CHESTERFIELD COUNTY SCHOOL DISTRICT CHESTERFIELD, SOUTH CAROLINA AUDITED BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION JUNE 30, 2009

Transcription

1 CHESTERFIELD COUNTY SCHOOL DISTRICT CHESTERFIELD, SOUTH CAROLINA AUDITED BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION JUNE 30, 2009

2 TABLE OF CONTENTS June 30, 2009 Page FINANCIAL SECTION Report of Independent Auditors 4 Management's Discussion and Analysis 5 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets 14 Statement of Activities 15 Fund Financial Statements: Balance Sheet - Governmental Funds 17 Statement of Revenues, Expenditures, and Changes in Fund Balances - And Reconciliation to the Statement of Activities - Governmental Funds 18 Statement of Net Assets - Proprietary Fund (Food Service) 20 Statement of Revenues, Expenses, and Changes in Net Assets - Proprietary Fund (Food Service) 21 Statement of Cash Flows - Proprietary Fund (Food Service) 22 Statement of Net Assets - Fiduciary Funds (Student Activities) 23 Notes to the Financial Statements 24 Notes to Required Supplementary Information 36 Required Supplementary Information: Budgetary Comparison Schedule - General Fund 38 Budgetary Comparison Schedule - Special Projects Fund 39 Budgetary Comparison Schedule - EIA 40 Supplementary Information: Combining Balance Sheet - Non-Major Governmental Funds 42 Combining Statement of Revenue, Expendtitures & Changes in Fund Balances Non-Major Governmental Funds 43 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual 45 Special Projects Fund Combining Schedule of Revenue, Expenditures and Changes in Fund Balance Special Projects 54 2

3 TABLE OF CONTENTS (CONTINUED) Summary Schedule for Designated State Restricted Grants 62 Education Improvement Act Combining Schedule of Revenues, Expenditures and Changes in Fund Balance - EIA 64 Summary Schedule by Program of Revenue and Expenditures - EIA 69 School Building Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance 71 SCAGO Education Facilities Corporation Schedule of Revenue, expenditures and Changes in Fund Balance 72 Debt Service: Schedule of Revenues, Expenditures and Changes in Fund Balance 74 SCAGO Educational Facilities Corporation Schedule of Revenue, Expenditures & Changes in Fund Balance 75 Proprietary Fund: Schedule of Revenues, Expenses and Changes in Fund Net Assets - Food Service Fund 77 Statement of Food Service from Local Sources by Lunchroom 79 Agency Funds: Schedule of Changes in Assets and Liabilities Agency Fund - Pupil Activity Funds 81 Schedule of Receipts, Disbursements, and Changes in Net Assets 82 Transactions of Activity Funds 83 Miscellaneous Schedules: Detailed Schedule of Due to State Department of Education / Federal Government 106 Location Reconciliation Schedule 107 COMPLIANCE SECTION 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 109 Independent Auditors' Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance In Accordance with OMB Circular A Schedule of Findings and Questioned Costs 113 Schedule of Expenditures of Federal Awards 114 3

4 Offices: Alan W. Thompson, CPA Whiteville, NC R. Bryon Scott, CPA Elizabethtown, NC Gregory S. Adams, CPA Thompson, Price, Scott, Adams & Co., P.A. CERTIFIED PUBLIC ACCOUNTANTS P.O. Box 398 / 1626 S. Madison Street Whiteville, North Carolina Telephone (910) Fax (910) Wilmington, NC To the Board of Education Chesterfield County School District Chesterfield County, South Carolina Independent Auditor s Report We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the Chesterfield County School District (the District), as of and for the year ended June 30, 2009, which collectively comprise the District s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the District's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Chesterfield County School District as of June 30, 2009, and the respective changes in financial position and cash flows, where applicable, thereof of the respective budgetary comparison for the General Fund, Special Projects Fund, and EIA Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. Members American Institute of CPA s NC Association of CPAs AICPA Division of Firms 4

5 In accordance with Government Auditing Standards, we have also issued our report dated November 5, 2009 on our consideration of the District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants. The purpose of the 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 read in conjunction with this report in considering the results of our audit. The Management s Discussion and Analysis and the budgetary information on pages 6 and 38-40, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of supplementary information. However, we did not audit this information and express no opinion on it. Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements of Chesterfield County School District. The combining and individual fund schedules listed in the Table of Contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements of Chesterfield County School District. The combining and individual fund financial statements and the schedule of expenditures of federal awards have 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. Thompson, Price, Scott, Adams & Co, P.A. November 5,

6 CHESTERFIELD COUNTY SCHOOL DISTRICT MANAGEMENT DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2009 Management's Discussion and Analysis Our discussion and analysis of the Chesterfield County School District's financial performance provides an overview of the District's financial activities for the fiscal year ended June 30, Please read it in conjunction with the District's basic financial statements, which begin on page 12. Financial Highlight The District continued the construction and rehabilitation of its school buildings. The District's general fund grew by $53,419. The Basic Financial Statements This annual report consists of a series of financial statements. The Statement of Net Assets and the Statement of Activities (on pages 14 & 15) provide information about the activities of the District as a whole and present a longer- term view of the District's finances. Fund financial statements start on page 17. For governmental activities, these statements tell how these services were financed in the shortterm as well as what remains for future spending. Fund financial statements also report the District's operations in more detail than the government-wide statements by providing information about the District's most significant funds. The remaining statements provide financial information about activities for which the District acts solely as a trustee or agent for the benefit of student groups. The Statement of Net Assets and the Statement of Activities Our analysis of the District as a whole begins on page 7. One of the most important questions asked about the District's finances is, "Is the District as a whole better off or worse off as a result of the year's activities?" The Statement of Net Assets and the Statement of Activities report information about the District as a whole and about its activities in a way that help answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most privatesector companies. All of the current year's revenue and expenses are taken into account regardless of when cash is received or paid. These two statements report the District's net assets and changes in them. You can think of the District's net assets the difference between assets and liabilities as one way to measure the District's financial health, or financial position. Over time, increases or decreases in the District's net assets are one indicator of whether its financial health is improving or deteriorating. You will need to consider other non-financial factors, however, such as changes in the District's property tax base, the support it receives from federal and state sources, and the condition i of its school buildings. In the Statement of Net Assets and the Statement of Activities, we divided the District into two kinds of activities: Governmental activities Most of the District's basic services are reported here, including instructional and support services, community service, debt service and building construction, improvements and maintenance. Business-type activity The District charges a fee or receives USDA reimbursement and commodities to provide food service. Fund Financial Statements Our analysis of the District's major funds begins on page 9. The fund financial statements begin on page 17 and provide detailed information about the most significant funds not the District as a whole. Most funds are required to be established by the South Carolina State Department of Education. Other funds are established by the District to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants and other money. The District's two kinds of funds, governmental and proprietary, use different accounting approaches. Governmental funds -Most of the District's services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the District's general governmental operations and the educational services that it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the District's programs. We describe the relationship (or difference) between governmental activities (reported in the government-wide financial statements) and governmental fund statements in a reconciliation accompanying the fund financial statements. 6

7 CHESTERFIELD COUNTY SCHOOL DISTRICT MANAGEMENT DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2009 Fund Financial Statements (Continued) Proprietary funds - The District reports its food service operations in a proprietary fund. Proprietary funds are reported in the same way that all activities are reported in the government-wide financial statements (e.g., the Statement of Net Assets and the Statement of Activities). In fact, the District's enterprise fund statements (a component of proprietary funds) are the same as the business-type activities reported in the government-wide statements but provide more detail and additional information, such as cash flows, for proprietary funds. Reporting the District's Fiduciary Responsibility Students engage in numerous curricular and extra-curricular activities that enhance their overall educational experience. Each school provides centralized accounting and control over the financial resources of these activities. These funds are held in a purely custodial capacity and do not have governmental operations. Therefore, they do not report changes in fiduciary net assets. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. Overall, the district's net assets resulted in a decrease of $505,532 from last year. The largest portion of the District's net assets (71.35%) reflects its investment in capital assets less any related debt used to acquire those assets that is still outstanding. An additional portion (21.40%) of the District's net assets represents resources subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets, which decreased $465,050 during the year, represents that portion of total net assets that can be used to finance day-to-day operations. Table I Net Assets Governmental Activities Business-type Activities Total Primary Government Current & other assets $ 26,521,181 $ 24,213,061 $ 148,460 $ 351,674 $ 26,669,641 $ 24,564,735 Capital assets 113,843, ,730, , , ,554, ,370,575 Total assets 140,365, ,943, , , ,224, ,935,310 Current liabilities 12,839, ,045, ,839, ,045,944 Long-term liabilities 80,927,997 78,938, ,927,997 78,938,133 Total liabilities 93,767,265 91,984, ,767,265 91,984,077 Net Assets: Invested in Capital Assets, net of debt 30,910,122 32,860, , ,728 31,620,639 33,500,575 Restricted 11,966,724 10,046, ,966,724 10,046,306 Unrestricted 3,720,942 3,052, , ,674 3,869,402 3,404,352 Total Net Assets $ 46,597,788 $ 45,959,831 $ 858,977 $ 991,402 $ 47,456,765 $ 46,951,233 The District is able to report positive balances in all three areas of net assets both for the government as a whole, as well as for its separate governmental and business type activities. 7

8 CHESTERFIELD COUNTY SCHOOL DISTRICT MANAGEMENT DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2009 Revenues Program revenues: Charges for Services 338,785 Table II Changes in Net Assets Governmental Activities Business-type Activities Total Primary Government $ $ 111,771 $ 732,675 $ 625,535 1,071, ,306 Operating Grants 43,606,105 47,558,925 3,029,476 3,223,988 46,635,581 50,782,913 Capital Grants - General revenues: Property and sales tax 18,296,117 18,845, ,296,117 18,845,006 Other general revenue 8,242,388 1,701,862-29,232 8,242,388 1,731,094 Total Revenue 70,483,395 68,217,564 3,762,151 3,878,755 74,245,546 72,096,319 Program expenses: Instruction 42,596,554 42,233, ,596,554 42,233,300 Support services 21,963,634 22,084, ,963,634 22,084,166 Community services 409, , , ,564 Intergovernmental 72,274 78, ,274 78,117 Interest on long-term debt 3,830,742 4,190, ,830,742 4,190,871 Food service - - 3,795,020 3,619,534 3,795,020 3,619,534 Total Expenses 68,873,026 69,005,018 3,795,020 3,619,534 72,668,046 72,624,552 Excess before transfer 1,610,369 (787,454) (32,869) 259,221 1,577,500 (528,233) Contributions of fixed assets (242,739) - 242, Gain (Loss) on Disposition of assets (87,521) 22, (87,521) 22,701 Transfers 127, ,796 (127,819) (126,796) - - Increase (Decrease) in Net Assets $ 1,407,928 $ (637,957) $ 82,051 $ 132,425 $ 1,489,979 $ (505,532) Net assets decreased by $505,532 at the end of the current year. This compares unfavorably with the prior year when net assets increased by $1,489,979. Governmental activities Net assets of the District's governmental activities reported a decrease of $637,957. Revenues decreased by $2,265,831. Program expenses for the year increased $131,992. Increased support functions and interest expense were the reason for this year's increase in expenditures. Business-Type activities yp y p p g, District under its child nutrition and agricultural commodity sharing programs, provides a significant portion of its revenue. Less than a quarter of the revenue is generated through direct charges to users of our food service. Since the federal government sets USDA reimbursements, the ability of food service to operate in the black is a function of operational efficiency. The food service's contribution to the general fund for overhead decreased from the prior year by $1,023. Its operations resulted in a net profit of $259,221 of the value of its net assets. The District's Funds The District's governmental funds (as presented on the balance sheet on page 17) reported a combined fund balance of $15,325,728 which is below last year's total of $17,285,401. The schedule below illustrates the fund balance and total change in fund balance during the year ended June 30,

9 CHESTERFIELD COUNTY SCHOOL DISTRICT MANAGEMENT DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2009 Fund Balance June 30, 2008 Fund Balance June 30, 2009 Increase (Decrease) General $ 5,233,575 $ 5,286,994 $ 53,419 Special Projects 507, ,044 75,709 Building Funds: District Component Unit 4,805,925 2,027,805 (2,778,120) Debt Service Funds: District 4,193,443 4,873, ,493 Component Unit 2,545,123 2,553,949 8,826 Total $ 17,285,401 $ 15,325,728 $ (1,959,673) The blended component unit's school building fund's decrease in fund balance represents expenditures for new construction in the District; and its fund balance represents unexpended bond proceeds reserved for future construction. The component unit's debt service balance includes a bond covenant reserve of $2,361,500. This money was set aside during the fiscal year ended June 30, General Fund The District's general fund balance increased slightly, primarily because the growth in revenue outpaced the growth in expenditures. The tables that follow assist in illustrating the financial activities and balances of the general fund. Revenues 2008 Amount 2009 Amount Percentage Change Taxes - Ad Valorem $ 13,346,424 $ 13,889, % Other local sources 779, , % Intergovernmental 34,972,867 33,565, % $ 49,098,726 $ 48,159, % State revenue decreased $1,407,431. Property tax revenue increased $543,344. Revenue decreased $938,860 overall Amount 2009 Amount Percentage Change Expenditures by object Salaries and wages $ 31,731,347 $ 32,605, % Fringe benefits 10,057,747 10,486, % Purchased services 2,470,458 2,191, % Supplies 3,129,117 2,978, % Capital outlay 1,076, , % Miscellaneous 95,583 22, % $ 48,560,380 $ 49,210, % The table above illustrates that the largest portion (87.8%) of general fund expenditures are for salaries and fringe benefits. The District is a service entity and as such is labor intensive. Expenditures are up $650,291 or 1.34% over the prior year. After transfers, revenues exceeded expenditures during the fiscal year by $53,419, resulting in an increase to the fund balance. During the prior fiscal year (07-08) the District was able to improve its fund balance by $1,717,696. Expenditures increased over the prior year $650,291, and revenue decreased by $938,860. Other Funds Special Projects The Special Projects Fund revenue increased by 10.89%. Revenue from federal sources increased by 3.83% (from $5,486,435 to $5,696,475). During the same period revenue from state sources decreased by 15.58% (from $1,996,907 to $1,685,862). Revenue from the state lottery decreased $135,674 from $666,389 in 2008 to $530,715 in The fund's revenues exceeded expenditures, resulting in a fund balance increase of $75,709 for the year ending June 30, The largest portion of this increase is attributable to Medicaid payments for services. 9

10 CHESTERFIELD COUNTY SCHOOL DISTRICT MANAGEMENT DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2009 The District received $6,517,991 for Education Improvement Act (EIA) programs during the year, a decrease of $663,665 over the prior year a 9.24% decrease. School Building Fund The Debt Service fund grew by $680,493 during the year. The fund received $2,370,000 from the sale of a short term general obligation bond. These funds were used to pay debt service of the District's blended component unit (see below). Ad valorem and related tax revenue increased substantially due to increases in millage rates. In addition to the debt service on the District's outstanding long-term debt, the short-term general obligation bond, mentioned above, was repaid from this revenue. Component Unit To facilitate the financing of new building construction and the District's debt management, a legally separate corporation was formed during the fiscal year ended June 30, It is the SCAGO Educational Facilities Corporation for Chesterfield School District. Although its directors and management are distinct from those of the District, the corporation exists solely for the benefit of the school district. Consequently, under reporting standards of the Governmental Accounting Standards Board (GASB) it is reported as if its finances are those of the school district, i.e., as a blended component unit. The component unit has two funds reported on the school district's financial statements. EIA The District's School Building received $94,473 from state sources for construction and renovation projects in the District. Please see the discussion of the District's blended component unit below. Debt Service Fund Blended Component Unit's School Building Fund This fund received the proceeds of the Corporation's issue of 2007 Installment Purchase Revenue Bonds. At the beginning of the current fiscal year $4,805,925 was available to complete the construction projects. $2,826,108 was spent during the current fiscal year. Legally, the Corporation will be the owner of these facilities until they are purchased by the District with acquisition payments, which are equal to the Corporation's debt service obligations for the repayment of the Installment Purchase Revenue Bonds. Blended Unit's Debt Service Fund The Corporation's debt service fund exists to manage repayment of the Installment t Purchase Revenue Bonds. The debt service of $1,652,500 was paid from "acquisition payments" from the District raised by the District from a general obligation bond issued (see above). The fund has $2,361,500 in a reserve fund required by the Bond's legal covenants. This reserve is to be maintained as a payment cushion and will be used to make final debt payments. General Fund Budgetary Analysis The general fund budget was modified by $2,452,420 during the year. All Revenues were less than budgeted, but expenditure amounts were favorable for the year. The final accounting showed actual expenses $444,346 less than amounts budgeted for the current year. After accounting for transfers, the fund balance increased $53,419 for the year ended June 30, Capital Assets The District spent $2,729,503 on constructions project during the year. The projects included bleacher contracts, additional costs for the New Edwards Elementary School, and additions for Ruby Elementary School. Debt The District did not assume any additional long-term debt during the year; however, it did issue a short- term general obligation bond to provide funds to meet its installment acquisition payments on building construction financed in the prior year using installment purchase bonds. The District paid $695,000 in principal on long-term general obligation bonds. At the end of the year the District's long-term debt (not including the value of vacation accruals) stood at $81,114,204, $1,819,546 less than at the end of the previous year. Factors expected to have an effect on future operations In January and April of 2009, the District received significant reductions in EFA and EIA funding. The District has already experienced a 4% reductions in EFA Funds after the approval of the budget. The impact of these funding reductions on District Operations is not determinable at this time. 10

11 CHESTERFIELD COUNTY SCHOOL DISTRICT MANAGEMENT DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2009 Contacting District Officials This financial report is designed to provide our citizens, taxpayers, students, 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 questions about this report or need additional financial information, contact the District finance director at Chesterfield County School District, 401 West Boulevard, Chesterfield, South Carolina

12 BASIC FINANCIAL STATEMENTS The Basic Financial Statements Include The Government-Wide Financial Statements which begin on page 14 The Fund Financial Statements which begin on page 17 And Notes to the Financial Statements which begin on page 25 12

13 GOVERNMENT-WIDE FINANCIAL STATEMENTS The Government-Wide Financial Statements include The Statement of Net Assets on page 14 and The Statement of Activities on page 15 13

14 Chesterfield, South Carolina Statement of Net Assets June 30, 2009 Governmental Activities Primary Government Business Type Activities Total ASSETS Cash and cash equivalents $ - $ - $ - Cash and investments with county treasurer 5,856,989-5,856,989 Investments 13,495,009-13,495,009 Internal balances (275,408) 275,408 - Accounts receivable 183, ,833 Due from other governments 2,997,635 17,935 3,015,570 Sales tax receivables 660, ,255 Property tax recivables (net) 855, ,852 Inventories and prepaid expenses 20,036 58,213 78,249 Deferred interest on advance refunding 418, ,978 Capital assets (Note 1) Land 1,616,080-1,616,080 Construction in progress 620, ,473 Buildings 150,167, ,167,708 Equipment 3,112,109 1,824,945 4,937,054 Less accumulated depreciation (41,785,523) (1,185,217) (42,970,740) Total capital assets 113,730, , ,370,575 Total assets $ 137,943,908 $ 991,402 $ 138,935,310 LIABILITIES Temporary Cash Overdrafts $ 54 $ - $ 54 Accounts payable and other current liabilities 6,732,864-6,732,864 Due to other governments 29,936-29,936 Deferred revenue 1,329,537-1,329,537 Accrued interest 1,153,086-1,153,086 Unamortized bond premium 1,015,522-1,015,522 Long-term liabilities Due within one year Bonds, capital leases, and contracts 1,171,071-1,171,071 Revenue bonds 300, ,000 Certificates of participation 705, ,000 Compensated absenses 608, ,874 Due in more than one year Bonds, capital leases, and contracts 52,878,133-52,878,133 Revenue bonds 22,180,000-22,180,000 Certificates of participation 3,880,000-3,880,000 Total liabilities $ 91,984,077 $ - $ 91,984,077 NET ASSETS Invested in capital assets net of related debt $ 32,860,847 $ 639,728 $ 33,500,575 Restricted for: Special Projects 583, ,044 Captial Projects 2,027,805-2,027,805 Debt Service 7,435,457-7,435,457 Unrestricted 3,052, ,674 3,404,352 Total net assets $ 45,959,831 $ 991,402 $ 46,951,233 The notes to the financial statements are an integral part of this statement. 14

15 Chesterfield, South Carolina Statement of Activities For the Year Ended June 30, 2009 Program Revenues Net (Expense) Revenue and Changes in Net Assets Primary Government Charges for Services Operating Grants and Contributions Capital Grants and Contributions Governmental Activities Business- Type Activites Functions / Programs Expenses Total Primary government Governmental Activities: - Instruction $ 42,233,300 $ 111,771 $ 46,827,309 $ - $ 4,705,780 $ - $ 4,705,780 Support services 22,084, ,616 - (21,352,550) - (21,352,550) Community services 418, (418,564) - (418,564) Intergovernmental 78, (78,117) - (78,117) Interest and other charges 4,190, (4,190,871) - (4,190,871) Depreciation-Unallocated - - Total Governmental activities 69,005, ,771 47,558,925 - (21,334,322) - (21,334,322) Business-type activities: School Food service 3,619, ,535 3,223, , ,989 Total business-type activities 3,619, ,535 3,223, , ,989 Total primary government $ 72,624,552 $ 737,306 $ 50,782,913 $ - $ (21,334,322) $ 229,989 $ (21,104,333) General revenues: Taxes: Property taxes, levied for general purposes 13,957,917-13,957,917 Property taxes, levied for debt service 2,467,806-2,467,806 Sales taxes 2,419,283-2,419,283 Unrestricted investment earnings 271, ,796 Gain(loss) on disposal of assets 22,701-22,701 Other local sources 1,430,066 29,232 1,459,298 Transfers (Indirect expense) 126,796 (126,796) - Total general revenues 20,696,365 (97,564) 20,598,801 Change in net assets (637,957) 132,425 (505,532) Net assets - beginning 46,597, ,977 47,456,765 Prior period adjustment Net assets - ending $ 45,959,831 $ 991,402 $ 46,951,233 The notes to the financial statements are an integral part of this statement. 15

16 FUND FINANCIAL STATEMENTS The Fund Financial Statements Include The Balance Sheet - Governmental Funds on page 17 The Statement of Revenue, Expenditures and Changes in Fund Balances -- Governmental Funds on page 18 The Statement of Net Assets - Proprietary Funds on page 20 The Statement of Revenue, Expenditures and Changes in Net Assets -- Proprietary Funds on page 21 The Statement of Cash Flows - Proprietary Funds on page 22 The Statement of Fiduciary Net Assets on page 23 16

17 General Fund Chesterfield County School District Chesterfield, South Carolina Balance Sheet - Governmental Funds June 30, 2009 Special Projects Major Funds SCAGO Educational Facilities Corp. School Building Debt Service EIA Non-Major Funds Non-Major Govenmental Funds Total Governmental Funds ASSETS Cash and cash equivalents $ - $ - $ - $ - $ - $ - $ - Cash with county treasurer / fiscal agent 1,647, ,209, ,856,989 Property tax receivables, net 739, , ,852 Sales taxes receivable , ,255 Accounts receivable 182, ,715 Due from other funds 4,032, ,080-3, ,756 30,266 5,162,123 Due from State Department of Education 863, ,018 94,473 1,441,729 Due from Federal Government 732 1,555, ,555,906 Inventories - supplies and materials 20,036 20,036 Investments 8,031,958-2,939, ,523,683 13,495,009 Total assets $ 15,517,251 $ 2,495,022 $ 2,939,368 $ 4,990,777 $ 640,774 $ 2,648,422 $ 29,231,614 LIABILITIES AND FUND BALANCES Liabilities: Temporary Cash Overdraws Accounts payable and accrued liabilities Due to other funds Due to other governments and agencies Deferred revenue Fund balances: Reserved for: Inventory Special projects Capital projects Debt Service Unreserved: Undesignated $ 54 $ - $ - $ - $ - $ - $ 54 6,732,864 6,732,864 2,758,327 1,385, , ,805 94,473 5,437,531-23, ,447-29, , , , ,522-1,705,501 Total liabilities $ 10,230,257 $ 1,911,978 $ 911,563 $ 116,841 $ 640,774 $ 94,473 $ 13,905,886 $ 20,036 $ - $ - $ - $ - $ - $ 20, , , ,027, ,027, ,873,936-2,553,949 7,427,885 5,266,958 5,266,958 Total fund balances 5,286, ,044 2,027,805 4,873,936-2,553,949 15,325,728 Total liabilities and fund balances $ 15,517,251 $ 2,495,022 $ 2,939,368 $ 4,990,777 $ 640,774 $ 2,648,422 $ 29,231,614 Total Fund Balances - Governmental Funds 15,325,728 Amounts reported for governmental activities in the Statement of Net Assets (Page 12) are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. Cost 155,516,370 Accumulated Depreciation (41,785,523) 113,730,847 Some property taxes receivable are not available to pay for current-period expenditures and therefore are deferred in the funds. Some liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. 375,964 (81,723,078) Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. Interest Payable (1,153,086) Unamortized Bond Premium (1,015,522) Deferred Interest 418,978 (1,749,630) Net Assets of Governmental Activities (page 14) $ 45,959,831 The notes to the financial statements are an integral part of this statement. 17

18 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2009 Major Funds Non-Major Funds General Fund Special Projects Fund SCAGO Educational Facilities Corp School Building Fund Debt Service Fund EIA Fund Non-Major Governmental Fund Total Governmental Funds REVENUES Local property taxes $ 13,889,768 $ - $ - $ 2,460,234 $ - $ - $ 16,350,002 Local sales taxes ,679, ,679,130 Other local 704, ,593 47,988 16, ,205 1,686,484 Total local 14,594, ,593 47,988 5,155, ,205 20,715,616 Local governments - 127, ,149 State 33,437,077 1,685, ,906 6,517,991 94,473 42,001,309 Federal 128,359 5,696,475-17, ,842,595 Total Intergovernmental 33,565,436 7,509, ,667 6,517,991 94,473 47,971,053 Total Revenues 48,159,866 8,298,079 47,988 5,439,067 6,517, ,678 68,686,669 EXPENDITURES Current: Instruction 30,616,708 4,529, ,233,616-39,380,195 Support services 18,518,637 3,203,422 2,826,108-1,164,969 94,473 25,807,609 Community services 74, , ,564 Intergovernmental , ,117 Debt service: Principal ,091, ,000 3,626,016 Interest ,697,072-1,117,500 3,814,572 Bond issurance costs / fees ,266-39,500 40,766 Total Expenditures 49,210,671 8,154,648 2,826,108 5,789,354 5,398,585 1,786,473 73,165,839 Excess (deficiency) of revenues over expenditures (1,050,805) 143,431 (2,778,120) (350,287) 1,119,406 (1,562,795) (4,479,170) OTHER FINANCING SOURCES Sale of fixed assets 22,701 22,701 Proceeds from debt issurance ,370, ,370,000 Transfers from other funds 1,233, , ,116 1,571,621 3,643,306 Transfers to other funds (151,645) (67,722) - (1,571,621) (1,725,522) - (3,516,510) Total other financing sources and (uses) 1,104,224 (67,722) - 1,030,780 (1,119,406) 1,571,621 2,519,497 Net change in fund balances Fund balances - beginning Fund balances - ending 53,419 75,709 (2,778,120) 680,493-8,826 (1,959,673) 5,233, ,335 4,805,925 4,193,443-2,545,123 17,285,401 $ 5,286,994 $ 583,044 $ 2,027,805 $ 4,873,936 $ - $ 2,553,949 $ 15,325,728 The notes to the financial statements are an integral part of this statement. 18

19 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities June 30, 2009 Net change in fund balances - governmental funds: $ (1,959,673) Amounts reported for Governmental Activities in the Statement of Activities are different because: Governmental funds report outlays for capital assets as expenditures because such outlays use current financial resources. In contrast, the Statement of Activities reports only a portion of the outlay as expense. The outlay is allocated over the assets' estimated useful lives as depreciation expense for the period. This is the amount by which capital outlays exceeded depreciation in the current period. Capitalized Assets 2,918,895 Depreciation Expense (3,031,920) (113,025) Repayment of long-term debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. 4,474,525 New debt issued during the year is recorded as a source of funds in the fund statements; it has no effect on the statement of activities - it affects only the government-wide statement of net assets. (2,370,000) Entered into lease purchase agreements for various computer equipment - these leases are capital leases but the assets are not recorded as capital assets because individually no piece of equipment is over the capitalization amount. These amounts were not recorded as revenue on the governmental fund statements. (284,979) Because some property and sales taxes will not be collected for several months after the District's fiscal year ends, they are considered "available" revenues and are deferred in the governmental funds. Deferred tax revenues increased (decreased) by this amount this year. (184,126) In the Statement of Activities, certain operating expenses - compensated absences (sick pay and vacations) - are measured by the amounts earned during the year. In governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid). This year, vacation and sick leave earned exceeded the amounts used. (42,438) When long-term debt instruments are sold at amounts greater than (premiums) or less than (discounts) their face amounts, the differences are treated as deferred interest. Discounts are treated as deferred or pre-paid charges (assets); while premiums are treated as deferred or unearned revenue (liabilities). On the government-wide financial statements, both are amortized to interest expense during the periods the underlying bonds are being repaid. The District had both deferred charges ($418,978) and unamortized premiums ($1,015,522). Amortization of deferred charges originating in a prior year increased interest expense by $73,937, while amortization of bond premiums of $59,612 resulted in a net decrease to interest expense. Consequently, the change in net assets reported on the government-wide statement of activities was $14,325 less than the change in fund balance reported on the governmental fund statement. (14,325) Interest on long-term debt in the Statement of Activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the Statement of Activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. The decreased interest reported in the Statement of Activities is the net result of a decrease in accrued interest on bonds, leases, certificates of participation and notes payable of... (143,916) Change in net assets of governmental activities $ (637,957) The notes to the financial statements are an integral part of this statement. 19

20 Chesterfield, South Carolina Statement of Net Assets - Proprietary Funds June 30, 2009 Enterprise Fund - Food Services ASSETS Current assets: Accounts receivable $ 118 Due from general fund 275,408 Due from other governmental units 17,935 Inventories Purchased food and supplies 58,213 Total current assets 351,674 Non-current assets: Capital Assets: Equipment 1,824,945 Less accumulated depreciation (1,185,217) Total non-current assets 639,728 Total assets $ 991,402 NET ASSETS Invested in capital assets, net of related debt $ 639,728 Unrestricted 351,674 Total net assets $ 991,402 The notes to the financial statements are an integral part of this statement. 20

21 Chesterfield, South Carolina Statement of Revenues, Expenses and Changes in Net Assets Proprietary Funds For the Year Ended June 30, 2009 OPERATING REVENUES: Enterprise Fund - Food Services Food sales $ 521,412 Special sales and miscellaneous 104,123 Total operating revenues 625,535 OPERATING EXPENDITURES: Food costs 1,760,365 Salaries and wages 1,222,973 Supplies and materials 532,067 Depreciation 96,969 Other operating costs 7,160 Total operating expenditures 3,619,534 Operating income (loss) (2,993,999) NON-OPERATING REVENUES (EXPENSES): USDA reimbursements 2,957,370 Commodities received from USDA 266,618 Other federal and state aid 29,232 Total operating revenues (expenses) 3,253, Income (loss) before contributions and transfers 259,221 CONTRIBUTIONS AND TRANSFERS Capital Contributions-Building Fund - Transfers out-indirect expenses (126,796) Total other financing sources and (uses) (126,796) Change in net assets 132,425 Total net assets -- beginning of year 858,977 Total net assets -- end of year $ 991,402 The notes to the financial statements are an integral part of this statement. 21

22 Chesterfield, South Carolina Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2009 Enterprise Fund - Food Services CASH FLOWS FROM OPERATING ACTIVITIES Received from patrons $ 633,599 Payments to employees for services (1,222,973) Payments to suppliers for goods and services (2,171,914) Net cash received from/(used by) operating activities (2,761,288) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Nonoperating grants received 3,055,212 Due from General Fund (267,744) Net cash received from/(used by) noncapital and related financing activities 2,787,468 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets (26,180) Total cash provided from (used by) capital and related financing activities (26,180) Net increase/(decrease) in cash and cash equivalents - Cash and cash equivalents, July 1 - Cash and cash equivalents, June 30 $ - Reconciliation of operating loss to net cash used by operating activities: Operating income (loss) $ (2,993,999) Adjustments to reconcile operating loss to net cash used by operating activities: Depreciation 96,969 Commodities used 266,618 Indirect cost transfer (126,796) Changes in assets and liabilities: (Increase)/decrease in accounts receivable 8,064 (Increase)/decrease in inventory (12,144) Increase/(decrease) in accounts payable - Total adjustments 232,711 Net cash used by operating activities $ (2,761,288) The notes to the financial statements are an integral part of this statement. 22

23 Chesterfield, South Carolina Statement of Fiduciary Net Assets June 30, 2009 Agency Funds ASSETS Cash and cash equivalents $ 550,076 Total assets $ 550,076 LIABILITIES Due to student groups $ 550,076 Total liabilities $ 550,076 The notes to the financial statements are an integral part of this statement. 23

24 NOTES TO FINANCIAL STATEMENTS 24

25 I. Summary of Significant Accounting Policies Chesterfield County School District Notes to the Financial Statements For the Fiscal Year Ended June 30, 2009 Financial Reporting Entity The Chesterfield County School District (the District) provides elementary, secondary and continuing education to the citizens of Chesterfield County, South Carolina, at public expense. The School District is governed by a school board composed of nine persons elected to four-year terms from single-member districts. The District's financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements (statements and interpretations). The accompanying financial statements present the District and its component unit, an entity for which the district is considered financially accountable. The blended component unit, although legally separate, is, in substance, part of the District's operations. Blended Component Unit. SCAGO Educational Facilities Corporation for Chesterfield School District, incorporated under the South Carolina Nonprofit Corporation Act of 1994, as amended, was organized to operate exclusively "to assist in the acquisition, design, construction, operation, financing and refinancing" of certain District projects. In accordance with Governmental Accounting Standards Board Statement No. 14, "The Reporting Entity", paragraph 53 b., since the component unit provides services entirely to the District, it is reported as a blended component unit. Consequently its resources and activities are reported with those of the District. SCAGO Educational Facilities Corporation for Chesterfield School District reports two governmental type funds: a school building fund, reported as a major fund, and a debt service fund, reported as a non-major fund. Separate financial statements are not available. Basis of Presentation Fund Accounting The accounting system is organized and operated on a fund basis. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The District's funds are grouped into governmental and business-type funds. The governmental funds are the general, special projects, EIA, school building, debt service, and the two funds of the District's blended component unit. The business-type fund is the food service fund. The student activity fund is the District's one fiduciary agency fund. Measurement Focus and Basis of Accounting These financial statements include both government-wide (reporting the District as a whole) and fund financial statements. Government-Wide Financial Statements The statement of net assets and the statement of activities display information about the District as a whole. These statements distinguish between activities that are governmental and those that are considered business- type activities. Neither the fiduciary funds of the District nor those of any component unit are included. The government-wide statements are prepared using the economic resources measurement focus and the accrual basis of accounting. This is the same approach used in the preparation of proprietary fund financial statements but differs from the manner in which governmental fund financial statements are prepared. Therefore, governmental fund financial statements include a reconciliation with brief explanations to better identify the relationship between the government-wide statements and the statements of governmental funds. The primary effect of internal activity has been eliminated from the government-wide financial statements. The government-wide statement of net assets presents consolidated governmental and business-type activities columns. Consistent with the full accrual basis of accounting, all long-term assets and receivables as well as long-term debt and obligations are included. The District's net assets are reported in three parts invested in capital assets, restricted net assets, and unrestricted net assets. The District first utilizes restricted resources to finance qualifying activities. The government-wide statement of activities reports both the gross and the net cost of each of the District's functions and business-type activities. The functions are also supported by general government revenue. The statement of activities reduces gross expenses (including depreciation) by related program revenue, operating and capital grants. Program revenues must be directly associated with the function or business-type activity. Operating grants include operating-specific and discretionary (either operating or capital) grants while the capital grants column reflects capital-specific grants. 25

26 Notes to the Financial Statements For the Fiscal Year Ended June 30, 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Measurement Focus and Basis of Accounting (continued) Government-Wide Financial Statements (continued) The net cost (by function or business-type activity) is normally covered by general revenue (property taxes, intergovernmental revenues, interest income, etc.). The District does not allocate indirect costs. The government-wide focus is more on the sustainability of the District as an entity and the change in the District's net assets resulting from the current year's activities. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The District has elected not to apply Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989, to business-type and enterprise funds of the primary government. Fund Financial Statements The fund financial statements include governmental funds, a proprietary fund (the food service enterprise fund) and a fiduciary fund (the student activities fund). Fund financial statements report detailed information about the District. The focus of governmental and enterprise (food service) statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. Non-major funds are grouped and reported in a single column. Details about non-major funds are included as supplemental information. The State Department of Education has mandated that all the special projects of the District be aggregated into one fund and treated as a major fund. In addition, all those activities funded by the Education Improvement Act have been designated by the State Department of Education as a major fund. The school building fund of the District's blended component unit and the District's debt service fund met the quantitative criteria of major funds established by GASB No. 34 and are reported as such. The District's school building fund and the debt service fund of its component unit are reported as non-major funds. Governmental fund financial statements are presented on the modified accrual basis of accounting. The measurement focus is the flow of expendable financial resources. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; i.e., when both measurable and available. "Available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The District considers all revenue available within sixty days of the close of the fiscal year to be available. Most expenditures are measurable and are recorded when the related fund liability is incurred. However, principal and interest on general long-term debt, which has not matured, are not recognized until paid. Allocations of costs, such as depreciation and amortization, are not recognized in the governmental funds. Proprietary and fiduciary fund financial statements, like the government-wide statements, are reported using the economic measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses of the District's food service enterprise fund result from providing food services. The principal operating revenue is charges for meals and other items paid by customers. Following State Department of Education guidance, the District considers all USDA reimbursements and USDA food commodity provisions to be non- operating revenue. Since these revenues are based on reimbursement rates established by other entities, GASB No. 33 considers them "exchange-like" transactions rather than pure exchange transactions. 26