Comprehensive Annual
Financial Report
Pima County, Arizona
For the Fiscal Year Ended June 30, 2012
2012
PIMA COUNTY, ARIZONA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
JUNE 30, 2012
BOARD OF SUPERVISORS
Ramón Valadez
Chair
District #2
Sharon Bronson
Vice Chair
District #3
Ann Day
District #1
Ray Carroll
District #4
Richard Elías
District #5
COUNTY ADMINISTRATOR
C. H. Huckelberry
Prepared by the Department of Finance and Risk Management
Tom Burke, Director
Michelle Campagne, Deputy Director Ellen Moulton, Deputy Director
Paul Guerrero, CPA, Division Manager
Financial Control & Reporting
Supervisors
Emilia Eveningred
Marilyn Hutzler
Pete Rodriguez
Accountants
Linda Baldazo
Leticia Brumbaugh
Leslie Butler
Sabrena Corwin
Brenda DeBoo-Nicely
Ted Garza
Linda House
Jean Lee, CPA
Sheri Morgan
Lorraine Nuñez
Janet Peete
Blanca Rossetti
Mary Scanlan
Phil Schroeck
Jennifer Serrano
Ann Westmoreland
Exhibit Page
I. INTRODUCTORY SECTION
Letter of Transmittal 1 - 6
Certificate of Achievement for Excellence in Financial Reporting 7
Organizational Chart 8
II. FINANCIAL SECTION
Independent Auditors' Report 9 - 10
A. MANAGEMENT'S DISCUSSION AND ANALYSIS
(required supplementary information) 11 - 29
B. BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement of Net Position A-1 31
Statement of Activities A-2 32 - 33
Governmental Fund Financial Statements (Major and Other)
Balance Sheet - Governmental Funds A-3 34
Reconciliation of the Balance Sheet of Governmental Funds to the
Statement of Net Position A-4 35
Statement of Revenues, Expenditures and Changes in
Fund Balances - Governmental Funds A-5 36
Reconciliation of the Statement of Revenues, Expenditures
and Changes in Fund Balances of Governmental Funds to the
Statement of Activities A-6 37
Proprietary Fund Financial Statements (Major and Other)
Statement of Net Position - Proprietary Funds A-7 38
Statement of Revenues, Expenses and Changes in Fund Net
Position - Proprietary Funds A-8 39
Statement of Cash Flows - Proprietary Funds A-9 40 - 41
Fiduciary Fund Financial Statements
Statement of Fiduciary Net Position - Fiduciary Funds A-10 42
Statement of Changes in Fiduciary Net Position - Fiduciary Funds A-11 43
Component Unit Financial Statements
Combining Statement of Net Position A-12 44
Combining Statement of Activities A-13 45
TABLE OF CONTENTS
PIMA COUNTY, ARIZONA
Comprehensive Annual Financial Report
For the Year Ended June 30, 2012
Exhibit Page
Notes to Financial Statements
Note 1: Summary of significant accounting policies 46 - 53
Note 2: Fund balance classifications 54
Note 3: Cash and investments 55 - 58
Note 4: Due from other governments 59
Note 5: Capital assets 59 - 61
Note 6: Claims, judgments and risk management 62 - 63
Note 7: Long-term liabilities 64 - 71
Note 8: Landfill liabilities 72
Note 9: Pension and other post employment benefits 72 - 78
Note 10: Interfund transactions 79
Note 11: Construction and other significant commitments 80
Note 12: Subsequent events 81
C. REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual - General Fund B-1 83
Notes to Schedule of Revenues, Expenditures and Changes in Fund
Balance - Budget and Actual - General Fund 84
Schedule of Retirement Plans' Funding Progress B-2 85
D. COMBINING STATEMENTS AND OTHER SCHEDULES
Other (Nonmajor) Governmental Funds
Combining Balance Sheet - Nonmajor Governmental Funds C-1 88 - 89
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances - Nonmajor Governmental Funds C-2 90 - 91
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual - Other Governmental Funds
Capital Projects Fund C-3 93
Debt Service Fund C-4 94
Transportation - Special Revenue Fund C-5 95
Health - Special Revenue Fund C-6 96
Regional Flood Control - Special Revenue Fund C-7 97
Other - Special Revenue Fund C-8 98
Other Grants - Special Revenue Fund C-9 99
School Reserve - Special Revenue Fund C-10 100
Environmental Quality - Special Revenue Fund C-11 101
Special Districts - Special Revenue Fund C-12 102
Solid Waste - Special Revenue Fund C-13 103
Library District - Special Revenue Fund C-14 104
Stadium District - Special Revenue Fund C-15 105
Street Lighting Improvement Districts - Special Revenue Fund C-16 106
Table of Contents (continued)
PIMA COUNTY, ARIZONA
Comprehensive Annual Financial Report
For the Year Ended June 30, 2012
Exhibit Page
Other (Nonmajor) Enterprise Funds
Combining Statement of Position - Nonmajor Enterprise Funds C-17 105
Combining Statement of Revenues, Expenses and Changes in Fund
Net Position - Nonmajor Enterprise Funds C-18 106
Combining Statement of Cash Flows - Nonmajor Enterprise Funds C-19 107 - 108
Internal Service Funds
Combining Statement of Net Position - Internal Service Funds C-20 109
Combining Statement of Revenues, Expenses and Changes in Fund
Net Position - Internal Service Funds C-21 110
Combining Statement of Cash Flows - Internal Service Funds C-22 111 - 112
Fiduciary Funds
Combining Statement of Fiduciary Net Position - Investment
Trust Funds C-23 113
Combining Statement of Changes in Fiduciary Net Position -
Investment Trust Funds C-24 114
Combining Statement of Fiduciary Net Position - Agency Funds C-25 115
Combining Statement of Changes in Fiduciary Net
Position - Agency Funds C-26 116
III. STATISTICAL SECTION
Financial Trends Information D-1 through 4 117 - 121
Net position by component
Changes in net position
Fund balances - governmental funds
Changes in fund balances - governmental funds
Revenue Capacity Information D-5 through 12 123 - 134
Taxable assessed value and estimated actual value of property
Direct and overlapping property tax rates
Direct and overlapping property tax rates - school districts
Principal property taxpayers
Real property tax levies and collections
Assessed, limited and full cash (secondary) value of
taxable property
Comparative net valuations and tax rates
Historical collections - hotel excise tax, car rental
surcharges and recreational vehicle tax
Streets and highways revenues
Table of Contents (continued)
PIMA COUNTY, ARIZONA
Comprehensive Annual Financial Report
For the Year Ended June 30, 2012
Exhibit Page
Debt Capacity Information D-13 through 19 135 - 144
Ratios of outstanding debt by type to personal income and per
capita
Ratio of net general bonded debt to assessed value and net bonded
debt per capita
Ratio of direct and overlapping debt to property values and
per capita
Computation of direct and overlapping governmental activities
debt outstanding
Legal debt margin
Regional Wastewater Reclamation pledged sewer
revenue debt coverage
Transportation revenue bonds - pledged revenue bond coverage
Pledged revenue bond coverage - lease revenue bonds
Lease, lease-purchase and purchase agreements
Ratio of annual debt service expenditures for general bonded debt
to total general expenditures
Demographic and Economic Information D-20 through 26 145 - 152
Demographic and economic statistics
Principal employers
Population and employment
Transportation and real estate
Economic indicators by calendar year
Population statistics
Average annual jail population
Operating Information D-27 through 29 153 - 155
Employees by function
Operating indicators by program
Capital assets and infrastructure by program
Table of Contents (continued)
PIMA COUNTY, ARIZONA
Comprehensive Annual Financial Report
For the Year Ended June 30, 2012
INTRODUCTION
PIMA COUNTY
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2012
INTRODUCTORY SECTION
Letter of Transmittal
Certificate of Achievement for Excellence in Financial Reporting
Organizational Chart
FINANCIAL SECTION
STATISTICAL SECTION
INTRODUCTORY SECTION
The purpose of the Introductory Section in a comprehensive annual financial report (CAFR) is to
familiarize readers with the organizational structure of the government, the nature and scope of the
services it provides, and the specifics of its legal operating environment.
PIMA COUNTY
DEPARTMENT OF FINANCE & RISK MANAGEMENT
130 WEST CONGRESS STREET
TUCSON, ARIZONA 85701-1317
(520) 724-8472 FAX (520) 770-4173
Thomas E. Burke, Director
December 18, 2012
The Honorable Board of Supervisors and Citizens
Pima County, Arizona
We are pleased to submit, in accordance with state statutes, the Comprehensive Annual Financial Report (CAFR) of
Pima County, prepared by the Department of Finance and Risk Management for the fiscal year ended June 30, 2012.
This report presents comprehensive financial and operating information about the County’s activities for the fiscal
year. The information is useful to its property owners, businesses, and other resource providers. Responsibility for
the accuracy, the completeness, and the fairness of the presented data, including all disclosures, rests with the
County.
This report is prepared in accordance with generally accepted accounting principles (GAAP) and in conformance
with standards of financial reporting as established by the Governmental Accounting Standards Board (GASB)
using the guidelines as recommended by the Government Finance Officers Association of the United States and
Canada (GFOA). GAAP requires that management provide a narrative introduction, overview, and analysis to
accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This
letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The MD&A
can be found immediately following the independent auditors’ report.
We believe that the financial information, as presented, is accurate in all material aspects; that it is presented in a
manner designed to openly disclose the financial position and results of operations of the County as measured by the
financial activity of its various funds; and that all disclosures necessary to enable the reader to gain the maximum
understanding of the County’s financial affairs have been included.
The CAFR consists of three sections:
• The INTRODUCTORY section familiarizes the reader with the organizational structure of the County, the
nature and scope of its services, and the specifics of its legal operating environment.
• The FINANCIAL section includes the independent auditors’ report, MD&A, audited basic financial
statements, notes to the statements, and required supplementary information necessary to fairly present the
financial position and results of operations of the County in conformity with GAAP. This section also
includes supporting statements and schedules necessary to produce a CAFR.
• The STATISTICAL section contains comprehensive statistical data on the County’s financial, physical,
economic, and demographic characteristics.
Pima County and County Services
Pima County is situated in the southern part of Arizona with a portion of its southern boundary bordering Mexico.
The County was organized in 1864 under the Arizona Territorial Legislature as one of the State’s four original
counties.
A five-member Board of Supervisors is responsible for implementing the County’s governmental and administrative
affairs. Each member is elected from a designated district to serve a four-year term. The Chair is selected by the
Board from among its members. The Board is also responsible for establishing the policies of the County, which
provide guidance to the various County constitutional officers and departments. The Board also appoints a County
Administrator who is responsible for the general administrative and overall operations of the various departments of
the County.
Pima County includes in its financial statements all funds, agencies, boards, commissions, and authorities for which
the Pima County Board of Supervisors is financially accountable. As the primary government, Pima County is
financially accountable if it appoints a voting majority of an organization’s governing body and either it is able to
impose its will on that organization or a potential exists for that organization to provide specific benefits to, or
impose specific financial burdens on Pima County. Additionally, the primary government may be financially
accountable if an organization is fiscally dependent on the primary government.
Pima County offers a wide variety of governmental services, including:
• Justice and Law Enforcement: Clerk of the Superior Court, Constables, County Attorney, Superior Court,
Juvenile Court, Justice Court, Sheriff, Indigent Defense, and Public Fiduciary
• Medical Services: Institutional Health, Public Health (including Animal Control), and Forensic Science
Center. Pima Health System & Services (including Posada del Sol) has ceased operations as of September
30, 2011; therefore, this CAFR is reporting the final financial activity for the fiscal year
• Community and Economic Development: Superintendent of Schools, Community Development and
Neighborhood Conservation, Economic Development and Tourism, Community Services, Employment and
Training, Community Resources, County Free Library District, Pima County Sports and Tourism
Authority, Southwestern Fair Commission, and Stadium District
• Public Works: Regional Flood Control District, Development Services (including Planning & Zoning),
Transportation, Regional Wastewater Reclamation, Solid Waste, Environmental Quality, Fleet Services,
Graphic Services, Cultural Resources, Natural Resources, Parks and Recreation, and Road and Lighting
Improvement Districts
• County Administration: Board of Supervisors, County Administrator, Assessor, Clerk of the Board,
Elections, Finance and Risk Management, Human Resources, Information Technology, Procurement,
Recorder, Treasurer, and Facilities Management
Pima County is responsible for reporting the financial activities of its component units. These units are either
discretely presented or blended. Although they are separate legal entities, blended component units are substantially
a part of the County’s financial activities and are combined with data for the County.
Blended and discrete component units include:
• Southwestern Fair Commission - Activities of the Commission are reported as a discrete component unit of
the County in the accompanying financial statements
• Pima County Sports and Tourism Authority - Activities of this discrete component unit are reported in the
accompanying financial statements
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• Pima County Stadium District, Regional Flood Control District, Library District, Street Lighting
Improvement Districts. Activities are reported as blended component units in special revenue funds in the
accompanying financial statements
• Special Districts. Pima County includes the financial activities of various road improvement districts in its
financial statements. As of June 30, 2012, the County’s road improvement districts are all inactive and are
reporting residual balances.
The County also has various independently governed schools, irrigation, fire, and a health district and other entities
for which the County is not financially accountable. These entities include the Industrial Development Authority,
Pima Association of Governments, Pima Council on Aging, the Workforce Investment Board, Regional
Transportation Authority, and the Tucson Regional Economic Opportunity, Inc. The financial statements of such
districts and entities are not included in the accompanying financial statements except to reflect amounts held in a
fiduciary capacity by the County Treasurer.
Economic Outlook
In response to the ongoing economic recession, Pima County has responded by implementing various cost savings
measures: modifying operations over the last 4 years through centralization of internal services to increase
efficiency and reduce costs, by reducing the workforce through attrition whenever possible, and by significantly
decreasing discretionary spending. Each year, departments have reduced budgets to accommodate reduced
revenues.
The primary property tax rate remains constant for fiscal year 2012-13 while Preliminary Primary Net Assessed
property values decreased 2.84%, generating a reduction in primary property tax revenues of $8.1 million.
Reductions in the secondary property tax levies for the Library District, Flood Control District, and Debt Service are
also occurring, which will reduce total County property taxes by $12.1 million. The recommended total County
budget for fiscal year 2012-13 is $1.2 billion or 5.4% less than the prior year, and 17% less than fiscal year 2007-08.
The MD&A beginning on page 11 provides for a general and specific discussion regarding the County’s economic
outlook.
Expenditure Limitation
Arizona voters approved a proposition in 1980 amending the state constitution that established expenditure
limitations for local governments, including Pima County. The expenditure limitation is determined each year by
adjusting the amount of actual payments of local revenues received by the County during fiscal year 1979-80 to
reflect inflation and subsequent population growth for the County. Not subject to this limitation are items such as
bond proceeds, related debt service, interest earnings, special voter approved districts, certain highway user revenue
funds, federal grant and aid funds, monies received pursuant to intergovernmental agreements, and state grants
which are to be used for specific purposes.
As in previous years, the County’s expenditures for fiscal year 2011-12 are expected to be under the limit of $501.8
million.
Major Program Initiatives and Developments
Several significant program initiatives and developments during the year include:
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Pima Health System & Services
On September 30, 2011, the County’s contracts with the Arizona Health Care Cost Containment System (AHCCCS)
terminated. This year the CAFR presents the closing of the enterprise fund with a final Statement of Revenues,
Expenses and Changes in Net Position. All year end remaining balances have been transferred to the County’s
governmental funds. Therefore, there is no Statement of Net Position for PHS&S.
Regional Optimization Master Plan
The Regional Optimization Master Plan is a master plan to allow Pima County to meet environmental regulatory
requirements mandated by the Arizona Department of Environmental Quality (ADEQ) for the County’s sewer
system. ADEQ directed the County to meet new stringent quality based on mandates set by the United States
Environmental Protection Agency (EPA).
The County is pursuing the most cost-effective option for the 32 MGD Wastewater Reclamation Facility (WRF): a
design-build-operate contract, with a single contractor providing all three elements. The DBO contract was awarded
to CH2MHill on December 7, 2010, for $164 million. The WRF is projected to be operational in September 2014.
For fiscal year 2012-13, the capital budget for wastewater infrastructure is $237.7 million. The Regional
Optimization Master Plan capital program is primarily funded with obligations paid for with revenues generated
mostly by user fees.
Debt Management
Pima County continues to utilize debt authorized by Pima County voters in numerous elections from 1997 to 2006.
At June 30, 2012, $7.7 million from the May 20, 1997, $66.3 million from the May 18, 2004, and $4.7million from
the May 16, 2006 bond elections remain unissued at June 30, 2012. The County issues Sewer Revenue Obligations
to fund the construction and improvement of the County’s wastewater conveyance systems and treatment facilities.
Bond sales anticipated for fiscal year 2012-13 include $50 million of general obligation debt, $60 million in sewer
revenue obligations, and approximately $18.5 million to be used for a new Fleet Services facility. A refunding of
the 1999 and 2003 capital lease agreements is expected to provide the County an interest rate savings.
Please refer to the MD&A beginning on page 11 and Note 7 beginning on page 63 for specific details on debt
issuances, defeasances, and refundings.
Capital Improvements
Major project expenditure budgets for next year include the Justice Court/Municipal Court Complex for $42.2
million; the Regional Public Safety Communications System (PCWIN) for $22.9; $18.5 million for the new Fleet
Services Facility, and $8.7 for the Communications Emergency Operations Center.
Four significant budgets for transportation projects for the year include:
● La Canada Drive: Ina Road to River Road at $8.9 million
● La Cholla Boulevard: Magee Road to Overton Road at $10.2 million
● Magee Road/Cortaro Farms Road, Thornydale Road to Mona Lisa project at $8.1million
● Magee Road, La Canada Drive to Oracle Road is budgeted at $8.7 million.
Please refer to the MD&A beginning on page 11 for details on these and other significant projects.
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Financial Information
Accounting System and Budgetary Control
In developing and evaluating the County’s accounting system, consideration is given to the adequacy of internal
control procedures. Internal controls for accounting purposes are designed to provide reasonable, but not absolute,
assurance regarding: (1) safeguarding of assets against loss from unauthorized use or disposition and (2) reliability
of financial records for preparing financial statements and maintaining accountability of assets. The concept of
reasonable assurance recognizes that the costs of implementing controls should not exceed their likely derived
benefits and the evaluation of costs and benefits requires estimates and judgments by management.
All internal control evaluations occur within the above framework. We believe that the County’s internal control
structure adequately safeguards assets and provides reasonable assurance of proper recording of financial
transactions.
Budgetary control is maintained at the elected official or department level with each department budgeted on a
account line item basis. Each year, the budget is presented emphasizing the programmatic components of County
services by identifying the costs and funding of those programs.
Cash Management
Most cash, other than imprest accounts, is on deposit with the County Treasurer or the State Treasurer. Amounts
temporarily available during the course of the fiscal year are invested by the County Treasurer according to statutory
guidelines. To address cash flow needs in the short term, the County maintains a revolving line-of-credit with Bank
of America, N.A. For short term needs within the County, the County uses internal borrowings among funds that
are recorded in its accounting records.
Risk Management
Pima County has established a Self Insurance Trust Fund to account for the risk management function of the
County. The Fund has an appointed Board of Trustees and provides self-insured coverage to the County for medical
malpractice, workers’ compensation, unemployment, general liability, property damage, environmental damage, and
employee dental benefits, as well as obtaining coverage for other risks. The Fund is financed by charges to other
County funds.
Other Information
Independent Audit
Arizona Revised Statutes require an annual audit of the financial statements. The County is fully compliant with this
legal requirement. An independent auditors’ report is included in this CAFR.
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http://www.pima.gov/finance/reports.shtml
Single Audit
As a recipient of federal and state financial assistance, the County is required to ensure adequate internal controls are
in place to comply with applicable laws and regulations related to administration of these programs. This internal
control structure is subject to periodic evaluation by management of Pima County.
As a part of the County’s Single Audit, tests are made to determine the adequacy of the internal control structure,
including that portion related to federal financial assistance programs and whether the County has complied with
applicable laws and regulations.
The Single Audit for the fiscal year ended June 30, 2011 reported no material weakness and two significant
deficiencies in its internal control over compliance.
A complete Single Audit report for fiscal year 2010-11 can be found at:
The Single Audit for Pima County for the fiscal year ended June 30, 2012, was not complete at the time of
publication of this CAFR.
As demonstrated by the statements and schedules included in the financial section of this report, Pima County
continues to meet its responsibility for sound financial management.
Certificate of Achievement
The GFOA awarded a Certificate of Achievement for Excellence in Financial Reporting to Pima County, Arizona,
for its CAFR for 24 years from fiscal years ended June 30, 1984 through 2011, except for fiscal years ended June
30, 1990 and June 30, 1999, due to missing the filing deadline.
In order to receive a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently
organized CAFR with contents that conform to program standards. Such reports must satisfy both generally
accepted accounting principles and applicable legal requirements.
In addition, for 13 consecutive years, Pima County has received GFOA’s Distinguished Budget Presentation Award
for its annual budget. The most current award was received for the fiscal year 2011-2012 budget document. In
order to qualify for the Distinguished Budget Presentation Award, the government’s budget had to be judged
proficient as a policy document, a financial plan, an operations guide, and a communications device.
Acknowledgements
Preparation of this report could not be accomplished without the efficient and dedicated service of the staff of the
County’s Finance and Risk Management Department. We also wish to thank the Board of Supervisors for its
continued support in planning and conducting the County’s financial operations in a responsible fiduciary manner.
Respectfully submitted,
C. H. Huckelberry
County Administrator
Tom Burke
Director, Finance and Risk Management
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JUSTICE & LAW
ENFORCEMENT
TREASURER
SUPERINTENDENT
SCHOOL
RECORDER
OF
RESIDENTS
PIMA COUNTY
JUSTICE COURTS
SHERIFF
BOARD OF
THE BOARD
CLERK OF
MEDICAL
SERVICES
PUBLIC
WORKS
COMMUNITY &
ECONOMIC
DEVELOPMENT
ADMINISTRATION
PIMA COUNTY ORGANIZATIONAL CHART
SUPERVISORS
COUNTY
ADMINISTRATOR
COUNTY
ATTORNEY
CONSTABLES
SUPERIOR
Elected Officials
JUDGES
Elected Officials
COURT
CLERK OF THE
SUPERIOR
COURT
ASSESSOR
8
FINANCIAL
PIMA COUNTY
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2012
INTRODUCTORY SECTION
FINANCIAL SECTION
Independent Auditors' Report
Management’s Discussion and Analysis
Basic Financial Statements
Required Supplementary Information Other than Management’s Discussion and Analysis
Combining Statements and Other Schedules
STATISTICAL SECTION
FINANCIAL SECTION
The Financial Section contains government-wide, combined, combining, and individual fund financial
statements and schedules, which present a financial “overview” of Pima County.
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
Independent Auditors’ Report
Members of the Arizona State Legislature
The Board of Supervisors of
Pima County, Arizona
We have audited the accompanying financial statements of the governmental activities, business-type activities,
aggregate discretely presented component units, each major fund, and aggregate remaining fund information
of Pima County as of and for the year ended June 30, 2012, 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 certain departments, one major fund, and one component
unit, which account for the following percentages of the assets, liabilities, revenues, and expenses or
expenditures of the opinion units affected:
Opinion Unit/Department
Assets
Liabilities
Revenues
Expenses/
Expenditures
Government-Wide Statements
Governmental Activities:
Stadium District 1.47% 2.06% 0.36% 0.90%
School Reserve Fund 0.10% 0.03% 0.46% 0.52%
Self-Insurance Trust 2.74% 4.30% 0.14% 0.00%
Business-Type Activities:
Regional Wastewater Reclamation Department 98.98% 99.84% 68.83% 63.51%
Development Services 0.29% 0.11% 2.71% 3.73%
Aggregate Discretely Presented Component Units:
Southwestern Fair Commission 99.84% 100.00% 97.82% 98.82%
Fund Statements
Major Fund:
Regional Wastewater Reclamation Department
Enterprise Fund 100.00% 100.00% 100.00% 100.00%
Aggregate Remaining Fund Information:
Stadium District 0.43% 0.37% 1.00% 1.81%
School Reserve Fund 0.34% 0.11% 1.26% 1.43%
Development Services 0.60% 0.51% 2.10% 2.68%
Self-Insurance Trust 10.22% 25.29% 6.85% 3.83%
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,
business-type activities, aggregate discretely presented component units, each major fund, and aggregate
remaining fund information of Pima County as of June 30, 2012, 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.
U.S. generally accepted accounting principles require that the Management’s Discussion and Analysis on
pages 11 through 29, the Budgetary Comparison Schedule on pages 81 and 82, and the Schedule of Agent
Retirement Plans’ Funding Progress on page 83 be presented to supplement the basic financial statements.
Such information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic
financial statements in an appropriate operational, economic, or historical context. We have applied certain
limited procedures to the required supplementary information in accordance with U.S. generally accepted
auditing standards, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management’s responses to our inquires, the
basic financial statements, and other knowledge we obtained during our audit of the basic financial statements.
We do not express an opinion or provide any assurance on the information because the limited procedures do
not provide us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the County’s basic financial statements. The combining and individual fund statements and
schedules and the introductory and statistical sections listed in the table of contents are presented for
purposes of additional analysis and are not required parts of the basic financial statements. Such information is
the responsibility of the County’s management and was derived from and relates directly to the underlying
accounting and other records used to prepare the basic financial statements. The combining and individual
fund statements and schedules have been subjected to the auditing procedures applied in the audit of the
basic financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in accordance with
U.S. generally accepted auditing standards by us and the other auditors. In our opinion, based on our audit,
the procedures performed as described previously, and the reports of the other auditors, the combining and
individual fund statements and schedules are fairly stated in all material respects in relation to the basic
financial statements 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 do not express
an opinion or provide any assurance 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 18, 2012
Management’s Discussion and Analysis
Management’s Discussion and Analysis
This section of Pima County’s comprehensive annual financial report presents a discussion and analysis
of the County’s financial performance during the year ended June 30, 2012 and should be read in
conjunction with the County’s basic financial statements in the following sections. All dollar amounts are
expressed in thousands (000’s) unless otherwise noted.
FINANCIAL HIGHLIGHTS
• At June 30, 2012, the net position for the County increased $125 million from the prior year.
Increases were experienced in all net asset categories, with a $98 million increase in net investment in
capital assets, an increase of $1 million in restricted net position and an increase of $26 million in
unrestricted net position.
• Assets of the County exceeded its liabilities by $2,274, an increase of 5.8% from the prior year. Of
this amount, $223,785 is available for general government expenditures (unrestricted net position).
Unrestricted net position increased by $25,731 from last year, or approximately 13%.
• $240,165 is restricted for specific purposes (restricted net position), and $1,810 is net investment in
capital assets.
The chart below presents the composition of restricted and unrestricted net position for the current and
prior years:
11
● General Fund revenues increased by $6,011 from the prior year while expenditures increased by
$16,616.
• The General Fund unassigned fund balance increased to $77,596, from $73,547 in the prior year. The
unassigned fund balances comprise 96% of the total fund balance of $80,767.
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
statements, (2) Fund statements, and (3) Notes. Required supplementary information is included in
addition to the basic financial statements.
Government-wide financial statements are designed to provide readers with a broad overview of
County finances in a manner similar to a private-sector business.
The statement of net position presents information on all County assets, deferred outflows, liabilities, and
deferred inflows with the difference between them reported as net position. Over time, increases or
decreases in net position 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 position changed during the most recent
fiscal year. All changes in net position 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
12
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 or sick 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, sanitation, health, welfare, culture and recreation, and education and
economic opportunity. The business-type activities of the County include Pima Health System &
Services, Regional Wastewater Reclamation, Development Services, and the County’s downtown parking
garages.
Discretely presented component units are included in the basic financial statements. They consist of two
legally separate entities for which the County is financially accountable. The County reports the
Southwestern Fair Commission, which operates the County Fairgrounds and the annual Pima County
Fair, as a discretely presented component unit. The Pima County Sports and Tourism Authority (S&TA)
is also reported as a discrete component unit. S&TA is a nonprofit municipal corporation established to
promote professional and amateur sports events and other suitable activities for the benefit of the public.
The government-wide financial statements can be found on pages 31-33.
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 with
applicable State statutes and Federal Office of Management and Budget budgeting guidelines. All of the
funds can be divided into three categories: (1) governmental funds, (2) proprietary funds, and (3)
fiduciary funds.
Governmental funds are used to account for essentially the same functions reported as governmental
activities in the government-wide financial statements. However, unlike the government-wide financial
statements, governmental fund financial statements focus on near-term inflows and outflows of
expendable resources, as well as on balances of expendable resources available at the end of the fiscal
year. Such information may be useful in evaluating the County’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By doing
so, readers may better understand the long-term impact of the government’s near-term financing
decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues,
expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between
governmental funds and governmental activities.
The County maintains fifteen individual governmental funds. Information is presented separately in the
Governmental Fund Balance Sheet and in the Governmental Fund Statement of Revenues, Expenditures
and Changes in Fund Balances for the General, Capital Projects and Debt Service funds which are
reported as major funds. Data from the other governmental funds are combined into a single, aggregated
presentation. Individual fund data for each of these non-major governmental funds is provided in the
form of combining statements.
13
The governmental fund financial statements can be found on pages 34-37. The combining
statements for non-major governmental funds can be found on pages 86-89.
Proprietary funds are maintained in two ways. Enterprise funds are used to report the same functions
presented as business-type activities in the government-wide financial statements. The County uses
enterprise funds to account for certain health care services, including medical and long-term health care,
sewer systems maintenance and operation, real estate-related development services, and parking garage
operations. 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
risk management, automotive fleet maintenance and operations, printing services, telecommunications,
wireless and IT network infrastructure. Because these services predominantly benefit governmental
rather than business-type functions, most of the assets, deferred outflows, liabilities, and deferred inflows
of these services have been included within governmental activities in the government-wide financial
statements.
Proprietary funds provide the same type of information as the government-wide financial statements, only
in more detail. Regional Wastewater Reclamation and Pima Health System & Services operations are
considered to be major funds of the County. Data from the other enterprise funds are combined into a
single, aggregated presentation. Similarly, the County’s internal service funds are combined into a single,
aggregated presentation in the proprietary funds financial statements. Individual fund data for the other
enterprise and internal service funds are provided in the form of combining statements.
The proprietary fund financial statements can be found on pages 38-41. The combining statements
for other enterprise and internal service funds can be found on pages 105-112.
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 programs.
The fiduciary fund financial statements can be found on pages 42-43.
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 46-79.
Required Supplementary Information (RSI) is presented concerning the County’s General Fund
budgetary schedule and the schedule of retirement plans’ funding progress. Required supplementary
information can be found on pages 81-83.
Combining Statements and Other Schedules referred to earlier provide information for non-major
governmental, enterprise, internal service, and fiduciary funds and are presented immediately following
the required supplementary information. Combining and individual fund statements and schedules can be
found on pages 86-116.
14
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve as a useful indicator of a government’s financial position over
time. County assets exceeded liabilities by $2,274 at June 30, 2012. The following table shows
condensed information for the Schedule of Assets, Liabilities and Net Position:
2012 2011 2012 2011 2012 2011
Current and other assets $596,855 $529,767 $246,415 $226,442 $843,270 $756,209
Capital assets (net):
Land, buildings, equipment,
infrastructure & other assets 1 ,809,998 1 ,718,730 1 ,092,477 9 05,710 2 ,902,475 2 ,624,440
Total assets $2,406,853 2 ,248,497 1 ,338,892 1 ,132,152 3 ,745,745 3 ,380,649
Current and other liabilities 1 20,443 7 1,038 4 2,655 5 1,975 1 63,098 1 23,013
Long-term liabilities 7 16,370 7 15,013 5 92,539 3 93,678 1 ,308,909 1 ,108,691
Total liabilities 8 36,813 7 86,051 6 35,194 4 45,653 1 ,472,007 1 ,231,704
Net position
Net investment in
1 ,245,227 1 ,136,033 5 64,561 5 75,525 1 ,809,788 1 ,711,558
Restricted 1 67,498 1 61,807 7 2,667 7 7,526 2 40,165 2 39,333
Unrestricted 1 57,315 1 64,606 6 6,470 3 3,448 2 23,785 1 98,054
Total net position $1,570,040 $1,462,446 $703,698 $686,499 $2,273,738 $2,148,945
Total
Table 1
Business-type Activities
Schedule of Assets, Liabilities, and Net Position
At June 30, 2012 and 2011
capital assets
Governmental Activities
Assets
Current and other assets increased by $87,061 mainly due to an increase in Cash and Cash Equivalents,
$91,543.
Capital assets increased by $278,035 primarily due to the following:
• An increase of $221,970 in construction in progress, with $45,340 for governmental activities and
$176,630 for business-type activities.
• Capitalization of software, $20,614, resulted in a net increase in Equipment of $23,224 in the
governmental activities and an accompanying decrease of $2,799 for business-type activities.
Total liabilities for the primary government increased by $240,303. Current liabilities increased $40,085
mainly due to an overall increase in accounts payable, with accounts payable for governmental activities
increasing $47,119 and accounts payable for business-type activities increasing by $10,815.
15
Net position
The largest portion of the County’s net position reflects its investment in capital assets (i.e. land,
buildings, infrastructure, and equipment), less any related outstanding debt used to acquire those assets.
As of June 30, 2012, net investment in capital assets totaled $1,809,788, comprising approximately 79.6%
of total net position. The County uses a portion of these capital assets to provide services to its citizens,
with the other portion available to its citizens for use; consequently, these assets are not available for
future spending. The $98,230 increase in capital assets, net of related debt, is primarily due to the
significant amount of capital project activity. Although the County’s investments in capital assets are
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.
Unrestricted net position for the primary government increased $25,731 mainly due to an increase in
business-type activities of 99% ($33,022), specifically; the Regional Wastewater Reclamation Fund had
an increase in its unrestricted net position of 120% from $25,652 to $56,462.
The table below provides the composition of net position for the County as of June 30, 2012.
Restricted net position represent resources that are subject to external restrictions on how they may be
used. As of June 30, 2012, restricted net position totaled $240,165 and comprised approximately 10% of
total net position. This represents an $832 increase in restricted net position from the prior fiscal year.
16
The remaining balance of the County’s net position represents unrestricted net position, which may be
used to meet the County’s ongoing obligations to citizens and creditors. As of June 30, 2012, unrestricted
net position totaled $223,785 and comprised approximately 10% of total net position.
Governmental activities
The following table shows details of the changes in net position for governmental activities:
2012 2011 Amount Percent
Program revenues:
Charges for services $ 66,904 $ 60,077 $ 6,827 11.4%
Operating grants and contributions 143,388 136,472 6,916 5.1%
Capital grants and contributions 47,528 65,030 (17,502) -26.9%
Total program revenues 257,820 261,579 (3,759) -1.4%
General revenues:
Property taxes 394,963 416,985 (22,022) -5.3%
State-shared taxes 116,660 111,804 4,856 4.3%
Investment earnings 3,416 2,153 1,263 58.7%
Other general revenues 43,072 33,336 9,736 29.2%
Total general revenues 558,111 564,278 (6,167) -1.1%
Total revenues 815,931 825,857 (9,926) -1.2%
Expenses:
General government 223,005 218,843 4,162 1.9%
Public safety 150,349 146,395 3,954 2.7%
Highways and streets 69,183 73,348 (4,165) -5.7%
Sanitation 7,224 6,208 1,016 16.4%
Health 47,248 36,475 10,773 29.5%
Welfare 94,409 90,521 3,888 4.3%
Culture and recreation 61,900 67,063 (5,163) -7.7%
Education and economic opportunity 55,126 56,626 (1,500) -2.6%
Amortization 805 (2,626) 3,431 -130.7%
Interest on long-term debt 24,776 26,079 (1,303) -5.0%
Total expenses 734,025 718,932 15,093 2.1%
Excess before transfers 81,906 106,925 (25,019) -23.4%
Transfers in 25,688 4,650 21,038 452.4%
Change in net position 107,594 111,575 (3,981) -3.6%
Ending net position $ 1,570,040 $ 1,462,446 $ 107,594 7.4%
Variance
Table 2
Governmental Activities
Schedule of Changes in Net Position
For the Years Ended June 30, 2012 and 2011
17
Ending net position for governmental activities increased by $107,594, a 7.4% increase. This year’s
change in net position decreased by $3,981 from last year, primarily due to a decrease in overall revenues
of $9,926 and an increase in expenses of $15,093.
Factors affecting the $9,926 decrease in revenues from governmental activities:
Revenue from capital grants and contributions decreased by $17,502 in Highway and Streets
Activity. This is primarily from a decrease in ARRA Stimulus revenue, $4,071, a decrease in
State Revenue of $6,232 and a decrease of $10,348 in Capital Contributions.
Total expenses for governmental activities were $734,025, up 2.1% or $15,093 compared to the previous
year’s total of $718,932. Factors contributing to the increase in expenses:
Health expenses increased by $10,772, of which $7,603 was related to a grant called
Communities Putting Prevention to Work which was awarded at $15 million. This grant was
predominantly awarded to funding partners in fiscal year 2012.
The increase in the Transfers in line item of $21,038 was due to an equity transfer of $26,436 from Pima
Health System & Services to Other Special Revenue Fund.
The chart below presents general and program revenues, as a percentage to total revenues. The amount
provided from each revenue source for governmental activities, as a percentage to total revenue for
governmental activities, has not changed significantly from the prior fiscal year. Property taxes,
operating grants, and state-shared taxes continue to account for approximately 72% of the County’s
revenues.
Charges for
services
7%
Operating grants
16%
Investment
earnings
1%
Capital grants &
contributions
8%
Property taxes
50%
State-shared
taxes
14%
Other general
revenue
4%
General and Program Revenues - Governmental Activities
18
The chart below presents expenses by function as a percentage to total expenses by function for
governmental activities:
Each expense by function as a proportion to total expenses by function for governmental activities has not
changed significantly from the prior fiscal year. General government, public safety, and welfare account
for approximately two-thirds of the County’s total expenses.
19
Business-type activities
Business-type activities, which are composed exclusively of enterprise funds, are intended to recover all
or a significant portion of their costs through user fees and charges. Change in net position for business-type
activities added $17,199 or 2.5% to the County's $124,793 change in total net position for the year
ended June 30, 2012. The following table shows changes in net position for business-type activities:
2012 2011 Amount Percent
Program revenues:
Charges for services $ 221,479 $ 363,421 $ (141,942) -39.1%
Operating grants and contributions 1,275 4,691 (3,416) -72.8%
Capital grants and contributions 2,676 4,192 (1,516) -36.2%
Total program revenues 225,430 372,304 (146,874) -39.5%
General revenues:
Investment earnings 1,001 900 101 11.2%
Other general revenues 1,903 2,681 (778) -29.0%
Total general revenues 2,904 3,581 (677) -18.9%
Total revenues 228,334 375,885 (147,551) -39.3%
Expenses:
Regional Wastewater Reclamation 117,774 113,495 4,279 3.8%
Pima Health System & Services 58,773 200,305 (141,532) -70.7%
Development Services 6,912 6,982 (70) -1.0%
Parking Garages 1,988 1,538 450 29.3%
Total expenses 185,447 322,320 (136,873) -42.5%
Excess before transfers 42,887 53,565 (10,678) -19.9%
Transfers in (out) (25,688) (4,650) (21,038) 452.4%
Change in net position 17,199 48,915 (31,716) -64.8%
Beginning net position 686,499 637,584 48,915 7.7%
Ending net position $ 703,698 $ 686,499 $ 17,199 2.5%
Table 3
Variance
Business-type Activities
Schedule of Changes in Net Position
For the Years Ended June 30, 2012 and 2011
Key elements of the change in net position from business-type activities include:
Primarily due to the closing of the Pima Health System & Service Enterprise Fund charges for
services revenue decreased by $141,942 and Pima Heath System & Services Expenses decreased
$141,532.
The increase of $21,038 in the Transfers in (out) line is due to an equity transfer $26,436 from
Pima Health System & Services to Other Special Revenue Fund.
20
FINANCIAL ANALYSIS OF THE COUNTY’S FUNDS
As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements.
Governmental funds
The County’s general government functions are accounted for in the General, Special Revenue, Debt
Service, and Capital Project funds. Included in these funds are special districts governed by the Board of
Supervisors (i.e. Flood Control, Library and Stadium Districts). The focus of the County's governmental
funds is to provide information on near-term inflows, outflows and balances of expendable resources.
Such information is useful in assessing the County's financing requirements. In particular, unassigned
fund balances may serve as a useful measure of a government's net resources available for spending at the
end of the fiscal year.
Major Governmental Funds
General Fund
The General Fund is the chief operating fund of the County. At June 30, 2012, total fund balance of the
General Fund was $80,767.
The net change in fund balance for the General Fund was $3,212. Revenues increased by $6,011.
Property Taxes decreased by $9,846, while Intergovernmental revenues, Charges for services, and
Miscellaneous revenues increased by $15,770.
Property taxes decreased $9,846 primarily due to lower assessed property valuations with the tax
rates remaining constant.
Intergovernmental revenue increased by $4,077 due to increases in State Shared Sales Tax of
$4,093.
Service fee revenue increased by $3,756 primarily in two areas:
Correctional Housing Revenues of $1,772
Fees for Recording Documents of $779.
Miscellaneous earnings increased by $7,937 of which $7,917 was Other Miscellaneous Revenue
– Operating.
Expenditures for the General Fund increased by $16,616 primarily in two categories:
The net increase in General Government expenditures of $10,997:
County Administrator expenditures increased by $5,129 primarily from a $1,586
increase in payments to other governments and agencies.
Superior Court expenditures increased by $3,463 primarily from increased
payroll costs.
21
There was an increase in Public Safety expenditures of $6,663, primarily as a result of the Sheriff
Department purchasing a helicopter for $2,556, and Sheriff operations expenditures increasing
$2,935.
Capital Projects Fund
Revenues for the Capital Projects Fund decreased by $3,530 and expenditures in capital outlay decreased
by $3,591. The net change in fund balance was an increase of $42,841.
Of the decrease in revenues, $3,147, can be attributed to intergovernmental revenues; Federal
revenue decreased by $2,947 and State revenue decreased by $871.
Expenditures decreased by $3,591 in capital outlay primarily from the decrease in expenditures
relating to the construction of the Behavioral Health Pavilion, $20,506, with an increase of
$15,584 in the Emergency Communications Systems expenditures.
The fund reported a $101,129 deficiency of revenues over expenditures. A net transfer in of $65,545 and
that resulted in a net change in the fund balance of $42,841 for the Capital Projects Fund.
Debt Service Fund
The fund accounts for the accumulation of resources for and the payment of principal and interest of
general long-term debt. At June 30, 2012, the net change in fund balance was a decrease of $7,605.
Secondary tax revenues remained relatively constant with a decrease of $3,160. Expenditures, mainly as
a result of increased principal payments, increased $7,840 from last fiscal year.
Budget to Actual Comparison for the General Fund
Overall, actual revenues were more than budgeted revenues by $18,734 and actual expenditures were less
than budgeted expenditures by $45,856. No variances between the budget to actual amounts at the
departmental level were significant enough to affect the County’s ability to provide future services.
Overview of all governmental funds
At June 30, 2012, the County's governmental funds reported combined fund balances of $395,385, an
increase of $33,655 from the prior year. Approximately 16.4% of the combined fund balances, or
$65,030, constitutes unassigned fund balance, which is available to meet the County's current and future
needs.
22
The following table presents the amount of revenues from various sources and increases or (decreases)
from the prior year:
Variance
Amount Percent Amount Percent Amount Percent
Taxes $ 4 07,711 48.6% $ 4 21,623 51.7% $ (13,912) -3.3%
Special assessments 2 45 0.0% 3 30 0.1% (85) -25.8%
Licenses and permits 8 ,155 1.0% 8 ,494 1.0% (339) -4.0%
Intergovernmental 3 27,939 39.1% 3 08,219 37.8% 1 9,720 6.4%
Charges for services 5 6,881 6.8% 5 4,491 6.7% 2 ,390 4.4%
Fines and forfeits 1 0,249 1.2% 6 ,786 0.8% 3 ,463 51.0%
Interest 2 ,286 0.3% 1 ,723 0.2% 5 63 32.7%
Miscellaneous 2 4,796 3.0% 1 4,162 1.7% 1 0,634 75.1%
Total revenues $ 8 38,262 100.0% $ 8 15,828 100.0% $ 2 2,434 2.7%
Table 4
2012 2011
Governmental Funds
Revenues Classified by Source
For the Years Ended June 30, 2012 and 2011
The following provides an explanation of revenues by source that changed significantly from the prior
year:
• The $19,720 increase in intergovernmental revenue was due to a $18,798 increase in Other
Governmental Funds.
• The $13,912 decrease in tax revenue is due to a $9,846 decrease in the General Fund revenue
from decreased property values.
The following table presents expenditures by function compared to prior year amounts:
23
Variance
Government Function Amount Percent Amount Percent Amount Percent
General government $ 236,020 25.7% $ 223,611 25.3% $ 12,409 5.5%
Public safety 145,711 15.9% 136,709 15.5% 9,002 6.6%
Highways and streets 33,651 3.7% 34,614 3.9% ( 963) -2.8%
Sanitation 6,317 0.7% 5,375 0.6% 942 17.5%
Health 46,672 5.1% 36,511 4.1% 10,161 27.8%
Welfare 94,360 10.3% 90,572 10.3% 3,788 4.2%
Culture and recreation 52,103 5.7% 49,986 5.7% 2,117 4.2%
Education and economic opportunity 47,798 5.2% 50,432 5.7% (2,634) -5.2%
Capital outlay 149,612 16.3% 153,203 17.3% (3,591) -2.3%
Debt service:
- Principal 78,688 8.6% 76,361 8.6% 2,327 3.0%
- Interest 24,762 2.7% 26,086 3.0% (1,324) -5.1%
- Miscellaneous 1,179 0.1% 21 0.0% 1,158 5514.3%
Total expenditures $ 916,873 100.0% $ 883,481 100.0% $ 33,392 3.8%
2012 2011
Table 5
Expenditures by Function
Governmental Funds
For the Years Ended June 30, 2012 and 2011
Total expenditures in governmental funds increased during the year by $33,392, primarily due to the
following:
• Health expenditures increased by $10,161 primarily from the Communities Putting Prevention to
Work grant.
• Public safety expenditures increased by $9,002 due to the Sheriff’s Department purchase of a
helicopter, $2,556.
• General Government expenditures increased by $12,409 due to a $10,997 increase in the general
fund.
Proprietary funds
The County’s proprietary fund functions are contained in the enterprise and internal service funds. The
enterprise funds of the County are Pima Health System & Services, Regional Wastewater Reclamation,
Development Services, and Parking Garages. Pima Health System & Services contract with the Arizona
Health Care Cost Containment System (AHCCCS) terminated on September 30, 2011. As a result, the
fund was closed and year-end balances were transferred to the other governmental funds as of June 30,
2012. These business-type activities are accounted for in a similar fashion to private-sector businesses
and the costs for services provided are expected to be covered either fully or in part by generated
revenues, which include fees charged to external users.
The internal service funds consist of the Self-Insurance Trust Fund and Other Internal Service Funds,
which are comprised of multiple smaller funds consisting of Fleet Services, Print Shop, and
Wireless/Telecommunications. The change in net position for all Internal Service Funds was $10,128,
generated primarily from the operations of the Self Insurance Trust Fund.
24
The following table presents a comparison of this year’s enterprise fund activities with the prior year:
2012 2011 Amount Percent
Operating revenues:
Net patient services $ 52,018 $ 205,814 $ (153,796) -74.7%
Charges for services 153,128 137,838 15,290 11.1%
Other 1,387 2,821 (1,434) -50.8%
Total net operating revenues 206,533 346,473 (139,940) -40.4%
Operating expenses:
Employee compensation 52,657 67,469 (14,812) -22.0%
Medical claims 39,096 157,607 (118,511) -75.2%
Operating supplies and services 10,158 8,986 1,172 13.0%
Utilities 5,845 (5,845) -100.0%
Sludge and refuse disposal 1,553 1,438 115 8.0%
Repair and maintenance 6,819 7,611 (792) -10.4%
Insurance premiums - - 100.0%
General and administrative 23,318 19,058 4,260 22.4%
Consultants and professional services 5,471 8,157 (2,686) -32.9%
Depreciation and amortization 35,819 32,022 3,797 11.9%
Total operating expenses 174,891 308,193 (133,302) -43.3%
Operating gain (loss) 31,642 38,280 (6,638) -17.3%
Nonoperating revenues (expenses):
Intergovernmental revenue 1,380 4,856 (3,476) -71.6%
Investment earnings 1,001 952 49 5.1%
Sewer connection fees 16,507 19,624 (3,117) -15.9%
Interest expense (6,539) (9,567) 3,028 -31.7%
Loss on disposal of capital assets 25 (596) 621 -104.2%
Amortization of deferred charges (941) (750) (191) 25.5%
Claim and judgment contingency losses (3,080) (3,080) 100.0%
Premium tax (1,112) (4,099) 2,987 -72.9%
Total nonoperating revenues 7,241 10,420 (3,179) -30.5%
Income (loss) before contributions
and transfers 38,883 48,700 (9,817) -20.2%
Capital contributions 2,571 4,027 (1,456) -36.2%
Transfers in 1,475 866 609 70.3%
Transfers (out) (27,163) (5,516) (21,647) 392.4%
Change in net position $ 15,766 $ 48,077 $ (32,311) -67.2%
Variance
Table 6
Schedule of Revenues, Expenses and Changes in Net Position
Enterprise Funds
For the Years Ended June 30, 2012 and 2011
While net patient revenues from Pima Health System & Services decreased by $153,796, revenues
continued to exceed operating expenses, generating an operating gain for all enterprise funds this year.
Regional Wastewater Reclamation contributed approximately 96%, or $30,476 to the $31,642 operating
gain for all enterprise funds.
25
• Charges for service revenue increased by $15,290 due primarily to a $9,853 increase in Regional
Wastewater Reclamation Sewer utility service fees.
• Medical claims expense decreased $118,511 and employee compensation expense decreased
$14,812 due to the termination of the AHCCCS contract with Pima Health System & Services
• Transfers in and transfers out are significantly more this year. This fiscal year, the transfer out of
$26,436 from Pima Health System & Services to Other Special Revenue was due to the
movement of equity from the Enterprise Fund to a new Other Special Revenue Fund. Last fiscal
year, Pima Health System & Services transferred out $4,596 as an equity transfer to the General
fund.
The chart below presents the revenues and expenses for business-type activities:
Capital Assets and Debt Administration
Capital Assets
The County’s total net investment in capital assets as of June 30, 2012 amounted to $2,902 (net of
accumulated depreciation), an increase of 10.6% ($278,035). Of this amount, $91,268 (32.8%) came
from governmental activities and $186,767 (67.2%) came from business-type activities. The County’s
investment in capital assets consists of land, buildings, sewage conveyance systems, infrastructure,
equipment, and construction in progress.
26
Capital assets for the governmental and business-type activities are presented below to illustrate changes
from the prior year:
2012 2011 2012 2011 2012 2011
Land $ 467,661 $ 448,790 $ 15,409 $ 15,409 $ 483,070 $ 464,199
Construction in progress 248,317 202,977 342,111 165,481 590,428 368,458
Buildings and improvements 422,879 432,149 212,446 207,081 635,325 639,230
Infrastructure 607,049 593,946 607,049 593,946
Sewage conveyance systems 442,803 435,232 442,803 435,232
Equipment 64,092 40,868 79,708 82,507 143,800 123,375
Total $ 1,809,998 $ 1,718,730 $ 1,092,477 $ 905,710 $ 2,902,475 $ 2,624,440
Table 7
Total
Governmental and Business-type Activities
For the Years Ended June 30, 2012 and 2011
Governmental Activities Business-type Activities
Capital Assets
Major capital asset events during the current fiscal year included the following:
Governmental activities
• Construction in progress increased $45,340 or 22.3% compared to last fiscal year. Current major
projects in progress include:
o the Regional Public Safety Communication System
o Pavement Preservation Program
o Magee Rd Cortaro Farms Rd: Thornydale Rd to Mona Lisa
o Justice Court/Municipal Court Complex
o Magee Rd, Cortaro Farms Rd, Mona Lisa Rd to La Canada
• Equipment acquisitions increased $23,224, or 56.8%, due to the capitalization of the County’s
new financial reporting system, $20,614 and a helicopter by the Sheriff department for $2,590.
Business-type activities
• Construction in progress increased approximately $176,630, or 106.7%, mainly due to Regional
Optimization Master Planning (ROMP) activities.
The County’s infrastructure assets are recorded at historical cost and estimated historical cost in the
government-wide financial statements. Additional information regarding the County’s capital assets can
be found in Note 5 of the financial statements on pages 58-60.
27
Long-term Debt
Significant, comparative long-term debt entered into during the last two fiscal years is presented below:
Bonds issued (at face value):
General Obligation $ 76,225 $75,000
Street and Highway Revenue (Transportation) 32,945
Sewer Revenue 4 3,625
Sewer System Revenue Obligations 189,160
Total $ 298,330 $ 1 18,625
2012 2011
Table 8
Long-Term Debt
For the Years Ended June 30, 2012 and 2011
During the year, $76,225 of General Obligation Bonds were issued, which included $16,225 of General
Obligations bonds issued to refund the 2003 Series (maturities 7/1/2014 through 7/1/2017) and $60,000 of
new debt issued for the purpose of funding various capital projects in the County.
In addition, the County issued $32,945 in Street and Highway Revenue Bonds. Of the amount issued
$18,425 was used for the improvement, construction, and reconstruction of streets and highways, $14,520
was used to partially refund the 2003 Series (maturities 7/1/2014 through 7/1/2018).
$189,160 of Sewer System Revenue Obligations were issued to finance additions and improvements to
the sewage and conveyance systems.
The most recent ratings for Pima County’s bonds and COPs are:
Rating Date Rating Date
Certificate of Participation (COPs) A+ May-2012 AA- Apr-2012
General Obligation AA- Apr-2012 AA Apr-2012
Street and Highway Revenue AA Apr-2012 AA Apr-2012
Sewer Bonds* AA- Nov-2012 AA Nov-2012
Sewer Revenue Obligations A+ Nov-2012 AA- Nov-2012
Standard & Poor's Fitch Ratings
Table 9
Credit Ratings
* This excludes the 2012A Sewer Refunding bonds which have ratings equal to the Obligations
The State constitution limits the amount of general obligation debt a governmental entity may issue to 6%
of its net assessed valuation without voter approval. However, Pima County has voter approval for
general obligation debt up to 15%. The current debt limitation for Pima County is $1,267,242, which is
significantly in excess of Pima County’s outstanding general obligation debt.
Additional information regarding the County’s debt can be found in Note 7 of the financial statements on
Pages 63-70
28
Economic Factors and Next Year’s Budget
Primary property taxes
The recession continues to impact the local economy, primarily evident by decreasing market values of
existing property. The primary net assessed value for fiscal year 2012-13 decreased $236 million or
2.84%. The contraction of the property tax base is expected to continue into fiscal year 2015-16 with the
net assessed value projected to decline by more than 6%.
The tax rate for fiscal year 2012-13 will remain constant, resulting in a levy that is $8 million less than
fiscal year 2011-12.
State shared revenues
An indication of increased consumer confidence is evident by positive projections of state shared sales tax
revenue. Current projections indicate a $7.4 million increase in fiscal year 2012-13. Even with this
positive projection however, it is still $13,286 less than the County received at its peak in fiscal year
2006-07.
Other revenues
General government revenues are expected to decrease by almost $6 million, primarily from $1 million
decrease from Federal payments in lieu of property taxes and $4.9 million less from grant, enterprise and
special revenue funds for central administrative support services.
University of Arizona Medical Center – South Campus
A two year agreement with the Arizona Board of Regents (ABOR) on behalf of the University Of
Arizona College Of Medicine provides funding for the University of Arizona Medical Center – South
Campus: $20 million in fiscal year 2010-11, $15 million in fiscal year 2011-12. The Board of
Supervisor’s have approved a second two year contract with ABOR with an annual funding of $15
million for each fiscal year.
Request for Information
This financial report is designed to provide a general overview of the County’s finances. Any questions
concerning the information provided in this report or requests for additional financial information should
be addressed to the Finance and Risk Management Department, 130 W. Congress, 6th Floor, Tucson, AZ,
85701.
29
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30
Basic Financial Statements
Primary Government
Governmental Business-type Component
Activities Activities Total Units
Assets
Cash and cash equivalents $ 5 04,113 $ 1 07,152 $ 6 11,265 $ 1,056
Property taxes receivable (net) 1 4,456 1 4,456
Interest receivable 209 95 304
Internal balances (3,133) 3,133
Due from other governments 6 2,462 6 2,462
Accounts receivable (net) 6,499 1 5,343 2 1,842 5
Inventories 2,476 3,306 5,782 36
Prepaids 3,513 11 3,524 60
Other assets 3,206 5,133 8,339
Restricted assets:
Cash and cash equivalents 2,326 1 12,242 1 14,568 1,500
Loans receivable 728 728
Capital assets not being depreciated:
Land 4 67,661 1 5,409 4 83,070
Construction in progress 2 48,317 3 42,111 5 90,428
Capital assets being depreciated (net):
Buildings and improvements 4 22,879 2 12,446 6 35,325 2,306
Sewage conveyance system 4 42,803 4 42,803
Equipment 6 4,092 7 9,708 1 43,800 666
Infrastructure 6 07,049 6 07,049
Total assets 2 ,406,853 1 ,338,892 3 ,745,745 5,629
Liabilities
Accounts payable 6 5,710 3 5,317 1 01,027 205
Interest payable 365 365
Contract retentions 1,991 1,991
Employee compensation 4 7,542 4,840 5 2,382
Due to other governments 3 3
Deposits and rebates 2,484 2,484 27
Deferred revenues 2,713 2,133 4,846
Noncurrent liabilities:
Due within one year 7 4,713 2 6,995 1 01,708
Due in more than one year 6 41,657 5 65,544 1 ,207,201
Total liabilities 8 36,813 6 35,194 1 ,472,007 232
Net Position
Net investment in capital assets 1 ,245,227 5 64,561 1 ,809,788 2,972
Restricted for:
Facilities, justice, library, tax stabilization,
and community development 1 03,592 1 03,592
Highways and streets 3 2,322 3 2,322
Debt service 2 2,538 2 2,538
Capital projects 3 0,224 3 1,680 6 1,904
Regional wastewater 1 8,449 1 8,449
Healthcare 1,360 1,360
Unrestricted 1 57,315 6 6,470 2 23,785 2,425
Total net position $ 1,570,040 $ 7 03,698 $ 2,273,738 $ 5,397
PIMA COUNTY, ARIZONA
Statement of Net Position
June 30, 2012
(in thousands)
Exhibit A - 1
See accompanying notes to financial statements
31
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions
Primary government:
Governmental activities:
General government $ 223,005 $ 30,444 $ 28,533 $ 4,130
Public safety 150,349 12,047 9,303 5,561
Highways and streets 69,183 5,059 51,567 35,251
Sanitation 7,224 3,487 1,133
Health 47,248 12,605 24,830
Welfare 94,409 68
Culture and recreation 61,900 2,254 403 261
Education and economic opportunity 55,126 1,008 27,551 2,325
Amortization - unallocated 805
Interest on long-term debt 24,776
Total governmental activities 734,025 66,904 143,388 47,528
Business-type activities:
Regional Wastewater Reclamation 117,774 154,601 2,571
Pima Health System & Services 58,773 58,722 1,275
Development Services 6,912 6,073 105
Parking Garages 1,988 2,083
Total business-type activities 185,447 221,479 1,275 2,676
Total primary government $ 919,472 $ 288,383 $ 144,663 $ 50,204
Component units:
Sports & Tourism Authority $ 59 $ 20 $ 1
Southwestern Fair Commission 4,959 4,940 120
Total component units $ 5,018 $ 4,960 $ 121
General revenues:
Property taxes, levied for general purposes
Property taxes, levied for regional flood control district
Property taxes, levied for library district
Property taxes, levied for debt service
Hotel/motel taxes, levied for sports facility and tourism
Other taxes, levied for stadium district
Unrestricted share of state sales tax
Unrestricted share of state vehicle license tax
Grants and contributions not restricted to specific programs
Interest and penalties on delinquent taxes
Investment earnings
Miscellaneous
Transfers
Total general revenues and transfers
Change in net position
Net position at beginning of year
Net position at end of year
Program Revenues
PIMA COUNTY, ARIZONA
Statement of Activities
For the Year Ended June 30, 2012
(in thousands)
See accompanying notes to financial statements
32
Primary Government
Governmental Business-type Component
Activities Activities Total Units Functions/Programs
Primary government:
Governmental activities:
$ (159,898) $ (159,898) General government
(123,438) (123,438) Public safety
22,694 22,694 Highways and streets
(2,604) (2,604) Sanitation
(9,813) (9,813) Health
(94,341) (94,341) Welfare
(58,982) (58,982) Culture and recreation
(24,242) (24,242) Education and economic opportunity
(805) (805) Amortization - unallocated
(24,776) (24,776) Interest on long-term debt
(476,205) (476,205) Total governmental activities
Business-type activities:
$ 39,398 39,398 Regional Wastewater Reclamation
1,224 1,224 Pima Health System & Services
(734) (734) Development Services
95 95 Parking Garages
39,983 39,983 Total business-type activities
(476,205) 39,983 (436,222) Total primary government
Component units:
$ (38) Sports & Tourism Authority
1 01 Southwestern Fair Commission
$ 6 3 Total component units
General revenues:
280,585 280,585 Property taxes, levied for general purposes
19,991 19,991 Property taxes, levied for regional flood control district
29,015 29,015 Property taxes, levied for library district
65,372 65,372 Property taxes, levied for debt service
6,285 6,285 Hotel/motel taxes, levied for sports facility and tourism
1,608 1,608 Other taxes, levied for stadium district
93,123 93,123 Unrestricted share of state sales tax
23,537 23,537 Unrestricted share of state vehicle license tax
4,268 4,268 Grants and contributions not restricted to specific programs
8,235 8,235 Interest and penalties on delinquent taxes
3,416 1,001 4,417 Investment earnings
22,676 1,903 24,579 92 Miscellaneous
25,688 (25,688) Transfers
583,799 (22,784) 561,015 92 Total general revenues and transfers
107,594 17,199 124,793 1 55 Change in net position
1,462,446 686,499 2,148,945 5 ,242 Net position at beginning of year
$ 1,570,040 $ 703,698 $ 2,273,738 $ 5 ,397 Net position at end of year
Net (Expense) Revenue and
Changes in Net Position
Exhibit A - 2
See accompanying notes to financial statements
33
Other Total
Governmental Governmental
General Capital Projects Debt Service Funds Funds
Assets
Cash and cash equivalents $ 9 1,085 $ 1 81,519 $ 2 6,639 $ 1 23,579 $ 422,822
Property taxes receivable (net) 1 0,148 2 ,440 1 ,868 14,456
Interest receivable 7 3 2 1 1 6 8 1 191
Due from other funds 7 ,528 1 ,148 1 ,575 4 ,892 15,143
Due from other governments 2 1,513 1 1,018 1 1 29,808 62,350
Accounts receivable 1 ,903 1 ,046 3 ,122 6 ,071
Inventory 6 7 1 ,374 1 ,441
Prepaid expenditures 1 ,984 7 2 2 ,056
Loan receivable 669 5 9 728
Other assets 1 ,018 1 ,018
Restricted cash equivalents 2 ,281 4 5 2 ,326
Total assets $ 134,970 $ 1 97,033 $ 3 0,681 $ 1 65,918 $ 5 28,602
Liabilities and fund balances
Liabilities:
Accounts payable $ 2 0,679 $ 2 9,136 $ 1 48 $ 1 2,787 $ 6 2,750
Medical claims payable 271 271
Contract retentions 1 ,980 1 1 1 ,991
Employee compensation 1 2,984 2 0 4 ,445 1 7,449
Due to other funds 543 1 ,901 7 7 12,515 1 5,036
Due to other governments 3 3
Deposits and rebates 199 2 ,281 4 2 ,484
Deferred revenues 1 9,795 346 2 ,158 10,934 3 3,233
Total liabilities 5 4,203 3 5,664 2 ,383 40,967 1 33,217
Fund balances:
Nonspendable 2 ,720 1 ,550 4 ,270
Restricted 333 1 57,688 1 05,468 2 63,489
Committed 7 ,234 10,264 17,498
Assigned 118 28,298 16,682 45,098
Unassigned 7 7,596 ( 3,553) ( 9,013) 65,030
Total fund balances 8 0,767 1 61,369 28,298 1 24,951 3 95,385
Total liabilities and fund balances $ 134,970 $ 1 97,033 $ 3 0,681 $ 1 65,918 $ 528,602
PIMA COUNTY, ARIZONA
Balance Sheet - Governmental Funds
June 30, 2012
(in thousands)
See accompanying notes to financial statements
34
Exhibit A - 3
Fund balances - total governmental funds $ 395,385
Amounts reported for governmental activities in the Statement of
Net Position are different because:
Capital assets used in governmental activities are not financial resources
and therefore are not reported in the governmental funds
Governmental capital assets $ 2,628,502
Less accumulated depreciation (840,418) 1,788,084
Some liabilities and their associated issuance costs are not due and payable
in the current period and therefore are not reported in the governmental funds
Bonds payable (603,093)
Certificates of participation payable (39,772)
Loans and leases payable (16,431)
Unamortized deferred issuance costs reported as other assets 2,188 (657,108)
Some compensated absences are not due and payable shortly after
June 30, 2012, and therefore are not reported in the governmental funds
Employee compensation (29,138)
Some liabilities are not due and payable shortly after June 30, 2012, and
are therefore not reported in the governmental funds
Landfill liability (20,872)
Pollution remediation liability (805) (21,677)
Deferred revenue in governmental funds is susceptible to full accrual on the
government-wide statements 30,521
Internal service funds are used by management to charge the costs of certain
activities to individual funds. The assets and liabilities of the internal service
funds are included in governmental activities in the Statement of Net Position 63,973
Net position of governmental activities $ 1,570,040
PIMA COUNTY, ARIZONA
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Position
June 30, 2012
(in thousands)
Exhibit A - 4
See accompanying notes to financial statements
35
Other Total
Governmental Governmental
General Capital Projects Debt Service Funds Funds
Revenues:
Property taxes $ 291,647 $ 6 6,148 $ 4 9,916 $ 4 07,711
Special assessments 245 2 45
Licenses and permits 2,696 5 ,459 8 ,155
Intergovernmental 127,029 $ 4 4,141 1 1 1 56,758 3 27,939
Charges for services 39,117 3 ,079 1 4,685 5 6,881
Fines and forfeits 5,213 5 ,036 1 0,249
Investment earnings 621 6 98 2 42 7 25 2 ,286
Miscellaneous 12,659 5 65 1 1,572 2 4,796
Total revenues 478,982 4 8,483 6 6,401 2 44,396 8 38,262
Expenditures:
Current:
General government 197,190 3 8,830 2 36,020
Public safety 123,235 2 2,476 1 45,711
Highways and streets 33,651 3 3,651
Sanitation 6,317 6 ,317
Health 2,919 4 3,753 4 6,672
Welfare 94,292 6 8 9 4,360
Culture and recreation 15,195 3 6,908 5 2,103
Education and economic opportunity 12,967 3 4,831 4 7,798
Capital outlay 149,612 1 49,612
Debt service - principal 78,390 2 98 7 8,688
- interest 24,762 2 4,762
- miscellaneous 1,172 7 1 ,179
Total expenditures 445,798 1 49,612 1 04,324 2 17,139 9 16,873
Excess (deficiency) of revenues over
(under) expenditures 33,184 ( 101,129) ( 37,923) 2 7,257 ( 78,611)
Other financing sources (uses):
Capital leases 894 8 94
Premium on bonds 7,349 7 ,349
Proceeds-refunding debt 30,745 3 0,745
Payments to escrow agent (33,013) ( 33,013)
Face amount of long-term debt 78,425 7 8,425
Proceeds from sale of capital assets 1,608 3 30 1 ,938
Transfers in 5,190 6 5,677 2 5,237 4 5,820 1 41,924
Transfers (out) ( 36,770) ( 132) ( 79,012) ( 115,914)
Total other financing sources (uses) (29,972) 1 43,970 3 0,318 ( 31,968) 1 12,348
Net change in fund balances 3,212 4 2,841 ( 7,605) ( 4,711) 3 3,737
Fund balances at beginning of year 77,555 1 18,528 3 5,903 1 29,744 3 61,730
Changes in nonspendable fund balance:
Change in inventory (55) ( 55)
Change in prepaids (27) ( 27)
Fund balances at end of year $ 80,767 $ 1 61,369 $ 2 8,298 $ 1 24,951 $ 3 95,385
PIMA COUNTY, ARIZONA
Statement of Revenues, Expenditures and Changes in Fund Balance
Governmental Funds
For the Year Ended June 30, 2012
(in thousands)
Exhibit A - 5
See accompanying notes to financial statements
36
Net change in fund balances - total governmental funds $ 33,737
Amounts reported for governmental activities in the Statement of Activities
are different because:
Governmental funds report capital outlays as expenditures. However,
in the Statement of Activities, the cost of those assets is depreciated
over their estimated useful lives and reported as depreciation expense
Expenditures for capital assets $ 141,790
Less current year depreciation (58,595) 83,195
The issuance of long-term debt (e.g., bonds, leases) provides current financial
resources to governmental funds but increases long-term liabilities in the Statement
of Net Position. Repayment of the principal of debt is an expenditure in the governmental
funds, but the repayment reduces long-term liabilities in the Statement of Net Position.
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
Face amount of long-term debt (78,425)
Premium on bonds (7,349)
Proceeds on refunding bonds (30,745)
Debt service - principal payments 78,688
Payments to escrow agent 33,013
Amendment to capital lease (894)
Deferred issuance costs 1,153
Amortization expense (805) (5,364)
Some revenues reported in the Statement of Activities do not represent
the collection of current financial resources and therefore are not reported as
revenues in the governmental funds
Donations of capital assets 8,137
Property tax revenues 4,234
Intergovernmental (18,688)
Other (1,550) (7,867)
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 the
governmental funds
Change in compensated absences (803)
Change in landfill liability (928)
Pollution remediation liability 228
Net book value of capital asset disposals (3,217)
Other (82) (4,802)
Internal service funds are used by management to charge the costs of certain
activities to individual funds. A portion of the net expense of the internal service funds is
reported with governmental activities 8,695
Change in net position of governmental activities $ 107,594
PIMA COUNTY, ARIZONA
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds
to the Statement of Activities
For the Year Ended June 30, 2012
(in thousands)
Exhibit A - 6
See accompanying notes to financial statements
37
Business-type Activities
Enterprise Funds
Governmental
Pima Regional Other Total Activities-
Health System Wastewater Enterprise Enterprise Internal Service
& Services Reclamation Funds Funds Funds
Assets
Current assets:
Cash and cash equivalents $ 99,491 $ 7,661 $ 107,152 $ 81,291
Restricted cash and cash equivalents 71,789 71,789
Interest receivable 91 4 95 18
Due from other funds 44 3 47 218
Due from other governments - - 112
Accounts receivable (net) 15,198 145 15,343 428
Inventory 3,306 3,306 1,035
Prepaid expense 6 5 11 1,457
Total current assets - 189,925 7,818 197,743 84,559
Noncurrent assets:
Restricted cash and cash equivalents 40,453 40,453
Capital assets:
Land and other improvements 13,641 1,768 15,409 592
Buildings and improvements 373,747 12,927 386,674 614
Sewage conveyance system 702,236 702,236
Equipment 112,298 1,210 113,508 38,895
Less accumulated depreciation (457,349) (10,112) (467,461) (19,349)
Construction in progress 342,111 342,111 1,162
Total capital assets (net of accumulated depreciation) - 1,086,684 5,793 1,092,477 21,914
Deferred financing costs 5,133 5,133
Total noncurrent assets - 1,132,270 5,793 1,138,063 21,914
Total assets - 1,322,195 13,611 1,335,806 106,473
Liabilities
Current liabilities:
Accounts payable 34,994 323 35,317 2,689
Employee compensation 4,148 692 4,840 955
Interest payable 365 365
Due to other funds 121 - 121 251
Deferred revenues 2,131 2 2,133 1
Current sewer revenue bonds and obligations payable 24,445 24,445
Current portion of wastewater loans payable 2,550 2,550
Current portion reported but unpaid losses 4,202
Current portion incurred but not reported losses 2,114
Total current liabilities - 68,754 1,017 69,771 10,212
Noncurrent liabilities:
Contracts and notes 15,365 15,365
Sewer revenue bonds and obligations payable 525,930 525,930
Wastewater loans payable 21,169 21,169
Reported but unpaid losses 19,253
Incurred but not reported losses 3,080 3,080 9,828
Total noncurrent liabilities 565,544 565,544 29,081
Total liabilities - 634,298 1,017 635,315 39,293
Net position
Net investment in capital assets 558,768 5,793 564,561 21,914
Restricted for:
Debt service 22,538 22,538
Capital projects 31,680 31,680
Regional wastewater reclamation 18,449 18,449
Unrestricted 56,462 6,801 63,263 45,266
Total net position $ - $ 687,897 $ 12,594 700,491 $ 67,180
Some amounts reported for business-type activities in the
Statement of Net Position are different because certain internal
service fund assets and liabilities are included with business-type
activities. 3,207
Net position of business-type activities $ 703,698
PIMA COUNTY, ARIZONA
Statement of Net Position - Proprietary Funds
June 30, 2012
(in thousands)
Exhibit A - 7
See accompanying notes to financial statements
38
Business-type Activities
Enterprise Funds
Governmental
Pima Regional Other Total Activities-
Health System Wastewater Enterprise Enterprise Internal Service
& Services Reclamation Funds Funds Funds
Operating revenues:
Net patient services $ 52,018 $ 52,018
Charges for services 6 ,704 $ 138,094 $ 8 ,330 153,128 $ 42,585
Other 1 ,182 1 66 39 1 ,387 4 07
Total net operating revenues 5 9,904 138,260 8 ,369 206,533 4 2,992
Operating expenses:
Employee compensation 1 1,370 3 5,474 5 ,813 5 2,657 7 ,646
Medical claims 3 9,096 3 9,096
Operating supplies and services 5 87 9 ,476 95 1 0,158 9 ,405
Sludge and refuse disposal 1 ,553 1 ,553
Repair and maintenance 96 6 ,501 2 22 6 ,819 1 ,398
Incurred losses 2 ,209
Insurance premiums 4 ,619
General and administrative 6 ,655 1 4,212 2 ,451 2 3,318 3 ,707
Consultants and professional services 2 31 5 ,091 1 49 5 ,471 1 ,302
Depreciation 1 15 3 5,477 2 27 3 5,819 3 ,510
Total operating expenses 5 8,150 107,784 8 ,957 174,891 3 3,796
Operating income (loss) 1 ,754 3 0,476 (588) 3 1,642 9 ,196
Nonoperating revenues (expenses):
Intergovernmental revenue 1 ,275 1 05 1 ,380
Investment earnings 1 18 8 48 35 1 ,001 1 ,260
Sewer connection fees 1 6,507 1 6,507
Interest expense (20) (6,519) (6,539)
Gain/(loss) on disposal of capital assets 3 42 (317) 25 (25)
Amortization of deferred charges (941) (941)
Claim and judgment contingency losses (3,080) (3,080)
Premium tax (1,112) (1,112)
Total nonoperating revenues 6 03 6 ,498 1 40 7 ,241 1 ,235
Income (loss) before contributions and transfers 2 ,357 3 6,974 (448) 3 8,883 1 0,431
Capital contributions 2 ,571 2 ,571 19
Transfers in 4 75 1 ,000 1 ,475
Transfers (out) (26,436) (709) (18) (27,163) (322)
Change in net position (24,079) 3 9,311 5 34 1 5,766 1 0,128
Net position at beginning of year 2 4,079 648,586 1 2,060 684,725 5 7,052
Net position at end of year $ $ 687,897 $ 12,594 700,491 $ 67,180
Some amounts reported for business-type activities in the
Statement of Activities are different because a portion of the
net expense of certain internal service funds is reported
with business-type activities. 1 ,433
Change in net position of business-type activities $ 17,199
PIMA COUNTY, ARIZONA
Statement of Revenues, Expenses and Changes in Fund Net Position
Proprietary Funds
For the Year Ended June 30, 2012
(in thousands)
Exhibit A - 8
See accompanying notes to financial statements
39
Governmental
Pima Regional Other Total Activities-
Health System Wastewater Enterprise Enterprise Internal Service
& Services Reclamation Funds Funds Funds
Cash flows from operating activities:
Cash received from other funds for goods and services provided $ 42,258
Cash received from customers for goods and services provided $ 55,170 $ 140,575 $ 8,422 $ 204,167
Cash received from miscellaneous operations 7,886 166 8,052 402
Cash payments to suppliers for goods and services (61,250) (26,849) (1,454) (89,553) (14,962)
Cash payments to other funds for goods and services (5,099) (8,540) (2,123) (15,762) (4,496)
Cash payments for incurred losses (7,607)
Cash payments to employees for services (12,449) (35,366) (4,996) (52,811) (6,597)
Net cash provided by (used for) operating activities (15,742) 69,986 (151) 54,093 8,998
Cash flows from noncapital financing activities:
Interest paid on short-term credit (20) (20)
Cash transfers in from other funds 1,000 1,000
Cash transfers out to other funds (26,436) (234) (18) (26,688) (322)
Loans with other funds (555) (244) (18) (817) 306
Premium tax (1,112) (1,112)
Intergovernmental revenues 2,347 105 2,452
Net cash provided by (used for) noncapital financing activities (25,776) (478) 1,069 (25,185) (16)
Cash flows from capital and related financing activities:
Proceeds from issuance of bonds and loans 189,160 189,160
Principal paid on bonds and loans (22,030) (22,030)
Interest paid on bonds and loans (11,869) (11,869)
Proceeds from premium 21,682 21,682
Sewer connection fees 16,203 16,203
Proceeds from sale of capital assets 762 762 333
Purchase of capital assets (199,105) (199,105) (7,158)
Net cash provided by (used for) capital and
related financing activities 762 (5,959) (5,197) (6,825)
Cash flows from investing activities:
Interest received on cash and investments 133 793 33 959 1,254
Net cash provided by investing activities 133 793 33 959 1,254
Net increase/ (decrease) in cash and cash equivalents (40,623) 64,342 951 24,670 3,411
Cash and cash equivalents at beginning of year 40,623 147,391 6,710 194,724 77,880
Cash and cash equivalents at end of year $ $ 211,733 $ 7,661 $ 219,394 $ 81,291
(continued)
PIMA COUNTY, ARIZONA
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2012
(in thousands)
Exhibit A - 9
See accompanying notes to financial statements
40
Governmental
Reconciliation of operating income (loss) to net Pima Regional Other Total Activities-cash
provided by (used for) operating activities Health System Wastewater Enterprise Enterprise Internal Service
& Services Reclamation Funds Funds Funds
Operating income (loss) $ 1,754 $ 3 0,476 $ ( 588) $ 3 1,642 $ 9 ,196
Adjustments to reconcile operating income (loss) to
net cash provided by (used for) operating activities:
Depreciation and amortization 115 35,477 227 35,819 3,510
Other 158
Changes in assets and liabilities:
Decrease (increase) in assets:
Accounts receivable 2,976 2,481 4 5,461 (262)
Due from other governments 216 49 265 (71)
Inventory and other assets 91 527 618 (84)
Prepaid expense 78 30 72 180 (433)
Increase (decrease) in liabilities:
Accounts payable (19,854) 887 250 (18,717) 2 ,227
Due to other governments (39) (136) (175)
Reported but unpaid losses (1)
Incurred but not reported losses (5,397)
Other current liabilities (1,079) 108 (29) (1,000) 155
Net cash provided by (used for) operating activities $ ( 15,742) $ 6 9,986 $ ( 151) $ 5 4,093 $ 8 ,998
Noncash investing, capital, and noncapital financing activities during the year ended June 30, 2012:
Regional Wastewater Reclamation Enterprise Fund received developer-built conveyance systems with estimated fair value of $3,520.
This contribution was recorded as an increase in capital assets and capital contributions.
Regional Wastewater Reclamation Enterprise Fund recorded a Board of Supervisors' approved connection fee credit agreement of $951.
This credit was recorded as an increase to deferred revenue and a decrease to capital contributions.
Regional Wastewater Reclamation Enterprise Fund retired expired Sewer Credit Agreements totaling $2. This transaction was recorded
as a decrease to deferred revenue and an increase in capital contributions.
Regional Wastewater Reclamation Enterprise Fund retired capital assets with a net book value of $314.
Pima Health System & Services retired equipment with a net book value of $286.
Pima Health System & Services transferred equipment with a net book value of $134 to the County's general government.
Internal Service Funds received a capital contribution of $19.
Internal Service Funds sold capital assets with a net book value of $358.
PIMA COUNTY, ARIZONA
Statement of Cash Flows
Proprietary Funds
For the Year Ended June 30, 2012
(in thousands)
Exhibit A - 9.1
See accompanying notes to financial statements
41
Investment
Trust Agency
Funds Funds
Assets
Cash and cash equivalents $ 297,724 $ 57,450
Interest receivable 96
Due from other governments 3,704
Total assets $ 297,820 $ 61,154
Liabilities
Employee compensation $ 496
Due to other governments 38,700
Deposits and rebates 21,958
Total liabilities $ 61,154
Net position
Held in trust for pool participants $ 297,820
PIMA COUNTY, ARIZONA
Statement of Fiduciary Net Position - Fiduciary Funds
June 30, 2012
(in thousands)
Exhibit A - 10
See accompanying notes to financial statements
42
Investment
Trust
Funds
Additions
Contributions from participants $ 2,608,930
Total contributions 2,608,930
Investment earnings 1,426
Total investment earnings 1,426
Total additions 2,610,356
Deductions
Distributions to participants 2,710,812
Total deductions 2,710,812
Change in net position (100,456)
Net position held in trust July 1, 2011 398,276
Net position held in trust June 30, 2012 $ 297,820
PIMA COUNTY, ARIZONA
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Year Ended June 30, 2012
(in thousands)
Exhibit A - 11
See accompanying notes to financial statements
43
Sports & Southwestern
Tourism Fair
Authority Commission Total
Assets
Cash and cash equivalents $ 9 $ 1,047 $ 1,056
Accounts receivable (net) 5 5
Inventories 36 36
Prepaids 60 60
Restricted assets:
Cash and cash equivalents 1,500 1,500
Capital assets (net):
Buildings and improvements 2,306 2,306
Machinery and equipment 666 666
Total assets 9 5,620 5,629
Liabilities
Accounts payable 205 205
Deposits and rebates 27 27
Total liabilities 232 232
Net Position
Net investment in capital assets 2,972 2,972
Unrestricted 9 2,416 2,425
Total net position $ 9 $ 5,388 $ 5,397
PIMA COUNTY, ARIZONA
Combining Statement of Net Position
Component Units
June 30, 2012
(in thousands)
Exhibit A - 12
See accompanying notes to financial statements
44
Program Revenues
Operating
Charges for Grants and
Expenses Services Contributions S&TA SFC Total
Sports & Tourism Authority (S&TA)
Operations $ 5 9 $ 2 0 $ 1 $ (38) $ (38)
Total S&TA 59 20 1 (38) (38)
Southwestern Fair Commission (SFC)
Operations 4,959 4,940 120 $ 1 01 101
Total SFC 4,959 4,940 120 101 101
Total component units $ 5 ,018 $ 4 ,960 $ 1 21 (38) 101 63
General revenues:
Miscellaneous 92 92
Total general revenues 92 92
Change in net position (38) 193 155
Net position at beginning of year 47 5,195 5,242
Net position at end of year $ 9 $ 5 ,388 $ 5 ,397
Net (Expense) Revenue
PIMA COUNTY, ARIZONA
Combining Statement of Activities
Component Units
For the Year Ended June 30, 2012
(in thousands)
Exhibit A - 13
See accompanying notes to financial statements
45
Note 1: Summary of Significant Accounting Policies
The accounting policies of Pima County (County) conform to U.S. generally accepted accounting principles
(GAAP) applicable to governmental units as promulgated by the Governmental Accounting Standards Board
(GASB) and the regulatory requirements of the State of Arizona. A summary of the County’s significant
accounting policies follows.
During the year ended June 30, 2012, the County early implemented the provisions of GASB Statement No. 61,
The Financial Reporting Entity: Omnibus, an amendment of GASB Statements No. 14 and No. 34. GASB
Statement No. 61 modifies certain requirements for the inclusion of component units in the financial reporting
entity. The County also early implemented the provisions of GASB Statement No. 63, Financial Reporting of
Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. GASB Statement No. 63
establishes criteria for reporting the consumption and acquisition of net position that is applicable to future
reporting periods.
A. Reporting Entity
The County is a general-purpose local government that is governed by a separately elected Board of
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 financially accountable.
Blended component units, although legally separate entities, are, in substance, part of the County’s operations.
Each blended component described below provides a financial benefit and/or financial burden to the County.
Therefore, data from these units are 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 Pima County Stadium District, a legally separate entity, was formed to promote and establish major league
baseball spring training in Pima County. The County Board of Supervisors is the Board of Directors of the
District. Acting in the capacity of the Board of Directors, the Pima County Board of Supervisors is able to
impose its will on the District. The Board of Directors levies the car rental surcharge rates and the recreation
vehicle (RV) park tax for the District. The District is reported as a special revenue fund (blended component
unit) in these financial statements. Complete financial statements for the District can be obtained from the Pima
County Department of Finance and Risk Management located at 130 West Congress Street, Tucson, Arizona
85701.
The Pima County Library District was established in 1986 when legislation allowed full taxing authority and the
ability to enter into agreements with other jurisdictions for the provision of library services. The Pima County
Board of Supervisors is the Board of Directors of the District. The Library District is reported as a special
revenue fund (blended component unit) in these financial statements. Separate financial statements for the
District are not available.
The Pima County Regional Flood Control District was established in 1978. The District is responsible for
floodplain management activities for the unincorporated areas of Pima County (except national forests, parks,
monuments, and Native American Nations), the City of South Tucson, and the Town of Sahuarita. The Pima
County Board of Supervisors is the Board of Directors for the Flood Control District. The Regional Flood
Control District is reported as a special revenue fund (blended component unit) in these financial statements.
Separate financial statements for the District are not available.
PIMA COUNTY, ARIZONA
Notes to Financial Statements
June 30, 2012
(in thousands)
46
Note 1: Summary of Significant Accounting Policies (continued)
The Pima County Street Lighting Improvement Districts (SLIDs) are responsible for street lighting for specific
regions of unincorporated Pima County. All budgetary and operational activities are administered by the Pima
County Board of Supervisors and meet the criteria for a blended component unit. SLIDs are reported as a
special revenue fund in these financial statements. Separate financial statements for the SLIDs are not
available.
The Southwestern Fair Commission, Inc. (SFC) is a nonprofit corporation, which manages and maintains the
fairgrounds owned by the County and conducts annual fair and other events at the fairgrounds. The
Commission’s members are appointed and can be removed at any time by the Pima County Board of
Supervisors. Based on these factors, and because SFC does not provide services entirely, or almost entirely to
the County, but rather to the general citizenry, SFC is reported as a separate component unit (discrete
presentation) in these financial statements. Complete financial statements for SFC can be obtained from the
Pima County Department of Finance and Risk Management located at 130 West Congress Street, Tucson,
Arizona 85701.
The Pima County Sports and Tourism Authority (S&TA) is a nonprofit municipal corporation established to
promote professional and amateur sports events and other suitable activities for the benefit of the public and to
increase opportunities for amateur youth sports in Pima County. S&TA members are appointed and can be
removed at any time by the Board of Supervisors. Based on these factors, and because S&TA does not provide
services entirely, or almost entirely to the County, but rather to the general citizenry, S&TA is reported as a
separate component unit (discrete presentation) in these financial statements. Separate financial statements
are unavailable for S&TA.
Related Organization:
The Industrial Authority of Pima County (Authority) is a legally separate entity that was created to promote
economic development and the development of affordable housing. The Authority fulfills its function through
the issuance of tax-exempt 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 Accounting
Primary government:
The government-wide, proprietary fund, and fiduciary fund financial statements are presented using the
economic resources measurement focus and the accrual basis of accounting with the exception of agency
funds, which have no 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-based financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized
when measurable and available. The County considers all revenues reported in the governmental funds to be
available if the revenues are collected within 30 days after year-end. Revenues that are collected after 30 days
are reported as deferred revenues. The County’s major revenue sources that are susceptible to accrual are
property taxes, intergovernmental, and charges for services. Expenditures are recorded when the related fund
liability is incurred, except for principal and interest on general long-term debt, claims and judgments,
compensated absences, landfill closure and post-closure care costs, and pollution remediation, which are
PIMA COUNTY, ARIZONA
Notes to Financial Statements
June 30, 2012
(in thousands)
47
Note 1: Summary of Significant Accounting Policies (continued)
recognized as expenditures to the extent they are due and payable. General capital asset acquisitions are
reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under
capital lease agreements are reported as other financing sources. The County may fund certain programs by a
combination of restricted, committed, assigned, and/or unassigned (general) revenues. When an
expenditure/expense is incurred that can be paid from either restricted or unrestricted fund balances/net
position, the County uses restricted fund balance/net position first. When an expenditure is incurred that can
be paid from more than one category of unrestricted fund balances, the County will use committed amounts
first, followed by assigned amounts, and lastly unassigned amounts. Fund balances of the governmental funds
are reported separately within classifications based on a hierarchy of the constraints placed on the use of those
resources. The classifications are based on the relative strength of the constraints that control how the specific
amounts can be spent. The classifications are nonspendable, restricted, and unrestricted, which includes
committed, assigned, and unassigned fund balance classifications.
The nonspendable fund balance classification includes amounts that cannot be spent because they are either not
in spendable form, such as inventories, or are legally or contractually required to be maintained intact.
Restricted fund balances are those that have externally imposed restrictions on their usage by creditors, such as
through debt covenants, grantors, contributors, or laws and regulations.
Committed fund balances are self-imposed limitations set prior to the year-end closing. The Pima County
Board of Supervisors is the highest level of decision making authority. Imposed limitations on the use of funds
must be approved by the Board of Supervisors at a regular supervisory meeting. Any modifications and/or
rescissions must also be approved by the board.
Assigned fund balances are limitations resulting from the intended use of funds. The Pima County Board of
Supervisors and/or its representative, the County Administrator, can authorize the constraints for the specific
purpose. Modifications or rescissions of the constraints can also be authorized by the same action that limited
the funds.
The unassigned fund balance is the residual classification for the General Fund and includes all spendable
amounts not reported in the other classifications. Also, deficits in fund balances of the other governmental
funds are reported as unassigned.
The County does not have a formal minimum fund balance policy, however, all County funds fund balances or
net position are analyzed throughout the year and reserved as necessary during the budgetary appropriation
process.
The County’s business-type activities and enterprise funds follow FASB Statements and Interpretations issued
on or before November 30, 1989, Accounting Principles Board Opinions, and Accounting Research
Bulletins, unless those pronouncements conflict with GASB pronouncements. The County has chosen the
option not to follow FASB statements and interpretations issued after November 30, 1989.
C. Basis of Presentation
The basic financial statements include both government-wide and fund-based financial statements. The
government-wide statements focus on the County as a whole, while the fund-based 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.
PIMA COUNTY, ARIZONA
Notes to Financial Statements
June 30, 2012
(in thousands)
48
Note 1: Summary of Significant Accounting Policies (continued)
Government-wide statements provide information about the primary government and its component units.
The statements include a statement of net position and a statement of activities. These statements report the
financial activities of the overall government, except for fiduciary activities. They also distinguish between
thegovernmental and business-type activities of the County and between the County and its discretely
presentedcomponent units. Governmental activities are financed primarily through taxes and
intergovernmental revenues. Business-type activities are financed in whole or in part by fees charged to
external parties. A statement of activities presents a comparison between direct expenses and program
revenues for each function of the County’s governmental activities and segment of its business-type activities.
Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly
identifiable to a particular function. The County does not allocate indirect expenses to programs or functions.
Program revenues include:
Charges for services (fines and forfeitures, licenses and permits, and special assessments);
Operating grants and contributions; and
Capital grants and contributions
Revenues that are not classified as program revenues, including internally dedicated resources and all taxes
levied or imposed by the County, are reported as general revenues. The net effect of interfund activity has
been eliminated from the government-wide financial statements to minimize the double counting of internal
activities.
Fund-based financial statements provide information about the County’s funds, including fiduciary funds
and blended component units. Separate statements are presented for the governmental, proprietary, and
fiduciary fund categories. The emphasis of fund-based financial statements is on major governmental and
enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are
aggregated and reported as non-major funds. Fiduciary funds are aggregated and reported by fund type.
Proprietary funds are financed mainly by fees and charges received from users of the services provided by the
fund’s operations. Proprietary funds distinguish operating revenues and expenses from non-operating items.
Operating revenues and expenses generally result from providing services and producing and delivering goods
in connection with a proprietary fund’s principal ongoing operations. All revenues and expenses not meeting
this definition are reported as non-operating revenues and 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 for those required to be accounted for in another fund.
The Capital Projects Fund accounts for financial resources to be used for the acquisition or construction of
capital facilities and other capital assets, other than those financed by proprietary funds.
The Debt Service Fund accounts for the accumulation of resources for, and the payment of, general long-term
debt principal and interest.
The County reports the following major enterprise funds:
Pima Health System and Services (PHS&S) provided payment for health care services including inpatient
hospital care and outpatient clinical care for medical and psychiatric problems, indigent health care under the
Arizona Health Care Cost Containment System (AHCCCS), an alternative to Medicaid, home health services,
PIMA COUNTY, ARIZONA
Notes to Financial Statements
June 30, 2012
(in thousands)
49
Note 1: Summary of Significant Accounting Policies (continued)
and long-term nursing care. The County’s AHCCCS contracts terminated on September 30, 2011, and the
Pima Health System and Services ceased operations. All residual balances of the fund were transferred to the
other governmental funds at June 30, 2012.
Regional Wastewater Reclamation (RWR) accounts for the management and operation of wastewater
treatment and water pollution control programs.
The County reports the following fund types:
Internal Service Funds account for the financing of goods or services provided by one department or agency
to other departments or agencies of the County, or to other governmental units, on a cost-reimbursement
basis.These funds account for fleet maintenance and operation, insurance, graphic services, and
telecommunications services.
Investment Trust Funds account for assets held by the County Treasurer in an external investment pool and
individual investment accounts for the benefit of outside jurisdictions.
Agency Funds account for the assets held by the County as an agent for individuals, private organizations, or
other governmental units. The agency funds are custodial in nature and do not present results of operations.
D. Cash and Investments
Primary government:
For purposes of its statements of cash flows, the County considers only those highly liquid investments, with a
maturity period of 3 months or less when purchased, to be cash equivalents. All investments are stated at fair
value.
If an individual fund has a deficit balance in the amount on deposit with the County Treasurer at year-end, that
balance is reclassified as an amount due to other funds.
E. Inventories and Prepaids
The County accounts for its inventories in the Health Fund using the purchase method. Inventories of the
Health Department 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 nonspendable fund balance to indicate that they do not constitute
“available spendable resources.” These inventories are stated at cost using the first-in, first-out method or
average cost method.
Inventories of the Transportation Department are recorded as assets when purchased and expensed when used.
Inventories in Transportation are valued at lower of cost or market, cost being determined using the moving
average method.
Inventories in the government-wide and proprietary funds’ financial statements are recorded as assets when
purchased and expensed when consumed.
Inventories of RWR, an enterprise fund, are valued at lower of cost or market, cost being determined using the
moving average method.
PIMA COUNTY, ARIZONA
Notes to Financial Statements
June 30, 2012
(in thousands)
50
Note 1: Summary of Significant Accounting Policies (continued)
Inventories of Internal Service Funds are valued at lower of cost or market, cost being determined using the
moving average method.
Prepaid expenses/expenditures are accounted for using the consumption method, except for the School Reserve
Fund reported as an Other Governmental Fund, which uses the purchase method.
F. Property Tax Calendar
The County levies real and personal property taxes on or before the third Monday in August that become due
and payable in two equal installments. The first installment is due on the first day of October and becomes
delinquent after the first business day of November. The second installment is due on the first day of March of
the next year and becomes delinquent after the first business day of May. A lien assessed against real and
personal property attaches on the first day of January preceding assessment and levy.
G. Capital Assets
Capital assets are reported at actual cost or estimated historical cost if historical records are not available.
Donated assets are reported at estimated fair value at the time received.
Capitalization thresholds, depreciation methods, and estimated useful lives of capital assets reported in the
government-wide statements and proprietary funds are as follows (excluding component units):
Capitalization Depreciation Estimated
Threshold Method Useful Life
Land All N/A N/A
Land improvements (Reported in buildings and improvements) All Straight Line 20 - 30 Years
Buildings and improvements $100 Straight Line 10 - 50 Years
Equipment $5 Straight Line 4 - 25 Years
Infrastructure/Sewer conveyance systems $100 Straight Line 10 - 50 Years
Intangible (Reported in land, equipment, and infrastructure) $100 Straight Line Varies
Discretely presented component units:
SFC capital assets are reported at actual cost. Depreciation is provided by the straight-line method over the
assets’ estimated useful life, which range from 5 to 40 years.
H. Investment Earnings
Investment earnings are composed of interest, dividends, and net changes in the fair value of applicable
investments.
PIMA COUNTY, ARIZONA
Notes to Financial Statements
June 30, 2012
(in thousands)
51
Note 1: Summary of Significant Accounting Policies (continued)
I. Compensated Absences
Compensated absences consist of vacation leave and a calculated amount of sick leave earned by employees
based on services already rendered.
Employees may accumulate up to 240 hours of vacation depending upon years of service, but any vacation
hours in excess of the maximum amount that are unused at their year-end are forfeited. Upon termination of
employment, all unused and unforfeited vacation benefits are paid to employees. Accordingly, vacation
benefitsareaccrued as a liability in the financial statementsin
Employees may accumulate up to 1920 hours of sick leave. Generally, sick leave benefits provide for ordinary
sick pay and are cumulative but are forfeited upon termination of employment. Sick leave benefits do not vest
with employees; however, employees who are eligible to retire from County service into the Arizona State
Retirement System, Public Safety Personnel Retirement System, or Corrections Officer Retirement Plan may
request sick leave be converted to annual leave on a predetermined conversion basis. An estimate of those
retirement payouts is accrued as a liability in the government-wide and proprietary fund financial statements in
Employee Compensation. ompensa for the governmental funds is accrued based on vacation
and sick leave paid within the first two pay periods after fiscal year end.
PIMA COUNTY, ARIZONA
Notes to Financial Statements
June 30, 2012
(in thousands)
52
Note 2: Fund Balance Classifications
The table below details the fund balance categories and classifications:
Other
General Capital Projects Debt Service Governmental CAFR
Fund Fund Fund Funds Total
Net Position:
Nonspendable:
Inventory $ 67 $ 1,374 $ 1 ,441
Prepaid expenses 1,984 72 2 ,056
Loan receivable 669 59 7 28
Permanent fund principal 45 4 5
Total nonspendable 2,720 1,550 4 ,270
Restricted for:
Capital Projects
Streets and highways $ 42,385 4 2,385
Other 78,481 7 8,481
Justice Court Complex 22,651 2 2,651
Judicial activities 34,367 3 4,367
Flood Control District 14,171 9,712 2 3,883
Health 9,792 9 ,792
Law enforcement 4,385 4 ,385
Library District 15,217 1 5,217
Parks and recreation 17 1 7
School reserve 508 5 08
Social services 3,186 3 ,186
Streets and highways 22,877 2 2,877
Tire fund 1,214 1 ,214
Other purposes 333 4,193 4 ,526
Total restricted 333 157,688 105,468 2 63,489
Committed to:
School reserve 414 4 14
Sports promotion (Stadium) 4,440 4 ,440
Other purposes 7,234 5,410 1 2,644
Total committed 7,234 10,264 1 7,498
Assigned to:
Debt service reserve $ 28,298 2 8,298
Judicial activities 114 1 14
Health 805 8 05
Parks and recreation 4 1,648 1 ,652
Landfill 1,890 1 ,890
School reserve 1,130 1 ,130
Other purposes 11,209 1 1,209
Total assigned 118 28,298 16,682 4 5,098
Unassigned: 77,596 (3,553) (9,013) 6 5,030
Total Net Position $ 80,767 $ 161,369 $ 28,298 $ 124,951 $ 3 95,385
PIMA COUNTY, ARIZONA
Notes to Financial Statements
June 30, 2012
(in thousands)
53
Note 3: Cash and Investments
Primary Government
The County’s cash and investment policies are governed by State statutes and by bond covenants. The County
Treasurer is authorized to invest public monies in the State Treasurer’s Investment Pool; interest bearing
savings accounts, certificates of deposit and repurchase agreements in eligible depositories; bonds or other
obligations issued or guaranteed by the United States government or any of the senior debt of its agencies,
sponsored agencies, corporations, sponsored corporations, or instrumentalities; specified state and local
government bonds; specified commercial paper, bonds, debentures, and notes issued by corporations organized
and doing business in the United States; bonds or other evidences of indebtedness of the State of Arizona or any
of its counties, cities, towns, or school districts as specified by statute; and bonds of any county municipal
district, municipal utility, or special taxing district of any state that are payable from revenues, earnings, or a
special tax pledged for all payments on the obligations. In addition, the County Treasurer may invest trust
funds in fixed income securities of corporations doing business in the United States.
Credit risk—The State statutes have the following requirements for credit risk:
1. Commercial paper must be of prime quality and be rated within the top two ratings by a nationally
recognized rating agency.
2. Corporate bonds, debentures, and notes must be rated within the top three ratings by a nationally
recognized rating agency.
3. Fixed income securities must carry one of the two highest ratings by Moody’s Investors Service and
Standard and Poor’s rating service. If only one of the above-mentioned services rates the security, it
must carry the highest rating of that service.
Custodial credit risk—Statutes require collateral for demand deposits and certificates of deposit at 101 percent
of all deposits not covered by federal depository insurance.
Concentration of credit risk—Statutes do not include any requirements for concentration of credit risk.
Interest rate risk—Statutes require that public monies invested in securities and deposits have a maximum
maturity of 5 years. Investments in repurchase agreements must have a maximum maturity of 180 days.
Foreign currency risk—Statutes do not allow foreign investments.
Deposits—At June 30, 2012, the carrying amount of the County’s deposits was $57,136 and the bank balance
was $66,485.
Custodial credit risk—Custodial credit risk is the risk that the County will not be able to recover its deposits if
a financial institution fails. The County does not have a formal policy with respect to custodial credit risk. As
of June 30, 2012, $1,977 of the County’s bank balance was exposed to custodial credit risk because it was
uninsured and uncollateralized.
PIMA COUNTY, ARIZONA
Notes to Financial Statements
June 30, 2012
(in thousands)
54
Note 3: Cash and Investments (continued)
Investments—At June 30, 2012, the County’s investments consisted of $552,258 invested in marketable
secu
Arizona State Government Publications
