IMLAY CITY COMMUNITY SCHOOLS IMLAY CITY, MICHIGAN AUDIT REPORT FOR THE YEAR ENDED JUNE 30, 2010

Transcription

1 IMLAY CITY COMMUNITY SCHOOLS IMLAY CITY, MICHIGAN AUDIT REPORT

2 TABLE OF CONTENTS PAGE Report of Independent Accountants Management s Discussion and Analysis I II - VIII Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets Statement of Activities Fund Financial Statements: Balance Sheet Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Fiduciary Fund Statement of Fiduciary Net Assets Budgetary Comparison Schedules: General Fund 6 Notes to the Financial Statements 7 19 Other Supplemental Information Combining Statements Nonmajor Funds: Combining Balance Sheet Other Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Other Governmental Funds Combining Balance Sheet School Service Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances School Service Funds Combining Balance Sheet Debt Retirement Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Debt Retirement Funds Individual Fund Schedules of Revenues, Expenditures and Other Financing Uses: Schedule 1 - General Fund - Schedule of Revenues and Other Financing Sources Budget and Actual Schedule 2 - General Fund - Schedule of Expenditures and Other Financing Uses Budget and Actual Other Supplemental Schedules: Schedule 3 - Trust and Agency Fund Schedule of Receipts and Disbursements Student Activities Schedule 4 - Schedule of Bond Principal and Interest Requirements 35 36

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4 IMLAY CITY COMMUNITY SCHOOLS IMLAY CITY, MICHIGAN MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 The Administration s Discussion and Analysis, a requirement of GASB 34, is intended to be the Imlay City Community Schools Administration s discussion and analysis of the financial results for the fiscal year ended June 30, Generally accepted accounting principles (GAAP) according to GASB 34 requires the reporting of two types of financial statements: District Wide Financial Statements and Fund Financial Statements. Fund Financial Statements: The School District s fund financial statements provide detailed information about the most significant funds not the School District as a whole. Some funds are required to be established by State law and by bond covenants. However, the School District establishes many other funds to help it control and manage money for particular purposes (the Food Service and Athletics Funds are examples) or to show that it is meeting legal responsibilities for using certain taxes, grants, and other money (such as bond-funded construction funds used for voter-approved capital projects). The governmental funds of the School District use the following accounting approach: Governmental funds All of the School District s services are reported in governmental funds. Governmental fund reporting focuses on showing how money flows into and out of funds and the balances left at year end are available for spending. They are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the operations of the School District and the services it provides. Governmental fund information 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. We describe the relationship (or differences) between governmental activities (reported in the statement of net assets and the statement of activities) and governmental funds in a reconciliation. In the fund financial statements, purchased capital assets are reported as expenditures in the year of acquisition. No asset is reported. The issuance of debt is recorded as a financial resource. The current year s payments of principal and interest on long-term obligations are recorded as expenditures. Future year s debt obligations are not recorded. District Wide Financial Statements: The District wide financial statements are full accrual basis statements. They report all of the District s assets and liabilities, both short and long-term, regardless if they are currently available or not. For example, assets that are restricted for use in the Debt Funds solely for the payment of long-term principal or interest are grouped with unrestricted assets of the General Fund. Capital assets and obligations of the District are reported in the Statement of Net Assets of the District wide financial statements. One of the most important questions asked about the School District is, As a whole, what is the School District s financial condition as a result of the year s activities? The statement of net assets and the statement of activities, which appear first in the School District s financial statements, report information on the School District as a whole and its activities in a way that helps you answer this question. We prepare these statements to include all assets and liabilities, using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year s revenues and expenses are taken into account regardless of when cash is received or paid. -II-

5 IMLAY CITY COMMUNITY SCHOOLS IMLAY CITY, MICHIGAN MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 District Wide Financial Statements: (Continued) These two statements report the Imlay City Community Schools net assets the difference between assets and liabilities, as reported in the statement of net assets as one way to measure the School District s financial health or financial position. Over time, increases or decreases in the School District s net assets as reported in the statement of activities are indicators of whether its financial health is improving or deteriorating. The relationship between revenues and expenses is the School District s operating results. However, the School District s goal is to provide services to our students, not to generate profits as commercial entities do. One must consider many other nonfinancial factors, such as the quality of the education provided and the safety of the schools, to assess the overall health of the School District. The statement of net assets and the statement of activities report the governmental activities for the School District, which encompasses all of the School District s services, including instruction, support services, community services, athletics, and food services. Property taxes, unrestricted State aid (foundation allowance revenue), and State and federal grants finance most of these activities. The School District as Trustee Reporting the School District s Fiduciary Responsibilities The School District is the trustee, or fiduciary, for its student activity funds. All of the School District s fiduciary activities are reported in a separate statement of fiduciary net assets. We exclude these activities from the School District s other financial statements because the School District cannot use these assets to finance its operations. The School District is responsible for ensuring that the assets reported in these funds are used for their intended purposes. SUMMARY OF NET ASSETS: The following summarizes the net assets at the fiscal years ended June 30, 2010 and 2009: NET ASSETS SUMMARY ASSETS Current Assets $7,052,824 $7,358,000 Non-Current Assets 28,551,780 29,256,957 TOTAL ASSETS $35,604,604 $36,614,957 LIABILITIES Current Liabilities $3,739,576 $3,832,947 Long-Term Liabilities 26,101,163 27,848,742 Total Liabilities $29,840,739 $31,681,689 NET ASSETS Invested in Capital Assets - Net of Related Debt 1,574, ,482 Restricted - Debt Retirement 1,651,946 1,569,911 Unrestricted 2,537,482 2,534,875 Total Net Assets $5,763,865 $4,933,268 TOTAL LIABILITIES AND NET ASSETS $35,604,604 $36,614,957 -III-

6 IMLAY CITY COMMUNITY SCHOOLS IMLAY CITY, MICHIGAN MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 RESULTS OF OPERATIONS: For the fiscal years ended June 30, 2010 and 2009 the District wide results of operations were: REVENUES General Revenues: Property Taxes Levied for General Operations $2,040,688 $2,027,380 Property Taxes Levied for Debt Service 2,443,578 2,450,064 State of Michigan Unrestricted Foundation Aid 13,297,707 13,798,207 Other General Revenues 189, ,020 Total General Revenues $17,971,010 $18,622,671 Operating Grants: Federal 2,344,882 2,220,869 State of Michigan 1,386,166 1,242,446 Other Grants 71,180 94,154 Total Operating Grants $3,802,228 $3,557,469 Charges for Services: Food Service 257, ,876 Athletics 50,218 59,615 Special Education Consortium 49,639 41,644 Other Charges for Services 143,863 95,131 Total Charges for Services $500,747 $486,266 Total Revenues $22,273,985 $22,666,406 EXPENSES Instruction & Instructional Support 11,048,383 11,555,922 Support Services 6,939,785 7,394,645 Community Services 44,027 47,469 Food Service 1,019,939 1,077,097 Athletics 446, ,537 Interest on Long-Term Debt 1,195,896 1,201,322 Depreciation 748, ,058 Total Expenses $21,443,388 $22,555,050 INCREASE IN NET ASSETS $830,597 $111,356 BEGINNING NET ASSETS 4,933,268 4,821,912 ENDING NET ASSETS $5,763,865 $4,933,268 -IV-

7 IMLAY CITY COMMUNITY SCHOOLS IMLAY CITY, MICHIGAN MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 GOVERNMENT- WIDE FINANCIAL ANALYSIS Analysis of Financial Position: During the year ended June 30, 2010, the District s total net assets increased by $830,597 to a total of $5,763,865. The largest portion of the net assets are the District s investment in capital assets. Net assets (invested in capital assets, net of related debt) increased by $745,955 during the year due to purchases of new capital assets and principal payments on related debt exceeding depreciation. The Districts unrestricted net assets increased by $2,607 during the year and the restricted portion of the net assets increased by $82,035. The restricted net assets consists of the restricted debt retirement funds that may only be used to pay bonded debt and restricted capital projects funds that may only be used to fund capital projects. The unrestricted net assets may be used to fund the educational services provided to students. Analysis of Results of Operations The District s overall revenues exceeded its expenses for the year by $830,597. The total revenues decreased by $392,421. The major change was a decrease in state aid. Expenses decreased by $1,111,662. Major decreases were in the areas of instruction and support services. FINANCIAL ANALYSIS OF GOVERNMENT S FUNDS GOVERNMENTAL FUNDS Analysis of Financial Position The focus of the 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 District s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a governments net resources available for spending at the end of the fiscal year. An analysis of changes for the governmental funds is as follows: General Fund The District s general fund is the chief operating fund of the district. Unreserved fund balance for the general fund decreased by $324,514 during the year with the decrease coming primarily from a decrease in cash. Revenues and other financing sources for the year decreased by $538,263 primarily from the decreases in state aid and interest income. Expenses and other financing uses decreased by $447,524 primarily due to the decrease in instructional expenses. The district offered a severance incentive plan. Eleven teachers participated in the plan with four of the positions being replaced. The major sources of general fund revenues are state aid and taxes. An analysis of them is as follows: 1. State of Michigan Unrestricted Aid (Net State Foundation Grant) The State of Michigan aid, unrestricted, is determined with the following variables: a. State of Michigan State Aid Act per student foundation allowance b. Student Enrollment - Blended at 75 percent of current year s fall count and 25 percent of prior year s winter count c. The District s non-homestead property tax levy 2. Per Student, Foundation Allowance: Annually, the State of Michigan establishes the per student foundation allowance. The Imlay City Community Schools foundation allowance was $7,316 per student for the school year. -V-

8 IMLAY CITY COMMUNITY SCHOOLS IMLAY CITY, MICHIGAN MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 FINANCIAL ANALYSIS OF GOVERNMENT S FUNDS GOVERNMENTAL FUNDS (Continued) Analysis of Financial Position (Continued) General Fund (Continued) 3. Student Enrollment: The District s blended student enrollment for the fall count of was 2,266 students. A decrease of 40 students from the prior year. 4. Property Taxes Levied For General Operations (General Fund Non-Homestead Taxes) The District levies 18 mills of property taxes for operations (General Fund) on Non-Homestead Properties. Under Michigan law, the taxable levy is based on the taxable valuation of properties. Annually, the taxable valuation increase in property values is capped at the rate of the prior year s CPI increase or 5 percent, whichever is less. At the time of sale, a property s taxable valuation is readjusted to the State Equalized Value, which is, theoretically, 50 percent of the market value. The District s non-homestead property tax revenue for the fiscal year was $1,985,522. A decrease of $44,426 from the prior year Debt Retirement Fund The District s debt retirement fund balance increased by $82,035. The fund balance is restricted to use for payments on bonded debt. The fund had expenditures of $222,959 and transfers of $2,147,093 to other debt funds in paying the required interest and principal payments of the school s bonded debt. The majority of the fund s revenue is derived from tax collections. An analysis of them is as follows: 1. Debt Fund Property and Industrial Facility In Lieu of Taxes The District s debt fund levy, which is used to pay the principal and interest on bond obligations, is based on the taxable valuation of all properties: homestead and non-homestead. In addition, the District collects IFT (Industrial Facilities Taxes) In Lieu of Taxes that are essentially taxed at 50 percent of the regular tax rate. For , the District s debt millage levy was 5.75 mills that generated revenue of $2,393,592. A decrease of $20,281 from the prior year. MAJOR FUND BUDGETARY HIGHLIGHTS: GENERAL FUND BUDGET VS. ACTUAL Variance Original & Final Variance Actual Original Budget Final Budget Actual Budget % & Final Budget % Revenue $18,525,871 $18,493,262 $18,526, Expenditures 19,024,327 19,209,471 18,851, TOTAL ($498,456) ($716,209) ($324,514) -VI-

9 IMLAY CITY COMMUNITY SCHOOLS IMLAY CITY, MICHIGAN MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 ANALYSIS OF BUDGETS: The Uniform Budget Act of the State of Michigan requires that the local Board of Education approve the original budget for the upcoming fiscal year prior to July 1, the start of the fiscal year. As a matter of practice, Imlay City Community Schools amends its budget during the school year. The June, 2010 budget amendment was the final budget for the fiscal year. Significant items affecting the budgets for the fiscal year were: General Fund: Original vs. Final Budgets o o Revenues There were no significant variance between original and final budget. Expenditures The final expenditure budgets increased $185,144 from the original budget. The major area of increase was in added needs instructional expenses. The district received ARRA Stimulus grants during the year that were not included in the original budget. Final Budget vs. Actual Results o o Revenues There were no significant variance between final budget and actual. Expenditures Actual expenditures were $358,467 less than budgeted. Savings came from unspent monies in the following budgeted expense areas; insurance, utilities, fuel, vehicle and maintenance supplies/parts, athletic transfer, miscellaneous supplies throughout the district, and instructional classroom supplies. CAPITAL ASSET AND DEBT ADMINISTRATION A. Debt, Principal Payments The District made principal payments on bonded, long-term debt obligations that reduced the amount of the District s long-term liabilities as follows: Principal Balance Increases (Decreases) Principal Payments Principal Balance Bonds Payable $26,963,997 $0 $1,151,503 $25,812,494 Installment Contracts 704, , ,862 Unamortized Premium 760, , ,987 Severance Package 464, , ,898 Compensated Absences 562, , ,565 Total Long-Term Debt $29,455,866 $0 $1,619,060 $27,836,806 -VII-

10 IMLAY CITY COMMUNITY SCHOOLS IMLAY CITY, MICHIGAN MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 CAPITAL ASSET AND DEBT ADMINISTRATION (Continued) B. Capital Assets The District s net investment in capital assets decreased by $705,17 during the fiscal year. This can be summarized as follows: Balance Balance Beginning Additions Deductions Ending Capital Assets $43,125,464 $311,724 $142,350 $43,294,838 Less: Accumulated Depreciation (13,868,507) (1,016,901) (142,350) (14,743,058) Net Investment Capital Assets $29,256,957 ($705,177) $0 $28,551,780 Significant additions were the purchase of 4 buses and installation of carpet. ECONOMIC FACTORS AND NEXT YEAR S BUDGET The Board of Education and Administration agreed to an estimate of a foundation allowance of $6,881 per pupil for the fiscal year based on information received from various educational organizations such as Michigan Association of School Business Officials, Michigan Association of School Administrators, and the Michigan Association of School Boards as well as discussions with local state representatives. The district budgeted for an enrollment decline of 12 students, or.5% from the fall of This brings our estimated fall 2010 enrollment to 2,266. * The Imlay City Community Schools 2010/2011 adopted budget is as follows: REVENUE $17,657,683 EXPENDITURES 18,359,298 NET (UNDER) BUDGET ($701,615) CONTACTING THE DISTRICT S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens and taxpayers with a general overview of the District s finances. If you have questions about this report or need additional information, contact the Business Office, Imlay City Community Schools. -VIII-

11 STATEMENT OF NET ASSETS AS OF JUNE 30, 2010 Governmental Activities ASSETS CURRENT ASSETS Cash and Cash Equivalents $939,753 Investments 3,062,045 Accounts Receivable 20,212 Due from Other Governmental Units 2,833,715 Inventory 9,309 Prepaid Expenses 187,790 Total Current Assets $7,052,824 NON-CURRENT ASSETS Capital Assets 43,294,838 Less: Accumulated Depreciation (14,743,058) Total Noncurrent Assets $28,551,780 TOTAL ASSETS $35,604,604 LIABILITIES CURRENT LIABILITIES Accounts Payable $305,467 Due to Other Governmental Units 116,825 Salaries Payable 1,188,353 Accrued Expenses 485,171 Deferred Revenue 8,117 Current Portion of Long-Term Obligations 1,635,643 Total Current Liabilities $3,739,576 NON-CURRENT LIABILITIES Noncurrent Portion of Long-Term Obligations 26,101,163 TOTAL LIABILITIES $29,840,739 NET ASSETS NET ASSETS Invested in Capital Assets, Net of Related Debt (Deficit) 1,574,437 Restricted for: Debt Retirement 1,651,946 Unrestricted 2,537,482 Total Net Assets $5,763,865 TOTAL LIABILITIES AND NET ASSETS $35,604,604 See accompanying notes to the basic financial statements. -1-

12 STATEMENT OF ACTIVITIES Program Revenues Net (Expense) Operating Revenue & Charges For Grants and Change in FUNCTIONS/PROGRAMS Expenses Services Contributions Net Assets Governmental Activities: Instruction $11,048,383 $0 $2,789,169 ($8,259,214) Support Services 6,939, , ,683 (6,521,600) Community Services 44, (44,027) Food Service 1,019, , ,376 25,464 Athletics 446,470 50,218 0 (396,252) Interest - Long-Term Obligations 1,195, (1,195,896) Depreciation - Unallocated 748, (748,888) TOTALS $21,443,388 $500,747 $3,802,228 ($17,140,413) General Revenues: Taxes: Property Taxes, Levied for General Purposes 4,484,266 State Aid 13,297,707 Investment Earnings 20,925 Miscellaneous 168,112 Total General Revenues and Transfers $17,971,010 Change in Net Assets $830,597 Net Assets - Beginning 4,933,268 Net Assets - Ending $5,763,865 See accompanying notes to the basic financial statements. -2-

13 BALANCE SHEET GOVERNMENTAL FUNDS AS OF JUNE 30, Debt Other Total General Retirement Governmental Governmental Fund Fund Funds Funds ASSETS Cash and Cash Equivalents $351,472 $33,015 $555,266 $939,753 Investments 1,443,114 1,618, ,062,045 Accounts Receivable 17, ,507 20,212 Due from Other Governmental Units 2,827, ,406 2,833,715 Due from Other Funds 140, ,303 Inventory 0 0 9,309 9,309 Prepaid Expenses 187, ,790 TOTAL ASSETS $4,967,693 $1,651,946 $573,488 $7,193,127 LIABILITIES Accounts Payable $287,603 $0 $17,864 $305,467 Due to Other Governmental Units 102, , ,825 Due to Other Funds , ,303 Salaries Payable 1,185, ,340 1,188,353 Accrued Expenses 288, ,092 Deferred Revenue 2, ,540 8,117 Total Liabilities $1,866,597 $0 $181,560 $2,048,157 FUND BALANCES Reserved For: Inventory 0 0 9,309 9,309 Debt Retirement 0 1,651, ,651,946 Unreserved: Undesignated, Reported In: General Fund 3,101, ,101,096 School Service Funds , ,619 Total Fund Balances $3,101,096 $1,651,946 $391,928 $5,144,970 TOTAL LIABILITIES AND FUND BALANCES $4,967,693 $1,651,946 $573,488 $7,193,127 See accompanying notes to the basic financial statements. -3-

14 RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCES TO NET ASSETS OF GOVERNMENTAL ACTIVITIES AS OF JUNE 30, 2010 Total Governmental Fund Balances: $5,144,970 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 as assets in governmental funds. The cost of the assets is $43,294,838 and the accumulated depreciation is $14,743,058 28,551,780 Accrued Interest on Long-Term Debt (196,079) Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-term liabilities at year end consist of: Bonds Payable $25,712,494 Land Contract 355,424 Installment Contract 218,438 Unamortized Premium 690,987 Teacher Severance Package 313,898 Compensated Absences Payable 445,565 Total Long-Term Liabilities (27,736,806) TOTAL NET ASSETS - GOVERNMENTAL ACTIVITIES $5,763,865

15 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS 2003 Debt Other Total General Retirement Governmental Governmental Fund Fund Funds Funds REVENUES Local Sources $2,253,374 $2,452,087 $353,529 $5,058,990 State Sources 14,495, ,723 14,683,873 Federal Sources 1,591, ,156 2,344,882 Total Revenues $18,340,250 $2,452,087 $1,295,408 $22,087,745 EXPENDITURES Current: Instruction 10,976, ,976,524 Student Services 1,238, ,238,838 Instructional Support 603, ,106 General Administration 336, ,190 School Administration 1,416, ,416,813 Business Administration 288, ,355 Operation & Maintenance of Plant 1,683, ,683,928 Transportation 1,314, ,314,755 Support Services - Other 236, ,788 Community Services 44, ,027 Food Service & Athletics 0 0 1,390,368 1,390,368 Debt Retirement Principal 0 170,000 1,081,503 1,251,503 Interest 0 42,505 1,218,318 1,260,823 Dues and Fees 0 10, ,229 Total Expenditures $18,139,324 $222,959 $3,690,964 $22,053,247 Excess (Deficiency) of Revenues Over (Under) Expenditures $200,926 $2,229,128 ($2,395,556) $34,498 OTHER FINANCING SOURCES (USES) Transfers (to) from Other Funds (300,598) (2,147,093) 2,447,691 0 Other Transfers (224,842) 0 0 (224,842) Total Other Financing Sources (Uses) ($525,440) ($2,147,093) $2,447,691 ($224,842) Net Change in Fund Balance ($324,514) $82,035 $52,135 ($190,344) FUND BALANCE - BEGINNING 3,425,610 1,569, ,793 5,335,314 FUND BALANCE - ENDING $3,101,096 $1,651,946 $391,928 $5,144,970 See accompanying notes to the basic financial statements. -4-

16 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Total net change in fund balances - governmental funds ($190,344) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which depreciation exceeded capital outlay in the current period. (705,176) Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. This is the amount of repayments reported as expenditures in the governmental funds. 1,451,131 Change in accrued interest on long-term liabilities 7,058 Payment on Teacher Severance Package 150,993 Decrease in accrued compensated absences 116,935 CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES $830,597

17 STATEMENT OF FIDUCIARY NET ASSETS STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUND AS OF JUNE 30, 2010 Trust & Agency ASSETS Cash and Cash Equivalents $112,786 TOTAL ASSETS $112,786 LIABILITIES Due to Student Groups $112,786 TOTAL LIABILITIES $112,786 See accompanying notes to the basic financial statements. -5-

18 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND Budgeted Amounts Variance With Original Final Actual Final Budget REVENUES Local Sources $2,314,257 $2,219,263 $2,253,374 $34,111 State Sources 15,365,602 14,467,796 14,495,150 27,354 Federal Sources 730,561 1,634,909 1,591,726 (43,183) Total Revenues $18,410,420 $18,321,968 $18,340,250 $18,282 EXPENDITURES Current: Instruction 10,826,380 11,037,264 10,976,524 60,740 Student Services 1,265,462 1,240,474 1,238,838 1,636 Instructional Support 628, , ,106 43,521 General Administration 348, , ,190 13,005 School Administration 1,491,948 1,475,735 1,416,813 58,922 Business Administration 269, , ,355 (18,821) Operation & Maintenance of Plant 1,991,436 1,741,698 1,683,928 57,770 Transportation 1,226,615 1,403,226 1,314,755 88,471 Support Services - Other 358, , ,788 5,396 Community Services 53,845 47,568 44,027 3,541 Total Expenditures $18,460,581 $18,453,504 $18,139,324 $314,180 Excess of Revenues Over Expenditures ($50,161) ($131,536) $200,926 $332,462 OTHER FINANCING SOURCES (USES) (448,295) (584,673) (525,440) 59,233 Net Change in Fund Balance ($498,456) ($716,209) ($324,514) $391,695 FUND BALANCE - BEGINNING 3,425,610 FUND BALANCE - ENDING $3,101,096 See accompanying notes to the basic financial statements. -6-

19 NOTES THE TO FINANCIAL STATEMENTS 1) REPORTING ENTITY The accompanying basic financial statements have been prepared in accordance with criteria established by the GASB for determining the various governmental organizations to be included in the reporting entity. These criteria include oversight responsibility, scope of public service, and special financing arrangements. Based on application of the criteria, the entity does not contain component units. The District receives funding from local, state, federal and interdistrict government sources and must comply with the accompanying requirements of these funding source entities. However, the District is not included in any other governmental "reporting entity" body that has separate legal standing and is fiscally independent of the governmental entities. As such, the Board of Education has decision-making authority, the authority to levy taxes, and determine its budget, the power to designate management, the ability to significantly influence operations and primary accountability for fiscal matters. 2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of Imlay City Community Schools conform to generally accepted accounting principles as applicable to school districts. The following is a summary of the significant accounting policies: In June 1999 the Governmental Accounting Standards Board (GASB) issued Statement No. 34, Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments. Certain of the significant changes in the Statement include the following: A Management Discussion and Analysis (MD&A) section to provide an analysis of the District s overall financial position and results of operations. Financial statements prepared with full accrual accounting for all of the District s activities. A change in the fund financial statements to focus on the major funds. These and other changes are reflected in the accompanying financial statements and notes to the financial statements. A) BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE STATEMENTS The District s basic financial statements include both government-wide (reporting the District as a whole) and fund financial statements (reporting the District s major funds). The government-wide financial statements categorize primary activities as either governmental or business type. All of the District s activities are classified as governmental activities. Fiduciary funds are not included in the government-wide financial statements. In the government-wide Statement of Net Assets, the governmental activities column is presented on a consolidated basis and is reported on a full-accrual economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The District s net assets are reported in three parts: invested in capital assets net of related debt; restricted net assets; and unrestricted net assets. The District first utilizes restricted resources to finance qualifying activities. The government-wide Statement of Activities reports both the gross and net cost of each of the District s functions. General government revenues also support the functions. The Statement of Activities reduces gross expenses by related program revenues, operating and capital grants. Program revenues must be directly associated with the function. Operating grants include operating-specific and discretionary grants. The net costs by function are normally covered by general revenue (property taxes, state and federal sources, interest income, etc.). The District does not allocate indirect costs. Inter-fund transactions have been eliminated in the governmentwide financial statements. -7-

20 NOTES THE TO FINANCIAL STATEMENTS 2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B) BASIC FINANCIAL STATEMENTS - FUND FINANCIAL STATEMENTS The accounts of the District are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund balance, revenues, and expenditures. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds are grouped, in the generalpurpose financial statements in this report, into five generic fund types in two broad fund categories as follows: Governmental Funds Governmental funds are those funds through which most school district functions typically are financed. The acquisition, use, and balances of the District's expendable financial resources and the related current liabilities are accounted for through governmental funds. General Fund The General Fund is used to record the general operations of the District pertaining to education and those operations not provided for in other funds. Included are all transactions related to the approved current operating budget. Special Revenue Funds Special Revenue Funds are used to segregate the transactions of particular activities from regular revenue and expenditure accounts. The District maintains full control of these funds. The District maintains two school service funds: Food Service and Athletic Funds. Debt Retirement Funds The Debt Retirement Fund is used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related costs. Capital Projects Fund The Capital Projects Fund is used to account for the acquisition and construction of major facilities by the School District. Fiduciary Funds Fiduciary fund reporting focuses on net assets and changes in net assets. The District s fiduciary funds consist of agency funds which are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The agency funds are used to account for amount held for student and employee groups. C) BASIS OF ACCOUNTING/MEASUREMENT FOCUS The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental fund types and expendable trust funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. Accrual Governmental activity in the government-wide financial statements is presented on the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred. -8-

21 NOTES THE TO FINANCIAL STATEMENTS 2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C) BASIS OF ACCOUNTING/MEASUREMENT FOCUS (Continued) Modified Accrual The governmental funds financial statements are presented on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; i.e., both measurable and available. Available means collectible within 60 days of year end. Expenditures are generally recognized under the modified accrual basis of accounting when the related liability is incurred. The exception to this general rule is that principal and interest on general obligation long-term debt is recognized when due. Those revenues susceptible to accrual are property taxes, state aid, interest revenue, grants and charges for services. Other revenue is recorded when received. The District reports deferred revenue on its governmental funds balance sheet. Deferred revenues arise when potential revenue does not meet both the measurable and available criteria for recognition in the current period. Deferred revenues also arise when the District receives resources before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the government has a legal claim to the resources, the liability for deferred revenue is removed from the combined balance sheet and revenue is recognized. D) CASH AND CASH EQUIVALENTS Cash and cash equivalents include amounts in demand deposits and certificates of deposit. The District reports its investments in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools and No. 40 Deposits and Investment Risk Disclosures. Under these standards, certain investments are valued at fair value as determined by quoted market prices, or by estimated fair values when quoted market prices are not available. The standards also provide that certain investments are valued at cost (or amortized cost) when they are of a short-term duration, the rate of return is fixed, and the district intends to hold the investment until maturity. Accordingly, investments in banker acceptances and commercial paper are recorded at amortized cost. State statues authorize the District to invest in bonds and other direct and certain indirect obligations of the U.S. Treasury, certificates of deposit, savings accounts, deposit accounts, or depository receipts of a bank, savings and loan association, or credit union, which is a member of the Federal Deposit Insurance Corporation, Federal Savings and Loan Insurance Corporation, or National Credit Union Administration, respectively; in commercial paper rated at the time of purchase within the three highest classifications established by no less than two standard rating services and which matures not more than 270 days after the date of purchase. The District is also authorized to invest in U.S. Government or federal agency obligation repurchase agreements, bankers acceptances of U.S. banks, and mutual funds composed of investments as outlined above. E) PREPAID ASSETS Payments made to vendors for services that will benefit periods beyond June 30, 2010, are recorded as prepaid items using the consumption method. A current asset for the prepaid amount is recorded at the time of the purchase and an expenditure/expense is reported in the year in which services are consumed. F) INVENTORY On government-wide financial statements are stated at cost and are expensed when used. On fund financial statements inventories are stated at cost. Inventory in governmental funds consists of expendable supplies held for consumption. -9-

22 NOTES THE TO FINANCIAL STATEMENTS 2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) G) CAPITAL ASSETS General capital assets are those assets not specifically related to activities reported in the proprietary funds. These assets generally result from expenditures in the governmental funds. These assets are reported in the governmental activities column of the government-wide statement of net assets but are not reported in the fund financial statements. All capital assets are capitalized at cost (or estimated historical cost) using a $5,000 capitalization threshold and updated for additions and retirements during the year. Donated fixed assets are recorded at their fair market values as of the date received. The School District maintains a capitalization threshold of one hundred dollars. The School District does not possess any infrastructure. Improvements are capitalized; the cost of normal maintenance and repairs that do not add to the value of the asset or materially extend an assets life are not. Interest incurred during the construction of capital assets is also capitalized. All reported capital assets are depreciated. Improvements are depreciated over the remaining useful lives of the related capital assets. Depreciation is computed using the straight-line method over the following useful lives: Description Buildings and Improvements Furniture and Equipment Vehicles and Buses Governmental Activities Estimated Lives years 5 10 years 8 years H) INTERFUND BALANCES On fund financial statements, receivables and payables resulting from short-term interfund loans are classified as interfund receivables/payables. These amounts are eliminated in the governmental activities columns of the statement of net assets. I) COMPENSATED ABSENCES The School District reports compensated absences in accordance with the provisions of GASB Statement No. 16, Accounting for Compensated Absences. Sick leave benefits are accrued as a liability using the termination payment method. An accrual for earned sick leave is made to the extent that it is probable that the benefits will result in termination payments. The liability is based on the School District s past experience of making termination payments. The entire compensated absence liability is reported on the government-wide financial statements. For governmental fund financial statements the current portion of unpaid compensated absences is the amount expected to be paid using expendable available resources. These amounts, if any, are recorded in the account compensated absences payable in the fund from which the employees who have accumulated unpaid leave are paid. The noncurrent portion of the liability is not reported. In proprietary funds, the entire amount of compensated absences is reported as a fund liability. J) ACCRUED LIABILITIES AND LONG-TERM OBLIGATIONS All payables, accrued liabilities and long-term obligations are reported in the government-wide financial statements. -10-

23 NOTES THE TO FINANCIAL STATEMENTS 2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) J) ACCRUED LIABILITIES AND LONG-TERM OBLIGATIONS (Continued) In general, payables and accrued liabilities that will be paid from governmental funds are reported on the governmental fund financial statements regardless of whether they will be liquidated with current resources. However, claims and judgments, the noncurrent portion of capital leases, compensated absences, contractually required pension contributions and special termination benefits that will be paid from governmental funds are reported as a liability in the fund financial statements only to the extent that they will be paid with current, expendable, available financial resources. In general, payments made within sixty days after year end are considered to have been made with current available financial resources. Bonds and other long-term obligations that will be paid from governmental funds are not recognized as a liability in the fund financial statements until due. K) FUND BALANCE RESERVES The School District reserves those portions of fund equity which are legally segregated for a specific future use or which do not represent available expendable resources and therefore are not available for appropriation or expenditure. Unreserved fund balance indicates that portion of fund equity which is available for appropriation in future periods. Fund equity reserves have been established for inventories. L) NET ASSETS Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. Net assets are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the School District or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. M) ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles 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. N) BUDGETARY DATA The budgetary process is prescribed by provisions of the State of Michigan Budget Act and entails the preparation of budgetary documents within an established timetable. All funds, other than agency funds, are legally required to be budgeted and appropriated. The legal level of budgetary control has been established by the Board of Education at the function level. Any budgetary modifications may only be made by resolution of the Board of Education. The School District follows these procedures in establishing the budgets for the individual funds as reflected in the financial statements. 1) Prior to June 30, the Superintendent submits to the School Board a proposed operating budget for the fiscal year commencing on July 1. 2) A public hearing is conducted during June to obtain taxpayer comments. 3) Prior to June 30, the budget is legally enacted through passage of a resolution. 4) For purposes of meeting emergency needs of the School District, transfer of appropriations may be made by the authorization of the Superintendent. Such transfers of appropriations must be approved by the Board of Education at its next regularly scheduled meeting. -11-

24 NOTES THE TO FINANCIAL STATEMENTS 2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) N) BUDGETARY DATA (Continued) 5) The School Superintendent is charged with general supervision of the budget and shall hold the department heads responsible for performance of their responsibilities. 6) During the year the budget is monitored, and amendments to the budget resolution are made when deemed necessary. O) NEW GASB STANDARD FOR SUBSEQUENT YEAR'S FINANCIAL STATEMENTS In March 2009, the Governmental Accounting Standards Board (GASB) approved Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. Certain of the significant changes in the Statement will require the following: 1) Fund balances for each of the District's governmental funds (General Fund, special revenue funds, capital projects funds, and debt service funds) will be displayed in the following classifications depicting the relative strength of the spending constraints placed on the purposes for which resources can be used: * Nonspendable fund balance - amounts that cannot be spent because they are either not in a spendable form (such as inventories and prepaid amounts) or are legally or contractually required to be maintained intact. * Restricted fund balance - amounts that can be spent only for specific purposes because of constraints imposed by external providers (such as grantors, bondholders, and higher levels of government), or imposed by constitutional provisions or enabling legislation. * Committed fund balance - amounts that can be spent only for specific purposes determined by a formal action of the government's highest level of decision-making authority. * Assigned fund balance - amounts the government intends to use for specific purposes that do not meet the criteria to be classified as restricted or committed. * Unassigned fund balance - amounts that are available for any purpose; these amounts can be reported only in the District's General Fund. 2) The Statement also establishes several new presentation and disclosure requirements, including requirements related to stabilization arrangements (i.e., "rainy day" amounts). 3) In addition, the Statement clarifies the definitions of the various types of governmental funds. Interpretations of certain terms within the new definition of special revenue funds may affect which activities the District can report in special revenue funds. The provisions of GASBS No. 54 must be implemented by the District no later than the fiscal year beginning July 1, Implementation will require the District to restate existing fund balances for the governmental funds. -12-

25 NOTES THE TO FINANCIAL STATEMENTS 3) STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY BUDGET VIOLATIONS 1968 PA2 provides that a local unit shall not incur expenditures in excess of the amount appropriated. In the body of the financial statements, the School District's actual expenditures and budgeted expenditures for the budgetary funds have been shown on a functional basis. The approved budgets of the School District for these budgetary funds were adopted to the functional level. During the year ended June 30, 2010, the School District incurred expenditures in certain budgetary funds which were in excess of the amounts appropriated. The District did not adopt a budget for the 2003 Debt Retirement Fund as it is not required by Michigan statute. 4) DEPOSITS AND INVESTMENTS As of June 30, 2010, the District had the following investments. Weighted Standard Average & Poor's Investment Type Fair value Maturity (Years) Rating % MILAF External Investment Pool - MICMS $ AAAm 0.00% MILAF External Investment Pool - MIMAX 3,061, AAAm % Total fair value $ 3,062, % Portfolio weighted average maturity day maturity equals , one year equals Interest rate risk. In accordance with its investment policy, the District will minimize interest rate risk, which is the risk that the market value of securities in the portfolio will fall due to changes in market interest rates, by; structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities in the open market; and, investing operating funds primarily in shorterterm securities, liquid asset funds, money market mutual funds, or similar investment pools and limiting the average maturity in accordance with the District s cash requirements. Credit risk. State law limits investments in commercial paper and corporate bonds to a prime or better rating issued by nationally recognized statistical rating organizations (NRSROs). As of June 30, 2010, the District s investment in the investment pool was rated AAA by Standards & Poor s and AAA by Moody s Investors Service. Concentration of credit risk. The District will minimize concentration of credit risk, which is the risk of loss attributed to the magnitude of the District s investment in a single issuer, by diversifying the investment portfolio so that the impact of potential losses from any one type of security or issuer will be minimized. More than 5% of the District s investments are in pooled investment accounts which represents 100% of the District s total investments. Custodial credit risk deposits. In the case of deposits, this is the risk that in the event of a bank failure, the District s deposits may not be returned to it. As of June 30, 2010, $854,152 of the District s bank balance of $1,401,347 was exposed to custodial credit risk because it was uninsured and collateralized with securities held by the pledging financial institution s trust department or agent, but not in the District s name. -13-

26 NOTES THE TO FINANCIAL STATEMENTS 4) DEPOSITS AND INVESTMENTS (Continued) Custodial credit risk investments. For an investment, this is the risk that, in the event of the failure of the counterparty, the District will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The District will minimize custodial credit risk, which is the risk of loss due to the failure of the security issuer or backer, by; limiting investments to the types of securities allowed by law; and pre-qualifying the financial institutions, broker/dealers, intermediaries and advisors with which the District will do business. Foreign currency risk. The District is not authorized to invest in investments which have this type of risk. The above amounts as previously report in Note 4: Deposits Including Fiduciary Funds of $112,786 $ 1,052,539 Investments 3,062,045 TOTAL $ 4,114,584 The above amounts are reported in the financial statements as follows: Cash Agency Fund $ 112,786 Cash District Wide 939,753 Investments District Wide 3,062,045 TOTAL $ 4,114,584 5) PROPERTY TAXES The School District levies its property taxes on July 1 and various municipalities collect its property taxes and remit them to the District through February. The delinquent real property taxes of the District are purchased by the County, and delinquent personal property taxes continue to be collected by the municipalities and recorded as revenue as they are collected. The county sells tax notes, the proceeds of which have been used to pay the District for these delinquent real property taxes. These delinquent real property taxes have been recorded as revenue in the current year. 6) RECEIVABLES Receivables at June 30, 2010, consist of taxes, accounts (fees), intergovernmental grants and interest. All receivables are considered collectible in full due to the ability to foreclose for the nonpayment of taxes, the stable condition of State programs, and the current year guarantee of federal funds. A summary of the principal items of intergovernmental receivables (due from other governmental units) follows: GOVERNMENTAL ACTIVITIES AMOUNT State Aid $ 2,672,118 Federal Grants 161,597 TOTAL GOVERNMENTAL ACTIVITIES $ 2,833,715 7) UNEMPLOYMENT COMPENSATION The District is subject to the Michigan Employment Security Act and has elected the reimbursement method of financing. Under this method, the District must reimburse the Employment Commission for all benefits charged against the District for the year. As of June 30, 2010, the School District had $27,523 in estimated claims in conjunction with the program. -14-

27 NOTES THE TO FINANCIAL STATEMENTS 8) SHORT-TERM DEBT The District has various options for short-term financing including tax anticipation notes, state aid anticipation notes and lines of credit. The District entered into no short-term financing arrangements during the fiscal year ended June 30, ) CAPITAL ASSETS Capital asset activity for the fiscal year ended June 30, 2010, was as follows: Balance Balance July 1, 2009 Additions Deductions June 30, 2010 GOVERNMENTAL ACTIVITIES Buildings and Improvements $38,225,278 $108,706 $0 $38,333,984 Land 1,122, ,122,900 Land Improvements 803, ,017 Equipment and Furniture 1,508,038 26, ,534,661 Vehicles 1,466, , ,350 1,500,276 Totals at Historical Cost $43,125,464 $311,724 $142,350 $43,294,838 Less: Accumulated Depreciation Buildings and Improvements (11,954,687) (774,291) 0 (12,728,978) Equipment and Furniture (858,538) (93,501) 0 (952,039) Land Improvements (100,751) (40,151) 0 (140,902) Vehicles (954,531) (108,958) (142,350) (921,139) Total Accumulated Depreciation ($13,868,507) ($1,016,901) ($142,350) ($14,743,058) GOVERNMENTAL ACTIVITIES CAPITAL ASSETS - NET $29,256,957 ($705,177) $0 $28,551,780 Depreciation expense, when appropriate, was allocated to governmental functions. Depreciation expense that was not allocated appears on the statement of activities as unallocated. Depreciation was recorded on the statement of activities as follows: Instruction $ 71,859 Support Services 120,112 Food Service 20,824 Athletics 55,217 Unallocated 748,889 TOTAL DEPRECIATION EXPENSE $ 1,016,901 Investment in capital assets net of related debt consists of the following: Capital Assets $ 43,294,838 Less: Accumulated Depreciation (14,743,058) Less: Long-Term Liabilities (27,736,806) Add: Severance Package 313,898 Add: Compensated Absences 445,565 TOTAL $ 1,574,

28 NOTES THE TO FINANCIAL STATEMENTS 10) SELF INSURANCE POOL The School District participates in a public entity risk pool (self-insurance pool) for its workers' compensation, property and casualty, general liability, and boiler insurance. The pool is through the MASB/SET/SEG and is administered by Corporate Services. The pool provides for reinsurance by various insurance companies at various levels, depending on the coverage. Should the pool experience significant losses in the aggregate, the School District may be required to pay additional monies to the pool. At present, the MASB/SET/SEG has not required additional funds, but rather has issued refunds based on experience gains over experience losses over the last few years. Premiums for the year ended June 30, 2010 were $83,269 and the School District received a dividend refund of $20, ) LONG-TERM LIABILITIES A) BOND ISSUES 1998 Durant Resolution Package Bonds Imlay City Community Schools issued Durant Resolution Bonds on November 24, 1998 in the amount of $325,344 at the interest rate of %. The bonds are a legal obligation of the school district but the annual State of Michigan appropriation is the only revenue source for making the annual debt service payments on the bonds. If the legislature fails to appropriate the bonds, the district is under no obligation for payment. The balance at June 30, 2010 was $62, General Obligation Building & Site Bonds Imlay City Community Schools has issued General Obligation Bonds dated September 1, 2003, in the amount of $7,635,000, bearing interest at rates varying from 2.00% to 5.00% per annum. The balance of the bonds as of June 30, 2010 was $970, Refunding Bonds On March 8, 2006, Imlay City Community Schools issued $22,125,000 in General Obligation Unlimited Tax Bonds with an average interest rates ranging from of 3.75% to 4.75%. The District issued the bonds to advance refund $15,755,000 of the outstanding 1994 Bond Issue with an interest rate of 4.90% to 5.40% and $7,370,000 of the outstanding 1997 Bond Issue with an interest rate of 5.0% to 5.7%. The net proceeds were deposited with an escrow agent and used to purchase U.S. Government Securities. These securities will provide for all of the future debt service on the 1994 and 1997 Bonds. As a result the 1994 and 1997 Bond Issues are considered defeased and the District has removed the liability from its accounts. The balance of the bonds at June 30, 2010 was $18,875, Refunding Bonds On March 9, 2007, Imlay City Community Schools issued $5,835,000 in General Obligation Unlimited Tax Bonds with an average interest rates ranging from of 4% to 5%. The District issued the bonds to advance refund $5,600,000 of the outstanding 1993 Bond Issue with an interest rate of 2% to 5.%. The net proceeds were deposited with an escrow agent and used to purchase U.S. Government Securities. These securities will provide for all of the future debt service on the 2003 Bonds. As a result the 2003 Bond Issues are considered defeased and the District has removed the liability from its accounts. The advanced refunding was done in order to reduce debt payments. The balance of the bonds at June 30, 2010 was $5,805,000. B) INSTALLMENT CONTRACTS The District is indebted on a land contract payable to National City Bank for the purchase of vacant land. The land contract calls for an annual payment of $79,834, including interest at 3.94% per annum. The balance at June 30, 2010 was $355,424. The District is indebted on a installment contract to Tri County Bank for the purchase of five 71 passenger school buses. The installment contract calls for 5 annual payments of $78,566, including interest at 3.90% per annum and matures in September, The balance at June 30, 2010 was $218,

29 NOTES THE TO FINANCIAL STATEMENTS 11) LONG-TERM LIABILITIES (Continued) C) TEACHER SEVERANCE PACKAGE Imlay City Community Schools has approved a severance package payable for 9 teachers. The package requires annual payments of $140,184 for a period of three years. The balance at the end of June 30, 2010 was $313,898. D) CHANGES IN GENERAL LONG-TERM DEBT Balance Balance Amount Due Governmental Activities: July 1, 2009 Additions Deductions June 30, 2010 in One Year Bond Issues $26,963,997 $0 $1,151,503 $25,812,494 $1,274,871 Unamortized Premium 760, , ,987 69,098 Installment Contracts 704, , , ,681 Severance Package 464, , , ,993 Compensated Absences 562, , ,565 0 Total Governmental Activities $29,455,866 $0 $1,619,060 $27,836,806 $1,635,643 E) PRINCIPAL REPAYMENT SCHEDULES BY FISCAL YEARS ARE AS FOLLOWS: Bonds Severance Unamortized Installment Payable Package Premium Contracts Interest Total June 30, ,274, ,993 69, ,681 1,202,165 2,837,808 June 30, ,400, ,993 69, ,003 1,149,169 2,916,079 June 30, ,546, , ,599 1,076,179 2,839,066 June 30, ,680, ,098 73, ,644 2,818,944 June 30, ,845, ,098 76, ,097 2,902,338 June 30, ,210, , ,066,160 14,622,420 June 30, ,875, ,198 4,772,198 June 30, ,970, ,434 2,409,434 June 30, , , ,064 TOTAL $25,712,494 $313,898 $690,987 $573,862 $9,794,110 $37,085,351 The payment dates of compensated absences is undeterminable. The interest expenditures on long-term obligations for the year were $1,288,

30 NOTES THE TO FINANCIAL STATEMENTS 12) OPERATING LEASES The District currently leases copier machines and a postage machine. The District pays a monthly rate plus a rate per copy. The minimum monthly payments and maturity dates are as follows: Monthly Payment Maturity Date Copier Borland Elementary $615 May 27, 2013 Copier Weston Elementary 615 May 27, 2013 Copier High School 615 May 27, 2013 Copier Middle School 615 May 27, 2013 Copier Administration 328 May 27, 2013 Copier Venture 350 May 27, 2013 Copier High School Counsel 232 May 27, 2013 Copier Athletics 232 May 27, 2013 Postage Machine 824 October, 2011 Folder/Stuffer 307 February, 2012 Future maturities are as follows: 2011 $ 46, , ,072 TOTAL $ 106,152 13) INTERFUND ACTIVITY Interfund balances at June 30, 2010 consisted of the following: DUE FROM DUE TO General Fund Food Service $67,910 Athletics 72,393 TOTAL $140,303 These balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting systems, and (3) payments between funds are made. 14) INTERFUND TRANSFERS Interfund transfers for the year ended June 30, 2010, consisted of the following: TRANSFERS T TRANSFERS FROM General Fund Athletics $300,598 These transfers were made to subsidize the cost of services for athletics. -18-

31 NOTES THE TO FINANCIAL STATEMENTS 15) DEFINED BENEFIT PENSION PLAN Plan Description The School District participates in the Michigan Public School Employees Retirement System (MPSERS), a statewide, cost-sharing, multiple-employer defined benefit public employee retirement system governed by the State of Michigan that covers substantially all employees of the School District. The MPSERS provides retirement, survivor and disability benefits to plan members and their beneficiaries. The MPSERS issues a publicly available financial report that includes financial statements and required supplementary information for the MPSERS. That report may be obtained by writing to the MPSERS at 7150 Harris Drive, PO Box 30673, Lansing, MI Funding Policy Employer contributions to the MPSERS result from the implementing effects of the School Finance Reform Act. Under these procedures, each school district is required to contribute the full actuarial funding contribution amount to fund pension benefits, plus an additional amount to fund retiree health care benefit amounts on a cash disbursement basis. The pension benefit rate totals percent for the period July 1, 2009 through September 30, 2009 and percent for the period October 1, 2009 through June 30, 2010 of the covered payroll to the plan. Basic plan members make no contributions. Member Investment Plan (MIP) members contribute at rates ranging from 3 percent to 4.3 percent of gross wages. Fixed MIP members contribute 3.9 percent of gross wages. MIP-Plus members contribute at rates ranging from 3 percent to 6.4 percent of gross wages. The School District s contributions to the MPSERS pension plan for the years ended June 30, 2010, 2009 and 2008 were $1,790,153, $1,809,660 and $1,824,058, respectively. Postemployment Benefits Under the MPSERS Act, all retirees participating in the MPSERS pension plan have the option of continuing health, dental and vision coverage. Retirees having these coverages contribute an amount equivalent to the monthly cost for Part B Medicare and 10 percent of the monthly premium amount for the health, dental and vision coverages. Required contributions for postemployment health care benefits are included as part of the School District s total contribution to the MPSERS pension plan discussed above. 16) RISK MANAGEMENT The District is exposed to various risks of loss in conducing its operations, from property and casualty theft, damage to various tort and liability claims and workman s compensation claims. The District limits its exposure to such claims through its participation in and payments of premiums to SET-SEG, Inc. Insurance Trust. This pool maintains a loss fund and is also required by the terms of the participation agreement to obtain insurance and reinsurance as necessary. The terms of the participation agreement with the pool indicate that, should losses of the pool incurred in a given coverage period exceed the loss fund and the aggregate excess reinsurance, the fund may access its member districts on a pro-rata basis to cover excess losses. In past years the loss fund has exceeded the amount necessary to maintain prudent loss reserves, resulting in annual premium refunds to member districts. The District s management believes that participation in this pool provides sufficient coverage to protect the District from any significant adverse financial impact. 17) CONTINGENCIES AND COMMITMENTS The District participates in a number of federally assisted grant programs. These programs are subject to program compliance audits. The audit of these programs for and including the year ended June 30, 2010, have been conducted and has been reported in this audit report. However, the compliance audit reports have not yet been accepted by the grantors. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time; although the District expects such amounts, if any, to be immaterial. 18) SUBSEQUENT EVENTS Management has evaluated subsequent events through September 16, 2010, the date on which the financial statements were available to be issued. -19-

32 OTHER SUPPLEMENTAL INFORMATION

33 COMBINING BALANCE SHEET - OTHER GOVERNMENTAL FUNDS AS OF JUNE 30, 2010 Total School Debt Other Service Retirement Governmental Funds Funds Funds ASSETS Cash and Cash Equivalents $555,266 $0 $555,266 Accounts Receivable 2, ,507 Due from Other Governmental Units 6, ,406 Inventory 9, ,309 TOTAL ASSETS $573,488 $0 $573,488 LIABILITIES Accounts Payable $17,864 $0 $17,864 Due to Other Governmental Units 13, ,900 Due to Other Funds 140, ,303 Salaries Payable 3, ,340 Accrued Expenses Deferred Revenue 5, ,540 Total Liabilities $181,560 $0 $181,560 FUND BALANCES Unreserved: Undesignated, Reported In: Special Revenue Funds 391, ,928 Total Fund Balances $391,928 $0 $391,928 TOTAL LIABILITIES AND FUND BALANCES $573,488 $0 $573,

34 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS Total School Debt Other Service Retirement Governmental Funds Funds Funds REVENUES Local Sources $353,529 $0 $353,529 State Sources 35, , ,723 Federal Sources 753, ,156 Total Revenues $1,141,905 $153,503 $1,295,408 OTHER FINANCING SOURCES (USES) Transfers from Other Funds 300,598 2,147,093 2,447,691 Total Revenues & Other Financing Sources $1,442,503 $2,300,596 $3,743,099 EXPENDITURES School Service 1,390, ,390,368 Debt Retirement 0 2,300,596 2,300,596 Total Expenditures $1,390,368 $2,300,596 $3,690,964 Net Change in Fund Balance $52,135 $0 $52,135 NET ASSETS - BEGINNING 339, ,793 NET ASSETS - ENDING $391,928 $0 $391,

35 COMBINING BALANCE SHEET SCHOOL SERVICE FUNDS AS OF JUNE 30, 2010 Food Athletic Service Activities Total ASSETS Cash and Cash Equivalents $465,665 $89,601 $555,266 Accounts Receivable 2, ,507 Due from Other Governmental Units 6, ,406 Inventory 9, ,309 TOTAL ASSETS $483,887 $89,601 $573,488 LIABILITIES Accounts Payable $17,825 $39 $17,864 Due to Other Governmental Units 0 13,900 13,900 Due to Other Funds 67,910 72, ,303 Salaries Payable 1,230 2,110 3,340 Accrued Expenses Deferred Revenue 4, ,540 Total Liabilities $91,959 $89,601 $181,560 FUND EQUITY Fund Balance - Reserved for Inventory 9, ,309 Fund Balance - Unreserved and Undesignated 382, ,619 Total Fund Equity $391,928 $0 $391,928 TOTAL LIABILITIES AND FUND EQUITY $483,887 $89,601 $573,

36 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE SCHOOL SERVICE FUNDS Food Athletic Service Activities Total REVENUES Local Sources Cafeteria Sales $257,027 $0 $257,027 Athletic Activities 0 50,218 50,218 Earnings on Investments 4, ,505 Other Local Revenue 1,740 40,039 41,779 Total Local Sources $262,874 $90,655 $353,529 State Sources State Reimbursements 35, ,220 Federal Sources Federal Reimbursements 753, ,156 Total Revenues $1,051,250 $90,655 $1,141,905 OTHER FINANCING SOURCES Transfers from General Fund 0 300, ,598 Total Revenues and Other Financing Sources $1,051,250 $391,253 $1,442,503 EXPENDITURES Salaries - Professional 44, ,478 Salaries - Non-Professional 251,439 65, ,296 Insurances 41, ,477 Fica, Retirement, Etc. 72,286 30, ,435 Other Benefits 1,800 1,800 3,600 Purchased Services 14, , ,335 Supplies and Materials 442,506 19, ,582 Capital Outlay 59,728 1,411 61,139 Other 70,671 10,355 81,026 Total Expenditures $999,115 $391,253 $1,390,368 EXCESS REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES $52,135 $0 $52,135 FUND BALANCE - BEGINNING OF YEAR $339,793 $0 $339,793 FUND BALANCE - END OF YEAR $391,928 $0 $391,

37 COMBINING BALANCE SHEET DEBT RETIREMENT FUNDS Durant Debt Debt Debt Total ASSETS Cash and Cash Equivalents $0 $0 $0 $0 TOTAL ASSETS $0 $0 $0 $0 FUND EQUITY Reserved - Debt Retirement $0 $0 $0 $0-24-

38 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE DEBT RETIREMENT FUNDS Durant Debt Debt Debt Total REVENUES State Sources $153,503 $0 $0 $153,503 OTHER FINANCING SOURCES Transfer from Other Debt Funds 0 1,895, ,243 2,147,093 Total Revenues and Other Financing Sources $153,503 $1,895,850 $251,243 $2,300,596 EXPENDITURES Redemption of Bond Principal 111, ,000 10,000 1,081,503 Interest on Bonded Debt 42, , ,693 1,218,318 Dues and Fees Total Expenditures $153,503 $1,895,850 $251,243 $2,300,596 EXCESS REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES $0 $0 $0 $0 FUND BALANCE - BEGINNING OF YEAR $0 $0 $0 $0 FUND BALANCE - END OF YEAR $0 $0 $0 $0-25-

39 INDIVIDUAL FUND SCHEDULES OF REVENUES, EXPENDITURES AND OTHER FINANCING USES

40 SCHEDULE 1 GENERAL FUND SCHEDULE OF REVENUES AND OTHER FINANCING SOURCES - BUDGET AND ACTUAL BUDGET ACTUAL VARIANCE REVENUES FROM Local Sources Property Tax Levy $2,023,056 $2,040,688 $17,632 Earnings on Investments and Deposits 7,475 7, Tuition 13,500 15,294 1,794 Preschool 18,000 15,149 (2,851) Child Care & Latchkey 22,000 26,150 4,150 Transportation 14,000 14, Rentals 27,000 32,745 5,745 Medicaid Reimbursement 68,500 71,180 2,680 Other Local Revenues 25,732 29,977 4,245 Total Revenues from Local Sources $2,219,263 $2,253,374 $34,111 State Sources Unrestricted State Aid Sec ,270,211 13,297,707 27,496 Special Education 643, ,524 0 Adult Education 9,568 9, Preschool 108, ,800 0 Bilingual Program 12,693 12,693 0 At Risk Sec. 31a 423, ,758 (242) Total Revenues from State Sources $14,467,796 $14,495,150 $27,354 Federal Sources Title I 368, ,557 9,451 AARA 646, ,572 0 Migrant Programs 153, ,147 0 Technology Literacy Grant 5,070 3,803 (1,267) Improving Teacher Quality 105,645 63,557 (42,088) English Language Acquisition Grants 39,951 33,461 (6,490) IDEA Special Education 266, ,878 0 Preschool 23,940 23,940 0 Medicaid Outreach Administrative Claims 25,600 22,811 (2,789) Total Revenues from Federal Sources $1,634,909 $1,591,726 ($43,183) Total Revenues $18,321,968 $18,340,250 $18,

41 GENERAL FUND SCHEDULE OF REVENUES AND OTHER FINANCING SOURCES - BUDGET AND ACTUAL SCHEDULE 1 (Continued) BUDGET ACTUAL VARIANCE OTHER FINANCING SOURCES Transfers from Other Districts $80,084 $89,884 $9,800 Other Transfers 82,889 88,035 5,146 Reimbursements - Insurance Claims 8,321 8,321 0 Total Other Financing Sources $171,294 $186,240 $14,946 TOTAL REVENUES AND OTHER FINANCING SOURCES $18,493,262 $18,526,490 $33,

42 GENERAL FUND SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES - BUDGET AND ACTUAL SCHEDULE 2 INSTRUCTION BUDGET ACTUAL VARIANCE BASIC PROGRAMS Weston - Elementary Salaries - Professional $1,341,986 $1,338,181 $3,805 Salaries - Non-Professional 27,800 26,712 1,088 Insurances 324, ,396 (3,524) Fica, Retirement, Etc. 336, ,415 2,073 Other Benefits 44,336 44,336 0 Purchased Services 20,645 21,292 (647) Supplies and Materials 64,604 63,360 1,244 Capital Outlay 33,200 33,200 0 Other (52) Total Weston - Elementary $2,194,079 $2,190,092 $3,987 Borland - Elementary Salaries - Professional 1,468,950 1,470,184 (1,234) Salaries - Non-Professional 12,750 12, Insurances 276, ,089 10,636 Fica, Retirement, Etc. 363, , Other Benefits 5,400 5,400 0 Purchased Services 30,098 26,994 3,104 Supplies and Materials 64,264 62,437 1,827 Capital Outlay 29,903 29, Other Total Borland - Elementary $2,251,999 $2,236,068 $15,931 Middle School Salaries - Professional 1,230,000 1,230,448 (448) Salaries - Non-Professional 18,350 16,938 1,412 Insurances 236, ,579 12,328 Fica, Retirement, Etc. 305, , Other Benefits 14,327 14,326 1 Purchased Services 67,096 74,125 (7,029) Supplies and Materials 69,950 61,043 8,907 Capital Outlay 35,710 45,498 (9,788) Other (695) Total Middle School $1,977,919 $1,972,494 $5,425 High School Salaries - Professional 1,567,147 1,566, Salaries - Non-Professional 36,185 33,169 3,016 Insurances 360, ,988 18,186 Fica, Retirement, Etc. 392, ,768 1,512 Other Benefits 30,453 30,453 0 Purchased Services 81,880 82,515 (635) Supplies and Materials 104,385 97,187 7,198 Capital Outlay 18,271 16,818 1,453 Other 4,680 1,258 3,422 Total High School $2,595,455 $2,560,716 $34,

43 SCHEDULE 2 (Continued) GENERAL FUND SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES - BUDGET AND ACTUAL INSTRUCTION (Continued) BUDGET ACTUAL VARIANCE Preschool - Borland Elementary Salaries - Professional $10,250 $10,087 $163 Salaries - Non-Professional 7,000 6, Fica, Retirement, Etc. 4,270 4, Purchased Services (10) Supplies and Materials 1, Other Total Preschool - Borland Elementary $22,735 $20,785 $1,950 Summer School - Venture Salaries - Professional 1,120 1,120 0 Fica, Retirement, Etc Total Summer School - Venture $1,392 $1,391 $1 Adult Education Other 17,600 16,254 1,346 Total Adult Education $17,600 $16,254 $1,346 Total Basic Programs $9,061,179 $8,997,800 $63,379 ADDED NEEDS Special Education Salaries - Professional 441, , Salaries - Non-Professional 91,468 87,086 4,382 Insurances 122, ,196 11,074 Fica, Retirement, Etc. 131, ,420 (2,352) Other Benefits 32,254 32,252 2 Purchased Services 11,576 8,332 3,244 Supplies and Materials 33,364 31,842 1,522 Capital Outlay 69,807 69, Other 43,848 82,247 (38,399) Total Special Education $977,372 $996,883 ($19,511) Compensatory Education Salaries - Professional 403, ,670 8,187 Salaries - Non-Professional 249, ,527 1,945 Insurances 109, ,220 (937) Fica, Retirement, Etc. 160, ,992 2,778 Other Benefits 4,260 4, Purchased Services 21,058 20, Supplies and Materials 41,848 38,365 3,483 Capital Outlay 7,300 7,322 (22) Other Total Compensatory Education $998,713 $981,841 $16,872 Total Added Needs $1,976,085 $1,978,724 ($2,640) Total Instruction $11,037,264 $10,976,524 $60,

44 SCHEDULE 2 (Continued) GENERAL FUND SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES - BUDGET AND ACTUAL BUDGET ACTUAL VARIANCE SUPPORT SERVICES STUDENT SERVICES Salaries - Professional $718,111 $719,958 ($1,847) Salaries - Non-Professional 111, ,171 (896) Insurances 141, ,612 2,051 Fica, Retirement, Etc. 202, ,214 (7,371) Other Benefits 18,017 18,016 1 Purchased Services 21,491 18,138 3,353 Supplies and Materials 17,622 13,276 4,346 Capital Outlay 4,562 4,562 0 Other 4,890 2,891 1,999 Total Student Services $1,240,474 $1,238,838 $1,636 INSTRUCTIONAL STAFF Salaries - Professional 166, , Salaries - Non-Professional 112, , Insurances 52,144 50,791 1,353 Fica, Retirement, Etc. 66,390 63,803 2,587 Other Benefits 15,738 15,737 1 Purchased Services 70,874 49,496 21,378 Supplies and Materials 17,557 7,471 10,086 Capital Outlay 3, ,467 Other 142, ,699 5,475 Total Instructional Staff $646,627 $603,106 $43,521 GENERAL ADMINISTRATION Salaries - Professional 125, ,701 0 Salaries - Non-Professional 53,755 54,651 (896) Insurances 34,808 35,109 (301) Fica, Retirement, Etc. 43,287 41,849 1,438 Purchased Services 66,755 60,975 5,780 Supplies and Materials 6,938 3,627 3,311 Capital Outlay 2,451 2, Other 15,500 12,077 3,423 Total General Administration $349,195 $336,190 $13,

45 SCHEDULE 2 (Continued) GENERAL FUND SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES - BUDGET AND ACTUAL SUPPORT SERVICES (Continued) BUDGET ACTUAL VARIANCE SCHOOL ADMINISTRATION Salaries - Professional $644,078 $641,308 $2,770 Salaries - Non-Professional 262, , Insurances 204, ,323 15,847 Fica, Retirement, Etc. 221, ,364 2,638 Other Benefits 18,585 7,100 11,485 Purchased Services 76,508 71,654 4,854 Supplies and Materials 24,659 13,191 11,468 Capital Outlay 9,500 1,601 7,899 Other 14,429 13,402 1,027 Total School Administration $1,475,735 $1,416,813 $58,922 BUSINESS OFFICE Salaries - Professional 55,825 55, Salaries - Non-Professional 1,455 1,667 (212) Insurances 18,907 18, Fica, Retirement, Etc. 65,731 63,264 2,467 Purchased Services 9,100 7,923 1,177 Supplies and Materials 3,340 2, Capital Outlay 2, ,117 Other 113, ,067 (24,891) Total Business Office $269,534 $288,355 ($18,821) OPERATION AND MAINTENANCE OF PLANT Salaries - Professional 31,399 31,814 (415) Salaries - Non-Professional 455, ,552 3,998 Insurances 146, , Fica, Retirement, Etc. 119, ,295 1,480 Other Benefits 6,300 6,300 0 Purchased Services 369, ,651 1,418 Supplies and Materials 573, ,418 47,614 Capital Outlay 38,452 36,810 1,642 Other 1, ,312 Total Operation and Maintenance of Plant $1,741,698 $1,683,928 $57,

46 SCHEDULE 2 (Continued) GENERAL FUND SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES - BUDGET AND ACTUAL SUPPORT SERVICES (Continued) BUDGET ACTUAL VARIANCE TRANSPORTATION Salaries - Professional $32,637 $31,399 $1,238 Salaries - Non-Professional 535, ,862 10,514 Insurances 220, ,903 13,571 Fica, Retirement, Etc. 139, ,630 2,971 Other Benefits 9,900 9,900 0 Purchased Services 51,873 43,795 8,078 Supplies and Materials 236, ,178 53,127 Capital Outlay 174, ,450 (1,650) Other 2,260 1, Total Transportation $1,403,226 $1,314,755 $88,471 OTHER SUPPORT SERVICES Salaries - Professional 75,449 72,210 3,239 Salaries - Non-Professional 29,821 30,330 (509) Insurances 20,966 18,311 2,655 Fica, Retirement, Etc. 25,882 28,050 (2,168) Purchased Services 24,616 25,056 (440) Supplies and Materials 5,800 3,250 2,550 Capital Outlay 4,000 1,597 2,403 Other 55,650 57,984 (2,334) Total Other Support Services $242,184 $236,788 $5,396 Total Support Services $7,368,673 $7,118,773 $249,900 COMMUNITY SERVICES Salaries - Non-Professional 19,300 19, Insurances 1,953 2,202 (249) Fica, Retirement, Etc. 4,746 4, Purchased Services 16,802 13,194 3,608 Supplies and Materials 2,360 1, Other 2,407 3,114 (707) Total Community Services $47,568 $44,027 $3,541 TOTAL EXPENDITURES $18,453,504 $18,139,324 $314,180 OTHER FINANCING USES Other Transfers 15,260 12,309 2,951 Site Improvements 265, ,375 25,070 Loan Payments 158, ,398 1 Transfers to Other Funds 316, ,598 16,265 TOTAL OTHER FINANCING USES $755,967 $711,680 $44,287 TOTAL EXPENDITURES AND OTHER FINANCING USES $19,209,471 $18,851,004 $358,

47 SCHEDULE 3 TRUST AND AGENCY FUND SCHEDULE OF RECEIPTS AND DISBURSEMENTS - STUDENT ACTIVITIES Due to (From) Due to (From) Student Groups Student Groups Student Activity July 1, 2009 Receipts Disbursements June 30, 2010 Art $1,956 $1,063 $573 $2,446 Athletic Administration Athletic Pop Fund 3,444 4,217 1,972 5,689 Baseball Baseball Field Beverage Consortium 1, Borland Art Borland BLT Borland General 15,769 26,217 30,956 11,030 Borland Student Council Boys Golf Bus Garage/Transportation 997 1, ,230 Chester Marcol Scholarship Class of Class of ,180 1,643 2, Class of ,292 17,921 15,643 3,570 Class of ,255 1, Class of Counseling Scholarships 1,617 16,405 16,800 1,222 Devin Faden Memorial 4, ,699 Drama Club 2, ,017 Early Childhood Programs 703 1,311 1, Eric Thuma Fund Football 2,309 5,820 7, French Club Girls Soccer Girls Softball 713 2,219 1,666 1,266 Girls Tennis Girls Track Golf 1,733 1,336 1,357 1,712 HS Athletic Program 1, ,130 HS Band 1,657 14,033 14,650 1,040 HS Cheerleading 155 4,362 3, HS Counseling 2,643 3,807 3,739 2,711 HS Field Trip HS Library HS Pop/Gift Fund 157 1, HS Science Club HS Student Council 3,727 2,865 5,426 1,166 HS Yearbook ,318 26,595 1,204 IC Alumni Football Game 1, ,905 IC Girls Basketball 87 4,267 3, IC New Field Signs ICCS Alumni Assoc. 1, ICCS Choir 7, ,394 Subtotal $66,315 $144,230 $148,123 $62,

48 TRUST AND AGENCY FUND SCHEDULE OF RECEIPTS AND DISBURSEMENTS - STUDENT ACTIVITIES SCHEDULE 3 (Continued) Due to (From) Due to (From) Student Groups Student Groups Student Activity July 1, 2009 Receipts Disbursements June 30, 2010 In & Out $0 $90,936 $90,853 $83 JV Cheer 0 1, Little League B-Ball ,274 12,013 3,378 Morgan's Xmas Service 0 3,145 3,145 0 MS Cheerleading 1,396 1,615 3,011 0 MS Class Trip 2,087 31,423 32,001 1,509 MS Donations MS Enrichment 3, ,834 MS General 4,951 14,430 14,558 4,823 MS Language Arts 671 1,737 2, MS Library 826 4,089 3,661 1,254 MS Pop 1, ,891 MS Student Council 3,324 4,433 2,394 5,363 MS Wrestling MS Yearbook 1, , NHS 2,887 2,016 2,483 2,420 Quiz Bowl Readiness SADD Ski Club 600 1,885 1, Spanish Club 118 1,067 1, Spartan Voice 1, ,670 Sr High General 1,832 3,959 4, Summer Sports Camp Tennis Venture High School 15,814 8,219 19,586 4,447 Volleyball 4,480 3,677 3,903 4,254 Weston Art 0 2, ,959 Weston General 5,305 8,325 12, Weston Library Weston Pop 4, ,009 3,039 Wrestling 2,831 2, ,957 TOTALS $128,299 $350,632 $366,145 $112,

49 SCHEDULE 4 SCHEDULE OF BOND PRINCIPAL AND INTEREST REQUIREMENTS AS OF JUNE 30, DURANT RESOLUTION PACKAGE BONDS DATE OF ISSUE - November 24, 1998 Original amount of issue - $325,344 INTEREST INTEREST PRINCIPAL TOTAL REQUIREMENT RATE REQUIREMENT REQUIREMENT PAYMENT DATE - MAY 15TH 2011 $2, % $19,871 $22, , % 20,816 22, , % 21,807 22,845 TOTAL $6,043 $62,494 $68, GENERAL OBLIGATION BUILDING & SITE BONDS DATE OF ISSUE - September 1, 2003 Original amount of issue - $7,635,000 INTEREST INTEREST AMOUNT AMOUNT PRINCIPAL TOTAL PAYMENT DATE NOVEMBER 1 MAY 1 RATE REQUIREMENT REQUIREMENT $18,278 $18, % $180,000 $216, ,083 15, % 185, , ,706 11, % 195, , ,050 8, % 200, , ,200 4, % 210, ,400 TOTAL $57,317 $57,315 $970,000 $1,084, REFUNDING BONDS DATE OF ISSUE - March 8, 2006 Original amount of issue - $22,125,000 INTEREST INTEREST AMOUNT AMOUNT PRINCIPAL TOTAL PAYMENT DATE NOVEMBER 1 MAY 1 RATE REQUIREMENT REQUIREMENT $449,813 $449, % $1,065,000 $1,964, , , % 1,185,000 2,044, , , % 1,320,000 2,120, , , % 1,470,000 2,204, , , % 1,625,000 2,285, , , % 1,790,000 2,373, , , % 1,890,000 2,384, , , % 1,990,000 2,389, , , % 2,080,000 2,380, , , % 2,175,000 2,386, ,269 54, % 2,285,000 2,393,538 TOTAL $3,026,757 $3,026,756 $18,875,000 $24,928,

50 SCHEDULE 4 (Continued) SCHEDULE OF BOND PRINCIPAL AND INTEREST REQUIREMENTS AS OF JUNE 30, GENERAL OBLIGATION REFUNDING BONDS DATE OF ISSUE - May 9, 2007 Original amount of issue - $5,835,000 INTEREST INTEREST AMOUNT AMOUNT PRINCIPAL TOTAL PAYMENT DATE NOVEMBER 1 MAY 1 RATE REQUIREMENT REQUIREMENT $120,146 $120, % $10,000 $250, , , % 10, , , , % 10, , , , % 10, , , , % 10, , , , % 235, , , , % 245, , , , % 260, , , , % 265, , ,646 96, % 280, , ,046 91, % 290, , ,246 85, % 305, , ,146 79, % 320, , ,746 72, % 330, , ,146 66, % 345, , ,246 59, % 360, , ,046 52, % 375, , ,359 44, % 395, , ,261 36, % 410, , ,805 27, % 430, , ,883 18, % 445, , ,649 9, % 465, ,298 TOTAL $1,779,464 $1,779,464 $5,805,000 $9,363,

51 IMLAY CITY COMMUNITY SCHOOLS IMLAY CITY, MICHIGAN FEDERAL AWARDS SUPPLEMENTAL INFORMATION

52 CONTENTS PAGE 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 1 2 Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A Schedule of Expenditures of Federal Awards for the year ended June 30, Notes/Reconciliation to the Schedule of Expenditures of Federal Awards for the year ended June 30, Reconciliation of Form R7120 "Grant Section Auditor's Report" to the Schedule of Expenditures of Federal Awards for the year ended June 30, Summary of Findings and Questioned Costs for the year ended June 30,

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