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Notes to the Financial Statements
NOTES TO THE FINANCIAL STATEMENTS
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Financial Reporting Entity
The Town of Prescott Valley (Town) was incorporated on August 22, 1978, under the provisions of the State of Arizona. The current Town Charter established the Council/Manager form of government. The Town provides basic government services to its citizens including public safety, roads, water, sewer, planning and zoning, parks and recreation facilities, library, and general administrative services. The accounting policies of the Town conform to U.S. Generally Accepted Accounting Principles (GAAP) as applicable to governmental units.
The financial reporting entity presented in these financial statements consists of the Town of Prescott Valley (the primary government) and its component units. The component units discussed below are included in the Town’s reporting entity because of the significance of their operational or financial relationships with the Town.
In accordance with GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, the Town includes in its financial statements all entities for which the Town’s Mayor and Council are financially accountable. As the primary government, the Town is financially accountable if it appoints a voting majority of an organization’s governing body, and: 1) it is able to impose its will on that organization, or 2) there is a potential for that organization to provide specific benefits to, or impose specific financial burdens on, the primary government. Additionally, the primary government may be financially accountable if an organization is fiscally dependent on the primary government.
In accordance with GASB Statement No. 72, Fair Value Measurement and Application, the Town addresses accounting and financial reporting issues related to fair value measurements and establishes a hierarchy of inputs to valuation techniques used to measure fair value. This Statement also enhances accountability and transparency through revised note disclosures.
In accordance with GASB Statement No. 87, Leases, the Town includes in its financial statements information to better account for and report leases. The statement requires recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. A lessee is required to recognize a lease liability and an intangible right‐to‐use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. The Town determined that there was no change to beginning net position due to GASB 87 implementation, and restatement of net position for prior periods is not required.
Individual Component Units ‐ Blended
The Town of Prescott Valley Municipal Property Corporation (MPC) is a not‐for‐profit corporation organized under the laws of the State of Arizona to assist the Town in the acquisition and financing of municipal projects and facilities. The MPC is governed by a board of directors who are responsible for approving the corporation’s bond sales. The Town Council must also approve all bond sales. Although it is legally separate from the Town, the MPC debt service liability is reported as a debt service fund (blended component unit) in these financial statements. Additional information for the MPC can be obtained from the Town of Prescott Valley, Finance Department, located at 7501 E. Skoog Boulevard, Prescott Valley, AZ 86314.
The Town of Prescott Valley has a total of seven (7) community facilities districts (CFDs). StoneRidge, Pronghorn Ranch, Raven Ridge and Quailwood Meadows were created as funding mechanisms for local subdivision developers. Parkway No. 1 and Southside No. 1 were created as a funding mechanism for public improvements within the district located along Highway 69. The purpose of these six (6) districts is to assist in financing necessary on‐ and off‐site infrastructure and public improvements. Generally, the developers initially build the public infrastructure, and the district sells bonds to buy the improvements from the developers. The Entertainment Center CFD was created as a funding mechanism for the operation and debt service obligation of the Findlay Toyota Center.
StoneRidge, Pronghorn Ranch, Quailwood Meadows, and Parkway No. 1 bonds are repaid from revenues generated through an ad valorem tax against property located within the respective districts. The property owners within the districts are solely responsible for repaying the bonds through ad valorem tax collections. Raven Ridge was created as a funding mechanism for a sewer line installation project and funded by a low interest loan through the Water Infrastructure Financing Authority (WIFA). Raven Ridge’s low interest loan and Southside’s bonds are repaid from assessments paid by the property owners within the districts. No Town revenues are pledged toward these obligations.
The Town Council serves as the board of directors for these districts. For financial reporting purposes, the districts are reported as blended component units. All community facilities districts are reported as governmental funds as if the districts were a part of the Town’s operation. Additional information for these districts can be obtained from the Town of Prescott Valley, Finance Department, 7501 E. Skoog Boulevard, Prescott Valley, AZ 86314.
B. Government‐Wide and Fund Financial Statements
The government‐wide financial statements (e.g., statement of net position and statement of activities) report information on the primary government and its component units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business‐type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable.
The statement of activities demonstrates the degree to which direct expenses are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not included among program revenues are reported instead as general revenues.
Separate financial statements are provided for governmental and proprietary funds. Major individual governmental funds and proprietary funds are reported as separate columns in the fund financial statements.
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government‐wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund statements. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes, where applicable (e.g., community facilities districts), are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements have been met.
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The Town considers revenues to be available if they are collected within sixty (60) days following the end of the fiscal period. Expenditures generally are recorded when a liability is incurred. However, debt service expenditures, as well as expenditures related to vacation, sick leave, claims and judgments, are recorded only when payment is due.
Property taxes, other local taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when the Town receives cash.
The government reports the following major governmental funds:
The General Fund is the government’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 Grant Fund was established to account for grant revenues and expenditures. Grant revenues may be used only for the stated purpose in the approved grant agreement and are subject to grantor expenditure guidelines.
The Streets Capital Improvement Fund is used to acquire, construct, and improve major streets projects.
The Southside District No. 1 Community Facilities District accounts for the principal and interest of debt obligations issued by the district.
The government reports the following major proprietary funds:
The Wastewater Fund accounts for the operating revenues and expenses of the Town’s sewer system.
The Prescott Valley Water System Fund accounts for the operating revenues and expenses of the Town’s water utility system.
As a general rule, the effect of interfund activity has been eliminated from the government‐wide financial statements. Exceptions to this general rule are payments in lieu of taxes where the amounts are reasonably equivalent in value to the interfund services provided and other charges between the government’s water and sewer function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.
Amounts reported as program revenues include: 1) charges to customers or applicants for goods, services or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from non‐operating revenues and expenses. Operating revenues and expenses generally result from providing services in connection with principle ongoing operations. Operating revenues of the enterprise funds are charges for customer services, consisting of water and sewer charges. Operating expenses for enterprise funds include the cost of services, administrative expenses, and depreciation. All revenues and expenses not meeting this definition are reported as non‐operating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the Town’s policy to use restricted resources first, then unrestricted resources as needed.
D. Property Tax Calendar
The County Treasurer is responsible for collecting property taxes for all government entities within the county. The county levies real and personal property taxes on or before the third Monday in August that become due and payable in two equal installments. The first installment is due on the first day of October and becomes delinquent after the first business day of November. The second installment is due on the first day of March of the next year and becomes delinquent after the first business day of May.
Pursuant to Arizona statutes, a lien against assessed real and personal property attaches on the first day of January preceding assessment and levy; however according to case law, an enforceable legal claim to the asset does not arise.
E. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net Position/Fund Balance
1. Deposits and Investments
Cash equivalents for purposes of the statements of cash flows are investments (including restricted assets) in the State of Arizona’s Local Government Investment Pool (LGIP), mutual funds, demand deposits, repurchase agreements and U.S. Treasury bills and notes.
Arizona Revised Statutes authorize the Town to invest public monies in the State Treasurer’s LGIP, interest‐bearing savings accounts, certificates of deposit and repurchase agreements in eligible depositories, bonds or other obligations of the U.S. government that are guaranteed as to principal and interest by the U.S. government, and bonds of the State of Arizona counties, cities, towns, school districts and special districts as specified by statute.
GASB Statement No. 31 provides that governmental entities may report all investments at fair value or they may elect to report certain money market investments and participating interest earning investment contracts at amortized cost. The Town has elected to report all investments at fair value. The Town’s policy is to invest in certificates of deposit, repurchase agreements, direct U.S. Treasury debt, securities guaranteed by the U.S. government or any of its agencies and the State of Arizona’s LGIP. The LGIP is overseen by the State of Arizona. The fair value of each share in the LGIP is $1.
2. Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due to/from other funds” (e.g., current portion of inter‐fund loans) or “advances to/from other funds” (e.g., non‐current portion of inter‐fund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Any residual balances outstanding between the governmental activities and business‐type activities are reported in the government‐wide financial statements as internal balances.
Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate they are not available for appropriation and are not expendable financial resources.
All accounts are shown net of an allowance for uncollectible accounts. All receivables outstanding for greater than ninety (90) days comprise the allowance for uncollectible accounts on June 30, 2022.
3. Inventories and Prepaid Items
Inventories of the governmental funds are recorded under the consumption method as expenditures when consumed rather than when purchased. Inventories are valued at yearend based on cost, with cost determined using an average cost method.
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government‐wide and fund financial statements. Prepayments are recorded under the purchase method as expenditures when incurred rather when consumed.
4. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position may report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to future periods and will not be recognized as an outflow of resources (expenses/expenditures) until then.
In addition to liabilities, the statement of financial position may report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time.
5. Restricted Cash and Investments
Certain proceeds of the Town’s bonds (including community facilities districts), as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheets because their use is limited by applicable bond covenants.
6. Capital Assets
Capital assets include property, plant, equipment, and infrastructure and are reported in the governmental and business‐type activities columns in the government‐wide financial statements.
Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000, and an estimated useful life in excess of one (1) year. Donated capital assets, donated works of art, and similar items and capital assets received through service concession arrangements are recorded at acquisition value or at fair market value if acquisition value is not available.
The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business‐type activities is included as part of the capitalized value of the assets constructed. There was no capitalized interest for the fiscal year 2021‐22.
Depreciation and amortization of all assets are recorded and calculated using the straight‐line method over the following estimated useful lives:
When capital assets are disposed, the cost and accumulated depreciation/amortization are removed from the accounts and any resulting gain/loss is recognized in the government‐wide and proprietary financial statements.
Infrastructure Buildings and Improvements 50 years 5‐50 years
Land Improvements Machinery and Equipment
10‐20 years 10 years Motor Vehicles 5 years Furniture, Fixtures and Office Equipment 5‐10 years
7. Compensated Absences
Compensated absences consist of general leave and a prior balance of sick leave accumulated by employees. Employees accumulate general leave hours depending on years of service. The Town’s policy is to pay employees for unused accumulated general leave hours at termination or retirement, up to a maximum amount depending on years of service at such time. The Town’s policy is applicable for both full‐time and part‐time employees.
All general leave pay is accrued when incurred in the government‐wide and proprietary fund financial statements. A liability for the current amount of compensated absences is recorded as a current liability on June 30 in the governmental and proprietary funds. The current compensated absences amount in the governmental funds is combined with accrued payroll and other payroll‐related amounts in the accrued payroll and benefits line item. The Town calculates this current amount based on the average general leave and compensatory time taken during the first ninety (90) days of the previous three (3) years. The General Fund, Highway User Revenue Fund, Wastewater Fund and Prescott Valley Water System Fund are typically used to liquidate compensated absences.
8. Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions and pension expense, information about the pension plan’s fiduciary net position and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis as they are reported by the plan. For this
purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with benefit terms. Investments are reported at fair value.
9. Long‐Term Obligations
In the government‐wide financial statements and the proprietary fund types in the fund financial statements, long‐term debt and other long‐term obligations are reported as liabilities in the applicable governmental activities, business‐type activities, or proprietary fund statement of net position. Bond premiums and discounts as well as the difference between the reacquisition price and the net carrying amount of old debt, are deferred, and amortized over the life of the bonds using the straight‐line method. Bond issuance costs are expensed.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources, while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.
10. Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.
II. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budget and Budgetary Accounting
The Town prepared an annual budget that covered fiscal year 2021‐22. The Town, like other towns and cities in the State of Arizona, is subject to numerous budget and budget‐related legal requirements. Article IX, Section 20 (1) of the Arizona Constitution sets limits on the Town’s legal budget capacity. The Town currently operates under the Alternative Expenditure Limitation – Home Rule Option. This option allows the Town Council to establish the budgetary limits locally. This option must be authorized by the voters every four years. It was last authorized by the citizens of Prescott Valley in August 2020. The fiscal year 2021‐22 budget appropriation is established and reflected in the financial statements.
The Town Council formally adopts the budget and legally allocates, or appropriates, available monies for the General Fund, Special Revenue Funds (Highway User Revenue Fund, UNS Facilities Relocation Fund, Impoundment Fee Fund, Police Safety Fund, Development Impact Fees Fund, Smart and Safe Arizona Fund, Donation Fund, and Grant Fund), Debt Service Funds (except for the community facilities districts’ debt service funds), Capital Improvement Funds, and Enterprise Funds. Therefore, these funds have appropriated budgets and budget to actual information is presented for governmental fund types.
Budgets for governmental funds are adopted under the GAAP method using a modified accrual basis.
Budgets for proprietary funds utilize the economic resources measurement focus and accrual basis except for principal debt service and capital outlay which are budgeted due to expenditure limitation purposes and then reclassified at year end to comply with GAAP.
Budgets for the community facilities districts are established in accordance with Arizona Revised Statutes, which do not require their inclusion in the Town budget or adoption by the Town Council.
Budgets for capital project funds are established for individual projects and unexpended funds are re‐appropriated each year until the project is completed and capitalized.
On or before the second regular Council meeting in June, the Town Manager submits to the Town Council a proposed budget for the fiscal year commencing the following July 1. The budget includes proposed expenditures and the means of financing them.
One public hearing is held prior to the budget’s final adoption in order to obtain citizens’ comments. On or before the first regular Council meeting in July, the budget is legally enacted through passage of a resolution which sets the limit for expenditures during the fiscal year. Additional expenditures may be authorized for expenditures directly necessitated by a natural or man‐made disaster as prescribed in the State Constitution, Article 9, Section 20. During fiscal year 2021‐22, there were no supplemental budgetary appropriations to the original budget.
The expenditure appropriations in the adopted budget are approved at the fund level. The maximum legal expenditure permitted for the fiscal year is the total budget as adopted. Departmental appropriations may be amended during the year. Upon the recommendation of the Town Manager and with the approval of the Town Council:
Management control of budgets is further maintained at a line‐item level within the individual Town departments.
B. Excess of Expenditures over Appropriations
Expenditure appropriations are adopted in the budget at the fund level. For presentation purposes, the following table shows any deficits at the line‐item level within departments/divisions, all of which were funded by available fund balances within the general fund:
The deficit in personnel services in Human Resources was due to the Assistant Town Manager position under Executive Management returning to a dedicated Human Resources Director position under Human Resources. The deficit in personnel services in Finance is due to hiring a new Town Manager at a higher rate than budgeted. The deficit in personnel in Facilities and Fleet Maintenance was due to higher than budgeted salaries and wages expenditures from re‐classifying one of the Town’s positions from Highway User Revenue Fund to General Fund (Facilities and Fleet Maintenance division).
General Fund: Original Budget Final Budget
Actual Expenditures Variance Between Final Budget and Actual Amounts
Current:
Human Resources
$ 473,973 $ 473,973 $ 574,090 $ (100,117) Finance 1,764,706 1,764,706 1,786,027 (21,321) Facilities and Fleet Maintenance 744,428 744,428 859,001 (114,573)
C. Deficit Fund Equity
For the fiscal year ending June 30, 2022, Southside Community Facilities District No. 1 and Entertainment Center Community Facilities District funds had deficit fund balances.
D. Fund Balance Classifications
Governmental fund balances as of June 30, 2022, are as follows:
Community Highway Development Streets Facilities Total User Impact Capital District Nonmajor Total General Revenue Fees Improvement Southside GovernmentalGovernmental
Fund Fund Fund Fund District No. 1 Funds Funds
Fund balances:
Nonspendable:
Prepaid items 110,817$ 890$ ‐$ ‐$ ‐$ 2,326$ $ 114,033
Advances to other funds 16,220,697 ‐ ‐ ‐ ‐ ‐ 16,220,697
Restricted for:
Capital projects
Community facilities districts ‐ ‐ 794,348 4,290,699 ‐ 500,000 5,585,047 ‐ ‐ ‐ ‐ ‐ 23,451 23,451
Debt service ‐ ‐ ‐ ‐ ‐ 1,299,554 1,299,554
Grantor and contributor purposes ‐ ‐ ‐ ‐ ‐ 1,121,559 1,121,559
Street improvements ‐ 6,125,591 ‐ ‐ ‐ ‐ 6,125,591
Committed to:
Replacement fund 334,545 ‐ ‐ ‐ ‐ ‐ 334,545
Stabilization fund 5,467,146 ‐ ‐ ‐ ‐ ‐ 5,467,146
Unassigned 46,720,462 ‐ ‐ ‐ (366,594) (31,354) 46,322,514 Total 68,853,667$ $ 6,126,481 $ 794,348 4,290,699$ (366,594)$ 2,915,536$ $ 82,614,137
Only restrictions imposed by external sources are shown as restricted net assets on the government‐wide financial statements. Restrictions imposed by external sources or the State of Arizona enabling legislation are shown as restricted fund balance on the governmental fund financial statements.
Nonspendable represents amounts such as inventories, advances, and prepaid items. Committed includes amounts that can be used only for the specific purposes determined by a formal action (i.e., resolution) of the Council, the Town’s highest level of decision‐making authority. A formal action is also required to modify or rescind an established commitment. Assigned amounts are intended to be used by the government for specific purposes, but do not meet the criteria to be restricted or committed. Assigned represents the remaining amount that is not restricted or committed in governmental funds other than the General Fund, which is classified as unassigned. Assigned is expressed by the direction of the Finance Director with the authority to assign amounts to be used for specific purposes as authorized by the Council adopted financial policies. Unassigned represents General Fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes. The Town’s General Fund will maintain an unassigned fund balance with a target of a minimum of 25% of General Fund revenues, excluding transfers. The intention of unassigned fund balance is to provide additional stability to the General Fund recognizing the cyclical nature of the economy and the volatility of the major revenue sources of the Town. Funds in excess of the minimum targets will be retained in the unassigned General Fund balance. In funds other than the General Fund, the unassigned balance is used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed, or assigned. When both restricted and unrestricted resources are available for use, it is the Town’s policy to use restricted resources first, then unrestricted resources. Unrestricted fund balance would be used in the order of committed, assigned and then unassigned.
The Town has set aside stabilization funds in the General Fund. The authority for the stabilization fund is the Council‐adopted financial policies. The stabilization fund is shown as committed on the governmental fund financial statements. The stabilization fund will be no less than 10% of general fund revenues, excluding transfers. It may only be used if specific action is taken by Mayor and Council after the unassigned fund balance is depleted. The Town Manager must be able to demonstrate the magnitude of the unforeseen emergency or catastrophic event, and that there are no reasonable budget adjustments available to continue to provide the essential services to the public. In the event the stabilization fund must be used, the Town must restore the balance to the minimum limit over a period not to exceed five (5) fiscal years following the fiscal year in which the event occurred. If the reduction to the stabilization fund was the result of an ongoing economic downturn, the Town is to restore the balance within five (5) fiscal years of revenue stabilization.
III. DETAILED NOTES ON ALL FUNDS
A. Cash and Investments
The Town maintains a cash investment pool for use by all funds except the Municipal Property Corporation and community facilities district funds, which have investments held separately by a trustee. The Town maintains petty cash funds in various departments, which amounts to $7,805 on June 30, 2022. The Entertainment Center CFD maintains a petty cash fund which amounts to $8,200 on June 30, 2022.
Deposits
On June 30, 2022, the carrying amount of the Town’s deposits was $12,684,020 and the bank balance was $14,217,805. The $1,533,785 difference represents outstanding checks, petty cash, and other reconciling items.
Custodial Credit Risk – Deposits
Custodial credit risk is the risk that in the event of a bank failure, the government’s deposits may not be returned. As of June 30, 2022, all of the Town’s deposits were covered by federal depository insurance or by the collateral held by the Town’s agent, pledging financial institution’s trust department, or agent in the name of the Town, leaving no funds uninsured or uncollateralized.
Interest Rate Risk
As a means of limiting its exposure to fair value losses as a result of changing interest rates, the Town’s investment policy limits the Town’s investment portfolio to maturities of five (5) years or less, unless matched to a specific cash flow.
Credit Risk
Town Charter, Ordinances and Trust Agreements authorize the Town to invest in obligations of the U.S. Treasury, U.S. Government agencies, certificates of deposit, bankers’ acceptances, repurchase agreements, mutual funds, corporations or sponsored corporations, money markets, and the State of Arizona Local Government Investment Pool (LGIP). The Town’s Investment Policy specifies the minimization of credit risk through the limitation to top tier quality investments, pre‐qualification of financial institutions, and diversification of the portfolio.
The Town’s investment in the bonds of U.S. agencies was rated AA+ by Standard and Poor’s, AAA by Fitch Ratings and Aaa by Moody’s Investors Service. On June 30, 2022, the Town’s investments in the State of Arizona Local Government Investment Pool were rated AAA.
Investments
The Town categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset.
The Town’s investments on June 30, 2022, are summarized in the following table:
Investment Type Investment Maturities (in Years) Category Fair Value Less Than 1 1 ‐ 5 6 ‐ 10
US Treasuries Level 1
US Agencies Level 1
Certificates of Deposit
Level 1 Local Government Investment Pool N/A $ 641,171 $ 641,171
‐$ ‐$ ‐ ‐ ‐ ‐ 1,002,477 1,002,477 ‐ ‐ 97,407,990 97,407,990 ‐ ‐ 99,051,638 $ 99,051,638 ‐$ ‐$
Total Town cash and investments at fair value are as follows:
Total Town cash and investments are reported as follows:
Debt securities are classified as held‐to‐maturity. A debt security should be classified as held‐to‐maturity only if the reporting entity has both the positive intent and the ability to hold those securities to maturity. In accordance with the Town’s investment policy, securities shall not be sold prior to maturity with the following exceptions: 1) a security with declining credit may be sold early to minimize loss of principal, 2) liquidity needs of the portfolio require that the security be sold, or 3) if market conditions present an opportunity to benefit from the sale.
Carrying Amount of Town deposits $ 12,684,020 Investments 99,051,638 Total cash and investments 111,735,658$
Primary government:
Cash and investments
Restricted cash and cash equivalents Total cash and investments $ 107,466,700 4,268,958
$ 111,735,658
B. Receivables
Receivables as of yearend for the government’s individual major and non‐major funds in the aggregate, as shown in the Balance Sheet, including the applicable allowances for uncollectible accounts, are as follows:
Receivables: Less: Charges for Inter‐ Special Gross Allowance for Net Total Misc‐ Services Grants Interest Leases governmental Assessments Receivables Uncollectibles Receivables ellaneous
General Fund Highway User Revenue Fund Development Impact Fees Fund Grants Fund Streets Capital Improvement Fund CFD ‐ Southside District No. 1 Wastewater System PV Water System Nonmajor Governmental Funds Total ‐$ ‐$ 26,471$ 3,990,946$ 1,922,414$ ‐$ 607,939$ 6,547,770$ ‐$ 6,547,770 $ ‐ ‐ 500 ‐ 467,193 ‐ ‐ ‐ 286 ‐ ‐ ‐ ‐ 467,693 ‐ 286 ‐ 467,693 ‐ 286
‐ 1,142,404 ‐ ‐ ‐ ‐ ‐ ‐ 238 ‐ 190,847 ‐ ‐ 1,142,404 ‐ 191,085 ‐ 1,142,404 ‐ 191,085
‐ ‐ ‐ ‐ ‐ 1,316,660 ‐ 1,316,660 ‐ 1,316,660
313,996 ‐ 1,669 ‐ ‐ ‐ 3,087,262 246,051 4,051 1,600,429 ‐ ‐
‐ 315,665 (37,465) 278,200 ‐ 4,937,793 (113,204) 4,824,589 ‐ ‐ 27 ‐ 1,645 1,983 272,166 275,821 ‐ 275,821 3,401,258$ 1,388,455$ 33,242 $ 5,591,375 $ 2,582,099$ 1,318,643$ $ 880,105 15,195,177$ (150,669)$ $15,044,508
C. Capital Assets
Capital asset activity for the year ended June 30, 2022, was as follows:
Capital Capital
Assets Assets June 30, 2021* Increases Decreases Transfers June 30, 2022
Governmental activities:
Capital assets, not being depreciated: Land 11,652,007$
Construction in progress
1,113,697 Total capital assets, not being depreciated: 12,765,704 $ 1,127,837 3,999,502 5,127,339
Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Infrastructure Total capital assets, being depreciated: Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Infrastructure Total accumulated depreciation:
61,492,340 24,984,306 12,778,352 208,990,436 308,245,434 2,769,695 705,889 1,243,932 2,718,880 7,438,396
(16,732,293) (1,671,413) (16,396,265) (1,098,732) (10,105,212) (1,003,565) (90,656,432) (6,545,062) (133,890,202) (10,318,772) Total capital assets, being depreciated, net 174,355,232 Right‐to‐use assets, being amortized: Land Buildings Machinery and equipment Total right‐to‐use assets, being amortized: 15,917 14,914 30,601 61,432
Less accumulated amortization for: Land Buildings Machinery and equipment Total accumulated amortization: (2,880,376)
(2,047) (5,966) (8,727) (16,740)
Total right‐to‐use assets, being amortized, net
61,432 Governmental activities capital assets, net 187,182,368
(16,740) 2,230,223 $ ‐ ‐$ $ 12,779,844
(325,000) (2,877,039)
1,911,160 (325,000) (2,877,039) 14,691,004
‐‐(103,806) ‐(103,806)
‐‐103,806 ‐103,806 ‐1,907,694 66,169,729 433,949 26,124,144 ‐ 13,918,478 535,396 212,244,712 2,877,039 318,457,063
‐ (18,403,706) ‐ (17,494,997) ‐ (11,004,971) ‐ (97,201,494) ‐ (144,105,168) 2,877,039 174,351,895
‐(325,000) 15,917 14,914 30,601 61,432
(2,047) (5,966) (8,727) (16,740) 44,692 189,087,591
Business‐type activities:
Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated: Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Infrastructure Total capital assets, being depreciated: Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Infrastructure Total accumulated depreciation: 1,768,810 6,215,663 7,984,473
745,637 879,899 1,625,536
4,119,272 30,374,439 10,670,569 144,248,947 189,413,227
91,786 ‐658,228 2,712,522 3,462,536
(3,758,083) (15,332,797)
(41,336) (821,386)
(8,862,714)
(526,145) (56,852,429) (3,945,297) (84,806,023) (5,334,164) Total capital assets, being depreciated, net 104,607,204 Right‐to‐use assets, being amortized: Land Total right‐to‐use assets, being amortized: Less accumulated amortization for: Land Total accumulated amortization: 824,040 824,040 (1,871,628)
(87,302) (87,302) ‐(4,026,626) (4,026,626)
‐‐(95,955) ‐(95,955)
‐‐95,515 ‐95,515 (440)
Total right‐to‐use assets, being amortized, net
824,040 Business‐type activities capital assets, net 113,415,717 Total $ 300,598,085 $ (87,302)
‐(333,394) (4,027,066) 1,896,829 $ (4,352,066) 23,299 (23,299) ‐2,537,746 3,045,637 5,583,383
‐
4,211,058 ‐ 30,374,439 ‐ 11,232,842 ‐ 146,961,469
‐ 192,779,808
‐
(3,799,419) ‐ (16,154,183) ‐ (9,293,344) ‐ (60,797,726) ‐ (90,044,672) ‐ 102,735,136
824,040 824,040
(87,302) (87,302) 736,738 109,055,257 298,142,848
*Capital Asset balance as of June 30, 2021 is reinstated (increased by $885,472) due to GASB 87 implementation.
Construction in progress activity for the year ended June 30, 2022, was as follows:
Governmental activities:
Agua Fria Drainage Project
Antelope Meadows Free Flow
Antelope Park Improvements
Boys & Girls Club Remodel
Bronze Sculpture
Central Core Multiuse Path ‐ Phase III
Disc Golf course ‐ Santa Fe Park
Florentine Road Storm Drain
Glassford Hill Rod ‐ Mill & Fill
Glassford Summit Trail Extension
HVAC ‐ Civic Center
Jenkin's Obelisk
Library Building Remodel
MVP Restroom
PV Monument Sign
Park View Drive Connector
Pipeline Multiuse Path
Starlight Pedestrian Improvement
Spreader Racks
Viewpoint Long Look ‐ Manley
Viewpoint Stormwater Channel Total governmental activities
Business‐type activities:
Bighorn PRV Station
Duplex Booster Station Upsizing
Monks Well
Florentine Road ‐ Storm Drain
Fire Hydrants (12)
Injection Well ‐ Mountain Valley Park
Second Street Sewer Manholes
Section II Sewer Upsizing
Summit II Water Tank
Tri‐City Pipeline and Tanks
Water Transmission Pipeline
WWTP Headworks Upgrade Total business‐type activities Total Construction
Construction in Progress in Progress June 30, 2021 Increases Decreases Transfers June 30, 2022
$ 325,000 17,000 ‐$
($ 325,000) 325,153 ‐ ‐$ ‐$ (342,153) ‐
‐ 460,789 ‐ ‐
460,789 10,190 1,497,769 ‐ (1,507,959) ‐ 63,095 68,589 ‐ (131,684) ‐ 36,979 ‐ ‐ ‐ 36,979
‐ 11,599 ‐ ‐ 11,599
109,890 ‐316,510 ‐ ‐ 29,650 ‐ ‐ 426,400 29,650
33,840 ‐ ‐ ‐ 33,840
‐54,550 ‐230,448 27,530 12,910 21,700 ‐ ‐ 21,700
78,987 ‐
(133,537) ‐ 249,069 ‐ ‐ 249,069
338,015 ‐
(568,463) ‐ 22,113 ‐ ‐ 49,643
180,333 ‐
(193,243) ‐ 187,828 ‐ ‐ ‐ 187,828
‐ 45,961 ‐ ‐ 45,961
4,437 ‐ ‐ ‐ ‐ 214,790 ‐ ‐
4,437 214,790
‐ 138,475 ‐ ‐ 138,475
1,113,697 3,999,502 (325,000) (2,877,039) 1,911,160
8,580 ‐ (8,580) ‐ ‐
205,692 10,100 ‐ ‐ 215,792
604,657 390,104 ‐ ‐ 994,761
18,370 228,882 ‐ ‐ 247,252
‐830,036
56,332 ‐ ‐ 35,595 ‐ ‐ 16,300 ‐ ‐ ‐ 56,332 865,631 16,300
88,554 ‐ ‐ ‐ 88,554
2,500 20,799 ‐
(23,299) ‐ 4,018,046 ‐ (4,018,046) ‐ ‐ 422,928 ‐ ‐ ‐ 422,928
‐ 138,087 ‐ ‐ 138,087
6,215,663 7,329,360$ 879,899 (4,026,626) 4,879,401$ $ (4,351,626) (23,299) 3,045,637 (2,900,338)$ 4,$ 956,797
Depreciation expense charged to functions/programs of the primary government was as follows:
Amortization expense charged to functions/programs of the primary government was as follows:
Governmental activities:
General government 942,287 $ Public safety 831,372 Highways and streets 4,788,736 Culture and recreation 2,015,131 Public works 1,741,246 Total depreciation expense ‐ governmental activities 10,318,772 $
Business‐type activities:
Wastewater 2,979,539 $ Prescott Valley water system 2,354,625 Total depreciation expense ‐ business‐type activities 5,334,164 $
Governmental activities:
General government 5,328 $ Public safety 8,013 Culture and recreation 3,399 Total amortization expense ‐ governmental activities 16,740 $
Business‐type activities:
Prescott Valley water system 87,302 $ Total amortization expense ‐ business‐type activities 87,302 $
D. Construction Commitments
The Town has active construction projects as of June 30, 2022. At yearend, the government’s commitments were as follows:
General Fund project (Library Building Remodel) is funded by the litigation proceeds. Highway User Revenue Fund project (Florentine Road Improvement) is funded by highway user tax. Development Impact Fees project (Antelope Park Improvements) is funded by impact fees. Grant Funds project (Florentine Road Improvement) is funded by the Coronavirus State and Local Fiscal Recovery Fund program (SLFRF). The PV Water System improvement projects (Monks Well, Florentine Road Improvement, Fire Hydrants, Injection Well – Mountain Valley Park, Wastewater Treatment Plant Headworks Upgrade) and Wastewater System project (Florentine Road Improvement) are being funded through the water and wastewater user fee revenues, water connection fee revenues, and SLFRF.
Total Contract
Remaining Balance General Fund 300,255 $ 51,186 $ Highway User Revenue Fund 2,104,682 1,996,954 Development Impact Fees Fund 488,602 28,939 Grant Funds 567,110 358,328 Wastewater System 736,445 556,665 PV Water System 2,172,814 1,626,866 $ 6,369,908 $ 4,618,938
E. Inter‐Fund Balances and Inter‐Fund Transfers
“Due to” and “due from” balances have been recorded when funds overdraw their share of pooled cash. The composition of inter‐fund balances as of June 30, 2022, was as follows:
“Advance to” and “advance from” balances have been recorded when funds overdraw their share of pooled cash, and the repayment is not expected within a reasonable time.
The Town has issued Certificates of Participation debt to fund the library building project. The repayment of the debt is to be shared between the General Fund and Development Impact Fees Fund. Due to previous economic conditions, the Development Impact Fees Fund did not have adequate cash to pay the debt service; therefore, the General Fund has advanced funds to the Development Impact Fees Fund.
The secondary assessed values for StoneRidge, Parkway, Pronghorn, and Quailwood community facilities districts were severely affected with the downturn in the housing market and commercial real estate values in 2008. As a result, the districts did not generate sufficient ad valorem taxes to cover operating expenditures incurred within the district. The Town has advanced funds to the districts to cover these costs. Due to increase of the secondary assessed or commercial real estate values, the districts have begun repaying the Town.
Southside community facilities districts (assessment district) did not collect sufficient amount of assessments to pay the property owner’s share of the annual debt service payment. The Town has advanced funds to the districts to cover these costs.
The Town had issued Municipal Property Corporation debt to fund capital project expenses in the enterprise funds. The payback period for the enterprise funds is over the life of the bonds as a means to fund the future debt service principal and interest payments. Municipal Property Corporation debt was refunded in fiscal year 2020‐21. The Town anticipates selling effluent water credits in the future to repay the advance to the General Fund.
The composition of advance balances as of June 30, 2022, was as follows:
Transfers are used to fund capital projects and debt service and to reallocate special revenue funds to operating centers or other operations.
Due To/From Other Funds Receivable Fund Payable Fund Amount General Fund Grants 981,490 $ 981,490$
Advance To/From Other Funds Receivable Fund General Fund General Fund General Fund General Fund General Fund General Fund General Fund Payable Fund
Amount Development Impact Fees 2,804,295 $
StoneRidge CFD 775,490
Parkway CFD No. 1 117,606
Pronghorn CFD 299,905
Quailwood CFD 111,956
Southside CFD No. 1
691,655 PV Water System 11,420,000 16,220,907$
Interfund Transfers
Transfer In:
Highway Development
User Impact Non‐major Revenue Fees Water Governmental
Transfer Out: Fund Fund System Funds Total
General Fund 2,500,000$ $ 44,681 ‐$ 3,372,823 $ 5,917,504$
Development Impact Fees Fund ‐ ‐ ‐ 1,830,846 1,830,846
Streets Capital Improvement Fund ‐ ‐ ‐ 2,024,875 2,024,875
Wastewater System ‐ ‐ 934,783 ‐ 934,783 Total $ 2,500,000 $ 44,681 934,783$ $ 7,228,544 10,708,008$
F. Leases
Town as Lessee ‐ Leases Payable
On July 1, 2021, Town of Prescott Valley, as a lessee, has entered into lease agreements involving land, a building, and printing and mailing equipment. The related obligations have been recorded at the present value of their future minimum lease payments as of the inception date. Revenues from General Fund and Prescott Valley Water System Fund are used to pay the lease obligations. The total of the Town’s right‐to‐use assets as of June 30, 2022 is $885,472 with accumulated amortization of $104,402.
The future lease payments under lease agreements are as follows:
Governmental
Business‐Type Fiscal Year Activities Activities Total
Ending Principal Interest Principal Interest Principal Interest 2023 17,799$ 418$ $ 77,274 11,292$ $ 95,073 11,710$ 2024 10,608 280 78,454 10,112 89,062 10,392 2025 5,334 187 79,652 8,914 84,986 9,101 2026 5,397 123 80,868 7,698 86,265 7,821 2027 2,851 69 82,103 6,463 84,954 6,532 2028‐32 2,366 34 341,142 13,122 343,508 13,156 44,355$ 1,111$ 739,493$ 57,601$ 783,848$ 58,712$
Town as Lessor – Leases Receivable
On July 1, 2021, Town of Prescott Valley, as a lessor, has entered into lease agreements involving land and buildings. The total amount of inflow of resources as of June 30, 2022 was $5,449,341, and Prescott Valley recognized lease revenue (including lease interest revenue) of $438,521 during the fiscal year.
G. Bonds, Loans, Capital Leases and Other Payables
The following are brief descriptions of bonds and long‐term loans/obligations outstanding as of June 30, 2022. There are several limitations and restrictions contained in the various documents, and the Town is in compliance with all significant limitations and restrictions.
Revenue Bonds
On November 19, 2020, the Town issued revenue bonds in the amount of $25,190,000 with an interest rate of 0.35%‐4.00%. The proceeds were used to advance refund the following bonds: Municipal Property Corporation (MPC) bonds Series 2011 and 2012 totaling $15,695,000 (including $1,760,000 of Wastewater Revenue bonds), and Private Placement bonds Series 2015, Series 2017, and Series 2018 totaling $14,230,000. This purchase resulted in a reduction of the total debt service payments over twelve (12) years by $5,105,074, present value cash flow savings of $4,870,192, and net present value savings of $1,729,926. The reacquisition price exceeded the net carrying amount of the old debt by $649,038. This amount is being amortized over the remaining life of the refunding debt.
Utility Revenue Bonds and Loans
Utility Revenue Bonds are issued as authorized by the voters for the construction, acquisition, furnishing and equipping of utility facilities. Such bonds are collateralized by revenue in excess of operating and maintenance expenses of the utility system and are repaid solely from user charges or fees for service.
In 2005 the Town had $9,317,000 in bond capacity that was authorized but un‐issued for Wastewater Revenue Bonds. Rather than issue bonds, the Town entered into a low‐interest, long‐term loan agreement with the Water Infrastructure Financing Authority (WIFA). This loan funded wastewater treatment facility expansion and is collateralized by revenue in excess of operating and maintenance expenses of the Town’s wastewater utility system. Property taxes cannot be used to pay the debt service on Utility Revenue Bonds or on these loans.
In 2006 Arizona statutes related to water infrastructure financing were amended. For towns and cities with populations of less than fifty thousand, the revenues of the towns and cities’ utility systems may now be pledged towards repayment of loan agreements without an election if the pledge does not violate any covenant pertaining to previous bond/loan issues. In March 2007 the Town entered into an additional loan agreement with WIFA in the amount of $5,000,000 to finance the balance of the wastewater treatment facility expansion project. On June 30, 2022, $3,672,321 in sewer loans (including principal and interest) remained outstanding to be repaid by future wastewater revenues. The debt principal and interest paid on this debt in fiscal year ended June 30, 2022, was $999,592.
For the fiscal year ended June 30, 2022, the net revenues available for service of wastewater system debt were $2,579,790. Current Wastewater Revenue Bond covenants require that the Town’s net wastewater system revenues (revenues remaining after providing sufficient funds for the system) are at least one and one‐quarter (1¼) times the maximum annual debt service payment. As of June 30, 2022, the Town’s debt service coverage is 2.58 times the annual debt service payment (see Table 14 in the statistical section).
Community Facilities District (CFD) Bonds
Community facilities districts are special purpose government entities which the Town Council may create under Arizona law to (among other things) acquire and improve public infrastructure. Community facilities districts may issue bonds, which are repaid either with ad valorem taxes levied directly on property within the community facilities district (approved by vote of the property owners and collected by Yavapai County), or with assessments applied against property benefited by the improvements. Aside from nominal costs the Town may incur based on intergovernmental agreements to administer community facilities districts, the Town has no liability for community facilities district bonds.
Community facilities districts are created only by petition to the Town Council from property owners within the community facilities district area. Because the members of the Town Council generally sit as community facilities district board members (as required by statute), the Town Council has adopted a policy that community facilities districts not be formed (or related debt incurred) unless the ratio of the full cash value of the unimproved community facilities district property to the proposed community facilities district debt, is a minimum of 3:1 (and 5:1 after construction of improvements). These ratios are verified by an appraisal. In addition, the policy states that cumulative debt of all community facilities districts should not exceed 15% of the Town’s secondary assessed valuation. At present, the cumulative debt of all community facilities districts does not exceed 15% of the Town’s secondary assessed valuation.
StoneRidge, Pronghorn Ranch and Quailwood Meadows have issued general obligation bonds to finance streets, utilities, parks and related public improvements, payable from ad valorem taxes levied directly on property within the districts and collected by the county. StoneRidge and Quailwood Meadows have $18,200,000 and $18,060,000 respectively of approved (but un‐issued) general obligation bond authority. The Raven Ridge Community Facilities District has entered into an agreement with WIFA in the amount of $925,446 to finance wastewater collection facilities, payable from assessments against property within the district. The Parkway Community Facilities District No. 1 involves commercial property for which parking areas have been constructed, based on general obligation bonds issued in the amount of $3.4 million, payable from ad valorem taxes levied directly on property within the district and collected by the county. The Southside Community Facilities District No. 1 has issued bonds in the amount of $3.0 million for the purpose of financing certain public infrastructure improvements within the district, payable from assessments against property within the district.
Pronghorn Ranch issued $6,150,000 in general obligation bonds with an interest rate of 4.18%. The proceeds, along with a $198,065 developer deposit, were used to advance refund $5,920,000 of outstanding Series 2002 and 2004 Pronghorn Ranch General Obligation Bonds. The net proceeds of $6,167,115 were deposited in an irrevocable trust with an escrow agent to provide for the future debt service payment on the refunded bonds. As a result, the Series 2002 and 2004 Pronghorn Ranch General Obligation Bonds are considered defeased and the liability for those bonds has been removed from the statement of net position.
Quailwood Meadows issued $5,810,000 in general obligation bonds with an interest rate of 4.21%. The proceeds, along with a $568,501 developer deposit, were used to advance refund $5,865,000 of outstanding Series 2004 Quailwood Meadows General Obligation Bonds. The net proceeds of $6,219,800 were deposited in an irrevocable trust with an escrow agent to provide for the future debt service payment on the refunded bonds. As a result, the Series 2004 Quailwood Meadows General Obligation Bonds are considered defeased and the liability for those bonds has been removed from the statement of net position.
The operator of the Prescott Valley Events Center (PVEC, LLC) filed for Chapter 11 Bankruptcy on August 14, 2015. On June 2, 2017, a Plan of Reorganization, which included the Entertainment Center Community Facilities District (ECCFD) and the Town, was initially filed with the Bankruptcy Court. The Court held a hearing on the Plan on July 12, 2017, in Phoenix, after which the modified Plan was again filed and sent out to creditors and other interested parties for voting. The bankruptcy plan was subsequently approved in early October and had a final settlement date of October 27, 2017. Part of the Plan involved issuance by ECCFD of two bond series in order to acquire the Events Center and related personal property interests and make needed improvements to the Center and related parking areas. The first series is revenue bonds in the amount of $16,000,000 with an interest rate of 4.00%. It is a part of the bankruptcy estate used to purchase the Center and related property interests. The second series is revenue bonds in the amount of $2,000,000 with an interest rate of 2.50% and was used to make necessary repairs and upgrades.
Financed Purchase Payables
On September 23, 2021, Town Council approved a purchase agreement with Yavapai County for the fairgrounds property, including the Exhibition Center, for the total purchase price of $3,033,000 paid over five (5) annual installments.
Changes in Long‐Term Liabilities
The following is a summary of changes in long‐term liabilities reported in the government‐wide financial statements for the year ended June 30, 2022:
Governmental activities:
Bonds payable:
Revenue bonds
Community facilities districts: General obligation bonds Revenue bonds Special assessments Long‐term loan payable Premium Total bonds payable Leases Net pension liability Financed purchase payable Compensated absences Governmental activity long‐term liabilities
Balance Balance Due within 06/30/2021* Increases Decreases 06/30/2022 One Year
20,730,000$
16,240,000 15,840,000 1,530,000 3,997 2,503,483 56,847,480 61,432 13,300,134 ‐1,596,950
71,805,996$ ‐$ 4,145,000$ 16,585,000$
1,410,000 14,830,000 720,000 15,120,000 125,000 1,405,000
2,985 227,590
1,012 2,275,893 6,630,575 50,216,905 17,077 44,355
3,967,273 10,063,206 7,204,201
3,033,000 606,600 2,426,400
1,497,982 1,548,553 1,546,379
8,498,255$ 18,866,011$ 61,438,240$ 4,360,000$
1,470,000 745,000 89,000 506 ‐6,664,506 17,799 ‐606,600 311,325
7,600,230$
Business‐type activities:
Long‐term loan payable Leases Business‐type activity long‐term liabilities Total long‐term liabilities 4,322,112$ 824,040
5,146,152$ 76,952,148$ ‐$ 8,498,255$ 872,163$ 84,547
956,710$ 19,822,721$ 3,449,949$ 739,493
4,189,442$ 65,627,682$ 901,049$ 77,274
978,323$ $ 8,578,553
*Long‐term debt balance as of June 30, 2021 is reinstated (increased by $885,472) due to GASB 87 implementation.
Other Long‐Term Obligations
Under Arizona statutes, municipalities may make expenditures for economic development purposes. Based on development agreements, the Town has entered into a number of agreements to make expenditures towards construction of necessary public improvements for certain commercial, industrial or institutional uses that coincide with the Town’s General Plan. Such expenditures are either in specified amounts (one‐time or over time) or in amounts defined as percentages of excise tax revenues collected (paid overtime). Since the Town collects no property taxes, all such expenditures are ultimately made from excise tax revenues regardless of the mechanism used to define the expenditures. Details of bonded debt as of June 30, 2022, are as follows:
Revenue Bonds
Details of revenue bonds as of June 30, 2022, are as follows: $20,730,000 Revenue Refunding Bonds, Series 2020, dated November 19, 2020, is due in annual installments of $4,145,000 to $255,000 through January 1, 2032, with interest at 5.00% to 4.00% per annum (Payable from excise tax revenues – refunding prior bonds for streets and related improvements, for the Town’s share of costs for land with an underground water source, for the construction of Library and Police buildings, and for the purchase of the joint facility from Yavapai College).
CFD Bonds/Loans
Details of bonds and loans payable as of June 30, 2022, are as follows:
$6,150,000 Pronghorn Ranch Community Facilities District General Obligation Bonds, Series 2013, is due in annual payments of $235,000 to $530,000 through July 15, 2029, with interest at 4.18% per annum (Payable from revenues generated through an ad valorem tax assessed by the district against the properties located within the boundaries of the district. The Town has no contingent obligation with respect to these bonds – streets, parks, utilities, and related improvements).
$925,446 Raven Ridge Community Facilities District long‐term loan. A loan agreement with the Water Infrastructure Financing Authority (WIFA) dated January 21, 2003, for a maximum principal amount of $925,446, at an interest rate of 3.188%. The total loan debt service was determined at the completion of the project after final loan drawdowns were submitted for a payback period of twenty (20) years with annual principal and semi‐annual interest payments (Payable from revenues generated through an assessment by the district against the properties located within the boundaries of the district. The Town has no contingent obligation with respect to these bonds – wastewater collection system).
$5,810,000 Quailwood Meadows Community Facilities District General Obligation Bonds, Series 2013, is due in annual payments of $165,000 to $560,000 through July 15, 2029, with interest at 4.2125% per annum (Payable from revenues generated through an ad valorem tax assessed by the district against the properties located within the boundaries of the district. The Town has no contingent obligation with respect to these bonds – streets, parks, utilities, and related improvements).
$3,425,000 Parkway Community Facilities District No. 1 General Obligation Bonds, Series 2006, is due in annual payments of $90,000 to $255,000 through July 15, 2031, with interest at 4.85% to 5.35% per annum (Payable from revenues generated through an ad valorem tax assessed by the district against the properties located within the boundaries of the district. The Town has no contingent obligation with respect to these bonds – parking facilities).
$3,025,000 Southside Community Facilities District No. 1 Special Assessment Revenue Bonds, Series 2008, is due in annual payments of $55,000 to $245,000 through July 1, 2032, with interest at 6.125% to 7.25% per annum (Payable from revenues generated through an assessment by the district against the properties located within the boundaries of the district. The Town has no contingent obligation with respect to these bonds – streets, utilities, and related improvements). Several property owners have paid off the assessments levied against their properties, which allowed for partial defeasance of the bonds. After the partial defeasance, the original repayment schedule changed to annual payments of $89,000 to $176,000 through July 1, 2032.
$8,540,000 StoneRidge Community Facilities District General Obligation Bonds, Series 2013, is due in annual payments of $330,000 to $680,000 through July 15, 2030, with interest at 4.00% per annum (Payable from revenues generated through an ad valorem tax assessed by the district against the properties located within the boundaries of the district. The Town has no contingent obligation with respect to these bonds – streets, parks, utilities, and related improvements).
$16,000,000 Entertainment Center Community Facilities District Revenue Bonds, Series 2017, is due in annual payments of $555,000 to $1,120,000 through July 1, 2037, with interest at 4.00% per annum (Payable from operating revenues generated by the Entertainment Center – purchase of the Entertainment Center and related property interests). $3,685,000
1,012
3,875,000
2,030,000
1,405,000
5,240,000
13,580,000
$2,000,000 Entertainment Center Community Facilities District Revenue Bonds, Series 2018, is due in annual payments of $110,000 to $160,000 through January 1, 2033, with interest at 2.50% per annum (Payable from operating revenues generated by the Entertainment Center – improvements to the Entertainment Center and related parking areas).
1,540,000
Classified in Business‐Type Activities on the Government‐Wide Financial Statements Loans
Details of loans payable as of June 30, 2022, are as follows: $9,317,470 Wastewater Enterprise Fund long‐term loan. A loan agreement was entered into between the Town and WIFA dated January 28, 2005, for a maximum principal amount of $9,317,470, at an interest rate of 3.408%, the proceeds of which are designated for capital construction for expansion of the wastewater treatment plant. The payback period is twenty (20) years with annual principal and semi‐annual interest payments (Payable solely from Town wastewater system revenue charges).
$5,000,000 Wastewater Enterprise Fund long‐term loan. A loan agreement was entered into between the Town and WIFA dated March 16, 2007, for a maximum principal amount of $5,000,000, at an interest rate of 3.112%, the proceeds of which are designated for capital construction for expansion of the wastewater treatment plant. The payback period is for twenty (20) years with annual principal and semi‐annual interest payments (Payable solely from Town wastewater system revenue charges). $1,899,787
1,550,162
Statutory Debt Limitation
Under the provisions of the Arizona Constitution, outstanding general obligation bonded debt for water, artificial light, sewer, open space preserves, parks, playgrounds and recreational facilities, public safety, law enforcement, fire and emergency services facilities, and streets and transportation facilities purposes may not exceed 20% of a municipality’s net secondary assessed valuation. Outstanding general obligation debt for all other purposes may not exceed 6% of a municipality’s net secondary assessed valuation. [Note that general obligation bonds of CFDs are not included.] The following summarizes the Town’s general obligation debt capacity as of June 30, 2022:
20% Constitutional Limit
6% Constitutional Limit 20% Constitutional Limit 115,653,666$ 6% Constitutional Limit 34,696,100 $ Less General Obligation Less General Obligation 20% Bond Outstanding ‐ 6% Bond Outstanding ‐Available 20% Limitation Available 6% Limitation Borrowing Capacity 115,653,666$ Borrowing Capacity 34,696,100$
Debt Service Requirements to Maturity
The following is a summary of debt service requirements to maturity for long‐term liabilities as of June 30, 2022. Deferred issuance costs and deferred amounts on refunding are not included.
Governmental Activities
Total Debt Fiscal Year Revenue Bonds Leases Primary Government
Ending Principal Interest Principal Interest Principal Interest 2023 4,360,000$ 791,650$ 17,799$ 418$ 4,377,799$ 792,068$ 2024 3,950,000 573,650 10,608 280 3,960,608 573,930 2025 4,515,000 376,150 5,334 187 4,520,334 376,337 2026 1,265,000 150,400 5,397 123 1,270,397 150,523 2027 1,315,000 99,800 2,851 69 1,317,851 99,869 2028‐32 1,180,000 145,800 2,366 34 1,182,366 145,834 16,585,000$ 2,137,450$ $ 44,355 1,111 $ 16,629,355 $ $ 2,138,561
Governmental Activities (continued) Community Facilities Districts
Fiscal Year StoneRidge CFD Pronghorn Ranch CFD Quailwood Meadows CFD Raven Ridge CFD
Ending Principal Interest Principal Interest Principal Interest Principal Interest 2023 495,000$ 199,700$ 395,000$ 145,778$ 420,000$ 154,388$ 506$ 43$ 2024 515,000 179,500 415,000 128,849 435,000 136,380 506 17
2025 2026
535,000 158,500 430,000 111,188 455,000 117,634 ‐ ‐ 555,000 136,700 450,000 92,796 475,000 98,046 ‐ ‐ 2027 580,000 114,000 470,000 73,568 490,000 77,721 ‐ ‐ 2028‐32 2,560,000 209,800 1,525,000 97,499 1,600,000 103,206 ‐ ‐ 2033‐37 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2038‐42 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 5,240,000$ 998,200$ 3,685,000$ 649,678$ $ 3,875,000 687,375$ 1,012$ 60$
Governmental Activities (continued) Community Facilities Districts (continued)
Total Debt Fiscal Year Parkway CFD No. 1 Southside CFD No. 1 Entertainment Center CFD Community Facilities Districts
Ending Principal Interest Principal Interest Principal Interest Principal Interest 2023 160,000$ 104,020$ 89,000$ 98,636$ 745,000$ 569,300$ 2,304,506$ $ 1,271,865 2024 170,000 95,275 93,000 92,039 770,000 540,875 2,398,506 1,172,935
2025 2026 175,000 86,133
99,000 85,079 805,000 511,350 2,499,000 1,069,884 185,000 76,592 108,000 77,305 830,000 480,600 2,603,000 962,039 2027 195,000 66,473 119,000 69,346 865,000 448,750 2,719,000 849,858 2028‐32 1,145,000 159,832 721,000 201,803 4,835,000 1,720,800 12,386,000 2,492,940 2033‐37 ‐ ‐ 176,000 6,380 5,150,000 742,800 5,326,000 749,180 2038‐42 ‐ ‐ ‐ ‐ 1,120,000 22,400 1,120,000 22,400 2,030,000$ 588,325$ 1,405,000$ 630,588$ 15,120,000$ 5,036,875$ 31,356,012 8,591,101
Total Government Activities Bonded and Long‐Term Debt 47,985,367$ $ 10,729,662
Business‐Type Activities
Prescott Valley
Total Debt Fiscal Year Wastewater Leases Business‐Type Activities
Ending Principal Interest Principal Interest Principal Interest 2023 901,049$ 98,063$ $ 77,274 $ 11,292 978,323$ 109,355$ 2024 930,894 67,723 78,454 10,112 1,009,348 77,835 2025 969,306 36,245 79,652 8,914 1,048,958 45,159 2026 319,381 15,218 80,868 7,698 400,249 22,916 2027 329,319 5,123 82,103 6,463 411,422 11,586 2028‐32 ‐ ‐ 341,142 13,122 341,142 13,122 3,449,949$ 222,372$ 739,493$ $ 57,601 4,189,442 279,973
Total Business‐Type Activity Bonded and Long‐Term Debt $ 4,189,442 279,973$
IV. OTHER INFORMATION
A. Risk Management
The Town is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, errors and omission, injuries to employees and natural disasters. As of July 1, 1987, the Town joined the Arizona Municipal Risk Pool (Pool) as an alternative to escalating general liability insurance costs. The Pool is made up of various towns and cities within Arizona that operates a common risk management and insurance program.
The agreement provides that the Pool will be self‐sustaining through member premiums. The Town pays an annual premium to the Pool for its general insurance coverage. If the Pool becomes insolvent or is otherwise unable to discharge its legal obligations, the Town (and all other participants) may be assessed an additional contribution based on the Town’s current year’s contribution divided by the current year’s contributions of all participants times the deficiency. The assessment may not exceed the original contribution to the Pool for the year in which the assessment is made.
At the end of the tenth (10th) year of the Pool’s existence and each year thereafter, any surplus fund in the Pool shall be distributed among the then existing participants in the Pool who were participating during the previous ten (10) years. The allocation shall be based on the proportion of contributions made by each participant.
The Town continues to carry commercial insurance for all other risks of loss, including workers’ compensation and health and accident insurance. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three (3) fiscal years.
B. Contingent Liabilities
The Town is party to several lawsuits’ incidental to its normal operation. Management, with concurrence of the Town Attorney, is of the opinion that settlement of these lawsuits will not have a material effect on the financial position of the Town. Therefore, no litigation or administrative action or proceeding has been reflected in the accompanying basic financial statements for these matters.
C. Commitments
The Town has entered into several agreements whereby it will reimburse developers a portion of the sales tax collected on their sites for a time period and/or maximum dollar amount as specified by the development agreements. The funding source for the reimbursements will come from sales tax collected on the site over the life of the agreement. The Town does not become liable under the agreements until the retailers within the prescribed areas have collected and remitted the tax to the Department of Revenue and subsequently submitted to the Town. The Town’s probable contingent liability on June 30, 2022, is approximately $16.7 million.
D. Tax Abatements
In accordance with GASB Statement No. 77, Tax Abatement Disclosures, and as stated in section C. Commitments above, the Town of Prescott Valley has entered Transaction Privilege Tax Abatement Programs with various business entities. These agreements were made under the authority of the Town Council who determined the agreements are consistent with the Town’s General Plan and that public purpose is served. These reimbursements were designed to assist with infrastructure development thereby attracting and retaining local businesses within the jurisdiction.
For the fiscal year ended June 30, 2022, the Town abated Transaction Privilege Tax under the abatement agreements in the amount of $2,903,905. This was comprised of developer reimbursements for the following agreements:
Purpose Crossroads intersection infrastructure/drainage Glassford Hill Road public infrastructure Quailwood public infrastructure Amount of Taxes Abated during the Fiscal Year $ 1,622,566 1,258,509 22,831 2,903,906
E. Community Facilities District Debt and Related Activities
The Parkway Community Facilities District No. 1 and Southside Community Facilities District No. 1 have situations in which contributions and assessments collected may not be sufficient to pay the annual debt service obligations. Separately issued financial statements for each community facilities district are available from the Town of Prescott Valley, Finance Department, 7501 E. Skoog Boulevard, Prescott Valley, AZ 86314. These separate reports discuss in more detail the impact of each situation on the particular District.
F. Retirement and Pension Plans
Defined Contribution Plans
Plan description. In lieu of participating in FICA‐Social Security, the Town has a defined contribution plan created in accordance with Internal Revenue Code Section 401(a). The plan is available to all full‐time employees of the Town, except Police personnel who are covered under the Arizona Public Safety Personnel Retirement System (APSPRS). The plan requires participants to contribute 9% of their earnings, with 8% being applied to the employee’s retirement account and 1% applied to their retirement health savings account. The Town is required to contribute 15%, with 13% being applied to the employee’s retirement account and 2% applied to their retirement health savings account. The plan is administered through ICMA Retirement Corporation, and participants can choose from various investment funds offered by the company. Normal retirement age is 65. There are no securities of the Town included in the plan assets.
Summary of significant accounting policies – basis of accounting and valuation of investments. The financial statements of ICMA Retirement Corporation are prepared using the accrual basis of accounting. Member and employer contributions are recognized in the period that the contributions are due. All plan investments are reported at fair value. Short‐term investments are reported at cost, which approximates fair value. Fair value of other securities is determined by the mean of the most recent bid and asked prices as obtained from dealers that make markets in such securities. Investments for which market quotations are not readily available are valued at their fair values as determined by the custodian under the direction of the ICMA Board of Trustees, with the assistance of a valuation service.
The employee’s contribution is always 100% vested. The employer’s contribution vests at the rate of 20% per year of service, thus employees are 100% vested after five (5) years of service. The following describes the payroll and contribution requirements for the year ended June 30, 2022:
Covered Total Payroll
Payroll % of Covered Payroll
Required Contribution
Actual Contribution Employer $ 17,145,495 $ 10,420,417 13% $ 1,354,654 $ 1,354,655 Employee N/A 10,420,417 8% 833,633 833,634
Deferred Compensation Plans
The Town also offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan is available to all Town employees and permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. A 1996 federal law now requires all assets and income of Internal Revenue Code Section 457 deferred compensation plans to be held in trust, custodial accounts, or annuity contracts for the exclusive benefit of the participants and their beneficiaries. Assets of the Town’s plan are administered by a private corporation under contract with the Town.
Pensions and Other Postemployment Benefits ‐ Public Safety Personnel Retirement System
Plan description. Town public safety employees (police) who are regularly assigned hazardous duty participate in the Public Safety Personnel Retirement System (PSPRS) or employees who became members on or after July 1, 2017, may participate in the Public Safety Personnel Defined Contribution Retirement Plan (PSPDCRP). The PSPRS administers an agent multiple‐employer defined benefit pension plan and an agent multiple‐employer defined benefit health insurance premium benefit (OPEB) plan. A nine‐member board known as the Board of Trustees and the participating local boards govern the PSPRS according to the provisions of A.R.S. Title 38, Chapter 5, Article 4.
Employees who were PSPRS members before July 1, 2017, participate in the agent plans, and those who became PSPRS members on or after July 1, 2017, participate in the cost‐sharing plans (PSPRS Tier 3 Risk Pool) which are not further disclosed because of their relative insignificance to the Town’s financial statements. The PSPRS issues a publicly available financial report that includes their financial statements and required supplementary information. The report is available on the PSPRS website at www.psprs.com.
Aggregate amounts. On June 30, 2022, the Town reported the following aggregate amounts related to pensions and other postemployment benefits (OPEB) for all plans to which it contributes.
The Town’s accrued payroll and employee benefits includes $67,807 of outstanding pension and OPEB contribution amounts payable to all plans for the year ended June 30, 2022. The Town reported $1,662,494 of pension and OPEB contributions as expenditures in the governmental funds related to all plans to which it contributes. The amount is employer contributions for pension only, health benefit, and LTD contributions for all plans of the Town.
Governmental Activities
Business‐type Activities Total Net pension and OPEB liability 7,009,559$ ‐$ 7, $ 009,559 Deferred outflows of resources 6,070,988 ‐ 6,070,988 Deferred inflows of resources 3,609,901 ‐ 3,609,901 Pension and OPEB expense 1,330,202 ‐ 1,330,202
Pension OPEB
Inactive employees or beneficiaries currently receiving benefits Inactive employees entitled to but not yet receiving benefits 34 34
16 1
Active employees 53 53 Total 103 88
Benefits Provided. PSPRS provides retirement, health insurance premium supplement, disability, and survivor benefits. State statute establishes benefits terms. Certain retirement, disability, and survivor benefits are calculated on the basis of age, average monthly compensation, and service credit as displayed below. See the publicly available PSPRS financial report for additional benefits information.
Years of service and age required to receive benefit Retirement Initial Membership Date: Tier 1 ‐ Before January 1, 2012 Tier 2 ‐ On or after January 1, 2012 and before July 1, 2017
20 years of service, any age 15 years of service, age 62 15 years of service, age 52.5
Final average salary is based on Highest 36 months of last 20 years Highest 60 months of last 20 years
Normal retirement: (Not to exceed 80%) (Not to exceed 80%)
Less than 20 years of service 50% less 4.0% for each year under 20 1.5% to 2.0% per year of service 20‐25 years of service 50% plus 2.0% for each year over 20 2.0% to 2.25% per year of service 25 or more years of service 50% plus 2.5% for each year over 20 2.5% per year of service
Accidental disability retirement
Catastrophic disability retirement 50% or normal retirement, whichever is greater
90% for the first 60 months, then reduced to 62.5% or normal retirement, whichever is greater
Ordinary disability retirement
Survivor benefit ‐ Retired members
Survivor benefit ‐ Active members Normal retirement with actual service or 20 years of service, whichever is greater, multiplied by years of service (not to exceed 20) divided by 20
80% to 100% of retired member’s pension benefit
80% to 100% of accidental disability retirement benefit or 100% of average monthly compensation if death was the result of injuries received on the job
Retirement and survivor benefits are subject to automatic cost‐of‐living adjustments based on inflation. PSPRS also provides temporary disability benefits of 50% of the member's compensation for up to twelve (12) months.
Health insurance premium benefits are available to retired or disabled members with 5 years of credited service. The benefits are payable only with respect to allowable health insurance premiums for which the member is responsible. Benefits range from $100 per month to $260 per month depending on the age of the member and dependents.
Contributions. State statutes establish the pension contribution requirements for active PSPRS employees. In accordance with State statutes, annual actuarial valuations determine employer contribution requirements for PSPRS pension and health insurance premium benefits. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. Contributions rates for the year ended June 30, 2022, are displayed on the following page. Rates are a percentage of active members’ annual covered payroll.
In addition, statute required the Town to contribute at the actuarially determined rate indicated below of annual covered payroll of retired members who worked for the Town in positions that an employee who contributes to PSPRS would typically fill and employees participating in the PSPRS Tier 3 Risk Pool and PSPDCRP members in addition to the Town’s required contributions to the PSPRS Tier 3 Risk pool and PSPDCRP.
Active members ‐ pension 7.65%to11.65%
Town of Prescott Valley: Tier 1 /Tier 2 Tier 3 Pension 30.52% 29.96% Health insurance 0.30% 0.13%
Town of Prescott Valley:
Pension 20.15%
Health insurance 0.00%
The contributions to the pension and OPEB plans for the year ended June 30, 2022, were:
During fiscal year 2022, the Town paid for PSPRS and OPEB contributions as follows: 98.5% from the General Fund, 1.5% from major funds and 0.0% from other funds.
Pension Health Insurance Retirees and beneficiaries 38,000$ ‐$ Inactive, non‐retired members ‐ ‐Active Members 3,909,649 13,937 3,947,649$ 13,937$
Pension and OPEB assets/liability. On June 30, 2022, the Town reported the following assets and liabilities:
Net (Assets) Liability Pension 7,204,201 $ Health insurance (194,642)
The net pension and OPEB assets/liability were measured as of June 30, 2021. The total liability used to calculate the net asset or liability was determined by an actuarial valuation as of that date. The total liability as of June 30, 2021, reflects changes of actuarial assumptions including changes in the amortization method for Tiers 1 and 2.
Actuarial assumptions. The significant actuarial assumptions used to measure the total pension/OPEB liability are as follows:
The long‐term expected rate of return on PSPRS plan investments was determined to be 7.3% using a building‐block method in which best‐estimate ranges of expected future real rates of return (expected returns, net of plan investment expenses and inflation) are developed for each major asset class.
The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table:
Pension OPEB
Actuarial valuation date June 30, 2021 Actuarial cost method Entry age normal Investment rate of return 7.30% June 30, 2021 Entry age normal 7.30%
Projected salary increases 3.50% Inflation 2.50% 3.50% 2.50%
Cost‐of‐Living Adjustment 1.75% 1.75%
Mortality rates PubS‐2010 tables using MP‐ PubS‐2010 tables using MP‐2019 improvement scale with adjustments 2019 improvement scale with adjustments
Asset Class
Target Allocation
Long‐Term Expected Real Rate of Return U.S. public equity 24% 4.08% Private credit 20% 5.74% Global private equity 20% 7.67% International public equity 16% 5.20% Diversifying strategies 10% 3.99% Other assets (capital appreciation) 7% 5.43% Core Bonds 2% 0.42% Cash ‐ Mellon 1% ‐0.31%
Total 100%
Pension discount rates. On June 30, 2021, the discount rate used to measure the total pension and OPEB liability was 7.3%, which is the same as the discount rate used on June 30, 2020. The projection of cash flows used to determine the PSPRS discount rates assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between the actuarially determined contribution rate and the member rate. Based on those assumptions, the plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long‐term expected rate of return on plan investments was applied to all periods of projected benefit payments for these plans to determine the total pension and OPEB liability.
Changes in Net (Assets)/Liability
Balances at June 30, 2020 Adjustment to Beginning of Year Changes for the year:
Service cost
Interest on the total liability
Differences between expected and actual experience
Changes of assumptions or other inputs
Contributions – employer
Contributions – employee
Net investment income
Benefit payments, including refunds of employee contributions
Administrative expense Net changes Balances atJune 30, 2021 Pension Increase/(Decrease) Health Insurance (OPEB) Increase/(Decrease)
Total (Assets) Liability Plan Fiduciary Net Position Net (Assets) Liability Total (Assets) Liability Plan Fiduciary Net Position
Net (Assets) Liability $ 37,857,130 $ 24,556,996 $ 13,300,134 $ 690,382 $ 704,594 $ (14,212) ‐ ‐ ‐ ‐ ‐ ‐ ‐ 748,599 ‐ 748,599 18,919 ‐ 18,919 2,741,891 ‐ 2,741,891 50,775 ‐ 50,775
442,688 ‐ 442,688 (49,682) ‐ (49,682) ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2,395,444 (2,395,444) ‐ 10,200 (10,200) ‐ 393,218 (393,218) ‐ ‐ ‐ ‐ 7,274,544 (7,274,544) ‐ 191,027 (191,027)
(2,091,166) (2,091,166) ‐ (27,504) (27,504) ‐ ‐ (34,095) 34,095 ‐ (785) 785 1,842,012 7,937,945 (6,095,933) (7,492) 172,938 (180,430) $ 39,699,142 $ 32,494,941 $ 7,204,201 $ 682,890 $ 877,532 $ (194,642)
Sensitivity of the Net Pension and OPEB Assets (Liability) to Changes in the Discount Rate. The following table presents the Town’s net pension and OPEB assets (liability) calculated using the discount rate of 7.3%, as well as what the net assets (liability) would be if it were calculated using a discount rate that is 1‐percentage‐point lower (6.3%) or 1‐percentage‐point higher (8.3%) than the current rate:
1% Decrease
Current Discount Rate 1% Increase Rate 6.30% 7.30% 8.30% Net pension (assets) liability $ 13,312,638 $ 7,204,201 $ 2,311,168 Net OPEB (assets) liability $ (109,963) $ (194,642) $ (265,229)
Plan fiduciary net position. Detailed information about the pension plan’s fiduciary net position is available in the separately issued PSPRS financial report. The report is available on the PSPRS website at www.psprs.com.
Expense Pension 1,358,154 $ Health insurance (27,952)
Deferred outflows/inflows of resources. On June 30, 2022, the Town reported deferred outflows of resources and deferred inflows of resources related to pensions and OPEB from the following sources:
The amounts of deferred outflows of resources resulting from contributions subsequent to the measurement date as reported in the table above will be recognized as an adjustment of the net pension and OPEB assets/liability in the year ended June 30, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions and OPEB will be recognized in pension and OPEB expense as follows:
Pension Health Insurance
Deferred Outflows of Resources Deferred Inflows of Resources
Deferred Outflows of Resources Deferred Inflows of Resources
Differences between expected and actual experience $ 1,416,385 $ ‐ $ 51,495 $ 142,929 Changes of assumptions or other inputs 635,242 ‐ 6,280 9,040 Net difference between projected and actual earnings on pension plan investments ‐ 3,377,267 ‐ 80,665 Contributions subsequent to the measurement date 3,947,649 ‐ 13,937 ‐
Total $ 5,999,276 $ 3,377,267 $ 71,712 $ 232,634
Fiscal Year Ended: Pension
Health Insurance June 30, 2023 (8,453)$ (42,736) $ June 29, 2024 (173,688) (43,270) June 30, 2025 (343,921) (42,513) June 30, 2026 (799,578) (48,359) June 30, 2027 ‐ 2,019 Thereafter ‐ ‐ (1,325,640)$ (174,859)$
G. Subsequent Events
On September 22, 2022, Town Council approved transitioning the Town to the Arizona State Retirement System with an expected enrollment date of January 1, 2023.
