Annual Financial Report for the Fiscal Year Ended June 30, 2012

Transcription

1 COOLIDGE UNIFIED SCHOOL DISTRICT NO. 21 Comprehensive Annual Financial Report Annual Financial Report for the Fiscal Year Ended June 30, 2012 for the Fiscal Year Ended June 30, North Arizona Boulevard Coolidge, AZ 85128

2 COOLIDGE, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2012 Issued by: Business Services Department

3 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal ASBO Certificate of Excellence GFOA Certificate of Achievement Organizational Chart List of Principal Officials Page i v vi vii viii FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT 1 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information) 5 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements: Statement of Net Assets 18 Statement of Activities 19 Fund Financial Statements: Balance Sheet Governmental Funds 22 Reconciliation of the Balance Sheet Governmental Funds to the Statement of Net Assets 25 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds 26 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds to the Statement of Activities 28 Statement of Fiduciary Assets and Liabilities 29 Notes to Financial Statements 30

4 TABLE OF CONTENTS (Cont d) FINANCIAL SECTION (Cont d) Page SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL (Required Supplementary Information) General Fund 48 Title I Grants Fund 49 Note to Required Supplementary Information 50 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Governmental Funds: Combining Balance Sheet All Non-Major Governmental Funds By Fund Type 54 Combining Statement of Revenues, Expenditures and Changes in Fund Balances All Non-Major Governmental Funds By Fund Type 55 Special Revenue Funds: Combining Balance Sheet 58 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 64 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual 70 Debt Service Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual 90 Capital Projects Funds: Combining Balance Sheet 92 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 94

5 TABLE OF CONTENTS (Cont d) FINANCIAL SECTION (Concl d) Page COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES (Concl d) Combining Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual 96 Agency Funds: Combining Statement of Fiduciary Assets and Liabilities 104 Combining Statement of Changes in Fiduciary Assets and Liabilities 105 STATISTICAL SECTION Financial Trends: Net Assets by Component 109 Expenses, Program Revenues, and Net (Expense)/Revenue 110 General Revenues and Total Changes in Net Assets 112 Fund Balances Governmental Funds 114 Governmental Funds Revenues 116 Governmental Funds Expenditures and Debt Service Ratio 118 Other Financing Sources and Uses and Net Changes in Fund Balances Governmental Funds 120 Revenue Capacity: Assessed Value and Estimated Actual Value of Taxable Property 121 Direct and Overlapping Property Tax Rates 122 Principal Property Taxpayers 123 Property Tax Levies and Collections 124

6 TABLE OF CONTENTS (Concl d) STATISTICAL SECTION (Concl d) Page Debt Capacity: Outstanding Debt by Type 125 Direct and Overlapping Governmental Activities Debt 126 Legal Debt Margin Information 127 Demographic and Economic Information: County-Wide Demographic and Economic Statistics 128 Principal Employers 129 Operating Information: Full-Time Equivalent District Employees by Type 130 Operating Statistics 132 Capital Assets Information 133

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8 INTRODUCTORY SECTION

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10 Governing Board Kristi Freader President Thomas Shope Jr. Vice President Thomas Bagnall Member Lisa Garrett Member Superintendent Dr. Cecilia E. Johnson District Office 450 N. Arizona Boulevard Coolidge, Arizona (Phone) (Fax) December 12, 2012 Citizens and Governing Board Coolidge Unified School District No N. Arizona Blvd. Coolidge, AZ State law mandates that school districts required to undergo an annual single audit publish a complete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America and audited in accordance with auditing standards generally accepted in the United States by a certified public accounting firm licensed in the State of Arizona. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of the Coolidge Unified School District No. 21 (District) for the fiscal year ended June 30, This report consists of management s representations concerning the finances of the District. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the District has established a comprehensive internal control framework that is designed both to protect the District s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the District s financial statements in conformity with accounting principles generally accepted in the United States of America. Because the cost of internal controls should not outweigh their benefits, the District s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free of material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The District s financial statements have been audited by Heinfeld, Meech & Co., P.C., a certified public accounting firm. The goal of the independent audit was to provide reasonable assurance that the financial statements of the District for the fiscal year ended June 30, 2012, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation.

11 The independent auditors concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the District s financial statements for the fiscal year ended June 30, 2012, are fairly presented in conformity with accounting principles generally accepted in the United States of America. The independent auditors report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the District was part of a broader, federally mandated Single Audit as required by the provisions of the Single Audit Act Amendments of 1996 and U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the District s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in a separately issued Single Audit Reporting Package. Accounting principles generally accepted in the United States of America require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The District s MD&A can be found immediately following the report of the independent auditors. PROFILE OF THE DISTRICT The District is one of 19 public school districts located in Pinal County, Arizona. It provides a program of public education from preschool through grade 12. The average daily membership for fiscal year was 3,492. Projected enrollment for fiscal year is 3,758. The District s Governing Board is organized under Section of the Arizona Revised Statutes (A.R.S.). Management of the District is independent of other state or local governments. The County Treasurer collects taxes for the District, but exercises no control over its expenditures/expenses. The membership of the Governing Board consists of five members elected by the public. Under existing statutes, the Governing Board s duties and powers include, but are not limited to, the acquisition, maintenance and disposition of school property; the development and adoption of a school program; and the establishment, organization and operation of schools. The Board also has broad financial responsibilities, including the approval of the annual budget, and the establishment of a system of accounting and budgetary controls. The financial reporting entity consists of a primary government and its component units. A component unit is a legally separate entity that must be included in the reporting entity in conformity with generally accepted accounting principles. The District is a primary government because it is a special-purpose government that has a separately elected governing body, is legally separate, and is fiscally independent of other state or local governments. Furthermore, there are no component units combined with the District for financial statement presentation purposes, and the District is not included in any other governmental reporting entity. ii

12 Consequently, the District s financial statements include only the funds of those organizational entities for which its elected governing board is financially accountable. The District s major operations include education, student transportation, construction and maintenance of District facilities, food services, and athletic functions. The annual expenditure budget serves as the foundation for the District s financial planning and control. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual expenditure budget approved by the District s Governing Board. The expenditure budget is prepared by fund for all Governmental Funds, and includes function and object code detail for the General Fund and some Special Revenue and Capital Projects Funds. The legal level of budgetary control (that is, the level at which expenditures cannot exceed the appropriated amount) is established at the individual fund level for all funds. Funds that are not required to legally adopt a budget may have overexpenditures of budgeted funds. The budget for these funds is simply an estimate and does not prevent the District from exceeding the budget as long as the necessary revenue is earned. The District is not required to prepare an annual budget of revenue; therefore, a deficit budgeted fund balance may be presented. However, this does not affect the District s ability to expend monies. FACTORS AFFECTING FINANCIAL CONDITION The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the District operates. Local Economy. The Coolidge Unified School District was formed in In 1972 the Coolidge School District annexed the Kenilworth Elementary School District forming the District s current boundaries encompassing 269 square miles. The District s northern border is with the school districts of Chandler and Queen Creek. The District has a K-12 student population of approximately 3,492 students served by seven schools. The District also operates a preschool program. The City of Coolidge was founded in 1925 and incorporated in The City of Coolidge has rail service that is devoted to freight. It is located within central Arizona and within 40 minutes of the Phoenix Metropolitan area, one of the fastest growing regions in the U.S. Interstate 10 is approximately 15 miles from Coolidge and the highway carries a rapidly increasing amount of leisure and commercial traffic. The City of Coolidge owns the Coolidge Municipal Airport, which has a lighted, paved runway of 5,590 feet and a secondary runway of 3,750 feet. Phoenix Sky Harbor International Airport to the northwest and Williams Gateway to the north are within an hour of the community. The vibrant and growing City of Tucson is located one hour to the south of Coolidge. Coolidge is home to the Casa Grande Ruins National Monument that attracts over 170,000 annual visitors from around the world. The City of Coolidge has a major natural gas line that runs through the community providing excellent uninterruptible gas service. All basic services such as water, sewer, electricity and telephone services are available and are in good condition. Casa Grande and Chandler Regional Medical Centers are both approximately 30 minutes from the City of Coolidge, and a hospital in Florence is approximately 10 minutes away. Agriculture is still a part of the District with cotton being the main crop and an increasing number of dairy farms. The City has a 60-acre industrial park and the Gila River Indian Community has a 500-acre industrial park just north of the City. The District has ample land to support affordable growth in all areas. iii

13 Long-term Financial Planning. Due to the decline in new house construction and student enrollment, the long-term plans for new elementary and middle schools has been pushed farther out into the future. Current renovations are funded by the sale of bonds in prior years in the amount of just over 16.0 million and involve the demolition and construction of existing classrooms and administrative buildings. The average age of school buildings is 13.2 years. AWARDS AND ACKNOWLEDGMENT Awards. The Association of School Business Officials International (ASBO) awarded a Certificate of Excellence in Financial Reporting to the District for its comprehensive annual financial report for the fiscal year ended June 30, In addition, the Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the District for its comprehensive annual financial report for the fiscal year ended June 30, In order to be awarded these certificates, the District published an easily readable and efficiently organized comprehensive annual financial report. This report satisfied both accounting principles generally accepted in the United States of America and applicable legal requirements. These certificates are valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the programs requirements and we are submitting it to ASBO and GFOA to determine its eligibility for the fiscal year certificates. Acknowledgments. The preparation of the comprehensive annual financial report on a timely basis was made possible by the dedicated service of the entire staff of the business services department. Each member of the department has our sincere appreciation for the contributions made in the preparation of this report. In closing, without the leadership and support of the Governing Board of the District, preparation of this report would not have been possible. Respectfully submitted, Shalee Ziegler Director of Business Services iv

14 Association of School Business Officials International The Certificate of Excellence in Financial Reporting Award is presented to Coolidge Unified School District No. 21 For Its Comprehensive Annual Financial Report (CAFR) For the Fiscal Year Ended June 30, 2011 The CAFR has been reviewed and met or exceeded ASBO International s Certificate of Excellence standards Brian L. Mee, SFO, RSBA President John D. Musso, CAE, RSBA Executive Director v

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16 vii Coolidge Unified School District #21 - Organizational Chart

17 LIST OF PRINCIPAL OFFICIALS GOVERNING BOARD Kristi Freader President Thomas Shope, Jr. Vice President Thomas Bagnall Member Lisa Garrett Member Jack Malpass Member ADMINISTRATIVE STAFF Dr. Cecilia E. Johnson Superintendent Patricia Jimenez Assistant Superintendent Thomas Frost Director of Human Resources Katherine Minard Director of Special Services Shalee Ziegler Director of Business Services Steve Adolph, Principal San Tan Foothills High School Jessie Arroyos, Principal Heartland Ranch Elementary School Laurie Black, Principal San Tan Heights Elementary School Cheryl Sullivan, Principal Hohokam Middle School Gerald Streit, Principal West Elementary School Denise Taylor, Principal Mountain Vista Middle School Steve Wyble, Principal Coolidge High School viii

18 FINANCIAL SECTION

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20 3033 N. Central Ave., Suite 300 Phoenix, Arizona Tel (602) Fax (602) INDEPENDENT AUDITORS REPORT Governing Board Coolidge Unified School District No. 21 We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Coolidge Unified School District No. 21 (District), as of and for the year ended June 30, 2012, which collectively comprise the District s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the District s management. Our responsibility is to express opinions on these financial statements based on our audit. 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Coolidge Unified School District No. 21, as of June 30, 2012, and the respective changes in financial position thereof 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 December 12, 2012, on our consideration of the Coolidge Unified School District No. 21 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 assessing the results of our audit. TUCSON PHOENIX FLAGSTAFF ALBUQUERQUE

21 Accounting principles generally accepted in the United States of America require that the management s discussion and analysis on pages 5 through 14 and budgetary comparison information on pages 48 through 50 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by 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 District s financial statements as a whole. The accompanying supplementary information such as the introductory section, combining and individual fund financial statements and schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements. The combining and individual fund financial statements and schedules are the responsibility of management and were 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 introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. HEINFELD, MEECH & CO., P.C. CPAs and Business Consultants December 12, 2012 Page 2

22 Page 3 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information)

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24 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 As management of the Coolidge Unified School District No. 21 (District), we offer readers of the District s financial statements this narrative overview and analysis of the financial activities of the District for the fiscal year ended June 30, We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found in the introductory section of this report. FINANCIAL HIGHLIGHTS The District s total net assets of governmental activities decreased 3.7 million which represents a 5 percent decrease from the prior fiscal year. General revenues accounted for 21.7 million in revenue, or 77 percent of all current fiscal year revenues. Program specific revenues in the form of charges for services and grants and contributions accounted for 6.5 million or 23 percent of total current fiscal year revenues. The District had approximately 31.9 million in expenses related to governmental activities, a decrease of 11 percent from the prior year primarily due to declining student enrollment and a reduction in staffing. Among major funds, the General Fund had 17.9 million in current fiscal year revenues, which primarily consisted of state aid and property taxes, and 20.9 million in expenditures. The General Fund s fund balance decrease from 7.0 million at the prior fiscal year end to 4.4 million at the end of the current fiscal year was primarily due to decreased property tax revenues resulting from declining property values, and reductions in state funding. Page 5

25 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the District s basic financial statements. The District s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the District s finances, in a manner similar to a private-sector business. The accrual basis of accounting is used for the government-wide financial statements. The statement of net assets presents information on all of the District s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The statement of activities presents information showing how the District s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences). The government-wide financial statements outline functions of the District that are principally supported by property taxes and intergovernmental revenues. The governmental activities of the District include instruction, support services, operation and maintenance of plant services, student transportation services, operation of non-instructional services, and interest on long-term debt. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District can be divided into two categories: governmental funds and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements use the modified accrual basis of accounting and focus on near-term inflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the District s near-term financing requirements. Page 6

26 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 OVERVIEW OF FINANCIAL STATEMENTS (Concl d) Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the District s near-term financing decision. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General, Title I Grants, and Debt Service Funds, all of which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and schedules. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the District. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the District s own programs. Due to their custodial nature, fiduciary funds do not have a measurement focus. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found immediately following the basic financial statements. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the District s budget process. The District adopts an annual expenditure budget for all governmental funds. A schedule of revenues, expenditures and changes in fund balances budget and actual has been provided for the General Fund and a Special Revenue Fund as required supplementary information. Page 7

27 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 GOVERNMENT-WIDE FINANCIAL ANALYSIS Net assets may serve over time as a useful indicator of a government s financial position. In the case of the District, assets exceeded liabilities by 77.4 million at the current fiscal year end. The largest portion of the District s net assets reflects its investment in capital assets (e.g., land and improvements, buildings and improvements, vehicles, furniture and equipment and construction in progress), less any related debt used to acquire those assets that is still outstanding. The District uses these capital assets to provide services to its students; consequently, these assets are not available for future spending. Although the District s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. In addition, a portion of the District s net assets are restricted for special purposes, debt service repayment, and capital outlay investment. The following table presents a summary of the District s net assets for the fiscal years ended June 30, 2012 and June 30, As of June 30, 2012 As of June 30, 2011 Current and other assets 8,396,323 13,035,030 Capital assets, net 102,433, ,625,273 Total assets, net 110,829, ,660,303 Current liabilities 1,166,744 1,314,199 Long-term liabilities 32,256,159 34,239,691 Total liabilities 33,422,903 35,553,890 Net assets: Invested in capital assets, net of related debt 71,120,014 71,227,912 Restricted 1,649,217 2,077,888 Unrestricted 4,637,584 7,800,613 Total net assets 77,406,815 81,106,413 At the end of the current fiscal year the District reported positive balances in all three categories of net assets. The same situation held true for the prior fiscal year. Page 8

28 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 GOVERNMENT-WIDE FINANCIAL ANALYSIS (Cont d) The District s financial position is the product of several financial transactions including the net result of activities, the acquisition of capital assets, and the depreciation of capital assets. The following are significant current year transactions that had an impact on the Statement of Net Assets. The utilization of cash reserves to refund approximately 4.8 million in debt. The issuance of approximately 3.8 million in refunding bonds. The addition of 1.9 million in capital assets through the construction of new schools and other school improvements and the purchases of vehicles, furniture, and equipment. Changes in net assets. The District s total revenues for the current fiscal year were 28.2 million. The total cost of all programs and services was 31.9 million. The following table presents a summary of the changes in net assets for the fiscal years ended June 30, 2012 and June 30, Fiscal Year Ended June 30, 2012 Fiscal Year Ended June 30, 2011 Revenues: Program revenues: Charges for services 907, ,149 Operating grants and contributions 4,871,395 6,476,174 Capital grants and contributions 691, ,706 General revenues: Property taxes 6,703,072 9,052,729 Investment income 27, ,822 Unrestricted county aid 791, ,870 Unrestricted state aid 14,004,455 14,939,420 Unrestricted federal aid 208, ,403 Total revenues 28,205,340 33,189,273 Expenses: Instruction 15,464,753 18,665,116 Support services students and staff 3,421,894 4,028,002 Support services administration 3,745,908 3,620,138 Operation and maintenance of plant services 3,558,925 3,669,267 Student transportation services 2,419,483 2,471,317 Operation of non-instructional services 1,886,137 1,920,526 Interest on long-term debt 1,407,838 1,539,758 Total expenses 31,904,938 35,914,124 Change in net assets (3,699,598) (2,724,851) Net assets, beginning 81,106,413 83,831,264 Net assets, ending 77,406,815 81,106,413 Page 9

29 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 GOVERNMENT-WIDE FINANCIAL ANALYSIS (Cont d) Expenses Millions FY FY The following are significant current year transactions that have had an impact on the change in net assets. A decrease of approximately 2.3 million in property taxes due to declining property values in the District. A decrease of 934,965 in unrestricted state aid was primarily due to the reductions in state equalization. The decrease of 1.6 million in operating grants and contributions was primarily due to reductions in American Recovery and Reinvestment Act (ARRA) grants, specifically IDEA and Education Stabilization funds. The following table presents the cost of the District s major functional activities. The table also shows each function s net cost (total cost less charges for services generated by the activities and intergovernmental aid provided for specific programs). The net cost shows the financial burden that was placed on the State and District s taxpayers by each of these functions. Page 10

30 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 GOVERNMENT-WIDE FINANCIAL ANALYSIS (Concl d) Year Ended June 30, 2012 Year Ended June 30, 2011 Net Net Total Expenses (Expense)/ Revenue Total Expenses (Expense)/ Revenue Instruction 15,464,753 (12,357,902) 18,665,116 (14,882,471) Support services students and staff 3,421,894 (2,361,864) 4,028,002 (2,765,202) Support services administration 3,745,908 (3,679,233) 3,620,138 (3,177,709) Operation and maintenance of plant services 3,558,925 (3,101,599) 3,669,267 (3,464,822) Student transportation services 2,419,483 (2,402,276) 2,471,317 (2,399,563) Operation of non-instructional services 1,886,137 (123,966) 1,920,526 (20,570) Interest on long-term debt 1,407,838 (1,407,838) 1,539,758 (1,539,758) Total 31,904,938 (25,434,678) 35,914,124 (28,250,095) The cost of all governmental activities this year was 31.9 million. Federal and State governments and charges for services subsidized certain programs with grants and contributions and other local revenues of 6.5 million. Net cost of governmental activities of 25.4 million was financed by general revenues, which are made up of primarily property taxes of 6.7 million and state aid of 14.0 million. FINANCIAL ANALYSIS OF THE DISTRICT S FUNDS As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. 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, unassigned fund balance may serve as a useful measure of the District s net resources available for spending at the end of the fiscal year. The financial performance of the District as a whole is reflected in its governmental funds. As the District completed the year, its governmental funds reported a combined fund balance of 6.2 million, a decrease of 3.4 million primarily due to a decrease of approximately 2.2 million in property taxes due to declining property values in the District. Page 11

31 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 FINANCIAL ANALYSIS OF THE DISTRICT S FUNDS (Concl d) The General Fund comprises 71 percent of the total fund balance. The entire General Fund s fund balance of 4.4 million constitutes unassigned fund balance. The General Fund is the principal operating fund of the District. The decrease in fund balance of 7.0 million to 4.4 million as of fiscal year end was primarily a result of a decrease in property tax revenues due to declining property values. General Fund revenues decreased 3.9 million in total, and General Fund expenditures decreased 720,530. The Debt Service Fund s fund balance decreased 203,221 to 495,304 at current fiscal year end. Debt Service Fund revenues increased 51,293 and expenditures decreased 1.2 million as a result of the effects of the bond refunding. BUDGETARY HIGHLIGHTS Over the course of the year, the District revised the General Fund annual expenditure budget primarily for changes in student enrollment and increases in operation and maintenance costs. The difference between the original budget and the final amended budget was a 121,520 increase, or less than one percent. The revenue budget for the General Fund was not revised. A schedule showing the original and final budget amounts compared to the District s actual financial activity for the General Fund is provided in this report as required supplementary information. There were no significant variances between the final amended budget and actual expenditures. Page 12

32 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets. At year end, the District had invested million in capital assets, including land, school buildings, athletic facilities, buses and other vehicles, computers, and other equipment. This amount represents a net increase prior to depreciation of 2.0 million from the prior fiscal year. Total depreciation expense for the current fiscal year was 3.4 million. The following schedule presents a summary of capital asset balances for the fiscal years ended June 30, 2012 and June 30, As of June 30, 2012 As of June 30, 2011 Capital assets non-depreciable 11,315,009 24,627,122 Capital assets depreciable, net 91,118,386 78,998,151 Total 102,433, ,625,273 Additional information on the District s capital assets can be found in Note 5. Debt Administration. At year end, the District had 31.6 million in long-term debt outstanding, 113,659 due within one year. This represents a net decrease of 1.9 million primarily due to the issuance of capital leases and refunding bonds. The District s general obligation bonds are subject to two limits; the Constitutional debt limit (total debt limit) on all general obligation bonds (up to 30 percent of the total secondary assessed valuation) and the statutory debt limit on Class B bonds (the greater of 10 percent of the secondary assessed valuation or 1,500 per student). The current total debt limitation for the District is 53.7 million and the Class B debt limit is 17.9 million. The District was within the Constitutional debt limit and the Class B debt limit at the dates the bonds were issued. However, because the District s secondary assessed value has fallen, no further debt issuances are possible until the outstanding bonds are reduced below the Class B limit. Additional information on the District s long-term debt can be found in Notes 6, 8 and 9. Page 13

33 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 ECONOMIC FACTORS AND NEXT YEAR S BUDGET AND RATES Many factors were considered by the District s administration during the process of developing the fiscal year budget. Among them: District student population (estimated 3,758). Arizona State legislature mandated reductions. Also considered in the development of the budget is the local economy and inflation of the surrounding area. Budgeted expenditures in the General Fund decreased 7 percent to 18.8 million in fiscal year State aid and property taxes are expected to be the primary funding sources. No new programs were added to the budget. CONTACTING THE DISTRICT S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, and investors and creditors with a general overview of the District s finances and to demonstrate the District s accountability for the resources it receives. If you have questions about this report or need additional information, contact the Business Services Department, Coolidge Unified School District No. 21, 450 North Arizona Blvd., Coolidge, Arizona Page 14

34 Page 15 BASIC FINANCIAL STATEMENTS

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36 Page 17 GOVERNMENT-WIDE FINANCIAL STATEMENTS

37 STATEMENT OF NET ASSETS JUNE 30, 2012 ASSETS Current assets: Cash and investments Property taxes receivable Accounts receivable Due from governmental entities Other assets Total current assets Noncurrent assets: Deferred charges Land Land improvements Buildings and improvements Vehicles, furniture and equipment Accumulated depreciation Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Construction contracts payable Accrued payroll and employee benefits Compensated absences payable Accrued interest payable Unearned revenues Obligations under capital leases Total current liabilities Noncurrent liabilities: Non-current portion of long-term obligations Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for: Federal and state projects Food service Other local initiatives Debt service Capital outlay Unrestricted Total net assets Governmental Activities 1,548, ,267 59,518 5,652,468 58,507 7,771, ,648 11,315,009 5,896,098 98,967,875 8,725,860 (22,471,447) 103,058, ,829, ,092 3,725 95, , ,665 18, ,659 1,512,666 31,910,237 31,910,237 33,422,903 71,120, , , , , ,564 4,637,584 77,406,815 Page 18 The notes to the basic financial statements are an integral part of this statement.

38 STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2012 Program Revenues Net (Expense) Revenue and Changes in Net Assets Functions/Programs Governmental activities: Instruction Support services - students and staff Support services - administration Operation and maintenance of plant services Student transportation services Operation of non-instructional services Interest on long-term debt Total governmental activities Expenses 15,464,753 3,421,894 3,745,908 3,558,925 2,419,483 1,886,137 1,407,838 31,904,938 Charges for Services 602,521 61, , ,575 Operating Grants and Contributions 1,813,040 1,060,030 66, ,227 17,207 1,518,216 4,871,395 Capital Grants and Contributions 691, ,290 Governmental Activities (12,357,902) (2,361,864) (3,679,233) (3,101,599) (2,402,276) (123,966) (1,407,838) (25,434,678) General revenues: Taxes: Property taxes, levied for general purposes Property taxes, levied for debt service Property taxes, levied for capital outlay Investment income Unrestricted county aid Unrestricted state aid Unrestricted federal aid Total general revenues Changes in net assets Net assets, beginning of year Net assets, end of year 3,947,407 2,753,081 2,584 27, ,874 14,004, ,580 21,735,080 (3,699,598) 81,106,413 77,406,815 Page 19 The notes to the basic financial statements are an integral part of this statement.

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40 Page 21 FUND FINANCIAL STATEMENTS

41 BALANCE SHEET - GOVERNMENTAL FUNDS JUNE 30, 2012 ASSETS Cash and investments Property taxes receivable Accounts receivable Due from governmental entities Due from other funds Other assets Total assets General 45, ,174 4,664, ,302 5,113,295 Title I Grants 217, ,977 Debt Service 1,141, ,093 1,294,062 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Construction contracts payable Due to other funds Accrued payroll and employee benefits Deferred revenues Bond interest payable Total liabilities 380,568 74, , , ,454 7, , , , ,758 Fund balances: Restricted Unassigned Total fund balances 4,357,935 4,357, , ,304 Total liabilities and fund balances 5,113, ,977 1,294,062 The notes to the basic financial statements are an integral part of this statement. Page 22

42 Non-Major Governmental Funds 361,324 59, , ,389 58,507 1,632,032 Total Governmental Funds 1,548, ,267 59,518 5,652, ,691 58,507 8,257,366 21,524 3, ,237 13,772 18, , ,092 3, ,691 95, , ,665 2,104,702 1,299,425 1,299,425 1,632,032 1,794,729 4,357,935 6,152,664 8,257,366 Page 23

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44 COOLIDGE UNIFIED SCHOOL DISTRICT NO. 1 RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS JUNE 30, 2012 Total governmental fund balances 6,152,664 Amounts reported for governmental activities in the Statement of Net Asset are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Governmental capital assets 124,904,842 Less accumulated depreciation (22,471,447) 102,433,395 Property tax revenues will not be available to pay for current period expenditures and, therefore, are deferred in the funds. 452,267 Deferred items related to the net cost of issuance of bonds are amortized over the life of the associated bond issue in the government-wide statements but not reported in the governmental funds. 624,648 Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds. Compensated absences payable (645,173) Obligations under capital leases (435,986) Bonds payable (31,175,000) (32,256,159) Net assets of governmental activities 77,406,815 Page 25 The notes to the basic financial statements are an integral part of this statement.

45 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2012 Revenues: Other local Property taxes State aid and grants Federal aid, grants and reimbursements Total revenues General 948,033 4,138,605 12,433, ,240 17,856,076 Title I Grants 1,505,467 1,505,467 Debt Service 7,742 2,780,270 2,788,012 Expenditures: Current - Instruction Support services - students and staff Support services - administration Operation and maintenance of plant services Student transportation services Operation of non-instructional services Capital outlay Debt service - Principal retirement Interest and fiscal charges Bond issuance costs Total expenditures 9,744,396 2,280,239 3,391,182 3,185,603 2,032, , ,102 20,862, , , ,403 54,207 1,406,098 1,394, ,345 1,530,897 Excess (deficiency) of revenues over expenditures (3,006,189) 99,369 1,257,115 Other financing sources (uses): Transfers in Transfers out Capital lease agreements Issuance of refunding bonds Premium on sale of bonds Payment to refunded bond escrow agent Total other financing sources (uses): 348, ,680 (99,369) (99,369) 2,967 3,795,000 6,106 (5,264,409) (1,460,336) Changes in fund balances (2,657,509) (203,221) Fund balances, beginning of year 7,015, ,525 Fund balances, end of year 4,357, ,304 Page 26 The notes to the basic financial statements are an integral part of this statement.

46 Non-Major Governmental Funds 777,816 2,584 1,795,968 3,409,065 5,985,433 2,158, , , ,302 17,462 1,587,614 1,816, ,827 13,286 6,643,825 (658,392) (252,278) 370, ,870 (540,522) 1,839,947 1,299,425 Total Governmental Funds 1,733,591 6,921,459 14,229,166 5,250,772 28,134,988 12,676,236 3,377,271 3,546,894 3,424,905 2,065,937 1,711,285 1,975, ,827 1,407, ,345 30,443,085 (2,308,097) 351,647 (351,647) 370,148 3,795,000 6,106 (5,264,409) (1,093,155) (3,401,252) 9,553,916 6,152,664 Page 27

47 COOLIDGE UNIFIED SCHOOL DISTRICT NO. 1 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2012 Net changes in fund balances - total governmental funds (3,401,252) Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report the portion of capital outlay for capitalized assets as expenditures. However, in the Statement of Activities, the costs of those assets are allocated over their estimated useful lives as depreciation expense. Expenditures for capitalized assets 1,953,705 Less current year depreciation (3,371,482) (1,417,777) Capital assets contributed to the District are not recorded in the governmental funds as they do not provide current financial resources but are recognized in the Statement of Activities as program revenues. 570,000 Obligations under capital leases provide current financial resources to governmental funds, but the issuance increases long term liabilities in the Statement of Net Assets. (370,148) Some revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes (218,387) Intergovernmental (281,261) (499,648) Issuances of refunding bonds and payments to escrows are expenditures in the governmental funds, but the issuances increases assets in the Statement of Net Assets and the payments reduce assets. Refunding bond issuance (3,795,000) Payment to refunded bond escrow agent 5,264,409 Premium on sale of bonds (6,106) Bond issuance costs 136,345 1,599,648 Repayments of capital lease principal are expenditures in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Assets. 120,827 Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Loss on disposal of capital assets (344,101) Compensated absences 42,853 (301,248) Change in net assets in governmental activities (3,699,598) Page 28 The notes to the basic financial statements are an integral part of this statement.