Basic financial statements / La Paz County, Arizona for the year ended June 30, ...

              La Paz County, Arizona
Basic Financial Statements
_______________
Year ended June 30, 2011
Table of Contents
Page
Independent Auditors’ Report ............................................................................................. 1-2
Management’s Discussion and Analysis (Required Supplementary Information) .......... 3-12
Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Assets ................................................................................................ 13
Statement of Activities ................................................................................................. 14
Fund Financial Statements:
Governmental Funds:
Balance Sheet ......................................................................................................... 15
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets .............................................................................. 16
Statement of Revenues, Expenditures, and Changes in
Fund Balances ...................................................................................................... 17
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmental Funds to the
Statement of Activities .......................................................................................... 18
Proprietary Fund:
Statement of Net Assets .......................................................................................... 19
Statement of Revenues, Expenses, and Changes in Fund Net Assets ...................... 20
Statement of Cash Flows ...................................................................................21-22
Fiduciary Funds:
Statement of Fiduciary Net Assets .......................................................................... 23
Statement of Changes in Fiduciary Net Assets ........................................................ 24
Table of Contents – Continued
Page
Notes to Financial Statements ...........................................................................................25-52
Other Required Supplementary Information:
Schedule of Agent Retirement Plan’s Funding Progress .......................................... 53
Budgetary Comparison Schedule – General Fund ..............................................54-56
Budgetary Comparison Schedule – Road Fund ....................................................... 57
Budgetary Comparison Schedule – Jail District Fund ............................................. 58
Notes to Budgetary Comparison Schedules............................................................. 59
Independent Auditors’ Report
The Auditor General of the State of Arizona
The Board of Supervisors of
La Paz County, Arizona
We have audited the accompanying financial statements of the governmental activities, business-type
activities, each major fund, and aggregate remaining fund information of La Paz County as of
and for the year ended June 30, 2011, which collectively comprise the County’s basic financial
statements as listed in the table of contents. 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 U.S. generally accepted auditing standards and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, business-type activities, each major
fund, and aggregate remaining fund information of La Paz County as of June 30, 2011, and the
respective changes in financial position and, where applicable, cash flows thereof for the year then
ended in conformity with U.S. generally accepted accounting principles.
As described in Note 1, the County implemented the provisions of the Governmental Accounting
Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type
Definitions, for the year ended June 30, 2011, which represents a change in accounting principle.
The Management’s Discussion and Analysis on pages 3 through 12, the Budgetary Comparison
Schedules on pages 54 through 59, the Schedule of Agent Retirement Plans’ Funding Progress on
page 53 are not required parts of the basic financial statements, but are supplementary information
required by the Governmental Accounting Standards Board. We have applied certain limited
1
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.
In connection with our audit, nothing came to our attention that caused us to believe that the
County failed to use highway user revenue fund monies received by the County pursuant to
Arizona Revised Statutes Title 28, Chapter 18, Article 2, and any other dedicated state
transportation revenues received by the County solely for the authorized transportation purposes.
However, our audit was not directed primarily toward obtaining knowledge of such
noncompliance.
In accordance with Government Auditing Standards, we have also issued our report dated
February 18, 2013, on our consideration of the County’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. 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 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.
This report is intended solely for the information and use of the members of the Arizona State
Legislature, the Auditor General of the State of Arizona, the Board of Supervisors, management,
and others within the County and is not intended to be and should not be used by anyone other than
these specified parties. However, this report is a matter of public record, and its distribution is not
limited.
Phoenix, Arizona
February 18, 2013
2
Management’s Discussion and Analysis
La Paz County
Management’s Discussion and Analysis
June 30, 2011
3
This discussion and analysis, prepared by La Paz County’s (the “County”) management, is intended to
be an easily readable analysis of the County’s financial activities based on currently known facts,
decisions or conditions during the fiscal year ended June 30, 2011. 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 total assets exceeded liabilities by $56,421,775 (net assets). Of this amount,
$16,169,560 is a deficit in unrestricted net assets, $5,491,624 is restricted for specific purposes
(restricted net assets), and $67,099,711 is invested in capital assets, net of related debt.
• The County’s total net assets as reported in the Statement of Activities decreased by $1,397,445
in comparison to the prior year’s decrease in total net assets of $7,079,284.
• At June 30, 2011, the governmental funds reported combined fund balances of $4,587,462, a
decrease of $955,862 in comparison with the prior year. The components of fund balances
consist of $293,993 that is nonspendable, $7,465,299 that is restricted or committed for specific
purposes and $3,171,830 that is an accumulated deficit. As further discussed in Note 8 to the
financial statements, the County’s overall financial condition continues to be compromised due
to the ongoing litigation in connection with a judgment against the County that was settled in
September 2011.
• At June 30, 2011 the unassigned fund balance for the General Fund was $764,558 or 5.9% of
General Fund expenditures. In accordance with Arizona Revised Statutes §42-17151, this entire
amount is budgeted to be expended in the next fiscal year.
Overview of the 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 of Net 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 of whether the financial position of the County is improving or deteriorating.
The Statement of Activities 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).
Management’s Discussion and Analysis - Continued
4
Overview of the Financial Statements - Continued
Both of these government-wide financial statements distinguish functions of the County that are
principally supported by taxes and intergovernmental revenues (governmental activities) 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
two business-type activities consisting of the Emerald Canyon Golf Course and the La Paz County Park.
The County Park was reclassified from the nonmajor governmental fund type to a major enterprise fund
type during the 2011 fiscal year.
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 street lighting districts that are also component units. Refer to Note 1 A,
Reporting Entity, on page 25 of this report for more information on the County’s component units.
The government-wide financial statements can be found on pages 13-14 of this 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: governmental funds, proprietary
funds, and fiduciary funds.
Governmental funds 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 governmental funds 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 balances for the General, Road, Jail District and Business 95 Road Improvement
funds. Data from the other governmental funds (non-major) are combined into a single, aggregated
presentation.
Management’s Discussion and Analysis - Continued
5
Overview of the Financial Statements - Continued
The governmental fund financial statements can be found on pages 15-18 of this report.
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 enterprise funds to account
for the Emerald Canyon Golf Course and the County Parks fund. Fund financial statements for the
enterprise funds provide the same type of information as the government-wide financial statements, only
in more detail.
The enterprise fund financial statements can be found on pages 19-22 of this report.
Fiduciary funds 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 be found on pages 23-24 of this 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 be found on pages 25-52 of this 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 for the County’s Public Safety Personnel Retirement System.
Required supplementary information can be found on pages 53-59 of this 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, improvements, machinery and equipment, and infrastructure), less accumulated depreciation
and related outstanding debt used to acquire those assets. 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 outstanding 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 may be used to meet the government’s ongoing
obligations to the citizens and creditors.
Management’s Discussion and Analysis - Continued
6
Government-Wide Financial Analysis - Continued
The following table summarizes the Statement of Net Assets at June 30, 2011 and 2010:
2011 2010 2011 2010
Governmental
Activities
Governmental
Activities
(as restated)
Business-
Type
Activities
Business-
Type
Activities
(as restated) 2011 Total
2010 Total
(as restated)
Current and other assets $ 7,184,696 $ 7 ,881,643 $ (618,737) $ (701,446) $ 6,565,959 $ 7,180,197
Capital assets 68,435,259 6 9,484,821 1 ,879,650 2 ,103,388 70,314,909 71,588,209
Total assets 75,619,955 7 7,366,464 1 ,260,913 1 ,401,942 76,880,868 78,768,406
Other liabilities 2,415,841 2,171,149 101,997 139,596 2,517,838 2 ,310,745
Long-term liabilities 17,824,378 1 8,528,175 116,877 110,266 17,941,255 18,638,441
Total liabilities 20,240,219 2 0,699,324 218,874 249,862 20,459,093 20,949,186
Net assets
Invested in capital assets,
net of related debt 65,220,061 65,929,534 1 ,879,650 2,103,388 67,099,711 68,032,922
Restricted 5,491,624 7,319,081 - - 5,491,624 7 ,319,081
Unrestricted net assets (deficit) (15,331,949) (16,581,475) (837,611) (951,308) (16,169,560) ( 17,532,783)
Total net assets $ 5 5,379,736 $ 56,667,140 $ 1 ,042,039 $ 1 ,152,080 $ 5 6,421,775 $ 5 7,819,220
Note: The 2010 balances were restated for the reclassification of the La Paz County Parks Fund from governmental activities
to business-type activities which resulted from the implementation of GASB Statement No. 54, Fund Balance Reporting and
Governmental Fund Type Definitions.
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 of the County, assets exceeded liabilities by
$56,421,775 at June 30, 2011 which is primarily the result of the County’s investment in long-lived
assets.
While the County’s financial position decreased from prior year, the decrease was not as significant as
that incurred during the 2010 fiscal year. A significant portion of the 2010 fiscal year’s decrease in net
assets pertained to the accrual of over $3 million related to an ongoing litigation involving a judgment
that was settled in September 2011.
Governmental activities current and other assets decreased by $433,217 primarily due to a decrease in
cash and cash equivalents totaling $792,243 which was offset by an increase in amounts due from other
governments. This increase related primarily from amounts due from the state of Arizona pertaining to
a flood clean-up project. The majority of this decrease in cash and cash equivalents resulted from the
incurrence of operating expenditures necessary for basic governmental services that are not offset by
revenues. Current liabilities increased by $244,692 primarily due to an increase in accounts payable,
amounts due to others and accrued salaries, wages and related liabilities.
Governmental activities long-term liabilities decreased by $703,797 primarily due to debt service
payments on notes payable, capital leases and payments made in connection with a judgment liability.
Management’s Discussion and Analysis - Continued
7
Government-Wide Financial Analysis - Continued
Business-type activities incurred a decrease in current and other assets resulting from the change in the
amount due to the General Fund for cumulative operating losses incurred in the Parks Fund.
Changes in Net Assets
The following table indicates the changes in net assets for governmental and business-type activities:
2011 2010 2011 2010 2011 2010
Governmental
Activities
Governmental
Activities
(as restated)
Business-Type
Activities
Business-Type
Activities
(as restated) Total Total
Revenues
Program revenues:
Charges for services $ 5,162,300 $ 5,836,880 $ 2,415,223 $ 2,486,607 $ 7,577,523 $ 8,323,487
Operating grants & contributions 6,121,690 5,316,511 - - 6,121,690 5,316,511
Capital grants & contributions 3,567,555 3,489,353 - - 3,567,555 3,489,353
General revenues:
Property taxes 4,425,543 4,139,711 - - 4,425,543 4,139,711
Share of state sales taxes 1,712,784 1,624,724 - - 1,712,784 1,624,724
Excise tax 2,112,049 2,000,067 - - 2,112,049 2,000,067
Payments in lieu of taxes 1,806,515 1,945,891 - - 1,806,515 1,945,891
Vehicle license tax 543,110 1,078,584 - - 543,110 1,078,584
Share of state lottery - 304,381 - - - 304,381
Investment earnings 3,274 7,042 (140) 999 3,134 8,041
Miscellaneous 393,558 179,588 7,040 2,030 400,598 181,618
Total revenues 25,848,378 25,922,732 2,422,123 2,489,636 28,270,501 28,412,368
Expenses
General government 8,137,045 11,867,678 - - 8,137,045 11,867,678
Public safety 10,311,771 10,359,659 - - 10,311,771 10,359,659
Highways and streets 5,402,814 6,374,904 - - 5,402,814 6,374,904
Sanitation 161,783 64,020 - - 161,783 64,020
Health 2,170,451 2,506,569 - - 2,170,451 2,506,569
Welfare 458,451 580,620 - - 458,451 580,620
Culture and recreation 145,947 141,198 2,397,986 2,319,694 2,543,933 2,460,892
Education 279,012 272,907 - - 279,012 272,907
Interest on long-term debt 202,686 1,004,403 - - 202,686 1,004,403
Total expenses 27,269,960 33,171,958 2,397,986 2,319,694 29,667,946 35,491,652
Change in net assets before transfers (1,421,582) (7,249,226) 24,137 169,942 (1,397,445) (7,079,284)
Transfers 134,178 47,340 (134,178) (47,340) - -
134,178 47,340 (134,178) (47,340) - -
Change in net assets (1,287,404) (7,201,886) (110,041) 122,602 (1,397,445) (7,079,284)
Beginning net assets, as restated 56,667,140 63,869,026 1,152,080 1,029,478 57,819,220 64,898,504
Ending net assets $ 55,379,736 $ 56,667,140 $ 1,042,039 $ 1,152,080 $ 56,421,775 $ 57,819,220
Management’s Discussion and Analysis - Continued
8
Government-Wide Financial Analysis - Continued
As previously discussed, net assets of the governmental activities decreased during the year by
$1,287,404. Total revenues decreased by $74,269, which is primarily from a combination of a $285,832
increase in property taxes while State shared vehicle license tax and state lottery monies decreased by
$839,855. Payments received from the State of Arizona for shared state lottery revenues ceased
altogether during 2011. Governmental activities expenses decreased by $5,823,706 due to continued
cost cutting measures and the previously discussed judgment related expenses/expenditures recognized
in the prior year.
Business-type activities reported a negative unrestricted net deficit balance totaling $837,611. This
resulted primarily from the inclusion of the Parks Fund as a County enterprise fund. This fund has a
beginning unrestricted deficit balance of $310,799d.
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 of the fiscal year. At June 30, 2011,
the County’s governmental funds reported combined fund balances of $4,587,462, a decrease of
$955,862 in comparison with the prior year.
The General Fund is the County’s primary operating fund. At the end of the current fiscal year, fund
balance of the General Fund was $905,362. Total General Fund revenue decreased by $453,693
primarily due to a decrease in the County’s share of vehicle license tax and a decrease in State shared
lottery revenue. General Fund expenditures increased by $59,914.
Overall salaries, wages and related personnel costs decreased by $805,317 from the prior year while
generally, there were reductions in other operating expenditures. The expenditures of other
governmental funds decreased by $1,970,242 in which $743,704 is attributable to the reclassification of
the Parks Fund from an other governmental fund type to an enterprise fund type. The remaining
decrease is largely due to a decrease in salaries, wages and related expenditures due to cost cutting
measures.
The Road Fund, a major County Fund is used for various road projects within the County and had an
overall decrease in expenditures totaling $417,262 due to a decrease in repair and rehabilitation of
various County roads and streets.
The Jail District Fund, also a major County fund, is used to report the activity of the County jail. During
2011, the Fund’s overall revenues decreased by $48,387 from 2010 because of a continued decrease in
revenues related to inmate housing activity while expenditures decreased by $35,720 from the prior
year. The Fund also made transfers of $550,000 to the County's General Fund.
Management’s Discussion and Analysis - Continued
9
Financial Analysis of the County’s Funds - Continued
The Business 95 Road Improvement Fund had an increase in expenditures totaling $261,492 from the
prior year pertaining to an increase in expenditures for repairs and maintenance on the Business 95
Highway.
The Other Governmental funds had a decrease in revenues totaling $440,514 in which the largest
component of that decrease was the reclassification of the County Parks Fund from the other
governmental fund type to the enterprise fund type. Intergovernmental revenues increased in the other
governmental funds by $329,344 primarily from funding received in connection with a flood restoration
project.
The Golf Course Fund is an enterprise fund of the County that had a decrease in revenues totaling
$121,478 due to less golf fees earned while expenses increased by $36,542.
The Parks Fund, also an enterprise fund of the County, had an increase in revenues totaling $55,071
while expenses increased by $125,537. The increase in expenses is primarily from an increase in
personnel costs and repairs and maintenance.
The following graphs present the amount of governmental revenues from various sources and
expenditures by function:
The composition of revenues remained generally consistent with the prior year with a slight increase in
intergovernmental revenues and a decrease in charges for services.
Management’s Discussion and Analysis - Continued
10
Financial Analysis of the County’s Funds - Continued
During 2011, the largest portion of the County’s expenditures continued to be for public safety at 36%
of total expenditures while general government functions represented 29% of the total. The County's
highways and streets expenditures are the third largest percentage of total expenditures at 16%.
General Fund Budgetary Highlights
The County did not amend the fiscal year 2010-11 adopted budget for the General Fund. General Fund
actual expenditures were $1.0 million under the adopted budget and actual revenues were less than
estimated revenues by $0.5 million.
Tax and intergovernmental revenue were greater than the budgeted amount predominately due to greater
than anticipated property taxes and shared state tax revenues and federal payment in lieu revenues.
Budgeted miscellaneous revenues are for various non-exchange transactions in which several did not
commence during 2011.
The following General Fund departments had variances from their original budget by more than ten
percent and $20,000:
Management’s Discussion and Analysis - Continued
11
General Fund Budgetary Highlights - Continued
• The Justice of the Peace Court #5 exceeded its budget by 17% due to greater than anticipated
operating costs.
• Court Administration exceeded its budget by 20% due to greater than anticipated costs pertaining to
court appointed legal counsel.
• The County Treasurer incurred less than anticipated expenditures due to unfilled vacant positions.
• During 2011, the Contingency line item was largely unused resulting in an $817,238 favorable
variance.
• The Public Defender incurred less than anticipated expenditures due to unfilled vacant positions.
• The General Administration budget includes costs for professional fees and other general
government expenses that were not incurred as anticipated during 2011.
• Sanitary Landfill exceeded the budget primarily due to unanticipated legal costs incurred pertaining
to the ongoing litigation involving the County landfill.
• The County’s Long-Term Care ALTCS line item had a favorable budget variance of $119,286 due to
less than anticipated amounts incurred for County’s portion of contributions Arizona Long-Term
Care System.
• The Chronically Mentally Ill department had less than anticipated expenditures due to an overall
continued decrease in the use of outside health care providers.
• Health Department Transit had an overall decrease in operating costs resulting in a favorable budget
variance.
Capital Assets and Debt Administration
Capital Assets
The County’s investment in capital assets as of June 30, 2011 amounted to $67.1 million (net of
accumulated depreciation and related debt). This investment in capital assets includes land and land
improvements, water rights, buildings, machinery and equipment, construction equipment and vehicles,
and infrastructure purchased, constructed or donated after July 1, 1982 (the year of the County’s
inception). The County’s net investment in capital assets decreased 1.4% from the prior period. Major
capital asset events during the current fiscal year included outlays for highway and street improvements
and new building heating and cooling systems.
Additional information on the County’s capital assets activity and balances can be found in Note 7 of the
notes to the financial statements on pages 39-40 of this report.
Management’s Discussion and Analysis - Continued
12
Capital Assets and Debt Administration - Continued
Long-Term Liabilities
At June 30, 2011 the County had total long-term liabilities outstanding of $17,941,255. This amount
consists primarily of obligations under capital leases of $1.8 million and $13.7 million in estimated
judgment liability related losses. The judgment liability is discussed in further detail on page 44 of the
financial statements.
Additional information on the County’s long-term debt can be found in Note 8 of the notes to the
financial statements on pages 41-45 of this report.
Economic Factors
• The County has accrued a $13.7 million for estimated liabilities in connection with a lawsuit that
was settled in September 2011 using proceeds from tax-exempt and taxable revenue bonds.
• Due to the current economic environment, it is anticipated that future shared revenues received from
the State of Arizona and property and sales tax revenues will continue to decrease.
• The County has taken into consideration the above economic factors in preparing future years’
budgets.
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.
Basic Financial Statements
Governmental Business-Type
Activities Activities Total
Assets
Cash and cash equivalents $ 4,137,583 $ 18,889 $ 4,156,472
Property taxes receivable 250,475 - 250,475
Internal balances 637,626 (637,626) -
Due from:
Others 154,384 - 154,384
Other governments 1,710,635 - 1,710,635
Prepaid items 293,993 - 293,993
Capital assets, not being depreciated 45,231,955 - 45,231,955
Capital assets, being depreciated, net 23,203,304 1,879,650 25,082,954
Total assets 75,619,955 1,260,913 76,880,868
Liabilities
Accounts payable 1,201,770 59,911 1,261,681
Accrued liabilities 599,224 38,579 637,803
Due to:
Others 364,417 3,507 367,924
Other governments 250,430 - 250,430
Noncurrent liabilities:
Due within one year 14,175,970 16,363 14,192,333
Due in more than one year 3,648,408 100,514 3,748,922
Total liabilities 20,240,219 218,874 20,459,093
Net Assets
Invested in capital assets, net of related debt 65,220,061 1,879,650 67,099,711
Restricted for:
Highways and streets 1,364,807 - 1,364,807
Judicial 2,053,515 - 2,053,515
Public safety 915,707 - 915,707
Health and welfare 661,395 - 661,395
Other purposes 496,200 - 496,200
Unrestricted (deficit) (15,331,949) (837,611) (16,169,560)
Total net assets $ 5 5,379,736 $ 1,042,039 $ 5 6,421,775
Primary Government
La Paz County
Statement of Net Assets
June 30, 2011
See the accompanying notes to the financial statements.
13
Functions/Programs Expenses
Charges for
Services
Operating
Grants and
Contributions
Capital Grants
and
Contributions
Governmental
Activities
Business-Type
Activities Total
Primary government:
Governmental activities:
General government $ 8,137,045 $ 2,882,432 $ 2,076,132 $ - $ (3,178,481) $ - $ (3,178,481)
Public safety 10,311,771 2,042,720 2,972,367 - (5,296,684) - (5,296,684)
Highways and streets 5,402,814 - 478,979 3,567,555 (1,356,280) - (1,356,280)
Sanitation 161,783 - 49,117 - (112,666) - (112,666)
Health 2,170,451 220,855 327,107 - (1,622,489) - (1,622,489)
Welfare 458,451 16,073 216,087 - (226,291) - (226,291)
Culture and recreation 145,947 220 1,901 - (143,826) - (143,826)
Education 279,012 - - - (279,012) - (279,012)
Interest on long-term debt 202,686 - - - (202,686) - (202,686)
Total governmental activities 27,269,960 5,162,300 6,121,690 3,567,555 (12,418,415) - (12,418,415)
Business-type activities
Golf course 1,528,745 1,613,296 - - - 84,551 84,551
Parks 869,241 801,927 - - - (67,314) (67,314)
Total business-type activities 2,397,986 2,415,223 - - - 17,237 17,237
Total primary government $ 29,667,946 $ 7,577,523 $ 6,121,690 $ 3,567,555 (12,418,415) 17,237 (12,401,178)
General revenues:
Taxes:
Property taxes levied for general purposes 4,414,821 - 4,414,821
Property taxes levied for special districts 10,722 - 10,722
Excise tax 2,112,049 - 2,112,049
Payments in lieu of taxes 1,806,515 - 1,806,515
Share of state sales taxes 1,712,784 - 1,712,784
Unrestricted share of vehicle license tax 543,110 - 543,110
Investment earnings 3,274 (140) 3,134
Miscellaneous 393,558 7,040 400,598
Transfers 134,178 (134,178) -
Total general revenues and transfers 11,131,011 (127,278) 11,003,733
Changes in net assets (1,287,404) (110,041) (1,397,445)
Net assets - July 1, 2010, as restated 56,667,140 1,152,080 57,819,220
Net assets - June 30, 2011 $ 55,379,736 $ 1,042,039 $ 56,421,775
Program Revenues Net (Expenses) Revenues and Changes in Net Assets
La Paz County
Statement of Activities
Year Ended June 30, 2011
See the accompanying notes to the financial statements.
14
Business 95
Road Other Total
General Road Jail District Improvement Governmental Governmental
Fund Fund Fund Fund Funds Funds
Assets
Cash and cash equivalents $ 997,347 $ 2,135,818 $ 72,329 $ - $ 932,089 $ 4,137,583
Property tax receivable 249,244 - - - 1,231 250,475
Due from:
Others 64,699 - - - 89,685 154,384
Other governments 224,268 360,782 396,697 - 728,888 1,710,635
Other funds 2,925,027 71,643 - 1,961,491 762,336 5,720,497
Prepaid items 140,804 - 124,125 - 29,064 293,993
Total assets $ 4,601,389 $ 2,568,243 $ 593,151 $ 1,961,491 $ 2,543,293 $ 12,267,567
Liabilities and Fund Balances
Liabilities:
Accounts payable $ 421,106 $ 328,431 $ 74,070 $ 5,950 $ 372,213 $ 1,201,770
Accrued liabilities 354,123 50,678 66,988 - 127,435 599,224
Due to:
Others 359,344 313 876 - 3,884 364,417
Other governments 250,430 - - - - 250,430
Other funds 2,130,624 964,328 888,335 40,034 1,059,550 5,082,871
Deferred revenue 180,400 - - - 993 181,393
Total liabilities 3,696,027 1,343,750 1,030,269 45,984 1,564,075 7,680,105
Fund balances:
Nonspendable:
Prepaid items 140,804 - 124,125 - 29,064 293,993
Restricted - 1,224,493 - - 4,118,340 5,342,833
Committed - - - 1,915,507 206,959 2,122,466
Unassigned 764,558 - (561,243) - (3,375,145) (3,171,830)
Total fund balances 905,362 1,224,493 (437,118) 1,915,507 979,218 4,587,462
Total liabilities and fund balances $ 4,601,389 $ 2,568,243 $ 593,151 $ 1,961,491 $ 2,543,293 $ 12,267,567
La Paz County
Balance Sheet
Governmental Funds
June 30, 2011
Major Funds
See the accompanying notes to the financial statements.
15
Fund balances—total governmental funds $ 4,587,462
Amounts reported for governmental activities in the
statement of net assets are different because:
Capital assets used in governmental activities are not financial resources
and, therefore, are not reported in the funds. The cost of the assets is
$120,823,416 and the accumulated depreciation is $52,388,157. 68,435,259
Some of the County's receivables 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. 181,393
Long-term liabilities are not due and payable in the current period and
therefore, are not reported in the funds.
Notes payable $ (1,390,510)
Obligations under capital leases (1,824,688)
Compensated absences payable (881,559)
Estimated liabilities for claims and judgments (13,727,621) (17,824,378)
Net assets of governmental activities $ 55,379,736
La Paz County
June 30, 2011
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets
See the accompanying notes to the financial statements.
16
Business 95
Road Other Total
General Road Jail District Improvement Governmental Governmental
Fund Fund Fund Fund Funds Funds
Revenues:
Taxes $ 5,969,434 $ 478,979 $ 1,086,323 $ - $ 10,722 $ 7,545,458
Licenses and permits 232,902 - - - 7,010 239,912
Fees, fines and forfeits 1,420,393 - - - 14,030 1,434,423
Intergovernmental 3,796,110 3,567,555 699,209 - 4,666,691 12,729,565
Charges for services 911,837 - 1,907,861 - 668,267 3,487,965
Investment (loss) income (698) 1,509 372 - 2,091 3,274
Miscellaneous 98,897 87,729 128,951 - 92,615 408,192
Total revenues 12,428,875 4,135,772 3,822,716 - 5,461,426 25,848,789
Expenditures:
Current:
General government 6 ,410,248 - - - 1,478,508 7,888,756
Public safety 4 ,183,921 - 3,256,378 - 2,320,598 9,760,897
Highways and streets - 3,847,585 - - 556,247 4,403,832
Sanitation 410,243 - - - 60,000 470,243
Health 1 ,193,452 - - - 952,261 2,145,713
Welfare 1 26,019 - - - 326,878 452,897
Culture and recreation - - - - 121,493 121,493
Education 2 08,844 - - - 63,730 272,574
Capital outlay 2 5,527 - - 505,427 3 48,696 879,650
Debt service:
Principal 1 77,365 - 162,723 - - 340,088
Interest 1 17,598 - 85,088 - - 202,686
Total expenditures 12,853,217 3,847,585 3,504,189 505,427 6,228,411 26,938,829
Excess (deficiency) of
revenues over expenditures (424,342) 288,187 318,527 (505,427) (766,985) (1,090,040)
Other financing sources (uses):
Transfers in 768,789 - - - 2,271,835 3,040,624
Transfers out (2,137,657) - (550,000) - (218,789) (2,906,446)
Total other financing
sources (uses) (1,368,868) - (550,000) - 2,053,046 134,178
Net change in fund balances (1,793,210) 288,187 (231,473) (505,427) 1,286,061 (955,862)
Fund balances, July 1, 2010, as restated 2,698,572 9 36,306 ( 205,645) 2 ,420,934 ( 306,843) 5,543,324
Fund balances (deficit), June 30, 2011 $ 905,362 $ 1,224,493 $ (437,118) $ 1,915,507 $ 979,218 $ 4,587,462
La Paz County
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
Year Ended June 30, 2011
Major Funds
See the accompanying notes the to financial statements.
17
Net change in fund balances - total governmental funds $ (955,862)
Amounts reported for governmental activities in the Statement of Activities
are different because:
the statement of activities the cost of those assets is allocated over their
estimated useful lives and reported as depreciation expense.
$ 1,733,250
Depreciation expense (2,768,182) (1,034,932)
assets is reported whereas in the governmental funds, the proceeds
from the sale increase financial resources. Thus the change in net
assets differs from the change in fund balance by the book value of the
capital assets sold.
Loss on disposal of capital assets (14,630)
liabilities in the statement of net assets:
Notes payable 132,670
Obligations under capital leases 207,419 340,089
Net decrease in compensated absences 55,248
Decrease in estimated liability for claims and judgments 308,460 363,708
14,223
Change in net assets of governmental activities $ ( 1,287,404)
financial resources are not reported as revenues in the funds
Revenues in the Statement of Activities that do not provide current
Repayment of debt principal is an expenditure in the governmental
reported as expenditures in the governmental funds:
funds, but the repayment reduces long-term
use of current financial resources and, therefore, are not
Some expenses in the Statement of Activities do not require the
In the Statement of Activities, only the gain or loss on the sale of capital
Expenditures for general capital assets
La Paz County
Reconciliation of the Statement of Revenues, Expenditures,
Year Ended June 30, 2011
and Changes in Fund Balances of Governmental Funds to the Statement of Activities
Governmental funds report capital outlays as expenditures. However, in
See the accompanying notes to the financial statements.
18
Total
Golf Enterprise
Course Fund Parks Fund Funds
Assets
Current assets:
Cash and cash equivalents $ 18,389 $ 500 $ 18,889
Noncurrent assets:
Capital assets, net of accumulated depreciation 1,004,458 875,192 1,879,650
Total assets 1,022,847 875,692 1,898,539
Liabilities
Current liabilities:
Accounts payable 42,811 17,100 59,911
Accrued payroll and employee benefits 25,402 13,177 38,579
Due to others 725 2,782 3,507
Due to General Fund 230,990 406,636 637,626
Compensated absences payable, current portion 10,603 5,760 16,363
Total current liabilities 310,531 445,455 755,986
Noncurrent liabilities:
Compensated absences payable 65,129 35,385 100,514
Total liabilities 375,660 480,840 856,500
Net Assets
Invested in capital assets, net of related debt 1,004,458 875,192 1,879,650
Unrestricted (deficit) (357,271) (480,340) (837,611)
Total net assets $ 647,187 $ 394,852 $ 1,042,039
Activities -
Enterprise Funds
La Paz County
Statement of Net Assets
Proprietary Fund
June 30, 2011
Business-Type
See the accompanying notes to the financial statements.
19
Total
Golf Enterprise
Course Fund Parks Fund Funds
Operating revenues:
Fees $ 1,613,296 $ 801,927 $ 2,415,223
Miscellaneous 3,431 3,469 6,900
Total operating revenues 1,616,727 805,396 2,422,123
Operating expenses:
Personnel services 753,643 436,425 1,190,068
Professional services 105,696 9,354 115,050
Supplies 151,335 100,439 251,774
Communications 5,878 5,887 11,765
Utilities 80,310 163,525 243,835
Repairs and maintenance 237,557 60,088 297,645
Depreciation 159,122 80,597 239,719
Other 35,204 12,926 48,130
Total operating expenses 1,528,745 869,241 2,397,986
Operating income (loss) 87,982 (63,845) 24,137
Transfers out - (134,178) (134,178)
Increase (decrease) in net assets 87,982 (198,023) (110,041)
Total net assets, July 1, 2010, as restated 559,205 592,875 1,152,080
Total net assets, June 30, 2011 $ 647,187 $ 394,852 $ 1,042,039
Enterprise Funds
La Paz County
Statement of Revenues, Expenses, and Changes in Fund Net Assets
Proprietary Fund
Year Ended June 30, 2011
Business-Type
Activities -
See the accompanying notes to the financial statements.
20
Total
Golf Enterprise
Course Fund Parks Fund Funds
Cash flows from operating activities:
Receipts from customers $ 1,647,201 $ 805,147 $ 2,452,348
Payments to suppliers and
providers of goods and services (641,129) (361,249) (1,002,378)
Payments to employees (747,119) (439,794) (1,186,913)
Net cash provided by operating activities 258,953 4,104 263,057
Cash flows from noncapital financing activities:
Transfers out to other funds - (134,178) (134,178)
Negative cash balance implicitly financed 230,990 406,636 637,626
Negative cash balance implicitly repaid (496,971) (264,395) (761,366)
Net cash (used for) provided by
noncapital financing activities (265,981) 8,063 (257,918)
Cash flows from capital
and related financing activities:
Purchases of capital assets (3,814) ( 12,167) (15,981)
Net cash used for capital
and related financing activities (3,814) (12,167) (15,981)
Net decrease in cash and cash equivalents (10,842) - (10,842)
Cash and cash equivalents, July 1, 2010 29,231 500 29,731
Cash and cash equivalents, June 30, 2011 $ 18,389 $ 500 $ 18,889
(continued)
Business-Type
Activities -
Enterprise Funds
La Paz County
Statement of Cash Flows
Proprietary Fund
Year Ended June 30, 2011
See the accompanying notes to the financial statements.
21
Total
Golf Enterprise
Course Fund Parks Fund Funds
Reconciliation of operating income (loss)
to net cash provided by operating activities:
Operating income (loss) $ 87,982 $ (63,845) $ 24,137
Adjustments to reconcile operating income (loss)
to net cash provided by operating activities:
Depreciation 159,122 80,597 239,719
Changes in assets and liabilities:
Decrease in prepaid items 356 - 356
Decrease (increase) in due from others 29,749 (3,379) 26,370
Decrease in accounts payable (25,505) (13,475) (38,980)
Increase in due to others 725 2,991 3,716
Increase in accrued payroll
and employee benefits 1,110 18 1,128
Increase in compensated absences payable 5,414 1,197 6,611
Net cash provided by operating activities $ 258,953 $ 4,104 $ 263,057
Enterprise Funds
La Paz County
Statement of Cash Flows - Continued
Proprietary Fund
Year Ended June 30, 2011
Business-Type
Activities -
See the accompanying notes to the financial statements.
22
Investment Agency
Trust Fund Funds
Assets
Cash and cash equivalents $ 12,719,867 $ 657,753
Total assets 12,719,867 $ 657,753
Liabilities
Due to other governments - $ 657,753
Total liabilities - $ 657,753
Net Assets
Held in trust for investment trust participants $ 12,719,867
La Paz County
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2011
See the accompanying notes to the financial statements.
23
Investment
Trust Fund
Additions:
Contributions from participants $ 34,114,627
Interest and dividends 242,930
Total additions 34,357,557
Deductions:
Distributions to participants 37,727,242
Total deductions 37,727,242
Change in net assets ( 3,369,685)
Net assets, July 1, 2010 16,089,552
Net assets, June 30, 2011 $ 12,719,867
La Paz County
Statement of Changes in Fiduciary Net Assets
Fiduciary Funds
Year Ended June 30, 2011
See the accompanying notes to the financial statements.
24
La Paz County
Notes to Financial Statements
June 30, 2011
25
Note 1 - Reporting Entity, Basis of Presentation and 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).
For the year ended June 30, 2011, the County implemented the provisions of GASB Statement No. 54,
Fund Balance Reporting and Governmental Fund Type Definitions. GASB Statement No. 54
establishes standards for financial reporting, including note disclosure requirements, for fund balance
classifications of the governmental funds and clarifies existing governmental fund type definitions.
A. Reporting Entity
The County is a general purpose local government located in southwestern Arizona that was
established in 1983. It 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 so intertwined with the
County that they 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
Description; Criteria
for Inclusion
Reporting
Method
Separate
Financial
Statements
Jail
District
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.
Blended Not
available
Various Street
Lighting
Districts
Operates and maintains street lighting in areas outside
local city jurisdictions; County board of supervisors
serves as board of directors.
Blended Not
available
Notes to Financial Statements - Continued
26
Note 1 - Reporting Entity, Basis of Presentation and Summary of Significant Accounting
Policies -Continued
The Industrial Development Authority of La Paz County (Authority) is a legally separate entity
that was created to assist in the financing of commercial and industrial enterprises. The
Authority fulfills its function through the issuance of tax exempt or taxable revenue bonds. The
County's Board of Supervisors appoints the Authority's Board of Directors. The Authority's
operations are completely separate from the County and the County is not financially
accountable for the Authority. Therefore, based on the criterion of GASB Statements Nos. 14
and 39, the financial activities of the Authority have not been included in the accompanying
financial statements.
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 segments 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 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.
Notes to Financial Statements - Continued
27
Note 1 - Reporting Entity, Basis of Presentation and Summary of Significant Accounting
Policies - Continued
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.
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. Nonoperating 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, a special revenue fund, accounts for monies from Highway User Revenue Fund
and Vehicle License Tax that are restricted for road maintenance and operations, pavement
preservation, and fleet services.
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
monies received from excise sales tax revenue that is restricted for debt service, maintenance of
effort payments received from the County General Fund and charges for services for prisoner
incarceration. The monies are expended for the operating expenditures of the County’s jail.
Notes to Financial Statements - Continued
28
Note 1 - Reporting Entity, Basis of Presentation and Summary of Significant Accounting
Policies - Continued
The Business 95 Road Improvement Fund accounts for monies from the Arizona Department of
Transportation that is committed 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. This fund was
reclassified from a special revenue fund to a capital projects fund as part of implementing GASB
Statement No. 54.
The County reports the following major enterprise funds:
The Golf Course Fund accounts for the activities and related operations and maintenance of an
18 hole golf course and pro-shop.
The Parks Fund accounts for the activities and related operations and maintenance of the
County's 6 public parks.
The County reports the following fiduciary fund types:
The Investment Trust Fund accounts for pooled assets held and invested by the County Treasurer
on behalf of other governmental entities.
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, with the exception of the agency funds, and
the accrual basis of accounting. The agency funds are custodial in nature and do not have a
measurement focus. 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 they become both measurable and available.
Notes to Financial Statements - Continued
29
Note 1 - Reporting Entity, Basis of Presentation and Summary of Significant Accounting
Policies - Continued
The County considers all revenues reported in the governmental funds to be available if the
revenues are collected within 60 days after year end. The County’s major revenue sources that
are susceptible to accrual are property taxes, sales taxes, licenses and permits, intergovernmental,
charges for services, and investment income. 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, in addition to 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 cash on hand, demand deposits,
and only those highly liquid investments with a maturity of 3 months or less when purchased to
be cash equivalents.
All investments are stated at fair value.
E. Inventories
Purchases of inventory items are recorded at the time of purchase as expenses or expenditures in
the funds from which the purchases were made, and because the amounts on hand at June 30,
2011, were immaterial, they are not included in the Statements of Net Assets or the Balance
Sheet.
Notes to Financial Statements - Continued
30
Note 1 - Reporting Entity, Basis of Presentation and Summary of Significant Accounting
Policies - Continued
F. Property Tax Calendar
The County levies real and personal 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.
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:
Capitalization
Threshold
Depreciation
Method
Estimated
Useful Life
Land All N/A N/A
Gravel and dirt roads All N/A N/A
Water rights All N/A N/A
Land improvements $5,000 Straight-line 10-30 years
Infrastructure 5,000 Straight-line 20-75 years
Buildings and improvements 5,000 Straight-line 25-50 years
Improvements other than buildings 1,000 Straight-line 7-30 years
Machinery and equipment 1,000 Straight-line 5-20 years
Golf course and improvements 1,000 Straight-line 30 years
Unlike paved roads, gravel and dirt roads are not depreciated since once they are placed in
operation, only annual maintenance is required to keep them operational for an indefinite period.
H. Investment Income
Investment income is comprised of interest, dividends, and net changes in the fair value of
applicable investments.
Notes to Financial Statements - Continued
31
Note 1 - Reporting Entity, Basis of Presentation and Summary of Significant Accounting
Policies – Continued
I. 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 government-wide and proprietary
fund’s financial statements. A liability for these amounts is reported in the governmental funds’
financial statements only if they have matured, for example, as a result of employee resignations
and retirements by fiscal year-end.
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 in the government-wide and
proprietary fund’s financial statements. A liability for these amounts is reported in the
governmental funds’ financial statements only for employees who have resigned or retired by
fiscal year-end.
J. Fund Balance Classifications
Fund balances of the governmental funds are reported separately within classifications based on
a hierarchy of the constraints placed on those resources. The classifications are based on the
relative strength of the constraints that control how the specific amounts can be spent. The
classifications are nonspendable, restricted, and unrestricted, which includes committed,
assigned, and unassigned fund balance classifications.
The nonspendable fund balance classification includes amounts that cannot be spent because
they are either not in spendable form such as inventories, or are legally or contractually required
to be maintained intact. Restricted fund balances are those that have externally imposed
restrictions on their usage by creditors, such as through debt covenants, grantors, contributors, or
laws and regulations.
Notes to Financial Statements - Continued
32
Note 1 - Reporting Entity, Basis of Presentation and Summary of Significant Accounting
Policies – Continued
The unrestricted fund balance category is comprised of committed, assigned, and unassigned
resources. Committed fund balances are self-imposed limitations approved in a public meeting
by the County’s Board of Supervisors, which is the highest level of decision-making authority
within the County. The constraints placed on committed fund balances can only be removed or
changed by the Board in a public meeting.
Assigned fund balances are resources constrained by the County’s intent to be used for specific
purposes, but are neither restricted nor committed. The Board of Supervisors has authorized the
County Manager, Elected Officials and the Finance Director to make assignments of resources
for specific purposes pursuant to resolution by the Board in a public meeting.
The unassigned fund balance is the residual classification for the General Fund and includes all
spendable amounts not reported in the other classifications. Also, deficits in fund balances of the
other governmental funds are reported as unassigned.
When an expenditure is incurred that can be paid from either restricted or unrestricted fund
balances, it’s the County’s policy to use restricted fund balance first. For the disbursement of
unrestricted fund balances, it’s the County’s policy to use committed amounts first, followed by
assigned amounts, and lastly unassigned amounts.
Note 2 - Stewardship, Compliance, and Accountability
Fifteen General Fund departments 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 County continues to work closely with these departments to minimize future similar
overruns.
Notes to Financial Statements - Continued
33
Note 3 - Fund Balance Classifications of the Governmental Funds
Deficit fund balances—At June 30, 2011, the following funds reported deficit fund balances
exceeding $50,000:
Fund Deficit
Governmental fu nds:
Emergency Services $ 150,188
La Paz Extension Fund 93,192
Health Department 434,089
Education & Employment Fund LPCC 152,505
Jail District 437,118
ACJC Drug Enforcement 325,152
Adult State Aid Enhancement 92,901
Task Force Prosecutor 270,709
Community Development 337,440
Child Support Program 224,233
Jail Commissary 74,308
Highway Safety Grant 74,477
Cops in School 276,531
Bio Terrorism 89,511
Racketeer Influenced and Corrupt
Organizations Act
112,195
Anti-Meth Initiative 55,096
Statewide Fiscal Stabilization 58,098
The above fund deficits resulted from operations during the year or carryovers from prior years
and are expected to be corrected through normal operations in the future or will be settled by
future transfers between funds.
Notes to Financial Statements - Continued
34
Note 3 - Fund Balance Classifications of the Governmental Funds - Continued
The fund balance categories and classifications for governmental funds as of June 30, 2011, were
as follows:
Major Funds
General
Fund
Road
Fund
Jail
District
Fund
Business 95
Road
Improvement
Fund
Other
Governmental
Funds
Total
Fund balances:
Nonspendable $ 140,804 $ - $ 124,125 $ - $ 29,064 $ 293,993
Restricted for:
Education - - - - 88,392 88,392
Health - - - - 434,120 434,120
Highways and streets - 1,224,493 - - 140,314 1,364,807
Judicial - - - - 1,908,486 1,908,486
Public safety - - - - 915,707 915,707
Transit - - - - 176,548 176,548
Water and sanitation - - - - 66,582 66,582
Welfare - - - - 227,275 227,275
Other purposes - - - - 160,916 160,916
Total restricted - 1,224,493 - - 4,118,340 5,342,833
Committed to:
Highways and streets - - - 1,915,507 - 1,915,507
Judicial - - - - 145,029 145,029
Other - - - - 61,930 61,930
Total committed - - - 1,915,507 206,959 2,122,466
Unassigned 764,558 - (561,243) - (3,375,145) (3,171,830)
Total fund balances $ 905,362 $ 1,224,493 $(437,118) $ 1,915,507 $ 979,218 $ 4,587,462
Notes to Financial Statements - Continued
35
Note 4 – Beginning Balances Restated
The net assets and fund balance on the government-wide statement of activities and the fund
financial statements as of July 1, 2010, have been restated. This prior period adjustment is the
result of implementing GASB Statement No. 54, Fund Balance Reporting and Governmental
Fund Type Definitions. The reconciliation below summarizes the classification change:
Governmental
Business-
Type
Other
Governmental
Activities Activities Funds
Net assets/fund balance as of June 30,
2010 as previously reported $ 57,260,015
$ 559,205
$ ( 617,642)
Restatements for the
reclassification of the Parks Fund ( 592,875)
592,875
310,799
Net assets/fund balances as of July 1,
2010, as restated $ 56,667,140
$ 1,152,080
$ ( 306,843)
Note 5 - 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 or agency obligations; specified state and local
government bonds; interest-earning investments such as savings accounts, certificates of deposit,
and repurchase agreements in eligible depositories; and specified commercial paper, bonds,
debentures, and notes issued by corporations organized and doing business in the United States.
In addition, the County Treasurer may invest trust funds in fixed income securities of
corporations doing business in the United States or District of Columbia.
Credit risk
Statutes have the following requirements for credit risk:
1. Commercial paper must be of prime quality and be rated within the top two ratings by a
nationally recognized rating agency.
2. Corporate bonds, debentures, and notes must be rated within the top three ratings by a
nationally recognized rating agency.
3. Fixed income securities must carry one of the two highest ratings by Moody’s investors
service and Standard and Poor’s rating service. If only one of the above-mentioned
services rates the security, it must carry the highest rating of that service.
Notes to Financial Statements - Continued
36
Note 5 - Deposits and Investments – Continued
Custodial credit risk - Statutes require collateral for demand deposits and certificates of deposit
at 101 percent of all deposits not covered by federal depository insurance.
Concentration of credit risk - Statutes do not include any requirements for concentration of credit
risk.
Interest rate risk - Statutes require that public monies invested in securities and deposits have a
maximum maturity of 5 years. Investments in repurchase agreements must have a maximum
maturity of 180 days.
Foreign currency risk - Statutes do not allow foreign investments.
Deposits - Custodial credit risk is the risk that in the event of bank failure the County’s deposits
may not be returned to the County. The County does not have a deposit policy for custodial
credit risk.
At June 30, 2011, the carrying amount of the County’s total cash in the bank was $7,229,107 and
the bank balance was $8,090,696. All County’s deposits are collateralized by the amount not
covered by depository insurance.
Investments - The County’s investments at June 30, 2011, were as follows:
Investment Type Rating Rating Agency Amount
S tate Treasurer’s investment pool 7 Unra ted Not app licable $10,298,690
The State Board of Investment provides oversight for the State Treasurer’s pools. The fair value
of a participant’s position in the pool approximates the value of that participant’s pool shares,
and the participant’s shares are not identified with specific investments.
Credit risk - The County does not have a formal investment policy with respect to credit risk.
However, the credit risk for the County’s investments is indicated in the preceding table.
Interest rate risk - The County does not have a formal policy regarding interest rate risk. At June
30, 2011, the County had the following investments in debt securities:
Notes to Financial Statements - Continued
37
Note 5 - Deposits and Investments – Continued
A reconciliation of cash and investments to amounts shown on the Statements of Net Assets
follows:
County
Treasurer's
Investment Pool Other Total
C ash on hand $ - $ 6,296 $ 6,296
Carrying amount of deposits 6,190,108 1,038,998 7,229,106
Reported amount of
investments 10,298,690 - 10,298,690
Total $ 16,488,798 $ 1,045,294 $ 17,534,092
Statements of Net Assets:
Investment
Governmental Business-Type Trust Agency
Activities Activities Fund Funds Total
Cash and cash
equivalents $ 4,137,583 $ 18,889 $ 12,719,867 $ 657,753 $17,534,092
$ 4,137,583 $ 18,889 $ 12,719,867 $ 657,753 $17,534,092
Note 6 - Condensed Financial Statements of County Treasurer’s Investment Pool
A.R.S. requires 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’s 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.
Investment
Maturities
Investment Type
Amount
Less than 1
Year
State Treasurer’s investment pool
$10,298,690
$10,298,690
$10,298,690 $10,298,690
Notes to Financial Statements - Continued
38
Note 6 - Condensed Financial Statements of County Treasurer’s Investment Pool –
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. The
Treasurer allocates interest earnings to each of the pool’s participants.
Deposits and investments of the County’s primary government are included in the County
Treasurer’s investment pool, except for $6,296 of cash on hand and $1,038,998 of deposits held
in bank. Therefore, deposit and investment risks of the Treasurer’s investment pool are
substantially the same as the County’s deposit and investment risks. See Note 5 for disclosure of
the County’s deposit and investment risks.
Details of each major asset classification follow:
Interest
Investment Type Rate(s) Maturities Fair Value
State Treasurer’s
No stated
interest
No stated
investment pool rate maturity $ 10,298,690
Certificates 8/2011 and
2/2012
of deposit 1.6%-2.7% 75,049
Deposits N/A N/A 6,115,059
$ 16,488,798
A condensed statement of the investment pool’s net assets and changes in net assets follows:
Statement of Net Assets
Assets $ 16,488,798
Net assets $ 16,488,798
Net assets held in trust for:
Internal participants
External participants
$ 3,768,931
12,719,867
Total net assets held in trust $ 16,488,798
Statement of Changes in Net Assets
Total additions $ 63,974,814
Total deductions (68,491,831)
Net decrease (4,517,017)
Net assets held in trust:
July 1, 2010
21,005,815
June 30, 2011 $ 16,488,798
Notes to Financial Statements - Continued
39
Note 7 - Capital Assets
Capital asset activity for the year ended June 30, 2011, was as follows:
Balance
June 30, 2010
(as restated) Increases Decreases
Balance
June 30, 2011
Governmental activities:
Capital assets
not being depreciated
Land $ 671,596 $ - $ - $ 671,596
Water rights 1,096,646 - - 1,096,646
Gravel and dirt roads 41,460,031 - - 41,460,031
Construction in progress 3,278,665 1,201,516 2,476,499 2,003,682
Total capital assets,
not being depreciated 46,506,938 1,201,516 2,476,499 45,231,955
Capital assets being depreciated:
Land improvements 32,676 - 32,676
Building and improvements 15,802,009 821,842 2,329 16,621,522
Machinery and equipment 14,243,552 254,282 537,258 13,960,576
Improvements
other than buildings 235,285 1,174 - 236,459
Infrastructure 42,809,293 1,930,935 - 44,740,228
Total capital assets
being depreciated 73,122,815 3,008,233 539,587 75,591,461
Total 119,629,753 4,209,749 3,016,086 120,823,416
Less accumulated depreciation for:
Land improvements 16,670 897 - 17,567
Buildings and improvements 4,058,428 479,916 1,229 4,537,115
Improvements
other than buildings 140,588 10,892 - 151,480
Machinery and equipment 11,448,081 1,048,502 523,728 11,972,855
Infrastructure 34,481,165 1,227,975 - 35,709,140
Total 50,144,932 2,768,182 524,957 52,388,157
Total capital assets
being depreciated, net 22,977,883 240,051 14,630 23,203,304
Governmental activities
capital assets, net $ 69,484,821 $ 1,441,567 $ 2,491,129 $ 68,435,259
Primary Government
Notes to Financial Statements - Continued
40
Note 7 - Capital Assets - Continued
The beginning capital asset balances were restated to record the effect of reclassifying the Parks Fund
from a governmental fund type to a proprietary fund type. The effect of the fund reclassification was a
reduction in the net book value of governmental-type activities of $943,622 with a corresponding
increase in business-type activities capital and net assets.
Balance
June 30,
2010, (as
restated) Increases Decreases
Balance
June 30, 2011
Business-type activities:
Capital assets being depreciated:
Golf course and improvements $ 2,868,215 $ 2,560 $ - $ 2,870,775
Land improvements 24,031 - - 24,031
Building and improvements 828,568 - - 828,568
Improvements
other than buildings 610,582 - - 610,582
Machinery and equipment 1,892,421 1 3,421 178,844 1,726,998
Total 6,223,817 15,981 178,844 6,060,954
Less accumulated depreciation for:
Golf course and improvements 1,954,583 94,556 - 2 ,049,139
Land improvements 13,026 801 - 13,827
Buildings and improvements 280,565 26,281 - 306,846
Machinery and equipment 590,385 1 4,867 1 6,839 588,413
Improvements
other than buildings 280,741 3 8,648 - 319,389
Machinery and equipment 1,001,129 64,566 162,005 903,690
Total 4,120,429 239,719 178,844 4,181,304
Business-type activities
capital assets, net $ 2,103,388 $ (223,738) $ - $ 1,879,650
Primary Government
Notes to Financial Statements - Continued
41
Note 7 - Capital Assets - Continued
Depreciation expense was charged to functions as follows:
Governmental activities:
General government $ 283,993
Public safety 591,572
Highways and streets 1,848,335
Welfare 656
Health 14,561
Culture and recreation 25,502
Education 3,563
Total governmental activities depreciation expense $ 2,768,182
Business-type activities:
Golf course $ 159,122
Parks 80,597
Total business-type activities depreciation expense $ 239,719
Note 8 - Long-Term Liabilities
The following schedule details the County’s long-term liability and obligation activity for the year
ended June 30, 2011:
The beginning compensated absences balances were restated to record the effect of the reclassification
of the Parks Fund from a governmental fund type to a proprietary fund type. The effect of the fund
reclassification was a reduction in the beginning compensated absences balance of the governmental
activities of $39,948 with a corresponding increase in business-type activities compensated absences.
Balance
June 30, 2010 Balance Due within
(Restated) Additions Reductions June 30, 2011 1 year
Governmental activities
Notes payable $ 1,523,180 $ - $ 132,670 $ 1,390,510 $ 142,568
Obligations under capital
leases 2,032,107 - 207,419 1,824,688 217,626
Compensated absences
payable 936,807 918,120 973,368 881,559 88,155
Estimated liabilities for claims
and judgments 14,036,081 - 308,460 13,727,621 13,727,621
Governmental activities
long-term liabilities $ 18,528,175 $ 918,120 $ 1,621,917 $ 17,824,378 $ 14,175,970
Business-type activities
Compensated absences
payable $ 110,266 $ 76,929 $ 70,318 $ 116,877 $ 16,363
Business-type activities
long-term liabilities $ 110,266 $ 76,929 $ 70,318 $ 116,877 $ 16,363
Notes to Financial Statements - Continued
42
Note 8 - Long-Term Liabilities - Continued
Capital leases
The County has acquired jail facilities and equipment under the provisions of various long-term lease
agreements classified as capital leases for accounting purposes because they provide for a bargain
purchase option or a transfer of ownership by the end of the lease term.
The assets acquired through capital leases are as follows:
Governmental
Activities
Jail facility $ 2,051,038
Machinery and equipment 195,232
Less: accumulated depreciation 225,425
Carrying value $ 2,020,845
On October 25, 2007, the County’s Jail District entered into a $2,022,075 lease purchase agreement to
finance the expansion of the County’s jail facility. The agreement is structured such that the facility is
leased to the bank which then issued the lease proceeds to the County. The bank in turn leases the
improvements back to the County that are paid in an amount totaling $2,671,127 through 2020.
Principal and interest payment are due biannually and began on July 1, 2009. Interest on the obligation
accrues at 4.6%. per annum. Upon the final lease payment, the title to the improvements will transfer
to the County.
The Jail District has pledged the maintenance of effort payments from the County’s General Fund to
the Jail District and voter approved excise tax for the payment of the debt service on the lease through
2020. Principal payments and interest expense incurred on this debt during 2011 totaled $247,811
while maintenance of effort and voter approved excise taxes were $699,209 and $1,086,323,
respectively. Annual principal and interest payments on the lease are expected to require 14% of total
pledged revenue.
On March 26, 2010 the County entered into a $195,232 lease agreement to purchase five vehicles for
the County's public works department. The agreement requires the County to make annual lease
payments on the obligation at 5.9% per annum through 2013, with the first payment due upon the
leases inception. No County revenues have been pledged for payment of debt service under this
obligation and the vehicles serve as collateral pursuant to the lease agreement.
The following schedule details debt service requirements to maturity for the County’s capital leases
payable at June 30, 2011:
Notes to Financial Statements - Continued
43
Note 8 - Long-Term Liabilities – Continued
Year Ending June 30,
Governmental
Activities
2012 $ 300,893
2013 300,893
2014 247,811
2015 247,811
2016 247,811
2017-2020 867,339
Total minimum lease payments 2,212,558
Less amount
representing interest
387,870
Present value of net minimum
lease payments
$ 1,824,688
Notes Payable
In August 2008, the County entered into a financing agreement totaling $1,250,000 in which the
proceeds were used for the purchase of Colorado River water rights. The interest rate is 7.75% per
annum and is payable with principal semiannually which began January 2010 and maturing in July
2018. Also, in January 2009 the County entered into financing agreement totaling $350,000 to finance
the construction of the Salome Community Center Project. The interest rate is 5.75% per annum and is
payable with principal semiannually which began July 2009 and maturing in January 2019. Pursuant
to these agreements, the County has pledged General Fund transaction privilege taxes. For the current
year, principal and interest paid on the notes was $241,882 and the total pledged transaction privilege
tax revenues was $1,025,726. Annual principal and interest payments on the notes are expected to
require 24% of total pledged transaction privilege tax revenue.
The annual debt service to maturity for the notes payable is as follows:
Governmental Activities
Year Ending
June 30
Principal
Interest
20 12 $ 142,568 $ 99,315
2013 153,213 88,670
2014 164,662 77,221
2015 176,978 64,904
2016 190,227 51,655
2017-2019 562,862 65,046
Total $ 1,390,510 $ 446,811
Notes to Financial Statements - Continued
44
Note 8 - Long-Term Liabilities – Continued
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 does
not 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 - Compensated absences are paid from various funds in the same proportion
that those funds pay payroll costs. During fiscal year 2011, the County paid for compensated absences
as follows: 53 percent from the General Fund, 9 percent from the Road Fund, 11 percent from the Jail
District Fund, 12 percent from the Enterprise Fund, and 15 percent from the other funds.
Claims and judgments – On January 25, 2008, a judgment was rendered in connection with a
September 4, 2007 verdict in favor of a defendant/counterclaimant. The claim involved a contractual
matter resulting in damages totaling $9,200,000 payable to the defendant/counterclaimant and
reimbursement of certain fees and costs as reported below. In addition, in accordance with Arizona
Revised Statute §44-1201, simple interest accrues on the liability at a rate of 10% per annum. The
following is a summary of the total estimated loss and remaining liability incurred in connection with
this claim as of June 30, 2011:
Damages $ 9,200,000
Interest accrued through June 30, 2011 at 10% per annum 2,759,543
Attorney fees and other incidental costs awarded to
defendant/counterclaimant and their bonding company
805,795
Estimated attorney fees incurred by the County
through June 30, 2011
1,466,106
Estimated remaining interest and attorney fees that will be incurred 1,462,283
Total estimated loss related to the claim 15,693,727
Amount already paid to the defendant/counterclaimant ( 500,000)
Attorney fees paid to-date through June 30, 2011 ( 1,466,106)
Total liability accrued as of June 30, 2011 $ 13,727,621
Notes to Financial Statements - Continued
45
Note 8 - Long-Term Liabilities – Continued
The County has reported what it currently believes is the maximum total loss exposure related to this
claim, which is not covered by the Arizona Counties Property and Casualty Pool. However, the
ultimate actual loss that will be incurred by the County in connection with this claim could change in
the near term as a result of pending litigation between the County and judgment creditors. In addition,
the above loss estimation is presented for accounting and reporting purposes only and does not
represent the County’s legal stance on the matter.
Note 9 - 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. For these risks of loss 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 on page 44.
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 $300 million per occurrence for
property claims and $15 million per occurrence for liability claims. However, lower limits apply to
certain categories of losses. 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 every 5
years. Both pools accrue liabilities for losses that have been incurred but not reported. These
liabilities are determined annually based on an independent actuarial valuation.
Notes to Financial Statements - Continued
46
Note 10 – Pensions and Other Postemployment Benefits
Plan Descriptions - The County contributes to four plans, three of which are described below. The
Corrections Officer Retirement Plan is not described due to its relative insignificance to the County’s
financial statements. Benefits are established by state statute and the plans generally provide
retirement, long-term disability and health insurance premium benefits including death and survivor
benefits.
The retirement benefits are generally paid at a percentage, based on years of service, of the retirees’
average compensation. Long-term disability benefits vary by circumstance, but generally pay a
percentage of the employee’s monthly compensation. Health insurance premium benefits are generally
paid as a fixed dollar amount per month towards the retiree’s healthcare insurance premiums, in
amounts based on whether the benefit is for the retiree or for the retiree and his or her dependents.
The Arizona State Retirement System (ASRS) administers a cost-sharing, multiple-employer defined
benefit pension plan; a cost-sharing, multiple-employer defined benefit plan health insurance premium
plan; and a cost sharing, multiple-employer defined benefit long-term disability plan that covers
employees of the State of Arizona and employees of participating political subdivisions and school
districts. The ASRS is governed by the Arizona State Retirement System Board according to the
provisions of A.R.S. Title 38, Chapter 5, Article 2.
The Public Safety Personnel Retirement System (PSPRS) administers an agent multiple-employer
defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium
plan that covers public safety personnel who are regularly assigned hazardous duty as employees of the
State of Arizona and employees of participating political subdivisions. The PSPRS, acting as a
common investment and administrative agent, is governed by a seven-member board, known as The
Board of Trustees, and the participating local boards according to the provisions of A.R.S. Title 38,
Chapter 5, Article 4.
The Elected Officials Retirement Plan (EORP) administers a cost-sharing, multiple-employer defined
benefit pension plan and a cost–sharing, multiple employer defined benefit health insurance premium
plan that covers State of Arizona and County elected officials and judges, and elected officials of
participating cities. The EORP is governed by The Board of Trustees of PSPRS according to the
provisions of A.R.S. Title 38, Chapter 5, Article 3. Because the health insurance premium plan benefit
of the EORP is not established as a formal trust, the EORP is reported in accordance with GASB No.
45 as an agent multiple-employer defined benefit plan. Accordingly, the disclosures that follow reflect
the EORP as if it were an agent multiple-employer defined benefit plan.
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.
Notes to Financial Statements - Continued
47
Note 10 - Pensions and Other Postemployment Benefits – Continued
ASRS___________ PSPRS and EORP
3300 North Central Avenue 3010 E. Camelback Road, Suite 200
P.O. Box 33910 Phoenix, AZ 85016-4416
Phoenix, AZ 85067-3910 (602) 255-5575
(602) 240-2000 or 1-800-621-3778
Funding Policy—The Arizona State Legislature establishes and may amend active plan members’ and
the County’s contribution rates for the ASRS, PSPRS and EORP.
Cost-sharing plan - For the year ended June 30, 2011, active ASRS members were required by statute
to contribute at the actuarially determined rate of 9.85 percent (9.6 percent for retirement and 0.25
percent for long-term disability) of the members’ annual covered payroll and the County was required
by statute to contribute at the actuarially determined rate of 9.85 percent (9.01 percent for retirement,
0.59 percent for health insurance premium and 0.25 percent for long-term disability) of the members’
annual covered payroll.
The County’s contributions to ASRS for the current and the two preceding years, all of which were
equal to the required contributions, were as follows:
Year ended
June 30
Retirement
Fund
Health Benefit
Supplement
Fund
Long-Term
Disability
Fund
2011 $ 762,488 $ 49,931 $ 21,159
2010 $ 750,845 $ 55,590 $ 35,841
2009 $ 696,862 $ 98,307 $ 44,424
Agent plans - For the year ended June 30, 2011, 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 23.12 percent, the aggregate of which is the actuarially required amount. The health
insurance premium portion of the contribution rate was actuarially set at 1.55 percent of the members’
annual covered payroll. Active EORP members were required by statute to contribute 7.00 percent of
the members’ annual covered payroll. The County was required to remit a designated portion of
certain court fees plus additional contributions at the actuarially determined rate of 17.42 percent of the
members’ annual covered payroll. The health insurance premium portion of the contribution rate was
actuarially set at 1.77 percent of covered payroll.
Actuarial methods and assumptions - The contribution requirements for the year ended June 30, 2011,
were established using the June 30, 2009 actuarial valuations and those actuarial valuations were based
on the following actuarial methods and assumptions.
Notes to Financial Statements - Continued
48
Note 10 - Pensions and Other Postemployment Benefits – Continued
Actuarial valuations involve estimates of the value of reported amounts and assumptions about the
probability of future events. Amounts determined regarding the funded status of the plans and the
annual required contributions are subject to continual revision as actual results are compared to past
expectations and new estimates are made. The required schedule of funding progress presented as
required supplementary information provides multiyear trend information that shows whether the
actuarial value of the plans’ assets are increasing or decreasing over time relative to the actuarial
accrued liability for benefits.
Projections of benefits are based on 1) the plans’ structure as understood by the County and plans’
members including the types of benefits in force at the valuation date, and 2) the pattern of sharing
benefit costs between the County and plans’ members to that point. Actuarial calculations reflect a
long-term perspective and employ methods and assumptions that are designed to reduce short-term
volatility in actuarial accrued liabilities and the actuarial value of assets. The significant actuarial
methods and assumptions used are the same for all plans and related benefits (unless noted), and the
actuarial methods and assumptions used to established the fiscal year 2011 contribution requirements,
are as follows:
Actuarial valuation date June 30, 2009
Actuarial cost method Projected unit credit
Amortization method Level percent closed for unfunded actuarial accrued
liability, open for excess
Remaining amortization period 27 years for unfunded actuarial accrued liability, 20
years for excess
Asset valuation method 7 - year smoothed market value
Actuarial assumptions:
Investment rate of return 8.50%
Projected salary increases 5.50% - 8.50% for PSPRS and 5.00% for EORP
Includes inflation at 5.50% for PSPRS and 5.00% for EORP
Annual Pension/OPEB Cost—The County's pension/OPEB cost for the agent plans for the year
ended June 30, 2011, and related information follows:
PSPRS EORP
Pension
Health
Insurance
Pension
Health
Insurance
Annual pension/OPEB cost $ 307,663 $ 22,108 $ 160,057 $ 18,102
Contributions made $ 307,663 $ 22,108 $ 160,057 $ 18,102
Notes to Financial Statements - Continued
49
Note 10 - Pensions and Other Postemployment Benefits – Continued
Trend Information—Annual pension and OPEB cost information for the current and 2 preceding
years follows for each of the agent plans.
Funded Status—The funded status of the PSPRS as of the most recent valuation date, June 30, 2011,
along with the actuarial assumptions and methods used in those valuations follow. The EORP, by
statue, is a cost-sharing plan. However, because of its statutory construction, in accordance with
GASB Statement No. 45, paragraphs 5 and 41, the EORP is reported for such purposes as an agent
multiple-employer plan. The Fund Manager obtains an actuarial valuation for the EORP on its
statutory basis as a cost-sharing plan and, therefore, actuarial information for the County, as a
participating government, is not available.
Plan
Year Ended
June 30
Annual
Pension/
OPEB Cost_
Percentage of
Annual Cost
Contributed
Net Pension/
OPEB
Obligation
PSPRS
Pension 2011 $ 307,663 100% $ -0-
Health insurance 2011 $ 22,108 100% $ -0-
Pension 2010 $ 381,937 100% $ -0-
Health insurance 2010 $ 31,069 100% $ -0-
Pension 2009 $ 443,141 100% $ -0-
Health insurance 2009 $ 30,630 100% $ -0-
EORP
Pension 2011 $ 160,057 100% $ -0-
Health insurance 2011 $ 18,102 100% $ -0-
Pension 2010 $ 146,254 100% $ -0-
Health insurance 2010 $ 2,917 100% $ -0-
Pension 2009 $ 112,057 100% $ -0-
Health insurance 2009 $ 31,606 100% $ -0-
Notes to Financial Statements - Continued
50
Note 10 - Pensions and Other Postemployment Benefits – Continued
The actuarial methods and assumptions used are the same for all plans and related benefits, and for the
most recent valuation date, are as follows:
Actuarial valuation date June 30, 2011
Actuarial cost method Projected unit credit
Amortization method Level percent-of-pay closed
Remaining amortization period 25 years for unfunded actuarial accrued liability, 20
years for excess
Asset valuation method 7-year smoothed market value
Actuarial assumptions:
Investment rate of return 8.25%
Projected salary increases 5.00% - 8.00% for PSPRS and 4.50% for EORP
Includes inflation at 5.00% for PSPRS; 4.50% for EORP
PSPRS
Pension
Health
Insurance
Actuarial accrued liability (a) $11,183,460 $ 287,027
Actuarial value of assets (b) 6,723,112 -
Unfunded actuarial accrued liability
(funding excess) (a) – (b) 4,460,348 287,027
Funded ratio (b)/(a) 60.1% 0.00%
Covered payroll (c) 1,377,862 1,377,862
Unfunded actuarial accrued liability (funding excess)
as a percentage of covered payroll ([(a) – (b)] / (c)) 323.7% 20.83%
Notes to Financial Statements - Continued
51
Note 11 - Interfund Balances and Activity
Interfund receivables and payables—Interfund balances at June 30, 2011, were as follows:
Interfund balances resulted from the time lag between the dates that (1) 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 and (4) loans between funds to cover negative
pooled cash balances. Except for interfund balances between the General Fund and certain Nonmajor
Governmental Funds, the Golf Course Fund and the Parks 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, 2011, were as follows:
Transfers To
Nonmajor
General Governmental
Fund Funds Total
Transfers From
General Fund $ - $ 2,137,657 $ 2,137,657
Jail District Fund 550,000 - 550,000
Nonmajor
governmental funds 218,789
- 218,789
Parks Fund - 134,178 134,178
$ 768,789 $ 2,271,835 $ 3,040,624
Payable To
General
Fund
Road
Fund
Business 95
Road
Improvement
Fund
Nonmajor
Governmental
Fund
Total
Payable From:
General Fund $ - $ - $ 1,961,491 $ 169,133 $ 2,130,624
Road Fund 542,032 - - 422,296 964,328
Jail District Fund 753,790 3,792 - 130,753 888,335
Business 95 Fund - - - 40,034 40,034
Nonmajor
Governmental Funds 994,898 64,652 - - 1,059,550
Golf Course Fund 230,620 250 - 120 230,990
Parks Fund 403,687 2,949 - - 406,636
$ 2,925,027 $ 71,643 $ 1,961,491 $ 762,336 $ 5,720,497
Notes to Financial Statements - Continued
52
Note 11 - Interfund Balances and Activity - Continued
Transfers from the General Fund to Nonmajor Governmental Funds were used primarily to subsidize
the Parker Library and the County Health Department and to reimburse the RICO Fund. In addition,
the Fill the GAP Local Court Assistance Fund, a nonmajor governmental fund, transferred monies to
the General Fund. Also, unrestricted revenues collected in the Jail District were transferred to the
General Fund. In addition, the Parks Fund transferred monies to the Parks Grant special revenue fund
to cover a deficit fund balance.
Note 12 - Subsequent Event
In September 2011, the County issued $16,240,000 in Tax-Exempt Series 2011A bonds and
$1,875,000 in a Taxable Series 2011B bond. The proceeds from the bond issuances were used to pay
the judgment liability discussed in Note 8 and related attorney fees and issuance costs. The Series
2011A bonds have annual principal payments beginning on July 1, 2014 with interest rates ranging
from 3.00% to 4.75% per annum with final maturity on July 1, 2036. The Taxable Series 2011B bond
has an interest rate of 5.25% per annum and matures on July 1, 2021.
The County adopted a resolution dated September 12, 2011 authorizing the levy of a transaction
privilege excise tax to pay for the annual debt service. The County anticipates that the tax will be
sufficient to cover the bonds' debt service requirements over their terms.
Required Supplementary Information
Public Safety Personnel Retirement System
Unfunded
Actuarial Actuarial Funding Annual Liability as
Actuarial Value Accrued (Liability) Funded Covered Percentage of
Valuation of Plan Assets Liability Excess Ratio Payroll Covered Payroll
Date (a) (b) (a-b) (a/b) (c) ([a-b]/c)
06/30/11
Pension $ 6,723,112 $ 11,183,460 $ (4,460,348) 60.1% $1 ,377,862 323.7%
Health
Insurance $ - $ 287,027 $ (287,027) 0.0% $1 ,377,862 20.8%
06/30/10
Pension $ 6,354,159 $ 10,738,464 $ (4,384,305) 59.2% $1 ,648,070 266.0%
Health
Insurance $ - $ 265,326 $ (265,326) 0.0% $1 ,648,070 16.1%
06/30/09
Pension $ 6,095,219 $ 9,803,198 $ (3,707,979) 62.2% $1 ,653,122 224.3%
Health
Insurance $ - $ 265,914 $ (265,914) 0.0% $1 ,653,122 16.1%
La Paz County
Required Supplementary Information
Schedule of Agent Retirement Plan's Funding Progress
June 30, 2011
53
Original and
Final Budgeted Actual Variance with
Amounts Amounts Final Budget
Revenues:
Taxes $ 5,817,072 $ 5,969,434 $ 152,362
Licenses and permits 211,000 232,902 21,902
Fees, fines, and forfeits 1,455,000 1,420,393 ( 34,607)
Intergovernmental 3,626,789 3,796,110 169,321
Charges for services 893,020 911,837 18,817
Investment income (loss) 225,000 (698) (225,698)
Miscellaneous 722,222 98,897 (623,325)
Total revenues 12,950,103 12,428,875 (521,228)
Expenditures:
Current:
General government:
Assessor 407,318 437,103 ( 29,785)
County attorney 648,688 704,234 ( 55,546)
Board of supervisors 633,210 647,411 ( 14,201)
Clerk of the superior court 467,820 464,082 3,738
Constable 1,250 - 1,250
Elections 141,735 126,841 14,894
Justice of the Peace #4 434,471 409,469 25,002
Justice of the Peace #5 262,970 307,673 ( 44,703)
Justice of the Peace #6 308,848 291,511 17,337
Planning and zoning 556,419 511,089 45,330
Recorder 254,298 241,466 12,832
Superior court 142,022 137,967 4,055
Court administration 311,100 373,510 ( 62,410)
Treasurer 285,548 250,923 34,625
Contingency 832,832 15,594 817,238
Management information services 217,020 209,031 7,989
Public defender 593,703 512,730 80,973
General administration 503,136 185,468 317,668
Community resources 76,926 67,075 9,851
Finance personnel 258,063 272,239 ( 14,176)
GIS/Master planning 30,035 23,317 6,718
Facilities management 509,381 542,005 ( 32,624)
Total general government 7,876,793 6,730,738 1,146,055
La Paz County
Required Supplementary Information
Budgetary Comparison Schedule
General Fund
Year Ended June 30, 2011
See accompanying notes to budgetary comparison schedule.
54
Original and
Final Budgeted Actual Variance with
Amounts Amounts Final Budget
Public safety:
Regional dispatch $ 728,821 $ 695,711 $ 33,110
Sheriff 2,624,515 2,560,017 64,498
Probation 134,098 137,706 (3,608)
Aircraft 6,600 1,568 5,032
Maintenance of effort 699,208 699,208 -
Juvenile probation 95,651 89,711 5,940
Total public safety 4,288,893 4,183,921 104,972
Sanitation:
Sanitary landfill 10,000 410,243 (400,243)
Total sanitation 10,000 410,243 (400,243)
Health:
Indigent health 441,576 442,021 (445)
County long term care ALTCS 759,282 639,996 119,286
C.M.I (chronically mental ill) 75,000 18,600 56,400
Health department transit 113,201 92,835 20,366
Total health 1,389,059 1,193,452 195,607
Welfare:
Public fiduciary 124,434 126,019 (1,585)
Total welfare 124,434 126,019 (1,585)
Education:
School superintendent 205,896 208,844 (2,948)
Total education 205,896 208,844 (2,948)
Total expenditures 13,895,075 12,853,217 1,041,858
Excess (deficiency) of
revenues over expenditures $ (944,972) $ (424,342) $ 520,630
La Paz County
Required Supplementary Information
Budgetary Comparison Schedule
General Fund - Continued
Year Ended June 30, 2011
See accompanying notes to budgetary comparison schedule.
55
Original and
Final Budgeted Actual Variance with
Amounts Amounts Final Budget
Other financing uses:
Transfers in $ - $ 768,789 $ 768,789
Transfers out (652,388) (2,137,657) (1,485,269)
Total other financing uses (652,388) (1,368,868) (716,480)
Net change in fund balances (1,597,360) (1,793,210) (195,850)
Fund balances, July 1, 2010 1,597,360 2,698,572 1,101,212
Fund balances, June 30, 2011 $ - $ 905,362 $ 905,362
La Paz County
Required Supplementary Information
Budgetary Comparison Schedule
General Fund - Continued
Year Ended June 30, 2011
See accompanying notes to budgetary comparison schedule.
56
Original and
Final Budgeted Actual Variance with
Amounts Amounts Final Budget
Revenues:
Taxes $ 507,500 $ 478,979 $ (28,521)
Intergovernmental 3,400,000 3,567,555 167,555
Investment income 2,000 1,509 (491)
Miscellaneous - 87,729 87,729
Total revenues 3,909,500 4,135,772 226,272
Expenditures:
Current:
Highways and streets 5,426,500 3,847,585 1,578,915
Total expenditures 5,426,500 3,847,585 1,578,915
Net change in fund balances ( 1,517,000) 288,187 1,805,187
Fund balances, July 1, 2010 1,517,000 936,306 (580,694)
Fund balances, June 30, 2011 $ - $ 1,224,493 $ 1,224,493
La Paz County
Required Supplementary Information
Budgetary Comparison Schedule
Road Fund
Year Ended June 30, 2011
See accompanying notes to budgetary comparison schedule.
57
Original and
Final Budgeted Actual Variance with
Amounts Amounts Final Budget
Revenues:
Taxes $ 1,000,000 $ 1,086,323 $ 86,323
Intergovernmental 699,209 699,209 -
Charges for services 2,000,000 1,907,861 (92,139)
Investment income 18,000 372 (17,628)
Miscellaneous - 128,951 128,951
Total revenues 3,717,209 3,822,716 105,507
Expenditures:
Current:
Public safety 3,322,881 3,256,378 66,503
Debt Service:
Principal retirement 162,723 162,723 -
Interest and fiscal charges 85,088 85,088 -
Total expenditures 3,570,692 3,504,189 66,503
Excess of revenues over expenditures 146,517 318,527 172,010
Other financing sources (uses):
Transfers out - (550,000) ( 550,000)
Net change in fund balances 146,517 (231,473) (377,990)
Fund balances, July 1, 2010 (146,517) (205,645) (59,128)
Fund balances, June 30, 2011 $ - $ (437,118) $ ( 437,118)
La Paz County
Required Supplementary Information
Budgetary Comparison Schedule
Jail District Fund
Year Ended June 30, 2011
See accompanying notes to budgetary comparison schedule.
58
La Paz County
Required Supplementary Information - Continued
Notes to Budgetary Comparison Schedule
June 30, 2011
59
Note 1 - Budgeting and Budgetary Control
A.R.S. requires 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.
prohibits 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.
For the General Fund, debt service and capital outlay 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, 2011, expenditures that exceeded final budget amounts at the
department level (the legal level of budgetary control) were as follows:
Fund/Department Excess
General Fund:
Assessor $ 29,785
County Attorney 55,546
Board of Supervisors 14,201
Justice of the Peace #5 44,703
Court Administration 62,410
Finance Personnel 14,176
Facilities Management 32,624
Probation 3,608
Sanitary Landfill 400,243
Indigent Health 445
Public Fiduciary 1,585
School Superintendent 2,948
The excesses were primarily the result of unexpected expenditures and expenditures made as a
result of unanticipated revenues, or both.