Comprehensive annual financial report / Yavapai County Community College District

              Y A V A P A I C O U N T Y C O M M U N I T Y C O L L E G E D I S T R I C T / PRESCOTT, ARIZONA
YC 080-03
Comprehensive
Annual Financial
Report
[ JUNE 30, 2002 ]
Y A V A P A I C O U N T Y C O M M U N I T Y C O L L E G E D I S T R I C T / PRESCOTT, ARIZONA
[
]
Comprehensive
Annual Financial
Report
Published and distributed by
The Office of
Business Services
Yavapai College
1100 East Sheldon Street
Prescott, Arizona 86301
http://www.yc.edu
June 30, 2002
Yavapai County Community College District
Comprehensive Annual Financial Report
Fiscal Year Ended June 30, 2002
Table of Contents
Introductory Section
Letter of Transmittal 1
Government Finance Officers Association Certificate of Achievement 9
List of Principal Officers 10
OrganizationalChart 11
Financial Section
Independent Auditor’s Report 13
Management’s Discussion and Analysis 15
Basic Financial Statements:
Statement of Net Assets 23
Statement of Revenues, Expenses, and Changes in Net Assets 24
Statement of Cash Flows 25
Notes to Financial Statements 27
Statistical Section
Revenues by Source – Year Ended June 30, 2002 41
Expenses by Function – Year Ended June 30, 2002 42
Expenditure Limitation - Statutory Limit to Budgeted Expenditures -
Last Ten Fiscal Years 43
Property Tax Levies and Collections - Last Ten Fiscal Years 44
Assessed Value and Current Market Value of All Taxable Property -
Last Ten Fiscal Years 45
Property Tax Rates, Direct and Overlapping Governments -
Last Ten Fiscal Years 46
Principal Taxpayers 47
Computation of Legal Debt Margin 48
Assessed Valuation, Tax Rate and Levy History - Last Ten Fiscal Years 49
Ratio of Net General Obligation Bonded Debt to Assessed Value and Net
General Bonded Debt Per Capita - Last Ten Fiscal Years 50
Ratio of Annual Debt Service Expenditures for General Bonded Debt to
Operating Expenses/Expenditures - Last Ten Fiscal Years 51
Computation of Direct and Overlapping Debt - General Obligation Bonds 52
Revenue Bond Coverage - Last Nine Fiscal Years 53
Historic Enrollment - Last Ten Fiscal Years 54
Student Enrollment/Demographic Statistics - Last Ten Fiscal Years 55
Economic Indicators for Yavapai County 56
Miscellaneous Statistics 57
Y A V A P A I C O U N T Y C O M M U N I T Y C O L L E G E D I S T R I C T / PRESCOTT, ARIZONA
INTRODUCTORY
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Y A V A P A I C O U N T Y C O M M U N I T Y C O L L E G E D I S T R I C T / PRESCOTT, ARIZONA
FINANCIAL
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15
October 4, 2002
MANAGEMENT’S DISCUSSION and ANALYSIS
This section of the Yavapai County Community College District (the “District”),
Comprehensive Annual Financial Report (CAFR) presents management’s discussion and
analysis of the District’s financial performance during the fiscal year ended June 30, 2002.
This management’s discussion and analysis is designed to focus on current activities,
resulting change and current known facts. Please read it in conjunction with the Vice
President for Finance and Facilities and Controller’s transmittal letter on page 1, the
District’s financial statements which begin on page 23 and the notes to the financial
statements beginning on page 27.
Basic Financial Statements
Beginning with fiscal year 2001-02, the District has presented its annual financial
statements in accordance with newly-effective pronouncements issued by the Government
Accounting Standards Board (GASB), the authoritative body for establishing Generally
Accepted Accounting Principles (GAAP) for state and local governments, including public
institutions of higher learning. 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. The reader will
observe that the presentation format has shifted from a columnar fund group 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 reflect 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 represents institutional equity or ownership in the total
assets of the District.
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The Statement of Revenues, Expenses, and Changes in Net Assets reflects the results of
operations for the fiscal year ended June 30, 2002. It shows the various revenues and
expenses, both operating and nonoperating, reconciling the beginning net asset amount to
the ending net asset amount – which is shown on the Statement of Net Assets described
above.
The Statement of Cash Flows reflects the cash 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
equivalent 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.
Financial Highlights and Analysis
Consistent with its mission to provide effective learning environments, instruction is the
primary function of the District. Major funding sources supporting all functions include
property taxes, state appropriations, and tuition and fees. The District exercises primary
and secondary tax levy authority for generation of funds for operating, capital equipment
and improvements, and debt retirement purposes. Although total revenues have been
increasing, in recent years the mix of funding sources has gradually been shifting. Over the
past ten years, property taxes as a percent of total revenues has risen while the
proportionate share of tuition and fees and state appropriations have declined.
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 and the Statement of Revenues, Expenses, and Changes in Net
Assets.
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Condensed Financial Information
Condensed Statement of Net Assets as of June 30, 2002
Assets:
Current assets $ 4,558,612
Non-current assets, other than capital assets 20,700,161
Capital assets, net of depreciation 29,560,790
Total assets 54,819,563
Liabilities:
Current liabilities 2,369,573
Non-current liabilities 30,336,736
Total liabilities 32,706,309
Net assets:
Capital assets, net of related debt 17,826,836
Restricted net assets 2,661,776
Unrestricted net assets 1,624,642
Total net assets $22,113,254
As noted earlier, net assets reflect the financial position of the District. The largest portion
of the District’s net assets (80.6 percent) reflects our investment in capital assets (e.g.,
land, buildings, improvements other than buildings, equipment, and library collections), net
of depreciation, less any related debt used to acquire those assets still outstanding. The
District uses these assets to provide services to students; consequently, these assets are
not available for future spending. Although the District’s investment in its capital assets is
reported net of related debt, it should be noted that the resources to repay this debt must
be provided from other sources since the capital assets themselves cannot be used to
liquidate these liabilities.
Net Assets
81%
12%
7%
Capital assets
Resricted assets
Unrestricted
assets
An additional portion of the District’s net assets (12 percent) represents resources that are
subject to external restrictions on how they may be used. The remaining balance of
unrestricted net assets of $1,624,642 may be used to meet the District’s ongoing mission to
the public. At the end of the year, the District is able to report positive balances in all three
categories of net assets.
Condensed Statement of Revenues, Expenses, and Changes in Net Assets
For the Year Ended June 30, 2002
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Revenues
Operating
Tuition and fees $5,743,255
Government grants and contracts 4,262,416
Other 2,270,716
Nonoperating
Property taxes 25,163,069
State aid 5,304,876
Investment income 682,068
Other 37,671
Total revenues 43,464,071
Expenses
Operating 39,606,188
Nonoperating 1,501,070
Total expenses 41,107,258
Income before other revenues,
expenses, gains 2,356,813
Capital appropriations, grants, and gifts 611,767
Increase in net assets 2,968,580
Total net assets, July 1, 2001 19,144,674
Total net assets, June 30, 2002 $22,113,254
Net assets increased by $2,968,580 over the previous year. This increase was attributed to
an increase in restricted net assets reserved for capital improvements and an increase in
capital net assets with the completion of several major projects.
Revenues by Source
57%
13%
13%
10%
7%
Property taxes
Tuition and fees
State
appropriations
Grants and
contracts
Other revenue
Operating revenues include tuition and fees – net of scholarship discounts and allowances.
In compliance with the new reporting pronouncements issued by GASB, these 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. Such transactions are reported as an asset – with the systematic
allocation of such costs expensed 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 (Footnote 1).
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Expenses by Function
29%
1%
8%
19% 8%
11%
4%
16%
4% Instruction
Public Service
Academic Support
Student Services
Institutional Support
Operation of Plant
Scholarships
Auxiliary
Interest on Debt
Capital Assets and Debt Management
Several of the Master Plan Project construction projects were in progress during this year,
with significant expansion and/or construction taking place at the Prescott Valley Center
and the Agribusiness and Science Technology Center in Chino Valley. The new Prescott
Valley Center was in operation for the spring semester. The Chino Valley Agribusiness and
Science Technology Center will be completed in 2003. In addition, architects have been
selected to design a new 15,000 square foot facility on the Verde Valley Campus and a
new 50,000 square foot building on the Prescott Campus. Funding for this capital
development plan came from general obligation bond debt (discussed below), which will be
issued in series over the next several years.
Equipment, along with all other capital assets (except land), is reported net of accumulated
depreciation for the first time this year in accordance with the new reporting standards
issued by GASB. This has the effect of reducing the book value of overall assets.
Depreciation totaled $1,499,182 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.
The District’s general obligation bond debt issues are rated Aaa by Moody’s Investors
Service and AAA by Standard & Poors. The District revenue bond debt issue is rated
BBB+ by Standard & Poors. These ratings indicate the high quality and strong credit
attributes of the District’s obligations. During the fiscal year, there have been no changes in
credit ratings or debt limitations that may affect future financing for the District.
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During the Project of 1988, the District issued $11,300,000 in general obligation bonds in
three separate series. This project included the construction of the Performance Hall and
other improvements. On August 1, 1993, the District issued $6,425,000 of general
obligation refunding bonds which refunded a portion of the Project of 1988 Series A and B.
In March 1993, the District issued $2,500,000 of revenue bonds to construct, furnish and
equip a residence hall. Repayment of revenue bond debt is administered by the trust
department of a local bank and is repaid from student fee revenues and interest earnings
on investments held by the trustee. Revenue bond proceeds and required reserves are
deposited into irrevocable trust accounts pursuant to the bond indentures.
On October 1, 1999, the District issued $4,425,000 of fixed-rate pledged revenue
obligations under a trust agreement with U.S. Bank. The obligations are payable solely from
lease payments pursuant to a lease purchase agreement. The revenue obligations are
subject to a one-time optional redemption by the District to be exercised on or before
October 1, 2001. The financing provided funds for five capital projects involving new
buildings and repairs, improvements, and major renovations to existing buildings.
On August 1, 2001, the District issued $25,955,000 in general obligation improvement and
refunding bonds. Of this amount, $955,000 was used to refund the remaining balance of
the Project of 1988, 1991 Series C, and, $3,030,000 was used to defease the Pledged
Revenue Obligations Series of 1999. The remaining balance of $21,970, 000 will be used
to fund the Master Plan Project of 2001 (see below). General obligation bond debt is
funded from secondary property tax levies collected by the Yavapai County Treasurer.
Bonds outstanding at June 30, 2002, were as follows:
Description
Original
Amount
Maturity
Ranges
Interest
Rates
Outstanding
Principal
General obligation
bonds
Project of 2001-
Series A
$25,955,000 7/1/03-2022 3.75 – 4.75% $22,345,000
Series 1993
Capital
Appreciation
(face value of
$675,000 less
unamortized
discount of
$33,775)
Current Interest
1,915,000
6,135,000
7/1/03
7/1/04-2010
5.2%
5.05 – 5.4%
641,225
5,175,000
Revenue bonds
Series 1993 2,500,000 7/1/03-2012 5.55 – 6.0% 1,815,000
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Current Factors Having Probable Future Financial Significance
The District is in the process of implementing the $69.5 million voter-approved Master Plan
Project of 2001. The second general obligation bond issue is planned for June 2003 in the
amount of $25 million to be funded by a secondary assessment of county property taxes.
Major facilities development construction projects include:
• The Verde Valley Campus Northern Arizona Regional Skill Center
• Construction of a 50,000 square foot computer commons/library/information
center on the Prescott Campus
• Construction of the Chino Valley Technical Training Center
• Rehabilitation of the ADOT property buildings and infrastructure for the
Prescott Campus and College services use
• Expansion of Prescott Valley Public Services Education and Training areas
• Upgrades to infrastructure and utilities on the Prescott and Verde Campuses
Request for Information
This discussion and analysis is designed to provide a general overview of the Yavapai
County Community College District’s finances for all those with an interest in such matters.
Questions concerning any of the information provided in this Comprehensive Annual
Financial Report or requests for additional financial information should be addressed to the
Office of Business Services, Yavapai District, 1100 E. Sheldon Street, Prescott, AZ 86301.
Y A V A P A I C O U N T Y C O M M U N I T Y C O L L E G E D I S T R I C T / PRESCOTT, ARIZONA
STATISTICAL
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