Basic financial statements / La Paz County, Arizona for the year ended June 30, 2004 |
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La paz County, Arizona Basic Financial Statements Year ended June 30, 2004 RECFI\/ ED OFFICE Of I tit. t'Kt.~ IDENT Table of Contents Independent Auditors' Report 1- 2 Management's Discussion and Analysis ( Required Supplementary Information) 3- 10 Basic Financial Statements: Government- Wide Financial Statements: Statement ofNet Assets 11 Statement ofActivities 12 Fund Financial Statements: Governmental Funds: Balance Sheet 13 Reconciliation ofthe Balance Sheet of Governmental Funds to the Statement ofNet Assets 14 Statement of Revenues, Expenditures, and Changes in Fund Balances 15 Reconciliation of the Statement ofRevenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement ofActivities 16 Proprietary Fund: Statement ofNet Assets 17 Statement of Revenues, Expenses, and Changes in Fund Net Assets 18 Statement of Cash Flows 19- 20 Fiduciary Funds: Statement of Fiduciary Net Assets 21 Statement of Changes in Fiduciary Net Assets 22 Table of Contents - Continued Page Notes to Financial Statements 23- 40 Other Required Supplementary Information: Schedule ofAgent Retirement Plan's Funding Progress 41 Budgetary Comparison Schedule - General Fund .42- 44 Budgetary Comparison Schedule - Road Fund 45 Budgetary Comparison Schedule - Business 95 Road Improvement Fund 46 Budgetary Comparison Schedule - Jail District Fund 47 Notes to Budgetary Comparison Schedules 48 HEINFELD, MEECH & CO., P. C. CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT 10120 N. Oracle Road Tucson, Arizona 85704 Tel ( 520) 742- 2611 Fax ( 520) 742- 2718 The Auditor General of the State of Arizona The Board of Supervisors La Paz County, Arizona We have audited the accompanying financial statements ofthe governmental activities, the business type activities, each major fund, and the aggregate remaining fund information of La Paz County, Arizona ( County), as of and for the year ended June 30, 2004, which collectively comprise the County's basic financial statements as listed in the table ofcontents. These financial statements are the responsibility of the County's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial 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 opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position ofthe governmental activities, business- type activities, each major fund, and the aggregate remaining fund information ofLa Paz County, Arizona, as ofJune 30, 2004, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. The Management's Discussion and Analysis on pages 3 through 10, Schedule of Agent Retirement Plan's Funding Progress on page 41, and the Budgetary Comparison Schedules on pages 42 through 48 are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. TUCSON • PHOENIX • FLAGSTAFF www. heinfe1dmeech. com In accordance with Government Auditing Standards, we will also issue our report on our consideration ofLa Paz County, Arizona's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters at a future date. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. HEINFELD, MEECH & CO., P. C. Certified Public Accountants September 15, 2008 2 Management's Discussion and Analysis Management's Discussion and Analysis This discussion and analysis, prepared by the County's management, is intended to be an easily readable analysis of La paz County's ( County) financial activities based on currently known facts, decisions or conditions during the fiscal year ended June 30, 2004. This analysis focuses on current year activities and should be read in conjunction with the County's basic financial statements following this section. Financial Highlights • The County's assets exceeded liabilities by $ 21,315,107 ( net assets). Ofthis amount, $ 2,530,487 ( unrestricted net assets) may be used to meet ongoing general obligations, $ 7,009,866 is restricted for specific purposes ( restricted net assets), and $ 12,158,628 is invested in capital assets, net of related debt. • The County's total net assets as reported in the Statement of Activities increased by $ 1,059,594. The increase is due primarily to an increase in general revenues of $ 1.1 million and an increase in operating and capital grants and contributions of $. 7 million while the County's expenses increased by a smaller proportion of $. 8 million. • At June 30, 2004, the governmental funds reported combined fund balances of $ 10,059,668, an increase of $ 5,477 in comparison with the prior year. The increase is a result of an increase in revenues in a greater proportion than the increase in expenditures. Approximately 94% of the combined fund balances, or $ 9,502,962 is available to meet the County's current and future needs ( unreserved fund balance). • At June 30,2004, unreserved fund balance for the general fund was $ 3,717,307 or 39% of general fund expenditures. In accordance with Arizona Revised Statutes  42- 17151, this entire amount is budgeted to be spent in the next fiscal year. Overview ofthe Financial Statements This discussion and analysis is intended to serve as an introduction to the County's basic financial statements. The County's basic financial statements comprise three components: 1) Government- wide financial statements, 2) Fund financial statements, and 3) Notes to the financial statements. Required supplementary information is included in addition to the basic financial statements. Government- wide Financial Statements are designed to provide readers with a broad overview of the County's finances, in a manner similar to private- sector businesses. The Statement ofNet Assets presents information on all County assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator ofwhether the financial position of the County is improving or deteriorating. The Statement ofActivities presents information showing how net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods ( e. g., uncollected taxes and earned but unused vacation leave). 3 Management's Discussion and Analysis Both of these government- wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues ( government activities) and from other functions that are intended to recover all or part of their costs through user fees and charges ( business- type activities). The governmental activities of the County include general government, public safety, highways and streets, sanitation, health, welfare, culture and recreation, and education. The County has one business- type activity, the Emerald Canyon Golf Course. Component units are included in our basic financial statements and consist of legally separate entities for which the County is financially accountable and that have substantially the same board as the County or provide services entirely to the County. The County has one major component unit, the La Paz County Jail District and several smaller component units. Refer to Note 1 A, Reporting Entity, on page 23 of this report for more information on the County's component units. The government- wide financial statements can be found on pages 11- 12 ofthis report. Fund Financial Statements are groupings of related accounts that are used to maintain control over resources that have been segregated for specific activities or objectives. The County, like other state and local governments, uses fund accounting to ensure and demonstrate finance- related legal compliance. All of the funds of the County can be divided into three categories: governmentalfunds, proprietaryfunds, andfiduciary funds. Governmentalfunds are used to account for essentially the same functions reported as governmental activities in the government- wide financial statements. However, unlike the government- wide financial statements, governmental funds financial statements focus on near- term inflows and outflows of usable resources, as well as on balances of usable resources available at the end of the fiscal year. Such information may be useful in evaluating a county's near- term financing requirements. Because the focus of governmental funds is narrower than that of the government- wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government- wide financial statements. By doing so, readers may better understand the long- term impact of the government's near- term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balance provide a reconciliation to facilitate this comparison between governmentalfunds and governmental activities. The County reports four major governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balance for the General, Road, Business 95 Road Improvement, and Jail District funds. Data from the other governmental funds ( non- major) are combined into a single, aggregated presentation. The governmentalfundfinancial statements can befound on pages 13- 16 ofthis report. 4 Management's Discussion and Analysis Proprietary funds, or enterprise funds, are used to report the same functions presented as business- type activities in the government- wide financial statements. La Paz County uses an enterprise fund to account for the Emerald Canyon Golf Course. Fund financial statements for the enterprise fund provides the same type of information as the government- wide financial statements, only in more detail. The enterprise fundfinancial statements can befound on pages 17- 20 ofthis report. Fiduciaryfunds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government- wide financial statements because the resources of those funds are not available to support the County's own programs. The fiduciary funds financial statements can befound on pages 21- 22 ofthis report. Notes to financial statements provide additional information that is essential to a full understanding of the data provided in the government- wide and fund financial statements. The notes can befound on pages 23- 40 ofthis report. Required supplementary information presents budgetary comparison schedules for the General, Road, Business 95 Road Improvement, and Jail District funds of the County. It also includes a schedule of agent retirement plan's funding progress. Required supplementary information can befound on pages 41- 49 ofthis report. Government- Wide Financial Analysis Net Assets The largest portion of the County's net assets reflects the investment in capital assets ( e. g., land, buildings, machinery and equipment, and infrastructure), less accumulated depreciation and related debt used to acquire those assets still outstanding. The County uses these assets to provide services to its citizens; consequently, these assets are not available for future spending. Although the County's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Restricted net assets represent resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets maybe used to meet the government's ongoing obligations to the citizens and creditors. 5 Management's Discussion and Analysis The following table summarizes the Statement ofNet Assets at June 30, 2004: 2004 2003 2004 2003 2004 2003 Business- Business- Governmental Governmental Type Type Activities Activities Activities Activities Total Total Current and other assets $ 12,055,981 $ 11,403,370 $ ( 338,171) $ ( 558,186) $ 11,717,810 $ 10,845,184 Capital assets 14,404,548 13,727,968 1,694,244 1,785,552 16,098,792 15,513,520 Total assets 26,460,529 25,131,338 1,356,073 1,227,366 27,816,602 26,358,704 Current and other liabilities 1,833,451 1,121,280 62,597 60,913 1,896,048 1,182,193 Long- term liabilities 2,928,197 3,183,403 1,677,250 1,737,595 4,605,447 4,920,998 Total liabilities 4,761,648 4,304,683 1,739,847 1,798,508 6,501,495 6,103,191 Net assets Invested in capital assets, net of related debt 12,158,528 11,199,824 84,244 80,552 12,242,772 11,280,376 Restricted for: Public safety 499,897 260,158 499,897 260,158 Highways and streets 5,306,547 5,618,453 5,306,547 5,618,453 Sanitation 79,091 101,050 79,091 101,050 Health 194,658 191,334 194,658 191,334 Debt service 532,633 329,563 503,316 331,746 1,035,949 661,309 Other purposes 397,040 550,979 397,040 550,979 Unrestricted net assets ( deficit) 2,530,487 2,575,294 ( 971,334) ( 983,440) 1,559,153 1,591,854 Total net assets $ 21,698,881 $ 20,826,655 $ ( 383,774) $ ( 571,142) $ 21,315,107 $ 20,255,513 As noted earlier, net assets may serve over time as a useful indicator of whether the financial position of the County is improving or deteriorating. In the case ofthe County, assets exceeded liabilities by $ 21,315,107 at June 30, 2004, indicating that the County is in a strong financial position. Capital assets ( and the related net asset invested in capital assets) increased as a result of continued expenditures on several road projects that are in process. Current liabilities increased as a result of an increase in amounts owed to vendors and amounts held in trust by the court system. Operating grants and contribution revenue increased as a result of an overall increase in grant funding for several federal and state grants. Excise tax increased during 2004. This amount is received from the state of Arizona which is dependent on the amount collected by the state. Public safety expenses increased due to an increase in spending on public safety grants such as those related to emergency services. Net assets increased by $ 1,059,594 during the fiscal year 2003- 04 resulting primarily from general and program revenues increasing in a greater proportion than expenses. Also, the business- type activity reflected an unrestricted net deficit of ($ 971,334) at June 30, 2004, which resulted primarily from initial start up costs incurred in 1989 that has not yet been recovered. 6 Management's Discussion and Analysis Changes in Net Assets The following table indicates the changes in net assets for governmental and business- type activities: 2004 2003 2004 2003 2004 2003 Governmental Governmental Business- Type Business- Type Activities Activities Activities Activities Total Total Revenues Program revenues: Charges for services $ 4,153,799 $ 3,803,923 $ 1,560,357 $ 1,491,691 $ 5,714,156 $ 5,295,614 Operating grants & contributions 3,789,084 3,083,846 3,789,084 3,083,846 Capital grants & contributions 3,481,115 3,489,990 3,481,115 3,489,990 General revenues: Property taxes 2,886,713 3,001,500 2,886,713 3,001,500 Share of state sales taxes 1,738,049 1,692,572 1,738,049 1,692,572 Excise tax 2,023,755 1,650,446 2,023,755 1,650,446 Payments in lieu of taxes 1,196,941 1,053,245 1,196,941 1,053,245 Vehicle license tax 989,660 892,948 989,660 892,948 Share of state lottery 550,035 550,035 550,035 550,035 Investment earnings 88,544 160,760 1,325 46,208 89,869 206,968 Miscellaneous 899,556 222,364 205 899,556 222,569 Total revenues 21,797,251 19,601,629 1,561,682 1,538,104 23,358,933 21,139,733 Expenses General government 5,780,803 5,674,042 5,780,803 5,674,042 Public safety 7,999,745 7,216,057 7,999,745 7,216,057 Highways and streets 4,011,208 3,686,559 4,011,208 3,686,559 Sanitation 67,463 86,493 67,463 86,493 Health 1,774,793 1,969,574 1,774,793 1,969,574 Welfare 333,673 339,391 333,673 339,391 Culture and recreation 766,341 706,819 1,347,648 1,494,430 2,113,989 2,201,249 Education 154,030 147,586 154,030 147,586 Interest on long- term debt 38,093 272,468 25,542 63,635 272,468 Total expenses 20,926,149 20,098,989 1,373,190 1,494,430 22,299,339 21,593,419 Change in net assets before transfers 871,102 ( 497,360) 188,492 43,674 1,059,594 ( 453,686) Transfers 1,124 ( 1,124) 1,124 ( 1,124) Change in net assets 872,226 ( 497,360) 187,368 43,674 1,059,594 ( 453,686) Beginning net assets ( deficit) 20,826,655 21,324,015 ( 571,142) ( 614,816) 20,255,513 20,709,199 Ending net assets ( deficit) $ 21,698,881 $ 20,826,655 $ ( 383,774) $ ( 571,142) $ 21,315,107 $ 20,255,513 During 2004, certain reclassifications were made to tax and intergovernmental revenues, accordingly, the 2003 tax and intergovernmental revenues were changed to reflect these reclassifications. 7 Management's Discussion and Analysis Financial Analysis of the County's Funds As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental funds - The focus of the County's governmental funds is to provide information of near- term inflows, outflows, and balances of useable resources. Such information is useful in assessing the County's financial requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end ofthe fiscal year. At June 30, 2004, the County's governmental funds reported combined fund balances of$ 1O, 059,668, an increase of $ 5,477 in comparison with the prior year. The increase is a result of an increase in revenues in the General and Jail District Funds in a greater proportion than expenditures in these funds. Approximately 94% of the combined fund balances, $ 9,502,962, constitutes unreserved fund balance, which is available to meet the County's current and future needs. The remainder of fund balance is reserved, indicating that it is not available for new spending because it has been committed for prepaid items and debt service expenditures. The General Fund is the County's primary operating fund. At the end of the current fiscal year, unreserved fund balance of the General Fund was $ 3,717,307. As a measure ofthe General Fund's liquidity, it is useful to compare both unreserved fund balance and total fund balance to total fund expenditures. The unreserved fund balance represents 39% oftotal General Fund expenditures while total fund balance represents 43% ofthat same amount. The Jail District Fund is a major County fund used to report the activity ofthe County jail. During 2004, the fund balance ofthis fund increased primarily due to an increase in charges for services which represent charges to other governments that use the facility. The Golf Course Fund is an enterprise fund of the County that had an increase in net assets due primarily from golf course fees that increased in greater proportion than golf course expenses. The following table presents the amount of governmental revenues from various sources as well as the increases or decreases from the prior year: Governmental Funds Revenue Comparison - By Source 2004 2003 Increase/( Decrease) Amount % of Total Amount % of Total Amount % Change Taxes $ 5,965,165 27.31% $ 5,523,787 28.13% $ 441,378 7.99% Licenses and permits 238,289 1.09% 208,300 1.06% 29,989 14.40% Intergovemmental 10,755,224 49.24% 10,012,731 50.98% 742,493 7.42% Fees, fines and forfeits 740,011 3.39% 728,387 3.71% 11,624 1.60% Charges for services 3,175,499 14.54% 2,827,384 14.40% 348,115 12.31% Investment income 88,544 0.41% 160,760 0.82% ( 72,216) - 44.92% Miscellaneous 878,513 4.02% 178,533 0.91% 699,980 392.07% Total revenues $ 21,841,245 100.00% $ 19,639,882 100.00% $ 2,201,363 11.21% The increase in tax revenue is caused primarily from an increase in excise tax imposed by the State on behalf of the County. The increase in intergovernmental revenue is due to an increase in funding from grants and contracts received from Federal and state agencies. The increase in charges for services is due primarily from an increase in charges to other governments for use of the County Jail Facility. Miscellaneous revenues increased primarily due to a greater amount of private contributions and indirect cost recovery. 8 Management's Discussion and Analysis The following table presents governmental expenditures by function compared to prior year amounts: Governmental Funds Expenditure Comparison - By Function 2004 2003 Increase/( Decrease) Amount % of Total Amount % of Total Amount % Change General government $ 5,800,371 26.52% $ 5,184,745 24.32% $ 615,626 11.87% Public safety 7,468,173 34.15% 7,042,079 33.04% 426,094 6.05% Highways and streets 4,244,413 19.41% 4,647,736 21.81% ( 403,323) - 8.68% Sanitation 67,463 0.31% 85,918 0.40% ( 18,455) - 21.48% Health 1,735,068 7.93% 2,017,745 9.47% ( 282,677) - 14.01% Welfare 323,840 1.48% 338,599 1.59% ( 14,759) - 4.36% Culture and recreation 654,683 2.99% 688,489 3.23% ( 33,806) - 4.91% Education 152,177 0.70% 147,499 0.69% 4,678 3.17% Capital outlay 1,070,487 4.89% 14,763 0.07% 1,055,724 7151.15% Debt service 354,510 1.62% 1,147,132 5.38% ( 792,622) - 69.10% Total expenditures $ 21,871,185 100.00% $ 21,314,705 100.00% $ 556,480 2.61% The following provides an explanation of the expenditures by function that changed significantly over the prior year: • Capital outlay was significant due to expenditures on road construction projects such as improvements to Highway B- 95, Salome Road and Vicksburg Road. • General government expenditures increased due to an overall increase in the cost of providing necessary services to County citizens. • The County's debt service expense decreased in 2004 largely due to the cost savings resulting from the refunding of certificates of participation that occurred in 2003. General Fund Budgetary Highlights The County did not amend the fiscal year 2003- 04 adopted budget for the General Fund. General Fund actual expenditures were $ 1.2 million under the adopted budget and actual revenues exceeded estimated revenues by $ 0.2 million. Tax revenues exceeded the anticipated budget amount primarily due to greater than anticipated excise tax and intergovernmental revenue did not meet the budgeted projection due to lower than anticipated grant and contract revenues. The following departments exceeded their General Fund expenditure budgets by more than ten percent and $ 10,000: • The Superior Court exceeded its budget by 49% due to rising indigent defense attorney costs. • Total costs of the Health Department's Transit department exceeded the budgeted amount by 39% due to greater than anticipated operating costs. • Management information services exceeded its budget by 26% due to greater than anticipated outside consultant costs. 9 Management's Discussion and Analysis Capital Assets and Debt Administration Capital Assets The County's investment in capital assets as of June 30, 2004, amounted to $ 16.1 million ( net of accumulated depreciation). This investment in capital assets includes land, buildings, machinery and equipment, construction equipment and vehicles, infrastructure purchased or constructed after June 30, 2002, construction in progress, and golf course improvements. The County's investment in capital assets increased 4.2 percent from the prior period. Major capital asset events during the current fiscal year included outlays for the new judicial complex, Business 95 road improvements, and for machinery and equipment, particularly heavy machinery. Additional information on the County's capital assets activity and balances can be found in Note 5 of the notes to the financial statements on page 33 ofthis report. Long- Term Debt At June 30, 2004, the County had total long- term debt outstanding of $ 3,856,020. This amount consists of certificates of participation of $ 3.8 million and capital leases of $ 56,020. During 2003, the County refunded all existing certificates ofparticipation to take advantage of lower interest rates. This resulted in reduced debt service requirements in 2004. Additional information on the County's long- term debt can be found in Note 6 of the Notes to the Financial Statements on page 35 ofthis report. Economic Factors • Despite a slow economy, the County's tax revenue is relatively stable. The County's sales tax revenue has remained stable because of tourism. The Colorado River attracts visitors in the summer, and both the river and desert areas attract visitors in the winter. • In 2003, the County took advantage of lower interest rates by refunding all outstanding certificates of participation for a combined economic gain of $ 406,053. This refunding also extended the amount of time the County has to repay the debt. • For the years ended June 30, 2003, and June 30, 2004, the County has budgeted $ 1 million and $. 75 million respectively, for contingencies. This practice may enable the County to better weather the current economic climate. Request for Information This financial report is designed to provide a general overview of the County's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the La paz County Finance Department, 1108 Joshua Avenue, Parker, AZ 85344. 10 La paz County Statement oCNet Assets June 30, 2004 Primary Government Governmental Business- Type Activities Activities Total Assets Cash and cash equivalents $ 9,037,947 $ 29,719 $ 9,067,666 Cash and investments held by trustee 532,633 503,316 1,035,949 Receivables, net Accounts 6,481 6,481 Property taxes 184,664 184,664 Internal balances 872,409 ( 872,409) Due from: Others 110,057 110,057 Other governments 1,287,717 1,287,717 Prepaid items 24,073 1,203 25,276 Capital assets, not being depreciated 1,120,626 1,120,626 Capital assets, being depreciated, net 13,283,922 1,694,244 14,978,166 Total assets 26,460,529 1,356,073 27,816,602 Liabilities Accounts payable 633,044 29,476 662,520 Accrued payroll and employee benefits 492,333 25,894 518,227 Due to: Others 442,243 7,227 449,470 Other governments 265,831 265,831 Noncurrent liabilities: Due within one year 634,131 290,175 924,306 Due in more than one year 2,294,066 1,387,075 3,681,141 Total liabilities 4,761,648 1,739,847 6,501,495 Net Assets Invested in capital assets, net of related debt 12,158,528 84,244 12,242,772 Restricted for: Public safety 499,897 499,897 Highways and streets 5,306,547 5,306,547 Sanitation 79,091 79,091 Health 194,658 194,658 Debt service 532,633 503,316 1,035,949 Other purposes 397,040 397,040 Unrestricted ( deficit) 2,530,487 ( 971,334) 1,559,153 Total net assets $ 21,698,881 $ ( 383,774) $ 21,315,107 See accompanying notes to financial statements. 11 La paz County Statement ofActivities Year Ended June 30, 2004 Program Revenues Net ( Expenses) Revenues and Changes in Net Assets Operating Capital Charges for Grants and Grants and Governmental Business- Type FunctionslPrograms Expenses Services Contributions Contributions Activities Activities Total Primary government: Governmental activities: General government $ 5,780,803 $ 1,326,883 $ 1,000,267 $ 25,061 $ ( 3,428,592) $ - $ ( 3,428,592) Public safety 7,999,745 1,879,612 2,224,334 - ( 3,895,799) - ( 3,895,799) Highways and streets 4,011,208 - 49,949 3,456,054 ( 505,205) - ( 505,205) Sanitation 67,463 212,740 42,626 - 187,903 - 187,903 Health 1,774,793 128,839 152,684 - ( 1,493,270) - ( 1,493,270) Welfare 333,673 32,058 235,210 - ( 66,405) - ( 66,405) Culture and recreation 766,341 510,717 53,356 - ( 202,268) - ( 202,268) Education 154,030 62,950 30,658 - ( 60,422) - ( 60,422) Interest on long- tenn debt 38,093 - - - ( 38,093) - ( 38,093) Total governmental activities 20,926,149 4,153,799 3,789,084 3,481,115 ( 9,502,151) - ( 9,502,151) Business- type activities Golf course 1,373,190 1,560,357 - - - 187,167 187,167 Total business- type activities 1,373,190 1,560,357 - - - 187,167 187,167 Total primary government $ 22,299,339 $ 5,714,156 $ 3,789,084 $ 3,481,115 ( 9,502,151) 187,167 ( 9,314,984) General revenues: Taxes: Property taxes levied for general purposes 2,877,795 - 2,877,795 Property taxes levied for improvement districts 8,918 - 8,918 Share of state sales taxes 1,738,049 - 1,738,049 Excise tax 2,023,755 - 2,023,755 Payments in lieu of taxes 1,196,941 - 1,196,941 Vehicle license tax 989,660 - 989,660 Share of state lottery 550,035 - 550,035 Investment earnings 88,544 1,325 89,869 Miscellaneous 899,556 - 899,556 Transfers 1,124 ( 1,124) Total general revenues and transfers 10,374,377 201 10,374,578 Changes in net assets 872,226 187,368 1,059,594 Net assets - July 1,2003 20,826,655 ( 571,142) 20,255,513 Net assets - June 30, 2004 $ 21,698,881 $ ( 383,774) $ 21,315,107 See accompanying notes to fInancial statements.. 12 La paz C01Dlty Balance Sheet Governmental FwlCls June 30, 2004 Major Funds Business 95 Road Other Total General Road Improvement Jan District Governmental Governmental Fund Fund Fund Fund Funds Funds Assets Cash and cash equivalents $ 2,937,639 $ 2,050,317 $ 3,246,596 $ 44,081 $ 759,314 $ 9,037,947 Cash and investments held by trustee 264,617 268,016 532,633 Receivables ( net ofallowances for uncollectibles): Accounts 6,481 6,481 Property taxes 183,075 1,589 184,664 Due from: Others 63,141 2,575 44,341 110,057 Other funds 1,701,821 36,893 47,971 174,818 1,961,503 Other governments 202,122 353,076 398,123 334,396 1,287,717 Prepaid items 18,822 35 5,216 24,073 Total assets $ 5,377,718 $ 2,440,321 $ 3,246,596 $ 760,766 $ 1,319,674 $ 13,145,075 liabilities and Fund Balances Liabilities: Accounts payable $ 172,886 $ 89,161 $ $ 71,783 $ 299,214 $ 633,044 Accrued payroll and employee benefits 244,260 68,090 64,584 115,399 492,333 Due to: Others 439,959 929 1,355 442,243 Other governments 265,831 265,831 Other funds 92,461 226,339 259,092 511,202 1,089,094 Deferred revenue 161,575 1,287 162,862 Totalliabilities 1,376,972 384,519 395,459 928,457 3,085,407 Fund balances: Reserved for: Certificates of participation payment 264,617 268,016 532,633 Prepaid items 18,822 35 5,216 24,073 Unreserved, reported in: General fund 3,717,307 3,717,307 Special revenue funds 2,055,767 3,246,596 97,291 386,001 5,785,655 Total fund balances 4,000,746 2,055,802 3,246,596 365,307 391,217 10,059,668 Total liabilities and fund balances $ 5,377,718 $ 2,440,321 $ 3,246,596 $ 760,766 $ 1,319,674 $ 13,145,075 See accompanying notes to financial statements. 13 La paz County Reconciliation ofthe Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2004 Fund balances- total governmental funds Amounts reported for governmental activities in the statement ofnet assets are different because: Capital assets used in governmental activities are not fmancial resources and, therefore, are not reported in the funds. The cost ofthe assets is $ 25,023,301 and the accumulated depreciation is $ 10,618,753. Some ofthe County's taxes will be collected after year- end, but are not available soon enough to pay for the current- period expenditures, and therefore are deferred in the funds. Long- term liabilities are not due and payable in the current period and therefore, are not reported in the funds. $ 10,059,668 14,404,548 162,862 Obligations under capital leases Compensated absences Certificates of participation Estimated liabilities for claims and judgments Net assets of governmental activities See accompanying notes to fmancial statements. 14 ( 56,020) ( 654,001) ( 2,190,000) ( 28,176) ( 2,928,197) $ 21,698,881 La paz County Statement ofRevenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2004 Major Funds Business 95 Road Other Total General Road Improvement Jail District Governmental Governmental Fund Fund Fund Fund Funds Funds Revenues: Taxes $ 4,408,435 $ 498,571 $ $ 1,049,212 $ 8,947 $ 5,965,165 Licenses and permits 227,616 10,673 238,289 Fees, fmes, and forfeits 732,544 7,467 740,011 Intergovernmental 3,531,827 3,456,054 279,032 3,488,311 10,755,224 Charges for services 539,911 1,871,294 764,294 3,175,499 Investment income 51,779 23,441 1,360 11,964 88,544 Miscellaneous 485,002 54,219 260 339,032 878,513 Total revenues 9,977,114 4,032,285 3,201,158 4,630,688 21,841,245 Expenditures: Current: CJeneralgovernment 5,000,797 799,574 5,800,371 Public safety 3,166,985 2,572,567 1,728,621 7,468,173 Highways and streets 4,236,055 108,606 8,358 4,353,019 Sanitation 2,879 64,584 67,463 Health 859,790 875,278 1,735,068 Welfare 90,960 232,880 323,840 Culture and recreation 654,683 654,683 Education 152,177 152,177 Capital outlay 113,861 848,020 961,881 Debt service: Principal 81,418 235,000 316,418 Interest 17,375 20,717 38,092 Total expenditures 9,486,242 4,236,055 108,606 2,828,284 5,211,998 21,871,185 Excess ( deficiency) of revenues over expenditures 490,872 ( 203,770) ( 108,606) 372,874 ( 581,310) ( 29,940) Other fmancing sources ( uses): Capital lease agreements 34,293 34,293 Transfers in 93,624 3,750 97,374 Transfers out ( 3,750) ( 92,500) ( 96,250) Total other fmancing sources and uses 124,167 ( 92,500) 3,750 35,417 Net change in fund balances 615,039 ( 203,770) ( 108,606) 280,374 ( 577,560) 5,477 Fund balances, July 1,2003 3,385,707 2,259,572 3,355,202 84,933 968,777 10,054,191 Fund balances, June 30, 2004 $ 4,000,746 $ 2,055,802 $ 3,246,596 $ 365,307 $ 391,217 $ 10,059,668 See accompanying notes to fmancial statements. 15 La paz County Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2004 Net change in fund balances- total governmental funds $ 5,477 Amounts reported for governmental activities in the Statement ofActivities are different because: Governmental funds report capital outlays as expenditures. However, in the statements of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Expenditures for general capital assets, infrastructure, and other related capital assets. $ 2,033,585 Depreciation expense ( 1,391,298) 642,287 Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long- term liabilities in the statement of net assets. Principal repayments: Certificates of participation 305,000 Capital leases 11,418 316,418 Some expenses in the Statement ofActivities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. Increase in compensated absences ( 228,368) Decrease in estimated liabilities for claims and judgments 201,450 ( 26,918) Collections ofrevenues in the governmental funds exceeded revenues reported in the Statement of Activities. ( 65,038) Change in net assets of governmental activities $ 872,226 See accompanying notes to fmancial statements. 16 La paz County Statement of Net Assets Proprietary Fund June 30, 2004 Business- Type Activities Enterprise Fund Golf Course Fund Assets Current assets: Cash and cash equivalents Prepaid items Total current assets Noncurrent assets: Cash and investments held by trustee Capital assets, net of accumulated depreciation Total noncurrent assets Total assets Liabilities Current liabilities: Accounts payable Accrued payroll and employee benefits Due to others Due to other funds Certificates of participation payable, current portion Compensated absences payable, current portion Total current liabilities Noncurrent liabilities: Certificates of participation payable Compensated absences payable Total noncurrent liabilities Total liabilities Net Assets Invested in capital assets, net of related debt Restricted for debt service Unrestricted ( deficit) Total net assets See accompanying notes to fmancial statements. 17 $ $ 29,719 1,203 30,922 503,316 1,694,244 2,197,560 2,228,482 29,476 25,894 7,227 872,409 270,000 20,175 1,225,181 1,340,000 47,075 1,387,075 2,612,256 84,244 503,316 ( 971,334) ( 383,774) La paz County Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Fund Year Ended June 30, 2004 Business- Type Activities Enterprise Fund Golf Course Fund Operating revenues: Golf course fees Miscellaneous Total operating revenues Operating expenses: Personnel services Professional services Supplies Communication Utilities Repairs and maintenance Depreciation Other Leases and rents Total operating expenses Operating income $ 1,559,663 694 1,560,357 628,699 130,414 116,346 6,155 55,256 198,272 157,767 40,020 2,179 1,335,108 225,249 Nonoperating revenues ( expenses): Investment income Interest expense Loss on disposal of capital assets Total nonoperating revenues ( expenses) Income before transfers Transfers out Increase in net assets Total net assets, July 1,2003 Total net assets, June 30, 2004 See accompanying notes to fmancia1 statements. 18 1,325 ( 25,542) ( 12,540) ( 36,757) 188,492 ( 1,124) 187,368 ( 571,142) $ ( 383,774) La paz County Statement of Cash Flows Proprietary Fund Year Ended June 30, 2004 Business- Type Activities Enterprise Fund Golf Course Fund Cash flows from operating activities: Receipts from customers Payments to suppliers and providers of goods and services Payments to employees Net cash provided by operating activities Cash flows from noncapital financing activities: Negative cash balance implicitly fmanced Negative cash balance implicitly repaid Cash transfers to other funds Net cash used for noncapital fmancing activities: Cash flows from capital and related financing activities: Purchases of capital assets Principal paid on certificates of participation Interest paid on certificates of participation Net cash used for capital and related fmancing activities Cash flows from investing activities: Interest received on investments Net cash provided by investing activities Net increase in cash and cash equivalents Cash and cash equivalents, July 1, 2003 Cash and cash equivalents, June 30, 2004 Reconciliation oftotal cash and cash equivalents: Cash and cash equivalents Cash and investments held by trustee Reconciliation of beginning cash and cash equivalents: Beginning cash and cash equivalents, as previously reported Beginning cash held by trustee originally excluded Adjusted beginning cash and cash equivalents See accompanying notes to fmancial statements. 19 $ $ $ $ $ $ 1,567,584 ( 554,781) ( 594,044) 418,759 872,409 ( 899,419) ( 1,124) ( 28,134) ( 78,999) ( 95,000) ( 25,542) ( 199,541) 1,325 1,325 192,409 340,626 533,035 29,719 503,316 533,035 8,880 331,746 340,626 ( continued) La paz County Statement of Cash Flows - Continued Proprietary Fund Year Ended June 30, 2004 Reconciliation of operating income to net cash provided by operating activities: Business- Type Activities Enterprise Fund Golf Course Fund Operating income Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation Changes in assets and liabilities: Increase in: Prepaid items Due to others Compensated absences payable Decrease in: Accounts payable Accrued payroll and employee benefits Net cash provided by operating activities See accompanying notes to fmancial statements. 20 $ $ 225,249 157,767 ( 596) 7,227 34,655 ( 477) ( 5,066) 418,759 La paz County Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2004 Investment Trust Funds Agency Funds Assets Cash and cash equivalents Accrued interest receivable Total assets Liabllities Due to other governments Total liabilities Net Assets Held in trust for investment participants $ 13,635,004 33,144 13,668,148 $ 13,668,148 $ $ 982,053 982,053 982,053 982,053 See accompanying notes to financial statements. 21 La paz County Statement of Changes in Fiduciary Net Assets Fiduciary Funds Year Ended June 30, 2004 Investment Trust Funds Additions: Contributions from participants $ 31,187,929 Interest and dividends 313,404 Total additions 31,501,333 Deductions: Distributions to participants 33,265,287 Total deductions 33,265,287 Change in net assets ( 1,763,954) Net assets, July 1, 2003 15,432,102 Net assets, June 30, 2004 $ 13,668,148 See accompanying notes to financial statements. 22 Note 1 - La Paz County Notes to Financial Statements June 30, 2004 Summary of Significant Accounting Policies The accounting policies of La Paz County conform to generally accepted accounting principles applicable to governmental units adopted by the Governmental Accounting Standards Board ( GASB). A. Reporting Entity The County is a general purpose local government that is governed by a separately elected board of three county supervisors. The accompanying financial statements present the activities of the County ( the primary government) and its component units. Component units are legally separate entities for which the County is considered to be financially accountable. Blended component units, although legally separate entities, are in substance part of the County's operations. Therefore, data from these units is combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the government- wide financial statements to emphasize they are legally separate from the County. Each blended component unit discussed below has a June 30 year- end. The County has no discretely presented component units. The following table describes the County's component units: Component Unit La Paz County Jail District La Paz County Municipal Property Corporation Various Street Lighting Districts La Paz County Health Services District Description; Criteria for Inclusion A tax- levying public improvement district that acquires, constructs, operates, maintains, and finances county jails and jail systems pursuant to Arizona Revised Statutes; County board of supervisors serves as board of directors A nonprofit corporation created by the County to assist in the acquisition of real and personal property for the County; County board of supervisors serves as board of directors Operates and maintains street lighting in areas outside local city jurisdictions; County board of supervisors serves as board of directors A tax- levying public improvement district that provides or [ mances health services; County board of supervisors serves as board of directors 23 Reporting Method Blended Blended Blended Blended For Separate Financial Statements Not available Not available Not available Not available Notes to Financial Statements - Continued B. Basis of Presentation The basic financial statements include both government- wide statements and fund financial statements. The government- wide statements focus on the County as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the usefulness of the information. Government- wide statements- provide information about the primary government ( the County) and its component units. The statements include a statement of net assets and a statement of activities. These statements report the financial activities of the overall government, except for fiduciary activities. They also distinguish between the governmental and business- type activities of the County. Governmental activities generally are financed through taxes and intergovernmental revenues. Business- type activities are financed in whole or in part by fees charged to external parties. A statement of activities presents a comparison between direct expenses and program revenues for each function of the County's governmental activities and segment of its business- type activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. The County does not allocate indirect expenses to programs or functions. Program revenues include: • charges to customers or applicants for goods, services, or privileges provided, • operating grants and contributions, and • capital grants and contributions, including special assessments. Revenues that are not classified as program revenues, including internally dedicated resources and all taxes, are reported as general revenues. Generally, the effect of interfund activity has been eliminated from the government- wide financial statements to minimize the double counting of internal activities. However, charges for interfund services provided and used are not eliminated if the prices approximate their external exchange values. Fund financial statements- provide information about the County's funds, including fiduciary funds and blended component units. Separate statements are presented for the governmental, proprietary, and fiduciary fund categories. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Fiduciary funds are aggregated and reported by fund type. 24 Notes to Financial Statements - Continued Proprietary fund revenues and expenses are classified as either operating or nonoperating. Operating revenues and expenses generally result from transactions associated with the fund's principal activity. Accordingly, revenues, such as golf course fees, in which each party receives and gives up essentially equal values, are operating revenues. Other revenues, such as investment income, result from transactions in which the parties do not exchange equal values. Operating expenses include the cost of services, administrative expenses, and depreciation on capital assets. Other expenses, such as interest expense, are considered to be nonoperating expenses. The County reports the following major governmental funds: The General Fund is the County's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Road Fund accounts for monies from specific revenue sources that are restricted for road maintenance and operations, pavement preservation, and fleet services. The Business 95 Road Improvement Fund accounts for monies from the Arizona Department of Transportation that is restricted for roadway realignment, shoulder improvements, and drainage improvements to state road Business 95. The State of Arizona transferred ownership jurisdiction and maintenance responsibilities to the County during fiscal year 2002. The Jail District Fund was established by La Paz County resolution  89- 5845 under the authority of Article 1, Chapter 25, and Title 48, of the Arizona Revised Statutes on November 20, 1989. On June 18, 1990, the Jail District Board of Directors adopted Resolution JD90- 12, under the authority of Arizona Revised Statutes  48- 4022, establishing a one- half cent excise sales tax effective January 1, 1991, through perpetuity. The Jail District Fund accounts for the receipt of tax revenue, maintenance of effort, intergovernmental revenue, debt service, and operating expenditures of the County's jail. The County reports the following major enterprise fund: The GolfCourse Fund accounts for the activities and related operations and maintenance of an 18 hole golf course and pro- shop. The County reports the following fund types: The investment trust funds account for pooled assets held and invested by the County Treasurer on behalf of County departments and other governmental entities. 25 Notes to Financial Statements - Continued The agency funds account for assets held by the County as an agent for the State and various local governments, and for property taxes collected and distributed to the State, local school districts, community college districts, and special districts. C. Basis of Accounting The government- wide, proprietary fund, and fiduciary fund financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Property taxes are recognized as revenue in the year for which they are levied. Grants and donations are recognized as revenue as soon as all eligibility requirements the provider imposed have been met. Governmental funds in the fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The County considers all revenues reported in the governmental funds to be available if the revenues are collected within 60 days after year end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long- term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they are due and payable. General capital asset acquisitions are reported as expenditures in governmental funds. Issuances of general long- term debt and acquisitions under capital lease agreements are reported as other financing sources. Under the terms of grant agreements, the County funds certain programs by a combination of grants and general revenues. Therefore, when program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. The County applies grant resources to such programs before using general revenues. The County's business- type activities and enterprise fund 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. The County has chosen the option not to follow FASB Statements and Interpretations issued after November 30, 1989. D. Cash and Investments For purposes of its statement of cash flows, the County considers only those highly liquid investments with a maturity of 3 months or less when purchased to be cash equivalents. Money market investments are stated at amortized cost. All other investments are stated at fair value. 26 Notes to Financial Statements - Continued E. Inventories Purchases of inventory items are recorded at the time of purchase as expenditures in the funds from which the purchases were made, and because the amounts on hand at June 30, 2004, were immaterial, they are not included in the Statements of Net Assets or the Balance Sheet. F. Property Tax Calendar The County levies real property taxes on or before the third Monday in August that become due and payable in two equal installments. The first installment is due on the first day of October and becomes delinquent after the first business day of November. The second installment is due on the first day of March of the next year and becomes delinquent after the first business day of May. During the year, the County also levies various personal property taxes that are due the second Monday of the month following receipt of the tax notice and become delinquent 30 days later. A lien assessed against real and personal property attaches on the first day of January preceding assessment and levy. G. Capital Assets Capital assets 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 government- wide statements and enterprise fund are as follows: Land Construction in progress Land improvements Infrastructure Buildings and improvements Improvements other than buildings Machinery and equipment Golf course and improvements 27 Capitalization Threshold All All $ 5,000 5,000 5,000 1,000 1,000 1,000 Depreciation Method N/ A N/ A Straight- line Straight- line Straight- line Straight- line Straight- line Straight- line Estimated Useful Life N/ A N/ A 10- 30 years 25- 50 years 25- 50 years 7- 30 years 5- 20 years 30 years Note 2 - Notes to Financial Statements - Continued H. Investment Income Investment income is composed of interest, dividends, and net changes in the fair value of applicable investments. 1. Compensated Absences Compensated absences consist of vacation leave and a calculated amount of sick leave earned by employees based on services already rendered. Employees may accumulate up to 160 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. Upon termination of employment, all unused and unforfeited vacation benefits are paid to employees. Accordingly, vacation benefits are accrued as a liability in the financial statements. Employees may accumulate an unlimited number of sick leave hours. Generally, sick leave benefits provide for ordinary sick pay and are cumulative but are forfeited upon termination of employment. However, employees who accumulate unused sick leave in excess of 384 hours are paid a percentage of the excess unused sick leave based on the number of years of consecutive service with the County; therefore, the excess sick leave is accrued. J. Reclassifications During 2004, certain changes were made to the classification of certain revenues and expenses/ expenditures from the prior year presentation. These changes had no effect on the County's beginning net assets or fund balances. Stewardship, Compliance, and Accountability Eleven General Fund departments and the Jail District Fund had an excess of actual expenditures over appropriations. General Fund departments with expenditures in excess of appropriations are caused mainly by excess expenditures for which budget modifications were not made. In total, the County's General Fund did not have expenditures in excess of appropriations since the County budgeted significant expenditures for the contingency department and no budget modifications were made. The Jail District Fund's excess of expenditures over appropriations occurred due to variable costs exceeding original expectations and these costs were funded by greater than anticipated charges for services. To avoid similar future overruns, the County analyzed the line items resulting in greater that anticipated costs to determine whether such costs will be recurring and adjusted its 2005 budget accordingly. 28 Notes to Financial Statements - Continued Deficit fund balances or net assets- At June 30, 2004, the following funds reported significant deficits greater than $ 5,000 in fund balances or net assets: Fund Governmental funds: Bio Terrorism ACJC Drug Enforcement Growing Smarter Planning Grant CmF Contract Sheriff Undesignated Fund SLIF Project Boats AORCC Boat Patrol Grant CA Rico HIDTA Grant Highway Safety Grant Criminal Justice Enhancement Park Grants Task Force Prosecutor WIA Year 1 County Racketeering Cops in School La Paz Extension Fund Rabies Control Capital Projects Fund CDBG Grant Parker Library Emergency Services DES Child Support Program Bill Williams REC Angling La Paz County Park Health Department Enterprise fund: La Paz County Golf Course Deficit $ 6,598 6,899 7,755 13,934 15,715 18,787 20,045 23,854 27,600 28,897 35,127 36,216 45,500 47,460 51,537 58,973 61,185 65,854 72,863 76,590 80,915 85,962 90,331 97,875 123,658 279,722 383,774 The above fund deficits resulted from the operations during the year or carryovers from prior years and are expected to be corrected through normal operations in the future. 29 Note 3 - Notes to Financial Statements - Continued Deposits and Investments Arizona Revised Statutes ( A. R. S.) authorize the County to invest public monies in the State Treasurer's investment pool; U. S. Treasury obligations; specified state and local government bonds; and interest- earning investments such as savings accounts, certificates of deposit, and repurchase agreements in eligible depositories. The statutes require collateral for demand deposits, certificates of deposit, and repurchase agreements at 101 percent of all deposits not covered by federal depository insurance. County Treasurer's Investment Pool- Arizona Revised Statutes require community colleges, school districts, and other local governments to deposit certain public monies with the County Treasurer. Those monies are pooled with County monies for investment purposes. Deposits- At June 30, 2004, the carrying amount of the investment pool's total cash in bank was $ 3,504,035, and the bank balance was $ 3,525,922. Ofthe bank balance, $ 100,000 was covered by federal depository insurance and $ 3,425,922 was covered by collateral held by the pledging financial institution's trust department or agent in the County's name. Investments- At June 30, 2004, the investments in the County Treasurer's investment pool consisted of the following: Fair Value Investment in State Treasurer's investment pool $ 19,357,723 The State Board of Investment 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. Those shares are not identified with specific investments and are not subject to custodial credit risk. Other deposits- At June 30, 2004, the total nonpooled cash on hand was $ 2,720. The carrying amount of the County's total nonpooled cash in bank was $ 820,245, and the bank balance was $ 865,122. Of the bank balance, $ 209,207 was covered by federal depository insurance or by collateral held by the County or its agent in the County's name and $ 655,915 was covered by collateral held by the pledging financial institution's trust department or agent in the County's name. 30 Notes to Financial Statements - Continued Other investments- At June 30, 2004, the County's nonpooled investments consisted of the following: u. s. government securities Total Fair Value $ 1,035,949 $ 1.035,949 These investments were uninsured and unregistered with securities held by the counterparty or by its trust department or agent, but not in the County's name. A reconciliation of cash and investments to amounts shown on the Statement of Net Assets follows: Cash and investments: Cash on hand Carrying amount of deposits Reported amount of investments Total Statement ofNet Assets: Cash and cash equivalents Cash and investments held by trustee Total County Treasurer's Investment Pool $ 3,504,035 19,357,723 $ 22,861.758 Total Primary Government $ 9,067,666 1,035,949 $ 10,103,615 Other $ 2,720 820,245 1,035,949 $ 1.858,914 Total Fiduciary Funds $ 14,617,057 $ 14,617,057 Total $ 2,720 4,324,280 20,393,672 $ 24,720,672 Total $ 23,684,723 1,035,949 $ 24,720,672 Note 4- Condensed Financial Statements of County Treasurer's Investment Pool A. R. S. require community colleges, school districts, and other local governments to deposit certain public monies with the County Treasurer. The Treasurer has a fiduciary responsibility to administer those and the County monies under her stewardship. The Treasurer invests, on a pool basis, all idle monies not specifically invested for a fund or program. In addition, the Treasurer determines the fair value of those pooled investments annually at June 30. 31 Notes to Financial Statements - Continued The County Treasurer's investment pool is not registered with the Securities and Exchange Commission as an investment company, and there is no regulatory oversight of its operations. The pool's structure does not provide for shares, and the County has not provided or obtained any legally binding guarantees to support the value of the participants' investments. Details of each major investment classification follow: Investment Type State Treasurer's Investment Pool Principal $ 19,357,723 Interest Rate( s) No stated interest rate Maturities No stated maturity Fair Value $ 19,357,723 A condensed statement of the investment pool's net assets and changes in net assets follows: Statement of Net Assets Assets Net assets Net assets held in trust for: Internal participants External participants Total net assets held in trust Statement of Changes in Net Assets Total additions Total deductions Net decrease Net assets held in trust: July 1,2003 June 30, 2004 32 $ 21,983,492 $ 21.983.492 $ 8,315,344 13,668,148 $ 21.983.492 $ 53,854,746 56,613,494 ( 2,758,748) 24,742,240 $ 21.983.492 Notes to Financial Statements - Continued Note 5 - Capital Assets Capital asset activity for the year ended June 30, 2004, was as follows: Primary Government Balance Balance June 30, July 1,2003 Increases Decreases 2004 Governmental activities: Capital assets not being depreciated: Land $ 630,070 $ $ $ 630,070 Construction in progress 1,034,168 147,886 691,498 490,556 Total capital assets, not being depreciated 1,664,238 147,886 691,498 1,120,626 Capital assets being depreciated: Land improvements 49,302 49,302 Buildings and improvements 9,413,450 1,096,114 10,509,564 Improvements other than buildings 341,075 164,803 505,878 Machinery and equipment 11,649,935 502,106 162,577 11,989,464 Infrastructure 848,467 848,467 Total 21,453,762 2,611,490 162,577 23,902,675 Less accumulated depreciation for: Land improvements 17,830 1,739 19,569 Buildings and improvements 1,903,503 274,940 2,178,443 Improvements other than buildings 159,074 32,264 191,338 Machinery and equipment 7,309,625 1,064,171 162,577 8,211,219 Infrastructure 18,184 18,184 Total 9,390,032 1,391,298 162,577 10,618,753 Total capital assets being depreciated, net 12,063,730 1,220,192 13,283,922 Governmental activities capital assets, net $ 13,727,968 $ 1.368,078 $ ( 691.498) $ 14.404,548 33 Notes to Financial Statements - Continued Primary Government Balance Balance June 30, July 1,2003 Increases Decreases 2004 Business- type activities: Capital assets being depreciated: Golf course and improvements $ 2,853,632 $ 298 $ $ 2,853,930 Machinery and equipment 837,968 78,701 62,636 854,033 Total 3,691,600 78,999 62,636 3,707,963 Less accumulated depreciation for: Golf course and improvements 1,281,138 96,643 1,377,781 Machinery and equipment 624,910 61,124 50,096 635,938 Total 1,906,048 157,767 50,096 2,013,719 Business- type activities capital assets, net $ 1.785,552 $( 78,768) $ 12,540 $ 1,694,244 Depreciation expense was charged to functions as follows: Governmental activities: General government Public safety Highways and streets Welfare Health Culture and recreation Education Total governmental activities depreciation expense Business- type activities: Golf course Total business- type activities depreciation expense 34 $ $ $ $ 257,974 425,342 581,798 26,058 7,677 91,241 1,208 1.391.298 157,767 157,767 Notes to Financial Statements - Continued Note 6- Long- Term Liabilities The following schedule details the County's long- term liability and obligation activity for the year ended June 30, 2004: Balance Balance Due within July 1,2003 Additions Reductions June 30, 2004 1 year Governmental activities Certificates of participation payable $ 2,495,000 $ $ 305,000 $ 2,190,000 $ 415,000 Obligations under capital leases 33,144 34,294 11,418 56,020 22,929 Compensated absences payable 425,633 931,335 702,967 654,001 196,202 Estimated liabilities for claims and judgments 229,626 201,450 28,176 Governmental activities long- term liabilities $ 3,183.403 $ 965,629 $ 1.220,835 $ 2,928,197 $ 634,131 Business- type activities Certificates of participation payable $ 1,705,000 $ $ 95,000 $ 1,610,000 $ 270,000 Compensated absences payable 32,595 81,852 47,197 67,250 20,175 Business- type activities long- term liabilities $ 1.737,595 $ 81.852 $ 142,197 $ 1.677.250 $ 290,175 Certificates of participation- The County has issued certificates of participation that are generally callable with interest payable semiannually to finance construction of the courthouse and government center complex, the jail facility, and the Emerald Canyon golf course. Certificates outstanding at June 30, 2004, were as follows: Original Maturity Interest Outstanding Description Amount Ranges Rates Principal Courthouse and government center complex - 2003 refunding $ 1,165,000 2004 - 2009 2.00 - 3.00% $ 1,095,000 Jail facility - series 2003 refunding 1,330,000 2004 - 2009 2.00 - 3.00% 1,095,000 Emerald Canyon GolfCourse - series 2003 refunding 1,705,000 2004 - 2009 2.00- 3.00% 1,610,000 $ 3,800,000 35 Business- Type Activities Notes to Financial Statements - Continued The following schedule details debt service requirements to maturity for the County's certificates of participation payable at June 30, 2004: Governmental Activities Year Ending June 30 Principal Interest Principal Interest 2005 $ 415,000 $ 50,238 $ 270,000 $ 35,138 2006 425,000 41,887 275,000 29,687 2007 430,000 32,562 280,000 23,788 2008 440,000 22,830 290,000 17,375 2009 480,000 13,175 495,000 13,056 Total $ 2,190,000 $ 160,692 $ 1.610,000 $ 119,044 In prior years, the County defeased certain certificates of participation by placing the proceeds of new certificates of participation in an irrevocable trust to provide resources for all future debt service payments on the old debt. The refunded debt is considered defeased and the related liabilities are not included in the County's financial statements. During the year ended June 30, 2004, the remaining balance of the outstanding refunded certificates of participation were repaid. Landfill closure and postclosure care costs- The County has contracted with an outside agency to provide operations for its solid waste facilities. The contract requires the outside agency to reserve funds in accordance with the closure plan for closure and postclosure care costs. In the event of termination of the contract, the required reserve funds are to be remitted to the County. Consequently, no liability for landfill closure and postclosure care costs has been recorded on the Statement of Net Assets. Insurance claims- The County provides life, health, and disability benefits to its employees and their dependents through the Arizona Local Government Employee Benefit Trust currently composed of six member counties. The Trust provides the benefits through a self- funding agreement with its participants and administers the program. The County is responsible for paying the premium and may require its employees to contribute a portion of that premium. If it withdraws from the Trust, the County is responsible for any claims run- out costs, including claims reported but not settled, claims incurred but not reported, and administrative costs. If the Trust were to terminate, the County would be responsible for its proportional share of any Trust deficit. Compensated absences and claims and judgments- Compensated absences are paid from various funds in the same proportion that those funds pay payroll costs. Claims and judgments are generally paid from the fund that accounts for the activity that gave rise to the claim. During fiscal year 2004, the County paid for compensated absences as follows: 49 percent from the General Fund, 5 percent from the Road Fund, 13 percent from the Jail District Fund, 13 percent from the Enterprise Fund, and 20 percent from the other funds. The County paid for claims and judgments from the General Fund. 36 Note 7- Note 8 - Notes to Financial Statements - Continued Risk Management The County 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; but was unable to obtain insurance at a cost it considered to be economically justifiable. Therefore, the County joined and is covered by three public entity risk pools: the Arizona Counties Property and Casualty Pool and the Arizona Counties Workers' Compensation Pool, which are described below, and the Arizona Local Government Employee Benefit Trust, which is described above. The Arizona Counties Property and Casualty Pool is a public entity risk pool currently composed of 11 member counties. The pool provides member counties catastrophic loss coverage for risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters; and provides risk management services. Such coverage includes all defense costs as well as the amount of any judgment or settlement. The County is responsible for paying a premium, based on its exposure in relation to the exposure of the other participants, and a deductible of $ 5,000 per occurrence for property claims and $ 5,000 per occurrence for liability claims. The County is also responsible for any payments in excess of the maximum coverage of $ 100 million per occurrence for property claims and $ 10 million per occurrence for liability claims. A County must participate in the pool at least 3 years after becoming a member; however, it may withdraw after the initial 3- year period. If the pool were to become insolvent, the County would be assessed an additional contribution. The Arizona Counties Workers' Compensation Pool is a public entity risk pool currently composed of 11 member counties. The pool provides member counties with workers' compensation coverage, as required by law, and risk management services. The County is responsible for paying a premium, based on an experience rating formula that allocates pool expenditures and liabilities among the members. The Arizona Counties Property and Casualty Pool and the Arizona Counties Workers' Compensation Pool receive independent audits annually and an audit by the Arizona Department of Insurance triennially. Both pools accrue liabilities for losses that have been incurred but not reported. These liabilities are determined annually based on an independent actuarial valuation. Retirement Plans Plan Descriptions- The County contributes to the three plans described below. Benefits are established by state statute and generally provide retirement, death, long- term disability, survivor, and health insurance premium benefits. 37 Notes to Financial Statements - Continued The Employee Security Plan ( ESP) is a defined contribution plan administered by Massachusetts Mutual Life Insurance Company that covers all permanent full- time employees of the County except for participants in the Public Safety Personnel Retirement System and the Elected Officials Retirement Plan. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. The Public Safety Personnel Retirement System ( PSPRS) is an agent multiple- employer defined benefit pension plan that covers public safety personnel who are regularly assigned hazardous duty as employees of the State of Arizona or one of its political subdivisions. The PSPRS, acting as a common investment and administrative agent, is governed by a five- member board, known as The Fund Manager, and 199 local boards according to the provisions ofA. R. S. Title 38, Chapter 5, Article 4. The Elected Officials Retirement Plan ( EaRP) is a cost- sharing multiple- employer defined benefit pension plan that covers elected officials and judges of certain state and local governments. The EORP is governed by The Fund Manager of PSPRS according to the provisions ofA. R. S. Title 38, Chapter 5, Article 3. Each plan issues a publicly available financial report that includes its financial statements and required supplementary information. A report may be obtained by writing or calling the applicable plan. ESP 1295 State Street Springfield, MA 01111 ( 413) 788- 8411 PSPRS and EORP 3010 E. Camelback Road, Suite, 200 Phoenix, AZ 85016 ( 602) 255- 5575 Funding Policy- The Arizona State Legislature establishes and may amend active plan members' and the County's contribution rates for the PSPRS and EORP plans. ESP- All employees under this plan were allowed to select a contribution rate of 6 to 10 percent. The plan also requires that the County contribute an amount equal to 6 percent of the employees' compensation for employees with service of 4 years or less, 8 percent for employees with service of at least 4 years but less than 7 years, and 10 percent for employees with service greater than 7 years. Both the County and covered employees made the required contributions of 6 to 10 percent amounting to contributions of $ 525,103 by the County and $ 870,963 by covered employees. Agent plan- For the year ended June 30, 2004, active PSPRS members were required by statute to contribute 7.65 percent of the members' annual covered payroll, and the County was required to contribute at the actuarially determined rate of 14.11 percent. 38 Notes to Financial Statements - Continued Cost- sharing plan- For the years ended June 30, 2004, 2003 and 2002, active EORP members were required by statute to contribute 7 percent of the members' annual covered payroll. During the years ended June 30, 2004, 2003 and 2002, employee contributions to the plan were $ 54,597, $ 54,519 and $ 53,966, respectively, which equaled the required contributions for the year. The County was required to contribute 6 percent of the members' covered payroll during 2004 and there were no required contributions for 2003 and 2002. The County's contributions to EORP for the years ended June 30, 2004, 2003 and 2002 were $ 46,798, $ 0 and $ 0, which equaled the required contributions for the year. Annual Pension Cost- The County's pension cost for the agent plan for the year ended June 30, 2004, and related information follows: PSPRS Contribution rates: County Plan members Annual pension cost Contributions made 14.11% 7.65% $ 164,042 $ 164,042 The current- year annual required contribution for the PSPRS was determined as part of their June 30, 2002, actuarial valuations using the entry- age actuarial cost method. The actuarial assumptions included ( a) 9 percent investment rate of return and ( b) projected salary increases ranging from 6.5 percent to 9.5 percent per year. Both ( a) and ( b) included an inflation component of 5.5 percent. The assumptions did not include cost- of- living adjustments. The actuarial value of assets was determined using techniques that smooth the effects of short- term volatility in the market value of investments over a 4- year period. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2002, was 20 years. Trend Information- Annual pension cost information for the current and two preceding years follows for the agent plan: Plan PSPRS Year Ended June 30 2004 2003 2002 Annual Pension Cost ( APC) $ 164,042 99,177 116,995 39 Percentage of APC Contributed 100% 100% 100% Net Pension Obligation $ 0 oo Note 9- Notes to Financial Statements - Continued Interfund Balances and Activity Interfund receivables and payables- Interfund balances at June 30, 2004, were as follows: Payable To Jail Nonmajor General Road District Governmental Fund Fund Fund Funds Total Payable from General Fund $ 211 $ 26,730 47,971 $ 17,549 $ 92,461 Road Fund 226,339 226,339 Jail District Fund 255,538 3,554 259,092 Nonmajor Governmental Funds 348,100 5,953 157,149 511,202 Golf Course Fund 871,633 656 120 872,409 Total $ 1.701.821 $ 36,893 $ 47,971 $ 174,818 $ 1.961.503 Interfund balances resulted from the time lag between the dates that ( l) interfund goods and services are provided or reimbursable expenditures occur, ( 2) transactions are recorded in the accounting system, and ( 3) payments between funds are made. Except for interfund balances between the Golf Course Fund and the General Fund, all interfund balances are expected to be repaid within 1 year from the date of the financial statements. Interfund transfers- Interfund transfers for the year ended June 30, 2004, were as follows: Transfer To Nonmajor General Governmental Fund Funds Total Transfer from General Fund $ - $ 3,750 $ 3,750 Jail District Fund 92,500 92,500 Golf Course Fund 1,124 1,124 Total $ 93,624 $ 3,750 $ 97,374 Transfers were used to ( l) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, and ( 2) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. Note 10 - Subsequent Event In September 2007, the County, the plaintiff in a lawsuit against an out- of- state company regarding a contractual agreement, lost a counter suit filed by the company against the County. The jury awarded the company $ 9.2 million in damages and the County intends to appeal the verdict. Based on the nature of the lawsuit, a contractual matter, the County's insurance does not cover losses related to the matter. Management and legal counsel intend to vigorously defend the County's position. No provision has been made in the 2004 basic financial statements for any loss that may be incurred as the events leading to the defendant's claim and the related suit occurred subsequent to year- end. 40 Required Supplementary Information La paz County Required Supplementary Information Schedule of Agent Retirement Plan's Funding Progress June 30, 2004 Public Safety Penonnel Retirement System Unfunded Actuarial Actuarial Funding Annual Liability as Actuarial Value Accrued ( Liability) Funded Covered Percentage Valuation ofPlan Assets Liability Excess Ratio Payroll of Covered Payroll nate ( a) ( b) ( a- b) ( alb) ( c) ([ a- b]/ c) 06/ 30104 $ 5,151,913 $ 6,204,379 $ ( 1,052,466) 83.0% $ 1,444,771 72.8% 06/ 30103 5,145,450 5,765,572 ( 620,122) 89.2% 1,398,063 44.4% 06/ 30102 5,250,603 5,391,985 ( 141,382) 97.4% 1,290,428 11.0% 41 La paz County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2004 Original and Final Budgeted Amounts Actual Amounts Variance with Final Budget Revenues: Taxes Licenses and permits Fees, fmes, and forfeits Intergovernmental Charges for services Investment income Miscellaneous Total revenues Expenditures: Current: General government Assessor County attorney Board of supervisors Clerk of the superior court Constable Elections Justice ofthe Peace # 4 Justice ofthe Peace # 5 Justice of the Peace # 6 Planning and zoning Recorder Superior court Treasurer Contingency Management information services Public defender General administration Finance personnel GISlMaster planning Facilities Management Total general government $ 3,399,242 $ 4,408,435 $ 1,009,193 223,000 227,616 4,616 710,000 732,544 22,544 4,095,184 3,531,827 ( 563,357) 535,833 539,911 4,078 64,000 51,779 ( 12,221) 707,479 485,002 ( 222,477) 9,734,738 9,977,114 242,376 362,773 332,793 29,980 503,673 471,827 31,846 462,724 453,857 8,867 297,079 276,855 20,224 1,000 1,978 ( 978) 74,574 39,969 34,605 338,549 339,097 ( 548) 163,710 156,455 7,255 249,070 241,976 7,094 371,731 336,696 35,035 172,867 173,476 ( 609) 394,791 586,479 ( 191,688) 217,356 209,421 7,935 750,000 750,000 124,506 157,033 ( 32,527) 447,551 433,864 13,687 301,021 302,634 ( 1,613) 192,955 184,201 8,754 21,099 10,628 10,471 438,091 414,130 23,961 5,885,120 5,123,369 761,751 See accompanying notes to budgetary comparison schedule. 42 La paz County Required Supplementary Information Budgetary Comparison Schedule General Fund - Continued Year Ended June 30, 2004 Original and Final Budgeted Actual Variance with Amounts Amounts Final Budget Public safety: Regional dispatch $ 497,002 $ 508,592 $ ( 11,590) Sheriff 1,853,497 1,938,269 ( 84,772) Probation 99,043 104,014 ( 4,971) Aircraft 16,850 19,149 ( 2,299) Maintenance of effort 575,653 575,653 Juvenile probation 87,356 70,746 16,610 Total public safety 3,129,401 3,216,423 ( 87,022) Sanitation: Sanitary landfill 10,000 2,879 7,121 Total sanitation 10,000 2,879 7,121 Health: Indigent health 434,130 201,630 232,500 County long term care ALTCS 731,997 553,373 178,624 C. M.! ( chronically mental ill) 116,850 17,240 99,610 Health department transit 92,064 128,191 ( 36,127) Total health 1,375,041 900,434 474,607 Welfare: Public fiduciary 93,229 90,960 2,269 Total welfare 93,229 90,960 2,269 Education: School superintendent 153,662 152,177 1,485 Total education 153,662 152,177 1,485 Total expenditures 10,646,453 9,486,242 1,160,211 Excess ( deficiency) of revenues over expenditures ( 911,715) 490,872 1,402,587 See accompanying notes to budgetary comparison schedule. 43 La paz County Required Supplementary Information Budgetary Comparison Schedule General Fund - Continued Year Ended June 30, 2004 Original and Final Budgeted Actual Variance with Amounts Amounts Final Budget Other fmancing sources ( uses): Capital lease agreements $ 34,293 $ 34,293 Transfers in 93,624 93,624 Transfers out $ ( 486,916) ( 3,750) 483,166 Total other fmancing sources ( uses) ( 486,916) 124,167 611,083 Net change in fund balances ( 1,398,631) 615,039 2,013,670 Fund balances, July 1,2003 1,398,631 3,385,707 1,987,076 Fund balances, June 30, 2004 $ $ 4,000,746 $ 4,000,746 See accompanying notes to budgetary comparison schedule. 44 La paz County Required Supplementary Information Budgetary Comparison Schedule Road Fund Year Ended June 30, 2004 Original and Final Budgeted Actual Variance with Amounts Amounts Final Budget Revenues: Taxes $ 1,097,000 $ 498,571 $ ( 598,429) Intergovernmental 3,140,000 3,456,054 316,054 Investment income 31,000 23,441 ( 7,559) Miscellaneous 54,219 54,219 Total revenues 4,268,000 4,032,285 ( 235,715) Expenditures: Current: Highways and streets 5,784,112 4,236,055 1,548,057 Total expenditures 5,784,112 4,236,055 1,548,057 Net change in fund balances Fund balances, July 1,2003 Fund balances, June 30, 2004 ( 1,516,112) ( 203,770) 1,516,112 2,259,572 $ $ 2,055,802 1,312,342 743,460 $ 2,055,802 See accompanying notes to budgetary comparison schedule. 45 La paz County Required Supplementary Information Budgetary Comparison Schedule Business 95 Road Improvement Fund Year Ended June 30, 2004 Revenues Total revenues Expenditures: Current: Highways and streets Total expenditures Net change in fund balances Fund balances, July 1, 2003 Fund balances, June 30, 2004 Original and Final Budgeted Amounts $ 300,000 300,000 ( 300,000) 300,000 $ Actual Amounts $ 108,606 108,606 ( 108,606) 3,355,202 $ 3,246,596 Variance with Final Budget $ 191,394 191,394 191,394 3,055,202 $ 3,246,596 See accompanying notes to budgetary comparison schedule. 46 La paz County Required Supplementary Information Budgetary Comparison Schedule Jail District Fund Year Ended June 30, 2004 Original and Final Budgeted Actual Variance with Amounts Amounts Final Budget Revenues: Taxes $ 855,000 $ 1,049,212 $ 194,212 Intergovernmental 575,653 279,032 ( 296,621) Charges for services 1,400,000 1,871,294 471,294 Investment income 15,500 1,360 ( 14,140) Miscellaneous 260 260 Total revenues 2,846,153 3,201,158 355,005 Expenditures: Current: Public safety 2,395,574 2,572,567 ( 176,993) Debt Service: Principal retirement 359,085 235,000 124,085 Interest and fiscal charges 20,717 ( 20,717) Total expenditures 2,754,659 2,828,284 ( 73,625) Excess ofrevenues over expenditures 91,494 372,874 281,380 Other fmancing uses: Transfers out ( 92,500) ( 92,500) Total other fmancing uses ( 92,500) ( 92,500) Net change in fund balances 91,494 280,374 188,880 Fund balances, July 1,2003 ( 91,494) 84,933 176,427 Fund balances, June 30, 2004 $ $ 365,307 $ 365,307 See accompanying notes to budgetary comparison schedule. 47 La paz County Required Supplementary Information Notes to Budgetary Comparison Schedules June 30, 2004 Note 1 - Budgeting and Budgetary Control A. R. S. require the County to prepare and adopt a balanced budget annually for each governmental fund. The Board of Supervisors must approve such operating budgets on or before the third Monday in July to allow sufficient time for the legal announcements and hearings required for the adoption of the property tax levy on the third Monday in August. A. R. S. prohibit expenditures or liabilities in excess of the amounts budgeted. Expenditures may not legally exceed appropriations at the department level. In certain instances, transfers of appropriations between departments or from the contingency account to a department may be made upon the Board of Supervisors' approval. With the exception of the General Fund, each fund includes only one department. Capital outlay and debt service expenditures are budgeted by department and accumulated by function on the Budgetary Comparison Schedule. Note 2 - Budgetary Basis of Accounting The County's budget is prepared on a basis consistent with generally accepted accounting principles. Note 3 - Expenditures in Excess of Appropriations For the year ended June 30, 2004, expenditures exceeded final budget amounts at the department level ( the legal level of budgetary control) as follows: Fund/ Department General Fund: Constable Justice ofthe Peace # 4 Recorder Superior Court Management information services General administration Regional dispatch Sheriff Probation Aircraft Health department transit Jail District Fund Excess $ 978 548 609 191,688 32,527 1,613 11,590 84,772 4,971 2,299 36,127 73,625 The excesses were primarily the result of unexpected expenditures and expenditures made as a result of unanticipated revenues, or both. 48
Object Description
TITLE | Basic financial statements / La Paz County, Arizona for the year ended June 30,... |
CREATOR | Arizona. Office of the Auditor General. |
SUBJECT | La Paz County (Ariz.)--Finance; |
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Government and politics |
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Language | English |
Publisher | Arizona. Office of the Auditor General. |
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RIGHTS MANAGEMENT | Copyright to this resource is held by the creating agency and is provided here for educational purposes only. It may not be downloaded, reproduced or distributed in any format without written permission of the creating agency. Any attempt to circumvent the access controls placed on this file is a violation of United States and international copyright laws, and is subject to criminal prosecution. |
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Source Identifier | LG 6.3:A 82 L 16 B 17 |
Location | o432347894 |
DIGITAL FORMAT | PDF (Portable Document Format) |
REPOSITORY | Arizona State Library, Archives and Public Records. |
Description
TITLE | Basic financial statements / La Paz County, Arizona for the year ended June 30, 2004 |
DESCRIPTION | 53 pages (PDF version). File size: 1648.19 KB. |
TYPE |
Text |
Material Collection |
Senate Received Reports |
Acquisition Note | Received in paper form from Senate Research Staff via S. Blixt January 6, 2009. |
RIGHTS MANAGEMENT | Copyright to this resource is held by the creating agency and is provided here for educational purposes only. It may not be downloaded, reproduced or distributed in any format without written permission of the creating agency. Any attempt to circumvent the access controls placed on this file is a violation of United States and international copyright laws, and is subject to criminal prosecution. |
DATE ORIGINAL | 2008-09-15 |
Time Period |
2000s (2000-2009) |
ORIGINAL FORMAT | Born digital |
Source Identifier | LG 6.3:A 82 L 16 B 17/ 2004 |
DIGITAL IDENTIFIER | RMD_SENATE_LAPAZ_COUNTY_JUN302008.pdf |
DIGITAL FORMAT | PDF (Portable Document Format) |
DIGITIZATION SPECIFICATIONS | Digitized into PDF form through scanning at the Records Management Division, Arizona State Library. |
REPOSITORY | Arizona State Library, Archives and Public Records. |
File Size | 1648.19 KB |
Full Text | La paz County, Arizona Basic Financial Statements Year ended June 30, 2004 RECFI\/ ED OFFICE Of I tit. t'Kt.~ IDENT Table of Contents Independent Auditors' Report 1- 2 Management's Discussion and Analysis ( Required Supplementary Information) 3- 10 Basic Financial Statements: Government- Wide Financial Statements: Statement ofNet Assets 11 Statement ofActivities 12 Fund Financial Statements: Governmental Funds: Balance Sheet 13 Reconciliation ofthe Balance Sheet of Governmental Funds to the Statement ofNet Assets 14 Statement of Revenues, Expenditures, and Changes in Fund Balances 15 Reconciliation of the Statement ofRevenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement ofActivities 16 Proprietary Fund: Statement ofNet Assets 17 Statement of Revenues, Expenses, and Changes in Fund Net Assets 18 Statement of Cash Flows 19- 20 Fiduciary Funds: Statement of Fiduciary Net Assets 21 Statement of Changes in Fiduciary Net Assets 22 Table of Contents - Continued Page Notes to Financial Statements 23- 40 Other Required Supplementary Information: Schedule ofAgent Retirement Plan's Funding Progress 41 Budgetary Comparison Schedule - General Fund .42- 44 Budgetary Comparison Schedule - Road Fund 45 Budgetary Comparison Schedule - Business 95 Road Improvement Fund 46 Budgetary Comparison Schedule - Jail District Fund 47 Notes to Budgetary Comparison Schedules 48 HEINFELD, MEECH & CO., P. C. CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT 10120 N. Oracle Road Tucson, Arizona 85704 Tel ( 520) 742- 2611 Fax ( 520) 742- 2718 The Auditor General of the State of Arizona The Board of Supervisors La Paz County, Arizona We have audited the accompanying financial statements ofthe governmental activities, the business type activities, each major fund, and the aggregate remaining fund information of La Paz County, Arizona ( County), as of and for the year ended June 30, 2004, which collectively comprise the County's basic financial statements as listed in the table ofcontents. These financial statements are the responsibility of the County's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial 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 opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position ofthe governmental activities, business- type activities, each major fund, and the aggregate remaining fund information ofLa Paz County, Arizona, as ofJune 30, 2004, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. The Management's Discussion and Analysis on pages 3 through 10, Schedule of Agent Retirement Plan's Funding Progress on page 41, and the Budgetary Comparison Schedules on pages 42 through 48 are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. TUCSON • PHOENIX • FLAGSTAFF www. heinfe1dmeech. com In accordance with Government Auditing Standards, we will also issue our report on our consideration ofLa Paz County, Arizona's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters at a future date. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. HEINFELD, MEECH & CO., P. C. Certified Public Accountants September 15, 2008 2 Management's Discussion and Analysis Management's Discussion and Analysis This discussion and analysis, prepared by the County's management, is intended to be an easily readable analysis of La paz County's ( County) financial activities based on currently known facts, decisions or conditions during the fiscal year ended June 30, 2004. This analysis focuses on current year activities and should be read in conjunction with the County's basic financial statements following this section. Financial Highlights • The County's assets exceeded liabilities by $ 21,315,107 ( net assets). Ofthis amount, $ 2,530,487 ( unrestricted net assets) may be used to meet ongoing general obligations, $ 7,009,866 is restricted for specific purposes ( restricted net assets), and $ 12,158,628 is invested in capital assets, net of related debt. • The County's total net assets as reported in the Statement of Activities increased by $ 1,059,594. The increase is due primarily to an increase in general revenues of $ 1.1 million and an increase in operating and capital grants and contributions of $. 7 million while the County's expenses increased by a smaller proportion of $. 8 million. • At June 30, 2004, the governmental funds reported combined fund balances of $ 10,059,668, an increase of $ 5,477 in comparison with the prior year. The increase is a result of an increase in revenues in a greater proportion than the increase in expenditures. Approximately 94% of the combined fund balances, or $ 9,502,962 is available to meet the County's current and future needs ( unreserved fund balance). • At June 30,2004, unreserved fund balance for the general fund was $ 3,717,307 or 39% of general fund expenditures. In accordance with Arizona Revised Statutes  42- 17151, this entire amount is budgeted to be spent in the next fiscal year. Overview ofthe Financial Statements This discussion and analysis is intended to serve as an introduction to the County's basic financial statements. The County's basic financial statements comprise three components: 1) Government- wide financial statements, 2) Fund financial statements, and 3) Notes to the financial statements. Required supplementary information is included in addition to the basic financial statements. Government- wide Financial Statements are designed to provide readers with a broad overview of the County's finances, in a manner similar to private- sector businesses. The Statement ofNet Assets presents information on all County assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator ofwhether the financial position of the County is improving or deteriorating. The Statement ofActivities presents information showing how net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods ( e. g., uncollected taxes and earned but unused vacation leave). 3 Management's Discussion and Analysis Both of these government- wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues ( government activities) and from other functions that are intended to recover all or part of their costs through user fees and charges ( business- type activities). The governmental activities of the County include general government, public safety, highways and streets, sanitation, health, welfare, culture and recreation, and education. The County has one business- type activity, the Emerald Canyon Golf Course. Component units are included in our basic financial statements and consist of legally separate entities for which the County is financially accountable and that have substantially the same board as the County or provide services entirely to the County. The County has one major component unit, the La Paz County Jail District and several smaller component units. Refer to Note 1 A, Reporting Entity, on page 23 of this report for more information on the County's component units. The government- wide financial statements can be found on pages 11- 12 ofthis report. Fund Financial Statements are groupings of related accounts that are used to maintain control over resources that have been segregated for specific activities or objectives. The County, like other state and local governments, uses fund accounting to ensure and demonstrate finance- related legal compliance. All of the funds of the County can be divided into three categories: governmentalfunds, proprietaryfunds, andfiduciary funds. Governmentalfunds are used to account for essentially the same functions reported as governmental activities in the government- wide financial statements. However, unlike the government- wide financial statements, governmental funds financial statements focus on near- term inflows and outflows of usable resources, as well as on balances of usable resources available at the end of the fiscal year. Such information may be useful in evaluating a county's near- term financing requirements. Because the focus of governmental funds is narrower than that of the government- wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government- wide financial statements. By doing so, readers may better understand the long- term impact of the government's near- term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balance provide a reconciliation to facilitate this comparison between governmentalfunds and governmental activities. The County reports four major governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balance for the General, Road, Business 95 Road Improvement, and Jail District funds. Data from the other governmental funds ( non- major) are combined into a single, aggregated presentation. The governmentalfundfinancial statements can befound on pages 13- 16 ofthis report. 4 Management's Discussion and Analysis Proprietary funds, or enterprise funds, are used to report the same functions presented as business- type activities in the government- wide financial statements. La Paz County uses an enterprise fund to account for the Emerald Canyon Golf Course. Fund financial statements for the enterprise fund provides the same type of information as the government- wide financial statements, only in more detail. The enterprise fundfinancial statements can befound on pages 17- 20 ofthis report. Fiduciaryfunds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government- wide financial statements because the resources of those funds are not available to support the County's own programs. The fiduciary funds financial statements can befound on pages 21- 22 ofthis report. Notes to financial statements provide additional information that is essential to a full understanding of the data provided in the government- wide and fund financial statements. The notes can befound on pages 23- 40 ofthis report. Required supplementary information presents budgetary comparison schedules for the General, Road, Business 95 Road Improvement, and Jail District funds of the County. It also includes a schedule of agent retirement plan's funding progress. Required supplementary information can befound on pages 41- 49 ofthis report. Government- Wide Financial Analysis Net Assets The largest portion of the County's net assets reflects the investment in capital assets ( e. g., land, buildings, machinery and equipment, and infrastructure), less accumulated depreciation and related debt used to acquire those assets still outstanding. The County uses these assets to provide services to its citizens; consequently, these assets are not available for future spending. Although the County's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Restricted net assets represent resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets maybe used to meet the government's ongoing obligations to the citizens and creditors. 5 Management's Discussion and Analysis The following table summarizes the Statement ofNet Assets at June 30, 2004: 2004 2003 2004 2003 2004 2003 Business- Business- Governmental Governmental Type Type Activities Activities Activities Activities Total Total Current and other assets $ 12,055,981 $ 11,403,370 $ ( 338,171) $ ( 558,186) $ 11,717,810 $ 10,845,184 Capital assets 14,404,548 13,727,968 1,694,244 1,785,552 16,098,792 15,513,520 Total assets 26,460,529 25,131,338 1,356,073 1,227,366 27,816,602 26,358,704 Current and other liabilities 1,833,451 1,121,280 62,597 60,913 1,896,048 1,182,193 Long- term liabilities 2,928,197 3,183,403 1,677,250 1,737,595 4,605,447 4,920,998 Total liabilities 4,761,648 4,304,683 1,739,847 1,798,508 6,501,495 6,103,191 Net assets Invested in capital assets, net of related debt 12,158,528 11,199,824 84,244 80,552 12,242,772 11,280,376 Restricted for: Public safety 499,897 260,158 499,897 260,158 Highways and streets 5,306,547 5,618,453 5,306,547 5,618,453 Sanitation 79,091 101,050 79,091 101,050 Health 194,658 191,334 194,658 191,334 Debt service 532,633 329,563 503,316 331,746 1,035,949 661,309 Other purposes 397,040 550,979 397,040 550,979 Unrestricted net assets ( deficit) 2,530,487 2,575,294 ( 971,334) ( 983,440) 1,559,153 1,591,854 Total net assets $ 21,698,881 $ 20,826,655 $ ( 383,774) $ ( 571,142) $ 21,315,107 $ 20,255,513 As noted earlier, net assets may serve over time as a useful indicator of whether the financial position of the County is improving or deteriorating. In the case ofthe County, assets exceeded liabilities by $ 21,315,107 at June 30, 2004, indicating that the County is in a strong financial position. Capital assets ( and the related net asset invested in capital assets) increased as a result of continued expenditures on several road projects that are in process. Current liabilities increased as a result of an increase in amounts owed to vendors and amounts held in trust by the court system. Operating grants and contribution revenue increased as a result of an overall increase in grant funding for several federal and state grants. Excise tax increased during 2004. This amount is received from the state of Arizona which is dependent on the amount collected by the state. Public safety expenses increased due to an increase in spending on public safety grants such as those related to emergency services. Net assets increased by $ 1,059,594 during the fiscal year 2003- 04 resulting primarily from general and program revenues increasing in a greater proportion than expenses. Also, the business- type activity reflected an unrestricted net deficit of ($ 971,334) at June 30, 2004, which resulted primarily from initial start up costs incurred in 1989 that has not yet been recovered. 6 Management's Discussion and Analysis Changes in Net Assets The following table indicates the changes in net assets for governmental and business- type activities: 2004 2003 2004 2003 2004 2003 Governmental Governmental Business- Type Business- Type Activities Activities Activities Activities Total Total Revenues Program revenues: Charges for services $ 4,153,799 $ 3,803,923 $ 1,560,357 $ 1,491,691 $ 5,714,156 $ 5,295,614 Operating grants & contributions 3,789,084 3,083,846 3,789,084 3,083,846 Capital grants & contributions 3,481,115 3,489,990 3,481,115 3,489,990 General revenues: Property taxes 2,886,713 3,001,500 2,886,713 3,001,500 Share of state sales taxes 1,738,049 1,692,572 1,738,049 1,692,572 Excise tax 2,023,755 1,650,446 2,023,755 1,650,446 Payments in lieu of taxes 1,196,941 1,053,245 1,196,941 1,053,245 Vehicle license tax 989,660 892,948 989,660 892,948 Share of state lottery 550,035 550,035 550,035 550,035 Investment earnings 88,544 160,760 1,325 46,208 89,869 206,968 Miscellaneous 899,556 222,364 205 899,556 222,569 Total revenues 21,797,251 19,601,629 1,561,682 1,538,104 23,358,933 21,139,733 Expenses General government 5,780,803 5,674,042 5,780,803 5,674,042 Public safety 7,999,745 7,216,057 7,999,745 7,216,057 Highways and streets 4,011,208 3,686,559 4,011,208 3,686,559 Sanitation 67,463 86,493 67,463 86,493 Health 1,774,793 1,969,574 1,774,793 1,969,574 Welfare 333,673 339,391 333,673 339,391 Culture and recreation 766,341 706,819 1,347,648 1,494,430 2,113,989 2,201,249 Education 154,030 147,586 154,030 147,586 Interest on long- term debt 38,093 272,468 25,542 63,635 272,468 Total expenses 20,926,149 20,098,989 1,373,190 1,494,430 22,299,339 21,593,419 Change in net assets before transfers 871,102 ( 497,360) 188,492 43,674 1,059,594 ( 453,686) Transfers 1,124 ( 1,124) 1,124 ( 1,124) Change in net assets 872,226 ( 497,360) 187,368 43,674 1,059,594 ( 453,686) Beginning net assets ( deficit) 20,826,655 21,324,015 ( 571,142) ( 614,816) 20,255,513 20,709,199 Ending net assets ( deficit) $ 21,698,881 $ 20,826,655 $ ( 383,774) $ ( 571,142) $ 21,315,107 $ 20,255,513 During 2004, certain reclassifications were made to tax and intergovernmental revenues, accordingly, the 2003 tax and intergovernmental revenues were changed to reflect these reclassifications. 7 Management's Discussion and Analysis Financial Analysis of the County's Funds As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental funds - The focus of the County's governmental funds is to provide information of near- term inflows, outflows, and balances of useable resources. Such information is useful in assessing the County's financial requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end ofthe fiscal year. At June 30, 2004, the County's governmental funds reported combined fund balances of$ 1O, 059,668, an increase of $ 5,477 in comparison with the prior year. The increase is a result of an increase in revenues in the General and Jail District Funds in a greater proportion than expenditures in these funds. Approximately 94% of the combined fund balances, $ 9,502,962, constitutes unreserved fund balance, which is available to meet the County's current and future needs. The remainder of fund balance is reserved, indicating that it is not available for new spending because it has been committed for prepaid items and debt service expenditures. The General Fund is the County's primary operating fund. At the end of the current fiscal year, unreserved fund balance of the General Fund was $ 3,717,307. As a measure ofthe General Fund's liquidity, it is useful to compare both unreserved fund balance and total fund balance to total fund expenditures. The unreserved fund balance represents 39% oftotal General Fund expenditures while total fund balance represents 43% ofthat same amount. The Jail District Fund is a major County fund used to report the activity ofthe County jail. During 2004, the fund balance ofthis fund increased primarily due to an increase in charges for services which represent charges to other governments that use the facility. The Golf Course Fund is an enterprise fund of the County that had an increase in net assets due primarily from golf course fees that increased in greater proportion than golf course expenses. The following table presents the amount of governmental revenues from various sources as well as the increases or decreases from the prior year: Governmental Funds Revenue Comparison - By Source 2004 2003 Increase/( Decrease) Amount % of Total Amount % of Total Amount % Change Taxes $ 5,965,165 27.31% $ 5,523,787 28.13% $ 441,378 7.99% Licenses and permits 238,289 1.09% 208,300 1.06% 29,989 14.40% Intergovemmental 10,755,224 49.24% 10,012,731 50.98% 742,493 7.42% Fees, fines and forfeits 740,011 3.39% 728,387 3.71% 11,624 1.60% Charges for services 3,175,499 14.54% 2,827,384 14.40% 348,115 12.31% Investment income 88,544 0.41% 160,760 0.82% ( 72,216) - 44.92% Miscellaneous 878,513 4.02% 178,533 0.91% 699,980 392.07% Total revenues $ 21,841,245 100.00% $ 19,639,882 100.00% $ 2,201,363 11.21% The increase in tax revenue is caused primarily from an increase in excise tax imposed by the State on behalf of the County. The increase in intergovernmental revenue is due to an increase in funding from grants and contracts received from Federal and state agencies. The increase in charges for services is due primarily from an increase in charges to other governments for use of the County Jail Facility. Miscellaneous revenues increased primarily due to a greater amount of private contributions and indirect cost recovery. 8 Management's Discussion and Analysis The following table presents governmental expenditures by function compared to prior year amounts: Governmental Funds Expenditure Comparison - By Function 2004 2003 Increase/( Decrease) Amount % of Total Amount % of Total Amount % Change General government $ 5,800,371 26.52% $ 5,184,745 24.32% $ 615,626 11.87% Public safety 7,468,173 34.15% 7,042,079 33.04% 426,094 6.05% Highways and streets 4,244,413 19.41% 4,647,736 21.81% ( 403,323) - 8.68% Sanitation 67,463 0.31% 85,918 0.40% ( 18,455) - 21.48% Health 1,735,068 7.93% 2,017,745 9.47% ( 282,677) - 14.01% Welfare 323,840 1.48% 338,599 1.59% ( 14,759) - 4.36% Culture and recreation 654,683 2.99% 688,489 3.23% ( 33,806) - 4.91% Education 152,177 0.70% 147,499 0.69% 4,678 3.17% Capital outlay 1,070,487 4.89% 14,763 0.07% 1,055,724 7151.15% Debt service 354,510 1.62% 1,147,132 5.38% ( 792,622) - 69.10% Total expenditures $ 21,871,185 100.00% $ 21,314,705 100.00% $ 556,480 2.61% The following provides an explanation of the expenditures by function that changed significantly over the prior year: • Capital outlay was significant due to expenditures on road construction projects such as improvements to Highway B- 95, Salome Road and Vicksburg Road. • General government expenditures increased due to an overall increase in the cost of providing necessary services to County citizens. • The County's debt service expense decreased in 2004 largely due to the cost savings resulting from the refunding of certificates of participation that occurred in 2003. General Fund Budgetary Highlights The County did not amend the fiscal year 2003- 04 adopted budget for the General Fund. General Fund actual expenditures were $ 1.2 million under the adopted budget and actual revenues exceeded estimated revenues by $ 0.2 million. Tax revenues exceeded the anticipated budget amount primarily due to greater than anticipated excise tax and intergovernmental revenue did not meet the budgeted projection due to lower than anticipated grant and contract revenues. The following departments exceeded their General Fund expenditure budgets by more than ten percent and $ 10,000: • The Superior Court exceeded its budget by 49% due to rising indigent defense attorney costs. • Total costs of the Health Department's Transit department exceeded the budgeted amount by 39% due to greater than anticipated operating costs. • Management information services exceeded its budget by 26% due to greater than anticipated outside consultant costs. 9 Management's Discussion and Analysis Capital Assets and Debt Administration Capital Assets The County's investment in capital assets as of June 30, 2004, amounted to $ 16.1 million ( net of accumulated depreciation). This investment in capital assets includes land, buildings, machinery and equipment, construction equipment and vehicles, infrastructure purchased or constructed after June 30, 2002, construction in progress, and golf course improvements. The County's investment in capital assets increased 4.2 percent from the prior period. Major capital asset events during the current fiscal year included outlays for the new judicial complex, Business 95 road improvements, and for machinery and equipment, particularly heavy machinery. Additional information on the County's capital assets activity and balances can be found in Note 5 of the notes to the financial statements on page 33 ofthis report. Long- Term Debt At June 30, 2004, the County had total long- term debt outstanding of $ 3,856,020. This amount consists of certificates of participation of $ 3.8 million and capital leases of $ 56,020. During 2003, the County refunded all existing certificates ofparticipation to take advantage of lower interest rates. This resulted in reduced debt service requirements in 2004. Additional information on the County's long- term debt can be found in Note 6 of the Notes to the Financial Statements on page 35 ofthis report. Economic Factors • Despite a slow economy, the County's tax revenue is relatively stable. The County's sales tax revenue has remained stable because of tourism. The Colorado River attracts visitors in the summer, and both the river and desert areas attract visitors in the winter. • In 2003, the County took advantage of lower interest rates by refunding all outstanding certificates of participation for a combined economic gain of $ 406,053. This refunding also extended the amount of time the County has to repay the debt. • For the years ended June 30, 2003, and June 30, 2004, the County has budgeted $ 1 million and $. 75 million respectively, for contingencies. This practice may enable the County to better weather the current economic climate. Request for Information This financial report is designed to provide a general overview of the County's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the La paz County Finance Department, 1108 Joshua Avenue, Parker, AZ 85344. 10 La paz County Statement oCNet Assets June 30, 2004 Primary Government Governmental Business- Type Activities Activities Total Assets Cash and cash equivalents $ 9,037,947 $ 29,719 $ 9,067,666 Cash and investments held by trustee 532,633 503,316 1,035,949 Receivables, net Accounts 6,481 6,481 Property taxes 184,664 184,664 Internal balances 872,409 ( 872,409) Due from: Others 110,057 110,057 Other governments 1,287,717 1,287,717 Prepaid items 24,073 1,203 25,276 Capital assets, not being depreciated 1,120,626 1,120,626 Capital assets, being depreciated, net 13,283,922 1,694,244 14,978,166 Total assets 26,460,529 1,356,073 27,816,602 Liabilities Accounts payable 633,044 29,476 662,520 Accrued payroll and employee benefits 492,333 25,894 518,227 Due to: Others 442,243 7,227 449,470 Other governments 265,831 265,831 Noncurrent liabilities: Due within one year 634,131 290,175 924,306 Due in more than one year 2,294,066 1,387,075 3,681,141 Total liabilities 4,761,648 1,739,847 6,501,495 Net Assets Invested in capital assets, net of related debt 12,158,528 84,244 12,242,772 Restricted for: Public safety 499,897 499,897 Highways and streets 5,306,547 5,306,547 Sanitation 79,091 79,091 Health 194,658 194,658 Debt service 532,633 503,316 1,035,949 Other purposes 397,040 397,040 Unrestricted ( deficit) 2,530,487 ( 971,334) 1,559,153 Total net assets $ 21,698,881 $ ( 383,774) $ 21,315,107 See accompanying notes to financial statements. 11 La paz County Statement ofActivities Year Ended June 30, 2004 Program Revenues Net ( Expenses) Revenues and Changes in Net Assets Operating Capital Charges for Grants and Grants and Governmental Business- Type FunctionslPrograms Expenses Services Contributions Contributions Activities Activities Total Primary government: Governmental activities: General government $ 5,780,803 $ 1,326,883 $ 1,000,267 $ 25,061 $ ( 3,428,592) $ - $ ( 3,428,592) Public safety 7,999,745 1,879,612 2,224,334 - ( 3,895,799) - ( 3,895,799) Highways and streets 4,011,208 - 49,949 3,456,054 ( 505,205) - ( 505,205) Sanitation 67,463 212,740 42,626 - 187,903 - 187,903 Health 1,774,793 128,839 152,684 - ( 1,493,270) - ( 1,493,270) Welfare 333,673 32,058 235,210 - ( 66,405) - ( 66,405) Culture and recreation 766,341 510,717 53,356 - ( 202,268) - ( 202,268) Education 154,030 62,950 30,658 - ( 60,422) - ( 60,422) Interest on long- tenn debt 38,093 - - - ( 38,093) - ( 38,093) Total governmental activities 20,926,149 4,153,799 3,789,084 3,481,115 ( 9,502,151) - ( 9,502,151) Business- type activities Golf course 1,373,190 1,560,357 - - - 187,167 187,167 Total business- type activities 1,373,190 1,560,357 - - - 187,167 187,167 Total primary government $ 22,299,339 $ 5,714,156 $ 3,789,084 $ 3,481,115 ( 9,502,151) 187,167 ( 9,314,984) General revenues: Taxes: Property taxes levied for general purposes 2,877,795 - 2,877,795 Property taxes levied for improvement districts 8,918 - 8,918 Share of state sales taxes 1,738,049 - 1,738,049 Excise tax 2,023,755 - 2,023,755 Payments in lieu of taxes 1,196,941 - 1,196,941 Vehicle license tax 989,660 - 989,660 Share of state lottery 550,035 - 550,035 Investment earnings 88,544 1,325 89,869 Miscellaneous 899,556 - 899,556 Transfers 1,124 ( 1,124) Total general revenues and transfers 10,374,377 201 10,374,578 Changes in net assets 872,226 187,368 1,059,594 Net assets - July 1,2003 20,826,655 ( 571,142) 20,255,513 Net assets - June 30, 2004 $ 21,698,881 $ ( 383,774) $ 21,315,107 See accompanying notes to fInancial statements.. 12 La paz C01Dlty Balance Sheet Governmental FwlCls June 30, 2004 Major Funds Business 95 Road Other Total General Road Improvement Jan District Governmental Governmental Fund Fund Fund Fund Funds Funds Assets Cash and cash equivalents $ 2,937,639 $ 2,050,317 $ 3,246,596 $ 44,081 $ 759,314 $ 9,037,947 Cash and investments held by trustee 264,617 268,016 532,633 Receivables ( net ofallowances for uncollectibles): Accounts 6,481 6,481 Property taxes 183,075 1,589 184,664 Due from: Others 63,141 2,575 44,341 110,057 Other funds 1,701,821 36,893 47,971 174,818 1,961,503 Other governments 202,122 353,076 398,123 334,396 1,287,717 Prepaid items 18,822 35 5,216 24,073 Total assets $ 5,377,718 $ 2,440,321 $ 3,246,596 $ 760,766 $ 1,319,674 $ 13,145,075 liabilities and Fund Balances Liabilities: Accounts payable $ 172,886 $ 89,161 $ $ 71,783 $ 299,214 $ 633,044 Accrued payroll and employee benefits 244,260 68,090 64,584 115,399 492,333 Due to: Others 439,959 929 1,355 442,243 Other governments 265,831 265,831 Other funds 92,461 226,339 259,092 511,202 1,089,094 Deferred revenue 161,575 1,287 162,862 Totalliabilities 1,376,972 384,519 395,459 928,457 3,085,407 Fund balances: Reserved for: Certificates of participation payment 264,617 268,016 532,633 Prepaid items 18,822 35 5,216 24,073 Unreserved, reported in: General fund 3,717,307 3,717,307 Special revenue funds 2,055,767 3,246,596 97,291 386,001 5,785,655 Total fund balances 4,000,746 2,055,802 3,246,596 365,307 391,217 10,059,668 Total liabilities and fund balances $ 5,377,718 $ 2,440,321 $ 3,246,596 $ 760,766 $ 1,319,674 $ 13,145,075 See accompanying notes to financial statements. 13 La paz County Reconciliation ofthe Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2004 Fund balances- total governmental funds Amounts reported for governmental activities in the statement ofnet assets are different because: Capital assets used in governmental activities are not fmancial resources and, therefore, are not reported in the funds. The cost ofthe assets is $ 25,023,301 and the accumulated depreciation is $ 10,618,753. Some ofthe County's taxes will be collected after year- end, but are not available soon enough to pay for the current- period expenditures, and therefore are deferred in the funds. Long- term liabilities are not due and payable in the current period and therefore, are not reported in the funds. $ 10,059,668 14,404,548 162,862 Obligations under capital leases Compensated absences Certificates of participation Estimated liabilities for claims and judgments Net assets of governmental activities See accompanying notes to fmancial statements. 14 ( 56,020) ( 654,001) ( 2,190,000) ( 28,176) ( 2,928,197) $ 21,698,881 La paz County Statement ofRevenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2004 Major Funds Business 95 Road Other Total General Road Improvement Jail District Governmental Governmental Fund Fund Fund Fund Funds Funds Revenues: Taxes $ 4,408,435 $ 498,571 $ $ 1,049,212 $ 8,947 $ 5,965,165 Licenses and permits 227,616 10,673 238,289 Fees, fmes, and forfeits 732,544 7,467 740,011 Intergovernmental 3,531,827 3,456,054 279,032 3,488,311 10,755,224 Charges for services 539,911 1,871,294 764,294 3,175,499 Investment income 51,779 23,441 1,360 11,964 88,544 Miscellaneous 485,002 54,219 260 339,032 878,513 Total revenues 9,977,114 4,032,285 3,201,158 4,630,688 21,841,245 Expenditures: Current: CJeneralgovernment 5,000,797 799,574 5,800,371 Public safety 3,166,985 2,572,567 1,728,621 7,468,173 Highways and streets 4,236,055 108,606 8,358 4,353,019 Sanitation 2,879 64,584 67,463 Health 859,790 875,278 1,735,068 Welfare 90,960 232,880 323,840 Culture and recreation 654,683 654,683 Education 152,177 152,177 Capital outlay 113,861 848,020 961,881 Debt service: Principal 81,418 235,000 316,418 Interest 17,375 20,717 38,092 Total expenditures 9,486,242 4,236,055 108,606 2,828,284 5,211,998 21,871,185 Excess ( deficiency) of revenues over expenditures 490,872 ( 203,770) ( 108,606) 372,874 ( 581,310) ( 29,940) Other fmancing sources ( uses): Capital lease agreements 34,293 34,293 Transfers in 93,624 3,750 97,374 Transfers out ( 3,750) ( 92,500) ( 96,250) Total other fmancing sources and uses 124,167 ( 92,500) 3,750 35,417 Net change in fund balances 615,039 ( 203,770) ( 108,606) 280,374 ( 577,560) 5,477 Fund balances, July 1,2003 3,385,707 2,259,572 3,355,202 84,933 968,777 10,054,191 Fund balances, June 30, 2004 $ 4,000,746 $ 2,055,802 $ 3,246,596 $ 365,307 $ 391,217 $ 10,059,668 See accompanying notes to fmancial statements. 15 La paz County Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2004 Net change in fund balances- total governmental funds $ 5,477 Amounts reported for governmental activities in the Statement ofActivities are different because: Governmental funds report capital outlays as expenditures. However, in the statements of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Expenditures for general capital assets, infrastructure, and other related capital assets. $ 2,033,585 Depreciation expense ( 1,391,298) 642,287 Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long- term liabilities in the statement of net assets. Principal repayments: Certificates of participation 305,000 Capital leases 11,418 316,418 Some expenses in the Statement ofActivities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. Increase in compensated absences ( 228,368) Decrease in estimated liabilities for claims and judgments 201,450 ( 26,918) Collections ofrevenues in the governmental funds exceeded revenues reported in the Statement of Activities. ( 65,038) Change in net assets of governmental activities $ 872,226 See accompanying notes to fmancial statements. 16 La paz County Statement of Net Assets Proprietary Fund June 30, 2004 Business- Type Activities Enterprise Fund Golf Course Fund Assets Current assets: Cash and cash equivalents Prepaid items Total current assets Noncurrent assets: Cash and investments held by trustee Capital assets, net of accumulated depreciation Total noncurrent assets Total assets Liabilities Current liabilities: Accounts payable Accrued payroll and employee benefits Due to others Due to other funds Certificates of participation payable, current portion Compensated absences payable, current portion Total current liabilities Noncurrent liabilities: Certificates of participation payable Compensated absences payable Total noncurrent liabilities Total liabilities Net Assets Invested in capital assets, net of related debt Restricted for debt service Unrestricted ( deficit) Total net assets See accompanying notes to fmancial statements. 17 $ $ 29,719 1,203 30,922 503,316 1,694,244 2,197,560 2,228,482 29,476 25,894 7,227 872,409 270,000 20,175 1,225,181 1,340,000 47,075 1,387,075 2,612,256 84,244 503,316 ( 971,334) ( 383,774) La paz County Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Fund Year Ended June 30, 2004 Business- Type Activities Enterprise Fund Golf Course Fund Operating revenues: Golf course fees Miscellaneous Total operating revenues Operating expenses: Personnel services Professional services Supplies Communication Utilities Repairs and maintenance Depreciation Other Leases and rents Total operating expenses Operating income $ 1,559,663 694 1,560,357 628,699 130,414 116,346 6,155 55,256 198,272 157,767 40,020 2,179 1,335,108 225,249 Nonoperating revenues ( expenses): Investment income Interest expense Loss on disposal of capital assets Total nonoperating revenues ( expenses) Income before transfers Transfers out Increase in net assets Total net assets, July 1,2003 Total net assets, June 30, 2004 See accompanying notes to fmancia1 statements. 18 1,325 ( 25,542) ( 12,540) ( 36,757) 188,492 ( 1,124) 187,368 ( 571,142) $ ( 383,774) La paz County Statement of Cash Flows Proprietary Fund Year Ended June 30, 2004 Business- Type Activities Enterprise Fund Golf Course Fund Cash flows from operating activities: Receipts from customers Payments to suppliers and providers of goods and services Payments to employees Net cash provided by operating activities Cash flows from noncapital financing activities: Negative cash balance implicitly fmanced Negative cash balance implicitly repaid Cash transfers to other funds Net cash used for noncapital fmancing activities: Cash flows from capital and related financing activities: Purchases of capital assets Principal paid on certificates of participation Interest paid on certificates of participation Net cash used for capital and related fmancing activities Cash flows from investing activities: Interest received on investments Net cash provided by investing activities Net increase in cash and cash equivalents Cash and cash equivalents, July 1, 2003 Cash and cash equivalents, June 30, 2004 Reconciliation oftotal cash and cash equivalents: Cash and cash equivalents Cash and investments held by trustee Reconciliation of beginning cash and cash equivalents: Beginning cash and cash equivalents, as previously reported Beginning cash held by trustee originally excluded Adjusted beginning cash and cash equivalents See accompanying notes to fmancial statements. 19 $ $ $ $ $ $ 1,567,584 ( 554,781) ( 594,044) 418,759 872,409 ( 899,419) ( 1,124) ( 28,134) ( 78,999) ( 95,000) ( 25,542) ( 199,541) 1,325 1,325 192,409 340,626 533,035 29,719 503,316 533,035 8,880 331,746 340,626 ( continued) La paz County Statement of Cash Flows - Continued Proprietary Fund Year Ended June 30, 2004 Reconciliation of operating income to net cash provided by operating activities: Business- Type Activities Enterprise Fund Golf Course Fund Operating income Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation Changes in assets and liabilities: Increase in: Prepaid items Due to others Compensated absences payable Decrease in: Accounts payable Accrued payroll and employee benefits Net cash provided by operating activities See accompanying notes to fmancial statements. 20 $ $ 225,249 157,767 ( 596) 7,227 34,655 ( 477) ( 5,066) 418,759 La paz County Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2004 Investment Trust Funds Agency Funds Assets Cash and cash equivalents Accrued interest receivable Total assets Liabllities Due to other governments Total liabilities Net Assets Held in trust for investment participants $ 13,635,004 33,144 13,668,148 $ 13,668,148 $ $ 982,053 982,053 982,053 982,053 See accompanying notes to financial statements. 21 La paz County Statement of Changes in Fiduciary Net Assets Fiduciary Funds Year Ended June 30, 2004 Investment Trust Funds Additions: Contributions from participants $ 31,187,929 Interest and dividends 313,404 Total additions 31,501,333 Deductions: Distributions to participants 33,265,287 Total deductions 33,265,287 Change in net assets ( 1,763,954) Net assets, July 1, 2003 15,432,102 Net assets, June 30, 2004 $ 13,668,148 See accompanying notes to financial statements. 22 Note 1 - La Paz County Notes to Financial Statements June 30, 2004 Summary of Significant Accounting Policies The accounting policies of La Paz County conform to generally accepted accounting principles applicable to governmental units adopted by the Governmental Accounting Standards Board ( GASB). A. Reporting Entity The County is a general purpose local government that is governed by a separately elected board of three county supervisors. The accompanying financial statements present the activities of the County ( the primary government) and its component units. Component units are legally separate entities for which the County is considered to be financially accountable. Blended component units, although legally separate entities, are in substance part of the County's operations. Therefore, data from these units is combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the government- wide financial statements to emphasize they are legally separate from the County. Each blended component unit discussed below has a June 30 year- end. The County has no discretely presented component units. The following table describes the County's component units: Component Unit La Paz County Jail District La Paz County Municipal Property Corporation Various Street Lighting Districts La Paz County Health Services District Description; Criteria for Inclusion A tax- levying public improvement district that acquires, constructs, operates, maintains, and finances county jails and jail systems pursuant to Arizona Revised Statutes; County board of supervisors serves as board of directors A nonprofit corporation created by the County to assist in the acquisition of real and personal property for the County; County board of supervisors serves as board of directors Operates and maintains street lighting in areas outside local city jurisdictions; County board of supervisors serves as board of directors A tax- levying public improvement district that provides or [ mances health services; County board of supervisors serves as board of directors 23 Reporting Method Blended Blended Blended Blended For Separate Financial Statements Not available Not available Not available Not available Notes to Financial Statements - Continued B. Basis of Presentation The basic financial statements include both government- wide statements and fund financial statements. The government- wide statements focus on the County as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the usefulness of the information. Government- wide statements- provide information about the primary government ( the County) and its component units. The statements include a statement of net assets and a statement of activities. These statements report the financial activities of the overall government, except for fiduciary activities. They also distinguish between the governmental and business- type activities of the County. Governmental activities generally are financed through taxes and intergovernmental revenues. Business- type activities are financed in whole or in part by fees charged to external parties. A statement of activities presents a comparison between direct expenses and program revenues for each function of the County's governmental activities and segment of its business- type activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. The County does not allocate indirect expenses to programs or functions. Program revenues include: • charges to customers or applicants for goods, services, or privileges provided, • operating grants and contributions, and • capital grants and contributions, including special assessments. Revenues that are not classified as program revenues, including internally dedicated resources and all taxes, are reported as general revenues. Generally, the effect of interfund activity has been eliminated from the government- wide financial statements to minimize the double counting of internal activities. However, charges for interfund services provided and used are not eliminated if the prices approximate their external exchange values. Fund financial statements- provide information about the County's funds, including fiduciary funds and blended component units. Separate statements are presented for the governmental, proprietary, and fiduciary fund categories. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Fiduciary funds are aggregated and reported by fund type. 24 Notes to Financial Statements - Continued Proprietary fund revenues and expenses are classified as either operating or nonoperating. Operating revenues and expenses generally result from transactions associated with the fund's principal activity. Accordingly, revenues, such as golf course fees, in which each party receives and gives up essentially equal values, are operating revenues. Other revenues, such as investment income, result from transactions in which the parties do not exchange equal values. Operating expenses include the cost of services, administrative expenses, and depreciation on capital assets. Other expenses, such as interest expense, are considered to be nonoperating expenses. The County reports the following major governmental funds: The General Fund is the County's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Road Fund accounts for monies from specific revenue sources that are restricted for road maintenance and operations, pavement preservation, and fleet services. The Business 95 Road Improvement Fund accounts for monies from the Arizona Department of Transportation that is restricted for roadway realignment, shoulder improvements, and drainage improvements to state road Business 95. The State of Arizona transferred ownership jurisdiction and maintenance responsibilities to the County during fiscal year 2002. The Jail District Fund was established by La Paz County resolution  89- 5845 under the authority of Article 1, Chapter 25, and Title 48, of the Arizona Revised Statutes on November 20, 1989. On June 18, 1990, the Jail District Board of Directors adopted Resolution JD90- 12, under the authority of Arizona Revised Statutes  48- 4022, establishing a one- half cent excise sales tax effective January 1, 1991, through perpetuity. The Jail District Fund accounts for the receipt of tax revenue, maintenance of effort, intergovernmental revenue, debt service, and operating expenditures of the County's jail. The County reports the following major enterprise fund: The GolfCourse Fund accounts for the activities and related operations and maintenance of an 18 hole golf course and pro- shop. The County reports the following fund types: The investment trust funds account for pooled assets held and invested by the County Treasurer on behalf of County departments and other governmental entities. 25 Notes to Financial Statements - Continued The agency funds account for assets held by the County as an agent for the State and various local governments, and for property taxes collected and distributed to the State, local school districts, community college districts, and special districts. C. Basis of Accounting The government- wide, proprietary fund, and fiduciary fund financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Property taxes are recognized as revenue in the year for which they are levied. Grants and donations are recognized as revenue as soon as all eligibility requirements the provider imposed have been met. Governmental funds in the fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The County considers all revenues reported in the governmental funds to be available if the revenues are collected within 60 days after year end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long- term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they are due and payable. General capital asset acquisitions are reported as expenditures in governmental funds. Issuances of general long- term debt and acquisitions under capital lease agreements are reported as other financing sources. Under the terms of grant agreements, the County funds certain programs by a combination of grants and general revenues. Therefore, when program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. The County applies grant resources to such programs before using general revenues. The County's business- type activities and enterprise fund 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. The County has chosen the option not to follow FASB Statements and Interpretations issued after November 30, 1989. D. Cash and Investments For purposes of its statement of cash flows, the County considers only those highly liquid investments with a maturity of 3 months or less when purchased to be cash equivalents. Money market investments are stated at amortized cost. All other investments are stated at fair value. 26 Notes to Financial Statements - Continued E. Inventories Purchases of inventory items are recorded at the time of purchase as expenditures in the funds from which the purchases were made, and because the amounts on hand at June 30, 2004, were immaterial, they are not included in the Statements of Net Assets or the Balance Sheet. F. Property Tax Calendar The County levies real property taxes on or before the third Monday in August that become due and payable in two equal installments. The first installment is due on the first day of October and becomes delinquent after the first business day of November. The second installment is due on the first day of March of the next year and becomes delinquent after the first business day of May. During the year, the County also levies various personal property taxes that are due the second Monday of the month following receipt of the tax notice and become delinquent 30 days later. A lien assessed against real and personal property attaches on the first day of January preceding assessment and levy. G. Capital Assets Capital assets 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 government- wide statements and enterprise fund are as follows: Land Construction in progress Land improvements Infrastructure Buildings and improvements Improvements other than buildings Machinery and equipment Golf course and improvements 27 Capitalization Threshold All All $ 5,000 5,000 5,000 1,000 1,000 1,000 Depreciation Method N/ A N/ A Straight- line Straight- line Straight- line Straight- line Straight- line Straight- line Estimated Useful Life N/ A N/ A 10- 30 years 25- 50 years 25- 50 years 7- 30 years 5- 20 years 30 years Note 2 - Notes to Financial Statements - Continued H. Investment Income Investment income is composed of interest, dividends, and net changes in the fair value of applicable investments. 1. Compensated Absences Compensated absences consist of vacation leave and a calculated amount of sick leave earned by employees based on services already rendered. Employees may accumulate up to 160 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. Upon termination of employment, all unused and unforfeited vacation benefits are paid to employees. Accordingly, vacation benefits are accrued as a liability in the financial statements. Employees may accumulate an unlimited number of sick leave hours. Generally, sick leave benefits provide for ordinary sick pay and are cumulative but are forfeited upon termination of employment. However, employees who accumulate unused sick leave in excess of 384 hours are paid a percentage of the excess unused sick leave based on the number of years of consecutive service with the County; therefore, the excess sick leave is accrued. J. Reclassifications During 2004, certain changes were made to the classification of certain revenues and expenses/ expenditures from the prior year presentation. These changes had no effect on the County's beginning net assets or fund balances. Stewardship, Compliance, and Accountability Eleven General Fund departments and the Jail District Fund had an excess of actual expenditures over appropriations. General Fund departments with expenditures in excess of appropriations are caused mainly by excess expenditures for which budget modifications were not made. In total, the County's General Fund did not have expenditures in excess of appropriations since the County budgeted significant expenditures for the contingency department and no budget modifications were made. The Jail District Fund's excess of expenditures over appropriations occurred due to variable costs exceeding original expectations and these costs were funded by greater than anticipated charges for services. To avoid similar future overruns, the County analyzed the line items resulting in greater that anticipated costs to determine whether such costs will be recurring and adjusted its 2005 budget accordingly. 28 Notes to Financial Statements - Continued Deficit fund balances or net assets- At June 30, 2004, the following funds reported significant deficits greater than $ 5,000 in fund balances or net assets: Fund Governmental funds: Bio Terrorism ACJC Drug Enforcement Growing Smarter Planning Grant CmF Contract Sheriff Undesignated Fund SLIF Project Boats AORCC Boat Patrol Grant CA Rico HIDTA Grant Highway Safety Grant Criminal Justice Enhancement Park Grants Task Force Prosecutor WIA Year 1 County Racketeering Cops in School La Paz Extension Fund Rabies Control Capital Projects Fund CDBG Grant Parker Library Emergency Services DES Child Support Program Bill Williams REC Angling La Paz County Park Health Department Enterprise fund: La Paz County Golf Course Deficit $ 6,598 6,899 7,755 13,934 15,715 18,787 20,045 23,854 27,600 28,897 35,127 36,216 45,500 47,460 51,537 58,973 61,185 65,854 72,863 76,590 80,915 85,962 90,331 97,875 123,658 279,722 383,774 The above fund deficits resulted from the operations during the year or carryovers from prior years and are expected to be corrected through normal operations in the future. 29 Note 3 - Notes to Financial Statements - Continued Deposits and Investments Arizona Revised Statutes ( A. R. S.) authorize the County to invest public monies in the State Treasurer's investment pool; U. S. Treasury obligations; specified state and local government bonds; and interest- earning investments such as savings accounts, certificates of deposit, and repurchase agreements in eligible depositories. The statutes require collateral for demand deposits, certificates of deposit, and repurchase agreements at 101 percent of all deposits not covered by federal depository insurance. County Treasurer's Investment Pool- Arizona Revised Statutes require community colleges, school districts, and other local governments to deposit certain public monies with the County Treasurer. Those monies are pooled with County monies for investment purposes. Deposits- At June 30, 2004, the carrying amount of the investment pool's total cash in bank was $ 3,504,035, and the bank balance was $ 3,525,922. Ofthe bank balance, $ 100,000 was covered by federal depository insurance and $ 3,425,922 was covered by collateral held by the pledging financial institution's trust department or agent in the County's name. Investments- At June 30, 2004, the investments in the County Treasurer's investment pool consisted of the following: Fair Value Investment in State Treasurer's investment pool $ 19,357,723 The State Board of Investment 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. Those shares are not identified with specific investments and are not subject to custodial credit risk. Other deposits- At June 30, 2004, the total nonpooled cash on hand was $ 2,720. The carrying amount of the County's total nonpooled cash in bank was $ 820,245, and the bank balance was $ 865,122. Of the bank balance, $ 209,207 was covered by federal depository insurance or by collateral held by the County or its agent in the County's name and $ 655,915 was covered by collateral held by the pledging financial institution's trust department or agent in the County's name. 30 Notes to Financial Statements - Continued Other investments- At June 30, 2004, the County's nonpooled investments consisted of the following: u. s. government securities Total Fair Value $ 1,035,949 $ 1.035,949 These investments were uninsured and unregistered with securities held by the counterparty or by its trust department or agent, but not in the County's name. A reconciliation of cash and investments to amounts shown on the Statement of Net Assets follows: Cash and investments: Cash on hand Carrying amount of deposits Reported amount of investments Total Statement ofNet Assets: Cash and cash equivalents Cash and investments held by trustee Total County Treasurer's Investment Pool $ 3,504,035 19,357,723 $ 22,861.758 Total Primary Government $ 9,067,666 1,035,949 $ 10,103,615 Other $ 2,720 820,245 1,035,949 $ 1.858,914 Total Fiduciary Funds $ 14,617,057 $ 14,617,057 Total $ 2,720 4,324,280 20,393,672 $ 24,720,672 Total $ 23,684,723 1,035,949 $ 24,720,672 Note 4- Condensed Financial Statements of County Treasurer's Investment Pool A. R. S. require community colleges, school districts, and other local governments to deposit certain public monies with the County Treasurer. The Treasurer has a fiduciary responsibility to administer those and the County monies under her stewardship. The Treasurer invests, on a pool basis, all idle monies not specifically invested for a fund or program. In addition, the Treasurer determines the fair value of those pooled investments annually at June 30. 31 Notes to Financial Statements - Continued The County Treasurer's investment pool is not registered with the Securities and Exchange Commission as an investment company, and there is no regulatory oversight of its operations. The pool's structure does not provide for shares, and the County has not provided or obtained any legally binding guarantees to support the value of the participants' investments. Details of each major investment classification follow: Investment Type State Treasurer's Investment Pool Principal $ 19,357,723 Interest Rate( s) No stated interest rate Maturities No stated maturity Fair Value $ 19,357,723 A condensed statement of the investment pool's net assets and changes in net assets follows: Statement of Net Assets Assets Net assets Net assets held in trust for: Internal participants External participants Total net assets held in trust Statement of Changes in Net Assets Total additions Total deductions Net decrease Net assets held in trust: July 1,2003 June 30, 2004 32 $ 21,983,492 $ 21.983.492 $ 8,315,344 13,668,148 $ 21.983.492 $ 53,854,746 56,613,494 ( 2,758,748) 24,742,240 $ 21.983.492 Notes to Financial Statements - Continued Note 5 - Capital Assets Capital asset activity for the year ended June 30, 2004, was as follows: Primary Government Balance Balance June 30, July 1,2003 Increases Decreases 2004 Governmental activities: Capital assets not being depreciated: Land $ 630,070 $ $ $ 630,070 Construction in progress 1,034,168 147,886 691,498 490,556 Total capital assets, not being depreciated 1,664,238 147,886 691,498 1,120,626 Capital assets being depreciated: Land improvements 49,302 49,302 Buildings and improvements 9,413,450 1,096,114 10,509,564 Improvements other than buildings 341,075 164,803 505,878 Machinery and equipment 11,649,935 502,106 162,577 11,989,464 Infrastructure 848,467 848,467 Total 21,453,762 2,611,490 162,577 23,902,675 Less accumulated depreciation for: Land improvements 17,830 1,739 19,569 Buildings and improvements 1,903,503 274,940 2,178,443 Improvements other than buildings 159,074 32,264 191,338 Machinery and equipment 7,309,625 1,064,171 162,577 8,211,219 Infrastructure 18,184 18,184 Total 9,390,032 1,391,298 162,577 10,618,753 Total capital assets being depreciated, net 12,063,730 1,220,192 13,283,922 Governmental activities capital assets, net $ 13,727,968 $ 1.368,078 $ ( 691.498) $ 14.404,548 33 Notes to Financial Statements - Continued Primary Government Balance Balance June 30, July 1,2003 Increases Decreases 2004 Business- type activities: Capital assets being depreciated: Golf course and improvements $ 2,853,632 $ 298 $ $ 2,853,930 Machinery and equipment 837,968 78,701 62,636 854,033 Total 3,691,600 78,999 62,636 3,707,963 Less accumulated depreciation for: Golf course and improvements 1,281,138 96,643 1,377,781 Machinery and equipment 624,910 61,124 50,096 635,938 Total 1,906,048 157,767 50,096 2,013,719 Business- type activities capital assets, net $ 1.785,552 $( 78,768) $ 12,540 $ 1,694,244 Depreciation expense was charged to functions as follows: Governmental activities: General government Public safety Highways and streets Welfare Health Culture and recreation Education Total governmental activities depreciation expense Business- type activities: Golf course Total business- type activities depreciation expense 34 $ $ $ $ 257,974 425,342 581,798 26,058 7,677 91,241 1,208 1.391.298 157,767 157,767 Notes to Financial Statements - Continued Note 6- Long- Term Liabilities The following schedule details the County's long- term liability and obligation activity for the year ended June 30, 2004: Balance Balance Due within July 1,2003 Additions Reductions June 30, 2004 1 year Governmental activities Certificates of participation payable $ 2,495,000 $ $ 305,000 $ 2,190,000 $ 415,000 Obligations under capital leases 33,144 34,294 11,418 56,020 22,929 Compensated absences payable 425,633 931,335 702,967 654,001 196,202 Estimated liabilities for claims and judgments 229,626 201,450 28,176 Governmental activities long- term liabilities $ 3,183.403 $ 965,629 $ 1.220,835 $ 2,928,197 $ 634,131 Business- type activities Certificates of participation payable $ 1,705,000 $ $ 95,000 $ 1,610,000 $ 270,000 Compensated absences payable 32,595 81,852 47,197 67,250 20,175 Business- type activities long- term liabilities $ 1.737,595 $ 81.852 $ 142,197 $ 1.677.250 $ 290,175 Certificates of participation- The County has issued certificates of participation that are generally callable with interest payable semiannually to finance construction of the courthouse and government center complex, the jail facility, and the Emerald Canyon golf course. Certificates outstanding at June 30, 2004, were as follows: Original Maturity Interest Outstanding Description Amount Ranges Rates Principal Courthouse and government center complex - 2003 refunding $ 1,165,000 2004 - 2009 2.00 - 3.00% $ 1,095,000 Jail facility - series 2003 refunding 1,330,000 2004 - 2009 2.00 - 3.00% 1,095,000 Emerald Canyon GolfCourse - series 2003 refunding 1,705,000 2004 - 2009 2.00- 3.00% 1,610,000 $ 3,800,000 35 Business- Type Activities Notes to Financial Statements - Continued The following schedule details debt service requirements to maturity for the County's certificates of participation payable at June 30, 2004: Governmental Activities Year Ending June 30 Principal Interest Principal Interest 2005 $ 415,000 $ 50,238 $ 270,000 $ 35,138 2006 425,000 41,887 275,000 29,687 2007 430,000 32,562 280,000 23,788 2008 440,000 22,830 290,000 17,375 2009 480,000 13,175 495,000 13,056 Total $ 2,190,000 $ 160,692 $ 1.610,000 $ 119,044 In prior years, the County defeased certain certificates of participation by placing the proceeds of new certificates of participation in an irrevocable trust to provide resources for all future debt service payments on the old debt. The refunded debt is considered defeased and the related liabilities are not included in the County's financial statements. During the year ended June 30, 2004, the remaining balance of the outstanding refunded certificates of participation were repaid. Landfill closure and postclosure care costs- The County has contracted with an outside agency to provide operations for its solid waste facilities. The contract requires the outside agency to reserve funds in accordance with the closure plan for closure and postclosure care costs. In the event of termination of the contract, the required reserve funds are to be remitted to the County. Consequently, no liability for landfill closure and postclosure care costs has been recorded on the Statement of Net Assets. Insurance claims- The County provides life, health, and disability benefits to its employees and their dependents through the Arizona Local Government Employee Benefit Trust currently composed of six member counties. The Trust provides the benefits through a self- funding agreement with its participants and administers the program. The County is responsible for paying the premium and may require its employees to contribute a portion of that premium. If it withdraws from the Trust, the County is responsible for any claims run- out costs, including claims reported but not settled, claims incurred but not reported, and administrative costs. If the Trust were to terminate, the County would be responsible for its proportional share of any Trust deficit. Compensated absences and claims and judgments- Compensated absences are paid from various funds in the same proportion that those funds pay payroll costs. Claims and judgments are generally paid from the fund that accounts for the activity that gave rise to the claim. During fiscal year 2004, the County paid for compensated absences as follows: 49 percent from the General Fund, 5 percent from the Road Fund, 13 percent from the Jail District Fund, 13 percent from the Enterprise Fund, and 20 percent from the other funds. The County paid for claims and judgments from the General Fund. 36 Note 7- Note 8 - Notes to Financial Statements - Continued Risk Management The County 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; but was unable to obtain insurance at a cost it considered to be economically justifiable. Therefore, the County joined and is covered by three public entity risk pools: the Arizona Counties Property and Casualty Pool and the Arizona Counties Workers' Compensation Pool, which are described below, and the Arizona Local Government Employee Benefit Trust, which is described above. The Arizona Counties Property and Casualty Pool is a public entity risk pool currently composed of 11 member counties. The pool provides member counties catastrophic loss coverage for risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters; and provides risk management services. Such coverage includes all defense costs as well as the amount of any judgment or settlement. The County is responsible for paying a premium, based on its exposure in relation to the exposure of the other participants, and a deductible of $ 5,000 per occurrence for property claims and $ 5,000 per occurrence for liability claims. The County is also responsible for any payments in excess of the maximum coverage of $ 100 million per occurrence for property claims and $ 10 million per occurrence for liability claims. A County must participate in the pool at least 3 years after becoming a member; however, it may withdraw after the initial 3- year period. If the pool were to become insolvent, the County would be assessed an additional contribution. The Arizona Counties Workers' Compensation Pool is a public entity risk pool currently composed of 11 member counties. The pool provides member counties with workers' compensation coverage, as required by law, and risk management services. The County is responsible for paying a premium, based on an experience rating formula that allocates pool expenditures and liabilities among the members. The Arizona Counties Property and Casualty Pool and the Arizona Counties Workers' Compensation Pool receive independent audits annually and an audit by the Arizona Department of Insurance triennially. Both pools accrue liabilities for losses that have been incurred but not reported. These liabilities are determined annually based on an independent actuarial valuation. Retirement Plans Plan Descriptions- The County contributes to the three plans described below. Benefits are established by state statute and generally provide retirement, death, long- term disability, survivor, and health insurance premium benefits. 37 Notes to Financial Statements - Continued The Employee Security Plan ( ESP) is a defined contribution plan administered by Massachusetts Mutual Life Insurance Company that covers all permanent full- time employees of the County except for participants in the Public Safety Personnel Retirement System and the Elected Officials Retirement Plan. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. The Public Safety Personnel Retirement System ( PSPRS) is an agent multiple- employer defined benefit pension plan that covers public safety personnel who are regularly assigned hazardous duty as employees of the State of Arizona or one of its political subdivisions. The PSPRS, acting as a common investment and administrative agent, is governed by a five- member board, known as The Fund Manager, and 199 local boards according to the provisions ofA. R. S. Title 38, Chapter 5, Article 4. The Elected Officials Retirement Plan ( EaRP) is a cost- sharing multiple- employer defined benefit pension plan that covers elected officials and judges of certain state and local governments. The EORP is governed by The Fund Manager of PSPRS according to the provisions ofA. R. S. Title 38, Chapter 5, Article 3. Each plan issues a publicly available financial report that includes its financial statements and required supplementary information. A report may be obtained by writing or calling the applicable plan. ESP 1295 State Street Springfield, MA 01111 ( 413) 788- 8411 PSPRS and EORP 3010 E. Camelback Road, Suite, 200 Phoenix, AZ 85016 ( 602) 255- 5575 Funding Policy- The Arizona State Legislature establishes and may amend active plan members' and the County's contribution rates for the PSPRS and EORP plans. ESP- All employees under this plan were allowed to select a contribution rate of 6 to 10 percent. The plan also requires that the County contribute an amount equal to 6 percent of the employees' compensation for employees with service of 4 years or less, 8 percent for employees with service of at least 4 years but less than 7 years, and 10 percent for employees with service greater than 7 years. Both the County and covered employees made the required contributions of 6 to 10 percent amounting to contributions of $ 525,103 by the County and $ 870,963 by covered employees. Agent plan- For the year ended June 30, 2004, active PSPRS members were required by statute to contribute 7.65 percent of the members' annual covered payroll, and the County was required to contribute at the actuarially determined rate of 14.11 percent. 38 Notes to Financial Statements - Continued Cost- sharing plan- For the years ended June 30, 2004, 2003 and 2002, active EORP members were required by statute to contribute 7 percent of the members' annual covered payroll. During the years ended June 30, 2004, 2003 and 2002, employee contributions to the plan were $ 54,597, $ 54,519 and $ 53,966, respectively, which equaled the required contributions for the year. The County was required to contribute 6 percent of the members' covered payroll during 2004 and there were no required contributions for 2003 and 2002. The County's contributions to EORP for the years ended June 30, 2004, 2003 and 2002 were $ 46,798, $ 0 and $ 0, which equaled the required contributions for the year. Annual Pension Cost- The County's pension cost for the agent plan for the year ended June 30, 2004, and related information follows: PSPRS Contribution rates: County Plan members Annual pension cost Contributions made 14.11% 7.65% $ 164,042 $ 164,042 The current- year annual required contribution for the PSPRS was determined as part of their June 30, 2002, actuarial valuations using the entry- age actuarial cost method. The actuarial assumptions included ( a) 9 percent investment rate of return and ( b) projected salary increases ranging from 6.5 percent to 9.5 percent per year. Both ( a) and ( b) included an inflation component of 5.5 percent. The assumptions did not include cost- of- living adjustments. The actuarial value of assets was determined using techniques that smooth the effects of short- term volatility in the market value of investments over a 4- year period. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2002, was 20 years. Trend Information- Annual pension cost information for the current and two preceding years follows for the agent plan: Plan PSPRS Year Ended June 30 2004 2003 2002 Annual Pension Cost ( APC) $ 164,042 99,177 116,995 39 Percentage of APC Contributed 100% 100% 100% Net Pension Obligation $ 0 oo Note 9- Notes to Financial Statements - Continued Interfund Balances and Activity Interfund receivables and payables- Interfund balances at June 30, 2004, were as follows: Payable To Jail Nonmajor General Road District Governmental Fund Fund Fund Funds Total Payable from General Fund $ 211 $ 26,730 47,971 $ 17,549 $ 92,461 Road Fund 226,339 226,339 Jail District Fund 255,538 3,554 259,092 Nonmajor Governmental Funds 348,100 5,953 157,149 511,202 Golf Course Fund 871,633 656 120 872,409 Total $ 1.701.821 $ 36,893 $ 47,971 $ 174,818 $ 1.961.503 Interfund balances resulted from the time lag between the dates that ( l) interfund goods and services are provided or reimbursable expenditures occur, ( 2) transactions are recorded in the accounting system, and ( 3) payments between funds are made. Except for interfund balances between the Golf Course Fund and the General Fund, all interfund balances are expected to be repaid within 1 year from the date of the financial statements. Interfund transfers- Interfund transfers for the year ended June 30, 2004, were as follows: Transfer To Nonmajor General Governmental Fund Funds Total Transfer from General Fund $ - $ 3,750 $ 3,750 Jail District Fund 92,500 92,500 Golf Course Fund 1,124 1,124 Total $ 93,624 $ 3,750 $ 97,374 Transfers were used to ( l) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, and ( 2) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. Note 10 - Subsequent Event In September 2007, the County, the plaintiff in a lawsuit against an out- of- state company regarding a contractual agreement, lost a counter suit filed by the company against the County. The jury awarded the company $ 9.2 million in damages and the County intends to appeal the verdict. Based on the nature of the lawsuit, a contractual matter, the County's insurance does not cover losses related to the matter. Management and legal counsel intend to vigorously defend the County's position. No provision has been made in the 2004 basic financial statements for any loss that may be incurred as the events leading to the defendant's claim and the related suit occurred subsequent to year- end. 40 Required Supplementary Information La paz County Required Supplementary Information Schedule of Agent Retirement Plan's Funding Progress June 30, 2004 Public Safety Penonnel Retirement System Unfunded Actuarial Actuarial Funding Annual Liability as Actuarial Value Accrued ( Liability) Funded Covered Percentage Valuation ofPlan Assets Liability Excess Ratio Payroll of Covered Payroll nate ( a) ( b) ( a- b) ( alb) ( c) ([ a- b]/ c) 06/ 30104 $ 5,151,913 $ 6,204,379 $ ( 1,052,466) 83.0% $ 1,444,771 72.8% 06/ 30103 5,145,450 5,765,572 ( 620,122) 89.2% 1,398,063 44.4% 06/ 30102 5,250,603 5,391,985 ( 141,382) 97.4% 1,290,428 11.0% 41 La paz County Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2004 Original and Final Budgeted Amounts Actual Amounts Variance with Final Budget Revenues: Taxes Licenses and permits Fees, fmes, and forfeits Intergovernmental Charges for services Investment income Miscellaneous Total revenues Expenditures: Current: General government Assessor County attorney Board of supervisors Clerk of the superior court Constable Elections Justice ofthe Peace # 4 Justice ofthe Peace # 5 Justice of the Peace # 6 Planning and zoning Recorder Superior court Treasurer Contingency Management information services Public defender General administration Finance personnel GISlMaster planning Facilities Management Total general government $ 3,399,242 $ 4,408,435 $ 1,009,193 223,000 227,616 4,616 710,000 732,544 22,544 4,095,184 3,531,827 ( 563,357) 535,833 539,911 4,078 64,000 51,779 ( 12,221) 707,479 485,002 ( 222,477) 9,734,738 9,977,114 242,376 362,773 332,793 29,980 503,673 471,827 31,846 462,724 453,857 8,867 297,079 276,855 20,224 1,000 1,978 ( 978) 74,574 39,969 34,605 338,549 339,097 ( 548) 163,710 156,455 7,255 249,070 241,976 7,094 371,731 336,696 35,035 172,867 173,476 ( 609) 394,791 586,479 ( 191,688) 217,356 209,421 7,935 750,000 750,000 124,506 157,033 ( 32,527) 447,551 433,864 13,687 301,021 302,634 ( 1,613) 192,955 184,201 8,754 21,099 10,628 10,471 438,091 414,130 23,961 5,885,120 5,123,369 761,751 See accompanying notes to budgetary comparison schedule. 42 La paz County Required Supplementary Information Budgetary Comparison Schedule General Fund - Continued Year Ended June 30, 2004 Original and Final Budgeted Actual Variance with Amounts Amounts Final Budget Public safety: Regional dispatch $ 497,002 $ 508,592 $ ( 11,590) Sheriff 1,853,497 1,938,269 ( 84,772) Probation 99,043 104,014 ( 4,971) Aircraft 16,850 19,149 ( 2,299) Maintenance of effort 575,653 575,653 Juvenile probation 87,356 70,746 16,610 Total public safety 3,129,401 3,216,423 ( 87,022) Sanitation: Sanitary landfill 10,000 2,879 7,121 Total sanitation 10,000 2,879 7,121 Health: Indigent health 434,130 201,630 232,500 County long term care ALTCS 731,997 553,373 178,624 C. M.! ( chronically mental ill) 116,850 17,240 99,610 Health department transit 92,064 128,191 ( 36,127) Total health 1,375,041 900,434 474,607 Welfare: Public fiduciary 93,229 90,960 2,269 Total welfare 93,229 90,960 2,269 Education: School superintendent 153,662 152,177 1,485 Total education 153,662 152,177 1,485 Total expenditures 10,646,453 9,486,242 1,160,211 Excess ( deficiency) of revenues over expenditures ( 911,715) 490,872 1,402,587 See accompanying notes to budgetary comparison schedule. 43 La paz County Required Supplementary Information Budgetary Comparison Schedule General Fund - Continued Year Ended June 30, 2004 Original and Final Budgeted Actual Variance with Amounts Amounts Final Budget Other fmancing sources ( uses): Capital lease agreements $ 34,293 $ 34,293 Transfers in 93,624 93,624 Transfers out $ ( 486,916) ( 3,750) 483,166 Total other fmancing sources ( uses) ( 486,916) 124,167 611,083 Net change in fund balances ( 1,398,631) 615,039 2,013,670 Fund balances, July 1,2003 1,398,631 3,385,707 1,987,076 Fund balances, June 30, 2004 $ $ 4,000,746 $ 4,000,746 See accompanying notes to budgetary comparison schedule. 44 La paz County Required Supplementary Information Budgetary Comparison Schedule Road Fund Year Ended June 30, 2004 Original and Final Budgeted Actual Variance with Amounts Amounts Final Budget Revenues: Taxes $ 1,097,000 $ 498,571 $ ( 598,429) Intergovernmental 3,140,000 3,456,054 316,054 Investment income 31,000 23,441 ( 7,559) Miscellaneous 54,219 54,219 Total revenues 4,268,000 4,032,285 ( 235,715) Expenditures: Current: Highways and streets 5,784,112 4,236,055 1,548,057 Total expenditures 5,784,112 4,236,055 1,548,057 Net change in fund balances Fund balances, July 1,2003 Fund balances, June 30, 2004 ( 1,516,112) ( 203,770) 1,516,112 2,259,572 $ $ 2,055,802 1,312,342 743,460 $ 2,055,802 See accompanying notes to budgetary comparison schedule. 45 La paz County Required Supplementary Information Budgetary Comparison Schedule Business 95 Road Improvement Fund Year Ended June 30, 2004 Revenues Total revenues Expenditures: Current: Highways and streets Total expenditures Net change in fund balances Fund balances, July 1, 2003 Fund balances, June 30, 2004 Original and Final Budgeted Amounts $ 300,000 300,000 ( 300,000) 300,000 $ Actual Amounts $ 108,606 108,606 ( 108,606) 3,355,202 $ 3,246,596 Variance with Final Budget $ 191,394 191,394 191,394 3,055,202 $ 3,246,596 See accompanying notes to budgetary comparison schedule. 46 La paz County Required Supplementary Information Budgetary Comparison Schedule Jail District Fund Year Ended June 30, 2004 Original and Final Budgeted Actual Variance with Amounts Amounts Final Budget Revenues: Taxes $ 855,000 $ 1,049,212 $ 194,212 Intergovernmental 575,653 279,032 ( 296,621) Charges for services 1,400,000 1,871,294 471,294 Investment income 15,500 1,360 ( 14,140) Miscellaneous 260 260 Total revenues 2,846,153 3,201,158 355,005 Expenditures: Current: Public safety 2,395,574 2,572,567 ( 176,993) Debt Service: Principal retirement 359,085 235,000 124,085 Interest and fiscal charges 20,717 ( 20,717) Total expenditures 2,754,659 2,828,284 ( 73,625) Excess ofrevenues over expenditures 91,494 372,874 281,380 Other fmancing uses: Transfers out ( 92,500) ( 92,500) Total other fmancing uses ( 92,500) ( 92,500) Net change in fund balances 91,494 280,374 188,880 Fund balances, July 1,2003 ( 91,494) 84,933 176,427 Fund balances, June 30, 2004 $ $ 365,307 $ 365,307 See accompanying notes to budgetary comparison schedule. 47 La paz County Required Supplementary Information Notes to Budgetary Comparison Schedules June 30, 2004 Note 1 - Budgeting and Budgetary Control A. R. S. require the County to prepare and adopt a balanced budget annually for each governmental fund. The Board of Supervisors must approve such operating budgets on or before the third Monday in July to allow sufficient time for the legal announcements and hearings required for the adoption of the property tax levy on the third Monday in August. A. R. S. prohibit expenditures or liabilities in excess of the amounts budgeted. Expenditures may not legally exceed appropriations at the department level. In certain instances, transfers of appropriations between departments or from the contingency account to a department may be made upon the Board of Supervisors' approval. With the exception of the General Fund, each fund includes only one department. Capital outlay and debt service expenditures are budgeted by department and accumulated by function on the Budgetary Comparison Schedule. Note 2 - Budgetary Basis of Accounting The County's budget is prepared on a basis consistent with generally accepted accounting principles. Note 3 - Expenditures in Excess of Appropriations For the year ended June 30, 2004, expenditures exceeded final budget amounts at the department level ( the legal level of budgetary control) as follows: Fund/ Department General Fund: Constable Justice ofthe Peace # 4 Recorder Superior Court Management information services General administration Regional dispatch Sheriff Probation Aircraft Health department transit Jail District Fund Excess $ 978 548 609 191,688 32,527 1,613 11,590 84,772 4,971 2,299 36,127 73,625 The excesses were primarily the result of unexpected expenditures and expenditures made as a result of unanticipated revenues, or both. 48 |