Mohave County annual financial report fiscal year ended 2006 
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Mohave County Annual Financial Report Fiscal Year Ended 2006
Mohave County Administration Building, built 2005
MOHAVE COUNTY Annual Financial Report Year Ended June 30, 2006 TABLE OF CONTENTS Independent Auditors' Report..............................................................................................................1 - 2 Management's Discussion and Analysis............................................................................................3 - 14 Government-wide Statements Statement of Net Assets ................................................................................................................ 16 Statement of Activities ................................................................................................................ 17 Fund Statements Governmental Funds Balance Sheet .................................................................................................................. 18 Reconciliation of the Balance Sheet to the Statement of Net Assets ............................... 19 Statement of Revenues, Expenditures, and Changes in Fund Balances ........................... 20 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities ...................................................................... 21 Proprietary Funds Statement of Net Assets .................................................................................................. 22 Statement of Revenues, Expenses, and Changes in Fund Net Assets .............................. 23 Statement of Cash Flows ................................................................................................. 24 Fiduciary Funds Statement of Fiduciary Net Assets ................................................................................... 25 Statement of Changes in Fiduciary Net Assets ................................................................ 26 Notes to Financial Statements..........................................................................................................27 - 50 Other Required Supplementary Information Budgetary Comparison Schedule General Fund ............................................................ 52 - 53 Budgetary Comparison Schedule Road Fund ....................................................................... 54 Budgetary Comparison Schedule Flood Control Fund ......................................................... 55 Notes to Budgetary Comparison Schedules......................................................................56 - 57 Schedule of Agent Retirement Plans' Funding Progress ......................................................... 58 Other Supplementary Information Budgetary Comparison Schedule Scenic Debt Service Fund................................................ 60 Budgetary Comparison Schedule County Capital Improvement Fund ................................. 61
JOHN TIMKO Financial Services Director
700 West Beale Street P.O. Box 7000 Kingman, AZ 86402-7000
Phone: (928) 753-0735 Fax: (928) 753-0704
Management's Discussion and Analysis
Our discussion and analysis of the County's financial performance provides an overview of the County's financial activities for the year ended June 30, 2006. Please read it in conjunction with the County's basic financial statements, which begin on page 16. Financial Highlights Total net assets of the County are $227.3 million, of which $60.5 million is unrestricted and may be used to meet the government's ongoing obligations to citizens and creditors. Property taxes increased by $3 million (8%) during the year. As Mohave County continues to be one of the fastest growing counties in the U.S., much of this increase is due to a larger tax base and rising assessed values. At June 30, 2006, total fund balances of the governmental funds were $78.1 million, down $2.6 million from the previous year's balances. General Fund revenues exceeded budgeted revenues by $1.3 million and expenditures were only 83% of the original adopted General Fund budget and 91% of the final General Fund budget.
Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to Mohave County's basic financial statements. Mohave County's basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements - The government-wide financial statements are designed to provide readers with a broad overview of Mohave County's finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of Mohave County's 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 Mohave County is improving or deteriorating. The statement of activities presents information showing how the government's 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 only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused accrued leave). Both of the government-wide financial statements distinguish functions of Mohave County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of Mohave County include general government, public safety, highways and streets, health, welfare, education, and culture and recreation. The business-type activities of Mohave County include water companies, recreation, and landfill operations. The government-wide financial statements include not only Mohave County itself (known as the primary government), but blended component units. The blended component units are legally separate entities for which Mohave County is financially accountable. They include the following: a television district, two tax-levying districts, special assessment districts and a finance corporation. The County's Board of Supervisors serves as the board of directors for all of the component units except the finance corporation which has a separate board of directors made up of County management. The list of blended component units follows: Mohave County Television District provides and maintains communication equipment for TV signals. Mohave County Library District provides and maintains library services for County residents. Mohave County Flood Control District provides flood control systems for the County.
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Mohave County Special Assessment Districts provide funds to construct or improve roads, bridges, and water distribution systems. Mohave Administration Building Finance Corporation provides financing and oversight of the construction and operation of the Mohave County administration building.
Financial information for the blended component units is combined with the financial information presented for the primary government itself. The government-wide financial statements are on pages 16-17 of this report. Fund financial statements - A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Mohave County, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of Mohave County can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental 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 fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financial 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 balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Mohave County maintains 183 individual 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 Fund, Road Fund, Flood Control Fund, Scenic Debt Service Fund, and the County Capital Improvement Fund, all of which are major funds. Data from the other 178 governmental funds are combined into a single, aggregated presentation, under the heading Other Governmental Funds. Mohave County adopts an annual appropriated budget for all its funds. A budgetary comparison schedule has been provided for the General Fund and the major Special Revenue Funds to demonstrate compliance with their budgets. These schedules are presented on pages 55 to 58. The governmental funds financial statements can be found on pages 18-21 of this report. Proprietary funds - Mohave County maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Mohave County uses enterprise funds to account for its water companies, park services and landfill operations. Internal Service Funds are an accounting device used to accumulate and allocate costs internally among Mohave County's various functions. Mohave County uses internal service funds to account for its fleet of vehicles, employees benefit health insurance trust, self-insurance trust, janitorial services, communication services, central print shop services and for its management information systems. Because all of these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds financial statements provide the same type of information as the government-wide financial statements, only in more detail. The proprietary funds financial statements provide separate information for the water companies and the landfill operations, which are considered major funds of Mohave County. Conversely, the internal service funds are combined into a single, aggregated presentation in the proprietary funds financial statements. The proprietary funds financial statements can be found on pages 22-24 of this report. Fiduciary funds - 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 Mohave County's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The fiduciary funds financial statements can be found on pages 25-26 of this report.
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Notes to the financial statements - The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 27-50 of this report. Other information - In addition to the basic financial statements and accompanying notes, pages 52-58 presents required supplementary information including budgetary comparison schedules and Mohave County's progress in funding its obligation to provide pension benefits to some of its employees. Other supplementary information presenting budgetary comparison schedules for the Scenic Debt Service Fund, and County Capital Improvement Fund are located on pages 60-61. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of Mohave County, assets exceeded liabilities by $227.3 million at the close of the most recent fiscal year. For details regarding the 2005 restatement, refer to Note 2 on page 33. By far the largest portion of Mohave County's net assets (59%) reflects its investment in capital assets (e.g., land, buildings, infrastructure, machinery, and equipment) less accumulated depreciation and any related debt used to acquire those assets that is still outstanding. Mohave County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although Mohave County's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
14% of Mohave County's net assets represent resources subject to external restrictions on how they may be used. The remaining $60.5 million of unrestricted net assets may be used to meet the government's ongoing obligations to citizens and creditors.
Government-wide Statement of Net Assets As of June 30, 2005 As restated Current assets and other assets Capital assets Total assets Long-term liabilities outstanding Other liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets $ $ 1 1 8 ,8 3 2 , 2 6 9 1 3 7 ,6 6 9 , 2 8 6 2 5 6 ,5 0 1 , 5 5 5 4 1 ,8 0 3 , 4 8 2 9 ,1 2 9 , 5 8 3 5 0 ,9 3 3 , 0 6 5 1 1 7 ,9 4 5 , 7 0 2 4 5 ,4 9 0 , 9 4 4 4 2 ,1 3 1 , 8 4 4 2 0 5 ,5 6 8 , 4 9 0 $ $ Increase (Decrease) $ 660,134 18,339,032 18,999,166 (5,067,474) 2,374,127 (2,693,347) 16,688,324 (13,356,903) 18,361,092 $ 21,692,513 % Change 0.56% 13.32% 7.41% -12.12% 26.00% -5.29% 14.15% -29.36% 43.58% 10.55%
2 0 06 119,492,403 156,008,318 275,500,721 36,736,008 11,503,710 48,239,718 134,634,026 32,134,041 60,492,936 227,261,003
Governmental activities - net assets highlights: The net assets invested in capital assets, net of related debt had a net increase of $16.5 million, details of the increase in assets are discussed later in this report under the Capital Asset and Debt Administration heading. Most of the increase is attributed to the increase in capital assets. The difference of $1.6 million between the increase in capital assets and increase in net assets-invested in capital assets, net of related debt is the change in debt offsetting the assets. Long-term liabilities decreased 14% from last year due to an early payoff of both the series 1998 Certificates of Participation and one improvement district. Other liabilities increased $2.1 million mostly due to increased accrued liabilities at year-end of $3.8 million. The Flood Control Fund had an outstanding distribution of taxes of $2.4 million, which is normally paid prior to year-end, included in accrued liabilities. The balance of the increase in accrued expenses was from various construction projects and one-time election equipment purchases. These increases were offset by a decrease in the payroll accrual of $1.3 million, due to the timing of the payroll. The restricted net assets reflected a net decrease of $13.7 million. This decrease was due to a $7.8 million reduction in restricted cash in the County Capital Improvement Fund for completion of the administration building and an additional $.8 million of restricted cash in other governmental funds used for capital projects. There was also a $4.4 million reduction in cash of debt service funds due to the early payoff of the series 1998 Certificates of Participation. Additionally, Highways and streets
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experienced a reduction in cash of $.5 million related to the completion of the road project in Golden Valley, which used up the balance of funds held by trustee for that project. Unrestricted net assets increased by $18 million from the prior year. $6 million of this increase is unspent revenue in the County Capital Improvement Fund. Unrestricted net assets were offset by $8.1 million for the administration building debt from the prior year, representing unspent construction proceeds. This year $.2 million remained unspent at year-end and offset the unrestricted net assets balance. The balance of the debt is now offsetting the invested in capital assets net assets. In addition, the internal service funds net assets, which are included here, increased by $1.4 million over the prior year, the majority of this increase represents funds set aside for fleet replacement. The remaining $2.3 million reflects the net increase resulting from the prior period adjustment of $4.1 million increase and $1.9 million excess of expenditures over revenues.
Governmental Activities Statement of Net Assets As of June 30, 2005 As restated Current assets and other assets Capital assets Total assets Long-term liabilities outstanding Other liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets $ $ 1 0 6 ,3 1 9 , 0 5 9 1 2 2 ,5 5 8 , 0 4 5 2 2 8 ,8 7 7 , 1 0 4 3 8 ,7 4 6 , 3 7 0 8 ,5 8 9 , 5 9 6 4 7 ,3 3 5 , 9 6 6 1 0 2 ,8 3 4 , 4 6 1 3 8 ,2 5 5 , 8 3 4 4 0 ,4 5 0 , 8 4 3 1 8 1 ,5 4 1 , 1 3 8 $ $ Increase (Decrease) $ (686,130) 18,172,512 17,486,382 (5,518,500) 2,119,548 (3,398,952) 16,521,804 (13,678,504) 18,042,034 $ 20,885,334 % Change -0.65% 14.83% 7.64% -14.24% 24.68% -7.18% 16.07% -35.76% 44.60% 11.50%
20 0 6 105,632,929 140,730,557 246,363,486 33,227,870 10,709,144 43,937,014 119,356,265 24,577,330 58,492,877 202,426,472
Governmental activities comparative statement of activities highlights: Mohave County continues to have recordbreaking growth in population and its economy. This has resulted in increases in assessed values for taxes, as well as other types of revenue. While providing services to an expanding population, the County has managed to maintain moderate growth in expenses, due to increased efficiency. The increase in expenses was primarily from a mid-year cost of living and market adjustment to salaries, which the County felt was necessary to attract and keep qualified personnel. Staffing levels also increased by approximately 4% over the previous year to meet the demands of our citizens. The County's total revenues increased $11.1 million while the expenses only increased $7.6 million over the prior year.
The chart below represents all revenues collected from governmental activities, including general revenues from the Statement of Activities.
Re ve n u e s by source - Gove rn m e n t a l activitie s
Ot h er , $13,874,359 , 11%
Ch ar ges for Services, $17,417,807 , 13%
Sales T ax es, $27,992,499 , 22%
Op er at in g Grants and Contributions, $29,522,114 , 23%
P r o p er t y T ax es, $40,458,411 , 31%
The following graph represents the expenses and program revenues for governmental activities from the Statement of Activities. Program revenue does not include the general revenues listed on the bottom portion of the Statement of Activities. Total revenues generated by governmental activities (program revenues and general revenues) were $129.3 million. The $82.3
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million of general revenues, which are not included in this graph, represents 64% of total revenues reported for governmental activities. While this graph indicates expenses exceeded program revenues, the addition of general revenues produced an increase to net assets of $20.9 million for the fiscal year as indicated on the Statement of Activities.
Expe n s e s and program re ve n u e s - Gove rn m e n t a l activitie s
Ex p en se Rev en ue
$ 5 0 ,0 0 0 ,0 0 0 $ 4 0 ,0 0 0 ,0 0 0 $ 3 0 ,0 0 0 ,0 0 0 $ 2 0 ,0 0 0 ,0 0 0 $ 1 0 ,0 0 0 ,0 0 0 $Ex p e n s e Re v e n u e Ge n e r a l Gove r n m e n t $43,924,202 $14,119,786 Hig h wa y s a n d st r e e t s $19,577,244 $14,348,619 C u lt u r e a n d re c r e a t io n $3,759,007 $647,713 In t e r e s t on long-t e r m $1,550,006 $-
P u b lic S a f e t y $20,957,064 $8,188,015
He a lt h $13,382,160 $4,737,230
We lf a r e $3,941,590 $3,791,340
Ed u c a t io n $1,290,580 $1,107,218
Governmental Activities Comparative Statement of Activities As of June 30,
2005 As restated Revenues: Program revenues Charges for services Operating grants & contributions Total program revenues General revenues Property taxes Other taxes Other revenues Total general revenues Total revenues Expenses: General government Public safety Highways and streets Health Welfare Culture and recreation Education Interest on long-term debt Total expenses Increase in net assets before transfers Transfers Increase in net assets Net assets beginning of year Net assets end of year 20 06 Increase (decrease) % Change
$
16,481,133 28,507,253 44,988,386 36,665,781 33,434,340 3,076,439 73,176,560 118,164,946 40,612,403 20,872,097 17,343,734 12,524,742 3,555,556 2,831,185 1,318,684 1,748,146 100,806,547 17,358,399 156,555 17,514,954 164,026,184 181,541,138
$
17,417,807 29,522,114 46,939,921 40,458,411 39,964,725 1,902,133 82,325,269 129,265,190 43,924,202 20,957,064 19,577,244 13,382,160 3,941,590 3,759,007 1,290,580 1,550,006 108,381,853 20,883,337 1,997 20,885,334 181,541,138 202,426,472
$
936,674 1,014,861 1,951,535 3,792,630 6,530,385 (1,174,306) 9,148,709 11,100,244 3,311,799 84,967 2,233,510 857,418 386,034 927,822 (28,104) (198,140) 7,575,306 3,524,938 (154,558) 3,370,380 17,514,954 20,885,334
5.7% 3.6% 4.3% 10.3% 19.5% -38.2% 12.5% 9.4% 8.2% 0.4% 12.9% 6.8% 10.9% 32.8% -2.1% -11.3% 7.5% 20.3% -98.7% 19.2% 10.7% 11.5%
$
$
$
The current year governmental financial statements reflect an increase of $2 million in program revenues. Program revenues increased due to a $.9 million increase in charges for services-from an increase in client base and an increase of $1 million in operating grants and contributions due to increases in federal grants. The $9.1 million increase in general revenues was due to the following increases and decreases. Increases of $3.8 million in property taxes levied for flood control purposes, $2.1 million in sales tax, $3.3 in auto lieu tax and a $1.1 million capital projects sales tax. The increases were generated by increased population growth and tourism. The assessed values rose substantially and new construction was at an all time high. Investment earnings decreased by $1.3 million due to the current year unrealized loss adjustment.
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Business-Type Activities - net assets highlights: The net assets increased by $807,000. This increase was due to capital contributions from other non-major governmental funds to business-type activities totaling $651,000, included in operating grants and contributions, and income before contributions and transfers of $158,000. Accounts receivable increased by $300,000 in the I-40 fund along with sales tax payable of the same amount for funds due from a customer for sales tax liability. The 15% increase to long-term liabilities outstanding resulted from the annual review by engineers projecting the closure and postclosure costs for the Landfill Fund. The 47% increase to other liabilities was due to a lump sum payment by Griffith Energy for sales taxes that were not previously paid to the I-40 Water Corridor Fund. These funds were accrued to fiscal year 2006 and will be paid to the State of Arizona in fiscal year 2007.
Business-type Activities Statement of Net Assets As of June 30, Increase (Decrease) $ 1,346,264 166,520 1,512,784 451,026 254,579 705,605 166,520 321,601 319,058 $ 807,179 % Change 10.76% 1.10% 5.48% 14.75% 47.15% 19.62% 1.10% 4.45% 18.98% 3.36%
2 00 5 Current assets and other assets Capital assets Total assets Long-term liabilities outstanding Other liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets $ $ 1 2, 51 3, 21 0 1 5, 11 1, 24 1 2 7,62 4,45 1 3, 0 5 7 , 1 1 2 53 9, 98 7 3, 5 9 7, 0 9 9 1 5, 11 1, 24 1 7,23 5,11 0 1,68 1,00 1 2 4, 0 2 7, 3 5 2 $ $
2 00 6 13,859,474 15,277,761 29,137,235 3,508,138 794,566 4,302,704 15,277,761 7,556,711 2,000,059 24,834,531
The chart below represents all revenues collected from business-type activities, including general revenues from the Statement of Activities.
Revenues by source - Business-type activities
Operating Grants and Contributions, $1,038,163 , 18% Ot h er , $205,283 , 3%
Un r est r ict ed Investment Earnings, $217,156 , 4% Ch ar ges for Services, $4,419,205 , 75%
Analysis of revenue changes - The Business-type Statement of Activities graph on the following page shows the increases and decreases in revenue discussed below. The charges for services increased by a total of $230,602. This increase is spread across all funds and is related to the population growth in the county. The water usage is up along with additional landfill use. The increase to the parks is related more to non-residents. This fluctuates from year to year but the trend is generally upward. Operating grants and contributions rose by $524,000. The majority of this increase was
due to capital contributions from other non-major governmental funds to business-type activities totaling $651,000, which was offset by a decrease in grants to the parks department. The contributions are discussed in more detail on the next page. The major change in general revenues was in other revenues which decreased by 213,000. $59,000 of the decrease was due to the current year investment loss. The balance of the decrease of approximately $154,000 was in miscellaneous revenue in G.V.I.D. This is a result of a reduction in the amount of assessment lien purchases.
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The graph below represents the expenses and program revenues for business-type activities from the Statement of Activities. Please note that program revenue does not include the general revenues on the bottom portion of the statement.
Expenses and program revenues - Business-type activities
Ex p en se Rev en ue $ 2 ,5 0 0 , 0 0 0 $ 2 ,0 0 0 , 0 0 0 $ 1 ,5 0 0 , 0 0 0 $ 1 ,0 0 0 , 0 0 0 $ 5 0 0 ,0 0 0 $Ex p en se Revenue Landfill $1,722,728 $1,775,701 Recr eat io n $1,437,477 $1,995,505 W at er companies $1,910,426 $1,686,162
Business-type activities - comparative statement of activities highlights: Net assets for all enterprise funds increased $807,000 from the prior year. The majority of this increase was due to capital contributions from other non-major governmental funds to business-type activities totaling $651,000, included in operating grants and contributions. These funds were used to purchase assets assigned to business-type activities; $601,000 to other enterprise funds to fund projects for County parks and $50,000 for well site improvements for the G.V.I.D. Fund. The Landfill expenses increased $1.1 million over the prior year. The majority of the increase was in waste tire removal expense of $800,000. This is an expense that happens every two to three years. In addition the landfill closure / postclosure costs increased by $237,000 due to the increase use in the current year landfill usage, caused by continued population growth. The recreation expenses increased by $210,000 mainly because of increases in personnel expense of $98,000 form market increases and increased personnel. Depreciation increased by $55,000 due to adding additional buildings and other structures. Maintenance supplies and outside services increased by $25,400 due to expansion of facilities and some major repairs. Utilities, including sewage increased by 16,000. The remaining increase was spread across other operating expenses also due to increased park usage and adding additional personnel. The water company expenses increased in total by $33,618, due to salary increases of $81,000. The increase in salaries was due to being fully staffed, in addition to market increases and raises. This was offset by decreases in depreciation of $40,000 and electric usage of $41,000. Some assets became fully depreciated the prior year. Demand charges were down in 2006 making our electric cost lower.
Business-type Activities Comparative Statement of Activities As of June 30,
Increase (decrease) % Change
2 0 05 Revenues: Program revenues Charges for services Operating grants & contributions Total program revenues General revenues Property taxes Other taxes Other revenues Total general revenues Total revenues Expenses: Landfill Recreation Water companies Total expenses Increase in net assets before transfers Transfers Increase in net assets Net assets beginning of year Net assets end of year
20 0 6
$
4, 1 88 , 60 3 5 14 , 07 4 4, 7 02 , 67 7 (23) 1 00 , 00 0 5 35 , 18 6 6 35 , 16 3 5, 3 37 , 84 0 6 12 , 24 6 1, 2 26 , 71 3 1, 8 76 , 80 8 3, 7 15 , 76 7 1, 6 22 , 07 3 (156,555) 1, 4 65 , 51 8 2 2, 5 61 , 83 4 2 4, 0 27 , 35 2
$
4,419,205 1, 0 38 , 16 3 5,457,368 100,000 322,439 422,439 5,879,807 1,722,728 1,437,477 1,910,426 5,070,631 809,176 (1,997) 807,179 24,027,352 24,834,531
$
230,602 5 2 4 ,0 8 9 754,691 23 (212,747) (212,724) 541,967 1,110,482 210,764 33,618 1,354,864 (812,897) 154,558 (658,339) 1,465,518 807,179
5.5% 1 0 1. 9 % 16.0% -100.0% 0.0% -39.8% -33.5% 10.2% 181.4% 17.2% 1.8% 36.5% -50.1% -98.7% -44.9% 6.5% 3.4%
$
$
$
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Financial Analysis of the Government's Funds
As noted earlier, Mohave County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds - The focus of Mohave County's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable sources. Such information is useful in assessing Mohave County's financing 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. As of the end of the current fiscal year, Mohave County's governmental funds reported combined ending fund balances of $78.1 million, a decrease of $2.6 million in comparison with the prior year. The reserved fund balances consist of $4.7 million reserved for debt service and $262,747 invested in inventory. The General Fund is the chief operating fund of Mohave County. At the end of the current fiscal year, unreserved fund balance of the General Fund was $10 million. As a measure of the General Fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. The General Fund unreserved fund balance represents 17% of total General Fund expenditures. During the current fiscal year, the fund balance of Mohave County's General Fund increased by $1,797. This represents less than a 1% increase from the fiscal year 2005 ending balance. Revenues increased by $4.7 million (7%), while expenditures increased $2.9 million (5%) over the previous year. Total expenditures as a percentage of the total budget were only 91% in fiscal year 2006. These increases are the result of rapid population growth in the county. The County addressed personnel requirements to provide services to a growing Mohave County population by giving market adjustments and COLA increases. These increases along with increased retirement and health insurance costs accounted for a 13% increase in personnel costs. Other major cost increases occurred in the following expenses: legal services, mental health and AHCCCS services, inmate costs, and equipment automation. The Road Fund had a total fund balance of $12.6 million, of which $262,747 is reserved for inventories and $12.4 million is unreserved and will be used for road maintenance. The net decrease in unrestricted fund balance during the current year in the Road Fund was $520,179. The decrease results from more road projects completed in this fiscal year than the amount of funds collected. The balance reflects funds available for ongoing road projects of the County. The Scenic Debt Service Fund had an ending fund balance of $1.3 million. The fund balance increased by $273,801 due to early payoffs of special assessment debt by property owners. The County Capital Improvement Fund had a fund balance of $28.2 million at June 30, 2006. This was an increase of $1.5 million from the prior year. The increase is partly due to a transfer in of $5.5 million for future capital projects and a $1.9 million transfer out for debt service and maintenance of the County administration building. Revenues increased by $790,000, while expenditures decreased by $3.3 million over the prior year (reflecting the construction in progress and debt payments of the County administration building). Overall the operating expenses exceeded revenue by $2.1 million.
The Other Governmental Funds had a combined fund balance of $20.3 million at June 30, 2006. This was a net decrease of $1.5 million from the prior year, after adjusting for the change in classification for the Flood Control Fund to a major fund this year, rather than as a part of the Other Governmental Funds. The net decrease is made up of a $4.7 million decrease in the Certificates of participation fund from an early payoff, and an increase of $1.3 million in capital projects funds and a net increase of $1.9 million in the special revenue funds. The increase in capital projects resulted from unexpected funds transferred in from the general fund for on-going county capital projects. The increase in the special revenue funds is partially from unexpended taxes in two taxing districts, the Library, and the T.V. district for a total of $.7 million. The remaining $1.2 million increase in net assets was the result of an increase of $2.2 million in intergovernmental revenue resulting from new grant funding sources in various special revenue funds and an increase in offsetting expenditures on those grants of $1 million. These are simply timing differences in federal grants that have different year ends and from unexpected levels of service. The demand for services has increased with the population growth.
Proprietary funds - Mohave County's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net assets of the water companies, park services, and landfill operations at the end of the year amounted to $1.4 million. Net assets for all enterprise funds increased $807,179, a 3% increase from the prior year. The only individual fund that did not show a profit was the 1-40 Water Corridor Fund, which had a decrease in net assets of $174,143. However, if you add back the non-cash expense of depreciation to that fund, they would have made a small
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profit. The Landfill fund's net assets increased by $242,470. The increase is from charges for services generated by increased usage form a growing population in Mohave County. The accumulated fund balance will be used for future expansion, as well as closure and postclosure costs. The G.V.I.D. Fund had a small profit of $160,000 from charges for services and some contributions of capital assets for a total increase of $209,869 in net assets. This increase was due to increased development in the water district. The Other Enterprise Funds posted a loss of $70,000, primarily due to the Parks Fund using resources to complete on-going projects. Net assets for the internal service funds increased by $1.3 million. $1 million of that amount was due to the Vehicle Replacement Fund, which will be used to replace an aging County fleet; these funds will be used during the next fiscal year to purchase new vehicles. General Fund Budgetary Highlights Revenues: The budgeted revenues were increased through a board-approved action to accept canine donations totaling $54,317 for the Sheriff's office. Expenditures: Differences between the original budget and the final amended budget were created by moving expenditures between line items and categories of budget. The net difference for expenditures was a decrease of $6.3 million, moved to transfers out to other funds. The increase in transfers out came from contingency. There were $6.8 million in decreases to general government activities, which included a decrease of $7.1 million from contingency to cover transfers as described below and $130,000 for a human resources compensation and classification study, an increase to indigent defense of $160,000 to cover excess legal costs, $461,000 to various other general fund departments to cover unexpected expenses, $40,000 to the medical examiner for autopsies and $25,000 to general administrative fund for a feasibility study for future expansion in Bullhead City. There was also a decrease in the general administrative fund of $.3 million for transfers to various other general fund departments for market increases. The entire market increase for salaries was budgeted in the general administrative fund and transferred as needed to various other general fund budgets. Transfers out: The increase of $6.4 million (reallocated from expenditures) was used to fund a $5.5 million allocation to the County Capital Improvement fund for the future jail expansion project and $.9 to cover various other capital projects. Budgeted transfers out exceeded actual by $2 million for unused budgeted transfers to internal service funds which were actually expenditures for services. The actual amounts were reflected as expenditures. Variances between actual revenues, expenditures and final budgeted amounts will be discussed below for all significant differences, as related to the schedule in required supplementary information. Overall, during the year, revenues exceeded budgetary estimates and expenditures were less than budgetary estimates. The primary exceptions for revenue exceeding budget were in fines and forfeits, charges for services, and licenses and permits. Moccasin Justice Court budgeted for fines and forfeits based on previous years' revenue-during a construction project period (which doubles fines). The current year revenues are at normal rates, not double, as the construction project was completed the prior year. Planning and zoning and Building inspection planned on outsourcing plan reviews and budgeted accordingly, that accounted for $367,000 of the uncollected charges for services. In addition, elections over estimated on the cities needs for elections this year, by $119,000. Two major construction projects did not materialize that were included in the permit budget for Planning and zoning so the revenue is lower than budgeted by $400,000 in licenses and permits. Tax revenue is budgeted at 95% of assessed valuation allowing for delinquent taxes. The $895,148 increase reflects that delinquencies were lower than budgeted. Intergovernmental revenue exceeded budgeted amounts because the economy expanded at a faster rate then expected and state shared revenues exceeded projections by more than $1.5 million. As permitted by State statutes, the County budgets its available unrestricted fund balance at the end of the prior fiscal year as contingency for the next year. The remaining contingency at year-end was $2 million. At year-end, the following departmental budgets exceeded actual expenses due to personnel vacancies: Assessor, Board of supervisors, Public defender, and Public legal defender. The Elections department budgeted revenues and expenditures exceeded the actual due to high budget estimates of election needs. The Justice courts had remaining budget of $141,000 due to vacancies savings and a professional services contract not completed during this year. Planning and zoning had vacancy savings of $234,000 along with excess budget of $511,000 for not outsourcing the plans review as they had planned. Building inspection had excess budget due to $289,000 vacancy savings, $180,000 for plans review that were not outsourced, and $100,000 for specialized laptops to use out in the field that were not purchased. The A.H.C.C.C.S. budget was inadvertently doubled for administrative expense by including the same $356,970 on two different lines of the budget, which is why there is remaining budget. Please see note 3 of the required supplementary information for the explanation of variance of the General administrative department.
11
Capital Asset and Debt Administration Capital assets Mohave County's investment in capital assets for its governmental and business-type activities as of June 30, 2006 amounts to $156 million (net of accumulated depreciation). This investment in capital assets includes land, buildings, water systems, improvements other than buildings, machinery and equipment, park facilities, roads, highways, and bridges. The net increase in Mohave County's invested in capital assets, net of related debt, for the current fiscal year was $16.7 million or 14%. There was an increase in capital assets of $18.3 million (net of depreciation) related to the following projects and purchases: $8.1 million for the completion of construction on the new administration building; $5.0 million for the Mohave Wash project; $1.2 million for the Bullhead City Justice Court building; $3.1 million for vehicles and road equipment added to the fleet, and $.9 million for minor equipment purchases.
Capital Assets, net of accumulated depreciation As of June 30, Increase 2005 Governmental activities Capital assets, not being depreciated Capital assets, being depreciated Total governmental assets Business-type activities Capital assets, not being depreciated Capital assets, being depreciated Total business-type assets Total governmental and business-type activities Capital assets, not being depreciated Capital assets, being depreciated Total capital assets $ $ 46,915,763 90,753,523 137,669,286 $ $ 41,424,964 114,583,354 156,008,318 $ $ (5,490,799) 23,829,831 18,339,032 -11.70% 26.26% 13.32% $ $ 1,626,010 13,485,231 15,111,241 $ $ 2,155,257 13,122,504 15,277,761 $ $ 529,247 (362,727) 166,520 32.55% -2.69% 1.10% $ $ 45,289,753 77,268,292 122,558,045 $ $ 39,269,707 101,460,850 140,730,557 $ $ (6,020,046) 24,192,558 18,172,512 -13.29% 31.31% 14.83% 2006 Decrease % Change
Major capital asset events during the current fiscal year include the following: OPUS International completed construction on the administration building in Kingman and the County received a certificate of occupancy in October 2005. Total expenditures for the year were $8.1 million. The County completed the Golden Valley road improvement projects, using the final $472,000 of the environmental trust funds awarded for those road improvements. The total cost of those improvements was $3 million dollars. Construction continues on the Mohave Wash project with total expenditures in 2006 of $5 million. The County expects to complete the project by June 30, 2007. The Parks fund spent $306,000 on improvements to the Hualapai Mountain Park visitor center.
Construction began on the Bullhead City Court Building addition with expenditures of $1.2 million for the year. The County expects to complete the project by June 30, 2007, at estimated additional costs of $200,000. The County replaced 62 aging vehicles from the fleet at a total cost of $1.5 million. Forty-six vehicles were purchased using general government funds; thirteen were purchased with Road funds; and three with business-type funds.
The 15% decrease to the governmental activities capital assets not being depreciated reflects the completion of the administration building and the Golden Valley roads project. These projects were previously reported under construction in progress and were not depreciated. Upon completion, the assets were reclassified as depreciable assets. Note 6, on
pages 38-39 of this report, contains additional information on Mohave County's capital assets.
12
Long-term debt - At the end of the current fiscal year, Mohave County had total debt outstanding of $36.7 million. Of this amount, $20.9 million comprises debt backed by buildings of the government used as collateral for Certificates of Participation issued and $3.7 million is special assessment debt for which the government can sell the taxpayer's property, to cover the debt, in the event of default by the property owners subject to the assessment. The remainder of Mohave County's long-term liabilities represents claims and judgments payable, notes payable, landfill closure and postclosure care costs payable, and compensated absences payable incurred during normal operations. State statutes limit the amount of general obligation debt a government entity may issue to 6% of its total secondary assessed valuation, without taxpayer approval, and up to 15% with the approval of a majority of taxpayers. The debt limitation for Mohave County, for fiscal year 2005/2006, was $92 million (6% of $1.5 billion secondary assessed value). Mohave County does not have any outstanding general obligation debt and therefore has its full debt limit capacity available for future needs. Note 8, on pages 40-44 of this report, contains additional information on Mohave County's long-term debt. Economic Factors and Next Year's Budgets and Rates Continued population growth that exceeds State and national growth significantly influences future budgets. More citizens result in more service demands. A growing and changing economy creates additional costs and additional demand for public services, requiring public revenues to keep pace with economic growth. All of these factors were considered in preparing
Mohave County's budget for the 2006 fiscal year.
% of Population Growth Between 1970 and 2000
6 00 % 5 00 % 4 00 % 3 00 % 2 00 % 1 00 % 0%
19 70 19 72 19 74 19 76 19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00
From 1970 to 2000 Mohave County, AZ grew by 130,052 people, a 494% increase in population. In addition, the population in Mohave County, AZ has grown faster than the state and the nation.
United States
A r iz ona
Mohav e County, AZ
% of Job Growth compared to the State and Nation 6 00% 5 00% 4 00% 3 00% 2 00% 1 00% 0%
19 70 19 72 19 74 19 76 19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00
Over the last 30 years job growth in Mohave County, AZ has outpaced that of the state and the nation.
United States Arizona Mohave County, AZ
13
The unemployment rate for Mohave County for 2006 was 4.1%, which is a slight increase from a rate of 4.0% in 2005. Even with this minor increase, the County's unemployment rate compares favorably to the state's average unemployment rate of 4.2% and the national average rate of 4.7%.
Comparison of Local, State and Federal Unemployment Rates
Data Compiled from Bureau of Statistics
Mohave County State of Arizona Federal
Requests for Information
2002 5.5 6.2 5.8
2003 5.3 5.6 6.0
2004 3.8 4.8 5.5
2005 4.0 4.5 5.2
2006 4.1 4.2 4.7
This financial report is designed to provide a general overview of Mohave County's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: Mohave County Finance P.O. Box 7000 Kingman, AZ 86402-7000
14
Basic Financial Statements
15
MOHAVE COUNTY Statement of Net Assets June 30, 2006 Primary Government Governmental Activities Assets Current Assets Cash and investments Receivables (net of allowances for uncollectibles): Property taxes Accounts Accrued interest Special assessments Internal balances Due from other governments Inventories Prepaid items Noncurrent Assets Restricted cash Note receivable Capital assets, not being depreciated Capital assets, being depreciated, net Total assets Liabilities Current Liabilities Accounts payable and other current liabilities Accrued payroll and employee benefits Accrued interest payable Due to other governments Deposits held for others Deferred revenue (unearned revenue) Current portion of long-term obligations Noncurrent liabilities Noncurrent portion of long-term obligations Total liabilities Net Assets Invested in capital assets, net of related debt Restricted for: Public safety Highways and streets Health Welfare Education Debt service Capital projects Other purposes Unrestricted Total net assets $ 2,180,460 12,383,996 586,217 373,166 183,213 7,976,683 525,692 367,903 58,492,877 202,426,472 $ 906,103 6,650,608 2,000,059 24,834,531 $ 2,180,460 12,383,996 586,217 373,166 183,213 7,976,683 1,431,795 7,018,511 60,492,936 227,261,003 $ 119,356,265 $ 15,277,761 $ 134,634,026 $ 24,167,087 43,937,014 $ 3,396,361 4,302,704 $ 27,563,448 48,239,718 $ 5,679,483 1,224,157 583,766 76,825 1,175,309 1,969,604 9,060,783 $ 242,984 31,992 261,510 158,080 100,000 111,777 $ 5,922,467 1,256,149 583,766 338,335 1,333,389 2,069,604 9,172,560 $ 2,511,311 39,269,707 101,460,850 246,363,486 $ 906,103 845,402 2,155,257 13,122,504 29,137,235 $ 3,417,414 845,402 41,424,964 114,583,354 275,500,721 2,392,486 687,991 294,844 3,327,700 2,467 6,081,228 367,903 257,354 392 781,931 43,381 (2,467) 174,498 253,184 59,865 2,392,878 1,469,922 338,225 3,327,700 6,255,726 621,087 317,219 $ 89,709,645 $ 10,797,185 $ 100,506,830 Business-Type Activities Total
The notes to the financial statements are an integral part of this statement
16
MOHAVE COUNTY Statement of Activities Year Ended June 30, 2006
Program Revenues
Net (Expense) Revenue and Changes in Net Assets Primary Government
Functions/Programs Primary Government: Governmental activities: General government Public safety Highways and streets Health Welfare Culture and recreation Education Interest on long-term debt Total governmental activities Business-type activities: Landfill Recreation Water companies Total business-type activities Total primary government
Expenses
Charges for Services
Operating Grants and Contributions
Governmental Activities
Business-Type Activities
Total
$
43,924,202 20,957,064 19,577,244 13,382,160 3,941,590 3,759,007 1,290,580 1,550,006 108,381,853 1,722,728 1,437,477 1,910,426 5,070,631
$
11,491,895 2,225,227 1,502,051 1,696,153 431,724 70,757 17,417,807 1,388,329 1,394,550 1,636,326 4,419,205
$
2,627,891 5,962,788 12,846,568 3,041,077 3,359,616 576,956 1,107,218 29,522,114 387,372 600,955 49,836 1,038,163
$
(29,804,416) (12,769,049) (5,228,625) (8,644,930) (150,250) (3,111,294) (183,362) (1,550,006) (61,441,932) (61,441,932)
$
52,973 558,028 (224,264) 386,737 386,737
$
(29,804,416) (12,769,049) (5,228,625) (8,644,930) (150,250) (3,111,294) (183,362) (1,550,006) (61,441,932) 52,973 558,028 (224,264) 386,737 (61,055,195)
$ 113,452,484
$
21,837,012
$
30,560,277
General revenues: Taxes Property taxes, levied for general purposes Property taxes, levied for flood control Property taxes, levied for debt service Share of state sales taxes Special county sales tax for capital projects Auto lieu tax Federal in lieu tax Local in lieu tax Utilities franchise tax County equalization revenue Investment earnings Miscellaneous Rent Deed sale revenue Transfers Total general revenues and transfers Change in net assets Net assets, July 1, 2005, as restated Net assets, June 30, 2006
$
33,563,426 6,627,190 267,795 20,183,057 7,809,442 9,599,164 1,911,725 22,391 438,946 195,150 972,633 254,403 234,937 245,010 1,997 82,327,266 20,885,334 181,541,138 202,426,472
100,000 217,156 101,923 3,360 (1,997) 420,442 807,179 24,027,352 $ 24,834,531
$
33,563,426 6,627,190 267,795 20,183,057 7,809,442 9,599,164 2,011,725 22,391 438,946 195,150 1,189,789 356,326 238,297 245,010 82,747,708 21,692,513 205,568,490 227,261,003
The notes to the financial statements are an integral part of this statement
17
MOHAVE COUNTY Balance Sheet Governmental Funds June 30, 2006 100 Assets Cash and investments Receivables (net of allowances for uncollectibles): Property taxes Accounts Accrued interest Special assessments Due from: Other funds Other governments Inventories Prepaid items Cash-restricted Total assets 428,923 1,858,968 25,391 $ 16,652,676 249,544 1,459,705 262,747 4,775 $ 13,624,063 575 $ 8,897,084 $ 4,211,604 693,179 525,692 $ 28,550,800 746,009 2,066,166 159,201 1,985,619 $ 24,448,127 1,424,476 6,078,018 262,747 189,942 2,511,311 $ 96,384,354 1,712,022 359,476 53,042 19,601 31,273 352,217 32,559 4,344 2,886,956 70,449 328,247 241,791 70,795 440,744 2,392,486 620,868 262,462 3,327,700 General Fund $ 12,214,854 205 Road Fund $ 11,596,418 305 Flood Control Fund $ 8,511,733 330 Scenic Debt Service Fund $ 1,320,304 410 County Capital Improvement Fund $ 27,261,480
Other Governmental Funds $ 18,409,555
Total Governmental Funds $ 79,314,344
Liabilities and Fund Balances Liabilities Accrued liabilities Accrued payroll and employee benefits Due to: Other funds Other governments Deposits held for others Claims and judgments payable Certificates of participation: Principal payable Interest payable Deferred revenue Total liabilities Fund balances Reserved for: Inventories Debt service Unreserved, reported in: General fund Special revenue funds Capital projects funds Total fund balances Total liabilities and fund balances 10,044,443 10,044,443 $ 16,652,676 12,383,996 12,646,743 $ 13,624,063 5,720,838 5,720,838 $ 8,897,084 1,324,648 $ 4,211,604 28,152,153 28,152,153 $ 28,550,800 12,431,344 4,463,292 20,274,077 $ 24,448,127 10,044,443 30,536,178 32,615,445 78,162,902 $ 96,384,354 262,747 1,324,648 3,379,441 262,747 4,704,089 3,329,009 6,608,233 977,320 252,468 3,176,246 2,886,956 2,886,956 398,647 900,000 583,766 653,985 4,174,050 900,000 583,766 7,122,418 18,221,452 447,130 1,124,234 301,003 6,062 2,493 50,905 722,084 76,825 49,131 62,037 1,177,769 76,825 1,173,365 413,945 $ 658,833 748,024 $ 827,872 143,386 $ 2,861,187 9,193 $ $ 398,647 $ 839,690 286,532 $ 5,586,229 1,187,135
The notes to the financial statements are an integral part of this statement
18
MOHAVE COUNTY Reconciliation of the Balance Sheet to the Statement of Net Assets Governmental Funds June 30, 2006
Fund balances - total governmental funds 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. Some receivables are not available to pay for current-period expenditures and therefore, are deferred in the funds. Property taxes receivable Special assessments receivable Internal service funds are used by management to charge the costs of certain activities, such as insurance, equipment maintenance, and telecommunications, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Assets. Some liabilities, including bonds and certificates of participation payable, are not due and payable in the current period and therefore, are not reported in the funds. Special assessment bonds Certificates of participation Certificates of participation premium-unamortized Note payable to landfill Compensated absences 1,880,220 3,272,594
$ 78,162,902
137,060,693
5,152,814
12,499,029
3,741,000 20,080,000 517,082 845,402 5,265,482
(30,448,966)
Net assets of governmental activities
$ 202,426,472
The notes to the financial statements are an integral part of this statement
19
MOHAVE COUNTY Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2006
100 General Fund Revenues: Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment income Rents Contributions Miscellaneous Total revenues Expenditures: Current: General government Public safety Highways and streets Health Welfare Culture and recreation Education Capital outlay Debt service: Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Proceeds from deed sale Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2005 Decrease in reserve for inventory of supplies Fund balances, June 30, 2006 1,052,647 (9,175,067) (8,122,420) 1,797 10,042,646 $ 10,044,443 60,267,242 32,934,721 18,059,137 8,925,746 347,638 $ 27,949,311 1,686,351 30,035,457 6,989,193 1,452,409 163,553 360 36,663 78,162 68,391,459 $
205 Road Fund 15,363,121 1,459,164 125,323 116,200 16,921 17,080,729
305 Flood Control Fund $ 6,627,190 42,886 635 116,033 6,786,744
330 Scenic Debt Service Fund $ 919,527 4,799 12,964 937,290
410 County Capital Improvement Fund $ 7,809,442 20,000 55,735 147,567 109,067 8,141,811
Other Governmental Funds $ 6,497,698 265,853 15,642,219 5,867,873 61,863 320,678 9,310 180,357 50,318 28,896,169
Total Governmental Funds $ 48,883,641 1,185,380 1,729,237 61,061,432 14,371,965 1,519,071 886,118 234,937 217,020 145,401 130,234,202
17,300,908 17,300,908
8,677,497 8,677,497
450,000 213,489 663,489
10,284,922 10,284,922
4,652,275 7,079,899 22,499 5,460,643 4,157,899 4,953,969 1,236,202 1,148,064 5,690,000 1,336,517 35,737,967
37,586,996 25,139,036 26,000,904 14,386,389 4,157,899 4,953,969 1,583,840 11,432,986 6,140,000 1,550,006 132,932,025
8,124,217
(220,179)
(1,890,753)
273,801
(2,143,111)
(6,841,798)
(2,697,823)
(300,000) (300,000) (520,179) 13,274,057 (107,135) $ 12,646,743
27,500 (350,694) 46,049 (277,145) (2,167,898) 7,888,736 $ 5,720,838
273,801 1,050,847 $ 1,324,648
5,500,000 (1,876,234) 3,623,766 1,480,655 26,671,498 $ 28,152,153
6,723,548 (1,601,510) 198,961 5,320,999 (1,520,799) 21,794,876 $ 20,274,077 $
13,303,695 (13,303,505) 245,010 245,200 (2,452,623) 80,722,660 (107,135) 78,162,902
The notes to the financial statements are an integral part of this statement
20
MOHAVE COUNTY Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities Governmental Funds Year Ended June 30, 2006
Net change in fund balances - total governmental funds Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital outlay Net effect of disposal of capital assets Depreciation expense Debt proceeds provide current financial resources to government funds, but issuing debt increases long-term liabilities in the Statement of Net Assets. Repayment of debt is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Assets. Principal repaid on long-term debt: Special assessment bonds Certificates of participation Certificates of participation premium-amortization Note payable to landfill Under the modified accrual basis of accounting used in governmental funds, expenditures are not recognized for transactions that are not normally paid with expendable available resources. In the Statement of Activities, however, which is presented on the accrual basis of accounting, expenses and liabilities are reported regardless of when the financial resources are available. Increase in compensated absences Collections of deferred revenues plus current-year revenues recorded in the governmental funds exceeded revenues reported in the Statement of Activities. Some cash outlays, such as purchases of inventories, are recorded as expenditures in the governmental funds when purchased. In the Statement of Activities, however, inventories are reported as expenses when consumed. Decrease in inventories Internal service funds are used by management to charge the costs of certain activities, such as insurance, equipment maintenance, and telecommunications to individual funds. The net revenue of certain internal service funds is reported with governmental activities. Change in net assets of governmental activities 635,000 5,505,000 39,775 154,598 22,790,797 169,303 (5,257,002)
$ (2,452,623)
17,703,098
6,334,373
(751,135)
(1,167,225)
(107,135)
1,325,981 20,885,334
The notes to the financial statements are an integral part of this statement
21
MOHAVE COUNTY Statement of Net Assets Proprietary Funds June 30, 2006 Business-type Activities - Enterprise Funds I-40 Water Corridor Fund Assets Current assets: Cash and investments Receivables (net of allowances for uncollectibles): Property taxes Accounts Accrued interest Due from: Other funds Other governments Inventories Prepaid items Total current assets Noncurrent assets: Cash - restricted Note receivable p accumulated depreciation, where applicable Land Infrastructure, net Buildings, net Equipment, net Construction in progress Total noncurrent assets Total assets Liabilities Current liabilities: Accrued liabilities Accrued payroll and employee benefits Due to: Other funds Other governments Deposits held for others Deferred revenues Current portion of: Compensated absences payable Claims and judgments payable Total current liabilities Noncurrent liabilities: Landfill closure and postclosure care costs payable Compensated absences payable Total noncurrent liabilities Total liabilities Net Assets Invested in capital assets, net of related debt Restricted for: Capital projects Sanitation Unrestricted (deficit) Total net assets Landfill Fund G.V.I.D. Fund Other Enterprise Funds Governmental ActivitiesInternal Service Funds
Total
$
73,454
$ 8,915,527
$ 1,030,659
$
777,545
$ 10,797,185
$ 10,395,301
515,171 3,825 430 73,841 226,799 51,600 945,120 606,219 -
167,009 33,756 97,284 9,213,576 845,402
392 99,174 3,773 9,112 26,385 4,884 1,174,379 299,884 -
577 2,027 101 3,373 3,381 787,004 -
392 781,931 43,381 9,643 174,498 253,184 59,865 12,120,079 906,103 845,402
67,123 32,382 99,366 3,210 105,156 67,412 10,769,950 -
4,551,516 100,874 5,258,609 6,203,729
106,818 38,382 990,602 10,204,178
40,388 6,478,565 53,297 204,507 16,956 7,093,597 8,267,976
1,481,772 432,941 987,622 274,800 509,323 3,686,458 4,473,462
1,628,978 11,463,022 1,040,919 618,563 526,279 17,029,266 29,149,345
3,669,864 3,669,864 14,439,814
145,199 3,412 5,728 255,424 17,798 -
28,625 4,072 649 -
27,404 6,661 1,964 6,086 134,982 -
41,756 17,847 3,769 5,300 100,000
242,984 31,992 12,110 261,510 158,080 100,000
93,254 37,022 343,606 1,944 -
14,306 441,867
9,747 43,093
16,578 193,675
71,146 239,818
111,777 918,453
184,905 1,280,054 1,940,785
4,361 4,361 446,228
3,362,308 2,969 3,365,277 3,408,370
5,050 5,050 198,725
21,673 21,673 261,491
3,362,308 34,053 3,396,361 4,314,814
1,940,785
4,652,390 606,219 498,892 $ 5,757,501
145,200 6,650,608 $ 6,795,808
6,793,713 299,884 975,654 $ 8,069,251
3,686,458 525,513 $ 4,211,971
15,277,761 906,103 6,650,608 2,000,059 $ 24,834,531
3,669,865 8,829,164 $ 12,499,029
The notes to the financial statements are an integral part of this statement
22
MOHAVE COUNTY Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds Year Ended June 30, 2006
Business-type Activities - Enterprise Funds
850 I-40 Water Corridor Fund Operating revenues: Taxes Charges for services Miscellaneous Total operating revenues Operating expenses: Personnel services Supplies Professional services Communications Insurance Landfill closure and postclosure care costs Insurance claims Lawsuit judgments Repairs and maintenance Public utility service Rents and leases Depreciation Other Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Investment income Rent income Intergovernmental Gain (loss) on disposal of capital assets Total nonoperating revenues (expenses) Income (loss) before contributions and transfers Capital contributions Transfers in Transfers out Increase (decrease) in net assets Total net assets, July 1, 2005 Total net assets, June 30, 2006 12,287 1,680 (75,034) (61,067) (174,143) (174,143) 5,931,644 $ 5,757,501 189,497 387,372 576,869 242,470 242,470 6,553,338 $ 6,795,808 9,101 1,680 10,781 160,033 49,836 209,869 7,859,382 $ 8,069,251 6,271 100,000 (13,584) 92,687 (69,975) 600,955 (1,997) 528,983 3,682,988 $ 4,211,971 217,156 3,360 487,372 (88,618) 619,270 158,385 650,791 (1,997) 807,179 24,027,352 $ 24,834,531 $ 86,514 (106,848) (20,334) 1,324,174 1,807 1,325,981 11,173,048 12,499,029 172,226 11,401 29,651 4,337 56,079 3,390 263,546 3,260 398,051 15,190 957,131 (113,076) 195,962 19,844 864,152 2,715 423,502 3,394 108,983 6,790 7,722 89,664 1,722,728 (334,399) 288,865 55,790 23,484 13,889 6,647 17,613 95,595 1,796 287,501 43,525 834,705 149,252 818,462 178,312 62,800 17,495 3,627 17,304 213,914 5,530 135,902 14,103 1,467,449 (162,662) 1,475,515 265,347 980,087 38,436 66,353 423,502 41,701 682,038 17,376 829,176 162,482 4,982,013 (460,885) 1,862,703 921,343 77,489 626,865 656,631 9,016,219 137,134 148,915 775 1,202,313 785,968 171,044 15,607,399 1,344,508 $ 839,264 4,791 844,055 $ 1,388,329 1,388,329 $ 893,819 90,138 983,957 $ 1,297,793 6,994 1,304,787 $ 4,419,205 101,923 4,521,128 $ 154 16,945,286 6,467 16,951,907 505 Landfill Fund 856 G.V.I.D. Fund Other Enterprise Funds Governmental ActivitiesInternal Service Funds
Total
The notes to the financial statements are an integral part of this statement
23
MOHAVE COUNTY Statement of Cash Flows Proprietary Funds Year Ended June 30, 2006
Business-type-Activities - Enterprise Funds Other Landfill G.V.I.D. Enterprise Fund Fund Funds Governmental ActivitiesInternal Service Funds
I-40 Water Corridor Fund
Total
Cash flows from operating activities: Receipts from customers and users Receipts from interfund services provided Payments to suppliers Payments to employees Payments for interfund services used Net cash provided by (used for) operating activities Cash flows from noncapital financing activities: Transfer to other funds Rent income Advances from other funds Subsidy from federal grant Net cash provided by (used for) noncapital financing activities Cash flows from capital and related financing activities: Purchases of capital assets Proceeds from sales of capital assets Net cash used for capital and related financing activities Cash flows from investing activities: Proceeds from sales and maturities of investments Interest and dividends received Net cash provided by (used for) investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, July 1, 2005 Cash and cash equivalents, June 30, 2006 Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities: Depreciation expense Landfill closure and postclosure care costs Expenses incurred but not reported Change in assets and liabilities: Receivables, net (increase) decrease Due from other funds, net (increase) decrease Due from other governments, (increase) decrease Inventories, (increase) decrease Prepaid items, net (increase) decrease Accrued liabilities, net increase (decrease) Due to other funds, increase (decrease) Due to other governments, net increase (decrease) Accrued payroll and employee related benefits, net increase (decrease) Compensated absences payable, net increase (decrease) Customer deposits, net increase (decrease) Total Adjustments Net cash provided by (used for) operating activities Turn this row font white to print
$ 850,830 (584,257) (168,720) (27,268) 70,585 1,820 1,820 (220,683) (220,683) 8,462 8,462 (139,816) 819,489 $ 679,673
$ 1,463,714 (1,046,294) (192,108) (43,544) 181,768 380,200 380,200 (30,546) (30,546) 154,598 155,741 310,339 841,761 8,073,766 $ 8,915,527
$
964,280 (236,229) (286,378) (79,761) 361,912 1,680 1,680 (74,726) (74,726) 7,120 7,120 295,986
$ 1,309,831 (450,260) (820,791) (49,557) (10,777) (1,997) 100,000 98,003 (107,564) 6,443 (101,121) (797) (797) (14,692) $ 792,237 777,545
$
4,588,655 (2,317,040) (1,467,997) (200,130) 603,488 (1,997) 3,500 480,200 481,703 (433,519) 6,443 (427,076) 154,598 170,526 325,124 983,239
$
79,131 17,140,364 (12,927,041) (1,873,935) (141,499) 2,277,020 17,154 17,154 (1,389,206) 68,283 (1,320,923) 65,481 65,481 1,038,732
1,034,557 $ 1,330,543
10,720,049 $ 11,703,288
9,356,569 $ 10,395,301
$ (113,076)
$
(334,399)
$
149,252
$
(162,662)
$
(460,885)
$
1,344,508
398,051 (321,475) (430) (73,841) (51,600) (25,979) 5,446 253,874 (3,093) 2,708 183,661 $ 70,585 0 $
7,722 423,502 74,797 9,653 (784) (1,996) 3,273 516,167 181,768 0 $
287,501 (99,140) (9,112) 478 (19,907) 741 3,051 3,635 (5,353) 50,766 212,660 361,912 0 $
135,902 2 5,090 43 (2,664) 12,453 2,042 (23,525) 17,542 5,000 151,885 (10,777) 0 $
829,176 423,502 (345,816) (4,452) (73,798) (53,786) (23,780) 7,445 256,925 (24,979) 18,170 55,766 1,064,373 603,488 0 $
785,968 (105,811) 217,948 (7,386) (2,125) (101,903) (24,561) 23,532 167,166 (37,783) 17,556 (89) 932,512 2,277,020 0
The notes to the financial statements are an integral part of this statement
24
MOHAVE COUNTY Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2006
Investment Trust Fund s Assets Cash and investments Receivables (net of allowances for uncollectibles): Accrued interest Total assets
Agency Funds
$
65,578,548 52
$
918,711 1
$
65,578,600
$
918,712
Liabilities Accounts Payable Deposits held for others Total liabilities Net Assets Held in trust for investment trust participants
-
$
298 918,414 918,712
$
$
65,578,600
The notes to the financial statements are an integral part of this statement
25
MOHAVE COUNTY Statement of Changes in Fiduciary Net Assets Fiduciary Funds Year Ended June 30, 2006
Investment Trust Funds Additions: Contributions from participants Investment income: Interest and dividend income Net decrease in fair value of investments Net investment income Total additions 1,791,195 (944,897) 846,298 438,759,756 $ 437,913,458
Deductions: Distributions to participants Total deductions Change in net assets Net assets, July 1, 2005 Net assets, June 30, 2006 $ (435,379,054) (435,379,054) 3,380,702 62,197,898 65,578,600
The notes to the financial statements are an integral part of this statement
26
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Table of Contents
Note 1 - Summary of Significant Accounting Policies ..................................................................................... 28
A. B. C. D. E. F. G. H. I. Reporting Entity......................................................................................................................................................28 Basis of Presentation ............................................................................................................................................... 29 Basis of Accounting ................................................................................................................................................ 30 Cash Equivalents and Investments..........................................................................................................................31 Inventories and Prepaid Items ................................................................................................................................. 31 Property Tax Calendar.............................................................................................................................................32 Capital Assets ......................................................................................................................................................... 32 Investment Income..................................................................................................................................................32 Compensated Absences ............................................................................................................................................ 33
Note 2 Beginning Balances Restated / Prior Period Adjustment ................................................................... 33 Note 3 Stewardship, Compliance, and Accountability................................................................................... 33 Note 4 Deposits and Investments ................................................................................................................... 34 Note 5 Property Taxes Receivable ................................................................................................................. 37 Note 6 Capital Assets ..................................................................................................................................... 38 Note 7 Restricted Assets................................................................................................................................. 39 Note 8 Long-Term Liabilities......................................................................................................................... 40 Note 9 Risk Management ............................................................................................................................... 44 Note 10 Operating Leases .............................................................................................................................. 45 Note 11 Retirement Plans............................................................................................................................... 45 Note 12 Interfund Balances and Activity ....................................................................................................... 47 Note 13 County Treasurer's Investment Pool ................................................................................................ 48 Note 14 Subsequent Events ............................................................................................................................ 50
27
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 1 - Summary of Significant Accounting Policies The accounting policies of Mohave County conform to generally accepted accounting principles applicable to governmental units adopted by the Governmental Accounting Standards Board (GASB). A. Reporting Entity
Mohave County is a general purpose local government that is governed by a separately elected board of three county supervisors. These financial statements present the activities of the County (the primary government) and its component units. Component units are legally separate entities for which the County is considered to be financially accountable. Blended component units, although legally separate entities, are in substance part of the County's operations. Therefore, data from these units is combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the government-wide financial statements to emphasize that 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: For Separate Financial Reporting Statements Description: Criteria for Inclusion Method A tax-levying district that provides flood control Blended Not systems; County board of supervisors serves as available board of directors A tax-levying district that provides and maintains Blended Not library services for County residents; County available board of supervisors serves as board of directors Provides and maintains communication equipment Blended Not resources to provide television signals to available residents; County board of supervisors serves as board of directors Constructs or improves roads, bridges, and water Blended Not distribution systems; County board of supervisors available serves as board of directors A corporation set up to provide financing and Blended Not available oversight of the construction and operation of the County administration building; Mohave management of Mohave County serves as the board of directors of the corporation
Component Unit Mohave County Flood Control District Mohave County Library District Mohave County Television District Mohave County Special Assessment Districts Mohave Administration Building - Finance Corporation
28
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 1 - Summary of Significant Accounting Policies (cont'd) B. Basis of Presentation
The basic financial statements include both government-wide statements and fund financial statements. The government-wide statements focus on the County as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the usefulness of the information. Government-wide statements--provide information about the primary government (the County) and its component units. The statements include a statement of net assets and a statement of activities. These statements report the financial activities of the overall government, except for fiduciary activities. They also distinguish between the governmental and business-type activities of the County. Governmental activities generally are financed through taxes and intergovernmental revenues. Business-type activities are financed in whole or in part by fees charged to external parties. A statement of activities presents a comparison between direct expenses and program revenues for each function of the County's governmental activities and segment of its business-type activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. The County only allocates indirect expenses to special taxing districts and proprietary funds. Program revenues include: Charges to customers or applicants for goods, services, or privileges provided, Operating grants and contributions, and Capital grants and contributions, including special assessments.
Revenues that are not classified as program revenues, including internally dedicated resources and some taxes, are reported as general revenues. Generally, the effect of interfund activity has been eliminated from the government-wide financial statements to minimize the double counting of internal activities. However, charges for interfund services provided and used are not eliminated if the prices approximate their external exchange values. Fund financial statements--provide information about the County's funds, including fiduciary funds and blended component units. Separate statements are presented for the governmental, proprietary, and fiduciary fund categories. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Fiduciary funds are aggregated and reported by fund type. 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 user charges, in which each party receives and gives up essentially equal values, are operating revenues. Other revenues, such as investment income, result from transactions in which the parties do not exchange equal values. Revenues generated by ancillary activities are also reported as nonoperating revenues. 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.
29
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 1 - Summary of Significant Accounting Policies (cont'd) The County reports the following major governmental funds: 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. Road Fund accounts for all taxes on gas and auto license fees collected for building and maintaining County roads. Flood Control Fund accounts for all monies collected from local taxpayers in the form of a levy on real property. These funds are used in planning, engineering, constructing, repairing, and maintaining flood control channels in Mohave County. Scenic Debt Service Fund accounts for collections of special district assessments from taxpayers, and semiannual bond payments. County Capital Improvement Fund accounts for a ¼ cent sales tax collected to provide for major capital improvements of the county.
The County reports the following major enterprise funds: I-40 Water Corridor Fund accounts for the operations of a water company located in the County's industrial park, off U.S. I-40. Landfill Fund accounts for the operations of two landfills located in Mohave County. G.V.I.D. Fund accounts for the operations of a water company located in Golden Valley.
The internal service funds account for automotive maintenance and operation, insurance, computer services, central purchasing services, janitorial services, and telecommunications services provided to the County's departments or to other governments on a cost-reimbursement basis. The investment trust funds account for pooled assets held and invested by the County Treasurer on behalf of the County's departments and other governmental entities; as well as individual investments, including money market investments held by outside trustees. The agency funds account for assets held by the County as an agent for the State and various local governments and for property taxes collected and distributed to the State, local school districts, community college districts, and special districts. C. Basis of Accounting
The government-wide, proprietary fund, and fiduciary fund financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Property taxes are recognized as revenue in the year for which they are levied. Grants and donations are recognized as revenue as soon as all eligibility requirements the provider imposed have been met.
30
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 1 - Summary of Significant Accounting Policies (cont'd) Governmental funds in the fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The County considers all revenues reported in the governmental funds to be available if the revenues are collected within 60 days after year end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on 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 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 except where matching requirements exist. The County's business-type activities and enterprise funds follow FASB Statements and Interpretations issued on or before November 30, 1989, Accounting Principles Board Opinions, and Accounting Research Bulletins, unless those pronouncements conflict with GASB pronouncements. The County has chosen the option not to follow FASB Statements and Interpretations issued after November 30, 1989. D. Cash Equivalents and Investments
For purposes of its statement of cash flows, the County considers all cash on hand, demand deposits, cash on deposit with the County Treasurer, and only those highly liquid investments with a maturity of 3 months or less when purchased to be cash equivalents. Nonparticipating interest-earning investment contracts are stated at cost. All other investments are stated at fair value. E. Inventories and Prepaid Items
The County accounts for its inventories in the governmental funds using the purchase method. Inventories of the governmental funds consist of expendable supplies held for consumption and are recorded as expenditures at the time of purchase. Amounts on hand at year end are shown on the balance sheet as an asset for informational purposes only and are offset by a fund balance reserve to indicate that they do not constitute "available spendable resources." These inventories are stated at cost using the first-in, first-out method. Inventories of the proprietary funds are recorded as assets when purchased and expensed when consumed. These inventories are stated at cost using the first-in, first-out method. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.
31
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 1 - Summary of Significant Accounting Policies (cont'd) 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, or estimated historical cost if historical records are not available. Certain infrastructure costs were estimated by calculating the current replacement cost of a similar asset and deflating this cost through the use of price-level indexes. Donated assets are reported at estimated fair value at the time received. Certain types of road improvements are expensed rather than capitalized. The improvement types that are expensed are millings and soil stabilization. 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 proprietary funds are as follows: Capitalization Threshold Land Construction in progress Buildings Equipment Infrastructure and improvements other than buildings H. Investment Income All $5,000 Depreciation Method $5,000 $5,000 $5,000 Straight Line Straight Line Straight Line Estimated Useful Life 20-50 years 3-20 years 10-50 years
Investment income is composed of interest, dividends, and net changes in the fair value of applicable investments.
32
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 1 - Summary of Significant Accounting Policies (concl'd) I. Compensated Absences
Compensated absences consist of vacation leave / sick leave earned by employees based on services already rendered. The County uses PTO (personal time off), which is a combination of vacation and sick leave, for compensating employees. PTO benefits do not vest with employees until they have satisfactorily completed their probationary period. Public Safety employees and those employees covered under the Judicial Merit System have a one year probationary period. All other employees have a six month probationary period. Employees may accumulate an unlimited number of PTO hours. Upon termination of employment, unused PTO hours, up to a limit of 400, are paid to employees. Any PTO balance in excess of 400 hours is forfeited. Accordingly, benefits are accrued as a liability in the financial statements. Note 2 Beginning Balances Restated / Prior Period Adjustment Prior Period Corrections: The beginning net assets of the governmental activities in the Statement of Activities, in the government-wide statements, were restated by $4,190,179 to record the effect of removing the prior year deferred revenue for special assessments and reflecting the revenue under the full accrual basis of accounting. Net Assets, June 30,2005 Prior period correction Net Assets, July 1, 2005, as restated $177,350,959 4,190,179 $ 181,541,138
Note 3 Stewardship, Compliance, and Accountability Deficit fund balances or net assets-At June 30, 2006, the following funds reported deficits in net assets or fund balances: Fund Deficit Special revenue funds:
Emergency management 1,659,985
J.I.P.S. Victims crime assistance Community punishment program Health grant WIC JAIBG grants Workforce investment act
26,346 17,140 14,234 9,368 7,898 5,708
The Emergency management deficit reflects an expense for a FEMA declared emergency in Beaver Dam in December 2005. The expenditures qualify to be fully refunded by F.H.W.A. The County has not yet been notified whether or not they will be reimbursed for the permanent repairs. If we are notified that F.H.W.A. will not fund the expenditures, the Road Fund will transfer the funds to cover the costs incurred to rebuild the roads and bridges. The other funds reflect programs for which additional funding is expected to become available in the next program year. The deficit will be made up by the General Fund for any funding that doesn't become available.
33
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 3 Stewardship, Compliance, and Accountability, concl'd Fund
Internal Service fund: Central services
Deficit
$69,000
The County closed down the operations of this fund during fiscal year 2006/2007. The board of Supervisors voted to transfer the balance needed from the General Fund to clear up the deficit fund balance. Services formerly provided by this fund will either be outsourced or provided by the procurement office which is budgeted under the General Fund .
Note 4 Deposits and Investments Arizona Revised Statutes (A.R.S.) authorize the County to invest public monies in the State Treasurer's investment pool; obligations issued or guaranteed by the United States or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations, or instrumentalities; specified state and local government bonds; interest earning investments such as saving 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 rated P1 by Moody's investors service or A1 or better by Standard and Poor's rating service. 2. Corporate bonds, debentures, and notes must be rated A or better by Moody's investors service or Standard and Poor's rating service. 3. Fixed income securities must carry one of the two highest ratings by Moody's and Standard and Poor's rating services. If only one of the above-mentioned services rates the security, it must carry the highest rating of that service. Custodial credit risk Statutes require collateral for demand deposits, certificates of deposit, and repurchase agreements 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 and that public operating fund monies invested in securities and deposits have a maximum maturity of 3 years. Investments in repurchase agreements must have a maximum maturity of 180 days. Foreign currency risk Statutes do not allow foreign investments.
34
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 4 Deposits and Investments (cont'd) Deposits - At June 30, 2006, the carrying amount of the County's deposits was $7,160,691 and the bank balance was $7,023,648. There was cash on hand of $26,010. The County does not have a formal policy for custodial credit risk.
At June 30, 2006, $7,023,648 of the County's bank balance was exposed to custodial risk as follows: Uninsured with collateral held by the pledging financial institution Uninsured with collateral held by the pledging institution's trust department or agent but not in the County's name Total deposits
$
4,512,337
$
2,511,311 7,023,648
At June 30, 2006, the Mohave Administration Building Finance Corporation had $1,506,921 of deposits held by a trustee. Of the total, $525,692 was held in the County Capital Improvement Fund and represented 2% of the total cash and investments in that fund. The balance of the cash held by trustee, $981,229, is reflected in the Administration Building Debt Service Fund and represents 100% of the total cash for that fund, which creates concentration of credit risk. These amounts are included in the deposit schedule above. Investments The County's investments at June 30, 2006, were as follows:
Investment Type U.S. agency securities Tennessee Valley Authority State Treasurer's Local Government Investment Pool Total investments
Amount $161,093,222 959,669 1,181,911 $163,234,802
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.
35
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 4 Deposits and Investments (cont'd) Credit Risk The County does not have a formal credit risk policy. At June 30, 2006, credit risk for the County's investments was as follows: Investment Type Federal Farm Credit Bank Federal Home Loan Bank Federal Home Loan Mortgage Corporation Federal National Mortgage Association Tennessee Valley Authority State Treasurer's Local Government Investment Pool Rating Aaa Aaa Aaa Aaa Aaa Unrated Rating Agency Moody's Moody's Moody's Moody's Moody's N/A Amount 26,639,037 55,696,577 31,469,697 47,287,911 959,669 1,181,911 $ 163,234,802
$
Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the event of the counterparty's failure, the County will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The County does not have a formal policy for custodial credit risk. Concentration of Credit Risk - The County does not have a formal policy for concentration of credit risk. The County had investments at June 30, 2006, of 5% or more in Federal Farm Credit Bank, Federal Home Loan Bank, Federal Home Loan Mortgage Corporation, and Federal National Mortgage Association. These investments were 16 percent, 34 percent, 19 percent and 29 percent, respectively, of the County's total investments. Interest Rate Risk The County does not have a formal policy with respect to interest rate risk. At June 30, 2006, the County had the following investments in debt securities.
Investment Type State Treasurer's investment pools U.S. agency securities Tennessee Valley Authority Total $
Amount 1,181,911 161,093,222 959,669 $ 163,234,802
Investment Maturities Less than 1 to 5 1 year Years $ 1,181,911 22,085,234 $ 23,267,145 139,007,988 959,669 $ 139,967,657 $
36
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 4 Deposits and Investments (concl'd) A reconciliation of cash and investments to amounts shown on the statements of net assets follows. Cash and Investments: Cash on hand Carrying amount of deposits Reported amount of investments Total Statements of Net Assets:
Governmental Activities $ 89,709,645 2,511,311 $ 92,220,956 Business-type Activities $ 10,797,185 906,103 $ 11,703,288 Investment Trust Funds $65,578,548 $65,578,548 Agency Funds $ 918,711 $ 918,711
Amount $ 26,010 7,160,691 163,234,802 $ 170,421,503
Cash and investments Restricted cash Total
Total $167,004,089 3,417,414 $170,421,503
Note 5 Property Taxes Receivable 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. Property taxes receivable consist of uncollected real and personal property taxes as determined from the records of the County Treasurer's Office, and at June 30, 2006, were as follows: General Fund $ 757,968 45,910 908,144 $1,712,022 Flood Control Fund $ 234,800 9,697 107,720 $ 352,217 Nonmajor Governmental Funds $ 203,564 10,851 113,832 $ 328,247 Total Governmental Funds $ 1,196,332 66,458 1,129,696 $ 2,392,486
Fiscal Year 2005 2004 Prior Total
That portion of property taxes receivable, not collected within 60 days after June 30, 2006, has been deferred and, consequently, is not included in current-year revenues on the fund statements. For the government-wide statements, the entire receivable balance has been recognized as revenue.
37
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 6 Capital Assets
Capital asset activity for the year ended June 30, 2006, was as follows: Balance July 1, 2005 Governmental activities: Capital assets not being depreciated: Land Construction in progress (estimated cost to complete $ 55,540,025) Total capital assets not being depreciated Capital assets being depreciated: Buildings Infrastructure & improvements other than buildings Equipment Total Less accumulated depreciation for: Buildings Infrastructure & improvements other than buildings Equipment Total Total capital assets being depreciated, net Governmental activities capital assets, net Business-type activities: Capital assets not being depreciated: Land Construction in progress (estimated cost to complete $ 246,420) Total capital assets not being depreciated Capital assets being depreciated: Buildings Utility systems Equipment Total Less accumulated depreciation for: Buildings Utility systems Equipment Total Total capital assets being depreciated, net Business-type activities capital assets, net $ $ Balance June 30, 2006
Increases
Decreases
$
24,794,226 20,495,527 45,289,753 37,748,147 89,474,910 33,598,609 160,821,666 (10,272,245) (55,447,760) (17,833,369) (83,553,374) 77,268,292 122,558,045
$
341,897 16,831,431 17,173,328 20,496,807 5,047,981 4,712,457 30,257,245 (779,187) (2,565,482) (2,698,301) (6,042,970) 24,214,275
$
(23,193,374) (23,193,374) (86,219) (43,335) (1,600,907) (1,730,461) 348,703 43,335 1,316,706 1,708,744 (21,717)
$
25,136,123 14,133,584 39,269,707 58,158,735 94,479,556 36,710,159 189,348,450 (10,702,729) (57,969,907) (19,214,964) (87,887,600) 101,460,850
$ 41,387,603
$ (23,215,091)
$
140,730,557
$
1,586,010 40,000 1,626,010 1,673,666 17,775,583 901,240 20,350,489 (6 4 8 , 2 4 2 ) (5,787,551) (429,465) (6,865,258) 13,485,231 15,111,241
$
42,968 486,279 529,247 83,349 145,420 251,263 480,032 (54,810) (670,431) (103,934) (829,175) (349,143)
$
(28,148) (5,414) (33,562) 15,105 4,873 19,978 (13,584)
$
1,628,978 526,279 2,155,257 1,728,867 17,921,003 1,147,089 20,796,959 (687,947) (6,457,982) (528,526) (7,674,455) 13,122,504
$
180,104
$
(13,584)
$
15,277,761
38
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 6 Capital Assets (concl'd)
Depreciation expense was charged to functions as follows: Governmental activities: General government Public safety Highways and streets Health Welfare Culture and recreation Education Internal service funds Total governmental activities depreciation expense Business-type activities: Landfill Recreation Water companies Total business-type activities depreciation expense
$ 3,373,583 561,160 1,090,173 20,714 64,838 144,953 1 ,581 785,968 $ 6 ,042,970
$
$
7,722 119,321 702,132 829,175
Note 7 Restricted Assets As of June 30, 2006, the County had restricted assets as follows: Governmental activities assets: Cash Business-type activities assets: Cash Cash 606,219 Total business-type activities assets $ 906,103 $2,511,311 $ 299,884 Cash held by trustees restricted by C.O.P.'s agreements for future construction, debt payments or major maintenance. GVID collections restricted for future repairs of infrastructure by agreement with customers. I-40 water corridor collections restricted for future infrastructure repairs by agreement with customers.
39
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 8 Long-Term Liabilities The following schedule details the County's long-term liability and obligation activity for the year ended June 30, 2006:
Balance July 1, 2005 Governmental activities: Special assessment bonds payable Certificates of participation payable Certificates of participation premiumunamortized Note payable Compensated absences payable Claims and judgments payable Governmental activities long-term liabilities Business-type activities: Landfill closure and postclosure care costs payable Compensated absences payable Business-type activities long-term liabilities $ 4,376,000 26,745,000
Additions
Reductions
Balance June 30, 2006
Due Within 1 Year
$
-
$
(635,000) (5,765,000)
$
3,741,000 20,980,000
$
646,000 1,405,000
556,857 1,000,000 4,681,696 1,386,817 $ 38,746,370
5,693,031 9,354,483 $ 15,047,514
(39,775) (154,598) (4,924,340) (9,047,301) $ (20,566,014)
517,082 845,402 5,450,387 1,693,999 $ 33,227,870
39,775 159,235 5,416,774 1,393,999 $ 9,060,783
$ 2,938,806 118,306 $ 3,057,112
$
423,502 129,138
$
(101,614)
$
3,362,308 145,830
$
111,777
$
552,640
$
(101,614)
$ 3,508,138
$
111,777
40
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 8 Long-Term Liabilities (cont'd) Bonds - The County's bonded debt consists of special assessment bonds that are generally callable with interest payable semiannually. Bond proceeds primarily pay for constructing infrastructure assets. Special assessment bonds are secured by pledges of revenues from special assessments levied against the benefiting property owners. The County is not obligated in any manner for the special assessment debt. However, if the property owner defaults on their payment of the debt, the County places a lien on the property. In the event that the lien is not cleared, the property is sold and the proceeds are used to pay off the debt. The original amount of special assessment bonds issued in prior years was $5,647,000. Bonds outstanding at June 30, 2006, were as follows: Original Amount $ 409,000 647,000 4,500,000 91,000 $ 5,647,000 Interest Rates 5.60% 6.375% 6.30% 5.50% Outstanding Principal June 30, 2006 $ 240,000 260,000 3,150,000 91,000 $ 3,741,000
District G.V.I.D. No. 1 Phase IV Horizon six street improvement Scenic road and bridge project improvement Mohave County improvement district Total
Maturities 1/07-1/12 1/07-1/10 1/07-1/13 in arrears
The following schedule details debt service requirements to maturity for the County's bonds payable at June 30, 2006.
Governmental activities Year Ending June 30 2007 2008 2009 2010 2011 2012-13 Total Special Assessment Bonds Principal Interest $ 646,000 555,000 555,000 555,000 490,000 940,000 $ 3,741,000 $ 269,397 179,556 144,823 110,089 75,355 58,940 $ 838,160
41
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 8 Long-Term Liabilities (cont'd) Certificates of participation - The County has issued certificates of participation that are generally noncallable with interest payable semiannually to purchase or construct capital facilities. The original amount of certificates issued in prior years was $24,190,000. Certificates outstanding at June 30, 2006, were as follows: Description Certificates of participation Series 2000 Certificates of participation Series 2004 Total Original Amount Maturity Ranges Interest Rates Outstanding Principal June 30, 2006
$
4,870,000 19,320,000
7/2006-7/2010 7/2006-7/2019
6.75%-7.375% 2.0%-5.0%
$
3,050,000 17,930,000
$ 24,190,000
$ 20,980,000
The following schedule details debt service requirements to maturity for the County's certificates of participation payable at June 30, 2006:
Governmental activities Year Ending June 30 2007 2008 2009 2010 2011 2012-16 2017-20 Total
Principal $ 1,405,000 1,640,000 1,720,000 1,795,000 1,895,000 6,730,000 5,795,000 $ 20,980,000
Interest $ 1,035,568 969,193 888,505 794,411 694,731 2,441,441 624,356 $ 7,448,205
Note payable During fiscal year 2005, the library fund borrowed $1,000,000 from the landfill to fund its portion of the 98 C.O.P.S reserve fund which was established to accumulate monies for an early payoff of the C.O.P.S. The landfill note is to be paid off over a period of six years at an interest rate of 3%. The following schedule details the debt service requirements for the note at June 30, 2006. Year Ending June 30 2007 2008 2009 2010 2011 Total Principal $ 159,235 164,012 168,933 174,001 179,221 $845,402 Interest $ 25,362 20,586 15,664 10,596 5,376 $ 77,584
42
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 8 - Long-Term Liabilities (cont'd) Landfill closure and postclosure care costs - The County owns two 160-acre landfill sites, Cerbat and Mohave Valley, which are operated by independent contractors under contract with the County. Both landfills began operations in January 1989. The County operates its landfills on a cell basis. The County owns additional unused parcels of land adjacent to the existing landfill sites that will (or may) be used, as needed, to open additional cells. An additional cell (4 acres) was opened at Cerbat this year. This reduced the percentage used from 98% to 67% of the open cells. This also extended the life five years. State and federal laws and regulations require the County to place a final cover on its Cerbat and Mohave Valley landfill sites when they stop accepting waste and to perform certain maintenance and monitoring functions at the sites for 30 years after closure. Although closure and postclosure care costs will not be paid until near or after the date that the landfills stop accepting waste, the County reports the long-term portion of these closure and postclosure care costs in each operating period even though actual payouts will not occur until the landfills are closed. These costs will be paid from the enterprise fund. The amount recognized each year is based on landfill capacity used at the end of each fiscal year. The $3,362,308 reported as landfill closure and postclosure care liability at June 30, 2006, represents the cumulative amount reported to date at the Cerbat and Mohave Valley landfills based on the use of 67% and 86%, respectively, of the estimated capacity of the open cells of the landfills. The County will recognize the remaining estimated costs of closure and postclosure care costs of $1,100,796 as the remaining estimated capacity is filled. These amounts are based on what it would cost to perform all closure and postclosure care in fiscal year 2006. The County expects to close the landfills in the years 2011 and 2028, respectively, and the actual cost may be higher due to inflation, changes in technology, or changes in regulations. According to state and federal laws and regulations, the County must comply with the local government financial test requirements that assure the County can meet the costs of landfill closure, postclosure, and corrective action when needed. The County is in compliance with these requirements. Insurance Claims - The County established two internal service funds, Health Insurance and SelfInsurance. The Health Insurance Fund is used to account for employee health benefits through a combination of self-insurance and commercial insurance. The Self-Insurance Fund provides property, casualty and general liability coverage up to $50,000 per claim and also accounts for premium payments to the Arizona Counties Workers' Compensation Pool for workers' compensation coverage. The Self-Insurance Fund is used to account for the risk financing of certain benefits and losses through combinations of cost-reimbursement, self-insurance for losses up to certain limits, participation in public entity risk pools, and the purchase of insurance for losses above the limits. Settled claims have not exceeded risk pool coverage or the purchased commercial insurance in any of the past three fiscal years. The Health Insurance Fund accounts for the financing of the uninsured risk of loss for certain health benefits (comprehensive major medical, prescriptions, dental, life/accidental death and dismemberment, and short-term disability) to eligible employees and their dependents, through a combination of commercial insurance and self-insurance. The County is self-insured, up to certain limits, with commercial insurance to cover losses above the limits. The life insurance is 100% commercial insurance. Under the health insurance program, the employees have a preferred provider organization program. The County is fully self-insured for dental, which is administered by Delta Dental. A third party administers the short-term disability. Settled claims have not exceeded available self-insurance
43
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 8 - Long-Term Liabilities (concl'd) funds or the purchased commercial insurance in any of the past three fiscal years. The insurance claims payable liability of the Self-Insurance Fund and Health Insurance Fund of $1,280,054 included in the balance below at June 30, 2006, is the estimated ultimate cost of settling claims that have been reported but not settled and claims that have been incurred but not reported. These amounts are based on estimates provided by the County's healthcare administrator (based on claims received subsequent to June 30, 2006) and Arizona Counties Property and Casualty Pool (based on expected outcomes of outstanding lawsuits and incurred but not reported occurrences). The balance of $413,945 is the liability due at June 30, 2006 from the Governmental funds for claims and judgments. Changes in the claims payable liability amount for the years ended June 30, 2005 and 2006 were as follows: 2005 2006 Claims payable - beginning of year $ 766,026 $ 1,386,817 Add: Claims incurred and changes in estimates 8,714,007 9,354,483 Deduct: Claims paid (8,093,216) (9,047,301) Claims payable - end of year $ 1,386,817 $ 1,693,999 Compensated absences and claims and judgments Compensated absences are paid from various funds in the same proportion that those funds pay payroll costs. Claims and judgments are generally paid from the fund that accounts for the activity that gave rise to the claim. During fiscal year 2006, the County paid for compensated absences as follows: 62 % from the General Fund, 12 % from major funds, and 26 % from other funds. The County paid for claims and judgments as follows: .6% from the General Fund and 99.4 % from the Self-Insurance Fund. However, the Self-Insurance Fund was funded $450,000 by the General Fund and $400,000 by the Road Fund this past year. Occasionally it is also reimbursed by other major funds. The Health Insurance Fund paid all claims, but was reimbursed 100% from the other funds for all claims and judgments paid. 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; but was unable to obtain insurance at a cost it considered to be economically justifiable for Workers' Compensation or liability insurance. Therefore, the County joined and is covered by two public entity risk pools: the Arizona Counties Property and Casualty Pool and the Arizona Counties Workers' Compensation Pool, which are described below. 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 $10,000 per occurrence for property claims and $50,000 per occurrence for liability claims. The County is also responsible for any payments in excess of the maximum coverage of $100 million per occurrence for property claims and $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 three years after becoming a member; however, it may withdraw after the initial three-year period. If the pool were to become
44
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 9 Risk Management (concl'd) insolvent, the County would be assessed an additional contribution. The Arizona Counties Workers' Compensation Pool is a public entity risk pool currently composed of 11 member counties. The pool provides member counties with workers' compensation coverage, as required by law, and risk management services. The County is responsible for paying a premium, based on an experience rating formula that allocates pool expenditures and liabilities among the members. The Arizona Counties Property and Casualty Pool and the Arizona Counties Workers' Compensation Pool receive independent audits annually and an audit by the Arizona Department of Insurance triennially. Both pools accrue liabilities for losses that have been incurred but not reported. These liabilities are determined annually based on an independent actuarial valuation. Note 10 Operating Leases The County leases buildings, copiers, computers, land and a parking lot under the provisions of various long-term lease agreements classified as operating leases for accounting purposes. Rental expenditures under the terms of the operating leases were $923,268 for the year ended June 30, 2006. The operating leases have remaining noncancellable lease terms from one to ninety years and provide renewal options. The future minimum payments required under the operating leases at June 30, 2006, were as follows: Year ending June 30, 2007 2008 2009 2010 2011 2012-2016 2017-2021 2022-2024 Total minimum lease payments Note 11 Retirement Plans Plan Descriptions - The County contributes to four plans, three of which are described below. The Elected Officials Retirement System (EORP) is not described, due to its relative insignificance to the County's financial statements. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. The Arizona State Retirement System (ASRS) administers a cost-sharing multiple-employer defined benefit pension 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. Governmental Activities $ 829,967 403,086 48,171 21,551 18,551
13,355 12,005 7,275 $1,353,961
45
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 11- Retirement Plans (cont'd) The Public Safety Personnel Retirement System (PSPRS) is an agent multiple-employer defined benefit pension plan that covers public safety personnel who are regularly assigned hazardous duty as employees of the State of Arizona or participating political subdivisions. The PSPRS, acting as a common investment and administrative agent, is governed by a five-member board, known as The Fund Manager, and the participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. The Corrections Officer Retirement Plan (CORP) is an agent multiple-employer defined benefit pension plan that covers certain employees of the State of Arizona, Departments of Corrections and Juvenile Corrections, and County employees whose primary duties require direct inmate contact. The CORP is governed by The Fund Manager of PSPRS and the participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 6. 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. ASRS 3300 N. Central Avenue P. O. Box 33910 Phoenix, AZ 85012 (602) 240-2000 or (800) 621-3778 PSPRS, CORP, and EORP 3010 E. Camelback Road Suite 200 Phoenix, AZ 85016-4416 (602) 255-5575
Funding Policy - The Arizona State Legislature establishes and may amend active plan members' and the County's contribution rates. Cost-sharing plans - For the year ended June 30, 2006, active ASRS members and the County were each required by statute to contribute at the actuarially determined rate of 7.4% (6.9% retirement and 0.5% long-term disability) of the members' annual covered payroll. The County's contributions to ASRS for the years ended June 30, 2006, 2005, and 2004, were $2,625,462, $1,850,484 and $1,649,976, respectively, which were equal to the required contributions for the year. Agent plans - For the year ended June 30, 2006, active PSPRS members were required by statute to contribute 7.65% of the members' annual covered payroll, and the County was required to contribute at the actuarially determined rate of 10.06%. Active CORP members were required by statute to contribute 8.5% of the members' annual covered payroll, and the County was required to contribute at the actuarially determined rate of 4%. Annual Pension Costs - The County's pension costs for the two agent plans for the year ended June 30, 2006 and related information follows. PSPRS CORP Contribution rates: County 10.06% 4.00% Plan members 7.65% 8.50% Annual pension cost $459,875 $82,510 Contributions made $459,875 $82,510
46
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 11- Retirement Plans (concl'd) The current-year annual required contributions for both the PSPRS and CORP were determined as part of their June 30, 2004 actuarial valuations using the individual entry-age actuarial cost method. The actuarial assumptions included (a) 8.75% investment rate of return and (b) projected salary increases ranging from 6.25% to 9.25% per year. Both (a) and (b) included an inflation component of 5.25%. The assumptions did not include cost-of-living adjustments. The actuarial value of assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a 7-year period. The unfunded (excess) actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2004, was 20 years. Trend Information Annual pension cost information for the current and two preceding years follows for each of the agent plans. Year Ended June 30 2006 2005 2004 2006 2005 2004 Annual Pension Cost (APC) $459,875 292,708 193,838 82,510 39,230 36,042 Percentage of APC Contributed 100% 100% 100% 100% 100% 100% Net Pension Obligation $0 0 0 0 0 0
Plan PSPRS CORP
Note 12 Interfund Balances and Activity Interfund Receivables and Payables - Interfund balances at June 30, 2006, were as follows:
Due from Other Funds Nonmajor Governmental Funds $ 365,907 2,347 146 I-40 Water Corridor G.V.I.D. Fund Fund $ $ 3,797 Nonmajor Enterprise Funds $ $ Internal Service Funds 76,800 1,054 $
General Fund General Fund Road Fund Flood Control Fund Due to Other Funds Nonmajor Governmental Funds I-40 Water Corridor Fund Landfill Fund G.V.I.D. Fund Nonmajor Enterprise Funds Internal Service Funds $ 1,211 $
Road Fund 4,423
T o ta l 447,130 6,062 2,493
313,159
14,021
377,755
-
-
-
17,149
722,084
114,553
413 1,220 1,635 227,686 $ 249,544 $
746,009 $
390 40 430
5,315 $9,112 $
101 101 $
649 354 1,993 1,367 99,366 $
5,728 649 1,964 3,769 343,606 1,533,485
Total $ 428,923
47
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 12 Interfund Balances and Activity (concl'd) The majority of the interfund receivables and payables result from year-end accruals and adjustments. All cash is transferred within the first two months of the next fiscal year for these transactions. Interfund Transfers Interfund transfers for the year ended June 30, 2006, were as follows:
Transfers out to Other Funds County Capital Nonmajor Flood Improvement Governmental Control Fund Funds Fund $ 348,688 $ $ 703,959 27,500
General Fund General Fund Flood Control Fund County Capital Improvement Fund Nonmajor Governmental Funds Internal Service Funds Total $ $
Road Fund
Nonmajor Enterprise Funds $ -
Total $ 1,052,647 27,500
Transfers in from Other Funds
5,500,000
-
-
-
-
-
5,500,000
3,673,260 1,807 $ 9,175,067
300,000 $ 300,000
2,006 $ 350,694
1,876,234 $ 1,876,234
870,051 $ 1,601,510 $
1,997 1,997
6,723,548 1,807 $ 13,305,502
The General Fund transfers monies to other funds to provide support for such items as matching funds for grants or to make up the shortfall of grant-funded programs that the County feels are important. Other funds also transfer monies to reimburse for shared expenses of programs and to cover matching grants. Note 13 County Treasurer's Investment Pool Arizona Revised Statutes require community colleges, school districts, and other local governments to deposit certain public monies with the County Treasurer. The Treasurer has a fiduciary responsibility to administer those and the County monies under his 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. 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. Substantially all deposits and investments of the County's primary government are included in the County Treasurer's investment pool, except for $4,906,626 of deposits. Therefore, the deposit and
48
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 13 County Treasurer's Investment Pool (concl'd) investment risks of the Treasurer's investment pool are substantially the same as the County's deposit and investment risks. See Note 4 for disclosure of the County's deposit and investment risks. Details of each major investment classification follow: Investment Type Federal Farm Credit Bank Federal Home Loan Bank Federal Home Loan Mortgage Corporation Federal National Mortgage Association Other State Treasurer's Local Government Investment Pool Principal $27,135,000 56,545,000 31,955,000 48,056,000 1,000,000 1,181,911 $165,872,911 Interest Rates 2.74-4.5% 2.00-6.05% 2.10-6.0% 2.00-6.05% 2.45% 1.00% Maturities 12/06-04/11 12/06-06/11 12/06-5/11 7/06-5/11 5/08 N/A Fair Value $26,639,037 55,696,577 31,469,697 47,287,911 959,669 1,181,911 $163,234,802
A condensed statement of the investment pool's net assets and changes in net assets follows. Statement of Net Assets Assets Liabilities Net assets Net assets held in trust for: Internal participants External participants Total net assets held in trust Statement of Changes in Net Assets Total additions Total deductions Net increase Net assets held in trust: July 1, 2005 June 30, 2006 152,344,649 $165,853,154 $752,015,222 (738,506,717) 13,508,505 $101,407,741 64,445,413 $165,853,154 $165,853,154
$165,853,154
49
MOHAVE COUNTY Notes to Financial Statements June 30, 2006
Note 14 Subsequent Events Capital Projects: Mohave Wash, flood control project - The Board of Supervisors approved a $4,478,182 contract for the Kingman Area Master Plan Mohave County Update, Mohave Wash Channel Project, Phase III, on September 6, 2006. This is an on-going flood control project. Law and Justice Center - A needs assessment is being done to determine the requirements for a new Law and Justice Center in Kingman to accommodate all the courts and the Probation Department. Actual construction is not projected to begin for approximately one year. Kingman Jail expansion - A needs assessment was done in fiscal year 2006 for expansio
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| Rating | |
| TITLE | Mohave County annual financial report fiscal year ended 2006 |
| DESCRIPTION | 63 pages (PDF version). File size: 1106.675 KB. |
| Material Collection |
Senate Received Reports |
| Acquisition Note | Received in paper form from Senate Research Staff via Susan Blixt on 9/13/2007. Cataloger located digital version. http://www.co.mohave.az.us/depts/finance/reports/AFR_2006.pdf |
| RIGHTS MANAGEMENT | Copyright to this resource is held by the creating agency and is provided here for educational purposes only. It may not be downloaded, reproduced or distributed in any format without written permission of the creating agency. Any attempt to circumvent the access controls placed on this file is a violation of United States and international copyright laws, and is subject to criminal prosecution. |
| DATE ORIGINAL | [200-?] |
| Time Period |
2000s (2000-2009) |
| ORIGINAL FORMAT | Born digital |
| Source Identifier | LG 6.3:M 54 F 45/ 2006 |
| DIGITAL IDENTIFIER | AFR_2006.pdf |
| REPOSITORY | Arizona State Library, Archives and Public Records--Law and Research Library. |
| Full Text | Mohave County Annual Financial Report Fiscal Year Ended 2006 Mohave County Administration Building, built 2005 MOHAVE COUNTY Annual Financial Report Year Ended June 30, 2006 TABLE OF CONTENTS Independent Auditors' Report..............................................................................................................1 - 2 Management's Discussion and Analysis............................................................................................3 - 14 Government-wide Statements Statement of Net Assets ................................................................................................................ 16 Statement of Activities ................................................................................................................ 17 Fund Statements Governmental Funds Balance Sheet .................................................................................................................. 18 Reconciliation of the Balance Sheet to the Statement of Net Assets ............................... 19 Statement of Revenues, Expenditures, and Changes in Fund Balances ........................... 20 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities ...................................................................... 21 Proprietary Funds Statement of Net Assets .................................................................................................. 22 Statement of Revenues, Expenses, and Changes in Fund Net Assets .............................. 23 Statement of Cash Flows ................................................................................................. 24 Fiduciary Funds Statement of Fiduciary Net Assets ................................................................................... 25 Statement of Changes in Fiduciary Net Assets ................................................................ 26 Notes to Financial Statements..........................................................................................................27 - 50 Other Required Supplementary Information Budgetary Comparison Schedule General Fund ............................................................ 52 - 53 Budgetary Comparison Schedule Road Fund ....................................................................... 54 Budgetary Comparison Schedule Flood Control Fund ......................................................... 55 Notes to Budgetary Comparison Schedules......................................................................56 - 57 Schedule of Agent Retirement Plans' Funding Progress ......................................................... 58 Other Supplementary Information Budgetary Comparison Schedule Scenic Debt Service Fund................................................ 60 Budgetary Comparison Schedule County Capital Improvement Fund ................................. 61 JOHN TIMKO Financial Services Director 700 West Beale Street P.O. Box 7000 Kingman, AZ 86402-7000 Phone: (928) 753-0735 Fax: (928) 753-0704 Management's Discussion and Analysis Our discussion and analysis of the County's financial performance provides an overview of the County's financial activities for the year ended June 30, 2006. Please read it in conjunction with the County's basic financial statements, which begin on page 16. Financial Highlights Total net assets of the County are $227.3 million, of which $60.5 million is unrestricted and may be used to meet the government's ongoing obligations to citizens and creditors. Property taxes increased by $3 million (8%) during the year. As Mohave County continues to be one of the fastest growing counties in the U.S., much of this increase is due to a larger tax base and rising assessed values. At June 30, 2006, total fund balances of the governmental funds were $78.1 million, down $2.6 million from the previous year's balances. General Fund revenues exceeded budgeted revenues by $1.3 million and expenditures were only 83% of the original adopted General Fund budget and 91% of the final General Fund budget. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to Mohave County's basic financial statements. Mohave County's basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements - The government-wide financial statements are designed to provide readers with a broad overview of Mohave County's finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of Mohave County's 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 Mohave County is improving or deteriorating. The statement of activities presents information showing how the government's 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 only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused accrued leave). Both of the government-wide financial statements distinguish functions of Mohave County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of Mohave County include general government, public safety, highways and streets, health, welfare, education, and culture and recreation. The business-type activities of Mohave County include water companies, recreation, and landfill operations. The government-wide financial statements include not only Mohave County itself (known as the primary government), but blended component units. The blended component units are legally separate entities for which Mohave County is financially accountable. They include the following: a television district, two tax-levying districts, special assessment districts and a finance corporation. The County's Board of Supervisors serves as the board of directors for all of the component units except the finance corporation which has a separate board of directors made up of County management. The list of blended component units follows: Mohave County Television District provides and maintains communication equipment for TV signals. Mohave County Library District provides and maintains library services for County residents. Mohave County Flood Control District provides flood control systems for the County. 3 Mohave County Special Assessment Districts provide funds to construct or improve roads, bridges, and water distribution systems. Mohave Administration Building Finance Corporation provides financing and oversight of the construction and operation of the Mohave County administration building. Financial information for the blended component units is combined with the financial information presented for the primary government itself. The government-wide financial statements are on pages 16-17 of this report. Fund financial statements - A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Mohave County, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of Mohave County can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental 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 fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financial 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 balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Mohave County maintains 183 individual 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 Fund, Road Fund, Flood Control Fund, Scenic Debt Service Fund, and the County Capital Improvement Fund, all of which are major funds. Data from the other 178 governmental funds are combined into a single, aggregated presentation, under the heading Other Governmental Funds. Mohave County adopts an annual appropriated budget for all its funds. A budgetary comparison schedule has been provided for the General Fund and the major Special Revenue Funds to demonstrate compliance with their budgets. These schedules are presented on pages 55 to 58. The governmental funds financial statements can be found on pages 18-21 of this report. Proprietary funds - Mohave County maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Mohave County uses enterprise funds to account for its water companies, park services and landfill operations. Internal Service Funds are an accounting device used to accumulate and allocate costs internally among Mohave County's various functions. Mohave County uses internal service funds to account for its fleet of vehicles, employees benefit health insurance trust, self-insurance trust, janitorial services, communication services, central print shop services and for its management information systems. Because all of these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds financial statements provide the same type of information as the government-wide financial statements, only in more detail. The proprietary funds financial statements provide separate information for the water companies and the landfill operations, which are considered major funds of Mohave County. Conversely, the internal service funds are combined into a single, aggregated presentation in the proprietary funds financial statements. The proprietary funds financial statements can be found on pages 22-24 of this report. Fiduciary funds - 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 Mohave County's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The fiduciary funds financial statements can be found on pages 25-26 of this report. 4 Notes to the financial statements - The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 27-50 of this report. Other information - In addition to the basic financial statements and accompanying notes, pages 52-58 presents required supplementary information including budgetary comparison schedules and Mohave County's progress in funding its obligation to provide pension benefits to some of its employees. Other supplementary information presenting budgetary comparison schedules for the Scenic Debt Service Fund, and County Capital Improvement Fund are located on pages 60-61. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of Mohave County, assets exceeded liabilities by $227.3 million at the close of the most recent fiscal year. For details regarding the 2005 restatement, refer to Note 2 on page 33. By far the largest portion of Mohave County's net assets (59%) reflects its investment in capital assets (e.g., land, buildings, infrastructure, machinery, and equipment) less accumulated depreciation and any related debt used to acquire those assets that is still outstanding. Mohave County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although Mohave County's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 14% of Mohave County's net assets represent resources subject to external restrictions on how they may be used. The remaining $60.5 million of unrestricted net assets may be used to meet the government's ongoing obligations to citizens and creditors. Government-wide Statement of Net Assets As of June 30, 2005 As restated Current assets and other assets Capital assets Total assets Long-term liabilities outstanding Other liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets $ $ 1 1 8 ,8 3 2 , 2 6 9 1 3 7 ,6 6 9 , 2 8 6 2 5 6 ,5 0 1 , 5 5 5 4 1 ,8 0 3 , 4 8 2 9 ,1 2 9 , 5 8 3 5 0 ,9 3 3 , 0 6 5 1 1 7 ,9 4 5 , 7 0 2 4 5 ,4 9 0 , 9 4 4 4 2 ,1 3 1 , 8 4 4 2 0 5 ,5 6 8 , 4 9 0 $ $ Increase (Decrease) $ 660,134 18,339,032 18,999,166 (5,067,474) 2,374,127 (2,693,347) 16,688,324 (13,356,903) 18,361,092 $ 21,692,513 % Change 0.56% 13.32% 7.41% -12.12% 26.00% -5.29% 14.15% -29.36% 43.58% 10.55% 2 0 06 119,492,403 156,008,318 275,500,721 36,736,008 11,503,710 48,239,718 134,634,026 32,134,041 60,492,936 227,261,003 Governmental activities - net assets highlights: The net assets invested in capital assets, net of related debt had a net increase of $16.5 million, details of the increase in assets are discussed later in this report under the Capital Asset and Debt Administration heading. Most of the increase is attributed to the increase in capital assets. The difference of $1.6 million between the increase in capital assets and increase in net assets-invested in capital assets, net of related debt is the change in debt offsetting the assets. Long-term liabilities decreased 14% from last year due to an early payoff of both the series 1998 Certificates of Participation and one improvement district. Other liabilities increased $2.1 million mostly due to increased accrued liabilities at year-end of $3.8 million. The Flood Control Fund had an outstanding distribution of taxes of $2.4 million, which is normally paid prior to year-end, included in accrued liabilities. The balance of the increase in accrued expenses was from various construction projects and one-time election equipment purchases. These increases were offset by a decrease in the payroll accrual of $1.3 million, due to the timing of the payroll. The restricted net assets reflected a net decrease of $13.7 million. This decrease was due to a $7.8 million reduction in restricted cash in the County Capital Improvement Fund for completion of the administration building and an additional $.8 million of restricted cash in other governmental funds used for capital projects. There was also a $4.4 million reduction in cash of debt service funds due to the early payoff of the series 1998 Certificates of Participation. Additionally, Highways and streets 5 experienced a reduction in cash of $.5 million related to the completion of the road project in Golden Valley, which used up the balance of funds held by trustee for that project. Unrestricted net assets increased by $18 million from the prior year. $6 million of this increase is unspent revenue in the County Capital Improvement Fund. Unrestricted net assets were offset by $8.1 million for the administration building debt from the prior year, representing unspent construction proceeds. This year $.2 million remained unspent at year-end and offset the unrestricted net assets balance. The balance of the debt is now offsetting the invested in capital assets net assets. In addition, the internal service funds net assets, which are included here, increased by $1.4 million over the prior year, the majority of this increase represents funds set aside for fleet replacement. The remaining $2.3 million reflects the net increase resulting from the prior period adjustment of $4.1 million increase and $1.9 million excess of expenditures over revenues. Governmental Activities Statement of Net Assets As of June 30, 2005 As restated Current assets and other assets Capital assets Total assets Long-term liabilities outstanding Other liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets $ $ 1 0 6 ,3 1 9 , 0 5 9 1 2 2 ,5 5 8 , 0 4 5 2 2 8 ,8 7 7 , 1 0 4 3 8 ,7 4 6 , 3 7 0 8 ,5 8 9 , 5 9 6 4 7 ,3 3 5 , 9 6 6 1 0 2 ,8 3 4 , 4 6 1 3 8 ,2 5 5 , 8 3 4 4 0 ,4 5 0 , 8 4 3 1 8 1 ,5 4 1 , 1 3 8 $ $ Increase (Decrease) $ (686,130) 18,172,512 17,486,382 (5,518,500) 2,119,548 (3,398,952) 16,521,804 (13,678,504) 18,042,034 $ 20,885,334 % Change -0.65% 14.83% 7.64% -14.24% 24.68% -7.18% 16.07% -35.76% 44.60% 11.50% 20 0 6 105,632,929 140,730,557 246,363,486 33,227,870 10,709,144 43,937,014 119,356,265 24,577,330 58,492,877 202,426,472 Governmental activities comparative statement of activities highlights: Mohave County continues to have recordbreaking growth in population and its economy. This has resulted in increases in assessed values for taxes, as well as other types of revenue. While providing services to an expanding population, the County has managed to maintain moderate growth in expenses, due to increased efficiency. The increase in expenses was primarily from a mid-year cost of living and market adjustment to salaries, which the County felt was necessary to attract and keep qualified personnel. Staffing levels also increased by approximately 4% over the previous year to meet the demands of our citizens. The County's total revenues increased $11.1 million while the expenses only increased $7.6 million over the prior year. The chart below represents all revenues collected from governmental activities, including general revenues from the Statement of Activities. Re ve n u e s by source - Gove rn m e n t a l activitie s Ot h er , $13,874,359 , 11% Ch ar ges for Services, $17,417,807 , 13% Sales T ax es, $27,992,499 , 22% Op er at in g Grants and Contributions, $29,522,114 , 23% P r o p er t y T ax es, $40,458,411 , 31% The following graph represents the expenses and program revenues for governmental activities from the Statement of Activities. Program revenue does not include the general revenues listed on the bottom portion of the Statement of Activities. Total revenues generated by governmental activities (program revenues and general revenues) were $129.3 million. The $82.3 6 million of general revenues, which are not included in this graph, represents 64% of total revenues reported for governmental activities. While this graph indicates expenses exceeded program revenues, the addition of general revenues produced an increase to net assets of $20.9 million for the fiscal year as indicated on the Statement of Activities. Expe n s e s and program re ve n u e s - Gove rn m e n t a l activitie s Ex p en se Rev en ue $ 5 0 ,0 0 0 ,0 0 0 $ 4 0 ,0 0 0 ,0 0 0 $ 3 0 ,0 0 0 ,0 0 0 $ 2 0 ,0 0 0 ,0 0 0 $ 1 0 ,0 0 0 ,0 0 0 $Ex p e n s e Re v e n u e Ge n e r a l Gove r n m e n t $43,924,202 $14,119,786 Hig h wa y s a n d st r e e t s $19,577,244 $14,348,619 C u lt u r e a n d re c r e a t io n $3,759,007 $647,713 In t e r e s t on long-t e r m $1,550,006 $- P u b lic S a f e t y $20,957,064 $8,188,015 He a lt h $13,382,160 $4,737,230 We lf a r e $3,941,590 $3,791,340 Ed u c a t io n $1,290,580 $1,107,218 Governmental Activities Comparative Statement of Activities As of June 30, 2005 As restated Revenues: Program revenues Charges for services Operating grants & contributions Total program revenues General revenues Property taxes Other taxes Other revenues Total general revenues Total revenues Expenses: General government Public safety Highways and streets Health Welfare Culture and recreation Education Interest on long-term debt Total expenses Increase in net assets before transfers Transfers Increase in net assets Net assets beginning of year Net assets end of year 20 06 Increase (decrease) % Change $ 16,481,133 28,507,253 44,988,386 36,665,781 33,434,340 3,076,439 73,176,560 118,164,946 40,612,403 20,872,097 17,343,734 12,524,742 3,555,556 2,831,185 1,318,684 1,748,146 100,806,547 17,358,399 156,555 17,514,954 164,026,184 181,541,138 $ 17,417,807 29,522,114 46,939,921 40,458,411 39,964,725 1,902,133 82,325,269 129,265,190 43,924,202 20,957,064 19,577,244 13,382,160 3,941,590 3,759,007 1,290,580 1,550,006 108,381,853 20,883,337 1,997 20,885,334 181,541,138 202,426,472 $ 936,674 1,014,861 1,951,535 3,792,630 6,530,385 (1,174,306) 9,148,709 11,100,244 3,311,799 84,967 2,233,510 857,418 386,034 927,822 (28,104) (198,140) 7,575,306 3,524,938 (154,558) 3,370,380 17,514,954 20,885,334 5.7% 3.6% 4.3% 10.3% 19.5% -38.2% 12.5% 9.4% 8.2% 0.4% 12.9% 6.8% 10.9% 32.8% -2.1% -11.3% 7.5% 20.3% -98.7% 19.2% 10.7% 11.5% $ $ $ The current year governmental financial statements reflect an increase of $2 million in program revenues. Program revenues increased due to a $.9 million increase in charges for services-from an increase in client base and an increase of $1 million in operating grants and contributions due to increases in federal grants. The $9.1 million increase in general revenues was due to the following increases and decreases. Increases of $3.8 million in property taxes levied for flood control purposes, $2.1 million in sales tax, $3.3 in auto lieu tax and a $1.1 million capital projects sales tax. The increases were generated by increased population growth and tourism. The assessed values rose substantially and new construction was at an all time high. Investment earnings decreased by $1.3 million due to the current year unrealized loss adjustment. 7 Business-Type Activities - net assets highlights: The net assets increased by $807,000. This increase was due to capital contributions from other non-major governmental funds to business-type activities totaling $651,000, included in operating grants and contributions, and income before contributions and transfers of $158,000. Accounts receivable increased by $300,000 in the I-40 fund along with sales tax payable of the same amount for funds due from a customer for sales tax liability. The 15% increase to long-term liabilities outstanding resulted from the annual review by engineers projecting the closure and postclosure costs for the Landfill Fund. The 47% increase to other liabilities was due to a lump sum payment by Griffith Energy for sales taxes that were not previously paid to the I-40 Water Corridor Fund. These funds were accrued to fiscal year 2006 and will be paid to the State of Arizona in fiscal year 2007. Business-type Activities Statement of Net Assets As of June 30, Increase (Decrease) $ 1,346,264 166,520 1,512,784 451,026 254,579 705,605 166,520 321,601 319,058 $ 807,179 % Change 10.76% 1.10% 5.48% 14.75% 47.15% 19.62% 1.10% 4.45% 18.98% 3.36% 2 00 5 Current assets and other assets Capital assets Total assets Long-term liabilities outstanding Other liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets $ $ 1 2, 51 3, 21 0 1 5, 11 1, 24 1 2 7,62 4,45 1 3, 0 5 7 , 1 1 2 53 9, 98 7 3, 5 9 7, 0 9 9 1 5, 11 1, 24 1 7,23 5,11 0 1,68 1,00 1 2 4, 0 2 7, 3 5 2 $ $ 2 00 6 13,859,474 15,277,761 29,137,235 3,508,138 794,566 4,302,704 15,277,761 7,556,711 2,000,059 24,834,531 The chart below represents all revenues collected from business-type activities, including general revenues from the Statement of Activities. Revenues by source - Business-type activities Operating Grants and Contributions, $1,038,163 , 18% Ot h er , $205,283 , 3% Un r est r ict ed Investment Earnings, $217,156 , 4% Ch ar ges for Services, $4,419,205 , 75% Analysis of revenue changes - The Business-type Statement of Activities graph on the following page shows the increases and decreases in revenue discussed below. The charges for services increased by a total of $230,602. This increase is spread across all funds and is related to the population growth in the county. The water usage is up along with additional landfill use. The increase to the parks is related more to non-residents. This fluctuates from year to year but the trend is generally upward. Operating grants and contributions rose by $524,000. The majority of this increase was due to capital contributions from other non-major governmental funds to business-type activities totaling $651,000, which was offset by a decrease in grants to the parks department. The contributions are discussed in more detail on the next page. The major change in general revenues was in other revenues which decreased by 213,000. $59,000 of the decrease was due to the current year investment loss. The balance of the decrease of approximately $154,000 was in miscellaneous revenue in G.V.I.D. This is a result of a reduction in the amount of assessment lien purchases. 8 The graph below represents the expenses and program revenues for business-type activities from the Statement of Activities. Please note that program revenue does not include the general revenues on the bottom portion of the statement. Expenses and program revenues - Business-type activities Ex p en se Rev en ue $ 2 ,5 0 0 , 0 0 0 $ 2 ,0 0 0 , 0 0 0 $ 1 ,5 0 0 , 0 0 0 $ 1 ,0 0 0 , 0 0 0 $ 5 0 0 ,0 0 0 $Ex p en se Revenue Landfill $1,722,728 $1,775,701 Recr eat io n $1,437,477 $1,995,505 W at er companies $1,910,426 $1,686,162 Business-type activities - comparative statement of activities highlights: Net assets for all enterprise funds increased $807,000 from the prior year. The majority of this increase was due to capital contributions from other non-major governmental funds to business-type activities totaling $651,000, included in operating grants and contributions. These funds were used to purchase assets assigned to business-type activities; $601,000 to other enterprise funds to fund projects for County parks and $50,000 for well site improvements for the G.V.I.D. Fund. The Landfill expenses increased $1.1 million over the prior year. The majority of the increase was in waste tire removal expense of $800,000. This is an expense that happens every two to three years. In addition the landfill closure / postclosure costs increased by $237,000 due to the increase use in the current year landfill usage, caused by continued population growth. The recreation expenses increased by $210,000 mainly because of increases in personnel expense of $98,000 form market increases and increased personnel. Depreciation increased by $55,000 due to adding additional buildings and other structures. Maintenance supplies and outside services increased by $25,400 due to expansion of facilities and some major repairs. Utilities, including sewage increased by 16,000. The remaining increase was spread across other operating expenses also due to increased park usage and adding additional personnel. The water company expenses increased in total by $33,618, due to salary increases of $81,000. The increase in salaries was due to being fully staffed, in addition to market increases and raises. This was offset by decreases in depreciation of $40,000 and electric usage of $41,000. Some assets became fully depreciated the prior year. Demand charges were down in 2006 making our electric cost lower. Business-type Activities Comparative Statement of Activities As of June 30, Increase (decrease) % Change 2 0 05 Revenues: Program revenues Charges for services Operating grants & contributions Total program revenues General revenues Property taxes Other taxes Other revenues Total general revenues Total revenues Expenses: Landfill Recreation Water companies Total expenses Increase in net assets before transfers Transfers Increase in net assets Net assets beginning of year Net assets end of year 20 0 6 $ 4, 1 88 , 60 3 5 14 , 07 4 4, 7 02 , 67 7 (23) 1 00 , 00 0 5 35 , 18 6 6 35 , 16 3 5, 3 37 , 84 0 6 12 , 24 6 1, 2 26 , 71 3 1, 8 76 , 80 8 3, 7 15 , 76 7 1, 6 22 , 07 3 (156,555) 1, 4 65 , 51 8 2 2, 5 61 , 83 4 2 4, 0 27 , 35 2 $ 4,419,205 1, 0 38 , 16 3 5,457,368 100,000 322,439 422,439 5,879,807 1,722,728 1,437,477 1,910,426 5,070,631 809,176 (1,997) 807,179 24,027,352 24,834,531 $ 230,602 5 2 4 ,0 8 9 754,691 23 (212,747) (212,724) 541,967 1,110,482 210,764 33,618 1,354,864 (812,897) 154,558 (658,339) 1,465,518 807,179 5.5% 1 0 1. 9 % 16.0% -100.0% 0.0% -39.8% -33.5% 10.2% 181.4% 17.2% 1.8% 36.5% -50.1% -98.7% -44.9% 6.5% 3.4% $ $ $ 9 Financial Analysis of the Government's Funds As noted earlier, Mohave County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds - The focus of Mohave County's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable sources. Such information is useful in assessing Mohave County's financing 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. As of the end of the current fiscal year, Mohave County's governmental funds reported combined ending fund balances of $78.1 million, a decrease of $2.6 million in comparison with the prior year. The reserved fund balances consist of $4.7 million reserved for debt service and $262,747 invested in inventory. The General Fund is the chief operating fund of Mohave County. At the end of the current fiscal year, unreserved fund balance of the General Fund was $10 million. As a measure of the General Fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. The General Fund unreserved fund balance represents 17% of total General Fund expenditures. During the current fiscal year, the fund balance of Mohave County's General Fund increased by $1,797. This represents less than a 1% increase from the fiscal year 2005 ending balance. Revenues increased by $4.7 million (7%), while expenditures increased $2.9 million (5%) over the previous year. Total expenditures as a percentage of the total budget were only 91% in fiscal year 2006. These increases are the result of rapid population growth in the county. The County addressed personnel requirements to provide services to a growing Mohave County population by giving market adjustments and COLA increases. These increases along with increased retirement and health insurance costs accounted for a 13% increase in personnel costs. Other major cost increases occurred in the following expenses: legal services, mental health and AHCCCS services, inmate costs, and equipment automation. The Road Fund had a total fund balance of $12.6 million, of which $262,747 is reserved for inventories and $12.4 million is unreserved and will be used for road maintenance. The net decrease in unrestricted fund balance during the current year in the Road Fund was $520,179. The decrease results from more road projects completed in this fiscal year than the amount of funds collected. The balance reflects funds available for ongoing road projects of the County. The Scenic Debt Service Fund had an ending fund balance of $1.3 million. The fund balance increased by $273,801 due to early payoffs of special assessment debt by property owners. The County Capital Improvement Fund had a fund balance of $28.2 million at June 30, 2006. This was an increase of $1.5 million from the prior year. The increase is partly due to a transfer in of $5.5 million for future capital projects and a $1.9 million transfer out for debt service and maintenance of the County administration building. Revenues increased by $790,000, while expenditures decreased by $3.3 million over the prior year (reflecting the construction in progress and debt payments of the County administration building). Overall the operating expenses exceeded revenue by $2.1 million. The Other Governmental Funds had a combined fund balance of $20.3 million at June 30, 2006. This was a net decrease of $1.5 million from the prior year, after adjusting for the change in classification for the Flood Control Fund to a major fund this year, rather than as a part of the Other Governmental Funds. The net decrease is made up of a $4.7 million decrease in the Certificates of participation fund from an early payoff, and an increase of $1.3 million in capital projects funds and a net increase of $1.9 million in the special revenue funds. The increase in capital projects resulted from unexpected funds transferred in from the general fund for on-going county capital projects. The increase in the special revenue funds is partially from unexpended taxes in two taxing districts, the Library, and the T.V. district for a total of $.7 million. The remaining $1.2 million increase in net assets was the result of an increase of $2.2 million in intergovernmental revenue resulting from new grant funding sources in various special revenue funds and an increase in offsetting expenditures on those grants of $1 million. These are simply timing differences in federal grants that have different year ends and from unexpected levels of service. The demand for services has increased with the population growth. Proprietary funds - Mohave County's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net assets of the water companies, park services, and landfill operations at the end of the year amounted to $1.4 million. Net assets for all enterprise funds increased $807,179, a 3% increase from the prior year. The only individual fund that did not show a profit was the 1-40 Water Corridor Fund, which had a decrease in net assets of $174,143. However, if you add back the non-cash expense of depreciation to that fund, they would have made a small 10 profit. The Landfill fund's net assets increased by $242,470. The increase is from charges for services generated by increased usage form a growing population in Mohave County. The accumulated fund balance will be used for future expansion, as well as closure and postclosure costs. The G.V.I.D. Fund had a small profit of $160,000 from charges for services and some contributions of capital assets for a total increase of $209,869 in net assets. This increase was due to increased development in the water district. The Other Enterprise Funds posted a loss of $70,000, primarily due to the Parks Fund using resources to complete on-going projects. Net assets for the internal service funds increased by $1.3 million. $1 million of that amount was due to the Vehicle Replacement Fund, which will be used to replace an aging County fleet; these funds will be used during the next fiscal year to purchase new vehicles. General Fund Budgetary Highlights Revenues: The budgeted revenues were increased through a board-approved action to accept canine donations totaling $54,317 for the Sheriff's office. Expenditures: Differences between the original budget and the final amended budget were created by moving expenditures between line items and categories of budget. The net difference for expenditures was a decrease of $6.3 million, moved to transfers out to other funds. The increase in transfers out came from contingency. There were $6.8 million in decreases to general government activities, which included a decrease of $7.1 million from contingency to cover transfers as described below and $130,000 for a human resources compensation and classification study, an increase to indigent defense of $160,000 to cover excess legal costs, $461,000 to various other general fund departments to cover unexpected expenses, $40,000 to the medical examiner for autopsies and $25,000 to general administrative fund for a feasibility study for future expansion in Bullhead City. There was also a decrease in the general administrative fund of $.3 million for transfers to various other general fund departments for market increases. The entire market increase for salaries was budgeted in the general administrative fund and transferred as needed to various other general fund budgets. Transfers out: The increase of $6.4 million (reallocated from expenditures) was used to fund a $5.5 million allocation to the County Capital Improvement fund for the future jail expansion project and $.9 to cover various other capital projects. Budgeted transfers out exceeded actual by $2 million for unused budgeted transfers to internal service funds which were actually expenditures for services. The actual amounts were reflected as expenditures. Variances between actual revenues, expenditures and final budgeted amounts will be discussed below for all significant differences, as related to the schedule in required supplementary information. Overall, during the year, revenues exceeded budgetary estimates and expenditures were less than budgetary estimates. The primary exceptions for revenue exceeding budget were in fines and forfeits, charges for services, and licenses and permits. Moccasin Justice Court budgeted for fines and forfeits based on previous years' revenue-during a construction project period (which doubles fines). The current year revenues are at normal rates, not double, as the construction project was completed the prior year. Planning and zoning and Building inspection planned on outsourcing plan reviews and budgeted accordingly, that accounted for $367,000 of the uncollected charges for services. In addition, elections over estimated on the cities needs for elections this year, by $119,000. Two major construction projects did not materialize that were included in the permit budget for Planning and zoning so the revenue is lower than budgeted by $400,000 in licenses and permits. Tax revenue is budgeted at 95% of assessed valuation allowing for delinquent taxes. The $895,148 increase reflects that delinquencies were lower than budgeted. Intergovernmental revenue exceeded budgeted amounts because the economy expanded at a faster rate then expected and state shared revenues exceeded projections by more than $1.5 million. As permitted by State statutes, the County budgets its available unrestricted fund balance at the end of the prior fiscal year as contingency for the next year. The remaining contingency at year-end was $2 million. At year-end, the following departmental budgets exceeded actual expenses due to personnel vacancies: Assessor, Board of supervisors, Public defender, and Public legal defender. The Elections department budgeted revenues and expenditures exceeded the actual due to high budget estimates of election needs. The Justice courts had remaining budget of $141,000 due to vacancies savings and a professional services contract not completed during this year. Planning and zoning had vacancy savings of $234,000 along with excess budget of $511,000 for not outsourcing the plans review as they had planned. Building inspection had excess budget due to $289,000 vacancy savings, $180,000 for plans review that were not outsourced, and $100,000 for specialized laptops to use out in the field that were not purchased. The A.H.C.C.C.S. budget was inadvertently doubled for administrative expense by including the same $356,970 on two different lines of the budget, which is why there is remaining budget. Please see note 3 of the required supplementary information for the explanation of variance of the General administrative department. 11 Capital Asset and Debt Administration Capital assets Mohave County's investment in capital assets for its governmental and business-type activities as of June 30, 2006 amounts to $156 million (net of accumulated depreciation). This investment in capital assets includes land, buildings, water systems, improvements other than buildings, machinery and equipment, park facilities, roads, highways, and bridges. The net increase in Mohave County's invested in capital assets, net of related debt, for the current fiscal year was $16.7 million or 14%. There was an increase in capital assets of $18.3 million (net of depreciation) related to the following projects and purchases: $8.1 million for the completion of construction on the new administration building; $5.0 million for the Mohave Wash project; $1.2 million for the Bullhead City Justice Court building; $3.1 million for vehicles and road equipment added to the fleet, and $.9 million for minor equipment purchases. Capital Assets, net of accumulated depreciation As of June 30, Increase 2005 Governmental activities Capital assets, not being depreciated Capital assets, being depreciated Total governmental assets Business-type activities Capital assets, not being depreciated Capital assets, being depreciated Total business-type assets Total governmental and business-type activities Capital assets, not being depreciated Capital assets, being depreciated Total capital assets $ $ 46,915,763 90,753,523 137,669,286 $ $ 41,424,964 114,583,354 156,008,318 $ $ (5,490,799) 23,829,831 18,339,032 -11.70% 26.26% 13.32% $ $ 1,626,010 13,485,231 15,111,241 $ $ 2,155,257 13,122,504 15,277,761 $ $ 529,247 (362,727) 166,520 32.55% -2.69% 1.10% $ $ 45,289,753 77,268,292 122,558,045 $ $ 39,269,707 101,460,850 140,730,557 $ $ (6,020,046) 24,192,558 18,172,512 -13.29% 31.31% 14.83% 2006 Decrease % Change Major capital asset events during the current fiscal year include the following: OPUS International completed construction on the administration building in Kingman and the County received a certificate of occupancy in October 2005. Total expenditures for the year were $8.1 million. The County completed the Golden Valley road improvement projects, using the final $472,000 of the environmental trust funds awarded for those road improvements. The total cost of those improvements was $3 million dollars. Construction continues on the Mohave Wash project with total expenditures in 2006 of $5 million. The County expects to complete the project by June 30, 2007. The Parks fund spent $306,000 on improvements to the Hualapai Mountain Park visitor center. Construction began on the Bullhead City Court Building addition with expenditures of $1.2 million for the year. The County expects to complete the project by June 30, 2007, at estimated additional costs of $200,000. The County replaced 62 aging vehicles from the fleet at a total cost of $1.5 million. Forty-six vehicles were purchased using general government funds; thirteen were purchased with Road funds; and three with business-type funds. The 15% decrease to the governmental activities capital assets not being depreciated reflects the completion of the administration building and the Golden Valley roads project. These projects were previously reported under construction in progress and were not depreciated. Upon completion, the assets were reclassified as depreciable assets. Note 6, on pages 38-39 of this report, contains additional information on Mohave County's capital assets. 12 Long-term debt - At the end of the current fiscal year, Mohave County had total debt outstanding of $36.7 million. Of this amount, $20.9 million comprises debt backed by buildings of the government used as collateral for Certificates of Participation issued and $3.7 million is special assessment debt for which the government can sell the taxpayer's property, to cover the debt, in the event of default by the property owners subject to the assessment. The remainder of Mohave County's long-term liabilities represents claims and judgments payable, notes payable, landfill closure and postclosure care costs payable, and compensated absences payable incurred during normal operations. State statutes limit the amount of general obligation debt a government entity may issue to 6% of its total secondary assessed valuation, without taxpayer approval, and up to 15% with the approval of a majority of taxpayers. The debt limitation for Mohave County, for fiscal year 2005/2006, was $92 million (6% of $1.5 billion secondary assessed value). Mohave County does not have any outstanding general obligation debt and therefore has its full debt limit capacity available for future needs. Note 8, on pages 40-44 of this report, contains additional information on Mohave County's long-term debt. Economic Factors and Next Year's Budgets and Rates Continued population growth that exceeds State and national growth significantly influences future budgets. More citizens result in more service demands. A growing and changing economy creates additional costs and additional demand for public services, requiring public revenues to keep pace with economic growth. All of these factors were considered in preparing Mohave County's budget for the 2006 fiscal year. % of Population Growth Between 1970 and 2000 6 00 % 5 00 % 4 00 % 3 00 % 2 00 % 1 00 % 0% 19 70 19 72 19 74 19 76 19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 From 1970 to 2000 Mohave County, AZ grew by 130,052 people, a 494% increase in population. In addition, the population in Mohave County, AZ has grown faster than the state and the nation. United States A r iz ona Mohav e County, AZ % of Job Growth compared to the State and Nation 6 00% 5 00% 4 00% 3 00% 2 00% 1 00% 0% 19 70 19 72 19 74 19 76 19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 Over the last 30 years job growth in Mohave County, AZ has outpaced that of the state and the nation. United States Arizona Mohave County, AZ 13 The unemployment rate for Mohave County for 2006 was 4.1%, which is a slight increase from a rate of 4.0% in 2005. Even with this minor increase, the County's unemployment rate compares favorably to the state's average unemployment rate of 4.2% and the national average rate of 4.7%. Comparison of Local, State and Federal Unemployment Rates Data Compiled from Bureau of Statistics Mohave County State of Arizona Federal Requests for Information 2002 5.5 6.2 5.8 2003 5.3 5.6 6.0 2004 3.8 4.8 5.5 2005 4.0 4.5 5.2 2006 4.1 4.2 4.7 This financial report is designed to provide a general overview of Mohave County's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: Mohave County Finance P.O. Box 7000 Kingman, AZ 86402-7000 14 Basic Financial Statements 15 MOHAVE COUNTY Statement of Net Assets June 30, 2006 Primary Government Governmental Activities Assets Current Assets Cash and investments Receivables (net of allowances for uncollectibles): Property taxes Accounts Accrued interest Special assessments Internal balances Due from other governments Inventories Prepaid items Noncurrent Assets Restricted cash Note receivable Capital assets, not being depreciated Capital assets, being depreciated, net Total assets Liabilities Current Liabilities Accounts payable and other current liabilities Accrued payroll and employee benefits Accrued interest payable Due to other governments Deposits held for others Deferred revenue (unearned revenue) Current portion of long-term obligations Noncurrent liabilities Noncurrent portion of long-term obligations Total liabilities Net Assets Invested in capital assets, net of related debt Restricted for: Public safety Highways and streets Health Welfare Education Debt service Capital projects Other purposes Unrestricted Total net assets $ 2,180,460 12,383,996 586,217 373,166 183,213 7,976,683 525,692 367,903 58,492,877 202,426,472 $ 906,103 6,650,608 2,000,059 24,834,531 $ 2,180,460 12,383,996 586,217 373,166 183,213 7,976,683 1,431,795 7,018,511 60,492,936 227,261,003 $ 119,356,265 $ 15,277,761 $ 134,634,026 $ 24,167,087 43,937,014 $ 3,396,361 4,302,704 $ 27,563,448 48,239,718 $ 5,679,483 1,224,157 583,766 76,825 1,175,309 1,969,604 9,060,783 $ 242,984 31,992 261,510 158,080 100,000 111,777 $ 5,922,467 1,256,149 583,766 338,335 1,333,389 2,069,604 9,172,560 $ 2,511,311 39,269,707 101,460,850 246,363,486 $ 906,103 845,402 2,155,257 13,122,504 29,137,235 $ 3,417,414 845,402 41,424,964 114,583,354 275,500,721 2,392,486 687,991 294,844 3,327,700 2,467 6,081,228 367,903 257,354 392 781,931 43,381 (2,467) 174,498 253,184 59,865 2,392,878 1,469,922 338,225 3,327,700 6,255,726 621,087 317,219 $ 89,709,645 $ 10,797,185 $ 100,506,830 Business-Type Activities Total The notes to the financial statements are an integral part of this statement 16 MOHAVE COUNTY Statement of Activities Year Ended June 30, 2006 Program Revenues Net (Expense) Revenue and Changes in Net Assets Primary Government Functions/Programs Primary Government: Governmental activities: General government Public safety Highways and streets Health Welfare Culture and recreation Education Interest on long-term debt Total governmental activities Business-type activities: Landfill Recreation Water companies Total business-type activities Total primary government Expenses Charges for Services Operating Grants and Contributions Governmental Activities Business-Type Activities Total $ 43,924,202 20,957,064 19,577,244 13,382,160 3,941,590 3,759,007 1,290,580 1,550,006 108,381,853 1,722,728 1,437,477 1,910,426 5,070,631 $ 11,491,895 2,225,227 1,502,051 1,696,153 431,724 70,757 17,417,807 1,388,329 1,394,550 1,636,326 4,419,205 $ 2,627,891 5,962,788 12,846,568 3,041,077 3,359,616 576,956 1,107,218 29,522,114 387,372 600,955 49,836 1,038,163 $ (29,804,416) (12,769,049) (5,228,625) (8,644,930) (150,250) (3,111,294) (183,362) (1,550,006) (61,441,932) (61,441,932) $ 52,973 558,028 (224,264) 386,737 386,737 $ (29,804,416) (12,769,049) (5,228,625) (8,644,930) (150,250) (3,111,294) (183,362) (1,550,006) (61,441,932) 52,973 558,028 (224,264) 386,737 (61,055,195) $ 113,452,484 $ 21,837,012 $ 30,560,277 General revenues: Taxes Property taxes, levied for general purposes Property taxes, levied for flood control Property taxes, levied for debt service Share of state sales taxes Special county sales tax for capital projects Auto lieu tax Federal in lieu tax Local in lieu tax Utilities franchise tax County equalization revenue Investment earnings Miscellaneous Rent Deed sale revenue Transfers Total general revenues and transfers Change in net assets Net assets, July 1, 2005, as restated Net assets, June 30, 2006 $ 33,563,426 6,627,190 267,795 20,183,057 7,809,442 9,599,164 1,911,725 22,391 438,946 195,150 972,633 254,403 234,937 245,010 1,997 82,327,266 20,885,334 181,541,138 202,426,472 100,000 217,156 101,923 3,360 (1,997) 420,442 807,179 24,027,352 $ 24,834,531 $ 33,563,426 6,627,190 267,795 20,183,057 7,809,442 9,599,164 2,011,725 22,391 438,946 195,150 1,189,789 356,326 238,297 245,010 82,747,708 21,692,513 205,568,490 227,261,003 The notes to the financial statements are an integral part of this statement 17 MOHAVE COUNTY Balance Sheet Governmental Funds June 30, 2006 100 Assets Cash and investments Receivables (net of allowances for uncollectibles): Property taxes Accounts Accrued interest Special assessments Due from: Other funds Other governments Inventories Prepaid items Cash-restricted Total assets 428,923 1,858,968 25,391 $ 16,652,676 249,544 1,459,705 262,747 4,775 $ 13,624,063 575 $ 8,897,084 $ 4,211,604 693,179 525,692 $ 28,550,800 746,009 2,066,166 159,201 1,985,619 $ 24,448,127 1,424,476 6,078,018 262,747 189,942 2,511,311 $ 96,384,354 1,712,022 359,476 53,042 19,601 31,273 352,217 32,559 4,344 2,886,956 70,449 328,247 241,791 70,795 440,744 2,392,486 620,868 262,462 3,327,700 General Fund $ 12,214,854 205 Road Fund $ 11,596,418 305 Flood Control Fund $ 8,511,733 330 Scenic Debt Service Fund $ 1,320,304 410 County Capital Improvement Fund $ 27,261,480 Other Governmental Funds $ 18,409,555 Total Governmental Funds $ 79,314,344 Liabilities and Fund Balances Liabilities Accrued liabilities Accrued payroll and employee benefits Due to: Other funds Other governments Deposits held for others Claims and judgments payable Certificates of participation: Principal payable Interest payable Deferred revenue Total liabilities Fund balances Reserved for: Inventories Debt service Unreserved, reported in: General fund Special revenue funds Capital projects funds Total fund balances Total liabilities and fund balances 10,044,443 10,044,443 $ 16,652,676 12,383,996 12,646,743 $ 13,624,063 5,720,838 5,720,838 $ 8,897,084 1,324,648 $ 4,211,604 28,152,153 28,152,153 $ 28,550,800 12,431,344 4,463,292 20,274,077 $ 24,448,127 10,044,443 30,536,178 32,615,445 78,162,902 $ 96,384,354 262,747 1,324,648 3,379,441 262,747 4,704,089 3,329,009 6,608,233 977,320 252,468 3,176,246 2,886,956 2,886,956 398,647 900,000 583,766 653,985 4,174,050 900,000 583,766 7,122,418 18,221,452 447,130 1,124,234 301,003 6,062 2,493 50,905 722,084 76,825 49,131 62,037 1,177,769 76,825 1,173,365 413,945 $ 658,833 748,024 $ 827,872 143,386 $ 2,861,187 9,193 $ $ 398,647 $ 839,690 286,532 $ 5,586,229 1,187,135 The notes to the financial statements are an integral part of this statement 18 MOHAVE COUNTY Reconciliation of the Balance Sheet to the Statement of Net Assets Governmental Funds June 30, 2006 Fund balances - total governmental funds 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. Some receivables are not available to pay for current-period expenditures and therefore, are deferred in the funds. Property taxes receivable Special assessments receivable Internal service funds are used by management to charge the costs of certain activities, such as insurance, equipment maintenance, and telecommunications, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Assets. Some liabilities, including bonds and certificates of participation payable, are not due and payable in the current period and therefore, are not reported in the funds. Special assessment bonds Certificates of participation Certificates of participation premium-unamortized Note payable to landfill Compensated absences 1,880,220 3,272,594 $ 78,162,902 137,060,693 5,152,814 12,499,029 3,741,000 20,080,000 517,082 845,402 5,265,482 (30,448,966) Net assets of governmental activities $ 202,426,472 The notes to the financial statements are an integral part of this statement 19 MOHAVE COUNTY Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2006 100 General Fund Revenues: Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment income Rents Contributions Miscellaneous Total revenues Expenditures: Current: General government Public safety Highways and streets Health Welfare Culture and recreation Education Capital outlay Debt service: Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Proceeds from deed sale Total other financing sources and uses Net change in fund balances Fund balances, July 1, 2005 Decrease in reserve for inventory of supplies Fund balances, June 30, 2006 1,052,647 (9,175,067) (8,122,420) 1,797 10,042,646 $ 10,044,443 60,267,242 32,934,721 18,059,137 8,925,746 347,638 $ 27,949,311 1,686,351 30,035,457 6,989,193 1,452,409 163,553 360 36,663 78,162 68,391,459 $ 205 Road Fund 15,363,121 1,459,164 125,323 116,200 16,921 17,080,729 305 Flood Control Fund $ 6,627,190 42,886 635 116,033 6,786,744 330 Scenic Debt Service Fund $ 919,527 4,799 12,964 937,290 410 County Capital Improvement Fund $ 7,809,442 20,000 55,735 147,567 109,067 8,141,811 Other Governmental Funds $ 6,497,698 265,853 15,642,219 5,867,873 61,863 320,678 9,310 180,357 50,318 28,896,169 Total Governmental Funds $ 48,883,641 1,185,380 1,729,237 61,061,432 14,371,965 1,519,071 886,118 234,937 217,020 145,401 130,234,202 17,300,908 17,300,908 8,677,497 8,677,497 450,000 213,489 663,489 10,284,922 10,284,922 4,652,275 7,079,899 22,499 5,460,643 4,157,899 4,953,969 1,236,202 1,148,064 5,690,000 1,336,517 35,737,967 37,586,996 25,139,036 26,000,904 14,386,389 4,157,899 4,953,969 1,583,840 11,432,986 6,140,000 1,550,006 132,932,025 8,124,217 (220,179) (1,890,753) 273,801 (2,143,111) (6,841,798) (2,697,823) (300,000) (300,000) (520,179) 13,274,057 (107,135) $ 12,646,743 27,500 (350,694) 46,049 (277,145) (2,167,898) 7,888,736 $ 5,720,838 273,801 1,050,847 $ 1,324,648 5,500,000 (1,876,234) 3,623,766 1,480,655 26,671,498 $ 28,152,153 6,723,548 (1,601,510) 198,961 5,320,999 (1,520,799) 21,794,876 $ 20,274,077 $ 13,303,695 (13,303,505) 245,010 245,200 (2,452,623) 80,722,660 (107,135) 78,162,902 The notes to the financial statements are an integral part of this statement 20 MOHAVE COUNTY Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities Governmental Funds Year Ended June 30, 2006 Net change in fund balances - total governmental funds Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital outlay Net effect of disposal of capital assets Depreciation expense Debt proceeds provide current financial resources to government funds, but issuing debt increases long-term liabilities in the Statement of Net Assets. Repayment of debt is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Assets. Principal repaid on long-term debt: Special assessment bonds Certificates of participation Certificates of participation premium-amortization Note payable to landfill Under the modified accrual basis of accounting used in governmental funds, expenditures are not recognized for transactions that are not normally paid with expendable available resources. In the Statement of Activities, however, which is presented on the accrual basis of accounting, expenses and liabilities are reported regardless of when the financial resources are available. Increase in compensated absences Collections of deferred revenues plus current-year revenues recorded in the governmental funds exceeded revenues reported in the Statement of Activities. Some cash outlays, such as purchases of inventories, are recorded as expenditures in the governmental funds when purchased. In the Statement of Activities, however, inventories are reported as expenses when consumed. Decrease in inventories Internal service funds are used by management to charge the costs of certain activities, such as insurance, equipment maintenance, and telecommunications to individual funds. The net revenue of certain internal service funds is reported with governmental activities. Change in net assets of governmental activities 635,000 5,505,000 39,775 154,598 22,790,797 169,303 (5,257,002) $ (2,452,623) 17,703,098 6,334,373 (751,135) (1,167,225) (107,135) 1,325,981 20,885,334 The notes to the financial statements are an integral part of this statement 21 MOHAVE COUNTY Statement of Net Assets Proprietary Funds June 30, 2006 Business-type Activities - Enterprise Funds I-40 Water Corridor Fund Assets Current assets: Cash and investments Receivables (net of allowances for uncollectibles): Property taxes Accounts Accrued interest Due from: Other funds Other governments Inventories Prepaid items Total current assets Noncurrent assets: Cash - restricted Note receivable p accumulated depreciation, where applicable Land Infrastructure, net Buildings, net Equipment, net Construction in progress Total noncurrent assets Total assets Liabilities Current liabilities: Accrued liabilities Accrued payroll and employee benefits Due to: Other funds Other governments Deposits held for others Deferred revenues Current portion of: Compensated absences payable Claims and judgments payable Total current liabilities Noncurrent liabilities: Landfill closure and postclosure care costs payable Compensated absences payable Total noncurrent liabilities Total liabilities Net Assets Invested in capital assets, net of related debt Restricted for: Capital projects Sanitation Unrestricted (deficit) Total net assets Landfill Fund G.V.I.D. Fund Other Enterprise Funds Governmental ActivitiesInternal Service Funds Total $ 73,454 $ 8,915,527 $ 1,030,659 $ 777,545 $ 10,797,185 $ 10,395,301 515,171 3,825 430 73,841 226,799 51,600 945,120 606,219 - 167,009 33,756 97,284 9,213,576 845,402 392 99,174 3,773 9,112 26,385 4,884 1,174,379 299,884 - 577 2,027 101 3,373 3,381 787,004 - 392 781,931 43,381 9,643 174,498 253,184 59,865 12,120,079 906,103 845,402 67,123 32,382 99,366 3,210 105,156 67,412 10,769,950 - 4,551,516 100,874 5,258,609 6,203,729 106,818 38,382 990,602 10,204,178 40,388 6,478,565 53,297 204,507 16,956 7,093,597 8,267,976 1,481,772 432,941 987,622 274,800 509,323 3,686,458 4,473,462 1,628,978 11,463,022 1,040,919 618,563 526,279 17,029,266 29,149,345 3,669,864 3,669,864 14,439,814 145,199 3,412 5,728 255,424 17,798 - 28,625 4,072 649 - 27,404 6,661 1,964 6,086 134,982 - 41,756 17,847 3,769 5,300 100,000 242,984 31,992 12,110 261,510 158,080 100,000 93,254 37,022 343,606 1,944 - 14,306 441,867 9,747 43,093 16,578 193,675 71,146 239,818 111,777 918,453 184,905 1,280,054 1,940,785 4,361 4,361 446,228 3,362,308 2,969 3,365,277 3,408,370 5,050 5,050 198,725 21,673 21,673 261,491 3,362,308 34,053 3,396,361 4,314,814 1,940,785 4,652,390 606,219 498,892 $ 5,757,501 145,200 6,650,608 $ 6,795,808 6,793,713 299,884 975,654 $ 8,069,251 3,686,458 525,513 $ 4,211,971 15,277,761 906,103 6,650,608 2,000,059 $ 24,834,531 3,669,865 8,829,164 $ 12,499,029 The notes to the financial statements are an integral part of this statement 22 MOHAVE COUNTY Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds Year Ended June 30, 2006 Business-type Activities - Enterprise Funds 850 I-40 Water Corridor Fund Operating revenues: Taxes Charges for services Miscellaneous Total operating revenues Operating expenses: Personnel services Supplies Professional services Communications Insurance Landfill closure and postclosure care costs Insurance claims Lawsuit judgments Repairs and maintenance Public utility service Rents and leases Depreciation Other Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Investment income Rent income Intergovernmental Gain (loss) on disposal of capital assets Total nonoperating revenues (expenses) Income (loss) before contributions and transfers Capital contributions Transfers in Transfers out Increase (decrease) in net assets Total net assets, July 1, 2005 Total net assets, June 30, 2006 12,287 1,680 (75,034) (61,067) (174,143) (174,143) 5,931,644 $ 5,757,501 189,497 387,372 576,869 242,470 242,470 6,553,338 $ 6,795,808 9,101 1,680 10,781 160,033 49,836 209,869 7,859,382 $ 8,069,251 6,271 100,000 (13,584) 92,687 (69,975) 600,955 (1,997) 528,983 3,682,988 $ 4,211,971 217,156 3,360 487,372 (88,618) 619,270 158,385 650,791 (1,997) 807,179 24,027,352 $ 24,834,531 $ 86,514 (106,848) (20,334) 1,324,174 1,807 1,325,981 11,173,048 12,499,029 172,226 11,401 29,651 4,337 56,079 3,390 263,546 3,260 398,051 15,190 957,131 (113,076) 195,962 19,844 864,152 2,715 423,502 3,394 108,983 6,790 7,722 89,664 1,722,728 (334,399) 288,865 55,790 23,484 13,889 6,647 17,613 95,595 1,796 287,501 43,525 834,705 149,252 818,462 178,312 62,800 17,495 3,627 17,304 213,914 5,530 135,902 14,103 1,467,449 (162,662) 1,475,515 265,347 980,087 38,436 66,353 423,502 41,701 682,038 17,376 829,176 162,482 4,982,013 (460,885) 1,862,703 921,343 77,489 626,865 656,631 9,016,219 137,134 148,915 775 1,202,313 785,968 171,044 15,607,399 1,344,508 $ 839,264 4,791 844,055 $ 1,388,329 1,388,329 $ 893,819 90,138 983,957 $ 1,297,793 6,994 1,304,787 $ 4,419,205 101,923 4,521,128 $ 154 16,945,286 6,467 16,951,907 505 Landfill Fund 856 G.V.I.D. Fund Other Enterprise Funds Governmental ActivitiesInternal Service Funds Total The notes to the financial statements are an integral part of this statement 23 MOHAVE COUNTY Statement of Cash Flows Proprietary Funds Year Ended June 30, 2006 Business-type-Activities - Enterprise Funds Other Landfill G.V.I.D. Enterprise Fund Fund Funds Governmental ActivitiesInternal Service Funds I-40 Water Corridor Fund Total Cash flows from operating activities: Receipts from customers and users Receipts from interfund services provided Payments to suppliers Payments to employees Payments for interfund services used Net cash provided by (used for) operating activities Cash flows from noncapital financing activities: Transfer to other funds Rent income Advances from other funds Subsidy from federal grant Net cash provided by (used for) noncapital financing activities Cash flows from capital and related financing activities: Purchases of capital assets Proceeds from sales of capital assets Net cash used for capital and related financing activities Cash flows from investing activities: Proceeds from sales and maturities of investments Interest and dividends received Net cash provided by (used for) investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, July 1, 2005 Cash and cash equivalents, June 30, 2006 Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities: Depreciation expense Landfill closure and postclosure care costs Expenses incurred but not reported Change in assets and liabilities: Receivables, net (increase) decrease Due from other funds, net (increase) decrease Due from other governments, (increase) decrease Inventories, (increase) decrease Prepaid items, net (increase) decrease Accrued liabilities, net increase (decrease) Due to other funds, increase (decrease) Due to other governments, net increase (decrease) Accrued payroll and employee related benefits, net increase (decrease) Compensated absences payable, net increase (decrease) Customer deposits, net increase (decrease) Total Adjustments Net cash provided by (used for) operating activities Turn this row font white to print $ 850,830 (584,257) (168,720) (27,268) 70,585 1,820 1,820 (220,683) (220,683) 8,462 8,462 (139,816) 819,489 $ 679,673 $ 1,463,714 (1,046,294) (192,108) (43,544) 181,768 380,200 380,200 (30,546) (30,546) 154,598 155,741 310,339 841,761 8,073,766 $ 8,915,527 $ 964,280 (236,229) (286,378) (79,761) 361,912 1,680 1,680 (74,726) (74,726) 7,120 7,120 295,986 $ 1,309,831 (450,260) (820,791) (49,557) (10,777) (1,997) 100,000 98,003 (107,564) 6,443 (101,121) (797) (797) (14,692) $ 792,237 777,545 $ 4,588,655 (2,317,040) (1,467,997) (200,130) 603,488 (1,997) 3,500 480,200 481,703 (433,519) 6,443 (427,076) 154,598 170,526 325,124 983,239 $ 79,131 17,140,364 (12,927,041) (1,873,935) (141,499) 2,277,020 17,154 17,154 (1,389,206) 68,283 (1,320,923) 65,481 65,481 1,038,732 1,034,557 $ 1,330,543 10,720,049 $ 11,703,288 9,356,569 $ 10,395,301 $ (113,076) $ (334,399) $ 149,252 $ (162,662) $ (460,885) $ 1,344,508 398,051 (321,475) (430) (73,841) (51,600) (25,979) 5,446 253,874 (3,093) 2,708 183,661 $ 70,585 0 $ 7,722 423,502 74,797 9,653 (784) (1,996) 3,273 516,167 181,768 0 $ 287,501 (99,140) (9,112) 478 (19,907) 741 3,051 3,635 (5,353) 50,766 212,660 361,912 0 $ 135,902 2 5,090 43 (2,664) 12,453 2,042 (23,525) 17,542 5,000 151,885 (10,777) 0 $ 829,176 423,502 (345,816) (4,452) (73,798) (53,786) (23,780) 7,445 256,925 (24,979) 18,170 55,766 1,064,373 603,488 0 $ 785,968 (105,811) 217,948 (7,386) (2,125) (101,903) (24,561) 23,532 167,166 (37,783) 17,556 (89) 932,512 2,277,020 0 The notes to the financial statements are an integral part of this statement 24 MOHAVE COUNTY Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2006 Investment Trust Fund s Assets Cash and investments Receivables (net of allowances for uncollectibles): Accrued interest Total assets Agency Funds $ 65,578,548 52 $ 918,711 1 $ 65,578,600 $ 918,712 Liabilities Accounts Payable Deposits held for others Total liabilities Net Assets Held in trust for investment trust participants - $ 298 918,414 918,712 $ $ 65,578,600 The notes to the financial statements are an integral part of this statement 25 MOHAVE COUNTY Statement of Changes in Fiduciary Net Assets Fiduciary Funds Year Ended June 30, 2006 Investment Trust Funds Additions: Contributions from participants Investment income: Interest and dividend income Net decrease in fair value of investments Net investment income Total additions 1,791,195 (944,897) 846,298 438,759,756 $ 437,913,458 Deductions: Distributions to participants Total deductions Change in net assets Net assets, July 1, 2005 Net assets, June 30, 2006 $ (435,379,054) (435,379,054) 3,380,702 62,197,898 65,578,600 The notes to the financial statements are an integral part of this statement 26 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Table of Contents Note 1 - Summary of Significant Accounting Policies ..................................................................................... 28 A. B. C. D. E. F. G. H. I. Reporting Entity......................................................................................................................................................28 Basis of Presentation ............................................................................................................................................... 29 Basis of Accounting ................................................................................................................................................ 30 Cash Equivalents and Investments..........................................................................................................................31 Inventories and Prepaid Items ................................................................................................................................. 31 Property Tax Calendar.............................................................................................................................................32 Capital Assets ......................................................................................................................................................... 32 Investment Income..................................................................................................................................................32 Compensated Absences ............................................................................................................................................ 33 Note 2 Beginning Balances Restated / Prior Period Adjustment ................................................................... 33 Note 3 Stewardship, Compliance, and Accountability................................................................................... 33 Note 4 Deposits and Investments ................................................................................................................... 34 Note 5 Property Taxes Receivable ................................................................................................................. 37 Note 6 Capital Assets ..................................................................................................................................... 38 Note 7 Restricted Assets................................................................................................................................. 39 Note 8 Long-Term Liabilities......................................................................................................................... 40 Note 9 Risk Management ............................................................................................................................... 44 Note 10 Operating Leases .............................................................................................................................. 45 Note 11 Retirement Plans............................................................................................................................... 45 Note 12 Interfund Balances and Activity ....................................................................................................... 47 Note 13 County Treasurer's Investment Pool ................................................................................................ 48 Note 14 Subsequent Events ............................................................................................................................ 50 27 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 1 - Summary of Significant Accounting Policies The accounting policies of Mohave County conform to generally accepted accounting principles applicable to governmental units adopted by the Governmental Accounting Standards Board (GASB). A. Reporting Entity Mohave County is a general purpose local government that is governed by a separately elected board of three county supervisors. These financial statements present the activities of the County (the primary government) and its component units. Component units are legally separate entities for which the County is considered to be financially accountable. Blended component units, although legally separate entities, are in substance part of the County's operations. Therefore, data from these units is combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the government-wide financial statements to emphasize that 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: For Separate Financial Reporting Statements Description: Criteria for Inclusion Method A tax-levying district that provides flood control Blended Not systems; County board of supervisors serves as available board of directors A tax-levying district that provides and maintains Blended Not library services for County residents; County available board of supervisors serves as board of directors Provides and maintains communication equipment Blended Not resources to provide television signals to available residents; County board of supervisors serves as board of directors Constructs or improves roads, bridges, and water Blended Not distribution systems; County board of supervisors available serves as board of directors A corporation set up to provide financing and Blended Not available oversight of the construction and operation of the County administration building; Mohave management of Mohave County serves as the board of directors of the corporation Component Unit Mohave County Flood Control District Mohave County Library District Mohave County Television District Mohave County Special Assessment Districts Mohave Administration Building - Finance Corporation 28 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 1 - Summary of Significant Accounting Policies (cont'd) B. Basis of Presentation The basic financial statements include both government-wide statements and fund financial statements. The government-wide statements focus on the County as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the usefulness of the information. Government-wide statements--provide information about the primary government (the County) and its component units. The statements include a statement of net assets and a statement of activities. These statements report the financial activities of the overall government, except for fiduciary activities. They also distinguish between the governmental and business-type activities of the County. Governmental activities generally are financed through taxes and intergovernmental revenues. Business-type activities are financed in whole or in part by fees charged to external parties. A statement of activities presents a comparison between direct expenses and program revenues for each function of the County's governmental activities and segment of its business-type activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. The County only allocates indirect expenses to special taxing districts and proprietary funds. Program revenues include: Charges to customers or applicants for goods, services, or privileges provided, Operating grants and contributions, and Capital grants and contributions, including special assessments. Revenues that are not classified as program revenues, including internally dedicated resources and some taxes, are reported as general revenues. Generally, the effect of interfund activity has been eliminated from the government-wide financial statements to minimize the double counting of internal activities. However, charges for interfund services provided and used are not eliminated if the prices approximate their external exchange values. Fund financial statements--provide information about the County's funds, including fiduciary funds and blended component units. Separate statements are presented for the governmental, proprietary, and fiduciary fund categories. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Fiduciary funds are aggregated and reported by fund type. 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 user charges, in which each party receives and gives up essentially equal values, are operating revenues. Other revenues, such as investment income, result from transactions in which the parties do not exchange equal values. Revenues generated by ancillary activities are also reported as nonoperating revenues. 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. 29 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 1 - Summary of Significant Accounting Policies (cont'd) The County reports the following major governmental funds: 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. Road Fund accounts for all taxes on gas and auto license fees collected for building and maintaining County roads. Flood Control Fund accounts for all monies collected from local taxpayers in the form of a levy on real property. These funds are used in planning, engineering, constructing, repairing, and maintaining flood control channels in Mohave County. Scenic Debt Service Fund accounts for collections of special district assessments from taxpayers, and semiannual bond payments. County Capital Improvement Fund accounts for a ¼ cent sales tax collected to provide for major capital improvements of the county. The County reports the following major enterprise funds: I-40 Water Corridor Fund accounts for the operations of a water company located in the County's industrial park, off U.S. I-40. Landfill Fund accounts for the operations of two landfills located in Mohave County. G.V.I.D. Fund accounts for the operations of a water company located in Golden Valley. The internal service funds account for automotive maintenance and operation, insurance, computer services, central purchasing services, janitorial services, and telecommunications services provided to the County's departments or to other governments on a cost-reimbursement basis. The investment trust funds account for pooled assets held and invested by the County Treasurer on behalf of the County's departments and other governmental entities; as well as individual investments, including money market investments held by outside trustees. The agency funds account for assets held by the County as an agent for the State and various local governments and for property taxes collected and distributed to the State, local school districts, community college districts, and special districts. C. Basis of Accounting The government-wide, proprietary fund, and fiduciary fund financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Property taxes are recognized as revenue in the year for which they are levied. Grants and donations are recognized as revenue as soon as all eligibility requirements the provider imposed have been met. 30 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 1 - Summary of Significant Accounting Policies (cont'd) Governmental funds in the fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The County considers all revenues reported in the governmental funds to be available if the revenues are collected within 60 days after year end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on 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 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 except where matching requirements exist. The County's business-type activities and enterprise funds follow FASB Statements and Interpretations issued on or before November 30, 1989, Accounting Principles Board Opinions, and Accounting Research Bulletins, unless those pronouncements conflict with GASB pronouncements. The County has chosen the option not to follow FASB Statements and Interpretations issued after November 30, 1989. D. Cash Equivalents and Investments For purposes of its statement of cash flows, the County considers all cash on hand, demand deposits, cash on deposit with the County Treasurer, and only those highly liquid investments with a maturity of 3 months or less when purchased to be cash equivalents. Nonparticipating interest-earning investment contracts are stated at cost. All other investments are stated at fair value. E. Inventories and Prepaid Items The County accounts for its inventories in the governmental funds using the purchase method. Inventories of the governmental funds consist of expendable supplies held for consumption and are recorded as expenditures at the time of purchase. Amounts on hand at year end are shown on the balance sheet as an asset for informational purposes only and are offset by a fund balance reserve to indicate that they do not constitute "available spendable resources." These inventories are stated at cost using the first-in, first-out method. Inventories of the proprietary funds are recorded as assets when purchased and expensed when consumed. These inventories are stated at cost using the first-in, first-out method. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 31 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 1 - Summary of Significant Accounting Policies (cont'd) 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, or estimated historical cost if historical records are not available. Certain infrastructure costs were estimated by calculating the current replacement cost of a similar asset and deflating this cost through the use of price-level indexes. Donated assets are reported at estimated fair value at the time received. Certain types of road improvements are expensed rather than capitalized. The improvement types that are expensed are millings and soil stabilization. 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 proprietary funds are as follows: Capitalization Threshold Land Construction in progress Buildings Equipment Infrastructure and improvements other than buildings H. Investment Income All $5,000 Depreciation Method $5,000 $5,000 $5,000 Straight Line Straight Line Straight Line Estimated Useful Life 20-50 years 3-20 years 10-50 years Investment income is composed of interest, dividends, and net changes in the fair value of applicable investments. 32 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 1 - Summary of Significant Accounting Policies (concl'd) I. Compensated Absences Compensated absences consist of vacation leave / sick leave earned by employees based on services already rendered. The County uses PTO (personal time off), which is a combination of vacation and sick leave, for compensating employees. PTO benefits do not vest with employees until they have satisfactorily completed their probationary period. Public Safety employees and those employees covered under the Judicial Merit System have a one year probationary period. All other employees have a six month probationary period. Employees may accumulate an unlimited number of PTO hours. Upon termination of employment, unused PTO hours, up to a limit of 400, are paid to employees. Any PTO balance in excess of 400 hours is forfeited. Accordingly, benefits are accrued as a liability in the financial statements. Note 2 Beginning Balances Restated / Prior Period Adjustment Prior Period Corrections: The beginning net assets of the governmental activities in the Statement of Activities, in the government-wide statements, were restated by $4,190,179 to record the effect of removing the prior year deferred revenue for special assessments and reflecting the revenue under the full accrual basis of accounting. Net Assets, June 30,2005 Prior period correction Net Assets, July 1, 2005, as restated $177,350,959 4,190,179 $ 181,541,138 Note 3 Stewardship, Compliance, and Accountability Deficit fund balances or net assets-At June 30, 2006, the following funds reported deficits in net assets or fund balances: Fund Deficit Special revenue funds: Emergency management 1,659,985 J.I.P.S. Victims crime assistance Community punishment program Health grant WIC JAIBG grants Workforce investment act 26,346 17,140 14,234 9,368 7,898 5,708 The Emergency management deficit reflects an expense for a FEMA declared emergency in Beaver Dam in December 2005. The expenditures qualify to be fully refunded by F.H.W.A. The County has not yet been notified whether or not they will be reimbursed for the permanent repairs. If we are notified that F.H.W.A. will not fund the expenditures, the Road Fund will transfer the funds to cover the costs incurred to rebuild the roads and bridges. The other funds reflect programs for which additional funding is expected to become available in the next program year. The deficit will be made up by the General Fund for any funding that doesn't become available. 33 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 3 Stewardship, Compliance, and Accountability, concl'd Fund Internal Service fund: Central services Deficit $69,000 The County closed down the operations of this fund during fiscal year 2006/2007. The board of Supervisors voted to transfer the balance needed from the General Fund to clear up the deficit fund balance. Services formerly provided by this fund will either be outsourced or provided by the procurement office which is budgeted under the General Fund . Note 4 Deposits and Investments Arizona Revised Statutes (A.R.S.) authorize the County to invest public monies in the State Treasurer's investment pool; obligations issued or guaranteed by the United States or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations, or instrumentalities; specified state and local government bonds; interest earning investments such as saving 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 rated P1 by Moody's investors service or A1 or better by Standard and Poor's rating service. 2. Corporate bonds, debentures, and notes must be rated A or better by Moody's investors service or Standard and Poor's rating service. 3. Fixed income securities must carry one of the two highest ratings by Moody's and Standard and Poor's rating services. If only one of the above-mentioned services rates the security, it must carry the highest rating of that service. Custodial credit risk Statutes require collateral for demand deposits, certificates of deposit, and repurchase agreements 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 and that public operating fund monies invested in securities and deposits have a maximum maturity of 3 years. Investments in repurchase agreements must have a maximum maturity of 180 days. Foreign currency risk Statutes do not allow foreign investments. 34 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 4 Deposits and Investments (cont'd) Deposits - At June 30, 2006, the carrying amount of the County's deposits was $7,160,691 and the bank balance was $7,023,648. There was cash on hand of $26,010. The County does not have a formal policy for custodial credit risk. At June 30, 2006, $7,023,648 of the County's bank balance was exposed to custodial risk as follows: Uninsured with collateral held by the pledging financial institution Uninsured with collateral held by the pledging institution's trust department or agent but not in the County's name Total deposits $ 4,512,337 $ 2,511,311 7,023,648 At June 30, 2006, the Mohave Administration Building Finance Corporation had $1,506,921 of deposits held by a trustee. Of the total, $525,692 was held in the County Capital Improvement Fund and represented 2% of the total cash and investments in that fund. The balance of the cash held by trustee, $981,229, is reflected in the Administration Building Debt Service Fund and represents 100% of the total cash for that fund, which creates concentration of credit risk. These amounts are included in the deposit schedule above. Investments The County's investments at June 30, 2006, were as follows: Investment Type U.S. agency securities Tennessee Valley Authority State Treasurer's Local Government Investment Pool Total investments Amount $161,093,222 959,669 1,181,911 $163,234,802 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. 35 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 4 Deposits and Investments (cont'd) Credit Risk The County does not have a formal credit risk policy. At June 30, 2006, credit risk for the County's investments was as follows: Investment Type Federal Farm Credit Bank Federal Home Loan Bank Federal Home Loan Mortgage Corporation Federal National Mortgage Association Tennessee Valley Authority State Treasurer's Local Government Investment Pool Rating Aaa Aaa Aaa Aaa Aaa Unrated Rating Agency Moody's Moody's Moody's Moody's Moody's N/A Amount 26,639,037 55,696,577 31,469,697 47,287,911 959,669 1,181,911 $ 163,234,802 $ Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the event of the counterparty's failure, the County will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The County does not have a formal policy for custodial credit risk. Concentration of Credit Risk - The County does not have a formal policy for concentration of credit risk. The County had investments at June 30, 2006, of 5% or more in Federal Farm Credit Bank, Federal Home Loan Bank, Federal Home Loan Mortgage Corporation, and Federal National Mortgage Association. These investments were 16 percent, 34 percent, 19 percent and 29 percent, respectively, of the County's total investments. Interest Rate Risk The County does not have a formal policy with respect to interest rate risk. At June 30, 2006, the County had the following investments in debt securities. Investment Type State Treasurer's investment pools U.S. agency securities Tennessee Valley Authority Total $ Amount 1,181,911 161,093,222 959,669 $ 163,234,802 Investment Maturities Less than 1 to 5 1 year Years $ 1,181,911 22,085,234 $ 23,267,145 139,007,988 959,669 $ 139,967,657 $ 36 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 4 Deposits and Investments (concl'd) A reconciliation of cash and investments to amounts shown on the statements of net assets follows. Cash and Investments: Cash on hand Carrying amount of deposits Reported amount of investments Total Statements of Net Assets: Governmental Activities $ 89,709,645 2,511,311 $ 92,220,956 Business-type Activities $ 10,797,185 906,103 $ 11,703,288 Investment Trust Funds $65,578,548 $65,578,548 Agency Funds $ 918,711 $ 918,711 Amount $ 26,010 7,160,691 163,234,802 $ 170,421,503 Cash and investments Restricted cash Total Total $167,004,089 3,417,414 $170,421,503 Note 5 Property Taxes Receivable 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. Property taxes receivable consist of uncollected real and personal property taxes as determined from the records of the County Treasurer's Office, and at June 30, 2006, were as follows: General Fund $ 757,968 45,910 908,144 $1,712,022 Flood Control Fund $ 234,800 9,697 107,720 $ 352,217 Nonmajor Governmental Funds $ 203,564 10,851 113,832 $ 328,247 Total Governmental Funds $ 1,196,332 66,458 1,129,696 $ 2,392,486 Fiscal Year 2005 2004 Prior Total That portion of property taxes receivable, not collected within 60 days after June 30, 2006, has been deferred and, consequently, is not included in current-year revenues on the fund statements. For the government-wide statements, the entire receivable balance has been recognized as revenue. 37 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 6 Capital Assets Capital asset activity for the year ended June 30, 2006, was as follows: Balance July 1, 2005 Governmental activities: Capital assets not being depreciated: Land Construction in progress (estimated cost to complete $ 55,540,025) Total capital assets not being depreciated Capital assets being depreciated: Buildings Infrastructure & improvements other than buildings Equipment Total Less accumulated depreciation for: Buildings Infrastructure & improvements other than buildings Equipment Total Total capital assets being depreciated, net Governmental activities capital assets, net Business-type activities: Capital assets not being depreciated: Land Construction in progress (estimated cost to complete $ 246,420) Total capital assets not being depreciated Capital assets being depreciated: Buildings Utility systems Equipment Total Less accumulated depreciation for: Buildings Utility systems Equipment Total Total capital assets being depreciated, net Business-type activities capital assets, net $ $ Balance June 30, 2006 Increases Decreases $ 24,794,226 20,495,527 45,289,753 37,748,147 89,474,910 33,598,609 160,821,666 (10,272,245) (55,447,760) (17,833,369) (83,553,374) 77,268,292 122,558,045 $ 341,897 16,831,431 17,173,328 20,496,807 5,047,981 4,712,457 30,257,245 (779,187) (2,565,482) (2,698,301) (6,042,970) 24,214,275 $ (23,193,374) (23,193,374) (86,219) (43,335) (1,600,907) (1,730,461) 348,703 43,335 1,316,706 1,708,744 (21,717) $ 25,136,123 14,133,584 39,269,707 58,158,735 94,479,556 36,710,159 189,348,450 (10,702,729) (57,969,907) (19,214,964) (87,887,600) 101,460,850 $ 41,387,603 $ (23,215,091) $ 140,730,557 $ 1,586,010 40,000 1,626,010 1,673,666 17,775,583 901,240 20,350,489 (6 4 8 , 2 4 2 ) (5,787,551) (429,465) (6,865,258) 13,485,231 15,111,241 $ 42,968 486,279 529,247 83,349 145,420 251,263 480,032 (54,810) (670,431) (103,934) (829,175) (349,143) $ (28,148) (5,414) (33,562) 15,105 4,873 19,978 (13,584) $ 1,628,978 526,279 2,155,257 1,728,867 17,921,003 1,147,089 20,796,959 (687,947) (6,457,982) (528,526) (7,674,455) 13,122,504 $ 180,104 $ (13,584) $ 15,277,761 38 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 6 Capital Assets (concl'd) Depreciation expense was charged to functions as follows: Governmental activities: General government Public safety Highways and streets Health Welfare Culture and recreation Education Internal service funds Total governmental activities depreciation expense Business-type activities: Landfill Recreation Water companies Total business-type activities depreciation expense $ 3,373,583 561,160 1,090,173 20,714 64,838 144,953 1 ,581 785,968 $ 6 ,042,970 $ $ 7,722 119,321 702,132 829,175 Note 7 Restricted Assets As of June 30, 2006, the County had restricted assets as follows: Governmental activities assets: Cash Business-type activities assets: Cash Cash 606,219 Total business-type activities assets $ 906,103 $2,511,311 $ 299,884 Cash held by trustees restricted by C.O.P.'s agreements for future construction, debt payments or major maintenance. GVID collections restricted for future repairs of infrastructure by agreement with customers. I-40 water corridor collections restricted for future infrastructure repairs by agreement with customers. 39 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 8 Long-Term Liabilities The following schedule details the County's long-term liability and obligation activity for the year ended June 30, 2006: Balance July 1, 2005 Governmental activities: Special assessment bonds payable Certificates of participation payable Certificates of participation premiumunamortized Note payable Compensated absences payable Claims and judgments payable Governmental activities long-term liabilities Business-type activities: Landfill closure and postclosure care costs payable Compensated absences payable Business-type activities long-term liabilities $ 4,376,000 26,745,000 Additions Reductions Balance June 30, 2006 Due Within 1 Year $ - $ (635,000) (5,765,000) $ 3,741,000 20,980,000 $ 646,000 1,405,000 556,857 1,000,000 4,681,696 1,386,817 $ 38,746,370 5,693,031 9,354,483 $ 15,047,514 (39,775) (154,598) (4,924,340) (9,047,301) $ (20,566,014) 517,082 845,402 5,450,387 1,693,999 $ 33,227,870 39,775 159,235 5,416,774 1,393,999 $ 9,060,783 $ 2,938,806 118,306 $ 3,057,112 $ 423,502 129,138 $ (101,614) $ 3,362,308 145,830 $ 111,777 $ 552,640 $ (101,614) $ 3,508,138 $ 111,777 40 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 8 Long-Term Liabilities (cont'd) Bonds - The County's bonded debt consists of special assessment bonds that are generally callable with interest payable semiannually. Bond proceeds primarily pay for constructing infrastructure assets. Special assessment bonds are secured by pledges of revenues from special assessments levied against the benefiting property owners. The County is not obligated in any manner for the special assessment debt. However, if the property owner defaults on their payment of the debt, the County places a lien on the property. In the event that the lien is not cleared, the property is sold and the proceeds are used to pay off the debt. The original amount of special assessment bonds issued in prior years was $5,647,000. Bonds outstanding at June 30, 2006, were as follows: Original Amount $ 409,000 647,000 4,500,000 91,000 $ 5,647,000 Interest Rates 5.60% 6.375% 6.30% 5.50% Outstanding Principal June 30, 2006 $ 240,000 260,000 3,150,000 91,000 $ 3,741,000 District G.V.I.D. No. 1 Phase IV Horizon six street improvement Scenic road and bridge project improvement Mohave County improvement district Total Maturities 1/07-1/12 1/07-1/10 1/07-1/13 in arrears The following schedule details debt service requirements to maturity for the County's bonds payable at June 30, 2006. Governmental activities Year Ending June 30 2007 2008 2009 2010 2011 2012-13 Total Special Assessment Bonds Principal Interest $ 646,000 555,000 555,000 555,000 490,000 940,000 $ 3,741,000 $ 269,397 179,556 144,823 110,089 75,355 58,940 $ 838,160 41 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 8 Long-Term Liabilities (cont'd) Certificates of participation - The County has issued certificates of participation that are generally noncallable with interest payable semiannually to purchase or construct capital facilities. The original amount of certificates issued in prior years was $24,190,000. Certificates outstanding at June 30, 2006, were as follows: Description Certificates of participation Series 2000 Certificates of participation Series 2004 Total Original Amount Maturity Ranges Interest Rates Outstanding Principal June 30, 2006 $ 4,870,000 19,320,000 7/2006-7/2010 7/2006-7/2019 6.75%-7.375% 2.0%-5.0% $ 3,050,000 17,930,000 $ 24,190,000 $ 20,980,000 The following schedule details debt service requirements to maturity for the County's certificates of participation payable at June 30, 2006: Governmental activities Year Ending June 30 2007 2008 2009 2010 2011 2012-16 2017-20 Total Principal $ 1,405,000 1,640,000 1,720,000 1,795,000 1,895,000 6,730,000 5,795,000 $ 20,980,000 Interest $ 1,035,568 969,193 888,505 794,411 694,731 2,441,441 624,356 $ 7,448,205 Note payable During fiscal year 2005, the library fund borrowed $1,000,000 from the landfill to fund its portion of the 98 C.O.P.S reserve fund which was established to accumulate monies for an early payoff of the C.O.P.S. The landfill note is to be paid off over a period of six years at an interest rate of 3%. The following schedule details the debt service requirements for the note at June 30, 2006. Year Ending June 30 2007 2008 2009 2010 2011 Total Principal $ 159,235 164,012 168,933 174,001 179,221 $845,402 Interest $ 25,362 20,586 15,664 10,596 5,376 $ 77,584 42 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 8 - Long-Term Liabilities (cont'd) Landfill closure and postclosure care costs - The County owns two 160-acre landfill sites, Cerbat and Mohave Valley, which are operated by independent contractors under contract with the County. Both landfills began operations in January 1989. The County operates its landfills on a cell basis. The County owns additional unused parcels of land adjacent to the existing landfill sites that will (or may) be used, as needed, to open additional cells. An additional cell (4 acres) was opened at Cerbat this year. This reduced the percentage used from 98% to 67% of the open cells. This also extended the life five years. State and federal laws and regulations require the County to place a final cover on its Cerbat and Mohave Valley landfill sites when they stop accepting waste and to perform certain maintenance and monitoring functions at the sites for 30 years after closure. Although closure and postclosure care costs will not be paid until near or after the date that the landfills stop accepting waste, the County reports the long-term portion of these closure and postclosure care costs in each operating period even though actual payouts will not occur until the landfills are closed. These costs will be paid from the enterprise fund. The amount recognized each year is based on landfill capacity used at the end of each fiscal year. The $3,362,308 reported as landfill closure and postclosure care liability at June 30, 2006, represents the cumulative amount reported to date at the Cerbat and Mohave Valley landfills based on the use of 67% and 86%, respectively, of the estimated capacity of the open cells of the landfills. The County will recognize the remaining estimated costs of closure and postclosure care costs of $1,100,796 as the remaining estimated capacity is filled. These amounts are based on what it would cost to perform all closure and postclosure care in fiscal year 2006. The County expects to close the landfills in the years 2011 and 2028, respectively, and the actual cost may be higher due to inflation, changes in technology, or changes in regulations. According to state and federal laws and regulations, the County must comply with the local government financial test requirements that assure the County can meet the costs of landfill closure, postclosure, and corrective action when needed. The County is in compliance with these requirements. Insurance Claims - The County established two internal service funds, Health Insurance and SelfInsurance. The Health Insurance Fund is used to account for employee health benefits through a combination of self-insurance and commercial insurance. The Self-Insurance Fund provides property, casualty and general liability coverage up to $50,000 per claim and also accounts for premium payments to the Arizona Counties Workers' Compensation Pool for workers' compensation coverage. The Self-Insurance Fund is used to account for the risk financing of certain benefits and losses through combinations of cost-reimbursement, self-insurance for losses up to certain limits, participation in public entity risk pools, and the purchase of insurance for losses above the limits. Settled claims have not exceeded risk pool coverage or the purchased commercial insurance in any of the past three fiscal years. The Health Insurance Fund accounts for the financing of the uninsured risk of loss for certain health benefits (comprehensive major medical, prescriptions, dental, life/accidental death and dismemberment, and short-term disability) to eligible employees and their dependents, through a combination of commercial insurance and self-insurance. The County is self-insured, up to certain limits, with commercial insurance to cover losses above the limits. The life insurance is 100% commercial insurance. Under the health insurance program, the employees have a preferred provider organization program. The County is fully self-insured for dental, which is administered by Delta Dental. A third party administers the short-term disability. Settled claims have not exceeded available self-insurance 43 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 8 - Long-Term Liabilities (concl'd) funds or the purchased commercial insurance in any of the past three fiscal years. The insurance claims payable liability of the Self-Insurance Fund and Health Insurance Fund of $1,280,054 included in the balance below at June 30, 2006, is the estimated ultimate cost of settling claims that have been reported but not settled and claims that have been incurred but not reported. These amounts are based on estimates provided by the County's healthcare administrator (based on claims received subsequent to June 30, 2006) and Arizona Counties Property and Casualty Pool (based on expected outcomes of outstanding lawsuits and incurred but not reported occurrences). The balance of $413,945 is the liability due at June 30, 2006 from the Governmental funds for claims and judgments. Changes in the claims payable liability amount for the years ended June 30, 2005 and 2006 were as follows: 2005 2006 Claims payable - beginning of year $ 766,026 $ 1,386,817 Add: Claims incurred and changes in estimates 8,714,007 9,354,483 Deduct: Claims paid (8,093,216) (9,047,301) Claims payable - end of year $ 1,386,817 $ 1,693,999 Compensated absences and claims and judgments Compensated absences are paid from various funds in the same proportion that those funds pay payroll costs. Claims and judgments are generally paid from the fund that accounts for the activity that gave rise to the claim. During fiscal year 2006, the County paid for compensated absences as follows: 62 % from the General Fund, 12 % from major funds, and 26 % from other funds. The County paid for claims and judgments as follows: .6% from the General Fund and 99.4 % from the Self-Insurance Fund. However, the Self-Insurance Fund was funded $450,000 by the General Fund and $400,000 by the Road Fund this past year. Occasionally it is also reimbursed by other major funds. The Health Insurance Fund paid all claims, but was reimbursed 100% from the other funds for all claims and judgments paid. 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; but was unable to obtain insurance at a cost it considered to be economically justifiable for Workers' Compensation or liability insurance. Therefore, the County joined and is covered by two public entity risk pools: the Arizona Counties Property and Casualty Pool and the Arizona Counties Workers' Compensation Pool, which are described below. 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 $10,000 per occurrence for property claims and $50,000 per occurrence for liability claims. The County is also responsible for any payments in excess of the maximum coverage of $100 million per occurrence for property claims and $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 three years after becoming a member; however, it may withdraw after the initial three-year period. If the pool were to become 44 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 9 Risk Management (concl'd) insolvent, the County would be assessed an additional contribution. The Arizona Counties Workers' Compensation Pool is a public entity risk pool currently composed of 11 member counties. The pool provides member counties with workers' compensation coverage, as required by law, and risk management services. The County is responsible for paying a premium, based on an experience rating formula that allocates pool expenditures and liabilities among the members. The Arizona Counties Property and Casualty Pool and the Arizona Counties Workers' Compensation Pool receive independent audits annually and an audit by the Arizona Department of Insurance triennially. Both pools accrue liabilities for losses that have been incurred but not reported. These liabilities are determined annually based on an independent actuarial valuation. Note 10 Operating Leases The County leases buildings, copiers, computers, land and a parking lot under the provisions of various long-term lease agreements classified as operating leases for accounting purposes. Rental expenditures under the terms of the operating leases were $923,268 for the year ended June 30, 2006. The operating leases have remaining noncancellable lease terms from one to ninety years and provide renewal options. The future minimum payments required under the operating leases at June 30, 2006, were as follows: Year ending June 30, 2007 2008 2009 2010 2011 2012-2016 2017-2021 2022-2024 Total minimum lease payments Note 11 Retirement Plans Plan Descriptions - The County contributes to four plans, three of which are described below. The Elected Officials Retirement System (EORP) is not described, due to its relative insignificance to the County's financial statements. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. The Arizona State Retirement System (ASRS) administers a cost-sharing multiple-employer defined benefit pension 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. Governmental Activities $ 829,967 403,086 48,171 21,551 18,551 13,355 12,005 7,275 $1,353,961 45 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 11- Retirement Plans (cont'd) The Public Safety Personnel Retirement System (PSPRS) is an agent multiple-employer defined benefit pension plan that covers public safety personnel who are regularly assigned hazardous duty as employees of the State of Arizona or participating political subdivisions. The PSPRS, acting as a common investment and administrative agent, is governed by a five-member board, known as The Fund Manager, and the participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. The Corrections Officer Retirement Plan (CORP) is an agent multiple-employer defined benefit pension plan that covers certain employees of the State of Arizona, Departments of Corrections and Juvenile Corrections, and County employees whose primary duties require direct inmate contact. The CORP is governed by The Fund Manager of PSPRS and the participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 6. 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. ASRS 3300 N. Central Avenue P. O. Box 33910 Phoenix, AZ 85012 (602) 240-2000 or (800) 621-3778 PSPRS, CORP, and EORP 3010 E. Camelback Road Suite 200 Phoenix, AZ 85016-4416 (602) 255-5575 Funding Policy - The Arizona State Legislature establishes and may amend active plan members' and the County's contribution rates. Cost-sharing plans - For the year ended June 30, 2006, active ASRS members and the County were each required by statute to contribute at the actuarially determined rate of 7.4% (6.9% retirement and 0.5% long-term disability) of the members' annual covered payroll. The County's contributions to ASRS for the years ended June 30, 2006, 2005, and 2004, were $2,625,462, $1,850,484 and $1,649,976, respectively, which were equal to the required contributions for the year. Agent plans - For the year ended June 30, 2006, active PSPRS members were required by statute to contribute 7.65% of the members' annual covered payroll, and the County was required to contribute at the actuarially determined rate of 10.06%. Active CORP members were required by statute to contribute 8.5% of the members' annual covered payroll, and the County was required to contribute at the actuarially determined rate of 4%. Annual Pension Costs - The County's pension costs for the two agent plans for the year ended June 30, 2006 and related information follows. PSPRS CORP Contribution rates: County 10.06% 4.00% Plan members 7.65% 8.50% Annual pension cost $459,875 $82,510 Contributions made $459,875 $82,510 46 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 11- Retirement Plans (concl'd) The current-year annual required contributions for both the PSPRS and CORP were determined as part of their June 30, 2004 actuarial valuations using the individual entry-age actuarial cost method. The actuarial assumptions included (a) 8.75% investment rate of return and (b) projected salary increases ranging from 6.25% to 9.25% per year. Both (a) and (b) included an inflation component of 5.25%. The assumptions did not include cost-of-living adjustments. The actuarial value of assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a 7-year period. The unfunded (excess) actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2004, was 20 years. Trend Information Annual pension cost information for the current and two preceding years follows for each of the agent plans. Year Ended June 30 2006 2005 2004 2006 2005 2004 Annual Pension Cost (APC) $459,875 292,708 193,838 82,510 39,230 36,042 Percentage of APC Contributed 100% 100% 100% 100% 100% 100% Net Pension Obligation $0 0 0 0 0 0 Plan PSPRS CORP Note 12 Interfund Balances and Activity Interfund Receivables and Payables - Interfund balances at June 30, 2006, were as follows: Due from Other Funds Nonmajor Governmental Funds $ 365,907 2,347 146 I-40 Water Corridor G.V.I.D. Fund Fund $ $ 3,797 Nonmajor Enterprise Funds $ $ Internal Service Funds 76,800 1,054 $ General Fund General Fund Road Fund Flood Control Fund Due to Other Funds Nonmajor Governmental Funds I-40 Water Corridor Fund Landfill Fund G.V.I.D. Fund Nonmajor Enterprise Funds Internal Service Funds $ 1,211 $ Road Fund 4,423 T o ta l 447,130 6,062 2,493 313,159 14,021 377,755 - - - 17,149 722,084 114,553 413 1,220 1,635 227,686 $ 249,544 $ 746,009 $ 390 40 430 5,315 $9,112 $ 101 101 $ 649 354 1,993 1,367 99,366 $ 5,728 649 1,964 3,769 343,606 1,533,485 Total $ 428,923 47 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 12 Interfund Balances and Activity (concl'd) The majority of the interfund receivables and payables result from year-end accruals and adjustments. All cash is transferred within the first two months of the next fiscal year for these transactions. Interfund Transfers Interfund transfers for the year ended June 30, 2006, were as follows: Transfers out to Other Funds County Capital Nonmajor Flood Improvement Governmental Control Fund Funds Fund $ 348,688 $ $ 703,959 27,500 General Fund General Fund Flood Control Fund County Capital Improvement Fund Nonmajor Governmental Funds Internal Service Funds Total $ $ Road Fund Nonmajor Enterprise Funds $ - Total $ 1,052,647 27,500 Transfers in from Other Funds 5,500,000 - - - - - 5,500,000 3,673,260 1,807 $ 9,175,067 300,000 $ 300,000 2,006 $ 350,694 1,876,234 $ 1,876,234 870,051 $ 1,601,510 $ 1,997 1,997 6,723,548 1,807 $ 13,305,502 The General Fund transfers monies to other funds to provide support for such items as matching funds for grants or to make up the shortfall of grant-funded programs that the County feels are important. Other funds also transfer monies to reimburse for shared expenses of programs and to cover matching grants. Note 13 County Treasurer's Investment Pool Arizona Revised Statutes require community colleges, school districts, and other local governments to deposit certain public monies with the County Treasurer. The Treasurer has a fiduciary responsibility to administer those and the County monies under his 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. 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. Substantially all deposits and investments of the County's primary government are included in the County Treasurer's investment pool, except for $4,906,626 of deposits. Therefore, the deposit and 48 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 13 County Treasurer's Investment Pool (concl'd) investment risks of the Treasurer's investment pool are substantially the same as the County's deposit and investment risks. See Note 4 for disclosure of the County's deposit and investment risks. Details of each major investment classification follow: Investment Type Federal Farm Credit Bank Federal Home Loan Bank Federal Home Loan Mortgage Corporation Federal National Mortgage Association Other State Treasurer's Local Government Investment Pool Principal $27,135,000 56,545,000 31,955,000 48,056,000 1,000,000 1,181,911 $165,872,911 Interest Rates 2.74-4.5% 2.00-6.05% 2.10-6.0% 2.00-6.05% 2.45% 1.00% Maturities 12/06-04/11 12/06-06/11 12/06-5/11 7/06-5/11 5/08 N/A Fair Value $26,639,037 55,696,577 31,469,697 47,287,911 959,669 1,181,911 $163,234,802 A condensed statement of the investment pool's net assets and changes in net assets follows. Statement of Net Assets Assets Liabilities Net assets Net assets held in trust for: Internal participants External participants Total net assets held in trust Statement of Changes in Net Assets Total additions Total deductions Net increase Net assets held in trust: July 1, 2005 June 30, 2006 152,344,649 $165,853,154 $752,015,222 (738,506,717) 13,508,505 $101,407,741 64,445,413 $165,853,154 $165,853,154 $165,853,154 49 MOHAVE COUNTY Notes to Financial Statements June 30, 2006 Note 14 Subsequent Events Capital Projects: Mohave Wash, flood control project - The Board of Supervisors approved a $4,478,182 contract for the Kingman Area Master Plan Mohave County Update, Mohave Wash Channel Project, Phase III, on September 6, 2006. This is an on-going flood control project. Law and Justice Center - A needs assessment is being done to determine the requirements for a new Law and Justice Center in Kingman to accommodate all the courts and the Probation Department. Actual construction is not projected to begin for approximately one year. Kingman Jail expansion - A needs assessment was done in fiscal year 2006 for expansio |
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