Operating Loss and Cash Deficit
Continue to Grow
The Medical Center is more dependent
on the County to subsidize its operations
since there has been a significant
increase in both its operating losses and
cash deficits as described below.
• The fiscal year 2002 operating loss has
increased by 101 percent since last
year and 135 percent since fiscal year
1999, as shown in the figure on the
right. Contributing factors include: a
$14 million patient-related expense
increase due to a larger uninsured
patient population; a loss of
disproportionate share revenues
totaling $13.1 million in fiscal year 2001
due to a change in state laws; and a
$3.6 million increase in depreciation
expense due to additional purchased
equipment and newly-improved and
constructed capital assets.
• Over the past decade, the Medical
Center operated with cash deficits
ranging from $30.9 million to $91.3
million. At June 30, 2002, a $57 million
cash deficit existed despite $79.4
million in subsidies being received
from the County’s General Fund during
fiscal year 2002. The $79.4 million in
cash subsidies received during fiscal
year 2002 was $38.8 million more than
cash subsidies received in the prior
fiscal year.
2002
Year Ended June 30, 2002
Maricopa County
Subject
Maricopa County issues a
Comprehensive Annual
Financial Report. The
County is responsible for
preparing financial
statements, maintaining
strong internal controls,
and demonstrating
accountablility for its use
of public monies. As the
auditors, our job is to
determine whether the
County has met its
responsibilities.
Our Conclusion
The information in the
County’s financial
statements is fairly stated
in all material respects
and the financial
statements can be relied
on. The financial
statements include data
for the Maricopa County
Stadium District. The
District, which had over
$367 million in assets and
$68 million in long-term
debt, was audited by a
local public accounting
firm. Our opinion is based,
in part, on the work of
those auditors.
REPORT
HIGHLIGHTS
FINANCIAL STATEMENT AUDIT
Medical Center Financial Condition
Continues to Worsen
For financial statement presentation, this
cash deficit is displayed as amounts due
to other funds for the Medical Center to
represent a temporary loan from the
County’s General Fund.
As a result of these increased operating
losses and cash deficits, the County’s
General Fund more heavily subsidizes
the Medical Center’s operations. The
Medical Center cannot continue
operations without these increased
subsidies from the County’s General
Fund. As a result of these subsidies, less
General Fund money is available for
other County operations.
$(17.7) $(18.8) $(20.7)
$(41.6)
$()
$(10)
$(20)
$(30)
$(40)
$(50)
1999 2000 2001 2002
Fiscal Year
In Millions
Operating Losses
page2
The information presented in the Maricopa County
Comprehensive Annual Financial Report for the
year ended June 30, 2002, follows the new
reporting model specified by the Governmental
Accounting Standards Board. The new accounting
standards required the County to implement the
new reporting model this year.
The new reporting model’s objective is to enhance
the understandability and usefulness of
government financial reports to the citizenry,
legislative and oversight bodies, and investors and
creditors.
The most important changes resulting from this
reporting model’s implementation include:
New government-wide financial statements that
focus on the overall government are presented, in
addition to traditional fund-based financial
statements;
Separate financial statements are presented for the
County’s largest funds, rather than by aggregate
fund types, such as special revenue, capital
projects, and debt service funds;
The value of the County’s infrastructure, such as
roadways, is reported in the government-wide
financial statements;
Depreciation expense is reported for all capital
assets the County owns;
Reconcilations are presented between the
government-wide financial statements, which focus
on the economic changes in total resources, and
the fund-based financial statements, which focus
on the financial changes in current spendable
resources; and
Management’s Discussion and Analysis, a new
document in which the County provides an
introduction and analytical overview of the County’s
financial activities is presented.
The County Implemented a New
Reporting Model
The management’s discussion and analysis,
government-wide financial statements, and
fund-based financial statements provides
three different views of the County’s financial
resources and results of the year’s financial
activities.
The tables below present a summarized
version of the County’s government-wide
Statement of Net Assets and Statement of
Activities reported in the current year CAFR for
the first time.
Statement of Net Assets
June 30, 2002
Total Governmental
and Business-type
Activities
Current and other assets $1,011,179,281
Capital assets 1,645,429,990
Total assets 2,656,609,271
Current and other liabilities 313,097,722
Long-term liabilities 412,677,406
Total liabilities 725,775,128
Net assets
Invested in capital assets, net of
related debt
1,340,288,321
Restricted net assets 375,721,923
Unrestricted net assets 214,823,899
Total net assets $1,930,834,143
Statement of Activities
For the Year Ended June 30, 2002
Total Governmental
and Business-type
Activities
Program revenues:
Governmental activities $ 347,528,303
Business-type activities 714,881,810
General revenues:
Governmental activities 1,006,917,364
Business-type activities 8,331,546
Total revenues 2,077,659,023
Expenses:
Governmental-activities 1,025,816,211
Business-type activities 742,785,776
Total expenses 1,768,601,987
Loss on disposal of capital assets (8,959,314)
Change in net assets 300,097,722
Net assets—beginning 1,630,736,421
Net assets—ending $1,930,834,143
Sales Taxes Collected for Jail Facilities Construction
and Maintenance
The County Reports Infrastructure Assets
for the First Time
page3
The government-wide financial statements
report certain infrastructure assets for the first
time as a result of implementing a new
reporting model. The County’s infrastructure
assets include roads, traffic signals, bridges,
dams, and drainage systems. The
Transportation Department and the Flood
Control District maintain the County’s
infrastructure assets.
The new reporting standards require that the
current fiscal year capital expenditures for
infrastructure assets be reported as capital
assets on the financial statements. Relative to
fiscal year 2002, the County reported
infrastructure assets of $64.9 million on its
government-wide financial statements, $1.9
million in infrastructure, $44.2 million in
construction in progress, and $18.8 million in
related land costs.
The County has collected a one-fifth cent
sales tax since January 1, 1999, for the
construction and maintenance of adult and
juvenile jail facilities. The figure to the right
shows selected Jail Facilities activities from
the inception of the sales tax through June 30,
2002. In the November 5, 2002 General
Election, voters approved Proposition 411,
which extends the existing sales tax until the
year 2027.
Reporting standards also require that the
County report all infrastructure assets
acquired or constructed subsequent to July
1980 on the financial statements by fiscal year
2006. The County is reporting all
Transportation Department infrastructure
assets and related land costs pertaining to
prior years’ activity, totaling $490.2 million,
$355.1 million in infrastructure, $63.9 million in
construction in progress, and $71.2 million in
related land costs on the current year financial
statements. The Flood Control District will
report infrastructure assets pertaining to prior
years in future County financial statements to
meet reporting requirements.
$329.4
$225.9
$175.9
$0
$50
$100
$150
$200
$250
$300
$350
Sales Tax
Collected
Jail Projects
Expenditures
Future Contracted
Construction
Expenditures
In Millions
Jail Facilities Selected Activities
For the Period January 1999 through June 2002
TO OBTAIN
MORE INFORMATION
Maricopa County
REPORT
HIGHLIGHTS
FINANCIAL STATEMENT AUDIT
Year Ended June 30, 2002
page 4
A copy of the full report
can be obtained by calling
the County at
(602) 506-3561
or by visiting
our Web site at:
www.auditorgen.state.az.us
Contact person for
this report is:
Dennis Levine
(602) 553-0333
