Comprehensive annual financial report / Maricopa County, Arizona 2012

              Fiscal Year Ended June 30, 2012
YUMA
APACHE
COCHISE
COCONINO
GILA
GRAHAM
GREENLEE
MARICOPA
COUNTY
MOHAVE
NAVAJO
PIMA
PINAL
SANTA CRUZ
YAVAPAI
LA PAZ
􀁄􄐀􀁩􆤀􀁳􇌀􀁴􇐀􀁲􇈀􀁩􆤀􀁣􆌀􀁴􇐀􀀠􂀀􀀱􃄀 􀁄􄐀􀁩􆤀􀁳􇌀􀁴􇐀􀁲􇈀􀁩􆤀􀁣􆌀􀁴􇐀􀀠􂀀􀀲􃈀
􀁄􄐀􀁩􆤀􀁳􇌀􀁴􇐀􀁲􇈀􀁩􆤀􀁣􆌀􀁴􇐀􀀠􂀀􀀳􃌀
􀁄􄐀􀁩􆤀􀁳􇌀􀁴􇐀􀁲􇈀􀁩􆤀􀁣􆌀􀁴􇐀􀀠􂀀􀀴􃐀 􀁄􄐀􀁩􆤀􀁳􇌀􀁴􇐀􀁲􇈀􀁩􆤀􀁣􆌀􀁴􇐀􀀠􂀀􀀵􃔀
Comprehensive Annual Financial Report
Maricopa County
Phoenix, Arizona
For the Fiscal Year
July 1, 2011 to June 30, 2012
Prepared By
Department of Finance
Shelby L. Scharbach, Assistant County Manager – Chief Financial Officer
INTRODUCTORY SECTION
Table of Contents
Listing of Maricopa County Officials
Organizational Chart
Letter of Transmittal
Citizens Audit Advisory Committee Letter
Certificate of Achievement for Excellence in Financial Reporting
Comprehensive Annual Financial Report
Table of Contents
For the Fiscal Year Ended June 30, 2012
i
Introductory Section
Page
Table of Contents i
Listing of Maricopa County Officials v
Organizational Chart vi
Letter of Transmittal vii
Maricopa County Citizens Audit Advisory Committee Letter xi
Certificate of Achievement for Excellence in Financial Reporting xii
Financial Section
Independent Auditors’ Report 1
Management’s Discussion and Analysis 3
Basic Financial Statements
Definitions of Government-wide Financial Statements and Listing of Major Funds 17
Government-wide Financial Statements
Statement of Net Assets 18
Statement of Activities 19
Fund Financial Statements
Governmental Funds Financial Statements
Balance Sheet 20
Statement of Revenues, Expenditures, and Changes in Fund Balances 22
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities 24
Proprietary Funds Financial Statements
Statement of Net Assets 26
Statement of Revenues, Expenses, and Changes in Fund Net Assets 27
Statement of Cash Flows 28
Fiduciary Funds Financial Statements
Statement of Fiduciary Net Assets 30
Statement of Changes in Fiduciary Net Assets 31
Basic Financial Statements – Notes 35
Required Supplementary Information
Budgetary Comparison Schedules – General Fund and Major Special Revenue Fund
General Fund 71
Detention Operations Fund 73
Note to Budgetary Comparison Schedules 74
Table of Contents (Continued)
For the Fiscal Year Ended June 30, 2012
ii
Page
Schedule of Agent Retirement Plans’ Funding Progress 75
Note to Schedule of Agent Retirement Plans’ Funding Progress 76
Modified Approach for Infrastructure Assets 77
Combining and Individual Fund Statements and Schedules
Listing of Nonmajor Governmental Funds 81
Governmental Funds
Combining Balance Sheet – Nonmajor Governmental Funds 88
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances –
Nonmajor Governmental Funds 104
Schedules of Revenues, Expenditures, and Changes in Fund Balances – Budget
and Actual
Special Revenue Funds
Adult Probation Fees Fund 121
Adult Probation Grants Fund 122
Air Quality Fees Fund 123
Air Quality Grants Fund 124
Animal Control Field Operations Fund 125
Animal Control Grants Fund 126
Animal Control License/Shelter Fund 127
Ballpark Operations Fund 128
Cactus League Operations Fund 129
CDBG Housing Trust Fund 130
Check Enforcement Program Fund 131
Child Support Enhancement Fund 132
Children’s Issues Education Fund 133
Clerk of Court Fill the Gap Fund 134
Clerk of the Court EDMS Fund 135
Clerk of the Court Grants Fund 136
Conciliation Court Fees Fund 137
Correctional Health Grants Fund 138
County Attorney Fill the Gap Fund 139
County Attorney Grants Fund 140
County Attorney RICO Fund 141
County School Indirect Cost Fund 142
Court Document Retrieval Fund 143
Criminal Justice Enhancement Fund 144
Del Webb Special Revenue Fund 145
Diversion Fund 146
Domestic Relations Mediation Education Fund 147
Elections Grants Fund 148
Emergency Management Fund 149
Environmental Services Environmental Health Fund 150
Environmental Services Grants Fund 151
Expedited Child Support Fund 152
Table of Contents (Continued)
For the Fiscal Year Ended June 30, 2012
iii
Page
Special Revenue Funds (Continued)
Flood Control Fund 153
Flood Control Grants Fund 154
General Government Grants Fund 155
Human Services Grants Fund 156
Inmate Health Services Fund 157
Inmate Services Fund 158
Judicial Enhancement Fund 159
Justice Court Judicial Enhancement Fund 160
Justice Courts Photo Enforcement Fund 161
Justice Courts Special Revenue Fund 162
Juvenile Probation Diversion Fund 163
Juvenile Probation Grants Fund 164
Juvenile Probation Special Fees Fund 165
Juvenile Restitution Fund 166
Lake Pleasant Recreation Services Fund 167
Law Library Fees Fund 168
Legal Defender Fill the Gap Fund 169
Library District Fund 170
Library District Grants Fund 171
Medical Examiner Grants Fund 172
Palo Verde Fund 173
Parks and Recreation Grants Fund 174
Parks Donations Fund 175
Parks Enhancement Fund 176
Parks Souvenir Fund 177
Parks Spur Cross Ranch Conservation Fund 178
Planning and Development Fees Fund 179
Probate Fees Fund 180
Public Defender Fill the Gap Fund 181
Public Defender Grants Fund 182
Public Defender Training Fund 183
Public Health Fund 184
Public Health Fees Fund 185
Recorder’s Surcharge Fund 186
School Communication Expense Fund 187
School Grants Fund 188
School Transportation Fund 189
Sheriff Donations Fund 190
Sheriff Grants Fund 191
Sheriff Jail Enhancement Fund 192
Sheriff RICO Fund 193
Small School Service Fund 194
Solid Waste Management Fund 195
Spousal Maintenance Enforcement Enhancement Fund 196
Superior Court Fill the Gap Fund 197
Taxpayer Information Fund 198
Transportation Grants Fund 199
Transportation Operations Fund 200
Trial Court Grants Fund 201
Trial Court Special Revenue Fund 202
Victim Compensation Interest Fund 203
Victim Compensation Restitution Fund 204
Table of Contents (Continued)
For the Fiscal Year Ended June 30, 2012
iv
Page
Special Revenue Funds (Continued)
Victim Location Fund 205
Waste Management Fund 206
Waste Tire Fund 207
Debt Service Funds
County Improvement Debt Fund 208
Stadium District Debt Service Fund 209
Capital Projects Funds
Detention Capital Projects Fund 210
Detention Technology Capital Improvement Fund 211
Flood Control Capital Projects Fund 212
General Fund County Improvements Fund 213
Intergovernmental Capital Projects Fund 214
Library District Capital Improvement Fund 215
Long Term Project Reserve Fund 216
Technology Capital Improvement Fund 217
Transportation Capital Projects Fund 218
Schedule of Capital Projects – Budget and Actual
All Capital Improvement Projects 219
Internal Service Funds
Listing of Internal Service Funds 227
Combining Statement of Net Assets 228
Combining Statement of Revenues, Expenses, and Changes in Net Assets 230
Combining Statement of Cash Flows 232
Agency Fund
Listing of Agency Fund 237
Statement of Changes in Assets and Liabilities 238
Statistical Section
Listing of Statistical Information 241
Net Assets by Component 242
Changes in Net Assets 243
Fund Balances, Governmental Funds 245
Changes in Fund Balances, Governmental Funds 246
Tax Revenues by Source, Governmental Funds 248
Assessed Value and Estimated Market Value of Taxable Property 249
Direct and Overlapping Property Tax Rates 250
Principal Property Tax Payers 251
Property Tax Levies and Collections 252
Ratios of Outstanding Debt by Type 253
Legal Debt Margin Information 254
Pledged Revenue Coverage 255
Demographic and Economic Statistics 256
Principal Employers 257
Budgeted Full-time Equivalent County Employees by Function/Program 258
Operating Indicators by Function/Program 259
Capital Asset Statistics by Function/Program 260
v
Maricopa County Officials
BOARD OF SUPERVISORS
Fulton Brock, District 1
Don Stapley, District 2
Andrew Kunasek, District 3
Max Wilson, District 4
Mary Rose Garrido Wilcox, District 5
􀁩􆤀􀁩􆤀􀁩􆤠
COUNTY MANAGER
Tom Manos
􀁩􆤀􀁩􆤀􀁩􆤠
ASSISTANT COUNTY MANAGER –
CHIEF FINANCIAL OFFICER
Shelby L. Scharbach
Organizational Chart
vi
Appointed
Elected
Maricopa County Citizens
County
Manager
Legal
Defender
Risk
Management
Human
Services
Board of
Supervisors
Clerk of the
Court
Constables County Sheriff Treasurer
Attorney
Superintendent Assessor
of Schools
Medical
Examiner
Public
Defender
Legal
Advocate
Public
Health
Human
Resources
Bus. Strat. &
Health Care
Programs
Procurement
Services
Animal Care
&
Control
Deputy County
Manager
Recorder
STAR Call Elections
Center
Assistant County
Manager
Waste
Resources &
Recycling
Transportation
Environmental
Services
Facilities
Management
Equipment
Services
Emergency
Management
Planning &
Development
Internal
Audit
Clerk of the
Board
Enterprise
Technology
Public
Advocate
Air
Quality
Assistant County
Manager
Public
Defense
Services
Finance
Public
Fiduciary
Parks &
Recreation
Contract
Counsel
Correctional
Health
Research &
Reporting
Non-
Departmental
Management
&
Budget
Deputy County
Manager
Assistant County
Manager
Maricopa County
County Administrative Office
vii
301 West Jefferson Street
10th Floor
Phoenix, AZ 85003-2143
Phone: 602-506-3571
Fax: 602-506-3328
www.maricopa.gov
December 21, 2012
The Honorable Board of Supervisors
Maricopa County
County Administration Building
301 W. Jefferson Street
Phoenix, AZ 85003
Arizona Revised Statute (A.R.S.) §41-1279.21 requires the Office of the Auditor General to
conduct financial audits of the accounts and records of County governments. Pursuant to
the statute, the Office of the Auditor General audited the Comprehensive Annual Financial
Report (CAFR) of Maricopa County in accordance with generally accepted auditing
standards for the year ended June 30, 2012.
This report consists of management’s representations concerning the finances of Maricopa
County. Consequently, management assumes full responsibility of the completeness and
reliability of all the information presented in this report. To provide a reasonable basis for
making these representations, management of Maricopa County has established a
comprehensive internal control framework that is designed both to protect the government’s
assets from loss, theft, or misuse and to compile sufficient reliable information for
preparation of Maricopa County’s financial statements in conformity with generally
accepted accounting principles (GAAP). Because the cost of internal control should not
outweigh their benefits, Maricopa County’s comprehensive framework of internal controls
has been designed to provide reasonable rather than absolute assurance that the financial
statements will be free from material misstatement. As management, we assert that, to the
best of our knowledge and belief, this financial report is complete and reliable in all material
respects.
The goal of the independent audit was to provide reasonable assurance that the financial
statements of Maricopa County for the fiscal year ended June 30, 2012, are free of material
misstatement. The independent audit involved examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements; assessing the
accounting principles used and significant estimates made by management; and evaluating
the overall financial statement presentation. The independent auditors expressed an
unqualified opinion on the Maricopa County financial statements for the fiscal year ended
June 30, 2012. The auditors concluded that the financial statements were considered fairly
presented in conformity with GAAP. The independent auditor’s report is presented as the
first component of the financial section of this report.
The independent audit of the financial statements of Maricopa County was part of a
broader, federally mandated Single Audit designed to meet the special needs of federal
grantor agencies. The standards governing Single Audit engagements require the
independent auditor to report not only on the fair presentation of the financial statements,
but also on the audited government’s internal controls and compliance with legal
requirements, with special emphasis on internal controls and legal requirements involving
the administration of federal awards. This report will be available in Maricopa County’s
separately issued Single Audit Report to be issued at a future date.
viii
GAAP requires management’s discussion and analysis (MD&A) immediately following the independent
auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial
statements. This MD&A complements this letter of transmittal and should be read in conjunction with it.
County Profile
Maricopa County was established on February 14, 1871 and is located in the south-central portion of the
State of Arizona. According to Arizona Department of Commerce, at July 1, 2011, Maricopa County
contained 59.7 percent of the State’s total population (www.azcommerce.com). The County occupies
9,225 square miles making it the 14th largest county in land area in the United States. Phoenix is the
capital of Arizona as well as the county seat for Maricopa County.
Maricopa County operates under a five member elected Board of Supervisors who appoints a County
Manager. The County Manager is responsible for the general administration and overall operations of the
various County departments. The County has several elected officials including the Assessor, Clerk of
the Superior Court, Constables, County Attorney, Recorder, Sheriff, Superintendent of Schools, and the
Treasurer.
Maricopa County offers a wide variety of governmental services, including:
􀁸􇡃 Community Resources: Library District, Stadium District, and Superintendent of Schools
􀁸􇡃 County Administration: Board of Supervisors, County Administrator, Assessor’s Office, Clerk of
the Board, Elections, Finance, Human Resources, Information Technology, Treasurer’s Office
and Facilities Management
􀁸􇡊 Justice and Law Enforcement: Clerk of the Superior Court, County Attorney, Trial Court, Adult
Probation, Juvenile Probation, Sheriff’s Department, Public Defender and Public Fiduciary
􀁸􇡍 Medical Services: Public Health, Human Services and Medical Examiner
􀁸􇡐 Public Works: Flood Control District, Transportation Department and Solid Waste Management
The annual budget serves as the foundation for Maricopa County’s financial planning and control. The
County is required by A.R.S. §42-17101 et. seq. to annually prepare and adopt a balanced budget.
Arizona law further requires that no expenditure shall be made or liability incurred in excess of the
amounts budgeted except as provided by law. Maricopa County’s annual budget is available on the
internet at the following address: http://www.maricopa.gov/budget/.
Economic Outlook
Maricopa County has a variety of industries within its boundaries with the majority comprised of high tech,
financial, and service industries. Some of the major employers located in the state include Wal-Mart,
Banner Health Systems, Wells Fargo & Co. and various local governments (The Phoenix Business
Journal, Book of Lists).
ix
Because of a favorable climate and mild weather conditions, tourism is also a large factor in the strength
of the local economy. Major sporting events can be held year around and many people come to the area
during the winter months. Maricopa County is the home to teams from major league professional sports,
which include the Arizona Cardinals of the National Football League (NFL), Phoenix Suns of the National
Basketball Association (NBA), Arizona Diamondbacks of the Major League Baseball (MLB) and the
Phoenix Coyotes of the National Hockey League (NHL). Maricopa County also hosts several major
league baseball teams for the annual spring training Cactus League. Maricopa County is also a host to
other major sporting events such as the Waste Management Phoenix Open golf tournament and Phoenix
International Raceway. Cities within Maricopa County also host college bowl games such as the Fiesta
Bowl and the Insight Bowl.
Arizona is slowly starting to recover from the economic downturn; however, a full recovery is still a couple
years away (Elliot D. Pollack & Co.). According to the W.P. Carey School of Business, it will take Arizona
until 2015 to recover and for the economy to be back to normal (http://knowledge.wpcarey.asu.edu).
Maricopa County’s unemployment rate is 6.9 percent as of October 2012, which remains below both the
State of Arizona and the United States unemployment rates of 8.1 percent and 7.9 percent, respectively
(www.workforce.az.gov).
Financial Policies and Long-Term Financial Planning
Financial Planning – Maricopa County has a fiscally conservative management philosophy, which has
allowed the County to be financially successful. Maricopa County prepares a five-year financial forecast,
with the assistance of an economist, which is updated on a quarterly basis for several major funds,
including the General Fund and Detention Operations Fund. The five-year forecast provides a
conservative estimate of the County’s fiscal condition given realistic economic trends, current Board
policies, and existing laws. The forecast does not incorporate anticipated policy changes, spending
priorities, or proposed new revenue sources.
Capital Improvement Program – Maricopa County’s Capital Improvement Program (CIP) identifies
capital projects to be completed over the next five years. Because these projects typically span more than
one fiscal year, the plans are updated annually to track existing projects, identify new projects, and
update funding estimates and forecasts. It is the County’s policy that new capital projects will be
undertaken only if future operating revenues are reasonably estimated to be sufficient to support
associated future operating costs. Operating costs associated with new facilities are budgeted by the user
department in conjunction with the Facilities Management Department. Estimated operating costs, as well
as anticipated savings in lease costs and operating costs of facilities to be replaced are factored into the
County’s ten-year financial forecast.
Debt Management – Maricopa County utilizes a modified “pay as you go” financial policy for large capital
improvement projects and other infrastructure. The County pays cash for many capital improvements, or
utilizes lease reversions or other funding sources from the General Fund to pay for large dollar projects.
Cash Management – Maricopa County maintains deposits and investments in the Treasurer’s Pool and
outside of the Treasurer’s Pool. The Treasurer’s Pool invests all idle monies not specifically invested for
a fund or program. In addition, the Treasurer determines the fair value of those pooled investments
monthly and at June 30. Deposits and investments held outside of the Treasurer’s Investment Pool
represent a small portion of the County’s total investments.
It is the County’s investment policy to: collateralize all deposits by at least 101 percent of the deposits not
covered by depository insurance; preserve the principal value and the interest income of an investment;
hold investments to maturity, where practical, to avoid any loss on investments resulting from an early
sale or retirement of an investment; and require all of the Treasurer’s securities be held by the agent or
trust department and in the County’s name.
Expenditure Limitation – On June 30, 1980, Arizona voters approved general propositions amending
the Arizona Constitution to establish expenditure and revenue limitations for local governments. The
purpose of the expenditure limitation is to control expenditures and to limit future increases in spending to
x
adjustments for inflation, deflation and population growth of the County. The Constitution also limits the
amount of revenues that may be generated from property taxes. A two-percent plus new construction
annual increase is the maximum allowed by law unless special voter approval is obtained. This report will
be available in Maricopa County’s separately issued Expenditure Limitation Report to be issued at a
future date.
Awards and Acknowledgements
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to Maricopa County for its
comprehensive annual financial report for the fiscal year ended June 30, 2011. In order to be awarded a
Certificate of Achievement, a government must publish an easily readable and efficiently organized
comprehensive annual financial report. This report must satisfy both U.S. general accepted accounting
principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
comprehensive annual financial report continues to meet the Certificate of Achievement Program’s
requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.
The preparation and audit of this report could not be accomplished without the efficient and dedicated
services of the Department of Finance staff, the assistance of administrative personnel in the various
departments, and the competent service of the Office of the Auditor General. We appreciate all of those
who assisted in and contributed to the preparation of this report. We also wish to express our sincere
appreciation to the Board of Supervisors for their support in planning and overseeing the financial
operations of the County in a responsible and progressive manner.
Respectfully submitted,
Tom Manos Shelby L. Scharbach
County Manager Assistant County Manager - Chief Financial Officer
xi
xii
FINANCIAL SECTION
Independent Auditors' Report
Management's Discussion and Analysis
Basic Financial Statements
Basic Financial Statements - Notes
Required Supplementary Information
Budgetary Comparison Schedules - General Fund and Major
Special Revenue Fund
Note to Budgetary Comparison Schedules
Schedule of Agent Retirement Plans' Funding Progress
Modified Approach for Infrastructure Assets
Combining and Individual Fund Statements and Schedules
Nonmajor Governmental Funds
Internal Service Funds
Agency Fund
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
Independent Auditors’ Report
Members of the Arizona State Legislature
The Board of Supervisors of
Maricopa County, Arizona
We have audited the accompanying financial statements of the governmental activities, each major fund,
and aggregate remaining fund information of Maricopa 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 three departments, which account for the following percentages of the assets and liabilities
of the opinion units affected:
Opinion Unit/Department Assets Liabilities
Government-wide Statements
Governmental activities:
Stadium District 6.14% 6.44%
Risk Management 0.99% 22.07%
Employee Benefits Trust 1.22% 3.35%
Fund Statements
Aggregate remaining fund information:
Stadium District 1.17% 0.01%
Risk Management 1.89% 48.73%
Employee Benefits Trust 2.35% 7.41%
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 the Stadium District, which
includes the Ballpark Operations and Cactus League Operations Special Revenue Funds, the Stadium
District Debt Service Fund, and the Long Term Project Reserve Capital Projects Fund; and the Risk
Management and Employee Benefits Trust Internal Service Funds, 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,
each major fund, and aggregate remaining fund information of Maricopa 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 3 through 13, the Budgetary Comparison Schedules on pages 71 through 74, the Schedule of
Agent Retirement Plans’ Funding Progress on pages 75 and 76, and the Modified Approach for
Infrastructure Assets information on page 77 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 inquiries, 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 21, 2012
Management’s Discussion and Analysis
3
This discussion and analysis is intended to be an easily readable analysis of Maricopa County’s (County)
financial activities based on currently known facts, decisions or conditions. This analysis focuses on
current year activities and should be read in conjunction with the Transmittal Letter that begins on page vii
and with the County’s basic financial statements following this section.
Financial Highlights
􀁸􇠠 The total assets of the County exceeded its liabilities at the close of the fiscal year by $4.6 billion (net
assets), an increase of 1.4 percent from the prior year. Of this amount, $698.2 million (unrestricted
net assets) may be used to meet the County’s ongoing obligations to citizens and creditors.
􀁸􇠠 The County’s total net assets as reported in the Statement of Activities increased by $63.1 million
from the prior year. The County’s primary sources of revenue are from taxes, grants and
contributions, and charges for services.
􀁸􇠠 The County’s governmental funds reported combined fund balances of $1,425.2 million, a decrease
in fund balance of $58.8 million over the prior fiscal year. Approximately 98.4 percent of the combined
fund balances or $1,402.7 million is spendable and available to meet the County’s current and future
needs.
Invested in capital
assets, net of related
debt - $3,238.4 (71%)
Restricted -
$625.2 (14%)
Unrestricted -
$698.2 (15%)
Composition of Net Assets
(in millions)
Taxes - $1,227.2 (67%)
Charges for Services -
$262.5 (14%)
Operating Grants &
Contributions -
$290.1 (16%)
Capital Grants &
Contributions -
$7.6 (1%)
Other -
$38.0
(2%)
Revenue Sources
(in millions)
Management’s Discussion and Analysis (Continued)
4
􀁸􇠠 Spendable fund balance for the General Fund decreased by 30.8 percent to $283.0 million;
approximately 33.3 percent of total General Fund expenditures. See page 8 for a description of
spendable fund balance. In accordance with Arizona Revised Statutes (A.R.S.), this entire amount is
budgeted to be spent in the next fiscal year. A.R.S. §42-17151 requires that total estimated sources
of revenue must equal the total estimated expenditures in the budget for the current fiscal year. In
addition, A.R.S. §42-17102 stipulates that the estimated expenditures may include an amount for
unanticipated contingencies or emergencies.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the County’s basic financial
statements. The County’s basic financial statements consist of three components: 1) Government-wide
financial statements, 2) Fund financial statements, and 3) Notes to the basic financial statements.
Required Supplementary Information is included in addition to the basic financial statements. The
Combining and Individual Fund Statements and Schedules – Nonmajor Funds begin on page 88.
Government-wide Financial Statements are designed to provide readers with a broad overview of the
County’s finances, in a manner similar to private-sector businesses.
􀁸􇠠 The Statement of Net Assets presents information on all County assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decreases in net assets
may serve as a useful indicator of whether the financial position of the County is improving or
deteriorating.
􀁸􇠠 The Statement of Activities presents information showing how net assets changed during the most
recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise
to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses
are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g.,
uncollected taxes and earned but unused vacation leave).
Both of these government-wide financial statements distinguish functions of the County that are
principally supported by taxes and intergovernmental revenues (governmental activities) from other
functions that are intended to recover all or a portion of their costs through user fees and charges
(business-type activities). The governmental activities of the County include general government; public
safety; highways and streets; health, welfare and sanitation; culture and recreation; education; and
interest on long-term debt. The County has no business-type activities.
Component units are legally separate entities for which the County is considered to be financially
accountable. Blended component units, although legally separate entities, are in substance part of the
County’s operations. Therefore, data from these units is combined with data of the primary government.
Discretely presented component units, on the other hand, are reported in a separate column in the
government-wide financial statements to emphasize they are legally separate from the County. The
Maricopa County Flood Control District, Maricopa County Library District, Maricopa County Public
Finance Corporation, Maricopa County Special Assessment Districts, Maricopa County Stadium District,
Maricopa County Street Lighting District, and the Housing Authority of Maricopa County are reported as
blended component units. The County has no discretely presented component units.
The Government-wide financial statements can be found on pages 18-19 of this report.
Fund Financial Statements are groupings of related accounts that are used to maintain control over
resources that have been segregated for specific activities or objectives. The County, like other state and
local governments, uses fund accounting to ensure and demonstrate finance-related legal compliance. All
of the funds of the County can be divided into three categories: governmental funds, proprietary funds
and fiduciary funds.
Management’s Discussion and Analysis (Continued)
5
􀁸􇡇 Governmental funds are used to account for essentially the same functions reported as
governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental funds financial statements focus on near-term
inflows and outflows of spendable resources, as well as on balances of spendable resources
available at the end of the fiscal year. Such information may be useful in evaluating a county’s near-term
financing requirements. Governmental funds include the general, special revenue, debt service,
and capital projects funds.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By
doing so, readers may better understand the long-term impact of the government’s near-term
financing decisions. Both the governmental funds Balance Sheet and the governmental funds
Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to
facilitate this comparison between governmental funds and governmental activities.
The County reports six major governmental funds. Information is presented separately in the
governmental funds Balance Sheet and in the governmental funds Statement of Revenues,
Expenditures, and Changes in Fund Balances for the General Fund, Detention Operations Fund,
County Improvement Debt Fund, Detention Capital Projects Fund, General Fund County
Improvements Fund and Technology Capital Improvement Fund.
Data from the other governmental funds (nonmajor) are combined into a single, aggregated
presentation. Individual fund data for each of these nonmajor governmental funds is provided in the
form of combining statements, which begin on page 88 of this report.
The governmental funds financial statements can be found on pages 20-24 of this report.
􀁸􇡐 Proprietary funds are used to account for the County’s internal service funds. Internal service funds
are an accounting device used to accumulate and allocate costs internally among the County’s
various functions. The County uses internal service funds to account for its equipment services,
telecommunications, reprographics, risk management, employee benefits trust, and sheriff
warehouse functions. Because these services predominantly benefit governmental rather than
business-type functions, they have been included within governmental activities in the government-wide
financial statements.
The County’s internal service funds are combined into a single, aggregated presentation in the
proprietary funds financial statements. Individual fund data for the internal service funds is provided in
the form of combining statements, which begin on page 228 of this report.
The proprietary fund financial statements can be found on pages 26-28 of this report.
􀁸􇡆 Fiduciary funds are used to account for resources held for the benefit of parties outside the
government. Fiduciary funds are not reflected in the government-wide financial statements because
the resources of those funds are not available to support the County’s own programs. The accounting
used for fiduciary funds is much like that used for proprietary funds.
The fiduciary funds financial statements can be found on pages 30-31 of this report.
Notes to the Financial Statements provide additional information that is essential to a full understanding
of the data provided in the government-wide and fund financial statements. The notes can be found on
pages 35-68 of this report.
Required Supplementary Information is presented concerning the County’s General Fund and
Detention Operations Fund. A budgetary comparison schedule has been provided for both of these funds
to demonstrate compliance with budget and additional information is provided by the Note to Budgetary
Comparison Schedules. Also presented is the schedule of funding progress for the County’s two agent
Management’s Discussion and Analysis (Continued)
6
retirement plans and infrastructure assets reported using the modified approach. Required supplementary
information can be found on pages 71-77 of this report.
Government-wide Financial Analysis
Net Assets
Net assets may serve over time as a useful indicator of a government’s financial position. The following
table reflects the condensed Statement of Net Assets of the County for June 30, 2012, as compared to
the prior year.
Statement of Net Assets
As of June 30
(in millions)
Governmental
Activities
2012 2011*
% Chg
P/Y
Current and other assets $ 1,773.2 $ 1,789.6 (0.9)%
Capital assets 3,380.3 3,258.6 3.7
Total assets 5,153.5 5,048.2 2.1
Current liabilities 264.5 197.9 33.7
Long-term liabilities 327.2 351.6 (6.9)
Total liabilities 591.7 549.5 7.7
Net assets
Invested in capital assets,
net of related debt 3,238.4 3,100.2 4.5
Restricted 625.2 632.1 (1.1)
Unrestricted 698.2 766.4 (8.9)
Total net assets 4,561.8 $ 4,498.7 1.4
* Assets, liabilities, and net assets for fiscal year 2011 were adjusted by $8.2 million for the following: inclusion of component units of
the Housing Authority, a nonmajor governmental fund and a blended component unit of the County; corrections of prior periods for
Housing Authority capital assets; corrections for prior year capital project expenditures, and corrections related to the Special
Assessment Fund. See Note 4 – Beginning Balances Restated for additional information.
By far, the largest portion - $3.2 billion or 71.0 percent - of the County’s net assets reflects the investment
in capital assets (e.g., land, buildings and improvements, machinery and equipment, infrastructure and
construction in progress), less accumulated depreciation and any related debt used to acquire those
assets that is still outstanding. Net assets invested in capital assets increased by $138.2 million due to an
increase in net capital assets of $121.6 million and a decrease in capital related debt, net of unspent
proceeds, of $16.6 million. The decrease in capital related debt was a result of regularly scheduled debt
service payments. The large increase in capital assets is mainly attributed to an increase in buildings and
infrastructure of $302.3 and $35.8 million, respectively, which was offset by a decrease in construction in
progress of $228.2 million. The increase in buildings and decrease in construction in progress is primarily
a result of the completion of the Criminal Court Tower Project, which resulted in the capitalization of a
building for $315.2 million, with a corresponding decrease in construction in progress. During fiscal year
2012, the County expended $52.7 million on the Criminal Court Tower Project. The increase in
infrastructure is due to an increase in Transportation and Flood Control District infrastructure of $23.4 and
$12.4 million, respectively.
The County uses capital assets to provide services to its citizens; consequently, these assets are not
available for future spending. Although the County’s investment in its capital assets is reported net of
related debt, it should be noted that the resources needed to repay this debt must be provided from other
sources, since the capital assets themselves cannot be used to liquidate these liabilities.
Management’s Discussion and Analysis (Continued)
7
The second component of the County’s total net assets, $625.2 million or approximately 13.7 percent,
represents resources that are subject to external restrictions on how they may be used. This component
decreased by $6.9 million from the prior year. This decrease can be attributed to expenses exceeding
revenues for the fiscal year. Although the economic environment is in recovery, it has still not fully
recovered as less revenue was collected than the prior year. The County was able to minimize the impact
of a decreased revenue base by employing a conservative approach to forecasting and budgeting. The
County has continued to minimize the negative impact of the economy by utilizing budget balancing
tactics, while still providing the citizens with mandated services.
The final component consists of unrestricted net assets, $698.2 million or 15.3 percent, and may be used
to meet the County’s ongoing obligations. Unrestricted net assets decreased from fiscal year 2011 by
$68.2 million. This decrease is primarily attributed to an increase in current liabilities of $66.6 million or
33.7 percent as a result of an increase in claims payable of $45.0 million for the accrual of indigent health
care claims in the General Fund (see Note 18 – Risk Management for further explanation).
Changes in Net Assets
As discussed previously, the County’s total net assets of $4.6 billion increased by $63.1 million as
reported in the Statement of Activities. The following table reflects the condensed Statement of Activities
of the County for the fiscal year 2012 compared to the prior year and indicates the changes in net assets
for governmental activities:
Statement of Activities
For the year ended June 30
(in millions)
Governmental
Activities % Chg
2012 2011* P/Y
Revenues:
Program revenues:
Charges for services $ 262.5 $ 274.6 (4.4)%
Operating grants and contributions 290.1 286.4 1.3
Capital grants and contributions 7.6 58.9 (87.0)
General revenues:
Taxes 1,227.2 1,228.1 (0.1)
Other 38.0 32.7 16.2
Total Revenues 1,825.4 1,880.7 (2.9)
Expenses:
General government 229.8 248.4 (7.5)
Public safety 940.7 893.8 5.2
Highways and streets 79.0 123.6 (36.0)
Health, welfare and sanitation 441.7 387.9 13.9
Other** 71.1 60.2 18.1
Total Expenses 1,762.3 1,713.9 2.8
Change in net assets 63.1 166.9 (62.2)
Net assets – beginning, as restated 4,498.7 4,331.8 3.9
Net assets – ending $4,561.8 $4,498.7 1.4
* Net assets for fiscal year 2011 were adjusted by $8.2 million for the following: inclusion of component units of the Housing Authority,
a nonmajor governmental fund and a blended component unit of the County; corrections of prior periods for Housing Authority capital
assets; corrections of prior year capital project expenditures; and corrections related to the Special Assessment Fund. See Note 4 –
Beginning Balances Restated for additional information.
** The functions of culture and recreation, and education along with interest on long-term debt are shown in the condensed Statement
of Activities above as other expenses.
One of the main differences a reader will see between the governmental funds reported in the fund
financial statements and the Statement of Activities is that governmental funds in the fund financial
Management’s Discussion and Analysis (Continued)
8
statements report capital outlays as expenditures. However, in the Statement of Activities the cost of
those assets is not expensed, but reported as a capital asset on the Statement of Net assets, and the
expense of those assets is allocated over their estimated useful lives and reported as depreciation
expense. Capital outlay expenditures exceeded depreciation expense in the current period by $133.0
million.
In the government-wide Statement of Activities, the significant revenues reported included taxes (County-levied,
general sales, and vehicle license taxes), charges for services, and operating grants and
contributions, which represent 67.2, 14.4 and 15.9 percent, respectively, of total governmental activities
revenues for fiscal year 2012. Tax revenues in total decreased $0.9 million primarily as a result of a
decrease in property tax revenue of $21.4 million, which was offset by an increase in sales tax revenues
of $20.8 million. The decrease in property tax revenues is a result of the decline in housing market
values experienced in prior years as a result of the economic downturn. Although the economy is
improving, the property tax levy is now experiencing the decline from prior year market devaluation as
there is a lag period between the actual decline in market value and when that decline is recognized for
the assessed valuation used for the property tax rate and levy. The increase in sales tax revenue is a
result of the improving economy. Charges for services revenue decreased $12.1 million as a result of a
decrease in Transportation Capital Projects Fund charges for services revenue of $14.3 million. This
decrease can be attributed to a decrease in intergovernmental transportation capital projects from the
prior fiscal year, for which the County would have received charges for services revenue. Operating
grants revenue increased $3.7 million from the prior year primarily as a result of increases in Public
Health grant revenue of $7.1 million, School Funds grant revenue of $3.5 million and Flood Control
District intergovernmental revenues of $5.9 million. The increase in Public Health and School Funds
grant revenues is a result of additional grant funding. The increase in Flood Control District
intergovernmental revenues is primarily a result of federal monies received for the Flood Control dam
rehabilitation project, for which the County received $3.5 million in additional revenue in fiscal year 2012.
These increases were offset by decreases in CDBG Housing Trust grant revenues of $4.6 million and
Transportation Department Highway User Revenue Fee (HURF) revenues of $6.9 million. The decrease
in HURF is a result of the change in the state distribution formula to divert more funds from counties to
support state programs. The decrease in CDBG grant revenues is a result of a cutback in the HOME and
CDBG grants by the federal grantor as a result of reduced funding.
Tax and other operating revenues provide the principal support for the functions of the County, which
include general government; public safety; highways and streets; health, welfare and sanitation; culture
and recreation; and education. Total expenses increased $48.4 million or 2.8 percent from the prior fiscal
year. The most significant fluctuations were in the public safety; highways and streets; and health,
welfare and sanitation functions, with net changes of $46.9, ($44.5), and $53.8 million, respectively. The
increase in public safety is primarily attributable to an increase in public safety expenditures as a result of
the mandated payment to the State of $26.4 million, of which $23.7 million was paid from public safety
departments. The increase is also attributed to an increase in internal service charges of $10.4 million
that were previously budgeted and paid for out of the general government department (governmental
activities). The decrease in highways and streets expenses is mainly due to a decrease in Transportation
infrastructure asset deletions, resulting in a decrease in loss on disposal of assets from the prior year of
$36.7 million. The increase in health, welfare, and sanitation expenses is primarily due to an increase in
total ALTCS contributions of $35.9 million (see page 9 for further information).
Financial Analysis of the County’s Funds
As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements. In order to provide comparative discussion of fund balances to the prior year,
the analysis below of ‘spendable’ balance represents restricted, committed, assigned, and unassigned
fund balance.
Governmental Funds. Governmental activities are contained in the general, special revenue, debt
service, and capital projects funds. The focus of the County’s governmental funds is to provide
Management’s Discussion and Analysis (Continued)
9
information on near-term inflows, outflows, and balances of spendable resources. Such information is
useful in assessing the County’s financing requirements. In particular, spendable fund balance may serve
as a useful measure of a government’s net resources available for spending at the end of the fiscal year.
As of June 30, 2012, the governmental funds reported combined fund balances of $1,425.2 million and a
decrease in fund balance of $58.8 million from the prior fiscal year. Approximately 98.4 percent of the
combined fund balances or $1,402.7 million is available to meet the County’s current and future needs
(spendable fund balance). The remaining fund balance is reserved for inventories, intergovernmental
loans and debt service.
The following funds are the County’s major governmental funds:
General Fund
The General Fund is the County’s primary operating fund. At the end of the current fiscal year, spendable
fund balance of the General Fund was $283.0 million, while total fund balance was $302.9 million. This
represents a decrease in the spendable fund balance from the prior year of $126.0 million, or 30.8
percent. As a measure of the General Fund’s liquidity, it may be useful to compare both spendable fund
balance and total fund balance to the total fund expenditures. Spendable fund balance represents 33.3
percent of the total fiscal year 2012 General Fund expenditures, while total fund balance represents 35.6
percent of that same amount. These ratios indicate a strong fund balance position in comparison to
expenditures.
During fiscal year 2012, the General Fund experienced a change in fund balance of ($126.5) million, a
decrease of $46.3 million from the prior fiscal year. While revenues stayed flat in comparison to prior
year, expenditures increased $43.2 million. The increase in expenditures is primarily a result of an
increase in total ALTCS contributions of $35.9 million. Total ALTCS contributions increased as a result of
the County no longer receiving a reduction in payment from the Federal Medical Assistance Percentages
(FMAP) stimulus monies.
Detention Operations Fund
The Detention Operations Fund is a special revenue fund that was established under the authority of
propositions 400 and 401, which were passed in the General Election of November 3, 1998. These
propositions authorized a temporary 1/5 of one-cent sales tax to be used for the construction and
operation of adult and juvenile detention facilities. On November 5, 2002, the voters approved the
extension of the 1/5 of one-cent sales tax in the General Election to be used for jail facility operations.
The extension begins in the month following the expiration of the original tax and may continue for not
more than twenty years after the date the tax collection begins.
The Detention Operations Fund accounts for the jail tax revenue along with transfers from the General
Fund for maintenance of effort (MOE). The MOE transfer from the General Fund is used to support the jail
detention operations. Arizona Revised Statutes require the County to calculate the maintenance of effort
transfer on an annual basis. The Detention Operations Fund transfers monies to the Detention Capital
Projects Fund for the construction of the jail and detention facilities. At the end of the current fiscal year,
total fund balance of the Detention Operations Fund was $77.9 million, of which 99.9 percent is restricted
and considered spendable. This was an increase in total fund balance of $20.9 million, or 36.7 percent,
from the prior fiscal year. Although the fund had more expenditures than revenues by $142.4 million, the
increase in fund balance can be attributed to net transfers of $163.4 million, which represented a net
increase in transfers of $193.6 million over the prior year. This net increase is primarily attributed to a
decrease in transfers out to the Detention Capital Projects Fund and Detention Technology Capital
Improvement Fund of $181.3 and $6.1 million, respectively. The amount to be transferred to the
Detention Capital Projects Fund and the Detention Technology Capital Improvement Fund for any given
year is determined through the budget planning process.
County Improvement Debt Fund
The County Improvement Debt Fund is a debt service fund that accounts for the debt service on the
Lease Revenue Refunding Bonds, Series 2003; Lease Revenue Bonds, Series 2007A; Lease Revenue
Management’s Discussion and Analysis (Continued)
10
Refunding Bonds, Series 2007B; and other long-term obligations. At the end of the current fiscal year,
spendable fund balance of the County Improvement Debt Fund was $13.0 million, of which $11.6 million
is restricted for debt service. This represents an increase of $6.2 million from the prior fiscal year and is a
result of transfers in for the payment of regularly scheduled debt service payments. As no new debt
issuances occurred during the fiscal year, the primary activity in this fund is debt service payments.
Detention Capital Projects Fund
The Detention Capital Projects Fund is a capital projects fund that accounts for construction associated
with the 1/5 of one-cent sales tax approved by voters in the General Election on November 3, 1998, and
extended by the voters on November 5, 2002. Funding is provided by transfers from the Detention
Operations Fund for construction of the adult and juvenile detention facilities. At the end of the current
fiscal year, fund balance of the Detention Capital Projects Fund was $244.1 million, all of which is
restricted and considered spendable. The fund balance in this fund decreased $22.1 million from the
prior fiscal year, which is primarily attributed to capital project expenditures for the Criminal Court Tower
Project.
General Fund County Improvements Fund
The General Fund County Improvements Fund is a capital projects fund that accounts for capital projects
funded by transfers from the General Fund. Projects that are currently funded include justice,
administrative, and energy conservation projects. At the end of the current fiscal year, fund balance of
the General Fund County Improvements Fund was $312.3 million, all of which is committed and
considered spendable. The fund balance in this fund increased $40.4 million from the prior fiscal year
primarily as a result of net transfers of $89.8 million exceeding capital outlay expenditures of $49.8 million
by $40.0 million.
Technology Capital Improvement Fund
The Technology Capital Improvement Fund is a capital projects fund that accounts for technology
improvement capital projects funded by transfers from the General Fund. Projects that are currently
funded include technology infrastructure upgrades, administrative and detention system projects, and
security and telephone system upgrades. At the end of the current fiscal year, fund balance of the
Technology Capital Improvement Fund was $178.8 million, all of which is committed and considered
spendable. The fund balance in this fund increased $29.3 million from the prior fiscal year primarily as a
result of transfers in of $64.8 million from the General Fund exceeding capital project expenditures of
$35.5 million by $29.3 million.
General Fund Budgetary Highlights
The difference between the original budget and the final amended budget for the General Fund resulted
in no significant change in revenues and a decrease in expenditures of $99.0 million. The decrease in
budgeted expenditures was primarily a result of excess budget authority being moved from the General
Fund to the General Fund County Improvements Fund for future capital projects. A significant favorable
expenditure variance, as compared to the budget, was incurred in the Public Works Department (general
government function) of $16.2 million. These savings were a result of the Public Works Department’s
less than anticipated spending on major maintenance. None of the variances between the budget and
actual amounts were significant enough to affect the County’s ability to provide future services.
Capital Assets and Long-Term Liabilities
Capital Assets
The County’s capital assets balance as of June 30, 2012, was $3.4 billion (net of accumulated
depreciation). Capital assets include land, buildings and improvements, infrastructure, machinery and
equipment, and construction in progress. The County reports infrastructure assets, which consist of the
Flood Control District and Transportation Department infrastructure, in the government-wide financial
statements in accordance with GASB Statement No. 34. Additional information regarding infrastructure
Management’s Discussion and Analysis (Continued)
11
assets can be found in the Notes to the Financial Statements (Note 1 – Summary of Significant
Accounting Policies and Note 12 – Capital Assets).
The Flood Control District infrastructure assets consist of drainage systems, dams, flood channels and
canals. Flood Control infrastructure is reported using the depreciation approach and the County uses the
straight-line method of depreciation on these assets. At June 30, 2012, Flood Control District
infrastructure-related assets consisted of land, infrastructure and construction in progress of $250.8,
$188.9, and $178.0 million, respectively, net of any related accumulated depreciation.
The Transportation Department infrastructure assets consist of a roadway system and a bridge system.
Both systems are reported under the modified approach, which means the County will maintain the
assets using an asset management system and will document that the infrastructure assets are being
preserved at the established condition level. During fiscal year 2012, the condition level of both systems
was within the established condition level. Actual maintenance/preservation costs varied by $3,988,554
and $137,432 from the estimated costs for the roadway and bridge system, respectively. Roadway and
Bridge System maintenance is predicated by the Federal clearance process. Additionally, projects were
delayed due to deficient subgrade soil that required remediation and will rollover to fiscal year 2013. See
Required Supplementary Information on page 77 for additional information. At June 30, 2012,
Transportation Department infrastructure-related assets consisted of land, infrastructure and construction
in progress of $333.9, $720.0, and $29.4 million, respectively.
Capital assets for governmental activities are presented below (in millions) to illustrate changes from the
prior year:
Governmental Activities
2012 2011* $ Change % Change
Land $ 722.4 $ 713.5 $8.9 1.2%
Infrastructure 720.0 696.6 23.4 3.4
Buildings and improvements (net of
accumulated depreciation) 1,400.9 1,101.9 299.0 27.1
Machinery and equipment
(net of accumulated depreciation) 91.1 84.9 6.2 7.3
Construction in progress 257.0 485.2 (228.2) (47.0)
Infrastructure (net of accumulated
depreciation) 188.9 176.5 12.4 7.0
Totals $ 3,380.3 $ 3,258.6 121.7 3.7
* The capital asset amounts for fiscal year 2011 were restated for inclusion of component units of the Housing
Authority, a nonmajor governmental fund and a blended component unit of the County; for corrections of
prior periods for Housing Authority capital assets; and corrections for prior year capital project expenditures.
See Note 4 – Beginning Balances Restated for additional information.
Capital assets, net of accumulated depreciation, increased by $121.7 million, or 3.7 percent, from the
prior year. The most significant impact on the increase in capital assets for the fiscal year ended June 30,
2012, was the increase in buildings and improvements and the decrease in construction in progress of
$299.0 and $228.2 million, respectively, from the prior fiscal year. During fiscal year 2012, the County
completed the Criminal Court Tower Project, which resulted in the capitalization of the building and
related equipment, and improvements of $315.2, $3.5, and $0.5 million, respectively. The completion and
capitalization of this project resulted in a corresponding decrease in construction in progress of $319.3
million. Transportation Department and Flood Control District infrastructure assets increased $22.8 and
32.3 million, respectively, from the prior year and accounted for changes in land, construction in progress,
and infrastructure of $6.3, $7.6, and $41.2 million, respectively.
Management’s Discussion and Analysis (Continued)
12
Long-Term Liabilities
Maricopa County has the following bond ratings:
Debt Instrument & Rating Agency Rating Date Awarded
General Obligation Bonds (implied or issuer credit rating)
Fitch Ratings AAA April 2011
Standard & Poor's AAA March 2011
Lease Revenue Bonds
Fitch Ratings AA+ April 2011
Standard & Poor's AA+ March 2011
Certificates of Participation
Fitch Ratings AA+ April 2011
At June 30, 2012, the County had total long-term liabilities (noncurrent liabilities due within one year and
more than one year) outstanding of $327.2 million, which represents a $24.5 million decrease from the
prior year balance of $351.7 million (restated). The majority of the decrease is attributable to debt service
payments made during fiscal year 2012 for lease revenue bonds ($11.3 million), certificates of
participation ($2.9 million), Stadium District revenue bonds ($3.6 million), and Stadium District loans ($1.2
million) and a net decrease of reported and incurred but not reported claims of $4.4 million. The largest
components of long-term liabilities at June 30, 2012, consisted of lease revenue bonds - $130.8 million,
Stadium District revenue bonds - $30.9 million, and reported claims and incurred but not reported claims -
$140.0 million.
Lease revenue bonds applicable to governmental activities are paid from the County Improvement Debt
Fund (debt service fund), which is funded by transfers from the General Fund. At June 30, 2012, the fund
balance in the County Improvement Debt Fund to pay future liabilities was $13.0 million.
Stadium District revenue bonds are special obligations of the District. The bonds are payable solely from
pledged revenues, consisting of car rental surcharges levied and collected by the Stadium District
pursuant to A.R.S. §48-4234. On June 5, 2002, the Stadium District issued revenue refunding bonds in
the amount of $58.2 million (par value) of which $30.9 million remains outstanding.
Reported and incurred but not reported claims applicable to governmental activities of $140.0 million are
reported in the Risk Management and Employee Benefits Trust funds (internal service funds). This is a
decrease of $4.4 million from the prior year as noted above. This liability is primarily related to actuarial
estimates for the County’s self-insured portion of future claims for general litigation related to torts; thefts
of, damage to, and destruction of assets; errors and omissions; injuries to employees; natural disasters;
and certain health benefits that are paid through the operations of the funds. Additional information
regarding long-term liabilities can be found in the Notes to Financial Statements (Note 14 – Long-Term
Liabilities and Note 18 – Risk Management).
Economic Factors and Next Year’s Budget and Rates
􀁸􇠠 Arizona will continue to experience slow growth for the remainder of this year and next, followed
by cautious acceleration as migration flows improve and construction begins to increase
(http://azeconomy.eller.arizona.edu).
􀁸􇠠 The United States Census Bureau reports that Maricopa County’s population increased by 1.7
percent from fiscal year 2010 to 2011 (www.census.gov). The unemployment rate in Maricopa
County, according to Arizona Workforce, in October 2012 was 6.9 percent, which remains below
both the state and national average of 8.1 percent and 7.9 percent, respectively
(www.workforce.az.gov).
Management’s Discussion and Analysis (Continued)
13
􀁸􇠠 As reported by the Arizona Department of Commerce, Maricopa County’s population increased
25.5 percent from July 1, 2000 to July 1, 2011, which is higher than the United States’ overall
population increase of 10.4 percent for the same time period (www.azcommerce.com).
As part of the annual budget planning process, the County’s Office of Management and Budget
developed a financial forecast to assist in both short and long range financial planning. This forecast
provides a conservative estimate of the County’s fiscal condition through the next five years given a
realistic economic forecast, current County policies and existing laws. The forecast was instrumental in
the determination of the fiscal year 2013 budget and tax rate, which took into account several significant
trends:
􀁸􇠠 Assessed property tax values are estimated to continue to decline though fiscal year 2015 with
only a 2.5 percent anticipated increase in fiscal year 2016.
􀁸􇠠 Annual collections of State Shared Sales Tax, Vehicle License Tax, Highway User Revenues and
County Jail Excise Tax revenues are expected to begin increasing slightly or at least remain flat
in fiscal year 2013 and are not expected to regain the peak levels of fiscal year 2007 until after
fiscal year 2017.
At the end of the fiscal year, total fund balance for the General Fund was $302.9 million, or 35.6 percent
of total General Fund expenditures, of which $283.0 million is considered spendable. Spendable fund
balance decreased by 30.8 percent from the prior year. See page 9 for further information. In
accordance with A.R.S., the entire amount will be budgeted in the next fiscal year. A.R.S. §42-17151
requires that total estimated sources of revenue must equal the total estimated expenditures in the
budget for the current fiscal year. The estimated expenditures may include an amount for unanticipated
contingencies or emergencies, per A.R.S. §42-17102.
Request for Information
This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with
a general overview of the County’s finances and to demonstrate the County’s accountability for the
money it receives. If you have any questions about this report or need additional financial information,
please contact Maricopa County Department of Finance, 301 W. Jefferson, Suite 960, Phoenix, AZ
85003, or at www.maricopa.gov.
14
Financial Section
Basic Financial Statements
Basic Financial Statements
Maricopa County
Definitions of Government-wide Financial Statements and
Listing of Major Funds
17
Government-wide Financial Statements
The Statement of Net Assets presents information on all of Maricopa County’s assets and liabilities, with
the difference between the two reported as net assets.
The Statement of Activities presents information showing how the government’s net assets changed
during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event
giving rise to the change occurs, regardless of the timing of related cash flows.
Major Funds
General Fund – is the County’s primary operating fund. It accounts for all financial resources of the
general government, except those required to be accounted for in another fund.
Special Revenue Funds
Detention Operations Fund – was established under the authority of propositions 400 and 401, which
were passed in the General Election of November 3, 1998. These propositions authorized a temporary
1/5 of one-cent sales tax to be used for the construction and operation of adult and juvenile detention
facilities. On November 5, 2002, the voters approved the extension of the 1/5 of one-cent sales tax in the
General Election to be used for jail facility operations. The extension begins in the month following the
expiration of the original tax and may continue for not more than twenty years after the date the tax
collection begins. The Detention Operations Fund accounts for the receipt of tax revenue, jail operations
expenditures, and transfers to the Detention Capital Projects Fund for construction of the adult and
juvenile detention facilities.
Debt Service Funds
County Improvement Debt Fund – accounts for the debt service on the Lease Revenue Refunding
Bonds, Series 2003; Lease Revenue Bonds, Series 2007A; Lease Revenue Refunding Bonds, Series
2007B; and other long-term obligations.
Capital Projects Funds
Detention Capital Projects Fund – Accounts for construction associated with the 1/5 of one-cent sales
tax approved by voters in the General Election on November 3, 1998, and extended by voters on
November 5, 2002. Funding is provided by transfers from the Detention Operations Fund for construction
of the adult and juvenile detention facilities.
General Fund County Improvements Fund – was established to fund current and future capital
projects. Fund assets may be used to pay directly for capital projects or may be appropriated by the
Board of Supervisors for debt service. None of the funds has been pledged for debt service, and fund
assets may be transferred by the Board of Supervisors at any time for any other County purpose.
Technology Capital Improvement Fund – Established by the Board of Supervisors to account for
General Fund and other resources committed for technology improvement projects.
Maricopa County
Statement of Net Assets
June 30, 2012
18
PRIMARY
GOVERNMENT
Governmental
Activities
ASSETS
Cash in bank and on hand $ 28,211,601
Cash and investments held by County Treasurer 1,483,133,886
Receivables (net of allowances for uncollectibles) 21,078,978
Due from other governmental units 163,109,995
Inventories 9,238,129
Prepaids 2,377,479
Deferred costs 1,914,257
Miscellaneous 4,149,129
Intergovernmental loans 15,882,280
Cash and investments held by trustee – restricted 44,174,858
Capital assets:
Land 722,403,268
Buildings and improvements 1,851,824,822
Machinery and equipment 329,367,375
Infrastructure – nondepreciable 719,965,384
Infrastructure – depreciable 271,659,077
Construction in progress 257,017,823
Less: accumulated depreciation (771,966,872)
Total assets 5,153,541,469
LIABILITIES
Accounts payable 89,734,671
Accrued liabilities 8,942,302
Employee compensation payable 79,363,197
Interest payable 3,046,279
Claims payable 45,000,000
Unearned revenue 22,932,990
Advances 6,096,949
Deposits held for other parties 9,404,281
Noncurrent liabilities:
Due within one year 64,708,488
Due in more than one year 262,492,446
Total liabilities 591,721,603
NET ASSETS
Invested in capital assets, net of related debt 3,238,389,442
Restricted for:
General government 4,247,409
Public safety 473,518,780
Highways and streets 51,387,649
Health, welfare and sanitation 24,791,910
Culture and recreation 46,130,937
Education 4,268,722
Debt service 20,884,938
Unrestricted 698,200,079
Total net assets $ 4,561,819,866
The notes to the financial statements are an integral part of this statement.
Maricopa County
Statement of Activities
For the Fiscal Year Ended June 30, 2012
19
Program Revenues Net (Expense)
Operating Capital Revenue and
Charges for Grants and Grants and Changes in Net
Expenses Services Contributions Contributions Assets
Functions/Programs
Primary government:
Governmental activities:
General government $ 229,774,209 $ 25,986,495 $ 8,605,840 $ 2,420,875 $ (192,760,999)
Public safety 940,656,263 157,678,693 45,279,385 311,954 (737,386,231)
Highways and streets 79,064,075 14,143,550 94,682,209 4,273,978 34,035,662
Health, welfare and sanitation 441,741,947 51,271,770 131,539,955 635,445 (258,294,777)
Culture and recreation 52,783,614 13,205,450 293,233 (39,284,931)
Education 12,886,213 179,928 9,723,225 (2,983,060)
Interest on long-term debt 5,441,500 (5,441,500)
Total governmental activities 1,762,347,821 262,465,886 290,123,847 7,642,252 (1,202,115,836)
Total primary government $ 1,762,347,821 $ 262,465,886 $ 290,123,847 $ 7,642,252 (1,202,115,836)
General revenues:
Taxes:
Property taxes, levied for general purposes 504,805,017
Property taxes, levied for Flood Control District 61,210,182
Property taxes, levied for Library District 19,049,420
Property taxes, levied for Street Lighting District 5,026,752
Share of state sales taxes 400,453,544
Sales tax – Jail construction and operation 118,052,954
Surcharge tax – Stadium District 5,192,003
Share of state vehicle license tax 113,363,658
Grants and contributions not restricted to specific programs 2,802,089
Unrestricted investment earnings 18,135,778
Miscellaneous 17,094,924
Total general revenues 1,265,186,321
Change in net assets 63,070,485
Net assets, beginning, as restated 4,498,749,381
Net assets, ending $4,561,819,866
The notes to the financial statements are an integral part of this statement.
Maricopa County
Balance Sheet
Governmental Funds
June 30, 2012
20
Detention County
General Operations Improvement Debt
ASSETS
Cash in bank and on hand $ 24,286,000 $ 350 $
Cash and investments held by County Treasurer 202,221,205 68,776,220 1,441,663
Receivables 16,594,808 228,296
Due from other funds 51,868,391
Due from other governmental units 77,642,731 22,709,382 7,515,182
Inventories 4,473,886 99,934
Miscellaneous 411,029 617,909
Intergovernmental loans 15,882,280
Cash and investments held by trustee – restricted 24,935,913
Total assets $ 393,380,330 $ 92,432,091 $ 33,892,758
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 16,727,254 $ 11,354,502 $
Employee compensation payable 7,957,230 3,209,442
Accrued liabilities 540,428 14,690
Due to other funds
Claims payable 45,000,000
Interest payable 2,904,290
Bonds payable 10,465,000
Notes payable
Special assessment debt with governmental commitment
Advances 6,096,949
Deferred revenue 14,123,378 7,515,182
Deposits held for other parties
Total liabilities 90,445,239 14,578,634 20,884,472
Fund balances:
Nonspendable 19,923,166 99,934
Restricted 77,753,523 11,566,623
Committed 159,000,000 1,441,663
Assigned 88,432,960
Unassigned 35,578,965
Total fund balances 302,935,091 77,853,457 13,008,286
Total liabilities and fund balances $ 393,380,330 $ 92,432,091 $ 33,892,758
Amounts reported for governmental activities in the Statement of Net Assets are different because:
Capital assets used in governmental activities are not financial resources and therefore, are not reported in the funds.
Some receivables are not available to pay for current period expenditures and therefore, are deferred in the funds.
Internal service funds are used by management to charge the costs of equipment services, telecommunications, reprographics, risk management,
employee benefits, and the sheriff warehouse to individual funds. The assets and liabilities of the internal service funds are included in
governmental activities in the Statement of Net Assets.
Some long-term liabilities and compensated absences are not due and payable shortly after June 30, 2012, and therefore, are not reported in the funds.
Net assets of governmental activities
The notes to the financial statements are an integral part of this statement.
21
Detention General Fund Technology Other Total
Capital County Capital Governmental Governmental
Projects Improvements Improvement Funds Funds
$ $ $ $ 3,820,440 $ 28,106,790
246,473,159 373,424,924 187,791,015 284,185,091 1,364,313,277
3,252,028 20,075,132
26,022 51,894,413
55,242,700 163,109,995
2,534,842 7,108,662
3,120,191 4,149,129
15,882,280
19,238,945 44,174,858
$ 246,473,159 $ 373,424,924 $ 187,791,015 $ 371,420,259 $ 1,698,814,536
$ 1,093,297 $ 10,136,397 $ 8,958,203 $ 37,419,643 $ 85,689,296
2,977,159 14,143,831
2,832,818 3,387,936
45,000,000 6,409,763 51,409,763
45,000,000
3,381 2,907,671
10,465,000
33,280 33,280
2,697 2,697
6,096,949
23,530,636 45,169,196
1,254,829 5,998,556 2,045,448 9,298,833
2,348,126 61,134,953 8,958,203 75,254,825 273,604,452
2,534,842 22,557,942
244,125,033 289,916,316 623,361,495
312,289,971 178,832,812 11,742,417 663,306,863
88,432,960
(8,028,141) 27,550,824
244,125,033 312,289,971 178,832,812 296,165,434 1,425,210,084
$ 246,473,159 $ 373,424,924 $ 187,791,015 $ 371,420,259
3,377,250,091
22,236,206
(26,391,691)
(236,484,824)
$ 4,561,819,866
Maricopa County
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
For the Fiscal Year Ended June 30, 2012
22
Detention County
General Operations Improvement Debt
REVENUES
Taxes $ 500,199,199 $ 118,052,954 $
Licenses and permits 1,913,678
Intergovernmental 530,821,947 2,241,068
Charges for services 40,081,935 27,382,452 2,044,982
Fines and forfeits 12,151,025
Special assessments
Interest income 6,564,308 2,340,568 5,235
Miscellaneous 8,678,147 48,583
Total revenues 1,100,410,239 150,065,625 2,050,217
EXPENDITURES
Current:
General government 161,853,795
Public safety 429,607,663 291,211,277
Highways and streets
Health, welfare and sanitation 249,419,875
Culture and recreation 1,097,796
Education 2,076,370
Debt service:
Principal 13,595,551
Interest 5,812,695
Capital outlay 6,791,168 1,246,615
Total expenditures 850,846,667 292,457,892 19,408,246
Excess (deficiency) of revenues
over expenditures 249,563,572 (142,392,267) (17,358,029)
OTHER FINANCING SOURCES (USES)
Transfers in 1,351 182,706,088 23,578,935
Transfers out (375,566,326) (19,349,950)
Total other financing sources (uses) (375,564,975) 163,356,138 23,578,935
Net change in fund balances (126,001,403) 20,963,871 6,220,906
Fund balances at beginning of year, as restated 429,402,403 56,935,901 6,787,380
Changes in nonspendable resources:
Decrease in inventories (465,909) (46,315)
Fund balances at end of year $ 302,935,091 $ 77,853,457 $ 13,008,286
The notes to the financial statements are an integral part of this statement.
23
Detention General Fund Technology Other Total
Capital County Capital Governmental Governmental
Projects Improvements Improvement Funds Funds
$ $ $ $ 85,852,564 $ 704,104,717
55,222,472 57,136,150
1,110,691 292,901,844 827,075,550
91,085,665 160,595,034
18,855,004 31,006,029
5,026,752 5,026,752
8,395,287 17,305,398
129,549 451,155 8,856,878 18,164,312
1,240,240 451,155 566,196,466 1,820,413,942
7,114,015 168,967,810
152,466,446 873,285,386
49,416,837 49,416,837
186,029,379 435,449,254
29,694,416 30,792,212
10,654,782 12,731,152
4,810,483 18,406,034
1,858,489 7,671,184
33,600,450 49,835,264 35,498,196 152,209,574 279,181,267
33,600,450 49,835,264 35,498,196 594,254,421 1,875,901,136
(32,360,210) (49,384,109) (35,498,196) (28,057,955) (55,487,194)
16,000,000 112,239,628 64,836,373 100,524,478 499,886,853
(5,700,000) (22,438,376) (79,521,255) (502,575,907)
10,300,000 89,801,252 64,836,373 21,003,223 (2,689,054)
(22,060,210) 40,417,143 29,338,177 (7,054,732) (58,176,248)
266,185,243 271,872,828 149,494,635 303,313,508 1,483,991,898
(93,342) (605,566)
$ 244,125,033 $ 312,289,971 $ 178,832,812 $ 296,165,434 $ 1,425,210,084
Maricopa County
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmental Funds to the
Statement of Activities
For the Fiscal Year Ended June 30, 2012
24
Net change in fund balances – total governmental funds (page 23) $ (58,176,248)
Amounts reported for governmental activities in the Statement of Activities on
page 19 are different because:
Governmental funds report capital outlays as expenditures. However, in the
Statement of Activities, the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount by which
capital outlays exceeded depreciation in the current period. 132,994,739
The net effect of various miscellaneous transactions involving capital assets is
to decrease net assets. (11,096,577)
Collections of certain revenues in the governmental funds exceeded revenues
reported in the Statement of Activities. (6,884,396)
The issuance of long-term debt (e.g., bonds, leases) provides current financial
resources to governmental funds, while the repayment of the principal of long-term
debt consumes the current financial resources of governmental funds.
Neither transaction, however, has any effect on net assets. Also, governmental
funds report the effect of issuance costs, premiums, discounts, and similar items
when debt is first issued, whereas these amounts are deferred and amortized in
the Statement of Activities. This amount is the net effect of these differences in
the treatment of long-term debt and related items. 20,192,957
Some expenses reported in the Statement of Activities do not require the use of
current financial resources and therefore, are not reported as expenditures in
governmental funds. (4,769,844)
Internal service funds are used by management to charge the costs of
equipment services, telecommunications, reprographics, risk management,
employee benefits, and the sheriff warehouse to individual funds. The net
expense of internal service funds is reported with governmental activities. (9,190,146)
Change in net assets of governmental activities (page 19) $ 63,070,485
The notes to the financial statements are an integral part of this statement.
25
Maricopa County
Statement of Net Assets
Proprietary Funds
June 30, 2012
26
Governmental
Activities –
Internal Service
Funds
ASSETS
Current assets:
Cash in bank and on hand $ 104,811
Cash and investments held by County Treasurer 118,820,609
Receivables:
Accounts 924,206
Accrued interest 79,640
Inventories 2,129,467
Prepaids 2,377,479
Total current assets 124,436,212
Noncurrent assets:
Capital assets:
Machinery and equipment 12,570,192
Less accumulated depreciation (9,549,406)
Total noncurrent assets 3,020,786
Total assets 127,456,998
LIABILITIES
Current liabilities:
Accounts payable 3,582,897
Employee compensation payable 4,210,179
Accrued liabilities 5,554,366
Due to other funds 484,650
Liability for reported and incurred but not reported claims (current portion) 45,602,680
Total current liabilities 59,434,772
Noncurrent liabilities:
Liability for reported and incurred but not reported claims 94,413,917
Total noncurrent liabilities 94,413,917
Total liabilities 153,848,689
NET ASSETS (DEFICIT)
Invested in capital assets 3,020,786
Unrestricted (29,412,477)
Total net deficit $ (26,391,691)
The notes to the financial statements are an integral part of this statement.
Maricopa County
Statement of Revenues, Expenses, and Changes in Fund Net Assets
Proprietary Funds
For the Fiscal Year Ended June 30, 2012
27
Governmental
Activities –
Internal Service
Funds
OPERATING REVENUES
Charges for services $ 175,978,294
Miscellaneous 325,085
Total operating revenues 176,303,379
OPERATING EXPENSES
Personal services 11,959,101
Supplies 18,371,133
Other services 9,453,602
Legal 5,343,230
Insurance and claims 132,600,276
Leases and rentals 58,576
Repairs and maintenance 2,081,358
Travel and transportation 45,867
Utilities 8,051,593
Depreciation 1,091,159
Total operating expenses 189,055,895
Operating loss (12,752,516)
NONOPERATING REVENUES (EXPENSES)
Investment income 873,316
Total nonoperating revenues 873,316
Loss before transfers (11,879,200)
Transfers in 2,716,418
Transfers out (27,364)
Change in net assets (9,190,146)
Total net deficit – beginning (17,201,545)
Total net deficit – ending $ (26,391,691)
The notes to the financial statements are an integral part of this statement.
Maricopa County
Statement of Cash Flows
Proprietary Funds
For the Fiscal Year Ended June 30, 2012
28
Governmental
Activities -
Internal Service
Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Charges for services $ 175,952,285
Other receipts 325,085
Payments for goods and services (176,651,653)
Payments for personal services and benefits (11,813,762)
Net cash used for operating activities (12,188,045)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Advances from General Fund 2,716,418
Transfers to other funds (27,364)
Loan payments to General Fund (126,779)
Net cash provided by noncapital financing activities 2,562,275
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Acquisition of capital assets (838,124)
Net cash used for capital and related financing activities (838,124)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest and dividends 801,311
Net cash provided by investing activities 801,311
Net decrease in cash and cash equivalents (9,662,583)
Cash and cash equivalents, July 1, 2011 128,588,003
Cash and cash equivalents, June 30, 2012 $ 118,925,420
RECONCILIATION OF OPERATING LOSS TO NET CASH
USED FOR OPERATING ACTIVITIES:
Operating loss $ (12,752,516)
Adjustments to reconcile operating loss to net cash
used for operating activities
Depreciation expense 1,091,159
Liability for reported and incurred but not reported claims - noncurrent 819,280
Changes in assets [(increase)/decrease] and liabilities [increase/(decrease)]:
Accounts receivable (26,009)
Inventories (266,574)
Prepaids (389,741)
Accounts payable 1,200,494
Employee compensation payable 145,339
Accrued liabilities 3,166,462
Liability for reported and incurred but not reported claims - current (5,175,939)
Net cash used for operating activities $ (12,188,045)
SCHEDULE OF NONCASH INVESTING, CAPITAL AND NONCAPITAL
FINANCING ACTIVITIES:
Accumulated depreciation from disposed capital assets $ 505,890
Machinery and equipment disposed (505,890)
Capital assets transferred from governmental activities 72,560
Accumulated depreciation transferred from governmental activities (72,560)
The notes to the financial statements are an integral part of this statement.
29
Maricopa County
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2012
30
Investment Agency
Trust Fund Fund
Assets
Cash in bank and on hand $ $ 38,177,702
Cash and investments held by County Treasurer 2,143,148,228 673,901
Accrued interest receivable 1,383,718
Miscellaneous 36,420
Total assets 2,144,531,946 $ 38,888,023
Liabilities
Accrued liabilities $ 360,310
Deposits held for other parties 38,527,713
Total liabilities $ 38,888,023
Net Assets
Held in trust for investment participants $ 2,144,531,946
The notes to the financial statements are an integral part of this statement.
Maricopa County
Statement of Changes in Fiduciary Net Assets
Fiduciary Funds
For the Fiscal Year Ended June 30, 2012
31
Investment
Trust Fund
Additions:
Contributions from participants $ 14,309,895,255
Investment income:
Interest income 11,584,298
Net change in fair value of investments 2,025,247
Net investment income 13,609,545
Total additions 14,323,504,800
Deductions:
Distributions to participants 14,554,317,160
Total deductions 14,554,317,160
Change in net assets (230,812,360)
Net assets – beginning, as restated 2,375,344,306
Net assets – ending $ 2,144,531,946
The notes to the financial statements are an integral part of this statement.
32
Financial Section
Basic Financial Statements - Notes
Basic Financial Statements - Notes
Maricopa County
Basic Financial Statements – Notes
35
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NOTE 2 FUND BALANCE CLASSIFICATIONS OF THE GOVERNMENTAL FUNDS
NOTE 3 REPORTING CHANGES
NOTE 4 BEGINNING BALANCES RESTATED
NOTE 5 RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL
STATEMENTS
NOTE 6 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
NOTE 7 DEPOSITS AND INVESTMENTS
NOTE 8 CONDENSED FINANCIAL STATEMENTS OF COUNTY TREASURER’S
INVESTMENT POOL
NOTE 9 RECEIVABLES
NOTE 10 DUE FROM OTHER GOVERNMENTAL UNITS
NOTE 11 INTERGOVERNMENTAL LOANS
NOTE 12 CAPITAL ASSETS
NOTE 13 CONSTRUCTION AND OTHER SIGNIFICANT COMMITMENTS
NOTE 14 LONG-TERM LIABILITIES
NOTE 15 MUNICIPAL LANDFILL CLOSURE AND POSTCLOSURE CARE COSTS
NOTE 16 MUNICIPAL REVOLVING LINE OF CREDIT AND IRREVOCABLE STANDBY
LETTER OF CREDIT
NOTE 17 OPERATING LEASES
NOTE 18 RISK MANAGEMENT
NOTE 19 POLLUTION REMEDIATION OBLIGATIONS
NOTE 20 PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS
NOTE 21 INTERFUND BALANCES AND ACTIVITY
NOTE 22 SUBSEQUENT EVENTS
Notes to the Financial Statements
36
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Maricopa County’s accounting policies conform to generally accepted accounting principles applicable to
governmental units adopted by the Governmental Accounting Standards Board (GASB).
A. Reporting Entity
Maricopa County is a general purpose local government that is governed by a separately elected
board of five county supervisors. The accompanying financial statements present the activities of the
County (the primary government) and its component units.
Component units are legally separate entities for which the County is considered to be financially
accountable. Blended component units, although legally separate entities, are so intertwined with the
County that they are in substance part of the County’s operations. Therefore, data from these units is
combined with data of the primary government. Discretely presented component units, on the other
hand, are reported in a separate column in the government-wide financial statements to emphasize
they are legally separate from the County. Maricopa County does not report any discretely presented
component units. Each blended component unit discussed below has a June 30 year-end.
The reporting entity is comprised of the primary government, Maricopa County Flood Control District,
Maricopa County Library District, Maricopa County Public Finance Corporation, Maricopa County
Special Assessment Districts, Maricopa County Stadium District, Maricopa County Street Lighting
Districts, and Housing Authority of Maricopa County.
The blended component units are as follows:
Maricopa County Flood Control District
The Maricopa County Flood Control District is a legally separate, tax-levying entity pursuant to A.R.S.
§48-3602 that provides flood control facilities and regulates floodplains and drainage to prevent
flooding of property in Maricopa County. As the Maricopa County Board of Supervisors serves as the
Board of Directors of the Flood Control District, it is able to significantly influence the programs,
projects, activities, or level of services provided by the District; therefore, the District is considered a
blended component unit of the County.
Maricopa County Library District
The Maricopa County Library District is a legally separate, tax-levying entity pursuant to A.R.S. §48-
3901 that provides and maintains library services for the residents of Maricopa County. As the
Maricopa County Board of Supervisors serves as the Board of Directors of the Library District, it is
able to significantly influence the programs, projects, activities, or level of services provided by the
District; therefore, the District is considered a blended component unit of the County.
Maricopa County Public Finance Corporation
Maricopa County Public Finance Corporation is a nonprofit corporation created by the Maricopa
County Board of Supervisors that exists primarily to assist the County in the acquisition, construction,
and improvement of County facilities, including real property and personal property. The Board of
Directors of the Public Finance Corporation is subject to the approval of the County Board of
Supervisors and the corporation exists primarily for the benefit of the County; therefore, the
Corporation is considered a blended component unit of the County. The Corporation has issued
lease revenue bonds on behalf of the County. Since this debt is in substance the County’s obligation,
these liabilities and resulting assets are reported on the County’s financial statements.
Notes to the Financial Statements
(Continued)
37
Maricopa County Special Assessment Districts
The Maricopa County Special Assessment Districts are legally separate entities that provide
improvements to various properties within the County. As the Maricopa County Board of Supervisors
serves as the Board of Directors of the Special Assessment Districts, it is able to significantly
influence the activities or level of services provided by the Districts; therefore, the Districts are
considered a blended component unit of the County.
Maricopa County Stadium District
The Maricopa County Stadium District is a legally separate entity pursuant to A.R.S. §48-4202 that
provides regional leadership and fiscal resources to assure the presence of Major League Baseball in
Maricopa County. As the Maricopa County Board of Supervisors serves as the Board of Directors of
the Stadium District, it is able to significantly influence the programs, projects, activities, or level of
services provided by the District; therefore, the District is considered a blended component unit of the
County. Complete financial statements for the Maricopa County Stadium District may be obtained at
the entity’s administrative office listed below:
Maricopa County Stadium District
401 East Jefferson
Phoenix, Arizona 85004
www.maricopa.gov/stadiumdistrict/
Maricopa County Street Lighting Districts
The Maricopa County Street Lighting Districts are legally separate entities that provide street lighting
in areas of the County that are not under local city jurisdictions. As the Maricopa County Board of
Supervisors serves as the Board of Directors of the Street Lighting Districts, the Districts are
considered a blended component unit of the County.
Housing Authority of Maricopa County
The Housing Authority is a legally separate entity pursuant to A.R.S. §36-1404 that provides efficient
and affordable rental housing to low-income households of Maricopa County. As the Maricopa
County Board of Supervisors serves as the Housing Authority’s Board of Commissioners, it is able to
significantly influence the programs, projects, activities, or level of services provided by the Housing
Authority; therefore, the Housing Authority is a blended component unit of the County. Effective for
fiscal year 2012, the Housing Authority reports two discretely presented component units, Rose
Terrace Development Partnership, L.L.C. and Maricopa Revitalization Partnership, L.L.C. These
component units are combined and reported with the Housing Authority as a single special revenue
fund on Maricopa County’s combining financial statements. Complete financial statements for the
Housing Authority of Maricopa County and their component units may be obtained at the entity’s
administrative office listed below:
Housing Authority of Maricopa County
2024 North Seventh Street, Suite 201
Phoenix, Arizona 85006
www.maricopahousing.org
Related Organization
The Industrial Development Authority of Maricopa County (Authority) is a legally separate entity that
was created to assist in the financing of commercial and industrial enterprises; safe, sanitary, and
affordable housing; and healthcare facilities. The Authority fulfills its function through the issuance of
tax exempt or taxable revenue bonds. The County Board of Supervisors appoints the Authority’s
Board of Directors. The Authority’s operations are completely separate from the County and the
County is not financially accountable for the Authority. Therefore, the financial activities of the
Authority have not been included in the accompanying financial statements.
Notes to the Financial Statements
(Continued)
38
B. Basis of Presentation
The basic financial statements include both government-wide statements and fund financial
statements. The government-wide statements focus on the County as a whole, while the fund
financial statements focus on major funds. Each presentation provides valuable information that can
be analyzed and compared between years and between governments to enhance the usefulness of
the information.
Government-wide financial statements – provide information about the primary government (the
County) and its component units. The statements include a statement of net assets and a statement
of activities. These statements report the overall government’s financial activities, except for fiduciary
activities. They also distinguish between the governmental and business-type activities of the County
and between the County and its discretely presented component units. Governmental activities
generally are financed through taxes and intergovernmental revenues. Business-type activities are
financed in whole or in part by fees charged to external parties. The County has no business-type
activities or discretely presented component units.
The statement of activities presents a comparison between direct expenses and program revenues
for each function of the County’s governmental activities. Direct expenses are those that are
specifically associated with a program or function and, therefore, are clearly identifiable to a particular
function. The County allocates indirect expenses to programs or functions. Program revenues
include:
􀁸􇠠 charges to customers or applicants for goods, services, or privileges provided;
􀁸􇠠 operating grants and contributions; and
􀁸􇠠 capital grants and contributions, including special assessments.
Revenues that are not classified as program revenues, including internally dedicated resources,
unrestricted grant revenues, and all taxes levied or imposed by the County are reported as general
revenues.
Generally, the effect of interfund activity has been eliminated from the government-wide financial
statements to minimize the double counting of internal activities. However, charges for interfund
services provided and used are not eliminated if doing so would distort the direct costs and program
revenues reported by the departments concerned.
Fund financial statements – provide information about the County’s funds, including fiduciary funds
and blended component units. Separate statements are presented for the governmental, proprietary,
and fiduciary fund categories. The emphasis of fund financial statements is on major governmental
funds, each displayed in a separate column. All remaining governmental funds are aggregated and
reported as nonmajor funds. Internal service and fiduciary funds are aggregated and reported by
fund type. The County has no enterprise funds.
Proprietary fund revenues and expenses are classified as either operating or nonoperating.
Operating revenues and expenses generally result from transactions associated with the fund’s
principal activity. Accordingly, revenues, such as user charges, in which each party receives and
gives up essentially equal values, are reported as operating revenues. Nonoperating revenues, such
as investment income, result from transactions in which the parties do not exchange equal values.
Operating expenses include the cost of services, administrative expenses, and depreciation on
capital assets. Other expenses, such as interest expense, are considered to be nonoperating
expenses.
Notes to the Financial Statements
(Continued)
39
The County reports the following major governmental funds:
The General Fund – is the County’s primary operating fund. It accounts for all financial resources of
the general government, except those required to be accounted for in another fund.
The Detention Operations Fund – was established under the authority of propositions 400 and 401,
which were passed in the General Election of November 3, 1998. These propositions authorized a
temporary 1/5 of one-cent sales tax to be used for the construction and operation of adult and juvenile
detention facilities. On November 5, 2002, the voters approved the extension of the 1/5 of one-cent
sales tax in the General Election. The extension begins in the month following the expiration of the
original tax and may continue for not more than twenty years after the date the tax collection begins.
The Detention Operations Fund accounts for the jail tax revenue and transfers from the General Fund
for maintenance of effort and jail operations expenditures. The Detention Operations Fund transfers
monies to the Detention Capital Projects Fund for the construction of the jail facilities. The amount to
be transferred to the Detention Capital Projects Fund for any given year is determined through the
budget planning process.
The County Improvement Debt Fund – accounts for the debt service on the Lease Revenue
Refunding Bonds, Series 2003; Lease Revenue Bonds, Series 2007A; Lease Revenue Refunding
Bonds, Series 2007B; and other long-term obligations. This fund’s main revenue source is from
transfers for the repayment of debt.
The Detention Capital Projects Fund – accounts for construction associated with the 1/5 of one-cent
sales tax approved by voters in the General Election on November 3, 1998, and extended by the
voters on November 5, 2002. Funding is provided by transfers from the Detention Operations Fund
for construction of the adult and juvenile detention facilities.
The General Fund County Improvements Fund – was established to fund current and future capital
projects. Fund assets may be used to pay directly for capital projects or may be appropriated by the
Board of Supervisors for debt service. Revenues in this fund consist mainly of transfers from the
General Fund. None of the funds has been pledged for debt service, and fund assets may be
transferred by the Board of Supervisors at any time for any other County purpose.
The Technology Capital Improvement Fund – was established to account for General Fund and other
resources committed for technology improvement projects.
The County also reports the following fund types:
The internal service funds – account for automotive maintenance and service, telecommunications
services, printing and duplicating services, insurance services, self-insured employee benefits, and
warehouse services provided to County departments or to other governments on a cost
reimbursement basis.
The investment trust fund – accounts for pooled assets the County Treasurer holds and invests on
behalf of other governmental entities.
The agency fund – accounts for assets the County holds as an agent for other governments and
individuals.
C. Basis of Accounting
The government-wide, proprietary fund, and fiduciary fund financial statements are presented using
the economic resources measurement focus, with exception of the agency fund, and the accrual
basis of accounting. The agency fund is custodial in nature and does not have a measurement focus.
Revenues are recorded when earned, and expenses are recorded at the time liabilities are incurred,
Notes to the Financial Statements
(Continued)
40
regardless of when the related cash flows take place. Property taxes are recognized as revenue in
the year for which they are levied. Grants and donations are recognized as revenue as soon as all
eligibility requirements imposed by the provider have been met.
Governmental funds in the fund financial statements are reported using the current financial
resources measurement focus and the modified accrual basis of accounting. Under this method,
revenues are recognized when they become both measurable and available. The County considers
all revenues reported in the governmental funds to be available if the revenues are collected within 60
days after year-end. The County’s major revenue sources that are susceptible to accrual are
property taxes, intergovernmental, charges for services, and investment income. Expenditures are
recorded when the related fund liability is incurred, except for principal and interest on general long-term
debt, landfill closure and postclosure care costs, pollution remediation obligations, claims and
judgments, and compensated absences, which are recognized as expenditures to the extent they are
due and payable. General capital asset acquisitions are reported as expenditures in governmental
funds. Loan proceeds and acquisitions under capital lease agreements are reported as other
financing sources.
Under the terms of grant agreements, the County funds certain programs by a combination of grants
and general revenues. Therefore, when program expenses are incurred, there are both restricted
and unrestricted net assets available to finance the program. For these types of programs, the
County applies grant resources to such programs before using general revenues. All other programs,
the County uses unrestricted revenues first.
The County’s internal service funds follow FASB Statements and Interpretations issued on or before
November 30, 1989, Accounting Principles Board Opinions, and Accounting Research Bulletins,
unless those pronouncements conflict with GASB pronouncements. The County has chosen the
option not to follow FASB Statements and Interpretations issued after November 30, 1989.
D. Cash and Investments
For purposes of its statements of cash flows, the County considers only those highly liquid
investments with a maturity of three months or less when purchased to be cash equivalents.
Nonparticipating interest-earning investment contracts are stated at cost. Money market investments
and participating interest-earning investment contracts with a remaining maturity of one year or less
at the time of purchase are stated at amortized cost. All other investments are stated at fair value.
E. Inventories
The County accounts for its inventories in the governmental funds using the purchase method.
Inventories of the governmental funds consist of expendable supplies held for consumption and are
recorded as expenditures at the time of purchase. Amounts on hand at year-end are shown on the
balance sheet as an asset for informational purposes only and as nonspendable fund balance to
indicate that they do not constitute “available spendable resources.” These inventories are stated at
weighted-average cost.
Inventories of government-wide and the internal service funds financial statements are recorded as
assets when purchased and expensed when consumed. The amounts shown on the statement of net
assets for government-wide and the internal service funds are valued at cost using first-in, first-out
and the moving average methods, respectively.
F. Property Tax Calendar
The County levies real property taxes and commercial personal property taxes on or before the third
Monday in August that become due and payable in two equal installments. The first installment is
Notes to the Financial Statements
(Continued)
41
due on the first day of October and becomes delinquent after the first business day of November. The
second installment is due on the first day of March of the next year and becomes delinquent after the
first business day of May.
During the year, the County also levies mobile home personal property taxes that are due the second
Monday of the month following receipt of the tax notice and become delinquent 30 days later.
A lien assessed against real and personal property attaches on the first day of January preceding
assessment and levy.
G. Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads,
bridges, sidewalks, and similar items), are reported in the government-wide statements and the
proprietary funds. Capital assets are defined as assets with an initial, individual cost of more than
$5,000. Such assets are recorded at historical cost or estimated historical cost if purchased or
constructed. Donated capital assets are recorded at estimated fair value at the date of donation. The
costs of normal maintenance and repairs that do not add to the value of the asset or materially extend
assets’ lives are not capitalized.
Property, plant, and equipment are depreciated using the straight-line method over the following
estimated useful lives:
Type of Assets Estimated Useful Life (In Years)
Buildings and improvements 20 - 50
Infrastructure 25 - 50
Autos and trucks 3 - 10
Other equipment 3 - 20
All infrastructure assets are reported on the government-wide financial statements. Infrastructure
maintained by the County Department of Transportation consists of roadways, bridges and related
assets. These assets are not depreciated as they are reported using the modified approach. Under
the modified approach, the County’s roadway and bridge systems are being preserved at a specified
condition level established by the County. For information on the modified approach, see Required
Supplementary Information – Modified Approach for Infrastructure Assets. The Flood Control District
accounts for the County’s remaining infrastructure assets consisting of drainage systems, dams, flood
channels and canals.
For the Department of Transportation’s infrastructure assets owned prior to fiscal year 2002, the
County estimated their historical cost. The fair market value for right-of-way assets was estimated
based on current regional land acquisitions and deflated by the trended growth rate, as determined by
the County assessed valuation from the State of Arizona Department of Revenue Abstract of the
Assessment Roll for vacant land, agriculture and government property not including legally exempt
land. The fair market value for roadway system assets was estimated based on current construction
costs and deflated using the Price Trends for Federal-Aid Highway Construction, published by the
U.S. Department of Transportation, Federal Highway Administration, Office of Program Administration
and Office of Infrastructure.
Flood Control District infrastructure assets are accounted for using the straight-line depreciation
method with a useful life between 25 and 50 years. For infrastructure assets owned prior to fiscal
year 2002, the County used internal records, maintained by the Flood Control District, to estimate
Flood Control’s historical cost for these assets.
H. Fund Balance Classifications
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.
Notes to the Financial Statements
(Continued)
42
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.
The unrestricted fund balance category is composed of committed, assigned, and unassigned
resources. Committed fund balances are self-imposed limitations approved by the County’s Board of
Supervisors, which is the highest level of decision-making authority within the County. The constraints
placed on committed fund balances can be removed or changed by only the Board.
Assigned fund balances are resources constrained by the County’s intent to be used for specific
purposes, but are neither restricted nor committed. Only the Board of Supervisors has authorization
to assign fund balances.
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’s policy is to account for most restricted and committed revenue sources (subject to legal
restriction, etc.) by segregating them in a separate fund; however, by its nature, the General Fund
may have several different classifications of fund balance. Therefore, when expending General Fund
fund balance, if an expenditure is incurred that can be paid from either restricted or unrestricted fund
balances, it’s the County’s policy to use unrestricted fund balance first. For the disbursement of
unrestricted fund balances, it is the County’s policy to use unassigned amounts first, followed by
assigned amounts, and lastly committed amounts.
I. Investment Income
Investment income is composed of interest, dividends, and net changes in the fair value of applicable
investments.
J. 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, and roll-over from
year-to-year, up to 240 or 320 hours (depending on employee classification) of vacation leave, but
any vacation hours in excess of the maximum amount that are unused at calendar year-end convert
to sick leave. Upon terminating employment, all unused vacation benefits are paid to employees.
Accordingly, vacation benefits are accrued as a liability in the financial statements.
Employees may accumulate an unlimited number of sick leave hours. Generally, sick leave benefits
provide for ordinary sick pay and are cumulative but are forfeited upon terminating employment.
Because sick leave benefits do not vest with employees, a liability for sick leave benefits is not
accrued in the financial statements. However, upon retirement, County employees with accumulated
sick leave in excess of 1,000 hours are entitled to a $10,000 nontaxable investment in a Post
Employment Health Plan (PEHP) established pursuant to Internal Revenue Code §501(c)(9). The
obligations vested at June 30, 2012, under this policy are accrued as a liability.
Compensated absences are substantially paid within one year from fiscal year-end and, therefore,
are reported as a current liability on the government-wide financial statements. A liability for these
amounts is reported in the governmental funds’ financial statements only if they have matured, for
example, as a result of employee resignations and retirements by fiscal year-end.
Notes to the Financial Statements
(Continued)
43
NOTE 2 – FUND BALANCE CLASSIFICATIONS OF THE GOVERNMENTAL FUNDS
The fund balance classifications of the governmental funds as of June 30, 2012, were as follows:
General
Fund
Detention
Operations
Fund
County
Improvement
Debt Fund
Detention
Capital
Projects
Fund
General Fund
County
Improvements
Fund
Technology
Capital
Improvement
Fund
Other
Governmental
Funds Total
Fund balances:
Nonspendable:
Inventory $ 4,473,886 $ 99,934 $ $ $ $ $ 2,534,842 $ 7,108,662
Loan receivable 15,449,280 15,449,280
Total nonspendable 19,923,166 99,934 2,534,842 22,557,942
Restricted for:
Capital projects 244,125,033 74,368,207 318,493,240
Debt service 11,566,623 9,318,315 20,884,938
Education 4,268,722 4,268,722
Flood control 59,844,252 59,844,252
Health and welfare 18,103,426 18,103,426
Judicial activities 21,168,261 21,168,261
Law enforcement 77,753,523 15,551,206 93,304,729
Library District 17,476,747 17,476,747
Other purposes 7,934,289 7,934,289
Parks and recreation 4,775,293 4,775,293
Social services 4,796,144 4,796,144
Stadium District 13,210,423 13,210,423
Transportation 37,383,320 37,383,320
Waste management 1,717,711 1,717,711
Total restricted 77,753,523 11,566,623 244,125,033 289,916,316 623,361,495
Committed to:
Capital projects 312,289,971 178,832,812 140,647 491,263,430
Debt service 1,441,663 1,441,663
General government 159,000,000 159,000,000
Health and welfare 8,785,861 8,785,861
Other purposes 2,815,909 2,815,909
Total committed 159,000,000 1,441,663 312,289,971 178,832,812 11,742,417 663,306,863
Assigned to:
General government 88,432,960 88,432,960
Total assigned 88,432,960 88,432,960
Unassigned 35,578,965 (8,028,141) 27,550,824
Total fund balances $ 302,935,091 $ 77,853,457 $ 13,008,286 $ 244,125,033 $ 312,289,971 $ 178,832,812 $ 296,165,434 $1,425,210,084
Stabilization Arrangements – The Board of Supervisors has the authority to authorize and establish a
stabilization arrangement by formal action. Subsequent modification, addition to, or expenditure from any
stabilization arrangements also requires formal action by the Board of Supervisors, the highest level of
decision-making authority within the County. At June 30, 2012, the General Fund had fund balances of
$159,000,000 committed for budget stabilization. These amounts were committed specifically to cover
either: a) an unusual revenue shortfall of 5% or more of estimated General Fund operating revenue for
fiscal year 2012 due to a natural disaster, a sudden, severe economic downturn and/or actions by the
State of Arizona to reduce shared revenues; b) an unusual unanticipated expenditure equaling 5% or
more of estimated General Fund operating revenue for fiscal year 2012 that must be funded due to
natural disaster, a legal judgment or settlement not covered by the County’s Risk Management Trust,
and/or actions by the State of Arizona that shift significant new expenditures to the County; or c) a
combination of the circumstances described in a) and b) that together equal 5% or more of estimated
General Fund operating revenue.
Notes to the Financial Statements
(Continued)
44
NOTE 3 – REPORTING CHANGES
Beginning in fiscal year 2012, the County established the Officer Safety Equipment Fund (special revenue
fund), a nonmajor governmental fund.
NOTE 4 – BEGINNING BALANCES RESTATED
On July 1, 2011, the County restated beginning net assets of the governmental activities and the
investment trust fund and beginning fund balance for the governmental funds for corrections of prior
periods related to the Special Assessments and Special Improvement Districts (Districts) that are reported
either in the governmental funds or investment trust fund, depending on the County’s fiduciary
responsibilities of the Districts’ assets. The adjustments were due to corrections for three separate
Districts that were misclassified, excluded, or double-reported of $438,281, $107,467, and ($30,625),
respectively. These errors in total affected the beginning net assets by $515,123 reported in the County
Treasurer’s Investment Pool presented in Note 8 – Condensed Financial Statements of County
Treasurer’s Investment Pool.
On July 1, 2011, the County also restated beginning net assets and beginning fund balance of the
governmental fund financial statements of $8,646,197 and ($48,310), respectively, for the inclusion of the
Housing Authority of Maricopa County’s discretely presented component units as part of the Housing
Authority Fund (nonmajor special revenue fund). In addition, beginning net assets were restated for
equipment purchased in the prior year but unrecorded by the Housing Authority of Maricopa County for
$15,461.
On July 1, 2011, the County also restated beginning fund balance of the governmental fund financial
statements of ($10,277,947) for corrections of previously unrecorded contracts retention payable. This
adjustment also affected the construction in progress beginning balance for governmental activities of
$10,277,947, but had no effect on beginning governmental activities net assets.
Beginning net assets/fund balance of governmental activities, governmental funds, and investment trust
fund were adjusted for the above, as follows:
Governmental
Activities
Governmental
Funds
Investment Trust
Fund
Net assets/fund balance as of June 30, 2011 $ 4,490,526,004 $ 1,494,756,436 $ 2,374,829,183
Plus (less): Districts adjustments (438,281) (438,281) 515,123
Plus (less): Housing Authority of Maricopa County 8,661,658 (48,310)
Less: Capital outlay adjustments (10,277,947)
Net assets/fund balance as of July 1, 2011, as restated
$ 4,498,749,381 $ 1,483,991,898 $ 2,375,344,306
Notes to the Financial Statements
(Continued)
45
NOTE 5 – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
The Governmental Funds Balance Sheet includes the reconciliation between fund balances – total
governmental funds and net assets – Governmental Activities as reported in the government-wide
Statement of Net Assets. The details of this reconciliation follow:
Fund balances – total governmental funds $ 1,425,210,084
Capital assets used in governmental activities are not financial resources and therefore,
are not reported in the funds.
Land 722,403,268
Buildings and improvements 1,851,824,822
Machinery and equipment 316,797,183
Infrastructure 991,624,461
Construction in progress 257,017,823
Accumulated depreciation (762,417,466)
Net governmental funds capital assets at June 30, 2012 3,377,250,091
Some receivables are not available to pay for current period expenditures and therefore,
are deferred in the funds.
Deferred revenue for property taxes receivable at June 30, 2012 15,100,257
Deferred revenue for grant revenues receivable at June 30, 2012 7,135,949
22,236,206
Internal service funds are used by management to charge the costs of equipment services,
telecommunications, reprographics, risk management, employee benefits, and the sheriff
warehouse to individual funds. The assets and liabilities of the internal service funds are
included in governmental activities in the Statement of Net Assets. (26,391,691)
Some long-term liabilities and compensated absences are not due and payable shortly
after June 30, 2012, and therefore, are not reported in the funds.
Noncurrent lease revenue bonds payable due in more than one year at June 30, 2012 (120,350,000)
Housing Authority loans payable due in more than one year at June 30, 2012 (2,754,637)
Stadium District revenue bonds payable at June 30, 2012 (30,945,000)
Stadium District loan payable at June 30, 2012 (6,906,857)
Special assessment debt with governmental commitment payable at June 30, 2012 (77,353)
Deferred issuance cost at June 30, 2012 1,914,257
Bond premium unamortized at June 30, 2012 (1,371,661)
Claims and judgments at June 30, 2012 (3,241,022)
Governmental funds compensated absences payable at June 30, 2012 (61,009,187)
Liability for closure and postclosure costs at June 30, 2012 (11,036,830)
Other liabilities at June 30, 2012 (567,926)
Accrued interest payable at June 30, 2012 (138,608)
(236,484,824)
Net assets of governmental activities $ 4,561,819,866
Notes to the Financial Statements
(Continued)
46
The governmental fund reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
Balances is a reconciliation between net changes in fund balances – total governmental funds and
changes in net assets of governmental activities as reported in the government-wide Statement of
Activities. The details of this reconciliation follow:
Net change in fund balances – total governmental funds $ (58,176,248)
Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the
cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.
This is the amount by which capital outlays exceeded depreciation in the current period.
Governmental funds capital outlay 203,775,840
Government-wide depreciation expense for the year ended June 30, 2012 (71,872,260)
Add: Internal service funds depreciation expense for the year ended June 30, 2012 1,091,159
132,994,739
The net effect of various miscellaneous transactions involving capital assets is to decrease net assets.
Net value of disposed capital assets for the year ended June 30, 2012 (20,321,541)
Adjustment for the net value of assets capitalized in the current year but acquired in prior years 2,218,157
Donations of capital assets 7,006,807
(11,096,577)
Collections of certain revenues in the governmental funds exceeded revenues reported in the Statement
of Activities.
Collections of grant revenues plus current-year revenues exceeding amount reported as earned
during the year ended June 30, 2012 (1,600,085)
Collections of property taxes plus current-year revenues exceeding amount reported as earned
during the year ended June 30, 2012 (5,284,311)
(6,884,396)
The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to
governmental funds, while the repayment of the principal of long-term debt consumes the current
financial resources of governmental funds. Neither transaction, however, has any effect on net assets.
Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items
when debt is first issued, whereas these amounts are deferred and amortized in the Statement of
Activities. This amount is the net effect of these differences in the treatment of long-term debt and
related items.
Principal paymen