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Home My WebLink About1994 Financial Statement June 30 3 0 0 0 4 4 4 4 TOWN OF MARANA Marana, Arizona FINANCIAL STATEMENTS 4 June 30, 1994 4 0 0 4 4 4 3 4 3 0 a 3 • 4 TABLE OF CONTENTS PAGE 4 4 INDEPENDENT AUDITOR'S REPORT 1 4 GENERAL PURPOSE FINANCIAL STATEMENTS: 4 EXHIBITS 1 Combined Balance Sheet -All Fund Types and Account Groups 2 4 2 Combined Statement of Revenues, Expen- ditures and Changes in Fund Balances - All Governmental Fund Types 3 0 3 Combined Statement of Revenues, Expen- ditures and Changes in Fund Balances - Budget and Actual, General and Spe- cial Revenue Fund Types 4 4 Combined Statement of Revenues, Expenses and Changes in Deficit -All Proprietary Fund Types 5 0 5 Combined Statement of Cash Flows -All Proprietary Fund Types 6 0 Summary of Significant Accounting Policies 7 Notes to Combined Financial Statements 13 4 4 0 0 0 0 7i / Clifton, Gunderson & Co. Certified Public Accountants & Consultants 4 4 Honorable Mayor and Town Council Town of Marana Marana, Arizona Independent Auditor's Report 0 We have audited the accompanying general purpose fmancial statements of the Town of Marana, Arizona, as of and for the year ended June 30, 1994. These general purpose fmancial statements are the responsibility of the Town's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. 0 We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of Office of Management and Budget (OMB) Circular A -128, Audits of State and Local Governments. Those standards and OMB Circular A -128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall fmancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose fmancial statements referred to above present fairly, in all material respects, the financial position of the Town of Marana, Arizona, as of June 30, 1994, and the results of its operations and cash flows of its proprietary fund types for the year then ended in conformity with generally accepted accounting principles. 0 0 .e 6 9. 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t Q U?��m i_ Oo� > m`c ~ Q °0 cCC ZCO¢ < ii_ ~ O < < <0 J 0 Z OO EMO CO 0 4 1- J J LL t- 0 • TOWN OF MARANA, ARIZONA COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES - EXHIBIT 2 Year Ended June 30, 1994 Totals 0 Special (Memorandum Only) General Revenue 1994 1993 REVENUES V Taxes Sales - Marana $ 2.562,918 $ - $ 2,562,918 $ 515,111 9 Sales - Arizona 154,756 - 154,756 142,585 Urban sharing 142,567 - 142,567 141.393 0 Auto lieu 49,809 - 49,809 38,231 Ucenses, fees and permits 917.090 - 917,090 243,731 Fines, forfeitures and . 0 penalties 75,284 - 75,284 67,178 Grants and contributions 0 Highway user fees - Arizona - 178,703 178,703 164,173 Public safety - Arizona - 21,514 21,514 39,100 Public safety - Tucson - 61,769 61,769 72,427 0 Block grants - Pima County - 227,348 227,348 148,041 LTAF Funds - Arizona - 20,540 20,540 19,805 0 Parks - Pima County 74,087 - 74.087 85,739 Other 145,103 10.790 155,893 62,892 0 Total revenues 4,121,614 520,664 4,642,278 1,740,406 0 OTHER FINANCIAL SOURCES Proceeds from bond sales - - - 315,000 0 Conversion of accounts to notes payable - - - 22,857 Y Total other financial sources - - - 337,857 ti Total revenues and other financial sources 4,121,614 520,664 4,642,278 2,078,263 EXPENDITURES } Administration 362,399 - 362,399 269,663 Development and planning services 94,751 - 94,751 36,579 Town attorney 211,178 - 211,178 50,184 Public safety 889,425 103,283 992,708 575,263 Magistrate court 108,613 - 108,613 86,557 0 Public works 258,539 179,005 437,544 233,786 Community development - 240,268 240,268 131,950 0 Parks 83,110 - 83,110 85,739 Capital outlays 137,307 27,620 164,927 291,814 0 Debt service: Principal retirement 107,774 6,995 114,769 61,159 Interest 43,509 2,253 45,762 36,804 0 Total expenditures 2,296,605 559,424 2,856,029 1,859,498 OTHER FINANCIAL USES Contributed capital to water fund 46,191 - 46,191 - Total expenditures and other financial uses 2,342,796 559,424 2,902.220 - Excess (deficiency) of revenues and 0 other financial sources over (under) expenditures and other financial uses 1,778,818 (38,760) 1,740,058 218,765 FUND BALANCES; BEGINNING 311.360 109,880 421.240 202,475 FUND BALANCES, ENDING $ 2,090,178 $ 71,120 $ 2,161,298 $ 421,240 These financial statements should be read only in connection with the accompanying summary of significant accounting policies and notes to combined financial statements. 3 it 0 0 TOWN OF MARANA, ARIZONA COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL. 0 GENERAL AND SPECIAL REVENUE FUND TYPES - EXHIBIT 3 Year Ended June 30, 1994 0 9 General Special Revenue Actual Budget (a) Variance Actual Budget (a) Variance 9 REVENUES Taxes Sales - Marana $ 2,562,918 $ 555,000 $ 2,007,918 $ - $ - $ - 0 Sales - Arizona 154,756 146,573 8,183 - - - Urban sharing 142,567 142,653 (86) - - - Auto lieu 49,809 38,200 11,609 - - - 0 Licenses, fees and permits 917,090 375,715 541,375 - - - Fines, forfeitures and 0 penalties 75,284 110,000 (34,716) - - - Grants and contributions Highway user fees - Arizona - - - 178,703 168,872 9,831 0 Public safety - Arizona - - - 21,514 25,727 (4,213) Public safety - Tucson - - - 61,769 79,988 (18,219) Block grants - Pima County - - - 227,348 627,348 (400,000) 0 LTAF Funds - Arizona - - - 20,540 20,531 9 Parks - Pima County 74,087 - 74,087 - - - Other 145,103 3,831,924 (3,686,821) 10,790 8,800 1,990 Total revenues 4,121,614 5,200,065 (1,078,451) 520,664 931,266 (410,602) 0 EXPENDITURES Administration 362,399 1,618,582 (1,256,183) - - - Development and planning services 94,751 116,946 (22,195) - - - Town attorney 211,178 - 211,178 - - - 9 9 Public safety 889,425 915,758 (26,333) 103,283 134,515 (31,232) Magistrate court 108,613 177,118 (68,505) - - - Public works 258,539 910,034 (651,495) 179,005 166,541 12,464 9 Community development - - - 240,268 - 240,268 Parks 83,110 100,722 (17,612) Capital outlays 137,307 1,285,363 (1,148,056) 27,620 612,848 (585,228) Debt service: Principal retirement 107,774 75,542 32,232 6,995 17,362 (10,367) 0 Interest 43,509 - 43,509 2,253 - 2,253 Total expenditures 2,296,605 5,200,065 (2,903,460) 559,424 931,266 (371,842) 0 OTHER FINANCIAL USES Contributed capital to water fund 46,191 - 46,191 - - - 9 Total expenditures and other financial uses 2,342,796 5,200,065 (2,857,269) 559,424 931,266 (371,842) Excess (deficiency) of revenues over (under) expenditures and other financial uses 1,778,818 - 1,778,818 (38,760) - (38,760) FUND BALANCES, BEGINNING 311,360 - 311,360 109,880 - 109,880 0 FUND BALANCES, ENDING $ 2,090,178 $ - $ 2,090,178 $ 71,120 $ - $ 71,120 9 7 (a) The Town's budget included an additional $85,092 for revenues and expenditures for water enterprise activities that is not included in this statement because these activities are proprietary in nature. 0 0 0 These financial statements should be read only in connection with the accompanying summary of significant accounting policies and notes to combined financial statements. 4 0 0 0 3 TOWN OF MARANA, ARIZONA COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN 9 DEFICIT — ALL PROPRIETARY FUND TYPES — EXHIBIT 4 Year Ended June 30, 1994 9 Proprietary Totals Fund Types (Memorandum Only) Water 1994 1993 0 OPERATING REVENUES Current use charges $ 71,285 $ 71,285 $ 72,295 Other 6,161 6,161 4,086 0 Total operating revenues 77,446 77,446 76,381 0 OPERATING EXPENSES Material, supplies, and other expenses 50,968 50,968 42,051 0 Depreciation expense 12,853 12,853 12,853 0 Total operating expenses 63,821 63,821 54,904 OPERATING INCOME 13,625 13,625 21,477 9 NONOPERATING REVENUES V (EXPENSES) Interest income 408 408 258 0 Bond interest expense (22,858) (22,858) (22,857) Bond fees (1,707) (1,707) (1,958) Total nonoperating revenues (expenses) (24,157) (24,157) (24,557) 0 NET LOSS (10,532) (10,532) (3,080) DEFICIT, BEGINNING (37,507) (37,507) (34,427) 0 DEFICIT, ENDING $ (48,039) $ (48,039) $ (37,507) 0 0 9 0 i These financial statements should be read only in connection with the accompanying summary of significant accounting policies and notes to combined financial statements. 5 9 0 0 TOWN OF MARANA, ARIZONA COMBINED STATEMENT OF CASH FLOWS ALL PROPRIETARY FUND TYPES - EXHIBIT 5 0 Year Ended June 30, 1994 0 Proprietary Totals Fund Types (Memorandum Only) Water 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES 0 Net loss $ (10,532) $ (10,532) $ (3,080) Adjustments to reconcile net loss to net i cash provided by operating activities: 9 Nonoperating revenues (expenses) associated with trustee/fiscal agents 24,379 24,379 24,557 Depreciation 12,853 12,853 12,853 Changes in operating assets and liabilities: Increase in accounts receivable (310) (310) (3,498) 0 Increase in accounts payable 2,301 2,301 560 Net cash provided by operating activities 28,691 28,691 31,392 CASH FLOWS FROM FINANCING ACTIVITIES Decrease in due to other funds (554) (554) (13,113) Payments to trustee /fiscal agents for debt service (24.578) (24,578) (24,821) Reimbursements from trustee /fiscal agents 3.374 3,374 5,000 Net cash used in financing activities (21,758) (21,758) (32,934) 4 NET INCREASE (DECREASE) IN CASH 6,933 6.933 (1,542) 0 CASH, BEGINNING OF YEAR 1,655 1,655 3,197 9 CASH, END OF YEAR (a) $ 8,588 $ 8,588 $ 1,655 Cash $ 8,588 $ 8,588 $ 1,655 4 Cash with trustee /fiscal agents 684 684 563 Total $ 9,272 $ 9,272 $ 2,218 (a) Cash on the balance sheet consists of cash the Town can access and cash on deposit with trustee/fiscal agents. Cash flows from cash 0 with trustee /fiscal agents are not presented above because these activities represent noncash transactions. SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES During fiscal 1994, there was a conversion of $46,191 due to the general fund to contributed capital, a noncash financing activity. 0 CASH FLOWS WITH TRUSTEE /FISCAL AGENTS FROM INVESTING AND ) OTHER ACTIVITIES Payments from water fund for debt service $ 24,578 $ 24,578 $ 24,821 Interest income 185 185 258 Decrease in investments 3,296 3,296 4,987 Reimbursements to water fund (3,374) (3,374) (5,000) Net cash with trustee/fiscal agents provided by investing and other activities 24,685 24,685 25,066 CASH FLOWS WITH TRUSTEE /FISCAL AGENTS FROM FINANCING AND OTHER ACTIVITIES Interest and other obligations paid (24,564) (24,564) (24,816) Decrease in accounts payable - - (1,859) Net cash with trustee/fiscal agents used in 0 financing and other activities (24,564) (24,564) (26,675) NET INCREASE (DECREASE) IN CASH WITH TRUSTEE /FISCAL AGENTS 121 121 (1,609) CASH WITH TRUSTEE /FISCAL AGENTS, BEGINNING OF YEAR 563 563 2,172 i CASH WITH TRUSTEE /FISCAL AGENTS, END OF YEAR $ 684 $ 684 $ 563 7 These financial statements should be read only in connection with the accompanying summary of significant accounting policies and notes to combined financial statements. 0 6 TOWN OF MARANA, ARIZONA SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES June 30, 1994 The Town of Marana (the Town) was incorporated on March 21, 1977, under the provisions of the Constitution of Arizona and the Arizona Revised Statutes. The Town operates under a council -mayor form of government. All funds and entities related to the Town that are con- trolled by the Mayor and Council are included in this annual financial report. This control is determined on the basis of budget adoption, taxing authority and the ability to issue outstanding debt secured by revenues or which is a general obligation of the Town, as well as selection of a governing authority, designation of management, ability to significantly influence operations and accountability for fiscal matters. The Town provides a full range of services including general 3 governmental administration, development and planning, legal, public safety, public works and parks services. The accounting policies of the Town conform to generally accepted accounting principles (GAAP) as applicable to governments. The Governmental Accounting Standards Board a (GASH) is the accepted standard - setting body for establishing accounting and financial reporting principles. The following is a summary of the more significant policies: REPORTING ENTITY In evaluating how to define the Town of Marana, for financial reporting purposes, management has considered all potential component units. The decision to include a potential component unit l in the reporting entity was made by applying the criteria set forth by GAAP. The basic, but not the only, criterion for including a potential component unit within the reporting entity is the Town's ability to exercise oversight responsibility. The most significant manifestation of this ability is financial inter- dependency. Other manifestations of the ability to exercise oversight responsibility include, but are not limited to, the selection of governing authority, the designation of management, the ability to significantly influence operations and accountability for fiscal matters. A second criterion used in evaluating potential component units is the scope of public service. Application of this criterion involves considering whether the activity benefits the Town and /or its citizens, or whether the activity is conducted within the geographic boundaries of the Town and is generally available to its citizens. A third criterion used to evaluate potential component units for inclusion or exclusion from the reporting entity is the existence of special financial relationships, regardless of whether the Town is able to exercise oversight responsibilities. Based upon the application of this criteria, the following component unit is considered within the Town's reporting entity: Town of Marana Municipal Property Corporation The Town of Marana Municipal Property Corporation governing board is appointed by the Town Council. The Town's general fund and water fund pay rent to the Municipal Property Corporation in order to fund the debt incurred to finance the purchase of the Town hall and fixed assets used by the water fund. The legal liability for the Municipal Property Corporation's debt remains with the Town. 7 TOWN OF MARANA, ARIZONA • SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES June 30, 1994 FUND ACCOUNTING The accounts of the Town are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self - balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds are grouped, in the financial statements in this report, into generic fund types and broad fund categories as follows: Governmental funds: General fund - This fund is the general operating fund of the Town. It is used to account for all fmancial resources, except those required to be accounted for in another fund. Special revenue funds - These funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. Debt service fund - Although such a fund is normally used to account for the accumulation of resources for the payment of general long -term debt principal, interest and related costs, the Town has not yet established such a fund. Proprietary funds: Enterprise /water fund - This fund is used to account for water utility operations that are fmanced and operated in a manner similar to private business enterprises. The intent of the governing body is that the costs (expenses, including depreciation) of providing water services to the 0 general public on a continuing basis be financed or recovered primarily through user charges. MEASUREMENT FOCUS, FIXED ASSETS AND LONG -TERM LIABILITIES The accounting and reporting treatment applied to the fixed assets and long -term liabilities associated with a fund are determined by its measurement focus. All governmental funds are accounted for on a spending or " fmancial flow" measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. Their reported fund balance (net current assets) is considered a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other fmancial sources) and decreases (expenditures and other fmancial uses) in net current assets, as 3 appropriate. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. 0 3 8 3 TOWN OF MARANA, ARIZONA SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES June 30, 1994 MEASUREMENT FOCUS, FIXED ASSETS AND LONG -TERM LIABILITIES (Continued) Fixed assets used in governmental fund type operations (general fixed assets) are accounted for in the general fixed assets group of accounts, rather than in governmental funds. Public domain ( "infrastructure ") general fixed assets consisting of certain improvements other than buildings, including roads, curbs and gutters, streets and sidewalks, bridges and lighting systems, are not capitalized. No depreciation is being provided on general fixed assets. All general fixed assets are valued at historical cost. Donated general fixed assets are valued at their estimated fair values on the dates of donation. Long -term liabilities expected to be financed from governmental funds are accounted for in the general long -term debt group of accounts, not in the governmental funds. Because of their spending measurement focus, expenditure recognition of governmental fund types is limited to exclude amounts represented by noncurrent liabilities. Since they do not affect l net current assets, such long -term amounts are not recognized as governmental fund type expenditures or fund liabilities. They are instead reported as liabilities in the general long -term debt group of accounts. The aforementioned two account groups are not funds. They are concerned only with the measurement of financial position. They are not involved with measurement of results of operations. The proprietary fund is accounted for in a cost of services or "capital maintenance" measurement focus. This means that all assets and all liabilities, whether current or noncurrent, associated with its activity are included on its balance sheet. Its reported fund equity, net total assets, is segregated into contributed capital and retained earnings components. Proprietary fund operating statements present increases (revenues) and decreases (expenses) in net total assets. Water operations property is stated at cost or fair values on the dates of donation. Depreciation (amortization) of all exhaustible fixed assets used by water operations is charged as an expense against its operations. Accumulated depreciation is reported on the water operations balance sheet. Depreciation is provided over the estimated useful lives of such assets using the straight - line method. These estimated useful lives are as follows: 9 TOWN OF MARANA, ARIZONA SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES June 30, 1994 MEASUREMENT FOCUS, FIXED ASSETS AND LONG -TERM LIABILITIES (Continued) Estimated Useful Lives (Years) a Pump stations, distribution system, equipment and improvements 20 Organization costs 40 Expenditures for water repairs and maintenance are charged to income. Additions, major renewals and replacements that increase the water properties' useful lives are capitalized. The cost of property sold or retired, together with the related accumulated depreciation, is removed from the appropriate accounts and resulting gain or loss is included in net income of the utility. The Town no longer carries any inventory. Supplies needed for operations are now being purchased on an as- needed basis. 9 BASIS OF ACCOUNTING 9 Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. The proprietary fund is maintained on an accrual basis of accounting. The governmental funds are maintained on a modified accrual basis. The modified accrual basis of accounting recognizes expenditures on an accrual basis, but revenues are recognized when received, except for material revenues determined to be both measurable and "available." "Available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Deferred revenue in the governmental funds arises when grant monies are received prior to the incurrence of qualifying expenditures. BUDGETS AND BUDGETARY ACCOUNTING The budgets formally adopted by the Mayor and Council are prepared on an object basis. All appropriations lapse at year end, and the budgetary information reflected on the financial statements represents the original adopted budget for fiscal 1994 with no augmentations. 10 TOWN OF MARANA, ARIZONA SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES June 30, 1994 ENCUMBRANCES Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is not employed as an extension of formal budgetary integration in the general fund and special revenue funds. ) RESERVES No reservations of fund balances have been established by the Mayor and Council at the end of fiscal 1994, except amounts reserved for restricted assets. BOND ISSUANCE COSTS For the water fund, bond issuance costs are capitalized in the period in which the bonds are issued and are amortized on a straight line basis over 20 years. For all other funds, bond issuance costs are recognized as expenditures in the period in which the bonds are issued. INVESTMENTS 0 Investments consist of deposits in the Arizona State Treasurer's Local Government Investment Pool, a category 1 investment. Pursuant to Arizona Revised Statutes, the Pool is not allowed to enter into reverse purchase agreements or to leverage the portfolio it maintains. Restricted investments consist of U.S. Government fund obligations, a category 1 investment. Category 1 investments are investments that are insured, registered or held by the Town's agent in the Town's name, or by the Town itself. All restricted investments are made through the Town's trustee /fiscal agents for the bond issues. Investments are stated at cost, which approximates market. RESTRICTED ASSETS The trust indentures executed for all of the bond series issued require all cash and investments for each bond series to be held on deposit by the trustee /fiscal agents. These assets are restricted for payment of interest and trustee fees associated with the bond issues, retirement of principal balances and purchasing the Town hall, the Honea Water Company and improvements to water fund fixed assets. 11 TOWN OF MARANA, ARIZONA SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES June 30, 1994 COMPENSATED ABSENCES In the general long -term debt group of accounts, essentially the entire accumulated liability for compensated absences is reflected, since the liability at June 30, 1994, will most likely not be paid within the current accounting cycle. Rather, in fiscal 1995 the Town will probably pay that year's accrual without utilizing amounts accrued from prior years. COMPARATIVE DATA Comparative total data for the prior year is presented in the accompanying general purpose financial statements in order to provide an understanding of changes in the Town's fmancial position and operations. However, presentation of prior year totals by fund type have not been presented in the statements, since their inclusion would make the statements unduly complex and difficult to read. TOTAL COLUMNS ON THE COMBINED FINANCIAL STATEMENTS 9 Total columns on the combined fmancial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate fmancial analysis. Data in these columns does not present financial position or results of operations in conformity with generally accepted accounting principles. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. Certain amounts for 1993 have been reclassified to conform to the 1994 presentation. SEIZED PROPERTY The Town Police have in their custody certain assets seized in criminal proceedings. Until formal procedures have been fmalized, the ownership of this property is not determinable. In addition, legal requirements dictate that such assets not be reflected on the Town's fmancial records in an agency capacity until Town ownership has been determined. Consequently, no such assets are recorded on these financial statements. S This information is an integral part of the accompanying combined financial statements. 12 TOWN OF MARANA, ARIZONA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1994 NOTE 1 - CASH The carrying amount of the Town's deposits with financial institutions was $105,328 and the bank balances were $186,010 at June 30, 1994. The bank balances are categorized as follows: Amount insured by the FDIC $ 171,119 Uncollateralized 14.891 Total bank balances $ 186,010 The uncollateralized balances are the result of Town management believing that accounts maintained with a financial institution are insured individually, rather than combined as one amount for insurance purposes with that financial institution. NOTE 2 - FIXED ASSETS, NET OF ACCUMULATED DEPRECIATION The following is a summary of the changes in general fixed assets for fiscal 1994: 0 4 Balance Balance July 1, June 30, 1993 Additions Deletions 1994 Land $ 58,284 $ - $ - $ 58,284 4 Land improvements 123,412 - (123,412) - Buildings 248,079 - 248,079 Assets under capital lease 146,872 332,679 (31,920) 447,631 Machinery, equipment and other assets 502,505 170,925 (176,137) 497,293 Marana Park 150,000 - - 150,000 Leasehold improvements - 9.303 - 9,303 $ 1,229,152 $ 512,907 $ (331,469) $1,410,590 13 TOWN OF MARANA, ARIZONA 0 NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1994 NOTE 2 - FIXED ASSETS, NET OF ACCUMULATED DEPRECIATION (CONTINUED) A summary of water fund property, plant and equipment at June 30, 1994, is as follows: Land $ 9,720 Water rights 50,000 Pump stations 57,000 Distribution system 89, Equipment and improvements 60,047 Bond issuance costs 27,268 Organization costs 47,523 Construction work-in-progress 20,272 360,830 Less accumulated depreciation and amortization (50.016) ) $ 310.814 NOTE 3 - LONG-TERM DEBT During 1990, the water fund issued revenue bonds through the Town of Marana Municipal Property Corporation for the purpose of purchasing the Honea Water Company and making improvements to the assets purchased. These 1990 bonds, secured by all general fund revenues, consist of a series of issues with fixed interest rates ranging from 7.55 % to 8.30%, depending upon the maturity dates of the various issues. Periodic principal payments are due July 1, 1995, through July 1, 2009, in amounts ranging from $10,000 to $30,000 annually. The 1990 series revenue bonds are callable as follows: Redemption Price (As Redemption Date a Percent of Principal) 7 -1 -1999 and thereafter 100.0% i The following is a schedule by years of the debt service requirements for these revenue bonds as of June 30, 1994: Years Ending 1990 Series June 30 Bonds 1995 $ 22,858 1996 32,858 1997 32,103 1998 31,338 1999 35,563 Thereafter 366.260 Total payments 520,980 Less amount representing interest (240,980) Principal $ 280,000 4 14 0 TOWN OF MARANA, ARIZONA NOTES TO COMBINED FINANCIAL STATEMENTS 0 June 30, 1994 0 NOTE 3 - LONG-TERM DEBT (CONTINUED) 0 The following is a summary of general long -term debt transactions for fiscal 1994: Balances Balances at at July 1, June 30, 1993 Additions Reductions 1994 0 Revenue Bonds(a) $ 315,000 $ - $ - $ 315,000 Capitalleases(b) 91,791 332,678 (57,593) 366,876 Notes payable(c) 74,539 - (57,176) 17,363 Compensated ) absences(d) 48,135 23,155 - 71,290 Total $ 529,465 $ 355,833 $(114,769 $ 770,529 i (a) In July, 1992, the Town issued revenue bonds through the Town of Marana Municipal ) Property Corporation for the purpose of exercising an option to purchase the Town hall. These bonds, secured by all general fund revenues and the Town hall, carry interest rates i ranging from 6% to 8%, depending upon the maturity dates of the various issues. The principal payments are due July 1, 1994, through July 1, 2018, in amounts ranging from $5,000 to $25,000 annually. i The 1992 Series Revenue Bonds are callable as follows: i Redemption Price (As Redemption Dates a Percent of Principal) i 7 -1 -2001 and 1 -1 -2002 101.0% 7 -1 -2002 and 1 -1 -2003 100.5 0 7 -1 -2003 and thereafter 100.0 0 Annual debt service requirements to maturity for these revenue bonds are as follows: Years Ending 1992 Series 0 June 30 Bonds 1995 $ 29,503 0 1996 29,203 1997 28,890 1998 28,565 0 1999 28,227 Thereafter 583573 0 Total payments 727,961 Less amount representing interest (412,961) 0 Principal $ 315,000 0 0 15 TOWN OF MARANA, ARIZONA NOTES TO COMBINED FINANCIAL STATEMENTS a.. June 30, 1994 NOTE 3 - LONG-TERM DEBT (CONTINUED) (b) The following is a schedule by years of the future minimum lease payments under capital leases as of June 30, 1994: Years Ending June 30 1995 $ 134,755 1996 116,130 1997 101,692 1998 61,706 1999 9355 Total net minimum lease payments 423,638 Less amount representing interest (56,762) Present value of net minimum lease payments $ 366,876 (c) During fiscal 1991 and 1993, the Town negotiated the following notes payable with vendors, thereby converting outstanding accounts payable balances: Note payable, requiring monthly installments of $583, including interest at 9% per year, with the fmal payment due in April 1995. $ 5,593 Note payable, requiring monthly installments of $1,013, including interest at 6% per year, with the final payment due in June 1995. 11,770 $ 17,363 The above notes mature in full during the year ending June 30, 1995. (d) This consists of the long -term portion of accrued vacation and compensatory time, with an increase of $23,155 for fiscal 1994. 16 TOWN OF MARANA, ARIZONA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1994 NOTE 4 - PUBLIC SAFETY PENSION PLAN All of the Town's full -time police officers are covered by the Marana Marshal's Arizona Public Safety Personnel Retirement System, which is a multiple- employer, public employee retirement system (PERS). The pension plan provides pension benefits, deferred allowances, death and disability benefits and health insurance benefits. A member is eligible if he is employed in a covered position prior to attaining age 50 years, for at least 20 hours a week for more than 6 months a year. A member may retire after reaching the age of 62 and completion of 15 years service, or completion of 20 years service with the Town. Benefits vest after 10 years of credited service. Police officers who retire with 25 or more years of credited service are entitled to monthly pension payments for the remainder of their lives equal to 50% of average monthly compensation for the first 20 years of credited service with the Town, plus 2 1/2% of average monthly compensation for each year of credited service above 20 years with the Town. Police officers who retire with 20 years of credited service, but less than 25 years of credited service, are entitled to monthly pension payments for the remainder of their lives equal to 50% of average monthly compensation for the first 20 years of credited service with the Town, plus 2% of average monthly compensation for each year of credited service between 20 and 25 years with the Town. Police officers who retire with less than 20 years of credited service with the Town are entitled to monthly pension payments for the remainder of their lives equal to at least 30% of the average monthly compensation for the entire service period increased at a rate of 4% a year for each service year above the minimum 15 years of service. The maximum monthly pension payment cannot exceed 80% of the average monthly compensation. Pension provisions include deferred allowances whereby a police officer may terminate his employment with the Town after accumulating 10 or more years credited service. Pension benefits are then equal to twice the amount of pension benefits based on the police officer's accumulated contributions. If the police officer does not withdraw his accumulated contributions, the police officer is entitled to these pension benefits upon reaching the age of 62. Pension provisions include disability and death benefits. Disabled officers are entitled to monthly payments for life of 50% of their average monthly compensation or normal pension amount, whichever is greater, if their disability is service connected, regardless of years of credited service. Average monthly compensation (AMC) is one - thirty -sixth of total compensation paid a member during the 3 years, out of the last 10 years of credited service, in which the amount paid was highest. If the police officer's disability was not service connected, the disabled officer is entitled to monthly payments for life of 25 % of AMC, if the credited service is less than 7 17 TOWN OF MARANA, ARIZONA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1994 NOTE 4 - PUBLIC SAFETY PENSION PLAN (CONTINUED) years, 50% of AMC, if the credited service is 7 through 13 years, or 75% of AMC, if the credited service is 14 through 19 years. If the police officer is only temporarily disabled, he is entitled to monthly payments equal to one - twelfth of 50% of compensation paid during the year a preceding the date the disability was incurred. The payments terminate after 12 months or prior recovery. Surviving spouses are entitled to two- thirds of the monthly payments, or 100% if duty related, the deceased active police officer would have been paid for disability or, in the case of a retired police officer, two- thirds of the retired officer's monthly pension payments. To qualify as a surviving spouse, the spouse must have been married to the deceased for at least 2 years. The spouse's benefits terminate upon her death. Each dependent child of a deceased police officer is entitled to one -ninth of the monthly payments the deceased active police officer would have been paid for disability or, in the case of a retired police officer, one -ninth of the retired officer's monthly pension payments. When the dependent child reaches the age of 18 or 23, if the dependent is a full -time student, the monthly payments will terminate. Pension provisions include health insurance benefits, whereby the retired police officer or his surviving spouse can elect to be covered by a health insurance plan provided by the Town or State of Arizona. The retired police officer or his surviving spouse pay for this coverage. However, they cannot be charged more than $60 per month plus an amount up to $25 per month for dependent coverage, if any. The Town's current year payroll for eligible police officers amounted to approximately $533,000. Police officers of the Town are required to pay 7.65 % of their gross earnings to the pension plan. The Town makes periodic contributions to the pension plan at actuarially determined rates that, expressed as percentages of annual covered payroll, are designed to accumulate sufficient assets to pay benefits when due. The normal cost and actuarial accrued liability are determined using an entry age actuarial funding method. Unfunded actuarial accrued liabilities are being amortized as a level percent of payroll over a period of 40 years (from July 1, 1978). During 1994, the Town was required to contribute 6.52 % of its police officers' covered payroll to the plan. Total contributions made during fiscal 1994 were approximately $76,000, of which approximately $35,000 was made by the Town and approximately $41,000 was made by police officers. The contributed amounts were actuarially determined as described above and were based on an actuarial valuation as of June 30, 1992. The pension contributions represent funding for normal cost and the amortization of the unfunded actuarial accrued liability. 18 0 TOWN OF MARANA, ARIZONA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1994 NOTE 4 - PUBLIC SAFETY PENSION PLAN (CONTINUED) Significant actuarial assumptions used to compute pension contribution requirements are the same as those used to determine the standardized measure of the pension obligation. The computation of the pension contribution requirements for fiscal 1994 was based on the same actuarial assumptions, benefit provisions, actuarial funding method and other significant factors as used to determine pension contribution requirements in the previous years. Presented below is the total pension benefit obligation of the Town's PERS as of June 30, 1993, the date of the last available report. The amount of the total pension benefit obligation is based on a standardized measurement established by GASB -5 that, with some exceptions, must be used by a PERS. The standardized measurement is the actuarial present value of credited projected benefits. This pension valuation method reflects the present value of estimated pension benefits that will be paid in future years as a result of police officer services performed to date and is adjusted for the effects of projected salary increases. A standardized measure of the pension benefit obligation was adopted by the GASB to enable readers of PERS fmancial statements to assess the Town's PERS funding status on a going - concern basis, assess progress made in accumulating sufficient assets to pay benefits when due and make comparisons among such plans. Because the standardized measure as of June 30, 1993, is used only for disclosure purposes by the Town's PERS, the measurement is independent of the actuarial computation made to determine contributions to the PERS, as previously explained. A variety of significant actuarial assumptions are used as of June 30, 1993, to determine the standardized measure of the pension benefit obligation and these assumptions are summarized below: . The present value of future pension payments is computed by using a discount rate of 9 %. The discount rate is equal to the estimated long -term rate of return on current and future investments of the pension plan. . Future pension payments reflect an assumption of 6.5 % (compounded annually) salary increases as a result of inflation. . Future pension payments reflect an assumption of additional projected salary increases ranging from 0.0% to 3.0% per year, depending on age, attributable to seniority/merit. 0 6 ) 19 TOWN OF MARANA, ARIZONA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1994 NOTE 4 - PUBLIC SAFETY PENSION PLAN (CONTINUED) The standardized measure of the assets in excess of the pension benefit obligation as of June 30, 1993, is as follows: Retirees and beneficiaries currently receiving benefits and terminated employees not yet receiving benefits $ - Current employees Accumulated employee contributions including allocated investment income 143,991 Employer- financed vested 95,272 Employer- financed nonvested 112,500 Health insurance 9,097 Total pension benefit obligation 360,860 Net assets available for benefits (419,558) Assets in excess of the pension benefit obligation $(58,698) No changes in actuarial assumptions or benefit provisions that would significantly affect the valuation of the pension benefit obligation occurred during fiscal 1993. During fiscal 1994 and as of June 30, 1994, the Marana Marshal's Arizona PERS held no securities issued by the Town or other related parties. Historical trend information as of June 30, 1993, for the Town's PERS is presented below: Fiscal Year 1993 1992 1991 . Net assets available for benefits as a percentage of the pension benefit obligation applicable to the Town's police officers. 116.3% 114.4% 150.8% . Unfunded pension benefit obligation 0 as a percentage of the Town's annual covered payroll for police officers. 00.0% 00.0% 00.0% 4 . Town's contributions to the pension plan as a percentage of annual cov- ered payroll for police officers. 5.87 % 6.28 % 5.85 % 20 TOWN OF MARANA, ARIZONA NOTES TO COMBINED FINANCIAL STATEMENTS June 30, 1994 4 NOTE 4 - PUBLIC SAFETY PENSION PLAN (CONTINUED) 4 Historical trend information is presented in order for a reader to assess the progress made in accumulating sufficient assets to pay pension benefits as they become payable. Ten year 4 historical trend information showing funding progress is presented in the System's separately issued financial report. NOTE 5 - COMMITMENTS AND CONTINGENCIES • The Town is continuously liable with respect to other claims incidental to the ordinary course of its operations. At June 30, 1994, it is the opinion of Town management, based on the advice • of the Town Attorney and outside counsel, that any such claims would not have a material effect on the Town's financial position. • The Town leases a truck under a noncancelable operating lease expiring in fiscal 1998. Future minimum lease payments under this lease are as follows: Years Ending June 30 1995 $ 3,388 1996 3,388 1997 3,388 1998 1,129 $ 11,293 The Town is also obligated under the terms of this lease to compensate the lessor for any mileage driven on the truck which is above the monthly intended mileage. Such a guarantee is in essence contingent rentals that are not determinable at year end. 4 o y 4 This information is an integral part of the accompanying combined financial statements. 21