,410 92,137 989,547
Total accumulated depreciation 25,179,134 2,298,402 685,389 26,792,147
Total capital assets being depreciated, net 20,884,246 (1,293,106) 19,591,140
Capital assets, net $ 21,445,031 $ (784,938) $ 17,178 $ 20,642,915
Yuma/La Paz Counties Community College District
(Arizona Western College)
Notes to Financial Statements
June 30, 2002
10
Note 6 - Long-Term Liabilities
The following schedule details the District’s long-term liability and obligation activity
for the year ended June 30, 2002:
Due
Balance Balance within
July 1, 2001 Additions Reductions June 30, 2002 one year
Compensated absences
payable $525,263 $58,049 $583,312 $99,163
Bonds payable:
Revenue bonds $ 740,000 $ 135,000 $ 605,000 $ 140,000
General obligation bonds 13,595,000 1,190,000 12,405,000 1,250,000
Pledged revenue obligations 855,000 270,000 585,000 422,000
Total bonds payable $15,190,000 $1,595,000 $13,595,000 $1,812,000
Revenue Bonds Payable – The District’s revenue bonds of 1971 and 1992 were
issued to provide monies to acquire, construct, equip, and furnish dormitories, a
college union, classroom facilities, and appurtenant facilities. The bonds are payable
solely from special sinking funds that are funded by stipulated amounts of gross
revenues from the operations of various facilities. The 1992 bonds are subject only to
the superior rights of the holders of previously issued bonds. Both issues are generally
callable and interest is payable semiannually. In accordance with the bond indentures,
the required repair and replacement account and debt service reserve funds have
been established and all requirements as of June 30, 2002, have been met.
Revenue bonds outstanding at June 30, 2002, were as follows:
Description
Original
Amount Interest Rates Maturities
Outstanding
Principal
Series A of 1971 $ 1,700,000 6.9 – 7% 7/1/02-10 $ 505,000
Series of 1992 750,000 6.0% 7/1/02 100,000
Total $ 605,000
Revenue bond debt service requirements to maturity, including $178,525 of interest,
are as follows:
Yuma/La Paz Counties Community College District
(Arizona Western College)
Notes to Financial Statements
June 30, 2002
11
Year ending June 30,
2003 $ 176,950
2004 75,975
2005 77,650
2006 74,150
2007 75,475
2008-2011 303,325
Total $ 783,525
General Obligation Bonds Payable – General obligation bonds payable at June 30,
2002, consisted of the outstanding general obligation bonds presented below. The
bonds are generally callable with interest payable semiannually.
Principal and interest on the bonds are payable from an ad valorem tax levied
against all the taxable property in the District. The bonds issued are payable from
such a tax without limit as to rate or amount.
General obligation bonds outstanding at June 30, 2002, were as follows:
Description
Original
Amount Interest Rates Maturities
Outstanding
Principal
Series of 1993 $ 16,355,000 3.7 – 6.25% 7/1/02 – 11 $ 12,405,000
General obligation bond debt service requirements to maturity, including $2,846,492 of
interest, are as follows:
Year ending June 30,
2003 $ 1,852,448
2004 1,850,829
2005 1,850,210
2006 1,855,272
2007 1,850,072
2008-2012 5,992,661
Total $ 15,251,492
Pledged Revenue Obligations – The District pledged revenue obligations of 1998
were issued to partially fund the acquisition, construction and equipping of an academic
complex. The obligations are payable from a pledge of, and secured by a lien on, all
tuition, fees, rentals and other charges from students, faculty and others. The
Yuma/La Paz Counties Community College District
(Arizona Western College)
Notes to Financial Statements
June 30, 2002
12
obligations are noncallable with interest payable semiannually. In accordance with the
trust agreement, the required debt service reserve fund has been established and all
requirements as of June 30, 2002, have been met.
Pledged revenue obligations outstanding at June 30, 2002, were as follows:
Description
Original
Amount Interest
Rates
Maturities
Outstanding
Principal
Series of 1998 $ 1,370,000 4.6 – 5.9% 7/1/02 – 03 $ 585,000
Pledged revenue obligation debt service requirements to maturity, including $27,540
of interest, are as follows:
Year ending June 30,
2003 $ 305,640
2004 306,900
Total $ 612,540
Note 7 - Risk Management
The District 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 District carries commercial insurance for all such risks of loss, including
workers’ compensation and accident insurance. Settled claims resulting from these
risks have not exceeded the commercial insurance coverage in any of the past three
fiscal years.
The District is a member of the Yuma Area Benefit Consortium which provides life
insurance, accidental death and dismemberment, disability, basic or major medical
coverage for accidents or sicknesses, as well as dental insurance coverage to its
employees through the Consortium. The Consortium, currently composed of three
members, provides benefits up to $75,000 per individual per calendar year through a
self-funding agreement with its participants and purchases commercial insurance to
cover claims in excess of this limit. An independent administrator provides the
Consortium with claims and recordkeeping services. The District is responsible for
paying the premiums, but may require its employees to contribute a portion of them.
The District would be assessed an additional contribution should the Consortium
become insolvent. This additional contribution shall not exceed the amount of the
District’s annual contribution (i.e., premium), and once made, thereby releases the
District from further legal obligations of any type. Should the District withdraw from the
Consortium, it would then be responsible for its proportional share of claims run-out
costs that exceed the Consortium reserves established for the incurred but not reported
Yuma/La Paz Counties Community College District
(Arizona Western College)
Notes to Financial Statements
June 30, 2002
13
claims liability. If the Consortium were to terminate, the District would be responsible for
its proportional share of any Consortium deficit. The District’s proportional share upon
termination shall not exceed the amount of the District’s annual contributions, and once
made, releases the District from all further legal obligations of any type.
Note 8 - Retirement Plan
Plan descriptions - The District 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, long-term
disability, survivor, and health insurance premium benefits. The System is
governed by the Arizona State Retirement System Board according to the provisions
of A.R.S. 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 Arizona State Retirement 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 District's contribution rates. For the year ended June 30, 2002,
active plan members and the District were each required by statute to contribute at the
actuarially determined rate of 2.49 percent (2.00 percent retirement and 0.49 percent
long-term disability) of the members' annual covered payroll. The District's
contributions to the System for the years ended June 30, 2002, 2001, and 2000 were
$636,632, $631,854, and $618,174, respectively, which were equal to the required
contributions for the year.
Note 9 - Operating Expenses
The District’s operating expenses are presented by functional classification in the
Statement of Revenues, Expenses, and Changes in Net Assets. The operating
expenses can also be classified into the following:
Personal services $ 18,400,142
Contract services 2,444,401
Supplies and other services 1,865,356
Communications and utilities 1,143,072
Scholarships 3,407,920
Depreciation 2,298,402
Other 2,576,890
Total $ 32,136,183
14
Supplementary Information
Yuma/La Paz Counties Community College District
(Arizona Western College)
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2002
See accompanying notes to schedule.
15
Federal Grantor/Pass-Through Grantor/Program Title
CFDA
Number
Pass-Through
Grantor's
Number Expenditures
National Aeronautics and Space Administration
Passed through United Negro College Fund
Curriculum Improvement Partnership Award Program
For Minority – Serving Institutions (CIPA) 43.Unknown NCC5-411 $ 3,943
U.S. Department of the Interior
Passed through Cocopah Indian Tribe
Vocational Training 15.Unknown None 15,514
National Science Foundation
Geosciences 47.050 51,108
Education and Human Resources 47.076 35,987
Total National Science Foundation 87,095
U.S. Department of Housing and Urban Development
Title IV – College Housing Program 14.Unknown 30,988
U.S. Department of Justice
Passed through Arizona State Department of Justice
Byrne Formula Grant Program 16.579 None 17,207
U.S. Department of Labor
Passed through Office of the Governor
Employment Services and Job Training-
Pilot and Demonstration Programs 17.249 A9-0023-001 55,839
Passed through Yuma County
WIA Adult Program 17.258 AWC99-IIA-C, E5702015 504,008
WIA Youth Activities 17.259 AWC99-IIA-C, E5702015 492,102
Total U.S. Department of Labor 1,051,949
U.S. Small Business Administration
Passed through Maricopa County Community College District
Small Business Development Center 59.037 0-7620-0003-08 46,742
U.S. Department of Education
Student Financial Aid Cluster:
Federal Supplemental Educational Opportunity Grants 84.007 229,016
Federal Work Study Program 84.033 277,056
Federal Perkins Loan Program – Federal Capital Contributions 84.038 156,072
Federal Pell Grant Program 84.063 5,440,990
Total Student Financial Aid Cluster 6,103,134
(Continued)
Yuma/La Paz Counties Community College District
(Arizona Western College)
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2002
(Continued)
See accompanying notes to schedule.
16
Federal Grantor/Pass-Through Grantor/Program Title
CFDA
Number
Pass-Through
Grantor's
Number Expenditures
TRIO Cluster:
Student Support Services 84.042 230,485
Talent Search 84.044 239,621
Upward Bound 84.047 216,780
Total TRIO Cluster 686,886
Higher Education- Institutional Aid 84.031 335,511
Child Care Access Means Parents in School 84.335 6,166
Bilingual Education – Professional Development 84.195 64,233
Passed through State Board of Directors for Community Colleges
Vocational Education – Basic Grants to States 84.048 30010 160,636
Passed through Arizona Commission for Postsecondary Education
Leveraging Educational Assistance Partnership 84.069 None 16,844
Passed through Arizona Department of Education
Tech-Prep Education 84.243 OOFUEDTP-070521-01A 122,587
Passed through Somerton School District
Adult Education – State Grant Program 84.002 00FAEABE-070065-10A 46,195
Total U.S. Department of Education 7,542,192
Total Expenditures of Federal Awards $8,795,630
17
Yuma/La Paz Counties Community College District
(Arizona Western College)
Notes to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2002
Note 1 - Basis of Presentation
The accompanying Schedule of Expenditures of Federal Awards includes the federal
grant activity of the Yuma/La Paz Counties Community College District and is
presented on the full accrual basis of accounting. The information in this schedule is
presented in accordance with the requirements of OMB Circular A-133, Audits of
States, Local Governments, and Non-profit Organizations. Therefore, some amounts
presented in this schedule may differ from amounts presented in, or used in the
preparation of, the financial statements.
Note 2 - Catalog of Federal Domestic Assistance (CFDA) Numbers
The program titles and CFDA numbers were obtained from the federal or pass-through
grantor or the 2002 Catalog of Federal Domestic Assistance. When no CFDA number
had been assigned to a program, the federal contract number was used.
Note 3 - Loans Outstanding
The expenditures reported on the Schedule of Expenditures of Federal Awards for
certain programs included loan balances outstanding at June 30, 2002, as follows:
CFDA Amount
Program Title Number Outstanding
Federal Perkins Loan Program –
Federal Capital Contributions 84.038 $148,240
Yuma/La Paz Counties Community College District
(Arizona Western College)
Schedule of Findings and Questioned Costs
Year Ended June 30, 2002
22
Section I - Summary of Auditor's Results
Financial Statements
Type of auditor's report issued: unqualified
YES NO
Material weakness identified in internal control over financial reporting? X
Reportable condition identified not considered to be material weakness? X (none reported)
Noncompliance material to the financial statements noted? X
Federal Awards
Material weakness identified in internal control over major programs? X
Reportable condition identified not considered to be a material weakness? X (none reported)
Type of auditor's report issued on compliance for major programs: unqualified
Any audit findings disclosed that are required to be reported in accordance with
Circular A-133 (section .510[a])? X
Identification of major programs:
CFDA Number Name of Federal Program or Cluster
17.258 WIA Adult Program
17.259 WIA Youth Activities
Student Financial Aid Cluster of Programs:
84.007 Federal Supplemental Educational Opportunity Grants
84.033 Federal Work Study Program
84.038 Federal Perkins Loan Program
84.063 Federal Pell Grant Program
Dollar threshold used to distinguish between Type A and Type B programs: $300,000
Auditee qualified as low-risk auditee? X
Other Matters
Auditee's summary schedule of prior audit findings required to be reported in
accordance with Circular A-133 (section .315[b])? X
Yuma/La Paz Counties Community College District
(Arizona Western College)
Schedule of Findings and Questioned Costs
Year Ended June 30, 2002
23
Section II - Financial Statement Findings
No matters were reported.
Yuma/La Paz Counties Community College District
(Arizona Western College)
Schedule of Findings and Questioned Costs
Year Ended June 30, 2002
24
Section III - Federal Award Findings and Questioned Costs
No matters were reported.