Financial Statements June 30, Aberdeen School District 6-1

Transcription

1 Financial Statements Aberdeen School District 6-1

2 School District Officials Board Members Term Expiration Robert Nikolas... Brian Sharp... Scott Wirth... Mike Miller... June 30, 2012 Brad Olson... June 30, 2012 Duane Alm... June 30, 2013 Linda Burdette... June 30, 2013 Superintendent Dr. Gary Harms... N/A Director of Finance Mr. Tom Janish... N/A

3 Table of Contents Independent Auditor s Report... 1 Management s Discussion and Analysis... 3 Financial Statements Statement of Net Assets...16 Statement of Activities...17 Balance Sheet Governmental Funds...18 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets...19 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds...20 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government- Wide Statement of Activities...23 Notes to Financial Statements...30 Required Supplementary Information Budgetary Comparison Schedule Budgetary Basis General Fund...50 Budgetary Comparison Schedule Budgetary Basis Capital Outlay Fund...52 Budgetary Comparison Schedule Budgetary Basis Special Education Fund...53 Budgetary Comparison Schedule Budgetary Basis Pension Fund...54 Budgetary Comparison Schedule Budgetary Basis Arena Fund...55 Notes to Required Supplementary Information...56 Supplementary Information Schedule of Expenditures of Federal Awards...57 Schedule of Expenditures of Federal Awards...58 Summary Schedule of Prior Audit Findings...59 Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards...60 Independent Auditor s Report on Compliance with Requirements That Could Have A Direct and Material Effect on Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A Schedule of Findings and Questioned Costs...64 Corrective Action Plan (Unaudited)...66

4 Independent Auditor s Report The School Board Aberdeen School District 6-1 Aberdeen, South Dakota We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the Aberdeen School District 6-1, Brown County, South Dakota as of and for the year ended, which collectively comprise the School District s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the School District's management. Our responsibility is to express opinions on these financial statements based on our audit. Except as described in the fourth paragraph, we conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. Management did not obtain an actuarial report related to its other postemployment benefits (OPEB) plan liability for the year ended. Governmental accounting standards require that such a report be obtained at least biennually to determine the liability to be recorded. We were unable to audit management s estimate of the OPEB liability and related expense reflected in the governmental activities of the statement of net assets and changes in net assets through other means. In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had the required biennual actuarial valuation related to the OPEB liability be completed, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities of the School District, as of, and the respective changes in financial position, thereof and for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 1 to the financial statements, the School District adopted the provisions of Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions Second Ave. S.W. P.O. Box 430 Aberdeen, SD T F EOE 1

5 In addition, in our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the School District, as of, the respective changes in financial position and cash flows, where applicable, thereof and for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated February 22, 2012 on our consideration of the School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in accessing the results of our audit. Accounting principles generally accepted in the United States of America require that the management s discussion and analysis and budgetary comparison information on pages 3 through 15 and 50 through 56, respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the School District s financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the financial statements. The schedule of expenditures of federal awards is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The accompanying corrective action plan on page 66 is presented for purposes of additional analysis and is not a required part of the financial statements. The corrective action plan has not been subjected to the auditing procedures applied in the audit of the basic financial statement and, accordingly, we do not express an opinion or provide assurance on it. Aberdeen, South Dakota February 22,

6 Management s Discussion and Analysis This section of Aberdeen School District 6-1 s annual financial report presents our discussion and analysis of the School District s financial performance during the fiscal year ended on. Please read it in conjunction with the School District s financial statements, which follow this section. Financial Highlights The School District s net assets from government and business-type activities increased $2,644,273. This increase was used to increase the cash position of the School District, reduce outstanding bonds payable and to purchase capital assets. During the year, the School District s revenues generated from taxes and other revenues of the governmental and business-type programs were $37,451,722. Governmental and business-type program expenditures were $34,807,449. As of, the School District s governmental funds reported combined ending fund balances of $8,927,973, an increase of $902,153, compared with the prior year. The general fund reported a $826,177 current year surplus. The School District completed a major addition and renovation of the Simmons Elementary School in August, The cost of the project is $2.8 million. The project was funded from $1.995 million of capital outlay certificate debt and the capital outlay fund budget. Overview of the Financial Statements This annual report consists of three parts management s discussion and analysis (this section), the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of the School District. The first two statements are government-wide financial statements that provide both long-term and shortterm information about the School District s overall financial status. The government-wide financial statements also include component unit financial statements. The remaining statements are fund financial statements that focus on individual parts of the School District government, reporting the School District s operations in more detail than the government-wide statements. The governmental funds statements tell how general government services were financed in the short-term as well as what remains for future spending. Proprietary fund statements offer short- and long-term financial information about the activities that the School District operates like a business. Fiduciary fund statements provide information about the financial relationships, like scholarship plans for graduating students in which the School District acts solely as a trustee or agent for the benefit of others, to whom the resources in question belong. 3

7 Management s Discussion and Analysis The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the information in the financial statements. Figure A-1 shows how the required parts of this annual report are arranged and relate to one another. Figure A-1 Required Components of Aberdeen School District s Annual Financial Report Management s Discussion and Analysis Basic Financial Information Required Supplemental Information Government-Wide Financial Statements Fund Financial Statements Notes to Financial Statements Figure A-2 summarizes the major features of the School District s financial statements, including the portion of the School District government they cover and the types of information they contain. The remainder of the overview section of the management s discussion and analysis explains the structure and contents of each of the statements. Figure A-2 Major Features of Aberdeen School District s Government-Wide and Fund Financial Statements Scope Required Financial Statements Accounting Basis and Measurement Focus Type of Asset/Liability Information Type of Inflow/Outflow Information Government-Wide Fund Statements Statements Governmental Funds Proprietary Funds Fiduciary Funds Entire School District The activities of the School Activities the School District Instances in which the School government (except District that are not proprietary or operates similar to private District is the trustee or agent fiduciary funds and the fiduciary, such as elementary and businesses, such as the food for someone else s resources School District s high school education programs service program and the selfinsurance component units) funds *Statement of Net Assets *Statement of Activities Accrual accounting and economic resources focus All assets and liabilities, both financial and capital, and short-term and longterm All revenues and expenses during year, regardless of when cash is received or paid *Balance Sheet *Statement of Revenues, Expenditures and Changes in Fund Balances Modified accrual accounting and current financial resources focus Only assets expected to be used up and liabilities that come due during the year or soon thereafter, no capital assets included Revenues for which cash is received during or soon after the end of the year; expenditures when goods or services have been received and payment is due during the year or soon thereafter *Balance Sheet *Statement of Revenues, Expenses and Changes in Net Assets *Statement of Cash Flows Accrual accounting and economic resources focus All assets and liabilities, both financial and capital, and short-term and long-term All revenues and expenses during year, regardless of when cash is received or paid *Statement of Fiduciary Net Assets *Statement of Changes in Fiduciary Net Assets Accrual accounting and economic resources focus All assets and liabilities, both short-term and long-term; the School District s funds do not currently contain capital assets although they can All revenues and expenses during year, regardless of when cash is received or paid 4

8 Management s Discussion and Analysis Government-Wide Statements The government-wide statements report information about the School District as a whole using accounting methods similar to those used by private-sector companies. The statement of net assets includes all of the government s assets and liabilities. All of the current year s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two government-wide statements report the School District s net assets and how they have changed. Net assets, the difference between the School District s assets and liabilities, are one way to measure the School District s financial health or position. Increases or decreases in the School District s net assets are an indicator of whether its financial health is improving or deteriorating, respectively. To assess the overall health of the School District you need to consider additional non-financial factors; such as, changes in the School District s property tax base and changes in the state school aid funding formula from the State of South Dakota. The government-wide financial statements of the School District are reported in three categories: Governmental Activities This category includes the School District s basic instructional services, such as elementary and high school educational programs, support services (guidance counselor, executive administration, Board of Education, fiscal services, etc.), debt service payments, extracurricular activities (sports, debate, music, etc.) and capital equipment purchases. Property taxes, state grants, federal grants and interest earnings finance most of these activities. Business-Type Activities The School District charges a fee to students to help cover the costs of providing hot lunch services to all students. The food service fund is the only business-type activity of the School District. Discretely Presented Component Unit Component units are legally separated organizations for which the School District is financially accountable, or the nature and significance of the unit s relationship with the School District is such that exclusion of the unit would cause the School District s financial statements to be misleading, or incomplete. The following entity is included in the component unit column of the School District s government-wide financial statements: Aberdeen Public Schools Foundation, Inc. Fund Financial Statements The fund financial statements provide more detailed information about the School District s most significant funds not the School District as a whole. Funds are accounting devices that the School District uses to keep track of specific sources of funding and spending for particular purposes. State law requires some of the funds. The School Board establishes other funds to control and manage money for particular purposes (like the Scholarship Trust). 5

9 Management s Discussion and Analysis The School District has four kinds of funds: Governmental Funds Most of the School District s basic services are included in the governmental funds, which focus on (1) how cash and other financial assets that can readily converted to cash flow in and out and (2) the balances left at the year-end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the School District s programs. Because this information does not encompass the additional long-term focus of the government-wide statements, we provide additional information at the bottom of the governmental funds statements, or on the subsequent page, that explains the relationship (or differences) between them. Proprietary Funds Services for which the School District charges customers a fee are generally reported in proprietary funds. Proprietary funds, like the government-wide statements, provide both short- and long-term financial information. The food service enterprise fund (one type of proprietary fund) is the same fund as the business-type activities reported in the government-wide statement, but provides more detail and additional information such as a statement of cash flows. The self-insurance internal service fund and the unemployment internal service fund (the other type of proprietary fund) used to report activities that provide services to the School District s other programs and activities. Fiduciary Funds The School District is the trustee, or fiduciary, for various external and internal parties. The School District is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All of the School District s fiduciary activities are reported in a separate statement of fiduciary net assets and a statement of changes in fiduciary net assets. We exclude these activities from the School District s government-wide financial statements because the School District cannot use these assets to finance its operations. Component Unit As mentioned above, component units are legally separate organizations for which the School District is financially accountable. Since there is only one component unit, the government-wide financial statements present information for the component unit (a) in a single column on the statement of net assets and (b) in a single column on the statement of activities.n 6

10 Management s Discussion and Analysis Financial Analysis of the School District as a Whole Net Assets The School District s combined net assets increased as follows: Table A-1 Aberdeen School District Statement of Net Assets Governmental Business-Type Activities Activities Total 6/30/2011 6/30/2011 6/30/2011 Current and Other Assets $ 22,611,771 $ 462,050 $ 23,073,821 Capital Assets 54,035, ,169 54,311,479 Total Assets $ 76,647,081 $ 738,219 $ 77,385,300 Long-Term Debt Outstanding $ 38,313,884 $ 8,180 $ 38,322,064 Unearned Revenue 9,065,502-9,065,502 Other Liabilities 3,613,722 10,364 3,624,086 Total Liabilities 50,993,108 18,544 51,011,652 Net Assets Investing in Capital Assets, Net of Related Debt 17,002, ,169 17,278,508 Restricted 3,725, ,506 4,169,291 Unrestricted 4,925,849-4,925,849 Total Net Assets 25,653, ,675 26,373,648 Total Liabilities and Net Assets $ 76,647,081 $ 738,219 $ 77,385,300 Beginning Net Assets $ 23,041,412 $ 687,863 $ 23,729,275 Increase in Net Assets 2,612,561 31,812 2,644,373 Percentage of Increase in Net Assets for % 4.6% 11.1% 7

11 Management s Discussion and Analysis Governmental Business-Type Activities Activities Total 6/30/2010 6/30/2010 6/30/2010 Current and Other Assets $ 21,670,729 $ 400,942 $ 22,071,671 Capital Assets 52,826, ,772 53,135,484 Total Assets $ 74,497,441 $ 709,714 $ 75,207,155 Long-Term Debt Outstanding $ 38,268,704 $ 11,516 $ 38,280,220 Unearned Revenue 8,866,128-8,866,128 Other Liabilities 4,321,197 10,235 4,331,432 Total Liabilities 51,456,029 21,751 51,477,780 Net Assets Investing in Capital Assets, Net of Related Debt 15,850, ,772 16,159,133 Restricted 3,501, ,191 3,880,608 Unrestricted 3,689,634-3,689,634 Total Net Assets 23,041, ,963 23,729,375 Total Liabilities and Net Assets $ 74,497,441 $ 709,714 $ 75,207,155 Beginning Net Assets $ 21,438,627 $ 644,624 $ 22,083,251 Increase in Net Assets 1,602,785 43,339 1,646,124 Percentage of Increase in Net Assets for % 6.7% 7.5% The statement of net assets reports all financial and capital resources. The statement presents the assets and liabilities in order of relative liquidity. The liabilities with average maturities greater than one year are reported in two components the amount due within one year and the amount due in more than one year. The long-term liabilities of the School District, consisting of compensated absences payable, early retirement benefits payable, capital outlay certificates payable and general obligation bonds payable, have been reported in this manner on the statement of net assets. The difference between the School District s assets and liabilities is its net assets. Changes in Net Assets The School District s total revenues totaled $37,451,722 (see Table A-2). Approximately 50% of the School District s revenue comes from property and other taxes, with 25% coming from state aid (see Figure A-3). The School District s total expenses totaled $34,807,449. The School District s expenses cover a range of services, encompassing instruction, support services and food services. Fifty-four percent of the total expenses were spent on instruction with 32% for support services (see Figure A-4). 8

12 Management s Discussion and Analysis Figure A-3, Aberdeen School District, Sources of Revenue for Fiscal Year State Sources 25% Intermediate 1% Local Sources 1% Program Grants & Contributions 19% Charges for Services 4% Taxes 50% Figure A-4, Aberdeen School District, Functional Expenses for Fiscal Year Co-Curricular 5% Support Services 32% Instruction 54% Debt Services 4% Food Service 5% 9

13 Management s Discussion and Analysis Governmental Activities Table A-2, and the narrative that follows, consider the operations of the government-wide activities. Changes in Net Assets Total Total Governmental Business-Type Activities Activities Total Revenues Program Revenues: Charges for Services $ 437,103 $ 1,034,094 $ 1,471,197 Operating Grants and Contributions 6,386, ,085 7,163,449 General Revenues: Taxes 18,886,325-18,886,325 Revenue State Sources 9,376,260-9,376,260 Revenue Federal Sources 24,525-24,525 Revenue Intermediate Sources 440, ,754 Revenue Local Sources 47,076-47,076 Unrestricted Investment Earnings 39,464 2,672 42,136 Total Revenues 35,637,871 1,813,851 37,451,722 Expenses Instruction 18,753,366-18,753,366 Support Services 11,138,823-11,138,823 Nonprogrammed Charges 175, ,000 Debt Service 1,333,585-1,333,585 Cocurricular Activities 1,624,536-1,624,536 Food Service - 1,782,139 1,782,139 Total Expenses 33,025,310 1,782,139 34,807,449 Changes in Net Assets 2,612,561 31,712 2,644,273 Net Assets, Beginning of Period 23,041, ,963 23,729,375 Net Assets, End of Period $ 25,653,973 $ 719,675 $ 26,373,648 10

14 Management s Discussion and Analysis Changes in Net Assets Total Total Governmental Business-Type Activities Activities Total Revenues Program Revenues: Charges for Services $ 435,421 $ 1,001,203 $ 1,436,624 Operating Grants and Contributions 6,372, ,305 7,078,500 General Revenues: Taxes 18,221,457-18,221,457 Revenue State Sources 9,549,696-9,549,696 Revenue Federal Sources 23,616-23,616 Revenue Intermediate Sources 472, ,813 Revenue Local Sources 43,862 (3,962) 39,900 Unrestricted Investment Earnings 36, ,890 Total Revenues 35,155,803 1,703,693 36,859,496 Expenses Instruction 19,015,531-19,015,531 Support Services 11,259,713-11,259,713 Nonprogrammed Charges 189, ,999 Debt Service 1,462,009-1,462,009 Cocurricular Activities 1,601,173-1,601,173 Food Service - 1,684,947 1,684,947 Total Expenses 33,528,425 1,684,947 35,213,372 Increase Before Contributions 1,627,378 18,746 1,646,124 Transfers (24,593) 24,593 - Changes in Net Assets 1,602,785 43,339 1,646,124 Net Assets, Beginning of Period 21,438, ,624 22,083,251 Net Assets, End of Period $ 23,041,412 $ 687,963 $ 23,729,375 Revenues of the School District s governmental activities increased by approximately 1.4% to $35,637,871 and expenses decreased by approximately 1.5% to $33,025,310. Factors contributing to these results included: The increase in revenue was due primarily to increases in tax valuations. The decrease in expenditures was due primarily to no increases in salary and a reduction in health insurance claims in the self-insurance fund. 11

15 Management s Discussion and Analysis Business-Type Activities Revenues of the School District s business-type activities increased by approximately 6.5% to $1,813,851 and expenses increased by 5.8% to $1,782,139. Factors contributing to these results included: The increase in revenue was due to increases in meal prices and increased student participation for the school year. The primary reason for the increase in expenses was increased food costs due to higher student participation. Financial Analysis of the School District s Funds Governmental Funds The focus of the School District s governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the School District s financing requirements. In particular, unreserved fund balance may serve as a useful measure of the net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the School District s governmental funds reported combined ending fund balances of $8,927,973, an increase of $902,153, compared to the prior year. Approximately 99% of this total amount ($8,849,071) constitutes spendable fund balances, which are available for spending at the School District s discretion. The remainder of the fund balances is nonspendable to indicate that the amounts are not available for new spending because they have already been committed for inventory ($78,902). The general fund is the chief operating fund of the School District. At the end of the current fiscal year, unreserved fund balance of the general fund was $5,236,552, while total fund balance was $5,315,454. As a measure of the general fund s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 24.3% of total general fund expenditures, while total fund balance represents 24.6% of that same amount. The fund balance of the School District s general fund increased by $826,177 during the current fiscal year. The School District had budgeted for an increase in the general fund balance of $193,289. Key factors in this increase are as follows: The budgeted revenues exceeded actual revenues and other financing sources by $53,720. Budgeted revenues and other financing sources were $22,447,412 and actual revenues and other financing sources were $22,393,692. The School District expended 96.9% of the general fund budget providing an unexpended budget of $686,608. The capital outlay fund had a decrease in fund balance of $63,318. The School District had budgeted for a decrease in the capital outlay fund balance of $263,223. The special education fund had a decrease in fund balance of $195,783. The School District had budgeted for a decrease in the special education fund balance of $364,554. This is due primarily to budgeted revenues exceeding actual revenue by $29,901 and the School District expending 96.9% of the special education budget providing and unexpended budget of $198,

16 Management s Discussion and Analysis The pension fund had an increase in fund balance of $13,415. The arena fund had an increase in fund balance of $8,932. The bond redemption fund had an increase in fund balance of $33,715. The capital project funds are used to account for the revenues and expenditures of the significant construction projects. Its fund balance increased by $279,015 due primarily to the issuance of $1,995,000 in debt for the Simmons Elementary project and the construction costs of the Holgate Middle School and Simmons Elementary School projects. The total revenues and other financing sources were $2,002,523 and the total expenditures of this fund were $1,723,508. Proprietary Funds The School District s enterprise fund, the food service fund, showed an increase in net assets of $31,712. The School District s internal service funds saw an increase in net assets of $252,489. Budgetary Highlights Over the course of the year, the School Board revised the School District s budget several times. These amendments fall into two categories: Supplemental appropriations and contingency transfers approved for unanticipated, yet necessary, expenses to provide for items necessary for the education program of this district. Increases in appropriations, primarily by contingency transfer, to prevent budget overruns. Capital Asset Administration By the end of , the School District had invested $54,311,479 in a broad range of capital assets, including land, buildings, construction in progress and various machinery and equipment (see Table A-3). This amount represents a net increase (including additions and deductions) of $1,175,995 or 2.2%. Table A-3 Aberdeen School District 6-1 Capital Assets Total Dollar Total % Governmental Activities Business-Type Activities Change Change Land $ 614,234 $ 614,234 $ - $ - $ - N/A Construction Work in Progress 1,547,969 2,679, (1,131,722) -42.2% Buildings 51,009,411 48,594, ,415, % Machinery and Equipment 863, , , ,772 (107,588) -8.6% Total Capital Assets $ 54,035,310 $ 52,826,712 $ 276,169 $ 308,772 $ 1,175, % This year s capital asset purchases were primarily construction and remodeling of buildings as part of the Holgate Middle School project and the Simmons Elementary School project. Additional information on the School District s capital assets can be found in Note 3. 13

17 Management s Discussion and Analysis Long-Term Debt At year-end, the School District had $38,231,394 in long-term debt. This is an increase of 1.3% as shown on Table A-4 below. Table A-4 Aberdeen School District 6-1 Outstanding Debt and Obligations Total Dollar Total % Governmental Activities Business-Type Activities Change Change General Obligation Bonds $ 17,735,000 $ 18,565,000 $ - $ - $ (830,000) -4.5% Early Retirement 694, ,442 8,180 11,516 (103,974) -12.9% Capital Outlay Certificates 19,297,971 18,411, , % OPEB Obligations 450, , , % Compensated Absences 135, , (1,472) -1.1% Total Outstanding Debt and Obligations $ 38,313,884 $ 38,268,704 $ 8,180 $ 11,516 $ 41, % The School District is liable for the accrued vacation leave payable for all full-time twelve (12) month employees. The School District also maintains an early retirement plan, which allows those meeting certain qualifications, to retire early and receive either 80% or 60% of their last year s salary in equal payments spread over the next six years. This plan allows the School District to reduce the overall program cost by hiring lower paid teachers to replace the higher paid teachers. Additional information on the School District s long-term debt can be found in Note 5. Economic Factors and Next Year s Budgets and Rates The School District experienced an increase in total property valuation of approximately $46,254,658 or 2.8% from the prior year. With the exception of the general fund and special education fund, the increase in property valuation allows the School District the ability to increase the amount of revenue generated from property taxes; however, the total amount which can be levied is limited by the State of South Dakota. For the general fund, one of the primary sources of revenue to the School District is based on a per-student allocation received from the State of South Dakota. This per-student allocation is based on student average daily membership (ADM) (see Figure A-5) and increases each year by the lesser of the rate of inflation or 3%. The state aid formula for fiscal year ensures that property taxes plus state aid will equal $4,805 per student which is a 0% increase from the prior year. The allocation for fiscal year will be reduced to $4,487 per student which is a 6.6% decrease from the prior year. Since the funding formula was implemented in , the annual increases in the allocation have not kept up with the increases in costs of education, primarily salary and benefit increases. The School District has been implementing budget cuts and efficiencies to help cover the gap between State funding and the costs of education. Remaining shortfalls have been paid using cash reserves. 14

18 Management s Discussion and Analysis The School District s enrollment for the past four years has been as follows in Figure A-5. Figure A-5, Aberdeen School District ADM For the Last Four Years Fall, 2008 Fall, 2009 Fall, 2010 Fall, 2011 Contacting the School District s Financial Management The financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the School District s finances and to demonstrate the School District s accountability for the money it receives. If you have questions about this report or need additional information, contact the Aberdeen School District s Finance Office, 1224 S 3 St, Aberdeen, SD The School District s discretely presented component unit issues its own separate financial statements. These statements may be obtained by directly contacting the individual component unit. 15

19 Statement of Net Assets Component Unit Primary Government Aberdeen Governmental Business-Type Public Schools Activities Activities Total Foundation, Inc. Assets Cash and cash equivalents $ 11,506,304 $ 389,449 $ 11,895,753 $ 205,953 Investments 65,286-65, ,981 Taxes receivable 9,305,456-9,305,456 - Other receivables 547, , Inventories 78,902 72, ,503 - Deferred charges 1,107,890-1,107,890 - Capital assets Land, improvements and construction in progress 2,162,203-2,162,203 - Other capital assets, net of depreciation 51,873, ,169 52,149,276 - $ 76,647,081 $ 738,219 $ 77,385,300 $ 588,267 Liabilities Accounts payable $ 640,452 $ 507 $ 640,959 $ - Other current liabilities 2,973,270 9,857 2,983,127 4,920 Deferred revenue 9,065,502-9,065,502 - Noncurrent liabilities: Due within one year 2,953,839 3,336 2,957,175 - Due in more than one year 35,360,045 4,844 35,364,889 - Total liabilities 50,993,108 18,544 51,011,652 4,920 Net Assets Invested in capital assets, net of related debt 17,002, ,169 17,278,508 - Restricted for: Capital Outlay 1,358,767-1,358,767 - Special Education 535, ,912 - Pension 136, ,722 - Arena 49,573-49,573 - Bond Redemption 782, ,849 - Capital Projects 861, ,962 - Food Service - 443, ,506 - Foundation ,981 Unrestricted 4,925,849-4,925, ,366 Total net assets 25,653, ,675 26,373, ,347 $ 76,647,081 $ 738,219 $ 77,385,300 $ 588,267 See Notes to Financial Statements 16

20 Statement of Activities Year Ended Component Net (Expense) Revenue and Unit Program Revenues Changes in Net Assets Aberdeen Operating Capital Primary Government Public Charges for Grants and Grants and Governmental Business-Type Schools Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Foundation, Inc. Primary Government Governmental activities: Instruction $ 18,753,366 $ 79,022 $ 6,156,501 $ - $ (12,517,843) $ - $ (12,517,843) $ - Support services 11,138, , (10,874,351) - (10,874,351) - Nonprogrammed charges 175, (175,000) - (175,000) - *Interest on long-term debt 1,333, (1,333,585) - (1,333,585) - Cocurricular activities 1,624,536 93, ,863 - (1,301,064) - (1,301,064) - Total governmental activities 33,025, ,103 6,386,364 - (26,201,843) - (26,201,843) - Business-type activities: Food service 1,782,139 1,034, , ,040 29,040 - Total primary government $ 34,807,449 $ 1,471,197 $ 7,163,449 $ - (26,201,843) 29,040 (26,172,803) - Component Unit $ 174,791 $ 73,260 $ 235, ,433 General Revenues Taxes: Property taxes 18,311,420-18,311,420 - Gross receipts tax 574, ,905 - Revenue from state sources: State aid 9,369,376-9,369,376 - Other 6,884-6,884 - Revenue from federal sources 24,525-24,525 - Unrestricted investment earnings 39,464 2,672 42, Other general revenues 491, ,147 - Transfers Loss on Disposal of Fixed Assets (3,317) - (3,317) - Total general revenues, transfers and loss on disposal of fixed assets 28,814,404 2,672 28,817, Change in Net Assets 2,612,561 31,712 2,644, ,286 Net Assets - Beginning 23,041, ,963 23,729, ,061 Net Assets - Ending $ 25,653,973 $ 719,675 $ 26,373,648 $ 583,347 * The School District does not have interest expense related to the functions presented above. This amount includes indirect interest expense on general long-term debt. See Notes to Financial Statements 17

21 Balance Sheet Governmental Funds Capital Special Bond Simmons Elementary Total General Outlay Education Pension Arena Redemption School Project Governmental Fund Fund Fund Fund Fund Fund Fund Funds Assets 104 Cash and cash equivalents $ 6,799,734 $ 1,465,853 $ 935,213 $ 130,824 $ 49,573 $ 762,001 $ 1,277,578 $ 11,420, Investments 65, , Taxes receivable - current 4,383,413 2,458,649 1,171, , ,438-9,065, Taxes receivable - delinquent 126,688 58,896 27,623 5,899-20, , Accounts receivable 79, , Due from other government 238, , , Interest receivable on investments and deposits 3, , Inventory of supplies 78, ,902 Liabilities and Fund Balances $ 11,774,959 $ 3,983,398 $ 2,360,490 $ 382,588 $ 49,573 $ 1,589,287 $ 1,278,058 $ 21,418,353 Liabilities 402 Accounts payable $ 70,319 $ 165,982 $ 53,232 $ - $ - $ - $ 350,919 $ 640, Accrued salaries payable 163,790-53, , Contracts payable 1,324, , ,749, Construction contracts payable - retained percentage ,177 65, Payroll deductions and withholdings and employer matching payable 390, , , Deferred revenue 4,510,101 2,517,545 1,198, , ,286-9,305,456 Total liabilities 6,459,505 2,683,527 1,852, , , ,096 12,490,380 Fund Balances 710 Nonspendable for: Inventory 78, , Restricted for: Capital Outlay - 1,299, ,299,871 Special Education , ,289 Pension , ,823 Arena , ,573 Bond Redemption , ,001 Capital Projects , , Assigned to: Next year's budget 253, , Unassigned 4,983, ,983,530 Total fund balances 5,315,454 1,299, , ,823 49, , ,962 8,927,973 $ 11,774,959 $ 3,983,398 $ 2,360,490 $ 382,588 $ 49,573 $ 1,589,287 $ 1,278,058 $ 21,418,353 See Notes to Financial Statements 18

22 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets Year Ended Total Fund Balances - Governmental Funds $ 8,927,973 Amounts Reported for Governmental Activities in the Statement of Net Assets are Different Because: Capital assets used in governmental activities are not financial resources and; therefore, are not reported in the funds. The cost of the assets is $68,775,864 and the accumulated depreciation is $14,740, ,035,310 Long-term liabilities, including bonds payable, OPEB liabilities, and accrued leave payable are not due and payables in the current period and; therefore, are not reported in the funds. The cost of the liabilities is $38,313,884 less the cost of deferred charges of $1,107,890. (37,205,994) Assets such as taxes receivable (delinquent) are not available to pay for current period expenditures and; therefore, are deferred in the funds. 239,954 Internal service funds are used by management to charge the the costs of activities, such as insurance, to individual funds. The assets and liabilities of internal service funds are included in governmental activities in the statement of net assets. (203,512) Interest expense payable is not included as a liability in the fund statements. Interest expense payable is included as a liability in the statement of net assets. (139,758) Net Assets - Governmental Funds $ 25,653,973 See Notes to Financial Statements 19

23 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended Capital Special Bond Holgate Middle Simmons Elementary Total General Outlay Education Pension Arena Redemption School Project School Project Governmental Fund Fund Fund Fund Fund Fund Fund Fund Funds Revenues 1000 Revenue from local sources 1100 Taxes: 1110 Ad valorem taxes $ 8,742,662 $ 4,849,721 $ 2,319,246 $ 484,972 $ - $ 1,615,086 $ - $ - $ 18,011, Prior year's ad valorem taxes 96,676 45,508 21,386 4,608-16, , Gross receipts taxes 574, , Other taxes 15, , Penalties and interest on taxes 22,390 10,864 5,121 1,112-4, , Tuition and fees: 1310 Regular day school tuition 9,411-38, , Summer school fees 31, , Earnings on investments and deposits 31, ,836 2,687 39, Cocurricular activities: 1710 Admissions 84, , , Other revenue from local sources: 1910 Rentals 19, , Contributions and donations 114, , , Charges for service 130, , , Other 30, , Revenue from intermediate sources 2100 County sources: 2110 County apportionment 316,274 42,170 63, , Revenue in lieu of taxes 19, , Revenue from state sources 3100 Grants-in-aid: 3110 Unrestricted grants-in-aid 9,369, ,369, Restricted grants-in-aid - 2,244, ,244, Tuition: 3320 Regular 62, , Other state revenue 6, , Revenue from federal sources 4100 Grants-in-aid: 4140 Restricted grants-in-aid received directly from federal government 64, , Restricted grants-in-aid received from federal government through the state 2,625,871-1,119, ,745, Johnson O'Malley funds 24, ,525 Total revenues 22,393,692 5,103,263 5,925, ,692 8,932 1,635,871 4,836 2,687 35,565,458 See Notes to Financial Statements 20

24 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended Capital Special Bond Holgate Middle Simmons Middle Total General Outlay Education Pension Arena Redemption School Project School Project Governmental Fund Fund Fund Fund Fund Fund Fund Fund Funds Expenditures 1000 Instruction 1100 Regular programs: 1110 Elementary schools 5,167,121 7, ,174, Middle/junior high schools 2,535,373 19, ,554, High school 3,105,371 32, ,137, Other regular programs 728, , Special programs: 1210 Gifted and talented 132, , Programs for special education - - 4,113, ,113, Culturally different 169, , Educationally deprived 939, , Other special programs 275, , , Support services 2100 Pupils: 2120 Guidance 544, , Health 119,382-97, , Psychological , , Speech pathology , , Student therapy services , , Support services - instructional staff: 2210 Improvement of instruction 211, ,766 15, , Educational media 846, , ,342, Support services - general administration: 2310 Board of education 117, , Executive administration 244, , Support services - school administration: 2410 Office of the principal 1,479, ,479, Support services - business: 2520 Fiscal services 330,836 19, , Operation and maintenance of plant 2,872, , ,415, Pupil transportation 124, , , Food services - 38, , Internal services 95,782 23, , Support services - central: 2640 Staff 191, , Support services - special education: 2710 Administrative costs , , Transportation costs , ,373 See Notes to Financial Statements 21

25 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended Capital Special Bond Holgate Middle Simmons Middle Total General Outlay Education Pension Arena Redemption School Project School Project Governmental Fund Fund Fund Fund Fund Fund Fund Fund Funds 4000 Nonprogrammed charges 4500 Early retirement payments , , , Pension Contributions , , Debt services - 2,058, ,602, ,660, Cocurricular activities 6100 Male activities 379, , Female activities 280, , Combined activities 677,296 59, , Capital outlay - 871, ,783 1,135,725 2,594,920 Total expenditures 21,567,515 5,186,081 6,121, ,277-1,602, ,783 1,135,725 36,677,805 Excess of Revenue over (under) Expenditures 826,177 (82,818) (195,783) 13,415 8,932 33,715 (582,947) (1,133,038) (1,112,347) Other Financing Sources (Uses) 5130 Sale of surplus property - 19, , General long-term debt issued ,995,000 1,995,000 Total other financing sources (uses) - 19, ,995,000 2,014,500 Net Change in Fund Balances 826,177 (63,318) (195,783) 13,415 8,932 33,715 (582,947) 861, ,153 Fund Balance - Beginning 4,489,277 1,363, , ,408 40, , ,947-8,025,820 Fund Balance - Ending $ 5,315,454 $ 1,299,871 $ 508,289 $ 130,823 $ 49,573 $ 762,001 $ - $ 861,962 $ 8,927,973 See Notes to Financial Statements 22

26 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government- Wide Statement of Activities Year Ended Net Change in Fund Balances - Total Governmental Funds $ 902,153 Amounts Reported for Governmental Activities in the Statement of Activities are Different Because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets in allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay ($2,660,220) exceeded depreciation ($1,383,006) in the current period. 1,211,915 Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. 830,000 In the statement of activities, certain operating expenses (early retirement) are measured by the amounts earned during the year. In the governmental expenditures, for these items are measured by the amount actually paid. Early retirement paid during the period exceeded the amount earned by $100, ,638 In both the government-wide and fund financial statements, revenues from property tax levies are applied to finance the budget of a particular period. Accounting for revenues from property tax accruals in the funds' statement differs from the accruals in the funds' statement differs from the require the amounts to be "available". This amount reflects the application of both the application period and "availability criteria". 56,230 Governmental funds do not reflect the change in accrued leave, but the statement of activities reflects the change in accrued leave through expenditures. 1,472 Repayment of capital outlay certificate principal is an expenditure in the governmental funds, but the repayment reduces longterm liabilities in the statement of net assets. 1,108,379 Interest expense payable is not included as an expenditure in the fund statements. Interest expense payable is included as an expenditure in the statement of activities. 75,944 See Notes to Financial Statements 23