Comprehensive annual financial report, Maricopa County, Arizona, for the fiscal year ended 2009

              YUMA
APACHE
COCHISE
COCONINO
GILA
GRAHAM
GREENLEE
MARICOPA
COUNTY
MOHAVE
NAVAJO
PIMA
PINAL
SANTA CRUZ
YAVAPAI
LA PAZ
Fiscal Year Ended June 30, 2009
District 1 District 2
District 3
District 4 District 5
Comprehensive Annual Financial Report
Maricopa County
Phoenix, Arizona
For the Fiscal Year
July 1, 2008 to June 30, 2009
Prepared By
Department of Finance
Shelby L. Scharbach, Chief Financial Officer
INTRODUCTORY SECTION
Table of Contents
Listing of Maricopa County Officials
Organizational Chart
Letter of Transmittal
Citizens Audit Advisory Committee Letter
Certificate of Achievement for Excellence in Financial Reporting
Comprehensive Annual Financial Report
Table of Contents
For the Fiscal Year Ended June 30, 2009
i
Introductory Section
Page
Table of Contents i
Listing of Maricopa County Officials v
Organizational Chart vi
Letter of Transmittal vii
Maricopa County Citizens Audit Advisory Committee Letter xi
Certificate of Achievement for Excellence in Financial Reporting xii
Financial Section
Independent Auditors’ Report 1
Management’s Discussion and Analysis 3
Basic Financial Statements
Definitions of Government-wide Financial Statements and Listing of Major Funds 17
Government-wide Financial Statements
Statement of Net Assets 19
Statement of Activities 20
Fund Financial Statements
Governmental Funds Financial Statements
Balance Sheet 22
Statement of Revenues, Expenditures, and Changes in Fund Balances 24
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities 26
Proprietary Funds Financial Statements
Statement of Net Assets 28
Statement of Revenues, Expenses, and Changes in Fund Net Assets 29
Statement of Cash Flows 30
Fiduciary Funds Financial Statements
Statement of Fiduciary Net Assets 32
Statement of Changes in Fiduciary Net Assets 33
Basic Financial Statements – Notes 37
Required Supplementary Information
Budgetary Comparison Schedules – General Fund and Major Special Revenue Fund
General Fund 75
General Fund by Department 76
Detention Operations Fund 77
Note to Budgetary Comparison Schedules 78
Table of Contents (Continued)
For the Fiscal Year Ended June 30, 2009
ii
Page
Schedule of Agent Retirement Plans’ Funding Progress 79
Note to Schedule of Agent Retirement Plans’ Funding Progress 80
Modified Approach for Infrastructure Assets 81
Combining and Individual Fund Statements and Schedules
Listing of Nonmajor Governmental Funds 85
Governmental Funds
Combining Balance Sheet – Nonmajor Governmental Funds 92
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances –
Nonmajor Governmental Funds 108
Schedules of Revenues, Expenditures, and Changes in Fund Balances – Budget
and Actual
Special Revenue Funds
Adult Probation Fees Fund 125
Adult Probation Grants Fund 126
Air Quality Fees Fund 127
Air Quality Grants Fund 128
Animal Control Field Operations Fund 129
Animal Control Grants Fund 130
Animal Control License/Shelter Fund 131
Ballpark Operations Fund 132
Cactus League Operations Fund 133
CDBG Housing Trust Fund 134
Check Enforcement Program Fund 135
Child Support Enhancement Fund 136
Children’s Issues Education Fund 137
Clerk of Court Fill the Gap Fund 138
Clerk of the Court EDMS Fund 139
Clerk of the Court Grants Fund 140
Conciliation Court Fees Fund 141
Correctional Health Grants Fund 142
County Attorney Fill the Gap Fund 143
County Attorney Grants Fund 144
County Attorney RICO Fund 145
County School Indirect Cost Fund 146
Court Document Retrieval Fund 147
Criminal Justice Enhancement Fund 148
Del Webb Special Revenue Fund 149
Diversion Fund 150
Domestic Relations Mediation Education Fund 151
Elections Grants Fund 152
Emergency Management Fund 153
Environmental Services Environmental Health Fund 154
Environmental Services Grants Fund 155
Events Center Fund 156
Table of Contents (Continued)
For the Fiscal Year Ended June 30, 2009
iii
Page
Special Revenue Funds (Continued)
Expedited Child Support Fund 157
Flood Control Fund 158
General Government Grants Fund 159
Human Services Grants Fund 160
Inmate Health Services Fund 161
Inmate Services Fund 162
Judicial Enhancement Fund 163
Justice Court Judicial Enhancement Fund 164
Justice Court Special Revenue Fund 165
Juvenile Probation Diversion Fund 166
Juvenile Probation Grants Fund 167
Juvenile Probation Special Fees Fund 168
Juvenile Restitution Fund 169
Lake Pleasant Recreation Services Fund 170
Law Library Fees Fund 171
Legal Defender Fill the Gap Fund 172
Library District Fund 173
Library District Grants Fund 174
Medical Examiner Grants Fund 175
Palo Verde Fund 176
Parks and Recreation Grants Fund 177
Parks Donations Fund 178
Parks Enhancement Fund 179
Parks Souvenir Fund 180
Parks Spur Cross Ranch Conservation Fund 181
Planning and Development Fees Fund 182
Probate Fees Fund 183
Public Defender Fill the Gap Fund 184
Public Defender Grants Fund 185
Public Defender Training Fund 186
Public Health Fund 187
Public Health Fees Fund 188
Recorder’s Surcharge Fund 189
School Communication Expense Fund 190
School Grants Fund 191
School Transportation Fund 192
Sheriff Donations Fund 193
Sheriff Grants Fund 194
Sheriff Jail Enhancement Fund 195
Sheriff RICO Fund 196
Small School Service Fund 197
Solid Waste Grants Fund 198
Solid Waste Management Fund 199
Spousal Maintenance Enforcement Enhancement Fund 200
Superior Court Fill the Gap Fund 201
Taxpayer Information Fund 202
Transportation Grants Fund 203
Transportation Operations Fund 204
Trial Court Grants Fund 205
Trial Court Special Revenue Fund 206
Victim Compensation Interest Fund 207
Victim Compensation Restitution Fund 208
Victim Location Fund 209
Table of Contents (Continued)
For the Fiscal Year Ended June 30, 2009
iv
Page
Special Revenue Funds (Continued)
Waste Management Fund 210
Waste Tire Fund 211
Debt Service Funds
County Improvement Debt Fund 212
Stadium District Debt Service Fund 213
Capital Projects Funds
County Improvement Fund 214
Detention Capital Projects Fund 215
Flood Control Capital Projects Fund 216
General Fund County Improvements Fund 217
Intergovernmental Capital Projects Fund 218
Library District Capital Improvement Fund 219
Long Term Project Reserve Fund 220
Transportation Capital Projects Fund 221
Schedule of Capital Projects – Budget and Actual
All Capital Improvement Projects 222
Internal Service Funds
Listing of Internal Service Funds 229
Combining Statement of Net Assets 230
Combining Statement of Revenues, Expenses, and Changes in Net Assets 232
Combining Statement of Cash Flows 234
Agency Fund
Listing of Agency Fund 239
Statement of Changes in Assets and Liabilities 240
Statistical Section
Listing of Statistical Information 243
Net Assets by Component 244
Changes in Net Assets 245
Fund Balances, Governmental Funds 247
Changes in Fund Balances, Governmental Funds 248
Tax Revenues by Source, Governmental Funds 250
Assessed Value and Estimated Market Value of Taxable Property 251
Direct and Overlapping Property Tax Rates 252
Principal Property Tax Payers 253
Property Tax Levies and Collections 254
Ratios of Outstanding Debt by Type 255
Legal Debt Margin Information 256
Pledged Revenue Coverage 257
Demographic and Economic Statistics 258
Principal Employers 259
Budgeted Full-time Equivalent County Employees by Function/Program 260
Operating Indicators by Function/Program 261
Capital Asset Statistics by Function/Program 262
v
Maricopa County Officials
BOARD OF SUPERVISORS
Fulton Brock, District 1
Don Stapley, District 2
Andrew Kunasek, District 3
Max Wilson, District 4
Mary Rose Garrido Wilcox, District 5
♦♦♦
COUNTY MANAGER
David R. Smith
♦♦♦
CHIEF FINANCIAL OFFICER
Shelby L. Scharbach
Organizational Chart
vi
Appointed
Elected
Maricopa County Citizens
County
Manager
Legal
Defender
Risk
Management
Community
Development
Human
Services
Board of
Supervisors
Clerk of the
Constables Sheriff Court Treasurer County
Attorney Assessor Superintendent
of Schools
Medical
Examiner
Contract
Counsel
Public
Defender
Legal
Advocate
Integrate
d
Criminal
Correctional
Health
Public
Health
Workforce
Management &
Development
Research and
Reporting
Health Care
Programs
Non-
Departmental
Employee
Health
Initiatives
Management
and
Budget
Materials
Management
Animal Care
and
Control
Regional Development
Services Assistant
County Manager
Recorder
STAR Call Elections
Center
Community
Collaboration Assistant
County Manager
Public Works
Assistant County
Manager
Solid
Waste
Transportation
Environmental
Services
Equipment
Services
Facilities
Management
Emergency
Management
Planning and
Development
Internal
Audit
Clerk of the
Board
Enterprise
Technology
Juvenile
Defender
General
Litigation
Air
Quality
Special
Litigation
Deputy County
Manager
Public
Defense
Services
County Attorney
Civil Division
Finance
Public
Fiduciary
Parks and
Recreation
Maricopa County
County Administrative Office
vii
301 West Jefferson Street
10th Floor
Phoenix, AZ 85003-2143
Phone: 602-506-3571
Fax: 602-506-3328
www.maricopa.gov
December 22, 2009
The Honorable Board of Supervisors
Maricopa County
County Administration Building
301 W. Jefferson Street
Phoenix, AZ 85003
Arizona Revised Statute (A.R.S.) §41-1279.21 requires the Office of the Auditor General to
conduct financial audits of the accounts and records of County governments. Pursuant to
the statute, the Office of the Auditor General audited the Comprehensive Annual Financial
Report (CAFR) of Maricopa County in accordance with generally accepted auditing
standards for the year ended June 30, 2009.
This report consists of management’s representations concerning the finances of Maricopa
County. Consequently, management assumes full responsibility of the completeness and
reliability of all the information presented in this report. To provide a reasonable basis for
making these representations, management of Maricopa County has established a
comprehensive internal control framework that is designed both to protect the government’s
assets from loss, theft, or misuse and to compile sufficient reliable information for
preparation of Maricopa County’s financial statements in conformity with generally
accepted accounting principles (GAAP). Because the cost of internal control should not
outweigh their benefits, Maricopa County’s comprehensive framework of internal controls
has been designed to provide reasonable rather than absolute assurance that the financial
statements will be free from material misstatement. As management, we assert that, to the
best of our knowledge and belief, this financial report is complete and reliable in all material
respects.
The goal of the independent audit was to provide reasonable assurance that the financial
statements of Maricopa County for the fiscal year ended June 30, 2009, are free of material
misstatement. The independent audit involved examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements; assessing the
accounting principles used and significant estimates made by management; and evaluating
the overall financial statement presentation. The independent auditors expressed an
unqualified opinion on the Maricopa County financial statements for the fiscal year ended
June 30, 2009. The auditors concluded that the financial statements were considered fairly
presented in conformity with GAAP. The independent auditor’s report is presented as the
first component of the financial section of this report.
The independent audit of the financial statements of Maricopa County was part of a
broader, federally mandated “Single Audit” designed to meet the special needs of federal
grantor agencies. The standards governing Single Audit engagements require the
independent auditor to report not only on the fair presentation of the financial statements,
but also on the audited government’s internal controls and compliance with legal
requirements, with special emphasis on internal controls and legal requirements involving
the administration of federal awards. This report will be available in Maricopa County’s
separately issued Single Audit Report to be issued at a future date.
viii
GAAP requires management’s discussion and analysis (MD&A) immediately following the independent
auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial
statements. This MD&A complements this letter of transmittal and should be read in conjunction with it.
County Profile
Maricopa County was established on February 14, 1871 and is located in the south-central portion of the
State of Arizona. According to Arizona Department of Commerce, at July 1, 2008, Maricopa County
contained 60.15 percent of the states total population (www.azcommerce.com). The County occupies
9,224 square miles of which 2,128 square miles are incorporated. Phoenix is the capital of Arizona as
well as the county seat for Maricopa County.
Maricopa County operates under a five member elected Board of Supervisors who appoints a County
Manager. The County Manager is responsible for the general administration and overall operations of the
various County departments. The County has several-elected officials including the Assessor, Clerk of
the Superior Court, Constables, County Attorney, Recorder, Sheriff, Superintendent of Schools, and the
Treasurer.
Maricopa County includes in its financial statements all activities of the County and its component units.
Component units are legally separate entities for which the County is considered to be financially
accountable. See Note 1 to the Notes to the Financial Statements - Summary of Significant Accounting
Policies for additional information.
Maricopa County offers a wide variety of governmental services, including:
• Community Resources: Library District, Stadium District, and Superintendent of Schools
• County Administration: Board of Supervisors, County Administrator, Assessor’s Office, Clerk of
the Board, Elections, Finance, Human Resources, Information Technology, Treasurer’s Office
and Facilities Management
• Justice and Law Enforcement: Clerk of the Superior Court, County Attorney, Trial Court, Adult
Probation, Juvenile Probation, Sheriff’s Department, Public Defender and Public Fiduciary
• Medical Services: Public Health, Human Services and Medical Examiner
• Public Works: Flood Control District, Transportation Department and Solid Waste Management
The annual budget serves as the foundation for Maricopa County’s financial planning and control. The
County is required by A.R.S. §42-17101 et. seq. to annually prepare and adopt a balanced budget.
Arizona law further requires that no expenditure shall be made or liability incurred in excess of the
amounts budgeted except as provided by law. Maricopa County’s annual budget is available on the
Internet at the following address: http://www.maricopa.gov/budget/.
Economic Outlook
Maricopa County has a variety of industries within its boundaries with the majority comprised of high tech,
financial, and service industries. Some of the major employers located in the state include Wal-Mart,
Banner Health Systems, Wells Fargo & Co. and various local governments (The Book of Lists).
ix
Because of a favorable climate and mild weather conditions, tourism is also a large factor in the strength
of the local economy. Major sporting events can be held year around and many people come to the area
during the winter months. Maricopa County is the home to teams from major league professional sports,
which include the Arizona Cardinals of the National Football League (NFL), Phoenix Suns of the National
Basketball Association (NBA), Arizona Diamondbacks of the Major League Baseball (MLB) and the
Phoenix Coyotes of the National Hockey League (NHL). Maricopa County also hosts twelve major
league baseball teams for the annual spring training Cactus League. Maricopa County is also a host to
other major sporting events such as the FBR Open, formerly known as the Phoenix Open, golf
tournament, and Phoenix International Raceway, which hosts two major NASCAR events each year.
Cities within Maricopa County also host college bowl games such as the Fiesta Bowl and the Insight
Bowl.
As Arizona’s economy starts to recover from the economic downturn, it is projected that job growth will
begin by the end of 2010 due to the Federal government economic stimulus spending, low interest rates,
the injection of liquidity into financial institutions, and stable prices for goods to motivate some increased
levels of purchasing (www.workforce.az.gov). Maricopa County’s unemployment rate increased to 8.7
percent as of October 2009, which remains below both the State of Arizona and the United States
unemployment rates of 9.3 percent, and 10.2 percent, respectively (www.azcommerce.com).
Financial Policies and Long-Term Financial Planning
Financial Planning – Maricopa County has a fiscally conservative management philosophy, which has
allowed the County to be financially successful. Maricopa County prepares a five-year financial forecast,
with the assistance of an economist, which is updated on a quarterly basis for several major funds,
including the General Fund and Detention Fund. The five-year forecast provides a conservative estimate
of the County’s fiscal condition given realistic economic trends, current Board policies, and existing laws.
The forecast does not incorporate anticipated policy changes, spending priorities, or proposed new
revenue sources.
Capital Improvement Program – Maricopa County’s Capital Improvement Program (CIP) identifies
capital projects to be completed over the next five years. Because these projects typically span more than
one fiscal year, the plans are updated annually to track existing projects, identify new projects, and
update funding estimates and forecasts. It is the County’s policy that new capital projects will be
undertaken only if future operating revenues are reasonably estimated to be sufficient to support
associated future operating costs. Operating costs associated with new facilities are budgeted by the user
department in conjunction with the Facilities Management Department. Estimated operating costs, as well
as anticipated savings in lease costs and operating costs of facilities to be replaced are factored into the
County’s ten-year financial forecast.
Due to the economic downturn, the County has cancelled, delayed or downsized projects in order to
concentrate efforts on continuing the new Court Tower project. The Court Tower project has a budget of
$339.5 million and is scheduled for completion in November 2011. The Court Tower is to be located
adjacent to the downtown County Court complex in Phoenix. The 682,792 square foot project includes 32
courts, jury assembly, in-custody holding, and secure judicial parking.
Debt Management – Maricopa County utilizes a modified “pay as you go” financial policy for large capital
improvement projects and other infrastructure. The County pays cash for many capital improvements, or
utilizes lease reversions or other funding sources from the General Fund to pay for large dollar projects.
The use of “pay as you go” for the Court Tower project is estimated to save taxpayers $191 million in
estimated debt service payments over twenty years. In addition, this funding philosophy will allow the
County to avoid assessing a secondary tax levy for debt service for the Court Tower that would have cost
the average taxpayer approximately $9.00 annually.
Cash Management – Maricopa County maintains deposits and investments in the Treasurer’s Pool and
outside of the Treasurer’s Pool. The Treasurer’s Pool invests all idle monies not specifically invested for
a fund or program. In addition, the Treasurer determines the fair value of those pooled investments
x
monthly and at June 30. Deposits and investments held outside of the Treasurer’s Investment Pool
represent a small portion of the County’s total investments.
It is the County’s investment policy to: collateralize all deposits by at least 101 percent of the deposits not
covered by depository insurance; preserve the principal value and the interest income of an investment;
hold investments to maturity, where practical, to avoid any loss on investments resulting from an early
sale or retirement of an investment; and require all of the Treasurer’s securities be held by the agent or
trust department and in the County’s name.
Expenditure Limitation – On June 30, 1980, Arizona voters approved general propositions amending
the Arizona Constitution to establish expenditure and revenue limitations for local governments. The
purpose of the expenditure limitation is to control expenditures and to limit future increases in spending to
adjustments for inflation, deflation and population growth of the County. The Constitution also limits the
amount of revenues that may be generated from property taxes. A two-percent plus new construction
annual increase is the maximum allowed by law unless special voter approval is obtained. This report will
be available in Maricopa County’s separately issued Expenditure Limitation Report to be issued at a
future date.
Awards and Acknowledgements
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to Maricopa County for its
comprehensive annual financial report for the fiscal year ended June 30, 2008. In order to be awarded a
Certificate of Achievement, a government must publish an easily readable and efficiently organized
comprehensive annual financial report. This report must satisfy both U.S. general accepted accounting
principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
comprehensive annual financial report continues to meet the Certificate of Achievement Program’s
requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.
The preparation of this report could not be accomplished without the efficient and dedicated services of
the Department of Finance staff, the assistance of administrative personnel in the various departments,
and the competent service of the Office of the Auditor General. We appreciate all of those who assisted
in and contributed to the preparation of this report. We also wish to express our sincere appreciation to
the Board of Supervisors for their support in planning and overseeing the financial operations of the
County in a responsible and progressive manner.
Respectfully submitted,
David R. Smith Shelby L. Scharbach
County Manager Chief Financial Officer
xi
xii
FINANCIAL SECTION
Independent Auditors' Report
Management's Discussion and Analysis
Basic Financial Statements
Basic Financial Statements - Notes
Required Supplementary Information
Budgetary Comparison Schedules - General Fund and Major
Special Revenue Fund
Note to Budgetary Comparison Schedules
Schedule of Agent Retirement Plans' Funding Progress
Modified Approach for Infrastructure Assets
Combining and Individual Fund Statements and Schedules
Nonmajor Governmental Funds
Internal Service Funds
Agency Fund
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
Independent Auditors’ Report
Members of the Arizona State Legislature
The Board of Supervisors of
Maricopa County, Arizona
We have audited the accompanying financial statements of the governmental activities, aggregate
discretely presented component units, each major fund, and aggregate remaining fund information of
Maricopa County as of and for the year ended June 30, 2009, which collectively comprise the County’s
basic financial statements as listed in the table of contents. These financial statements are the
responsibility of the County’s management. Our responsibility is to express opinions on these financial
statements based on our audit. We did not audit the financial statements of three departments and a
discretely presented component unit, the Housing Authority, which account for the following percentages
of the assets, liabilities, revenues and other sources, and expenses or expenditures and other uses of the
opinion units affected:
Opinion Unit/Department
Assets
Liabilities
Revenues/
Sources/
Additions
Expenses/
Expenditures/Uses/
Deductions
Government-wide Statements
Governmental activities:
Stadium District 7.37% 9.60% 0.62% 0.89%
Risk Management 1.24% 11.51% 0.07% 0.00%
Employee Benefits Trust 1.33% 2.96% 0.14% 0.00%
Aggregate discretely presented
component unit:
Housing Authority 100.00% 100.00% 99.40% 99.52%
Fund Statements
Aggregate remaining fund
information:
Stadium District 0.98% 0.05% 0.09% 0.09%
Risk Management 2.00% 32.01% 0.24% 0.19%
Employee Benefits Trust 2.15% 8.22% 0.86% 0.81%
Those financial statements were audited by other auditors whose reports thereon have been furnished to
us, and our opinions, insofar as they relate to the amounts included for those entities, are based solely on
the reports of the other auditors.
We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that
our audit and the reports of the other auditors provide a reasonable basis for our opinions.
In our opinion, based on our audit and the reports of the other auditors, the financial statements referred to
above present fairly, in all material respects, the respective financial position of the governmental activities,
aggregate discretely presented component units, each major fund, and aggregate remaining fund
information of Maricopa County as of June 30, 2009, and the respective changes in financial position and,
where applicable, cash flows thereof for the year then ended in conformity with U.S. generally accepted
accounting principles.
The Management’s Discussion and Analysis on pages 3 through 14, the Budgetary Comparison
Schedules on pages 75 through 78, the Schedule of Agent Retirement Plans’ Funding Progress on pages
79 and 80, and the Infrastructure Assets information on page 81 are not required parts of the basic
financial statements, but are supplementary information required by the Governmental Accounting
Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the required supplementary
information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming our opinions on the financial statements that
collectively comprise the County’s basic financial statements. The introductory section, combining and
individual fund statements and schedules, and statistical section listed in the table of contents are
presented for purposes of additional analysis and are not required parts of the basic financial statements.
The combining and individual fund statements and schedules have been subjected to the auditing
procedures applied by us and the other auditors in the audit of the basic financial statements and, in our
opinion, based on our audit and the reports of the other auditors, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole. The introductory and statistical sections have
not been subjected to the auditing procedures applied in the audit of the basic financial statements and,
accordingly, we express no opinion on them.
In accordance with Government Auditing Standards, we will also issue our report on our consideration of
the County’s internal control over financial reporting and on our tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements and other matters at a future date. The
purpose of that report is to describe the scope of our testing of internal control over financial reporting and
compliance and the results of that testing, and not to provide an opinion on internal control over financial
reporting or on compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standards and should be considered in assessing the results of our audit.
Debbie Davenport
Auditor General
December 22, 2009
Management’s Discussion and Analysis
3
This discussion and analysis is intended to be an easily readable analysis of Maricopa County’s (County)
financial activities based on currently known facts, decisions or conditions. This analysis focuses on
current year activities and should be read in conjunction with the Transmittal Letter that begins on page vii
and with the County’s basic financial statements following this section.
Financial Highlights
• The total assets of the County exceeded its liabilities at the close of the fiscal year by $4,045.8 million
(net assets), an increase of 5.2 percent from the prior year. Of this amount, $776.4 million
(unrestricted net assets) may be used to meet the County’s ongoing obligations to citizens and
creditors.
Composition of Net Assets
(in millions)
Restricted -
$565.2 (14%)
Unrestricted -
$776.4 (19%)
Invested in capital
assets, net of
related debt -
$2,704.2 (67%)
• The County’s total net assets as reported in the Statement of Activities increased by $200.0 million
from the prior year. The County’s primary sources of revenue are from taxes, charges for services,
and grants and contributions.
Revenue Sources
(in millions)
Charges for Services -
$287.8 (15%)
Operating Grants &
Contributions -
$229.0 (12%)
Capital Grants &
Contributions -
$124.2 (6%)
Other -
$52.4
(3%)
Taxes - $1,219.8
(64%)
• The County’s governmental funds reported combined fund balances of $1,424.8 million, an increase
in fund balance of $22.0 million over the prior fiscal year. Approximately 97.0 percent of the combined
fund balances or $1,381.7 million is unreserved and available to meet the County’s current and future
needs.
Management’s Discussion and Analysis (Continued)
4
• Unreserved fund balance for the General Fund decreased by 19.9 percent to $410.0 million;
approximately 46.6 percent of total General Fund expenditures. In accordance with Arizona Revised
Statutes (A.R.S.), this entire amount is budgeted to be spent in the next fiscal year. A.R.S. §42-17151
requires that total estimated sources of revenue must equal the total estimated expenditures in the
budget for the current fiscal year. In addition, A.R.S. §42-17102 stipulates that the estimated
expenditures may include an amount for unanticipated contingencies or emergencies.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the County’s basic financial
statements. The County’s basic financial statements consist of three components: 1) Government-wide
financial statements, 2) Fund financial statements, and 3) Notes to the basic financial statements.
Required Supplementary Information is included in addition to the basic financial statements. The
Combining and Individual Fund Statements and Schedules – Nonmajor Funds begin on page 92.
Government-wide Financial Statements are designed to provide readers with a broad overview of the
County’s finances, in a manner similar to private-sector businesses.
• The Statement of Net Assets presents information on all County assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decreases in net assets
may serve as a useful indicator of whether the financial position of the County is improving or
deteriorating.
• The Statement of Activities presents information showing how net assets changed during the most
recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise
to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses
are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g.,
uncollected taxes and earned but unused vacation leave).
Both of these government-wide financial statements distinguish functions of the County that are
principally supported by taxes and intergovernmental revenues (governmental activities) from other
functions that are intended to recover all or a portion of their costs through user fees and charges
(business-type activities). The governmental activities of the County include general government; public
safety; highways and streets; health, welfare and sanitation; culture and recreation; education; and
interest on long-term debt. The County has no business-type activities.
Component units are legally separate entities for which the County is considered to be financially
accountable. Blended component units, although legally separate entities, are in substance part of the
County’s operations. Therefore, data from these units is combined with data of the primary government.
Discretely presented component units, on the other hand, are reported in a separate column in the
government-wide financial statements to emphasize they are legally separate from the County. The
Maricopa County Flood Control District, Maricopa County Library District, Maricopa County Public
Finance Corporation, Maricopa County Special Assessment Districts, Maricopa County Stadium District,
and the Maricopa County Street Lighting Districts are reported as blended component units. The Housing
Authority of Maricopa County and Maricopa County Sports Commission are reported as discretely
presented component units. However, during the year, the County Board of Supervisors voted to
terminate the Phoenix Regional Sports Commission, see Note 1 – Summary of Significant Accounting
Policies for further information.
The Government-wide financial statements can be found on pages 19-21 of this report.
Fund Financial Statements are groupings of related accounts that are used to maintain control over
resources that have been segregated for specific activities or objectives. The County, like other state and
local governments, uses fund accounting to ensure and demonstrate finance-related legal compliance. All
of the funds of the County can be divided into three categories: governmental funds, proprietary funds
and fiduciary funds.
Management’s Discussion and Analysis (Continued)
5
• Governmental funds are used to account for essentially the same functions reported as
governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental funds financial statements focus on near-term
inflows and outflows of 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 county’s near-term
financing requirements. Governmental funds include the general, special revenue, debt service,
and capital projects funds.
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.
The County reports five major governmental funds. Information is presented separately in the
governmental funds Balance Sheet and in the governmental funds Statement of Revenues,
Expenditures, and Changes in Fund Balances for the General Fund, Detention Operations Fund,
County Improvement Debt Fund, County Improvement Fund and General Fund County
Improvements Fund.
Data from the other governmental funds (nonmajor) are combined into a single, aggregated
presentation. Individual fund data for each of these nonmajor governmental funds is provided in the
form of combining statements, which begin on page 92 of this report.
The governmental funds financial statements can be found on pages 22-26 of this report.
• Proprietary funds are used to account for the County’s internal service funds. Internal service funds
are an accounting device used to accumulate and allocate costs internally among the County’s
various functions. The County uses internal service funds to account for its equipment services,
telecommunications, reprographics, risk management, employee benefits trust, and sheriff
warehouse functions. Because these services predominantly benefit governmental rather than
business-type functions, they have been included within governmental activities in the government-wide
financial statements.
The County’s internal service funds are combined into a single, aggregated presentation in the
proprietary funds financial statements. Individual fund data for the internal service funds is provided in
the form of combining statements, which begin on page 230 of this report.
The proprietary fund financial statements can be found on pages 28-30 of this report.
• Fiduciary funds are used to account for resources held for the benefit of parties outside the
government. Fiduciary funds are not reflected in the government-wide financial statements because
the resources of those funds are not available to support the County’s own programs. The accounting
used for fiduciary funds is much like that used for proprietary funds.
The fiduciary funds financial statements can be found on pages 32-33 of this report.
Notes to the Financial Statements provide additional information that is essential to a full understanding
of the data provided in the government-wide and fund financial statements. The notes can be found on
pages 37-71 of this report.
Required Supplementary Information is presented concerning the County’s General Fund and
Detention Operations Fund. A budgetary comparison schedule has been provided for both of these funds
to demonstrate compliance with budget and additional information is provided by the Note to Budgetary
Comparison Schedules. Also presented is the schedule of funding progress for the County’s two agent
Management’s Discussion and Analysis (Continued)
6
retirement plans and infrastructure assets reported using the modified approach. Required supplementary
information can be found on pages 75-81 of this report.
Government-wide Financial Analysis
This year is the eighth fiscal year that the County applied Governmental Accounting Standards Board
(GASB) Statement No. 34.
Net Assets
Net assets may serve over time as a useful indicator of a government’s financial position. The following
table reflects the condensed Statement of Net Assets of the County for June 30, 2009, as compared to
the prior year.
Statement of Net Assets
As of June 30
(in millions)
Governmental
Activities
2009 2008*
% Chg
P/Y
Current and other assets $ 1,713.5 $ 1,683.0 1.8%
Capital assets 2,886.5 2,741.8 5.3
Total assets 4,600.0 4,424.8 4.0
Current liabilities 180.1 196.0 (8.1)
Long-term liabilities 374.1 383.0 (2.3)
Total liabilities 554.2 579.0 (4.3)
Net assets
Invested in capital assets,
net of related debt 2,704.2 2,546.8 6.2
Restricted 565.2 526.2 7.4
Unrestricted 776.4 772.8 0.5
Total net assets $ 4,045.8 $ 3,845.8 5.2
* Net assets and capital assets amounts for fiscal year 2008 were restated for various infrastructure adjustments
related to the prior period. See Note 3 – Beginning Balances Restated for additional information.
By far, the largest portion - $2.7 billion or 67 percent - of the County’s net assets reflects the investment in
capital assets (e.g., land, buildings and improvements, machinery and equipment, infrastructure and
construction in progress), less accumulated depreciation and any related debt used to acquire those
assets that is still outstanding. Net assets invested in capital assets increased by $157.4 million due to an
increase in net capital assets of $144.7 million, which was magnified by a decrease in capital related
debt, net of unspent proceeds, of $22.1 million. The change in capital related debt, net of proceeds,
included a decrease in capital related debt of $15.0 million and a decrease in unspent proceeds of $2.3
million. The decrease in capital related debt was a result of the payment of regularly scheduled debt
payments and was not due to any early debt refunding. The large increase in capital assets is mainly
attributed to Transportation infrastructure capital projects, which increased $138.4 million from the prior
year. These projects are accounted for in the Transportation Capital Projects Fund, which had capital
outlay expenditures of $65.0 million. In addition to the Transportation infrastructure assets resulting from
capital outlay, the County received $106.6 million in donated Transportation infrastructure from other
jurisdictions.
The County uses capital assets to provide services to its citizens; consequently, these assets are not
available for future spending. Although the County’s investment in its capital assets is reported net of
related debt, it should be noted that the resources needed to repay this debt must be provided from other
sources, since the capital assets themselves cannot be used to liquidate these liabilities.
Management’s Discussion and Analysis (Continued)
7
The second component of the County’s total net assets, $565.2 million or approximately 14 percent,
represents resources that are subject to external restrictions on how they may be used. This component
increased by $39.0 million from the prior year.
The final component consists of unrestricted net assets, $776.4 million or 19 percent, and may be used to
meet the County’s ongoing obligations. Unrestricted net assets increased from fiscal year 2008 by $3.6
million.
Both the increases in the restricted and unrestricted net assets can be attributed to revenues exceeding
expenses for the fiscal year. Although the economic environment is in a decline, with less revenue
collected than the prior year, the County was able to ensure that expenses did not exceed revenues by
employing a conservative approach to forecasting and budgeting. The County minimized the negative
impact of the economy by utilizing budget balancing tactics, while still providing the citizens with
mandated services.
Changes in Net Assets
As discussed previously, the County’s total net assets of $4.0 billion increased by $200.0 million as
reported in the Statement of Activities. The following table reflects the condensed Statement of Activities
of the County for the fiscal year 2009 compared to the prior year and indicates the changes in net assets
for governmental activities:
Governmental
Activities % Chg
2009 2008* P/Y
Revenues:
Program revenues:
Charges for services $ 287.8 $ 273.5 5.2%
Operating grants and contributions 229.0 263.4 (13.1)
Capital grants and contributions 124.2 68.4 81.6
General revenues:
Taxes 1,219.8 1,282.9 (4.9)
Other 52.4 86.0 (39.3)
Total Revenues 1,913.2 1,974.2 (3.1)
Expenses:
General government 174.7 182.9 (4.5)
Public safety 984.6 965.9 1.9
Highways and Streets 90.3 143.4 (37.1)
Health, welfare and sanitation 403.8 383.9 5.2
Other** 59.8 63.7 (6.0)
Total Expenses 1,713.2 1,739.8 (1.5)
Change in net assets 200.0 234.4 (14.6)
Net assets – beginning, as restated 3,845.8 3,611.4 6.5
Net assets – ending $ 4,045.8 $ 3,845.8 5.2
* Net assets for fiscal year 2008 were adjusted by $4.6 million for various Transportation infrastructure adjustments related to the prior
period. See Note 3 – Beginning Balances Restated for additional information.
** The functions of culture and recreation, and education along with interest on long-term debt are shown in the condensed Statement
of Activities above as other expenses.
One of the main differences a reader will see between the governmental funds reported in the fund
financial statements and the Statement of Activities is that governmental funds in the fund financial
statements report capital outlays as expenditures. However, in the Statement of Activities the cost of
those assets is reported as a capital asset and the expense of those assets is allocated over their
estimated useful lives and reported as depreciation expense. Capital outlay expenditures exceeded
depreciation expense in the current period by $131.1 million. This increase is offset by disposals and
other miscellaneous capital asset transactions, such as donations, totaling $14.3 million.
Management’s Discussion and Analysis (Continued)
8
In the government-wide Statement of Activities, the significant revenues reported included taxes (County-levied,
general sales, and vehicle license taxes), charges for services, and operating grants, which
represent 65.8, 15.0 and 12.0 percent, respectively, of total governmental activities revenues for fiscal
year 2009. Tax revenues in total decreased by $63.1 million from the prior year. All tax revenues, with
the exception of property taxes, decreased from the prior year, which is a result of the declining economic
environment. The increase in property taxes of $38.3 million in fiscal year 2009 was offset by decreases
in sales taxes, other County-levied taxes, and vehicle license taxes of $66.0, $22.0, and $13.3 million,
respectively. Fiscal year 2009 property tax revenue continued to increase from the prior year even with
current falling housing values as there is a lag period between the actual decline in market value and
when that decline is recognized for the assessed valuation used for the property tax rate and levy. The
primary assessed valuations applicable to fiscal year 2010 are anticipated to decrease. Charges for
services revenue increased $14.3 million from the prior year primarily from the reclassification of $21.9
million in Transportation intergovernmental charges for services from the intergovernmental revenue line-item
to the charges for services line-tem, which resulted in a corresponding decrease in operating grants
and contributions revenue. Thus, this increase does not represent additional charges for services
revenue realized by the County or an actual drop in operating contributions for the year. Including the
reclassification based decrease discussed above, operating grants and contributions decreased $34.4
million in total from the prior year. Although capital grants and contributions represents only 6.5 percent
of the County’s total revenues, it increased $55.8 million from the prior-year due to additional donations
and contributions related to infrastructure assets. During fiscal year 2009, the County received a total of
$111.6 million in Flood Control and Transportation infrastructure assets from other jurisdictions compared
to $45.4 million in fiscal year 2008.
Tax and other operating revenues provide the principal support for the functions of the County, which
include general government; public safety; highways and streets; health, welfare and sanitation; culture
and recreation; and education. Although, total expenses remained consistent with the prior year,
decreasing only $26.6 million or 1.5 percent, fluctuations within the functional classifications occurred
between fiscal years 2008 and 2009. The most significant fluctuations were in the public safety;
highways and streets; and health, welfare and sanitation functions, with net changes of $18.7, ($53.1),
and $19.9 million, respectively. The increase in public safety function expenses is primarily attributable to
the State Budget Neutrality Compliance Fund payment of $24.2 million, of which $17.9 million was paid
from the public safety function. See page 10 for more information. The decrease in highways and streets
expenses is primarily due to a decrease in the amount of capital outlay not resulting in a capital asset of
$16.9 million from the prior year. As a higher amount of capital outlay was reclassified as an asset, the
amount expensed on the government-wide statements decreased. In addition, the decrease in expenses
is also due to a decrease in asset deletions, including infrastructure related assets, of $17.3 million, which
resulted in a lower loss on disposal of assets in fiscal year 2009 from the prior year. The increase in
health, welfare, and sanitation expenses is primarily due to the State Budget Neutrality Compliance Fund
payment of which $3.2 million was paid from the health, welfare and sanitation function and additional
ALTCS withholdings of $8.0 million from the prior fiscal year. See page 10 for more information.
Financial Analysis of the County’s Funds
As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements.
Governmental Funds. Governmental activities are contained in the general, special revenue, debt
service, and capital projects funds. The focus of the County’s governmental funds is to provide
information on near-term inflows, outflows, and balances of spendable resources. Such information is
useful in assessing the 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.
Management’s Discussion and Analysis (Continued)
9
As of June 30, 2009, the governmental funds reported combined fund balances of $1,424.8 million and an
increase in fund balance of $22.0 million over the prior fiscal year. Approximately 97.0 percent of the
combined fund balances or $1,381.7 million is available to meet the County’s current and future needs
(unreserved fund balance). The remaining fund balance is reserved for inventories, intergovernmental
loans, advances and debt service.
The following funds are the County’s major governmental funds:
The General Fund is the County’s primary operating fund. At the end of the current fiscal year,
unreserved fund balance of the General Fund was $410.0 million, while total fund balance was $431.0
million. This represents a decrease in the unreserved fund balance from the prior year of $102.1 million,
or 19.9 percent. As a measure of the General Fund’s liquidity, it may be useful to compare both
unreserved fund balance and total fund balance to the total fund expenditures. Unreserved fund balance
represents 46.6 percent of the total fiscal year 2009 General Fund expenditures, while total fund balance
represents 49.0 percent of that same amount. These ratios indicate a strong fund balance position in
comparison to expenditures.
The Detention Operations Fund is a special revenue fund that was established under the authority of
propositions 400 and 401, which were passed in the General Election of November 3, 1998. These
propositions authorized a temporary 1/5 of one-cent sales tax to be used for the construction and
operation of adult and juvenile detention facilities. On November 5, 2002, the voters approved the
extension of the 1/5 of one-cent sales tax in the General Election to be used for jail facility operations.
The extension begins in the month following the expiration of the original tax and may continue for not
more than twenty years after the date the tax collection begins.
The Detention Operations Fund accounts for the jail tax revenue along with transfers from the General
Fund for maintenance of effort (MOE). The MOE transfer from the General Fund is used to support the jail
detention operations. Arizona Revised Statutes require the County to calculate the maintenance of effort
transfer on an annual basis. The Detention Operations Fund transfers monies to the Detention Capital
Projects Fund for the construction of the jail facilities. At the end of the current fiscal year, total fund
balance of the Detention Operations Fund was $190.8 million, of which more than 99 percent is
unreserved. This was an increase in total fund balance of $35.1 million, or 22.6 percent, from the prior
fiscal year. Although the fund had more expenditures than revenues by $134.1 million, the increase in
fund balance can be attributed to net transfers of $169.1 million, which was a net increase of $35.3 million
over the prior year. Transfers from the General Fund for maintenance of effort were $170.1 million while
transfers to the Detention Capital Projects Fund were $951.0 thousand. The amount to be transferred to
the Detention Capital Projects Fund for any given year is determined through the budget planning
process.
The County Improvement Debt Fund is a debt service fund that accounts for the debt service on the
Lease Revenue Bonds, Series 2001; the Lease Revenue Refunding Bonds, Series 2003; Lease Revenue
Bonds, Series 2007A; Lease Revenue Refunding Bonds, Series 2007B; Lease Trust Certificates, Series
2004; and other long-term obligations. At the end of the current fiscal year, unreserved fund balance of
the County Improvement Debt Fund was $7.0 million, while total fund balance was $15.8 million.
The County Improvement Fund is a capital projects fund that accounts for capital projects funded through
the issuance of long-term obligations. Projects currently funded include justice and administrative
facilities. At the end of the current fiscal year, fund balance of the County Improvement Fund was $1.7
million, all of which is unreserved.
The General Fund County Improvements Fund is a capital projects fund that accounts for capital projects
funded by transfers from the General Fund. Projects that are currently funded include justice,
administrative and parks facilities. At the end of the current fiscal year, fund balance of the General Fund
County Improvements Fund was $419.8 million, all of which is unreserved.
Management’s Discussion and Analysis (Continued)
10
The following table presents the amount of all governmental funds revenues from various sources as well
as increases or decreases from the prior year.
Revenues Classified by Source
Governmental Funds
(in millions)
2009 2008 Increase/(Decrease)
Percent Percent % Chg
Revenues by Source Amount of Total Amount of Total Amount P/Y
Taxes $ 687.0 38% $ 672.2 35% $ 14.8 2.2%
Intergovernmental 783.9 43 904.6 47 (120.7) (13.3)
Charges for services 169.5 9 153.4 8 16.1 10.5
Other 179.0 10 188.8 10 (9.8) (5.2)
Totals $ 1,819.4 100% $ 1,919.0 100% $ (99.6) (5.2)
During fiscal year 2009, the County experienced a decrease in governmental revenues from the previous
year of $99.6 million, a 5.2 percent decrease. This decrease in revenue is mainly attributable to the
decrease in sales tax related revenues for the General Fund and Detention Operations Fund of $66.0 and
$21.2 million, respectively, as detailed below.
Intergovernmental and taxes revenues comprise 81 percent of total governmental funds revenue. Taxes
revenues increased from fiscal year 2008 as a result of additional property tax revenue of $32.9 million,
which was a result of an increase in assessed valuations. Fiscal year 2009 property tax revenue
continued to increase from the prior year even with the continued decline in housing values as there is a
lag period between the actual decline in market value and when that decline is recognized for the
assessed valuation used for the property tax rate and levy. This increase in property tax revenue was
partially offset by a decrease in jail tax revenue of $21.2 million in the Detention Operations Fund, which
is a result of the continued decline of sales tax revenues in the County and State due to the ailing
economy. Likewise, the decrease in intergovernmental revenue was mainly attributed to a decrease in
the sales tax apportionment, as reported in the General Fund, of $66.0 million. As with the jail tax
revenue, the decrease in General Fund sales tax apportionment is due to the continued downturn in the
County’s and State’s economy. Intergovernmental revenue also decreased due to the reclassification of
Transportation cost-sharing revenue from intergovernmental to charges for services, for which the County
received $22.0 million in fiscal year 2008. This reclassification of cost-sharing revenue resulted in an
increase in charges for services revenue over the prior-year, but does not represent a true increase in
revenue.
The following table presents the amount of all governmental funds expenditures by function compared to
prior year amounts.
Expenditures by Function
Governmental Funds
(in millions)
2009 2008 Increase/(Decrease)
Expenditures by Function Amount
Percent of
Total Amount
Percent of
Total Amount
% Chg
P/Y
General government $ 176.7 10% $ 173.3 9% $ 3.4 2.0%
Public safety 895.8 49 883.0 48 12.8 1.4
Health, welfare and sanitation 396.7 22 378.8 21 17.9 4.7
Capital outlay 220.5 12 279.0 15 (58.5) (21.0)
Other 125.7 7 126.7 7 (1.0) (.8)
Totals $ 1,815.4 100% $ 1,840.8 100% $ (25.4) (1.4)
Expenditures from governmental fund types for fiscal year 2009 decreased by $25.4 million, a 1.4 percent
decrease from the prior year. Although expenditures decreased overall, general government, public
safety and health, welfare and sanitation experienced a total increase of $34.1 million from the prior year.
This increase is primarily attributable to an increase in payments to the State of Arizona of $32.2 million
from the prior year for additional ALTCS withholdings of $8.0 million and State Budget Neutrality
Compliance Fund payments of $24.2 million. The State Budget Neutrality Compliance Fund payment was
Management’s Discussion and Analysis (Continued)
11
pursuant to Arizona State Laws 2008, Chapter 288, Section 10, a result of the State of Arizona fiscal year
2009 budget balancing initiatives. The decrease in capital outlay expenditures is partially due to the
County-wide capital purchasing freeze implemented in March 2008 as a response to the economic
downturn. The capital outlay decrease is also due to the completion of several major capital projects
funded through Lease Revenue Bonds and accounted for in the County Improvement Fund, for which
capital project expenditures decreased $29.9 million from the prior year.
General Fund Budgetary Highlights
The difference between the original budget and the final amended budget for the General Fund resulted
in an increase in revenues of $211.0 thousand and an increase in expenditures of $23.2 million. The
increase in budgeted expenditures was primarily a result of an increase in the contingency budget in the
General Government Department. Due to revenue shortfalls, contingency expenditures were utilized to
help balance the budget. A significant unfavorable revenue variance, as compared to the budget, was
incurred for intergovernmental revenues of $73.8 million. This variance is primarily due to state shared
sales taxes received being less than anticipated due to the decline in the state’s economic environment.
Significant favorable expenditure variances, as compared to the budget, were incurred in the General
Government Department (general government function) of $203.7 million. These savings were a result of
spending from the contingency and reserve funds that was less than anticipated. None of the variances
between the budget and actual amounts were significant enough to affect the County’s ability to provide
future services.
Capital Assets and Long-Term Liabilities
Capital Assets
The County’s capital assets balance as of June 30, 2009, was $2.9 billion (net of accumulated
depreciation). Capital assets include land, buildings and improvements, infrastructure, machinery and
equipment, and construction in progress. The County reports infrastructure assets, which consist of the
Flood Control District and Transportation Department infrastructure, in the government-wide financial
statements in accordance with GASB Statement No. 34. Additional information regarding infrastructure
assets can be found in the Notes to the Financial Statements (Note 1 – Summary of Significant
Accounting Policies and Note 11 – Capital Assets).
The Flood Control District infrastructure assets consist of drainage systems, dams, flood channels and
canals. Flood Control infrastructure is reported using the depreciation approach and the County uses the
straight-line method of depreciation on these assets. At June 30, 2009, Flood Control District
infrastructure-related assets consisted of land, infrastructure and construction in progress of $242.5,
$234.8, and $154.2 million, respectively, net of any related accumulated depreciation.
The Transportation Department infrastructure assets consist of a roadway system and a bridge system.
Both systems are reported under the modified approach, which means the County will maintain the
assets using an asset management system and will document that the infrastructure assets are being
preserved at the established condition level. During fiscal year 2009, the condition level of both systems
was within the established condition level. Actual maintenance/preservation costs varied by ($2,181,608)
and $1,864,234 from the estimated costs for the roadway and bridge system, respectively. Roadway
system actual maintenance and preservation costs exceeded estimated costs as funds originally
budgeted for capital purchases were reallocated for roadway maintenance. These funds were not
included in the original estimated costs. Bridge maintenance and preservation costs fell below the
estimated costs as two bridge repair projects were delayed due to final review and approval of the design
plans. See Required Supplementary Information on page 81 for additional information. At June 30,
2009, Transportation Department infrastructure-related assets consisted of land, infrastructure and
construction in progress of $247.4, $645.9, and $25.3 million, respectively.
Management’s Discussion and Analysis (Continued)
12
Capital assets for governmental activities are presented below (in millions) to illustrate changes from the
prior year:
Governmental Activities
2009 2008* $ Change % Change
Land $ 614.8 $ 569.8 $ 45.0 7.9%
Infrastructure 645.7 573.6 72.1 12.5
Buildings and improvements (net of
accumulated depreciation) 1,119.9 1,126.1 (6.2) (0.6)
Machinery and equipment
(net of accumulated depreciation) 108.9 106.9 2.0 1.9
Construction in progress 230.1 198.3 31.8 16.0
Infrastructure (net of accumulated
depreciation) 167.1 167.2 (.1) (0.1)
Totals $ 2,886.5 $ 2,741.9 144.6 5.3
* The capital asset amounts for fiscal year 2008 were restated for various prior period corrections. See
Note 3 – Beginning Balances Restated for additional information.
Capital assets, net of accumulated depreciation, increased by $114.6 million, or 5.3 percent, from the
prior year. The most significant impact on the increase in capital assets for the fiscal year ended June 30,
2009, was in the increase in infrastructure related capital assets, which accounted for $118.7 million of
the total increase from the prior year. During fiscal year 2009, Transportation Department and Flood
Control District infrastructure assets changed $138.4 and ($19.7) million, respectively, from the prior year
and accounted for changes in land, construction in progress, and non-depreciable infrastructure of $43.8,
($1.8), and $76.8 million, respectively.
Long-Term Liabilities
Maricopa County has the following bond ratings:
Debt Instrument & Rating Agency Rating Date Awarded
General Obligation Bonds (implied or issuer credit rating)
Fitch Ratings AAA April 2007
Standard & Poor's AAA August 2007
Moody's Investor Services Aa1 April 2009
Lease Revenue Bonds
Fitch Ratings AA+ April 2007
Standard & Poor's AA+ April 2007
Moody's Investor Services Aa2 April 2009
Certificates of Participation
Fitch Ratings AA+ April 2007
Moody's Investor Services Aa3 April 2009
At June 30, 2009, the County had total long-term liabilities (noncurrent liabilities due within one year and
more than one year) outstanding of $374.1 million, which represents a $8.9 million decrease from the
prior year balance of $383.0 million. The majority of the $8.9 million decrease is attributable to the
issuance of capital leases of $20.1 million, a net increase of reported and incurred but not reported claims
of $5.3 million, a net increase of closure and postclosure costs of $3.0 million, and debt service payments
made during fiscal year 2009 for lease revenue bonds ($9.8 million), lease trust certificates ($4.6 million),
Stadium District revenue bonds ($3.1 million), and capital leases ($19.1 million). The largest components
of long-term liabilities at June 30, 2009, consisted of lease revenue bonds - $163.9 million, Stadium
District revenue bonds - $41.2 million, capital leases - $51.1 million, and reported claims and incurred but
not reported claims - $74.0 million.
Lease revenue bonds applicable to governmental activities are paid from the County Improvement Debt
Fund (debt service fund) that was funded in prior years by transfers from the General Fund and is
predominately unrestricted. At June 30, 2009, the fund balance in the County Improvement Debt Fund to
Management’s Discussion and Analysis (Continued)
13
pay future liabilities was $15.8 million. Proceeds from the bonds are currently being used for capital
projects.
Stadium District revenue bonds are special obligations of the District. The bonds are payable solely from
pledged revenues, consisting of car rental surcharges levied and collected by the Stadium District
pursuant to A.R.S. §48-4234. On June 5, 2002, the Stadium District issued revenue refunding bonds in
the amount of $58,225,000 (par value) of which $41,165,000 remains outstanding.
Capital leases applicable to governmental activities of $51.1 million have been entered into for various
lease-purchase agreements, which are callable at par plus accrued interest. This is an increase of $1.0
million from the prior year primarily related to the purchase of communications and network infrastructure
technology equipment.
Reported and incurred but not reported claims applicable to governmental activities of $73.9 million are
reported in the Risk Management and Employee Benefits Trust funds (internal service funds). This is an
increase of $5.3 million from the prior year primarily related to actuarial estimates for the County’s self-insured
portion of future claims for general litigation related to torts; thefts of, damage to, and destruction
of assets; errors and omissions; injuries to employees; natural disasters; and certain health benefits that
are paid through the operations of the funds. Additional information regarding long-term liabilities can be
found in the Notes to Financial Statements (Note 13 – Long-Term Liabilities and Note 17 – Risk
Management).
Economic Factors and Next Year’s Budget and Rates
• As Arizona’s economy starts to recover, it is projected that job growth will begin by the end of
2010 due to the Federal government economic stimulus spending, low interest rates, the injection
of liquidity into financial institutions, and stable prices for goods to motivate some increased levels
of purchasing (www.workforce.az.gov).
• The population in Maricopa County continues to grow, even though Arizona economy has
faltered. The Arizona Department of Commerce reports that Maricopa County’s population
increased by 2.1 percent from fiscal year 2007 to 2008 (www.azcommerce.com). The
unemployment rate in Maricopa County, according to Arizona Workforce, in October 2009 was
8.7 percent, which remains below both the state average of 9.3 percent and national average of
10.2 percent (www.workforce.az.gov).
• As reported by the Arizona Department of Commerce, Maricopa County’s population increased
29.2 percent from July 1, 2000 to July 1, 2008, which is higher than the United States overall
population increase of 7.8 percent for the same time period (www.azcommerce.com).
As part of the annual budget planning process, the County’s Office of Management and Budget
developed a financial forecast to assist in both short and long range financial planning. This forecast
provides a conservative estimate of the County’s fiscal condition through the next five years given a
realistic economic forecast, current County policies and existing laws. The forecast was instrumental in
the determination of the fiscal year 2010 budget and tax rate, which took in to account several significant
trends:
��� Significant declines in property tax assessed values, amounting to $10.2 billion (20.5%).
Maricopa County’s primary (general operating) property tax levy is limited to 2% annual increases
on existing property, plus taxes on new properties.
• State Shared Sales Tax, Vehicle License Tax, Highway User Revenues and County Jail Excise
Tax revenues stop declining in fiscal year 2009-10, and begin to increase in the years thereafter.
However, annual collections generally do not regain the peak levels of fiscal years 2004-2006
until after the forecast period.
Management’s Discussion and Analysis (Continued)
14
• Staggering State budget deficits continue to pose a significant risk to Maricopa County’s fiscal
stability. As in the fiscal year 2009-10 Adopted Budget, the forecast assumes continuation of the
$24.1 million fiscal year 2008-09 mandated contribution to the State, along with sizable increases
in mandated healthcare contributions, in particular the ALTCS program
At the end of the fiscal year, unreserved fund balance for the General Fund was $410.0 million, or 46.6
percent of total General Fund expenditures. Unreserved fund balance decreased by 19.9 percent from
the prior year. This decrease is primarily attributable to General Fund transfers out to the General County
Improvements Fund for capital projects. In accordance with Arizona Revised Statutes (A.R.S.), the entire
amount will be budgeted in the next fiscal year. A.R.S. §42-17151 requires that total estimated sources of
revenue must equal the total estimated expenditures in the budget for the current fiscal year. The
estimated expenditures may include an amount for unanticipated contingencies or emergencies, per
A.R.S. §42-17102.
Request for Information
This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with
a general overview of the County’s finances and to demonstrate the County’s accountability for the
money it receives. If you have any questions about this report or need additional financial information,
please contact Maricopa County Department of Finance, 301 W. Jefferson, Suite 960, Phoenix, AZ
85003, or at www.maricopa.gov.
Financial Section
Basic Financial Statements
Basic Financial Statements
Maricopa County
Definitions of Government-wide Financial Statements and
Listing of Major Funds
17
Government-wide Financial Statements
The Statement of Net Assets presents information on all of Maricopa County’s assets and liabilities, with
the difference between the two reported as net assets.
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.
Major 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.
Special Revenue Funds
Detention Operations Fund – was established under the authority of propositions 400 and 401, which
were passed in the General Election of November 3, 1998. These propositions authorized a temporary
1/5 of one-cent sales tax to be used for the construction and operation of adult and juvenile detention
facilities. On November 5, 2002, the voters approved the extension of the 1/5 of one-cent sales tax in the
General Election to be used for jail facility operations. The extension begins in the month following the
expiration of the original tax and may continue for not more than twenty years after the date the tax
collection begins. The Detention Operations Fund accounts for the receipt of tax revenue, jail operations
expenditures, and transfers to the Detention Capital Projects Fund for construction of the adult and
juvenile detention facilities.
Debt Service Funds
County Improvement Debt Fund – accounts for the debt service on the Lease Revenue Bonds, Series
2001; the Lease Revenue Refunding Bonds, Series 2003; Lease Revenue Bonds, Series 2007A; Lease
Revenue Refunding Bonds, Series 2007B; Lease Trust Certificates, Series 2004; and other long-term
obligations.
Capital Projects Funds
County Improvement Fund – Accounts for capital projects funded through the issuance of long-term
obligations.
General Fund County Improvements Fund – was established to fund current and future capital
projects. Fund assets may be used to pay directly for capital projects or may be appropriated by the
Board of Supervisors for debt service. None of the funds has been pledged for debt service, and fund
assets may be transferred by the Board of Supervisors at any time for any other County purpose.
18
Maricopa County
Statement of Net Assets
June 30, 2009
19
PRIMARY COMPONENT
GOVERNMENT UNIT
Governmental Housing
Activities Authority
ASSETS
Cash in bank and on hand $ 4,496,758 $ 2,475,467
Cash and investments held by County Treasurer 1,411,608,236
Receivables (net of allowances for uncollectibles) 30,469,818 126,176
Due from other governmental units 154,072,356
Inventories 10,335,643 99,423
Prepaids 1,369,772 50,665
Deferred costs 4,123,078
Miscellaneous 2,511,205
Intergovernmental loans 15,535,019
Cash and investments held by trustee – restricted 78,987,939 1,342,180
Capital assets:
Land 614,764,012 4,121,733
Buildings and improvements 1,445,447,324 42,043,753
Machinery and equipment 284,199,295 692,624
Infrastructure – nondepreciable 645,692,028
Infrastructure – depreciable 234,785,020
Construction in progress 230,145,945
Less: accumulated depreciation (568,553,804) (28,181,384)
Total assets 4,599,989,644 22,770,637
LIABILITIES
Accounts payable 77,680,219 103,906
Accrued liabilities 10,677,495 156,695
Employee compensation payable 64,079,158 17,423
Interest payable 4,021,826
Unearned revenue 23,588,634
Due to other governmental units 11,000
Deposits held for other parties 141,897
Noncurrent liabilities:
Due within one year 81,946,057
Due in more than one year 292,141,941 489,987
Total liabilities 554,146,330 909,908
NET ASSETS
Invested in capital assets, net of related debt 2,704,196,813 18,676,726
Restricted for:
General government 4,478,079
Public safety 385,793,340
Highways and streets 72,402,494
Health, welfare and sanitation 38,465,585
Culture and recreation 40,925,947 1,017,458
Education 4,164,079
Debt service 18,994,284
Unrestricted 776,422,693 2,166,545
Total net assets $ 4,045,843,314 $ 21,860,729
The notes to the financial statements are an integral part of this statement.
Maricopa County
Statement of Activities
For the Fiscal Year Ended June 30, 2009
20
Program Revenues
Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions
Functions/Programs
Primary government:
Governmental activities:
General government $ 174,659,283 $ 28,672,080 $ 5,802,445 $
Public safety 984,626,109 161,019,287 33,515,569 16,905,667
Highways and streets 90,253,798 29,894,868 91,217,388 107,276,363
Health, welfare and sanitation 403,757,839 54,265,926 90,577,759
Culture and recreation 42,912,993 13,111,055 291,206
Education 8,298,531 837,422 7,623,545
Interest on long-term debt 8,707,887
Total governmental activities 1,713,216,440 287,800,638 229,027,912 124,182,030
Total primary government $ 1,713,216,440 $ 287,800,638 $ 229,027,912 $ 124,182,030
Component units:
Housing Authority $ 25,016,482 $ 1,499,214 $ 16,185,226 $ 1,128,604
Sports Commission 121,236 56,627 19,000
Total component units $ 25,137,718 $ 1,555,841 $ 16,204,226 $ 1,128,604
General revenues:
Taxes:
Property taxes, levied for general purposes
Property taxes, levied for Flood Control District
Property taxes, levied for Library District
Share of state sales taxes
Sales tax – Jail construction and operation
Surcharge tax – Stadium District
Share of state vehicle license tax
Grants and contributions not restricted to specific programs
Unrestricted investment earnings
Gain on disposal of capital assets
Miscellaneous
Total general revenues
Change in net assets
Net assets beginning, as restated
Net assets, ending
The notes to the financial statements are an integral part of this statement.
21
Net (Expense) Revenue and
Changes in Net Assets
Primary Government Component Units
Governmental Housing Sports
Activities Authority Commission Total
$ (140,184,758)
(773,185,586)
138,134,821
(258,914,154)
(29,510,732)
162,436
(8,707,887)
(1,072,205,860)
(1,072,205,860)
$ (6,203,438) $ $ (6,203,438)
(45,609) (45,609)
(6,203,438) (45,609) (6,249,047)
482,697,371
73,506,944
20,504,964
394,920,581
116,878,703
5,304,565
126,036,362
4,097,990
36,013,917 13,392 13,392
3,797 3,797
12,247,649 38,847 38,847
1,272,209,046 17,189 38,847 56,036
200,003,186 (6,186,249) (6,762) (6,193,011)
3,845,840,128 28,046,978 6,762 28,053,740
$ 4,045,843,314 $ 21,860,729 $ $ 21,860,729
Maricopa County
Balance Sheet
Governmental Funds
June 30, 2009
22
Detention County
General Operations Improvement Debt
ASSETS
Cash in bank and on hand $ 101,520 $ 350 $
Cash and investments held by County Treasurer 308,762,722 175,965,913 6,591,213
Receivables 20,110,889 548,191 2,549,616
Due from other funds 43,729,338
Due from other governmental units 75,617,782 22,974,299 14,933,647
Inventories 5,450,779 312,990
Miscellaneous 412,954 918,369
Intergovernmental loans 15,535,019
Advances to other funds 24,333
Cash and investments held by trustee - restricted 1,068,112 23,677,434
Total assets $ 470,813,448 $ 200,720,112 $ 47,751,910
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 18,151,102 $ 8,629,551 $
Employee compensation payable 3,210,395 1,307,079
Accrued liabilities 556,114 6,987
Due to other funds
Due to other governmental units
Interest payable 3,800,782
Bonds payable 11,080,000
Special assessment debt with governmental commitment
Advances from other funds
Deferred revenue 17,930,616 17,067,247
Total liabilities 39,848,227 9,943,617 31,948,029
Fund balances:
Reserved for:
Inventories 5,450,779 312,990
Intergovernmental loans 15,467,006
Advances 12,167
Debt service 8,796,652
Unreserved, reported in:
General fund 410,035,269
Special revenue funds 190,463,505
Capital projects funds
Debt service funds 7,007,229
Total fund balances 430,965,221 190,776,495 15,803,881
Total liabilities and fund balances $ 470,813,448 $ 200,720,112 $ 47,751,910
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.
Internal service funds are used by management to charge the costs of equipment services, telecommunications, reprographics, risk management,
employee benefits, and the sheriff warehouse to individual funds. The assets and liabilities of the internal service funds are included in
governmental activities in the Statement of Net Assets.
Some long-term liabilities and compensated absences are not due and payable shortly after June 30, 2009, and therefore, are not reported in the funds.
Net assets of governmental activities
The notes to the financial statements are an integral part of this statement.
23
General Fund Other Total
County County Governmental Governmental
Improvement Improvements Funds Funds
$ $ $ 3,743,568 $ 3,845,438
419,358,604 374,619,810 1,285,298,262
23,063 862,121 4,882,318 28,976,198
43,729,338
40,546,628 154,072,356
2,798,077 8,561,846
1,179,882 2,511,205
15,535,019
24,333
37,613,750 16,628,643 78,987,939
$ 37,636,813 $ 420,220,725 $ 444,398,926 $ 1,621,541,934
$ 2,711,418 $ 379,533 $ 44,689,656 $ 74,561,260
1,222,519 5,739,993
5,856,411 6,419,512
33,227,924 9,697,452 42,925,376
11,000 11,000
10,757 3,811,539
11,080,000
16,813 16,813
24,333 24,333
17,187,086 52,184,949
35,939,342 379,533 78,716,027 196,774,775
2,798,077 8,561,846
15,467,006
12,167
10,197,632 18,994,284
410,035,269
175,763,735 366,227,240
1,697,471 419,841,192 176,923,455 598,462,118
7,007,229
1,697,471 419,841,192 365,682,899 1,424,767,159
$ 37,636,813 $ 420,220,725 $ 444,398,926
2,882,931,866
28,596,315
52,274,956
(342,726,982)
$ 4,045,843,314
Maricopa County
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
For the Fiscal Year Ended June 30, 2009
24
Detention County
General Operations Improvement Debt
REVENUES
Taxes $ 472,001,004 $ 116,878,703 $
Licenses and permits 2,303,516
Intergovernmental 535,999,339 3,022,483
Charges for services 42,786,139 35,867,475 2,652,765
Fines and forfeits 16,370,058
Special assessments
Miscellaneous 15,056,648 5,566,863 1,077,995
Total revenues 1,084,516,704 161,335,524 3,730,760
EXPENDITURES
Current:
General government 170,024,276
Public safety 435,663,771 294,944,125
Highways and streets
Health, welfare and sanitation 245,811,481
Culture and recreation 1,162,914
Education 1,727,263
Debt service:
Principal 15,692,000
Interest 7,697,371
Other expenditures
Capital outlay 25,678,451 541,025
Total expenditures 880,068,156 295,485,150 23,389,371
Excess (deficiency) of revenues
over expenditures 204,448,548 (134,149,626) (19,658,611)
OTHER FINANCING SOURCES (USES)
Transfers in 2,353,568 170,081,832 11,529,674
Transfers out (329,094,075) (951,000)
Capital lease agreements 20,121,941
Total other financing sources (uses) (306,618,566) 169,130,832 11,529,674
Net change in fund balances (102,170,018) 34,981,206 (8,128,937)
Fund balances at beginning of year 533,590,840 155,654,885 23,932,818
Increase (decrease) in reserve for inventories (455,601) 140,404
Fund balances at end of year $ 430,965,221 $ 190,776,495 $ 15,803,881
The notes to the financial statements are an integral part of this statement.
25
General Fund Other Total
County County Governmental Governmental
Improvement Improvements Funds Funds
$ $ $ 98,084,639 $ 686,964,346
39,135,581 41,439,097
244,881,431 783,903,253
88,237,371 169,543,750
20,990,329 37,360,387
4,841,432 4,841,432
344,330 10,542,603 62,761,159 95,349,598
344,330 10,542,603 558,931,942 1,819,401,863
6,713,940 176,738,216
165,210,641 895,818,537
54,407,137 54,407,137
150,890,680 396,702,161
32,708,004 33,870,918
6,795,859 8,523,122
3,141,968 18,833,968
2,328,739 10,026,110
3,188 3,188
45,529,816 11,492,109 137,240,246 220,481,647
45,529,816 11,492,109 559,440,402 1,815,405,004
(45,185,486) (949,506) (508,460) 3,996,859
8,111,757 154,897,475 99,197,493 446,171,799
(14,364,097) (101,762,627) (446,171,799)
20,121,941
8,111,757 140,533,378 (2,565,134) 20,121,941
(37,073,729) 139,583,872 (3,073,594) 24,118,800
38,771,200 280,257,320 370,605,398 1,402,812,461
(1,848,905) (2,164,102)
$ 1,697,471 $ 419,841,192 $ 365,682,899 $ 1,424,767,159
Maricopa County
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmental Funds to the
Statement of Activities
For the Fiscal Year Ended June 30, 2009
26
Net change in fund balances – total governmental funds (page 25) $ 24,118,800
Amounts reported for governmental activities in the Statement of Activities
pages 20 – 21 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. This is the amount by which
capital outlays exceeded depreciation in the current period. 131,053,202
The net effect of various miscellaneous transactions involving capital assets
(i.e., sales, trade-ins, and donations) is to increase net assets. 14,345,900
Revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds. 2,931,314
The issuance of long-term debt (e.g., bonds, leases) provides current financial
resources to governmental funds, while the repayment of the principal of long-term
debt consumes the current financial resources of governmental funds.
Neither transaction, however, has any effect on net assets. Also, governmental
funds report the effect of issuance costs, premiums, discounts, and similar items
when debt is first issued, whereas these amounts are deferred and amortized in
the Statement of Activities. This amount is the net effect of these differences in
the treatment of long-term debt and related items. 18,260,600
Some expenses reported in the Statement of Activities do not require the use of
current financial resources and therefore, are not reported as expenditures in
governmental funds. (5,756,171)
Internal service funds are used by management to charge the costs of
equipment services, telecommunications, reprographics, risk management,
employee benefits, and the sheriff warehouse to individual funds. The net
revenue of internal service funds is reported with governmental activities. 15,049,541
Change in net assets of governmental activities (page 21) $ 200,003,186
The notes to the financial statements are an integral part of this statement.
27
Maricopa County
Statement of Net Assets
Proprietary Funds
June 30, 2009
28
Governmental
Activities –
Internal Service
Funds
ASSETS
Current assets:
Cash in bank and on hand $ 651,320
Cash and investments held by County Treasurer 126,309,974
Receivables:
Accounts 1,240,119
Accrued interest 253,501
Inventories 1,773,797
Prepaids 1,369,772
Total current assets 131,598,483
Noncurrent assets:
Capital assets:
Buildings and improvements 323,649
Machinery and equipment 10,561,172
Less accumulated depreciation (7,336,867)
Total noncurrent assets 3,547,954
Total assets 135,146,437
LIABILITIES
Current liabilities:
Accounts payable 3,118,959
Employee compensation payable 763,756
Accrued liabilities 4,257,983
Due to other funds 803,962
Liability for reported and incurred but not reported claims (current portion) 33,749,545
Total current liabilities 42,694,205
Noncurrent liabilities:
Liability for reported and incurred but not reported claims 40,177,276
Total noncurrent liabilities 40,177,276
Total liabilities 82,871,481
NET ASSETS
Invested in capital assets 3,547,954
Unrestricted 48,727,002
Total net assets $ 52,274,956
The notes to the financial statements are an integral part of this statement.
Maricopa County
Statement of Revenues, Expenses, and Changes in Fund Net Assets
Proprietary Funds
For the Fiscal Year Ended June 30, 2009
29
Governmental
Activities –
Internal Service
Funds
OPERATING REVENUES
Charges for services $ 204,925,522
Miscellaneous 1,228,580
Total operating revenues 206,154,102
OPERATING EXPENSES
Personal services 11,507,899
Supplies 26,436,411
Other services 4,290,249
Legal 7,201,470
Insurance and claims 132,602,806
Leases and rentals 13,613
Repairs and maintenance 2,308,674
Travel and transportation 15,051
Utilities 8,391,384
Depreciation 941,573
Total operating expenses 193,709,130
Operating income 12,444,972
NONOPERATING REVENUES (EXPENSES)
Investment income 2,652,705
Loss on disposal of capital assets (1,628)
Total nonoperating revenues 2,651,077
Income before transfers 15,096,049
Transfers out (46,508)
Change in net assets 15,049,541
Total net assets – beginning 37,225,415
Total net assets – ending $ 52,274,956
The notes to the financial statements are an integral part of this statement.
Maricopa County
Statement of Cash Flows
Proprietary Funds
For the Fiscal Year Ended June 30, 2009
30
Governmental
Activities -
Internal Service
Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Charges for services $ 205,841,398
Other receipts 1,228,580
Payments for goods and services (176,526,156)
Payments for personal services (11,593,202)
Net cash provided by operating activities 18,950,620
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Loan from General Fund 803,962
Loan payments to General Fund (719,868)
Net cash provided by noncapital financing activities 84,094
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Acquisition of capital assets (171,655)
Net cash used for capital and related financing activities (171,655)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest and dividends 3,016,681
Net cash provided by investing activities 3,016,681
Net increase in cash and cash equivalents 21,879,740
Cash and cash equivalents, July 1, 2008 105,081,554
Cash and cash equivalents, June 30, 2009 $ 126,961,294
RECONCILIATION OF OPERATING INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Operating income $ 12,444,972
Adjustments to reconcile operating income to net cash
provided by operating activities
Depreciation expense 941,573
Liability for reported and incurred but not reported claims – noncurrent 6,673,757
Changes in assets [(increase)/decrease] and liabilities [increase/(decrease)]:
Accounts receivable 915,876
Inventories 42,648
Prepaids 228,190
Accounts payable (1,843,902)
Employee compensation payable (85,303)
Accrued liabilities 998,490
Liability for reported and incurred but not reported claims - current (1,365,681)
Net cash provided by operating activities $ 18,950,620
SCHEDULE OF NONCASH INVESTING, CAPITAL AND NONCAPITAL
FINANCING ACTIVITIES:
Accumulated depreciation from disposed capital assets $ 151,244
Machinery and equipment disposed (152,872)
Loss on disposal of capital assets 1,628
Capital assets transferred to governmental activities (46,508)
Transfer out capital assets to governmental activities 46,508
The notes to the financial statements are an integral part of this statement.
31
Maricopa County
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2009
32
Investment Agency
Trust Fund Fund
Assets
Cash in bank and on hand $ $ 37,673,530
Cash and investments held by County Treasurer 2,224,476,594
Accrued interest receivable 4,355,412
Total assets 2,228,832,006 $ 37,673,530
Liabilities
Deposits held for other parties $ 37,673,530
Total liabilities $ 37,673,530
Net Assets
Held in trust for investment participants $ 2,228,832,006
The notes to the financial statements are an integral part of this statement.
Maricopa County
Statement of Changes in Fiduciary Net Assets
Fiduciary Funds
For the Fiscal Year Ended June 30, 2009
33
Investment
Trust Fund
Additions:
Contributions from participants $ 14,302,874,486
Investment income:
Interest income 49,459,823
Net decrease in fair value of investments (7,957,801)
Net investment earnings 41,502,022
Total additions 14,344,376,508
Deductions:
Distributions to participants 14,634,695,419
Total deductions 14,634,695,419
Change in net assets (290,318,911)
Net assets – beginning 2,519,150,917
Net assets – ending $ 2,228,832,006
The notes to the financial statements are an integral part of this statement.
34
Financial Section
Basic Financial Statements - Notes
Basic Financial Statements - Notes
Maricopa County
Basic Financial Statements – Notes
37
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NOTE 2 REPORTING CHANGES
NOTE 3 BEGINNING BALANCES RESTATED
NOTE 4 RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL
STATEMENTS
NOTE 5 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
NOTE 6 DEPOSITS AND INVESTMENTS
NOTE 7 CONDENSED FINANCIAL STATEMENTS OF COUNTY TREASURER’S
INVESTMENT POOL
NOTE 8 RECEIVABLES
NOTE 9 DUE FROM OTHER GOVERNMENTAL UNITS
NOTE 10 INTERGOVERNMENTAL LOANS
NOTE 11 CAPITAL ASSETS
NOTE 12 CONSTRUCTION AND OTHER SIGNIFICANT COMMITMENTS
NOTE 13 LONG-TERM LIABILITIES
NOTE 14 MUNICIPAL LANDFILL CLOSURE AND POSTCLOSURE CARE COSTS
NOTE 15 MUNICIPAL REVOLVING LINE OF CREDIT AND IRREVOCABLE STANDBY
LETTER OF CREDIT
NOTE 16 OPERATING LEASES
NOTE 17 RISK MANAGEMENT
NOTE 18 POLLUTION REMEDIATION OBLIGATIONS
NOTE 19 PENSIONS AND OTHER POSTEMPLOYEMENT BENEFITS
NOTE 20 INTERFUND BALANCES AND ACTIVITY
NOTE 21 SUBSEQUENT EVENTS
Notes to the Financial Statements
(Continued)
38
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of Maricopa County conform to U.S. generally accepted accounting principles
applicable to governmental units adopted by the Governmental Accounting Standards Board (GASB).
A. Reporting Entity
Maricopa County is a general purpose local government governed by a separately elected board of
five county supervisors. The accompanying financial statements present the activities of the County
(the primary government) and its component units.
Component units are legally separate entities for which the County is considered to be financially
accountable. Blended component units, although legally separate entities, are in substance part of
the County’s operations. Therefore, data from these units is combined with data of the primary
government. Discretely presented component units, on the other hand, are reported in a separate
column in the government-wide financial statements to emphasize they are legally separate from the
County. Each blended and discretely presented component unit discussed below has a June 30
year-end.
The reporting entity is comprised of the primary government, Maricopa County Flood Control District,
Maricopa County Library District, Maricopa County Public Finance Corporation, Maricopa County
Special Assessment Districts, Maricopa County Stadium District, Maricopa County Street Lighting
Districts, Housing Authority of Maricopa County, and Phoenix Regional Sports Commission.
The blended component units are as follows:
Maricopa County Flood Control District
The Maricopa County Flood Control District is a legally separate, tax-levying entity pursuant to A.R.S.
§48-3602 that provides flood control facilities and regulates floodplains and drainage to prevent
flooding of property in Maricopa County. As the Maricopa County Board of Supervisors serves as the
Board of Directors of the Flood Control District, it is able to significantly influence the programs,
projects, activities, or level of services provided by the District; therefore, the District is considered a
blended component unit of the County.
Maricopa County Library District
The Maricopa County Library District is a legally separate, tax-levying entity pursuant to A.R.S. §48-
3901 that provides and maintains library services for the residents of Maricopa County. As the
Maricopa County Board of Supervisors serves as the Board of Directors of the Library District, it is
able to significantly influence the programs, projects, activities, or level of services provided by the
District; therefore, the District is considered a blended component unit of the County.
Maricopa County Public Finance Corporation
Maricopa County Public Finance Corporation is a nonprofit corporation created by the Maricopa
County Board of Supervisors that exists primarily to assist the County in the acquisition, construction,
and improvement of County facilities, including real property and personal property. The Board of
Directors of the Public Finance Corporation is subject to the approval of the County Board of
Supervisors and the corporation exists primarily for the benefit of the County; therefore, the
Corporation is considered a blended component unit of the County. The Corporation has issued
lease revenue bonds, certificates of participation, and lease trust certificates that evidence undivided
proportionate interests in rent payments to be made under the lease agreements, with an option to
purchase, between Maricopa County and the Corporation. Since this debt is in substance the
County’s obligation, these liabilities and resulting assets are reported on the County’s financial
statements.
Notes to the Financial Statements
(Continued)
39
Maricopa County Special Assessment Districts
The Special Assessment Districts are legally separate entities that provide improvements to various
properties within the County. As the Maricopa County Board of Supervisors serves as the Board of
Directors of the Maricopa County Special Assessment Districts, it is able to significantly influence the
activities or level of services provided by the Districts; therefore, the Districts are considered a
blended component unit of the County.
Maricopa County Stadium District
The Maricopa County Stadium District is a legally separate entity pursuant to A.R.S. §48-4202 that
provides regional leadership and fiscal resources to assure the presence of Major League Baseball in
Maricopa County. As the Maricopa County Board of Supervisors serves as the Board of Directors of
the Stadium District, it is able to significantly influence the programs, projects, activities, or level of
services provided by the District; therefore, the District is considered a blended component unit of the
County.
Complete financial statements for the Maricopa County Stadium District may be obtained at the
entity’s administrative office listed below:
Maricopa County Stadium District
401 East Jefferson
Phoenix, Arizona 85004
www.maricopa.gov/stadiumdistrict
Maricopa County Street Lighting Districts
The Street Lighting Districts are legally separate entities that provide street lighting in areas of the
County that are not under local city jurisdictions. As the Maricopa County Board of Supervisors
serves as the Board of Directors of the Maricopa County Street Lighting Districts, the Districts are
considered a blended component unit of the County.
The discretely presented component units are as follows:
Housing Authority of Maricopa County
The Housing Authority is a legally separate entity pursuant to A.R.S. §36-1404 that provides efficient
and affordable rental housing to low-income households of Maricopa County. Each member of the
Maricopa County Board of Supervisors appoints one member to the Board of Commissioners while
the sixth member shall be based on the recommendation of the County Manager and the seventh
member shall be appointed by a majority vote of the Maricopa County Board of Supervisors. The
County does not have the ability to impose its will on the Housing Authority. The Housing Authority is
a discretely presented component unit, as the Maricopa County Board of Supervisors may dissolve
the Authority at any time at the sole discretion of the County and, therefore, a financial benefit or
burden exists.
Complete financial statements for the Housing Authority of Maricopa County may be obtained at the
entity’s administrative office listed below:
Housing Authority of Maricopa County
2024 North Seventh Street, Suite 201
Phoenix, Arizona 85006
www.maricopahousing.org
Phoenix Regional Sports Commission
The Phoenix Regional Sports Commission (Sports Commission) was a legally separate entity
pursuant to A.R.S. §11-701. The Sports Commission provided the citizens of Maricopa County with a
variety of sporting experiences by assisting in the promotion and acquisition of events, teams, and
youth programs. The Sports Commission’s governing board consisted of fifteen members, of whom
Notes to the Financial Statements
(Continued)
40
the Maricopa County Board of Supervisors appointed five members, a state university president
appointed one member, and the remaining nine members were appointed by the seven most
populous cities’ mayors within the County. The County did not have the ability to impose its will on
the Sports Commission. The Sports Commission was a discretely presented component unit, as the
Maricopa County Board of Supervisors could terminate the Sports Commission at any time at the sole
discretion of the County and, therefore, a financial benefit or burden existed.
On May 6, 2009, the County Board of Supervisors conducted a public hearing and voted to terminate
the Sports Commission effective June 30, 2009. Upon termination, the County assumed all
outstanding liabilities and obligations of the Sports Commission and acquired all of their assets. On
June 30, 2009, the Sports Commission was terminated and ceased operations.
Related Organization
The Industrial Development Authority of Maricopa County (Authority) is a legally separate entity that
was created to assist in the financing of commercial and industrial enterprises; safe, sanitary, and
affordable housing; and healthcare facilities. The Authority fulfills its function through the issuance of
tax exempt or taxable revenue bonds. The County Board of Supervisors appoints the Authority’s
Board of Directors. The Authority’s operations are completely separate from the County and the
County is not financially accountable for the Authority. Therefore, the financial activities of the
Authority have not been included in the accompanying financial statements.
B. Basis of Presentation
The basic financial statements include both government-wide statements and fund financial
statements. The government-wide statements focus on the County as a whole, while the fund
financial statements focus on major funds. Each presentation provides valuable information that can
be analyzed and compared between years and between governments to enhance the usefulness of
the information.
Government-wide financial 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 and between the County and its discretely presented component units. 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. The County has no
business-type activities.
The statement of activities presents a comparison between direct expenses and program revenues
for each function of the County’s governmental 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 allocates indirect expenses to programs or functions. Program revenues
include:
• charges to customers or applicants for goods, services, or privileges provided,
• operating grants and contributions, and
• capital grants and contributions, including special assessments.
Revenues that are not classified as program revenues, including internally dedicated resources,
unrestricted grant revenues, and all County levied taxes or taxes not levied by the County that are not
restricted to a specific program, 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 doing so would distort the direct costs and program
revenues reported by the departments concerned.
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,
Notes to the Financial Statements
(Continued)
41
and fiduciary fund categories. The emphasis of fund financial statements is on major governmental
fund, each displayed in a separate column. All remaining governmental funds are aggregated and
reported as nonmajor funds. Internal service and fiduciary funds are aggregated and reported by
fund type. The County has no enterprise funds.
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 reported as operating revenues. Nonoperating revenues, such
as investment income, result from transactions in which the parties do not exchange equal values.
Operating expenses include the cost of services, administrative expenses, and depreciation on
capital assets. Other expenses, such as interest expense, are considered to be nonoperating
expenses.
The County reports the following major governmental funds:
The General Fund – is the County’s primary operating fund. It accounts for all financial resources of
the general government, except those required to be accounted for in another fund.
The Detention Operations Fund – was established under the authority of propositions 400 and 401,
which were passed in the General Election of November 3, 1998. These propositions authorized a
temporary 1/5 of one-cent sales tax to be used for the construction and operation of adult and juvenile
detention facilities. On November 5, 2002, the voters approved the extension of the 1/5 of one-cent
sales tax in the General Election. The extension begins in the month following the expiration of the
original tax and may continue for not more than twenty years after the date the tax collection begins.
The Detention Operations Fund accounts for the jail tax revenue and transfers from the General Fund
for maintenance of effort and jail operations expenditures. The Detention Operations Fund transfers
monies to the Detention Capital Projects Fund for the construction of the jail facilities. The amount to
be transferred to the Detention Capital Projects Fund for any given year is determined through the
budget planning process.
The County Improvement Debt Fund – accounts for the debt service on the Lease Revenue Bonds,
Series 2001; the Lease Revenue Refunding Bonds, Series 2003; Lease Revenue Bonds, Series
2007A; Lease Revenue Refunding Bonds, Series 2007B; Lease Trust Certificates, Series 2004; and
other long-term obligations.
County Improvement Fund – Accounts for capital projects funded through the issuance of long-term
obligations.
The General Fund County Improvements Fund – was established to fund current and future capital
projects. Fund assets may be used to pay directly for capital projects or may be appropriated by the
Board of Supervisors for debt service. None of the funds has been pledged for debt service, and fund
assets may be transferred by the Board of Supervisors at any time for any other County purpose.
The County also reports the following fund types:
The internal service funds – account for automotive maintenance and service, telecommunications
services, printing and duplicating services, insurance services, self-insured employee benefits, and
warehouse services provided to County departments or to other governments on a cost
reimbursement basis.
The investment trust fund – accounts for pooled assets held and invested by the County Treasurer on
behalf of other governmental entities.
The agency fund – accounts for assets held by the County as an agent for other governments and
individuals.
Notes to the Financial Statements
(Continued)
42
C. Basis of Accounting
The government-wide, proprietary fund, and fiduciary fund financial statements are presented using
the economic resources measurement focus, with exception of the agency fund, and the accrual
basis of accounting. The agency fund is custodial in nature and does not have a measurement focus.
Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred,
regardless of when the related cash flows take place. Property taxes are recognized as revenue in
the year for which they are levied. Grants and donations are recognized as revenue as soon as all
eligibility requirements imposed by the provider have been met.
Governmental funds in the fund financial statements are reported using the current financial
resources measurement focus and the modified accrual basis of accounting. Under this method,
revenues are recognized when they become both measurable and available. The County considers
all revenues reported in the governmental funds to be available if the revenues are collected within 60
days after year-end. The County’s major revenue sources that are susceptible to accrual are
property taxes, intergovernmental, charges for services, and investment earnings. Expenditures are
recorded when the related fund liability is incurred, except for principal and interest on general long-term
debt, claims and judgments, and compensated absences, which are recognized as expenditures
to the extent they are due and payable. General capital asset acquisitions are reported as
expenditures in governmental funds. Loan proceeds and acquisitions under capital lease agreements
are reported as other financing sources.
Under the terms of grant agreements, the County funds certain programs by a combination of grants
and general revenues. Therefore, when program expenses are incurred, there are both restricted
and unrestricted net assets available to finance the program. The County applies grant resources to
such programs before using general revenues.
The County’s internal service funds and the discretely presented component units 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 Housing Authority, one of the discretely presented component units, has also
chosen to follow FASB Statements and Interpretations issued after November 30, 1989, except for
those that conflict with GASB pronouncements
D. Cash and Investments
For purposes of its statements of cash flows, the County considers only those highly liquid
investments with a maturity of three months or less when purchased to be cash equivalents.
Nonparticipating interest-earning investment contracts are stated at cost. Money market investments
and participating interest-earning investment contracts with a remaining maturity of one year or less
at time of purchase are stated at amortized cost. All other investments are stated at fair value.
E. Inventories
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
weighted-average cost.
Inventories of government-wide and the internal service funds financial statements are recorded as
assets when purchased and expensed when consumed. The amounts shown on the statement of net
assets for government-wide and the internal service funds are valued at cost using first-in, first-out
and the moving average method, respectively.
Notes to the Financial Statements
(Continued)
43
F. Property Tax Calendar
The County levies real property taxes and commercial 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.
During the year, the County also levies mobile home personal property taxes that are due the second
Monday of the month following receipt of the tax notice and become delinquent 30 days later.
A lien assessed against real and personal property attaches on the first day of January preceding
assessment and levy.
G. Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads,
bridges, sidewalks, and similar items), are reported in the government-wide statements and the
proprietary funds. Capital assets are defined as assets with an initial, individual cost of more than
$5,000. Such assets are recorded at historical cost or estimated historical cost if purchased or
constructed. Donated capital assets are recorded at estimated fair value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend assets’ lives are not capitalized.
Property, plant, and equipment of the primary government and the discretely presented component
units are depreciated using the straight-line method over the following estimated useful lives:
Estimated Useful Life (In Years)
Type of Assets Primary Government
Discretely Presented
Component Units
Buildings and improvements 20 - 50 20 - 30
Infrastructure 25 - 50 N/A
Autos and trucks 3 - 10 7
Other equipment 3 - 20 5 - 7
All infrastructure assets are reported on the government-wide financial statements. Infrastructure
maintained by the County Department of Transportation consists of roadways, bridges and related
assets. These assets are not depreciated as they are reported using the modified approach. Under
the modified approach, the County’s roadway and bridge systems are being preserved at a specified
condition level established by the County. For information on the modified approach, see Required
Supplementary Information – Modified Approach for Infrastructure Assets. The Flood Control District
accounts for the County’s remaining infrastructure assets consisting of drainage systems, dams, flood
channels and canals.
For the Department of Transportation’s infrastructure assets owned prior to fiscal year 2002, the
County estimated their historical cost. The fair market value for right-of-way assets was estimated
based on current regional land acquisitions and deflated by the trended growth rate, as determined by
the County assessed valuation from the State of Arizona Department of Revenue Abstract of the
Assessment Roll for vacant land, agriculture and government property not including legally exempt
land. The fair market value for roadway system assets was estimated based on current construction
costs and deflated using the Price Trends for Federal-Aid Highway Construction, published by the
U.S. Department of Transportation, Federal Highway Administration, Office of Program Administration
and Office of Infrastructure.
Flood Control District infrastructure assets are accounted for using the straight-line depreciation
method with a useful life between 25 and 50 years. For infrastructure assets owned prior to fiscal
year 2002, the County used internal records, maintained by the department, to estimate Flood
Control’s historical cost for these assets.
Notes to the Financial Statements
(Continued)
44
H. Investment Income
Investment income is composed of interest, dividends, and net changes in the fair value of applicable
investments.
I. Compensated Absences
Compensated absences consist of vacation leave and a calculated amount of sick leave earned by
employees based on services already rendered. Employees may accumulate up to 240 hours of
vacation leave, but any vacation hours in excess of the maximum amount that are unused at calendar
year-end convert to sick leave. Upon termination of employment, all unused vacation benefits are
paid to employees. Accordingly, vacation benefits are accrued as a liability in the financial
statements.
Employees may accumulate an unlimited number of sick leave hours. Generally, sick leave benefits
provide for ordinary sick pay and are cumulative but are forfeited upon termination of employment.
Because sick leave benefits do not vest with employees, a liability for sick leave benefits is not
accrued in the financial statements. However, upon retirement, County employees with accumulated
sick leave in excess of 1,000 hours are entitled to a $10,000 nontaxable investment in a Post
Employment Health Plan (PEHP) established pursuant to Internal Revenue Code §501(c)(9). In
addition, in March 2009, the Board established the Post Employment Health Plan Enhancement
Program as a retirement incentive. Under the PEHP Enhancement Program, employees with
accumulated sick leave are entitled to receive a one-time, lump-sum, non-taxable contribution up to
$30,000. The contribution amount is based on the employee’s accumulated sick leave at their
separation of service date. To be eligible for this Enhancement retirement incentive, an employee
must have retired and separated from service on or before May 31, 2009. The obligations vested at
June 30, 2009, under these policies are accrued as a liability.
Compensated absences are substantially paid within one year from fiscal year-end and, therefore,
are reported as a current liability on the government-wide financial statements.
NOTE 2 – REPORTING CHANGES
Beginning in fiscal year 2009, the County established the Library District Capital Improvement (capital
project fund) and the Small School Service (special revenue fund) Funds. Both are nonmajor
governmental funds. In prior years, the Small School Service Fund was reported with the School Grants
Fund (special revenue fund).
NOTE 3 – BEGINNING BALANCES RESTATED
On July 1, 2008, the County restated governmental activities capital asset balances by $4,646,460 for
corrections of prior periods of Transportation infrastructure related assets. These corrections were a
result of assets that were incorrectly deleted in prior periods of $16,944,978, assets that should have
been deleted in prior periods of ($17,599,811), assets that were owned by the County but unrecorded of
$9,629,619, and expenses that were incorrectly capitalized of ($4,328,326). This restatement was
comprised of adjustments to land, infrastructure, and construction in progress of $42,602,817,
($33,611,481), and ($4,344,876), respectively.
Governmental
Activities
Net assets reported as of June 30, 2008 $ 3,841,193,668
Add: Infrastructure asset corrections 4,646,460
Net assets as of July 1, 2008, as restated $ 3,845,840,128
Notes to the Financial Statements
(Continued)
45
NOTE 4 – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
The Governmental Funds Balance Sheet includes the reconciliation between fund balances – total
governmental funds and net assets – Governmental Activities as reported in the government-wide
Statement of Net Assets. The details of this reconciliation follow:
Fund balances – total governmental funds $ 1,424,767,159
Capital assets used in governmental activities are not financial resources and therefore,
are not reported in the funds.
Land 614,764,012
Buildings and improvements 1,445,123,675
Machinery and equipment 273,638,123
Infrastructure 880,477,048
Construction in progress 230,145,945
Accumulated depreciation (561,216,937)
Net governmental funds capital assets at June 30, 2009 2,882,931,866
Some receivables are not available to pay for current period expenditures and therefore,
are deferred in the funds.
Deferred revenue for property taxes receivable at June 30, 2009 21,019,813
Deferred revenue for grant revenues receivable at June 30, 2009 5,442,902
Deferred revenue for contributions receivable at June 30, 2009 2,133,600
28,596,315
Internal service funds are used by management to charge the costs of equipment services,
telecommunications, reprographics, risk management, employee benefits, and the sheriff
warehouse to individual funds. The assets and liabilities of the internal service funds are
included in governmental activities in the Statement of Net Assets. 52,274,956
Some long-term liabilities and compensated absences are not due and payable shortly
after June 30, 2009, and therefore, are not reported in the funds.
Noncurrent lease revenue bonds due in more than one year at June 30, 2009 (153,285,000)
Certificates of participation due in more than one year at June 30, 2009 (3,385,000)
Stadium District revenue bonds payable at June 30, 2009 (41,165,000)
Stadium District loan payable at June 30, 2009 (10,465,338)
Special assessment debt with governmental commitment payable at June 30, 2009 (176,778)
Deferred issuance cost at June 30, 2009 4,123,078
Bond premium payable at June 30, 2009 (5,426,862)
Governmental funds capital leases payable at June 30, 2009 (51,135,339)
Claims and judgments at June 30, 2009 (6,672,374)
Governmental funds compensated absences payable at June 30, 2009 (57,575,409)
Liability for closure and postclosure costs at June 30, 2009 (17,352,673)
Accrued interest payable at June 30, 2009 (210,287)
(342,726,982)
Net assets of governmental activities $ 4,045,843,314
Notes to the Financial Statements
(Continued)
46
The governmental fund reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
Balances is a reconciliation between net changes in fund balances – total governmental funds and
changes in net assets of governmental activities as reported in the government-wide Statement of
Activities. The details of this reconciliation follow:
Net change in fund balances – total governmental funds $ 24,118,800
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.
This is the amount by which capital outlays exceeded depreciation in the current period.
Governmental funds capital outlay 194,918,743
Government-wide depreciation expense for the year ended June 30, 2009 (64,807,114)
Add: Internal service funds depreciation expense for the year ended June 30, 2009 941,573
131,053,202
The net effect of various miscellaneous transactions involving capital assets is to increase net assets.
Net value of disposed capital assets for the year ended June 30, 2009 (97,288,694)
Adjustment for the net value of assets capitalized in the current year but acquired in prior years 16,759
Donations of capital assets 111,617,835
14,345,900
Revenues in the Statement of Activities that do not provide current financial resources are not reported
as revenues in the funds.
Collections of deferred revenues plus current-year grant revenues exceeding amounts reported as
earned for the year ended June 30, 2009 (2,196,316)
Property taxes earned during the year ended June 30, 2009 5,484,030
Collections of deferred contributions revenues exceeding amounts reported as earned for the year
ended June 30, 2009 (356,400)
2,931,314
The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to
governmental funds, while the repayment of the principal of long-term debt consumes the current
financial resources of governmental funds. Neither transaction, however, has any effect on net assets.
Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items
when debt is first issued, whereas these amounts are deferred and amortized in the Statement of
Activities. This amount is the net effect of these differences in the treatment of long-term debt and
related items.
Principal payments on bonds 14,156,545
Principal payments on lease trust certificates 4,612,000
Proceeds from capital leases (20,121,941)
Proceeds from special assessment debt (145,969)
Net decrease in bond premium 905,486
Principal payments on certificates of participation 465,000
Principal payments on capital leases 19,080,246
Net decrease in deferred issuance costs (707,115)
Accrued interest payable on long-term debt 16,348
18,260,600
Some expenses reported in the Statement of Activities do not require the use of current financial
resources and therefore, are not reported as expenditures in governmental funds.
Net decrease in employee compensation payable 298,905
Decrease in reserve for inventories (2,164,102)
Net increase in claims and judgments (860,504)
Net increase in liability for closure and postclosure costs (3,030,470)
(5,756,171)
Internal service funds are used by management to charge the costs of equipment services,
telecommunications, reprographics, risk management, employee benefits, and the sheriff warehouse to
individual funds. The net revenue of internal service funds is reported with governmental activities. 15,049,541
Change in net assets of governmental activities $ 200,003,186
Notes to the Financial Statements
(Continued)
47
NOTE 5 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
At June 30, 2009, the following funds reported deficits in fund balances or net assets.
FUND DEFICIT
Governmental Funds:
Adult Probation Grants $ 46,048
Air Quality Grants 162,154
Correctional Health Grants 6,587
County Attorney Grants 19,791
Emergency Management 57,851
Human Services Grants 1,524,217
Juvenile Probation Grants 23,795
Public Health 545,642
School Grants 35,272
Sheriff Grants 1,448,590
Sheriff RICO 27,933
Transportation Grants 506,586
Trial Court Grants 25,995
Proprietary Funds:
Risk Management $ 6,854,179
The deficits in fund balances or net assets for Adult Probation Grants, Air Quality Grants, Correctional
Health Grants, County Attorney Grants, Emergency Management, Human Services Grants, Juvenile
Probation Grants, Public Health, School Grants, Sheriff Grants, Transportation Grants, and Trial Court
Grants Funds were attributed to the deferring of certain grant revenues. The County accrues grant
revenue received within 60 days after year-end, as it is availab