HANFORD JOINT UNION HIGH SCHOOL DISTRICT COUNTY OF KINGS AND TULARE HANFORD, CALIFORNIA AUDIT REPORT FOR THE YEAR ENDED JUNE 30, 2011

Transcription

1 HANFORD JOINT UNION HIGH SCHOOL DISTRICT COUNTY OF KINGS AND TULARE HANFORD, CALIFORNIA AUDIT REPORT FOR THE YEAR ENDED JUNE 30, 2011 M. GREEN AND COMPANY LLP Certified Public Accountants Visalia, CA 93277

2

3 Introductory Section

4

5 Hanford Joint Union High School District Audit Report For The Year Ended June 30, 2011 TABLE OF CONTENTS Page ExhibiUTable INTRODUCTORY SECTION Table of Contents... i-ii MANAGEMENT'S DISCUSSION AND ANALYSIS....1 FINANCIAL SECTION Independent Auditors' Report on Financial Statements Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets Exhibit A-1 Statement of Activities Exhibit A-2 Fund Financial Statements: Balance Sheet- Governmental Funds Exhibit A-3 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets Exhibit A-4 Statement of Revenues, Expenditures, and Changes in Fund Balances- Governmental Funds Exhibit A-5 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Exhibit A-6 Statement of Net Assets -Internal Service Fund Exhibit A-7 Statement of Revenues, Expenses, and Changes in Fund Net Assets- Internal Service Fund Exhibit A-8 Statement of Cash Flows - Proprietary Funds Exhibit A-9 Statement of Fiduciary Net Assets - Fiduciary Funds Exhibit A-10 Statement of Changes in Fiduciary Net Assets- Fiduciary Funds Exhibit A-11 Notes to the Financial Statements REQUIRED SUPPLEMENTARY INFORMATION SECTION Budgetary Comparison Schedules: General Fund Exhibit B-1 Schedule of Funding Progress- Other Postemployment Benefit Plan.. : Exhibit B-2

6 Hanford Joint Union High School District Audit Report For The Year Ended June 30, 2011 TABLE OF CONTENTS Page Exhibit/Table OTHER SUPPLEMENTARY INFORMATION SECTION Budgetary Comparison Schedules as Supplementary Information: Special Revenue Funds: Budgetary Comparison Schedules: Adult Education Fund Cafeteria Fund Deferred Maintenance Fund Exhibit C-1 Exhibit C-2 Exhibit C-3. Capital Projects Funds: Budgetary Comparison Schedules: Building Fund Exhibit C-4 Capital Facilities Fund... ~ Exhibit C-5 State School Building Lease-Purchase Fund Exhibit C-6 County School Facilities Fund Exhibit C-7 Special Reserve Fund for Capital Outlay Projects..., Exhibit C-8 Other Required Schedules as Supplementary Information: Local Education Agency Organization Structure Table D-1 Schedule of Average Daily Attendance... 60' TableD-2 Schedule of Instructional Time Table D-3 Schedule of Financial Trends and Analysis Table D-4 Reconciliation of Annual Financial and Budget Report With Audited Financial Statements Table D-5 Schedule of Charter Schools..., Table D-6 Schedule of Expenditures of Federal Awards Table D-7 Notes to the Schedule of Expenditures of Federal Awards OTHER INDEPENDENT AUDITORS' REPORTS 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 Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control over Compliance In Accordance With OMB Circular A Independent Auditors' Report on State Compliance FINDINGS AND QUESTIONED COSTS SECTION Schedule of Findings and Questioned Costs Letter to Management Summary Schedule of Prior Audit Findings... 78

7 Management's Discussion and Analysis

8

9 HANFORD JOINT UNION HIGH SCHOOL DISTRICT KINGS COUNTY. MANAGEMENT DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 INTRODUCTION The Hanford Joint Union High School District is an educational community committed to providing all students a competitive education with multiple learning opportunities in a safe, orderly environment fully equipped to teach 21st century skills. As a learning community, we strive to improve student achievement, to be responsive to community needs and to foster accountability for all. The Management Discussion and Analysis of Hanford Joint Union High School District's financial statements provide an overall review of the District's financial activities for the. fiscal year ended June 30, This analysis will look at the District's financial performance as a whole. The Management Discussion and Analysis should be reviewed in conjunction with the auditor's transmittal letter, notes to the basic financial statements and the basic government-wide fmancial statements to enhance the understanding of the District's financial performance. The District is a small, suburban school district offering instruction to students from ninth through twelfth grade, including programs for vocational and adult education. During the school year, the District operated three comprehensive high schools, two continuation high schools, one community day school, and one adult school on the traditional school schedule, for the instruction of approximately 4300 students. USING THE COMPREHENSIVE ANNUAL FINANCIAL REPORT This comprehensive annual financial report consists of a series of financial statements and notes to those statements. The statements are organized so the reader can understand the Hanford Joint Union High School District as a whole, and then proceed to provide an increasingly detailed look at specific financial activities. The Management Discussion and Analysis Statement is provided to assist our citizens, taxpayers and investors in reviewing the District's finances and to show the District's accountability for the money it receives. FINANCIAL IDGHLIGHTS The Hanford Joint Union High School District's Government-wide Statement of Net Assets illustrates total net assets of $58,571,111, the result of assets of $129,834,536 minus liabilities of$71,263,425. 1

10 General Revenues accounted for $30,717,812 in revenue. The District had $38,498,757 in expenses related to governmental activities. The General Fund reported a positive fund balance of$7;842,921 which included the fund balance of the Pupil Transportation Equipment Fund and Special Reserve for OPEB, which are included with the General Fund as a result ofgasb No. 54. STUDENT ENROLLMENT & DEMOGRAPHIC TRENDS The Hanford Joint Union High School District has an emollment of approximately 4300 students for the current school year, with emollment projected to increase in the immediate future. In addition to tracking emollment, the District also watches actual Average Daily Attendance (ADA). The ADA is typically lower than a District's emollment, although the two terms are often (though incorrectly) used interchangeably. The anticipated ADA for the District is 3606 for grades 9-12 and 500 for adult education. The ratio of actual attendance to emollment summarizes the District's changes and efforts to increase attendance. Figure 1 surrimarizes a historical analysis ofthe District's emollment to actual positive attendance ratios. Figure 1. District Emollment to Actual Attendance Ratios (Grades 9-,12 only) ~------'-----~ ~-~-----, 4,000 -,--~--~---~ ~~ --~---~----~~~-~----~~---~ ~ , ,~r-'--~-1 3,800 3,700 3,600 3,500 3,400 3, Enrolhnent mll Attendance Projected ' ' ' School districts have traditionally placed great importance on the accurate projection of student emollment for the ensuing budget year, due to the broad range of funding and programs impacted by this number. These impacts range from the very basic funding for California school districts which calculates the number of days attended by the emolled students times a unique "base revenue limit amount" (for tlie Hanford Joint Union High School District revenue limit amount was $6,035.70; an increase of $5.16 from 2009 : ), to how much a particular special program will receive, to the amount of one-time monies a district may receive. Increased ADA is intended to generate additional dollars to help offset normal inflationary costs of operating the business of education, and related growth cost for the additional emollment. 2

11 REPORTING THE DISTRICT AS A WHOLE THE STATEMENT OF NET ASSETS AND STATEMENT OF ACTIVITIES One of the most important questions asked about the District's finances is, "Is the District better off or worse off as a result of the year's activities?" "The Statement of Net Assets and the Statement of Activities" reports information about the District as a whole and about its activities in a manner that helps to answer this question. These statements include all assets and liabilities using the accrual basis of accounting similar to the accounting used by private sector corporations. All of the current year's revenues and expenses are taken into consideration regardless of when cash is received or paid. These two statements report the District's net assets and changes in them. The change in net assets provides the reader a tool to assist in determining whether the District's financial health is improving or deteriorating. The reader will need to consider other nonfinancial factors, such as property tax base, current property tax laws, student enrollment, and facility conditions in arriving at their conclusion regarding the overall condition of the District. FUND FINANCIAL STATEMENTS The fund financial statements provide detailed information about the most significant funds, not the District as a whole. Some funds are required to be established by State statute, while many other funds are established by the District to help manage money for particular purposes and compliance with various provisions. The District's two types of funds, governmental and proprietary, use different accounting approaches as further described in the notes to the financial statements. GOVERNMENTAL FUNDS Most of the District's activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in future periods. These funds are reported using an accounting method called modified accrual accounting. Governmental fund statements provide a detailed short-term view of the District's general governmental operations and the basic services it provides. Governmental fund information helps you determine whether there are more or less financial resources available to spend in the near future to finance the District's programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds is reconciled in the notes to the fmancial statements. Governmental funds include most of the major funds of the District. A more detailed discussion of Governmental funds follows. PROPRffiTARYFUNDS Proprietary funds use the same basis of accounting as business-type activities, therefore the statements will essentially match. This includes the Internal Service Fund. 3

12 FIDUCIARY FUNDS Fiduciary funds are used to account for resources held for the benefit of parties outside the governmental entity. 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. The District uses an agency fund to account for resources held for student activities and groups. These funds include Associated Student Body Funds and Foundation Trust and Scholarship Funds. The Hanford Joint Union High School District is the trustee, or fiduciary, for its student activity funds. All of the District's fiduciary activities are reported in separate Statements of Fiduciary Net Assets. We exclude these activities from the District's other financial statements because the District cannot use these assets to finance its operations. The Hanford Joint Union High School District is responsible for ensuring that the assets reported in these funds are used for their intended purpose. NOTES TO THE FINANCIAL STATEMENTS The notes provide additional information that is essential for a full understanding of the data provided in the government-wide and fund financial statements. e THE DISTRICT AS A WHOLE The "Statement ofnet Assets" providesthe perspective of the District as a whole. Table 1 provides a summary of the District's net assets for fiscal years and Table 1. Net Assets Current and other Assets Capital Assets Total Assets Current Liabilities Long-Term Debt Total Liabilities $ ,426,478 96,408, ,834,536 5,437,540 65,825,885 71,263,425 $ ,245,967 99,890, ,136,789 5,156,574 66,785,017 71,941,591 Total Percentage Change % -1.74% -3.49% 5.45% -1.44% -0.94% Net Assets Invested in Capital Assets, Net of related debt 31,449,381 34,040, % Restricted Unrestricted Total Net Assets 20,983,581 6,138,149 $ 58,571,111 22,086,318 4,068,612 $ 60,195, % 50.87% -2.70% 4

13 Table 2 shows the changes in net assets for fiscal year Table 2. Changes in Net Assets Total Percentage Governmental Activities Change Revenues Program Revenues Charges for Services $ 592,480 $ 514, % Operating Grants & Contributions 5,446,365 5,004, % Capital Grants & Contributions 118, , % General Revenues Revenue Limit Sources 22,297,855 20,665; % Federal Revenues 81,240 70, % State Revenues 4,751,373 4,299, % Local Revenues 3,587,344 4,976, % Total Revenues 36,874,670 35,684, % Expenses Instruction 17,816,079 18,748, % Instruction Related 4,083,811 3,956, % Student Support Services 3,529,284 3,717, % Administration 2,481,290 2,094, % Maintenance & Operations 7,160,632 6,875, % Other 3,427,661 3,739, % Total Expenses 38,498,757 39,132, % Change in Net Assets $ (1,624,087) $ (3,447,806) 52.90% GOVERNMENTAL FUNDS The District's Governmental Funds include Special Reserve Funds, Debt Service Funds, Capital Projects Funds, and most importantly, the General Fund. Figure 2 summarizes District Revenue by source of the District's General Fund. Figure 3 summarizes the District's General Fund Expenditures by function. 5

14 Figure 2. Revenues by Source r l Other State 14% Revenue Limit 72% Figure 3. Expenditures by Function ~ General Achninistration 7% -Other Outgo, 5% CommWlity Services, 0% 55% ciliary Services, 1% Pupil Services, Instruction Related Services, 12% GENERAL FUND BUDGET INFORMATION The District's budget is prepared in accordance with California law and is based on the modified accrual basis of accounting, utilizing measurable and available. revenue, disbursements and encumbranc.es. The most significant budgeted fund is the-general Fund. 6

15 The District begins the budget process in January of each year, to be completed by June 30. After updating of the forecast for changes in revenue and expenditure assumptions, the operating budget begins at the school level. Each school in the District receives a per pupil allocation augmented with resources for special education students. The departments provide input to the Business Office for their budget needs. The site and department budgets are reviewed monthly to ensure management becomes aware of any significant variations during the year. GENERAL FUND BUDGET VARIATIONS In June ofeach year, a Budget is adopted by the District's Board oftrustees, effective July 1 through June 30. The Budget is based on year-ending projections from the previous year's budget. As the school year progresses, the Budget is revised and updated, with numerous financial reports made public outlining the revisions. Finally, in August of the following year, the books are closed for the July 1 -June 30 fiscal year, and the results are audited, yielding actual final numbers. There are several reasons for budget revisions. Most notable are any salary increases granted by the Board of Trustees for District employees for the original budget does not presume salary increases. Also, any changes in the number of staff and/or staff utilization of health and welfare benefits that vary from the original projections would also yield budget revisions. The implementation of new instructional or categorical programs can also affect budget projections. For the Hanford Joint Union High School District, the increased emphasis on closing the achievement gap for all of our students will push forward several academicfocused programs that will impact expenditures in personnel, instructional materials, outside services and supplies. The State and Federal budget issues have an impact on the District's budget. As revenues from these two sources change, so do District revenues, since 95% of District General Fund revenues come from State and Federal revenue streams. The final actual numbers of the General Fund that will be certified by February ofthe next year will be the reflection of the culmination of these several factors. The net difference in fund balance between the final budget and the actual balance of the General Fund was an increase of$1,297,713 and may be summarized as follows: $ (131,043) decrease in total revenue 1,299,309 increase in total expenditures 129,44 7 increase in transfers $1,297,713 increase in fund balance This includes the budget and actual of the the Pupil Transportation Equipment Fund and the Special Reserve for OPEB that are included in the General Fund as a result of implementation of GASB No

16 CAPITAL ASSETS AND DEBT ADMINISTRATION CAPITAL ASSETS At the end of the fiscal year , the District had $96,408,058 invested in land, buildings, equipment, and construction in progress. Table 3 shows fiscal year balances. Table 3. Changes in Net Assets (Net of Depreciation) Governmental 2011 Land $ 2,531,468 Improvements 61,457,429 Buildings 30,187,639 Equipment 2,216,772 Construction in Progress 14,750 Totals $ 96,408,058 Activities 2010 $ 2,430,773 64,206,309 30,884,848 2,368,892 $ 99,890,822 Total Percentage Change % -4.28% -2.26%.,6.42% % -3.49% This year's major additions included: Well- SP Additional land purchase - SP Fencing Total $ $ 100, , , ,985 Work in Progress included: Demolition of OH Building - HH $ 14,750 8

17 DEBT At June 30, 2011, the District had $65,276,444 in debt outstanding. Table 4 summarizes these debts. _Table 4. Outstanding Debt at Year-end Total Percentage Governmental Activities Change General Obligation Bonds $ 45,063,915 $ 45,740, % Bond Premium 1,011,342 1,052, % Certificates of Participation 14,613,333 14,991, % Compensated Absences 159, , % Early Retirement 158, , % Other - Bond Interest 4,270,087 4,065, % Total $ 65,276,444 $ 66,307, % FOR THE FUTURE The State of California is still in a budget crisis. The Board of Trustees and the Administration of the Hanford Joint Union High School District closely monitor this situation. In order to help alleviate the growing costs of health insurance, the District went fully self-insured beginning October 1, we-are currently still self-insured although the plan has suffered financially this past year. A third-party administrator, Delta Health Systems, administers the plan for the District. 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 fmances and to show the District's accountability for the money it receives. If you have questions about this report or need additional financial information contact Renee Willhite, Director of Business at ext

18

19 Financial Section

20

21 taj M. Green and Company LLP ==~,~~~==c=nr=r.=w=m=v==pu=~=u=c=a=c=c=o=u=w=~=nt.=~==~==~======================= Tulare JES; Post Office Box 3330 Visalia, California Telephone (559) FAX (559) mail: Web Site: Board of Trustees Hanford Joint Union High School District 823 W. Lacey Boulevard Hanford, California Members of the Board of Trustees: Independent Auditors' Report on Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information o( Hanford Joint Union High School District as of and for the year ended June 30, 2011, which collectively comprise the District's basic financial statements as listed in the table of contents. These financial statements are the responsibility of Hanford Joint Union High School 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 the 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 Hanford Joint Union High School District as of June 30, 2011, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note A to the financial statements, Hanford Joint Union High School District adopted the provisions of Government Auditing Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions for the fiscal year ended June 30, In accordance with Government Auditing Standards, we have also issued our report dated December 15, 2011, on our consideration of Hanford Joint Union High School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The Management's Discussion and Analysis, the budgetary comparison information and the Schedule of Funding Progress for OPEB Benefits identified as Required Supplementary Information in the table of contents are not a required part of the basic financial statements but are supplementary information required by. accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. 10

22

23 Our audit was conducted for the purpose of forming opinions on the financial statements which collectively comprise Hanford Joint Union High School District's basic financial statements. The other required schedules included as supplementary information as listed in the table of contents, which includes the Schedule of Expenditures of Federal Awards required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations are presented for purposes of additional analysis and are not a required part of the basic financial statements. This information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The budgetary comparison schedules presented as other supplementary information on pages 51 through 58 have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. December 15,

24

25 Basic Financial Statements

26 HANFORD JOINT UNION HIGH SCHOOL DISTRICT STATEMENT OF NET ASSETS JUNE 30, 2011 EXHIBIT.,f.-1 ASSETS: Cash in County Treasury Cash on Hand and in Banks Cash in Revolving Fund Cash with a Fiscal Agentrrrustee Accounts Receivable Stores Inventories Unamortized Bond Issuance Costs Unamortized Issuance Costs Other Current Assets Capital Assets: Land Land Improvements, Net Buildings, Net Equipment, Net VVorkin Progress Total Assets LIABILITIES: Accounts Payable Deferred Revenues Noncurrent Liabilities: Other Postemployment Benefit Obligations Due within one year Due in more than one year Total Liabilities NET ASSETS. Invested in Capital Assets, Net of Related Debt Restricted For:. Debt Service Capital Projects Legally Restricted Balances Specjfic Purposes Unrestricted Total Net Assets Governmental Activities $ 21,737, ,393 3,325 3,371,134 6,273,228 16, , , ,419 2,531,468 61,457,429 30,187,639. 2,216,772 14, ,834,536 4,929, , ,441 1,991,259 63,285,185 71,263,425 31,449,381 2,586,180 17,355; , ,044. 6,138,149 $ 58,571,111 The accompanying notes are an integral part of this statement.

27 'HANFORD JOINT UNION HIGH SCHOOL DISTRICT STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2011 EXHIBIT A-2 Functions/Programs PRIMARY GOVERNMENT: Government Activities: Instruction Instruction-Related Services Pupil Services Ancillary Services Community Services General Administration Plant Services Other Outgo Total Governmental Activities Total Primary Government Expenses Charges for Services $ 17,816,079 $ 89,022 4,083,811 4,688 3,529, , , ,645 2,481,290 20,894 7,160,632 69,670 2,872,510 9,577 38,498, ,480 $ 38, $ 592,480 General Revenues: Revenue Limit Sources Federal Revenues State Revenues Local Revenues Transfers Total General Revenues Change in Net Assets Net Assets - Beginning Net Assets - Ending Net (Expense) Revenue and Changes in Program Revenues Net Assets Operating Capital Grants and Grants and Governmental Contributions Contributions Activities $ 3,494,770 $ 118,013 $ (14,114,274) 448,932 (3,630, 191) 1,053,109 (2,077,546) (441,506) (113,645) 174,419 (2,285,977) 74,057 (7,016,905) 201,078 (2,661,855) 5,446, ,013 (32,341,899) $ 5,446,365 $ (32,341,899) 22,297,855 81,240 4,751,373 3,587,344 30,717,812 (1,624,087) 60,195,198 $ 58,571,111 The accompanying notes are an integral part of this statement. 13

28 HANFORD JOINT UNION HIGH SCHOOL DISTRICT BALANCE SHEET- GOVERNMENTAL FUNDS JUNE 30, 2011 The accompanying notes are an integral part of this statement. 14

29 EXHIBIT A-3 Special Reserve Capital Outlay Projects Other Governmental Funds Total Governmental Funds $ 4,945,179 $ 3,285,913 19, ,000 $ 8,600,394 $ 3,894,031 2, , ,051 16,676 4,449,168 $ $ 21,719,328 3,325 3,285,913 6,273, ,758 16,676 31,951,228 $ 80,076 $ 80, , , ,047 $ 2,374, , ,042 3,535,484 8,520,318 2,855 16,676 3,795,813 3,325 16,676 20,983, , , ,573 8,520,318 4,033,121 1,039,133 5,990,679 28,415,744 $ 8,600,394 $ 4,449,168 $ 31,951,228 15

30 This page is left blank intentionally.

31 HANFORD JOINT UNION HIGH SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS. JUNE 30, 2011 EXHIBIT A-4 Total fund balances- governmental funds balance sheet $ 28,415,744 Amounts reported for governmental activities in the Statement of Net Assets ("SNA") are different because: Capital assets used in governmental activities are not reported in the funds. Costs of bond issuance are amortized over the life of the bond. The assets and liabilities of internal service funds are included in governmental activities in the. SNA. Payables for bond principal which are not due in the current period are not reported in the funds. Payables for bond interest which are not due in the current period are not reported in the funds. Payables for retirement incentives which are not due in the current period are not reported in the funds. Payables for compensated absences which are not due in the current period are not reported in the funds. Payables for COPS which are not due in the current period are not reported in the funds. Cost of COPS issuance is amortized over the life of the COPS. Bond premiums are amortized over the life of the bond. COPS original issue discount is amortized over the life of the COPS. OPES liabilities which are not due and payable in the current period are not reported in the funds. Net assets of governmental activities - St13tement of Net Assets 96,408, ,903 (126,060) (45,063,915) (6,311 '108) (158,124) (159,643) (14,613,333) 606,953 (1,011,342).189,419 (549,441) $ 58,571,111 The accompanying notes are an integral part of this statement. 16

32 HANFORD JOINT UNION HIGH SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2011 Revenues: Revenue Limit Sources: State Apportionments $ Local Sources Federal Revenue other State Revenue Other Local 'Revenue Total Revenues Expenditures: Instruction Instruction - Related Services Pupil Services Ancillary Services Community Services General Administration Plant Services Other Outgo Debt Service: Principal Interest Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Transfers In Transfers Out Total other Financing Sources (Uses) Net Change in Fund Balance Fund Balance, July 1 Fund Balance, June 30 $ General Fund County School Facilities Fund 19,498,632 $ 2,799,409 2,633,207 5,534,364 1,574, ,991 32,040, ,991 16,699;741 3,517,361 2,633, ,310 9,605 2,128,082 3,250, , ,954 98,971 1,029 29,073, ,606 2,967,110 (101,615) 1,980 (1,069,184) {1,067,204) 1,899,906 (101,615) 5,943,015 8,120,999 7,842,921 $ 8,019,384 The accompanying notes are an integral part of this statement. 17

33 EXHIBIT A-5 Special Reserve Other Total Capital Outlay Governmental Governmental Projects Funds Funds $ $ $ 19,498,632 2,799, ,292 \ 3,316, ,548 5,764, ,250 3,699,268 5,509, ,250 4,613,108 36,888, ,597 17,436, ,443 3,739, ,625 3,547, , , ,645 69,707 2,197, , ,349 4,144, , , ,710 1,153, ,044. 1,694,984 2,405,057 1,341,642 4,838,455 35,472,704 (1,224,392) {225;347) 1,415, , ,184 1,071,164 (1,980) (1,071,164) 350, ,204 (874,392) 491,857 1,415,756 9,394,710 3,541,264 26,999,988 $ 8,520,318 $ 4,033,121 $ 28,415,744 18

34 HANFORD JOINT UNION HIGH SCHOOL DISTRICT. 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, 2011 EXHIBIT A-6 ~ Net change in fund balances - total. governmental funds Amounts reported for governmental activities in the Statement of Activities ("SOA'') are different because: Capital outlays are not reported as expenses in the SOA. The depreciation of capital assets used in governmental activities is not reported in the funds.. COP issuance costs and similar items are amortized in the SOA but not in the funds. Revenues in the SOA not providing current financial resources are _not reported as revenues in the funds. Repayment of bond principal is an expenditure in the funds but is not an expense in the SOA. Payment of retirement incentive principal is an expenditure in the funds but is not an expense in the SOA. Repayment of loan principal is an expenditure in the funds but is not an expense in the SOA. Bond issuance costs and similar items are amortized in the SOA but not in the funds. The accretion of interest on capital appreciation bonds is not reported in the funds. (Increase) decrease in accrued interest from beginning of period to end,of period. The net revenue (expense) of internal service funds is reported with governmental activities. Compensated absences are reported as the amount earned in the SOA but as the amount paid in the funds. Bond premiums are reported in the funds but not in the SOA. COP original issue discount is reported in the funds but not in the SOA. OPEB obligation in excess of the "pay as you go" amount are expenses in the SOAbut not expenditures in the funds. Change in net assets of governmental activities - Statement of Activities $ $ 1.415, ,310 (4,224,074) (27,950) (13,790} 676, , ,333 (42,356} (204,388) 66,570 (491,755) 20,062 41,555 (6,930} (71,511) (1,624,087) The accompanying notes are an integral part of this statement. 19

35 HANFORD JOINT UNION HIGH SCHOOL DISTRICT STATEMENT OF NET ASSETS INTERNAL SERVICE FUND JUNE 30, 2011 Nonmajor Internal Service Fund EXHIBIT A-7 ASSETS: Current Assets: Cash in County Treasury Cash on Hand and in Banks Cash'with a Fiscal Agenvrrustee Total Current Assets Total Assets LIABILITIES: Current Liabilities: Accounts Payable Incurred But Not Reported Claim.s Total Current Liabilities Total Liabilities $ Self-Insurance Fund 18, ,393 85, , ,734 25, , , ,793 NET ASSETS: Unrestricted Net Assets Total Net Assets (126,059) $====(1=26=,0=5=9) The accompanying notes are an integral part of this statement. 20

36 HANFORD JOINT UNION HIGH SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS- INTERNAL SERVICE FUND FOR THE YEAR ENDED JUNE 30, 2011 Operating Revenues: Local Revenue Total Revenues Operating Expenses: Services and Other Operating Expenses Total Expenses Operating Income (Loss) Income (Loss) before Contributions and Transfers lnterfund Transfers In lnterfund Transfers Out Change in Net Assets $ Nonmajor Internal Service Fund Self-Insurance Fund 3,391,099 3,391,099 3,882,853 3,882,853 (491,754) (491,754) 2,905,320 (2,905,320) (491,754) EXHIBIT A-8,, Total Net Assets- Beginning Total Net Assets- Ending $ 365,695 (126,059) The accompanying notes are ~n integral part of this statement. 21

37 HANFORD JOINT UNION HIGH SCHOOL DISTRICT STATEMENT OF CASH FLOWS INTERNAL SERVICE FUND FOR THE YEAR ENDED JUNE 30, 2011 EXHIBIT A-9 Nonmajor Internal Service Fund Cash Flows from Operating Activities: Cash Received from Premiums Cash Paid for Claims Net Cash Provided (Used) by Operating Activities Cash Flows from Investing Activities: Interest and Dividends on Investments Net Cash Provided (Used) for Investing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year Cash and Cash Equivalents at End of Year $ $ Self-Insurance Fund 6,295,371 (6,911,865) (616,494) 1,048 1,048 (615,446) 1,003, ,734 The accompanying notes are an integral part of this statement. 22

38 HANFORD JOINT UNION HIGH SCHOOL DISTRICT STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2011 Agency Fund EXHIBIT A-10 oj ASSETS: Cash in County Treasury $ Cash on Hand and in Banks Total Assets LIABILITIES: Accounts Payable Due to Student Groups Total Liabilities NET ASSETS: Held in Trust Total Net Assets $ Foundation Trust Fund Student Body Fund 734,159 $ 563, , , , , , ,496 $ The accompanying notes are; an integral part of this statement. 23

39 HANFORD JOINT UNION HIGH SCHOOL DISTRICT STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS FOR THE YEAR ENDED JUNE 30, 2011 EXHIBIT A-11 Additions: Investment Income Plan Member Contributions Total Additions Deductions: Scholarship Awards Administrative Expenses Total Deductions Change in Net Assets Net Assets-Beginning of the Year Net Assets-End of the Year Foundation Trust Fund $ 10,535 65,707 76,242 62,150 2,174 64,324 11, ,578 $ 733,496 The accompanying notes are an integral part of this statement. 24

40 HANFORD JOINT UNION HIGH SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2011 A. Summary of Significant Accounting Policies Hanford Joint Union High School District (District) accounts for its financial transactions. in accordance with the pol ides and procedures of the Department of Education's "California School Accounting Manual". The accounting policies of the District conform to accounting principles generally accepted in the United States of America (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB) and the American Institute of Certified Public Accountants (AICPA).. 1. Reporting Entity The District's combined financial statements include the accounts of all its operations. The District evaluated whether any other entity should be included in these financial statements. The criteria for including organizations as component units within the District's reporting entity, as set forth in GASB Statement No. 14, "The Financial Reporting Entity," as amended by GASB Statement No. 39 "Determining Whether Certain Organizations are Component Units" include whether: - the organization is legally separate (can sue and be sued in its name) - the District holds the corporate powers of the organization - the District appoints a voting majority of the organization's board - the District is able to impose its will on the organization - the organization has the potential to impose a financial benefit/burden on the District - there is fiscal dependency by the organization on the District - it would be misleading or cause the financial statements to be incomplete to exclude another organization Based on these criteria, the District has no component units. Additionally, the District is not a component unit of any other reporting entity as defined by the GASB Statement. 2. Basis of Presentation, Basis of Accounting a. Basis of Presentation Government-wide Statements: The statement of net assets and the statement of activities include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the double-counting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. The statement of activities presents a comparison between direct expenses and program revenues for each function of the District's governmental activities. Direct. expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. The District does not allocate indirect expenses in the statement of activities. Program revenues include (a) fees, fines, and charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the District's funds, with separate statements presented for each fund category. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. All remaining governmental funds are aggregated and reported as non-major funds. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. 25

41 HANFORD JOINT UNION HIGH SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2011 The District reports the following major governmental funds: The General Fund is the District's primary operating fund. It is used to account for all financial resources of the District except those required to be accounted for in another fund. The County School Facilities Fund is used to receive apportionments from the. State School Facilities Fund authorized by the State Allocation Board for new school facility construction, modernization projects, and facility hardship grants. The Special Reserve Fund for Capital Outlay Projects exists primarily to provide for the accumulation of General Fund monies for capital outlay purposes. In addition, the District reports the following fund types: Non-Major Governmental Funds: Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specific purposes. The following special revenue funds are utilized by the District: The Adult Education Fund is used. to account separately for federal, state and local revenues to operate the adult education programs and is used only for those expenditures as necessary for the operation of the District's adult education program. Under GASB Statement No. 54, this fund would no longer meet the definition of a special revenue fund if not for substantial federal, state and local revenues received by the District which are expected to continue. The Cafeteria Fund is used to account separately for federal, state, and local resources to operate the food service program and is used only for those expenditures as necessary for the operation of the District's food service program. The Deferred Maintenance Fund is used to account separately for state apportionments, District contributions and expenditures made in accordance with the District's five year plan for deferred maintenance purposes. During 2009, legislation was passed that allowed the fund balance and state apportionments to be flexible for expenditure purposes.until fiscal year , which was extended through by Senate Bill 70. The District has elected to continue the use of the Deferred Maintenance Fund and has committed these resources for the purpose of deferred maintenance expenditures. Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related costs. The following debt service fund is maintained by the District: The Bond Interest and Redemption Fund is used to account for the accumulation of resources for, and the repayment of, district bonds, interest, and related costs. This fund is under the control of the Kings County Assessor and, therefore, is not budgeted by the District. Capital Projects Funds are used to account for the acquisition and/or construction of all major governmental general fixed assets. The District maintains the following capital projects funds: The State School Building Lease-Purchase Fund is used to account for the acquisition of portable classrooms and related equipment from state apportionments. (Education Code Section 17708). The Capital Facilities Fund is used to account for resources received from developer impact fees assessed under provisions of the California Environmental Quality Act (CEQA). 26

42 HANFORD JOINT UNION HIGH SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2011 The Building Fund is used to account for the acqujsuon of major governmental capital facilities and buildings from the proceeds of bond sales and certificates of participation. In addition, the District reports the following fund types: Internal Service Funds: These funds are used to account for revenues and expenses related to services provided to parties inside the District. These funds facilitate distribution of support costs to the users of support services on a cost-reimbursement basis. Because the principal users of the internal services are the District's governmental activities, this fund type is included in the "Governmental Activities" column of the government-wide financial statements. The Self-Insurance Fund is used to account for District self-insured health, v1s1on, dental, and hearing benefits for its employees. The General Fund transfers the premiums for this coverage and health insurance to the Self-Insurance Fund. Fiduciary funds are reported in the fiduciary fund financial statements. However, because their assets are held in a trustee or agent capacity and are therefore not available to support District programs, these funds are not included in the government-wide statements. Private-Purpose Trust Funds: These funds are used to report trust arrangements under which principal and income benefit individuals, private organizations, or other governments not reported in other fiduciary fund types. Agency Funds: These funds are used to report student activity funds and other resources held in a purely custodial capacity (assets equal liabilities). Agency funds typically involve only the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organizations, or other governments. The following fund is in use: The District maintains one agency fund for the schools' student bodies.. b. Measurement Focus, Basis of Accounting Government-wide, Proprietary, and Fiduciary Fund Financial Statements: These financial statements are reported using the economic resources measurement focus. The government-wide and proprietary fund financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Governmental Fund Financial Statements: Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The District does not consider revenues collected after its year-end to be available in the current period. Revenues from local sources consist primarily of property taxes. Property tax revenues. and revenues received from the State are recognized under the susceptible-to-accrual concept. Miscellaneous revenues are recorded as revenue when received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned; since they are both measurable and available. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. When the District incurs an expenditure or expense for which both restricted and unrestricted resources may be used, it is the District's policy to use restricted resources first, then unrestricted resources. 27

43 HANFORD JOINT UNION HIGH SCHOOL DISTRICT NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED JUNE 30, Encumbrances Under GASB Statement No. 20, "Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting," all proprietary funds will continue to follow Financial Accounting Standards Board ("FASB") standards issued on or before November 30, However, from that date forward, proprietary funds will have the option of either 1) choosing not to apply future FASB standards (including amendments of earlier pronouncements), or 2) continuing to follow new FASB pronouncements unless they conflict with GASB guidance. The District has chosen to apply future FASB standards. Encumbrance accounting is used in all budgeted funds to reserve portions of applicable appropriations for which commitments have been made. Encumbrances are recorded for purchase orders, contracts, and other. commitments when they are written. Encumbrances are liquidated when the commitments are paid. All encumbrances are liquidated as of June Budgets and Budgetary Accounting Annual budgets are adopted on a basis consistent with generally accepted accounting principles for all governmental funds. By state law, the District's governing board must adopt a final budget no later than July 1. A public hearing must be conducted to receive comments prior to adoption. The District's governing board satisfied these requirements. These budgets are revised by the District's governing board and district superintendent during the year to give consideration to unanticipated income and expenditures.. Formal budgetary integration was used as a management control device during the year for all budgeted funds. The District employs budget control by minor object and function and by individual appropriation accounts. Expenditures cannot legally exceed appropriations by major object code. All appropriations lapse at year ~nd. Expenditures by major object code did not exceed the final budgeted amounts except in the General Fund and the Cafeteria Fund. 5. Assets, Liabilities, and Equity a. Deposits and Investments Cash balances held in banks and in revolving funds are fully insured or collateralized. For purposes of the statement of cash flows, highly liquid investments are considered to be cash equivalents if they have a maturity of three months or less when purchased.. In accordance with Education Code Section 41001, the District maintains substantially all its cash in the Kings County Treasury. The county pools these funds with those of other districts in the county and invests the cash. These pooled funds are carried at cost, which approximates market value. Interest earned is deposited quarterly into participating funds. Any investment losses are proportionately shared by all funds in the pool. The county is authorized to deposit cash and invest excess funds by California Government Code Section et seq. The funds maintained by the county are either secured by federal depository insurance or are collateralized. Information regarding the amount of dollars invested in derivatives with the Kings County Treasury was not available. Cash with fiscal agent in the Self-Insurance Fund represents funds held for the payment of employee health, vision and dental costs. 28