WILMINGTON PUBLIC LIBRARY DISTRICT Wilmington, Illinois Annual Financial Report For the Fiscal Year Ended June 30, 2014

Transcription

1 Wilmington, Illinois Annual Financial Report For the Fiscal Year Ended June 30, 2014

2 Table of Contents Page Financial Section Independent Auditor s Report 1-3 Management s Discussion and Analysis (unaudited) 4-10 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position 11 Statement of Activities 12 Fund Financial Statements Balance Sheet-Governmental Funds 13 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 14 Statement of Revenues, Expenditures and Changes in Fund Balances-Governmental Funds 15 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 16 Notes to Financial Statements Required Supplementary Information: Defined Benefit Pension Plan-Schedule of Funding Progress 29 Statement of Revenues, Expenditures and Changes in Fund Balances- Budget and Actual General Fund 30 Notes to Required Supplementary Information 31 Supplementary Information: Nonmajor Governmental Funds: Combining Balance Sheet 32 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 33 Schedules of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Building Maintenance Fund 34 IL Municipal Retirement Fund 35 Social Security Fund 36 Audit Fund 37 Insurance Fund 38 Working Cash Fund 39 Supplementary Individual Fund Financial Schedule General Fund Schedule of Expenditures Budget and Actual 40 Statistical Section (Unaudited) Assessed Valuations, Tax Rates, Tax Extensions and Tax Collections 41 Legal Debt Margin 42 Compliance Section Independent Auditor s 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 43-44

3 William J. Crawford Certified Public Accountant, P.C. 590 West Perry Street Telephone Coal City, Illinois Fax INDEPENDENT AUDITOR S REPORT To the President and Board of Trustees Wilmington Public Library District Wilmington, Illinois Report on the Financial Statements I have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Wilmington Public Library District, as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the District s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility My responsibility is to express opinions on these financial statements based on my audit. I conducted my 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 I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, I express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinions

4 Opinions In my 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 Wilmington Public Library District, as of June 30, 2014, 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. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis and budgetary comparison information on pages 4 through 10 and 30 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. I 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 my inquiries, the basic financial statements, and other knowledge I obtained during my audit of the basic financial statements. I do not express an opinion or provide any assurance on the information because the limited procedures do not provide me with sufficient evidence to express an opinion or provide any assurance. Other Information My audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Wilmington Public Library District s basic financial statements. The combining and individual nonmajor fund financial statements, supplementary schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and the supplementary schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In my opinion, the combining and individual nonmajor fund financial statements and the supplementary schedules are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The statistical section has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, I do not express an opinion or provide any assurance on it

5 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, I have also issued my report dated August 8, 2014 on my consideration of the Wilmington Public Library District s internal control over financial reporting and on my 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 my 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 in considering the Wilmington Public Library District s internal control over financial reporting and compliance. William J. Crawford Certified Public Accountant, P.C. Coal City, Illinois August 8,

6 Management s Discussion and Analysis June 30, 2014 Introduction As management of the Wilmington Public Library District (the District ), we offer readers of the District s financial statements this narrative overview and analysis of the District s financial activities for the fiscal year ended June 30, We encourage readers to consider the information presented here in conjunction with the District s basic financial statements that follow this section. Financial Highlights The assets of the District exceeded its liabilities at the close of the most recent fiscal year ending June 30, 2014 by $1,354,127 (net position). Of this amount, $779,962 (unrestricted net position) may be used to meet ongoing obligations to citizens and creditors in accordance with the District s fund designation and fiscal policies. The District s total net position increased by $170,720 for the fiscal year. The increase was due to a concerted effort to reduce costs in all aspects of the District s operations in addition to obtaining additional contributions to fund operations. Developer contributions from the Ridgeport development added to the positive outcome in the amount of $109,363. As of June 30, 2014, the District s governmental funds reported combined ending fund balances of $624,430, an increase of $167,742 over the prior fiscal year. The District issued no new debt during the year ended June 30, Existing debt was reduced by $4,057 through required monthly payments. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the District's basic financial statements. The District s basic financial statements are comprised of three components: governmentwide financial statements, fund financial statements, and notes to the financial statements. This report also includes 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. Although other governments may report governmental activities and business-type activities, the District has no business-type activities. The Statement of Net Position presents information on all of the District s assets and liabilities with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating

7 The Statement of Activities presents information showing how the District's net position changed during the most recent fiscal year. All changes in net position 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. Both of the government-wide financial statements present functions of the District that are principally supported by taxes and intergovernmental revenues (primarily grants). The governmental activities of the District are primarily for culture and recreational purposes. The government-wide financial statements can be found on pages of this report. 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 fall into the governmental funds category. 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 focus on near-term inflows and outflows 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 a government s near-term financing requirements. 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 effect of the government s near-term financing decisions. 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. The District maintains seven individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, which is considered to be the only major fund. Data from the other six governmental funds are combined into a single, aggregated nonmajor fund presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements and individual fund schedules elsewhere in this report. The governmental fund financial statements can be found on pages of this report. Notes to the Basic 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 on pages of this report

8 Other Information In addition to the basic financial statements and the accompanying notes, this report also presents certain Required Supplementary Information (RSI) other than the management s discussion and analysis, consisting of information concerning the District s progress in funding its obligation to provide pension benefits to its employees and a budgetary comparison statement for the General Fund. Required supplementary information can be found on pages of this report. This report also presents combining nonmajor fund statements and for all nonmajor governmental funds along with individual budgetary comparison schedules of revenues, expenditures and changes in fund balances for all nonmajor special revenue and permanent funds. The information can be found on pages of this report. Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government s financial position. In the case of the Wilmington Public Library District, assets exceeded liabilities by $1,354,127 at the close of the most recent fiscal year. Since the District has no business-type activities, all of the net position is reported as governmental activities. Below is a summary table of all relevant components of net position: WILMINGTON PUBLIC LIBRARY DISTRICT Net Position Governmental Activities June 30, 2014 June 30, 2013 Current and other assets $ 892,225 $ 720,844 Capital assets 537, ,202 Total assets 1,429,439 1,272,046 Current and other liabilities 75,312 34,853 Long-term liabilities - 53,786 Total liabilities 75,312 88,639 Net position: Net investment in capital assets 483, ,333 Restricted 90,763 95,018 Unrestricted 779, ,056 Total net position $ 1,354,127 $ 1,183,407 A large portion of the District s net position is invested in capital assets (land, buildings, library collection and equipment) less any related outstanding debt. These assets are used to provide services to District residents; consequently, they are not available for future spending. While the District s investment in capital assets is reported net of related debt, 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. Unrestricted net position the part of net position that can be used to finance day-to-day operations without constraints established by enabling legislation, debt covenants, or other legal requirements is $779,962 at the end of the year. The primary difference between June 30, 2014 and June 30, 2013 is represented by an increase in cash and cash equivalents. The increase is primarily due to developer contributions from the Ridgeport development of $109,363, as well as a concerted effort to reduce costs in all aspects of the District s operations in addition to obtaining additional contributions to fund operations

9 The District s total revenues and expenses are reflected in the following table: WILMINGTON PUBLIC LIBRARY DISTRICT Changes in Net Position Governmental Activities June 30, 2014 June 30, 2013 Revenues Program revenues: Charges for services $ 32,296 $ 26,715 Operating grants and contributions 17,333 19,405 Capital grants and contributions - 5,000 General revenues: Property taxes 619, ,394 Replacement tax 16,787 16,017 Developer fees 109,363 Landfill fees 12,142 12,855 Investment earnings Loss on equipment disposal - (225) Total revenues 807, ,424 Expenses Culture and recreation 624, ,578 Property management 10,088 10,026 Interest on long-term debt 2,435 2,629 Total expenses 636, ,233 Change in net position 170,720 55,191 Net position, beginning 1,183,407 1,128,216 Net position, ending $ 1,354,127 $ 1,183,407 Program revenues of $49,629 comprised of charges for services and operating grants and contributions, represent 6.15% of total revenues and only cover about 7.79% of government expenses. As expected, general revenues of $757,908 represented 93.85% of all revenues and provided the required support and coverage for expenses. The largest component of general revenues is represented by property taxes, which increased by $31,144 this year. Program revenues decreased by $1,491 during the current year mainly due to an additional $5,000 back to books grant provided through the state under the library services and technology act in the prior year offset by a $3,695 increase in service and fines revenue during the current fiscal year. The culture and recreation function is the principal expense function of the District. Salaries, employee retirement costs, and benefits for personnel of $383,079 are the largest expense type at 60.16% of total expenses, which represents a $14,215 (3.85%) increase over the prior year. Property management represents costs of rental of real property to outside parties and interest on long-term debt represents interest charges on the building mortgage loan. Financial Analysis of the Government's Funds As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with financerelated 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 - 7 -

10 requirements. In particular, unreserved fund balance may serve as a useful measure of a government s net resources available for spending at the end of the fiscal year. The continued improving financial performance of the District as a whole is reflected in its governmental funds as well. At the end of the fiscal year, the District's governmental funds reported combined ending fund balances of $624,430. $500,136 of this amount constitutes unassigned fund balance of the General Fund that is available as of the end of the fiscal year for spending on future operations. General Fund - The General Fund is the primary operating fund of the District. The General Fund balance increased by $171,497 this year with the following notable items: Developer fee income increased $109,363 due to an agreement with the Ridgeport development regarding fee requirements upon permit approvals. Property tax income increased $3,542 due to an improved economy with a slight effect on restrictive tax caps. Due to deficit spending in the Social Security and IMRF Funds, the General Fund was required to transfer $684 and $443 respectively to each fund during the fiscal year. General Fund Budgetary Highlights The original 2014 fiscal year budget was adopted on September 16, The comparison of General Fund original budget to the final budget is on page 30. During the fiscal year, no appropriation line item transfers were required. General Fund revenues of $680,351 fell short of budgeted revenues of $977,100 by $296,749 (30%). This shortfall was the result of development fees that failed to materialize and property tax cap limitations during the current fiscal year. General Fund expenditures were also less than budgeted. Of the total appropriations of $1,078,000, approximately 53%, or $570,265, went unspent. The savings was actively managed in a direct response to projected revenue shortfalls and less than anticipated capital outlays due to development fees that were not received. Because actual revenues were lower than budgetary estimates and actual expenditures were less than budgetary estimates, the excess of budget vs. actual revenues over expenditures of $273,516 reflects the overall positive change compared to original estimated amounts for the General Fund. Capital Assets and Debt Administration Capital Assets - At June 30, 2014, the District had $537,214 invested in capital assets including land, buildings, equipment, and library collection costing $1,000 or more. This amount is net of accumulated depreciation to date. Increases during the year represent additions to those categories, while decreases represent retirements of assets during the year and depreciation of depreciable assets for the year

11 Capital Assets (net of depreciation) Governmental Activities June 30, 2014 June 30, 2013 Land $ 121,565 $ 121,565 Land improvements-exhaustible 14,876 16,402 Buildings & improvements 265, ,367 Furniture and equipment 23,778 21,707 Library collection 111, ,161 $ 537,214 $ 551,202 Net capital assets decreased by $13,988 for the 2014 fiscal year. The District expended available resources to acquire $87,632 in capital asset additions during the year. The additions to capital assets were for various library improvements and equipment in the amount of $9,470 and annual library collection purchases of $78,162. These additions are reduced by the current year's depreciation expense of $101,620 and asset disposals. Additional information on the District's capital assets is presented in the notes to the basic financial statements. Debt Administration - At June 30, 2014, the District had total debt outstanding of $53,812. The debt is secured by a mortgage note on the purchase of an adjacent house on August 31, Outstanding Debt Governmental Activities June Mortgage Note $ 53,812 $ 57,869 - Total outstanding debt decreased by $4,057 during the fiscal year. The decrease was a result of scheduled monthly payments. Additional information on the District's long-term debt is presented in the notes to the basic financial statements. Economic Factors and Next Year's Budget The following are currently known Wilmington Public Library District economic factors considered in going into the fiscal year. The property tax base in the District, according to the 2013 tax levy, shows a decrease in the assessed value of property in the District by approximately 1.94 percent from the 2012 tax levy. The recent trend of decreased assessed valuation is slowing, and the trend of no growth or gradual positive growth may commence in the next couple of years due to the slowly improving economy. This condition could be reflected in future property tax revenues. The City of Wilmington has entered into a TIF agreement with a corporate logistics center that includes additional potential development fees for the Wilmington Public Library District. The District is to receive the development fee based upon permitted square footage of the development in an amount not to exceed $250,000. The project has begun and future fees could be as high as $140,637 over and above the current year revenue of $109,

12 Requests for Information This financial report is designed to provide citizens, taxpayers, investors, and creditors with a general overview of the District's finances and to show the District's accountability for the money it receives. If you have any questions about this report or need additional financial information, contact Maria Meachum, Library Director, 201 S. Kankakee St., Wilmington, IL 60481, or by calling during regular office hours, Monday through Thursday, from 9:00 a.m. to 8:00 p.m., and Friday through Saturday 9:00 a.m. to 5:00 p.m. central standard time

13 Statement of Net Position June 30, 2014 Assets Governmental Activities Cash and cash equivalents $ 545,569 Other receivables 1,799 Property taxes receivable (net) 299,049 Prepaid expenses 4,870 Restricted cash and cash equivalents 40,938 Capital assets: Land 121,565 Other capital assets, net of depreciation 415,649 Total capital assets 537,214 Total assets 1,429,439 Liabilities Accounts payable and accrued expenses 13,246 Compensated absences due within one year 8,254 Long-term liabilities: Due within one year 53,812 Due in more than one year - Total liabilities 75,312 Net Position Net investment in capital assets 483,402 Restricted for: Permanent fund-working cash 40,938 Special Revenue Funds: Building maintenance purposes 34,882 Employee retirement purposes 5,347 Insurance and risk management purposes 9,246 Audit purposes 350 Unrestricted 779,962 Total net position $ 1,354,127 The notes to the financial statements are an integral part of this statement

14 Statement of Activities For the Year Ended June 30, 2014 Net (Expense) Revenue and Changes in Program Revenues Net Position Operating Capital Charges for Grants and Grants and Governmental Functions/Programs Expenses Services Contributions Contributions Activities Governmental activities: Culture and recreation $ 624,294 22,029 17,333 - (584,932) Property management 10,088 10, Interest on long-term debt 2, (2,435) Total governmental activities 636,817 32,296 17,333 - (587,188) General revenues: Property taxes 619,538 Replacement taxes 16,787 Landfill fees 12,142 Developer fees 109,363 Investment earnings 78 Total general revenues 757,908 Change in net position 170,720 Net position-beginning 1,183,407 Net position-ending $ 1,354,127 The notes to the financial statements are an integral part of this statement

15 Balance Sheet Governmental Funds June 30, 2014 Other Total General Governmental Governmental Fund Funds Funds Assets Cash and cash equivalents $ 505,933 39, ,569 Other receivables 1, ,799 Property taxes receivable (net) 242,714 56, ,049 Prepaid expenses - 4,870 4,870 Restricted cash and cash equivalents - 40,938 40,938 Total assets $ 750, , ,225 Liabilities, Deferred Inflows and Fund Balances Liabilities- Accounts payable and accrued expenses $ 21,500-21,500 Deferred inflows of resources- Unavailable property tax revenue 199,898 46, ,295 Fund Balances: Nonspendable - 45,808 45,808 Restricted - 49,825 49,825 Committed 28,661-28,661 Unassigned 500, ,136 Total fund balances 528,797 95, ,430 Total liabilities, deferred inflows and fund balances $ 750, , ,225 The notes to the financial statements are an integral part of this statement

16 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2014 Total fund balances for governmental funds $ 624,430 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds Add-cost of capital assets 1,506,496 Deduct-accumulated depreciation (969,282) Unearned property taxes will be collected this year, but are not available soon enough to pay for the current period's expenditures, and therefore are not recorded in the funds 246,295 Long-term liabilities are not due and payable in the current period and therefore are not reported as fund liabilities. The long-term liabilities were adjusted as follows: Building mortgage (53,812) Net position of governmental activities $ 1,354,127 The notes to the financial statements are an integral part of this statement

17 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2014 Other Total General Governmental Governmental Fund Funds Funds Revenues Property taxes $ 492, , ,629 Replacement taxes 16,787-16,787 Grant income 11,681-11,681 Landfill fees 12,142-12,142 Property management income 10,267-10,267 Charges for current services 11,613-11,613 Fines 8,402-8,402 Developer fees 109, ,363 Interest income Donations 5,652-5,652 Miscellaneous 2,014-2,014 Total revenues 680, , ,628 Expenditures Current: Culture and recreation: Personnel 323, ,154 Library materials/services 91,084-91,084 Contractual 42,325 59, ,551 Employee retirement costs - 59,925 59,925 Administrative 27,909-27,909 Total culture and recreation 484, , ,623 Capital outlay 16,771-16,771 Debt service 6,492-6,492 Total expenditures 507, , ,886 Excess (deficiency) of revenues over (under) expenditures 172,616 (4,874) 167,742 Other Financing Sources (Uses) Transfers in 8 1,127 1,135 Transfers out (1,127) (8) (1,135) Net change in fund balances 171,497 (3,755) 167,742 Fund balances-beginning 357,300 99, ,688 Fund balances-ending $ 528,797 95, ,430 The notes to the financial statements are an integral part of this statement

18 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended June 30, 2014 Net change in fund balances-total governmental funds $ 167,742 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital purchases as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense Add-cost of capital purchases 87,632 Deduct-depreciation expense (101,620) Repayment of mortgage principal was an expenditure in governmental funds, but the repayment reduced long-term liabilities in the governmentwide statement of net position- Building mortgage principal retirement 4,057 Because some property taxes will not be collected for several months after the District's fiscal year ends, they are not considered as "available" revenues in the governmental funds. They are however, recorded as revenues in the statement of activities 246,295 Unearned property taxes of the prior year received in the current year are recognized in the prior year statement of activities (233,386) Change in net position of governmental activities $ 170,720 The notes to the financial statements are an integral part of this statement

19 Notes to Financial Statements June 30, 2014 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Wilmington Public Library District (the District) have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The significant accounting policies are described below: A. Reporting Entity The Wilmington Public Library District was converted from a township library by action under provisions of applicable state law. The District received all assets and assumed all liabilities of the former Wilmington Township Public Library and began its operation on July 30, The District operates under a President-Trustee form of government consisting of seven trustees. Library services are provided to all patrons within established boundaries. The accompanying financial statements present the District and related organizations for which the District is financially accountable. Financial accountability of the primary government is defined as being determined on the basis of fiscal dependency, appointment of a voting majority of a governing board, ability to impose its will or potential for the organization to provide specific financial benefits to, or to impose specific financial burdens on the primary government. The accompanying financial statements include only the operations of the District, since management has determined that there are no other organizations that meet the criteria for inclusion in the reporting entity. B. Government-wide and Fund Financial Statements The government-wide financial statements (i.e. the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the government as a whole. For the most part, the effect of interfund activity has been removed from these statements. The statements generally distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Business-type activities are financed in whole or in part by fees to external parties for goods or services. The District has no business-type activities. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues

20 Notes to Financial Statements June 30, 2014 C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures (including capital outlay) generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures and claims and judgments, are recorded only when payment is due. Property taxes, other intergovernmental revenues, and investment income associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the District. In accordance with GASB Statement No. 34, major individual governmental funds are reported as a separate column in the fund financial statements. Governmental Funds The District reports the following major governmental fund: General Fund - This is the District's primary operating fund. It accounts for all financial resources, except those required to be accounted for in another fund. The District s General Fund primarily receives revenues from local property taxes. The District reports the following governmental fund types in the "Other Governmental Funds" column: Special Revenue Funds account for the proceeds of specific revenue sources requiring separate accounting because of legal or regulatory provisions or administrative action. Special revenue funds consist of the following: Building Maintenance Fund, Illinois Municipal Retirement Fund, Social Security Fund, Audit Fund, and Insurance Fund. Permanent Funds account for resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the District's programs. The Working Cash Fund is the only permanent fund

21 Notes to Financial Statements June 30, 2014 D. Assets, Liabilities, Deferred Inflows of Resources and Net Position/Fund Balance Deposits and Investments Cash and cash equivalents of all funds, including restricted cash, are pooled into common accounts in order to maximize investment opportunities and improve cash management. The District considers all cash on hand, demand deposits, money market accounts, certificates of deposit, and short-term investments with original maturities of three months or less from the date of acquisition to be cash equivalents. Investments, if any, are stated at fair value. Property Tax Receivables The District levies its property tax for the subsequent year in December. This levy is certified to the County of Will, as they are the collection agency for taxes within the county. Taxes are recognized as receivables in the current year when the District is notified by the County of the amount. Property taxes attach as an enforceable lien on property on January 1 and are payable in two installments on June 4 and September 4, and collections are remitted to the District from May through December. When the receivable for taxes is recognized by the District, an amount of one-half of one percent is estimated to be uncollectible in the year of the levy. Under current procedures, the County Treasurer distributes all property taxes received to the District including amounts paid by taxpayers that have filed tax objections in the circuit court that such taxes are illegal and excessive. Any tax objections that are sustained in the subsequent legal proceedings are deducted from future property tax distributions that are due to the District. In the Fund Financial Statements property tax revenues are recognized under the modified accrual basis of accounting so that (a) taxes relating to the current budget and collected within 60 days after the end of the fiscal year be recognized as revenue currently; and (b) a property tax assessment made during the current year for the purpose of financing the budget of the following fiscal period be recorded as receivable and the related revenue deferred to the period for which it was levied. Therefore, property tax revenue reflected in the statement of revenues, expenditures and changes in fund balances includes that portion (approximately 60%) of the 2013 property tax levy due and received by, or expected to be received within 60 days after June 30, The portion of the 2013 property tax levy not currently available is reported as a deferred inflow of resources in the balance sheet. Property taxes receivable for prior years are considered to be uncollectible. Restricted Cash and Cash Equivalents Restricted cash and cash equivalents are only available from the Working Cash Fund for loans to other funds for capital needed for operations. Prepaid Items In the government-wide financial statements, prepaid items are recorded on an accrual basis using the consumption method. Expenses reflect the amount of materials and supplies consumed and the amount of prepaid items applicable to the current period

22 Notes to Financial Statements June 30, 2014 Capital Assets Capital assets, which include land, buildings and improvements, equipment, and library collection, are reported under the governmental activities column in the government-wide financial statements. Capital assets are defined as assets with an initial individual cost of more than the specified threshold for its type and an estimated useful life of greater than one year. All purchased or constructed capital assets are reported at cost or estimated historical costs if actual historical cost is not available. Donated assets are recorded at their estimated fair value at the date of donation. The costs of maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not capitalized. Capital assets are recorded as expenditures at the acquisition date in the fund financial statements of governmental funds. The District has no general infrastructure assets. Depreciation of capital assets is recorded in the statement of activities on a straight-line basis over the estimated useful life of the asset. Capitalization thresholds (the dollar values above which asset acquisitions are added to the capital asset accounts) and the estimated useful lives of capital assets reported in the government-wide statements are as follows: Asset Class Capitalization Estimated Threshold Useful Life Land improvements - exhaustible $ 1, years Buildings $ 1, years Building improvements $ 1, years Furniture & equipment $ 1, years Library collection None 3-5 years Long-Term Obligations In the government-wide financial statements, long-term obligations are reported as liabilities of governmental activities in the statement of net position and interest paid is reported under the governmental function of interest on long-term debt in the statement of activities. In the governmental fund financial statements, debt payments are recorded as expenditures and the face amount of debt issued is reported as other financing sources. Issuance costs, whether or not withheld from the actual bond proceeds, are reported as debt service expenditures. Deferred Inflows of Resources In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. The District has only one type of item that qualifies for reporting in this category. Accordingly, the item, unavailable property tax revenue, is reported in the governmental funds balance sheet. These amounts are deferred and recognized as an inflow of resources in the period that amounts become available

23 Notes to Financial Statements June 30, 2014 Compensated Absences The District provides paid time off (PTO) to eligible employees for periods of time away from work. PTO benefit time encompasses the traditional vacation, personal days, administrative days and sick pay. During year one through two of employment, a full-time employee accrues thirteen days of paid time off (PTO), and from three through six years of employment, nineteen days of paid time off per year are accrued. After six years of employment, an employee accrues twenty-four days of paid time off per year. Paid time off leave will be granted on the anniversary of the date of hire and does not carry over at the end of the anniversary year. Accumulated amounts as of June 30, 2014 in the amount of $8,254 are reflected in the financial statements. The District also provides employees with an extended illness bank (EIB) account to assist in rendering payment for the time missed due to long-term illnesses. EIB hours accrue to full-time employees in the amount of 80 hours on the anniversary of the date of hire each year up to a maximum of 240 hours. EIB balances are not forfeited and are not paid at the time for vacation leave and other compensated absences with similar characteristics; GASB Statement No. 16 requires the accrual of a liability as the benefits are earned by the employees, if both of these conditions are met: a. The employees right to receive compensation is attributable to services already rendered. b. It is probable that the employer will compensate the employees for the benefits through paid time off or some other means, such as cash payments at termination or retirement. As of June 30, 2014, the accumulated potential liability for accumulated extended illness bank is approximately $17,947. Because employees do not receive compensation for unused sick leave at termination, no liability is recorded on the financial statements. Net Position/Fund Balances In the government-wide financial statements, the difference between the District s total assets and total liabilities represents net position. Net position displays three components-net investment in capital assets; restricted (distinguished between major categories of restrictions); and unrestricted. Unrestricted net position represents the net position available for futures operations. In the fund financial statements, fund balance consists of non-spendable fund balance, which includes amounts that cannot be spent because they are not in spendable form, or they are legally or contractually required to be maintained intact. Restricted fund balances are amounts restricted to specific purposes by creditors, grantors, contributors, or by enabling legislation or constitutional provisions. Committed fund balances are amounts that can only be used for specific purposes as pursuant to official action by the District Board prior to the end of the reporting period. Assigned fund balances are amounts the District intends to use for specific purpose but is neither restricted nor committed. Unassigned fund balance represents fund balance that has not been assigned to other funds and has not been restricted, committed, or assigned to specific purposes within the General Fund

24 Notes to Financial Statements June 30, 2014 When restricted and other fund balance resources are available for use, it is the District s policy to use restricted resources first, followed by committed, assigned, and unassigned amounts, respectively. NOTE 2: DEPOSITS The District is allowed to invest funds pursuant to the Public Funds Investment Act. Under the act, the District is authorized to make deposits in interest bearing depository accounts in federally insured and/or state chartered banks and savings and loan associations. Allowed investments include U.S. Government obligations and its agencies or instrumentalities, money market mutual funds registered under the Investment Company Act of 1940 that invest in allowable securities and fully collateralized repurchase agreements. Interest Rate Risk The District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Custodial Credit Risk This is the risk that, in the event of failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The Public Funds Investment Act requires that all deposits in financial institutions not insured by the Federal Deposit Insurance Corporation or other approved state insurer be fully collateralized by securities or mortgages that have a market value of not less than the principal amount of the deposits. As of June 30, 2014, the carrying amount of the District's bank deposits was $586,507 and the bank balance was $597,278. $250,000 of bank balances was covered by federal depository insurance, with the remaining balance of $347,278 having specific pledged collateral in the name of the District. NOTE 3: RECEIVABLES In the government-wide statements, receivables consist of all revenues earned at year-end and not yet received. Those receivables consist of grants operated on the reimbursement basis, other various receivables and property taxes receivable. Property taxes receivable are shown net of an allowance for uncollectible taxes in the amount of $3,118 (0.5%) for the 2013 tax levy. Governmental funds report unavailable revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. At the end of the current year, unavailable property tax revenue in the amount of $246,295 represents the entire balance