THE NEW AMERICA SCHOOL - DENVER FINANCIAL STATEMENTS JUNE 30, 2013

Transcription

1 THE NEW AMERICA SCHOOL - DENVER FINANCIAL STATEMENTS JUNE 30, 2013

2 Contents Page Independent Auditors Report Management s Discussion And Analysis... i - iv Basic Financial Statements Statement Of Net Position...3 Statement Of Activities...4 Balance Sheet - Governmental Funds...5 Statement Of Revenues, Expenditures And Changes In Fund Balance - Governmental Funds...6 Reconciliation Of The Statement Of Revenues, Expenditures And Changes In Fund Balances Of Governmental Funds To The Statement Of Activities...7 Notes To Financial Statements Required Supplementary Information Schedule Of Revenues, Expenditures And Changes In Fund Balance - Budget And Actual - General Fund... 18

3 RubinBrown LLP Certified Public Accountants & Business Consultants Board of Directors The New America School - Denver Denver, Colorado Independent Auditors Report th Street Suite 300 Denver, CO T F W rubinbrown.com E info@rubinbrown.com Report On The Financial Statements We have audited the accompanying financial statements of the governmental activities and the major fund of The New America School - Denver (the School), as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the School s basic financial statements as listed in the table of contents. Management s Responsibility For The Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

4 To the Board of Directors The New America School - Denver We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the major fund as of June 30, 2013, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis, on pages i through iv, and the budgetary comparison schedule, on page 18, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, which considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. November 11, 2013 Page 2

5 New America School - Denver Management s Discussion and Analysis As of and for the Year Ended June 30, 2013 As management of New America School Denver (the School), we offer readers of the School s basic financial statements this narrative and analysis of the financial activities of the School as of and for the year ended June 30, We encourage readers to consider the information presented here in conjunction with additional information provided in the basic financial statements. Financial Highlights The year ended June 30, 2013 was the ninth year of operations for the School. The School opened under a charter granted by the Adams County School District 14 and has been part of Mapleton School District during FY2013. On July 1, 2013, the school will be chartered under the Charter School Institute (CSI). As of June 30, 2013, the net position amounted to $426,639. The operations of the School are funded primarily by tax revenue received under the State School Finance Act (the Act). State categorical revenue for the year was $2,704,929. The school operated within budget and had one budget amendment during the year. Overview of Basic Financial Statements This discussion and analysis is intended to serve as an introduction to the School s basic financial statements. These basic financial statements are comprised of three components: 1) governmentwide financial statements. 2) fund financial statements, and 3) notes to the financial statements. Government-Wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the School s finances, in a manner similar to a private-sector business. The statement of net position (formerly titled, Net Assets ) presents information on all of the School s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the School is improving or deteriorating. The statement of activities presents information showing how the School s net position changed during the year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenue and expenses are reported in this statement for some items that will only result in cash flow changes in future fiscal periods (for example, salaries and benefits earned but unpaid as of yearend). Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The School, like other local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. The school maintains one governmental fund the General Fund. i

6 New America School - Denver Management s Discussion and Analysis As of and for the Year Ended June 30, 2013 Overview of Basic Financial Statements (continued) Fund Financial Statements (continued) The school adopts an annual budget for its fund (which may be amended, as was the case during the year ended June 30, 2013). Budgetary comparisons have been provided for the general fund in the basic financial statements to demonstrate compliance with these budgets. Notes to Basic Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the basic financial statements. Government-Wide Financial Analysis As noted previously, net position may serve over time as a useful indicator of the School s financial position. As of June 30, 2013, the School s net position exceeded liabilities by $426,639. $82,070 of these funds is restricted to comply with Article X, Section 20 of the Colorado Constitution, known as the TABOR amendment. Accordingly, these funds are not available to satisfy general operating expenses of the School. In addition, $2,900 is invested in capital assets, net of accumulated depreciation. The remaining $341,669 is unrestricted and available to meet the School s ongoing financial obligations. Net Position Assets June 30, 2013 June 30, 2012 Cash $ 457,493 $ 275,995 Receivables, and other current assets 103,183 33,603 Prepaid expenses 42,326 36,588 Capital assets, net of accum depreciation 2,900 6,249 Total assets $ 605,902 $ 352,435 Liabilities Accounts payable 21,765 10,802 Due to New America Schools 54,773 46,265 Accrued expenses 0 16,447 Accrued salaries and benefits 84,906 77,394 Compensated absences 17,819 17,557 Total liabilities 179, ,465 Net position Invested in capital assets 2,900 6,249 Restricted for emergencies 82,070 85,735 Unrestricted 341,669 91,986 Total net position $ 426,639 $ 183,970 ii

7 New America School - Denver Management s Discussion and Analysis As of and for the Year Ended June 30, 2013 Change in Net Position Revenues June 30, 2013 June 30, 2012 Operating grant $ - $ 114,537 State categorical revenue 2,704,929 2,761,335 Capital construction - 16,269 Capital construction Grant 318,542 - Operating grants & contributions 500 Other 7, Total revenues 3,031,337 2,892,916 Expenditures Instruction 1,105,908 1,043,703 Supporting 1,682,760 1,750,489 Total expenses 2,788,668 2,794,192 Increase in Net Position 242,669 98,724 Net Position, beginning of year 183,970 85,246 Net Position, end of year $ 426,639 $ 183,970 Financial Analysis of the School s Funds The General Fund is considered a major fund and is used to account for the School s general operations. During the ninth year of operations, the School increased its general fund balance by $246,280. Approximately $317,000 of the general fund balance is unassigned. The School received $6,883 for each FTE (393 FTEs during the year) for a total of $2,704,929. iii

8 New America School - Denver Management s Discussion and Analysis As of and for the Year Ended June 30, 2013 General Fund Budgetary Highlights The School budgeted General Fund expenditures of $3,104,411 for the year ended June 30, Actual expenditures for the year were $2,785,057. There was one budget amendment during the year in the General Fund. Capital Assets and Long-Term Debt The school rents its facilities under an operating lease that was revised beginning July 1 st, Annual rent payments under the lease were $179,463 for the year ended June 30, With employment contract terms from August 1 to July 31, the School provides opportunities for employees to carry all unused vacation days through July and up to five days may be carried into the next school year. This commitment makes it possible for employees to use vacation that has been earned throughout the school year. The liability for compensated absences payable as of June 30, 2013 is $17,819 due within one year. Economic Factors and Next Year s Budget The primary factor driving the budget for the School is student enrollment. Funded Pupil Count (FPC) for the school year was 393. The FPC projected for the school year is 425. This is a major factor used in preparing the School s budget for the fiscal year Request for Information This financial report is designed to provide a general overview of the School s finances for all those with an interest in the School. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: New America School 925 S. Niagara Street, No. 140 Denver, CO iv

9 STATEMENT OF NET POSITION June 30, 2013 Assets Governmental Activities Cash (Note 3) $ 457,493 Accounts receivable 103,183 Prepaid items and deposits 42,326 Capital assets, net of accumulated depreciation (Note 4) 2,900 Total Assets 605,902 Liabilities Accounts payable 21,765 Due to New America Schools (Note 9) 54,773 Accrued salaries and benefits (Note 5) 84,906 Compensated absences (Note 6) 17,819 Total Liabilities 179,263 Net Position Net investment in capital assets 2,900 Restricted for emergencies (Note 10) 82,070 Unrestricted 341,669 Total Net Position $ 426,639 See the accompanying notes to financial statements. Page 3

10 STATEMENT OF ACTIVITIES For The Year Ended June 30, 2013 Net Revenue (Expense) And Changes In Program Revenues Net Position Operating Primary Charges Grants, Capital Government For Services Contributions Grants And Governmental Function/Program Expenses And Sales And Interest Contributions Activities Governmental Activities Instructional $ 1,105,908 $ $ $ $ (1,105,908) Supporting services 1,682, ,542 (1,364,218) Total Governmental Activities $ 2,788,668 $ $ $ 318,542 (2,470,126) General Revenues Per pupil revenue 2,704,929 Other 7,866 Total General Revenues 2,712,795 Change In Net Position 242,669 Net Position, Beginning Of Year 183,970 Net Position, End Of Year $ 426,639 See the accompanying notes to financial statements. Page 4

11 BALANCE SHEET - GOVERNMENTAL FUNDS June 30, 2013 General Fund Assets Cash $ 457,493 Accounts receivable 103,183 Prepaid items and deposits 42,326 Total Assets $ 603,002 Liabilities And Fund Equity Accounts payable $ 21,765 Due to The New America Schools 54,773 Accrued salaries and benefits 84,906 Total Liabilities 161,444 Nonspendable for prepaid items and deposits 42,326 Restricted for emergencies 82,070 Unassigned 317,162 Total Fund Balance 441,558 Total Liabilities And Fund Balance $ 603,002 Governmental fund balance $ 441,558 Amounts reported for governmental activities in the statement of net position are different because Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. 2,900 Long-term liabilities, including compensated absences, are not due and payable in the current period and therefore, are not reported in the fund financial statements. (17,819) Net Position Of Governmental Activities $ 426,639 See the accompanying notes to financial statements. Page 5

12 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS For The Year Ended June 30, 2013 General Fund Revenues Local sources $ 2,712,795 Federal and state sources 318,542 Total Revenues 3,031,337 Expenditures Instruction 1,102,297 Supporting services 1,682,760 Total Expenditures 2,785,057 Net Change In Fund Balance 246,280 Fund Balance, Beginning Of Year 195,278 Fund Balance, End Of Year $ 441,558 See the accompanying notes to financial statements. Page 6

13 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, 2013 Net Change In Fund Balances - Total Governmental Funds $ 246,280 Amounts reported for governmental activities in the statement of activities are different because Governmental funds report capital outlay as expenditures, but in the statement of activities, these costs are allocated over their estimated useful lives as depreciation. Depreciation expense in excess of capital outlay (3,349) Changes in compensated absences are not recorded in the governmental funds. However, in the statement of activities, they are reported when earned or incurred. (262) Change In Net Position - Statement Of Activities $ 242,669 See the accompanying notes to financial statements. Page 7

14 NOTES TO FINANCIAL STATEMENTS June 30, Summary Of Significant Accounting Policies Reporting Entity The New America School - Denver (the School) was formed in 2003, pursuant to the Colorado Charter Schools Act, to form and operate a charter school. The accounting policies of the School conform to generally accepted accounting principles (GAAP) as applicable to governmental units. Following is a summary of the more significant policies. The financial reporting entity consists of the School and organizations for which the School is financially accountable. All funds, organizations, institutions, agencies, departments and offices that are not legally separate are part of the School. In addition, any legally separate organizations for which the School is financially accountable are considered part of the reporting entity. Financial accountability exists if the School appoints a voting majority of the organization s governing board and is able to impose its will on the organization, or if the organization provides benefits to or imposes financial burdens on the School. Based upon the application of these criteria, there are no organizations that should be included in the School s reporting entity. However, the School is a component unit of the Adams County School District 1 (the District). The School is deemed to be fiscally dependent upon the District because the District provides the majority of support to the School in the form of per pupil operating revenue. Government-Wide And Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the School. The effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by intergovernmental revenues, are reported in a single column. The statement of activities demonstrates the degree to which the direct expenses of the given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to students or others who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Page 8

15 Notes To Financial Statements (Continued) Other revenues, not directly related to a particular function or program, are reported separately as general revenues. Major individual governmental funds are reported in separate columns in the fund financial statements. Measurement Focus, Basis Of Accounting And Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under the 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. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collected within the current period or soon enough thereafter to pay liabilities of the current period, not to exceed 60 days. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due. Intergovernmental revenues, grants and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the School. Internally dedicated resources are reported as general revenues, rather than as program revenues. The School reports the following major governmental fund: General Fund - This fund is the primary operating fund of the School. It is used to account for all general operating financial resources of the School. There are no resources required to be accounted for in another fund. Page 9

16 Notes To Financial Statements (Continued) Accounting standards require the classification of net position into three components: net investment in capital assets, restricted and unrestricted. These classifications are defined as follows: Net investment in capital assets - This component of net position consists of capital assets, including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction or improvement of those assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt attributable to the unspent proceeds are not included in the calculation of net investment in capital assets. Restricted - This component of net position consists of constraints placed on net position use through external constraints imposed by creditors, grantors, contributors or laws or regulations of other governments or constraints imposed through constitutional provisions or enabling legislation. Unrestricted - The component of net position that does not meet the definition of restricted or net investment in capital assets. When both restricted and unrestricted resources are available for use, it is the School s policy to use restricted resources first and the unrestricted resources as they are needed. The School has not adopted fund balance policies; therefore, the School will follow the guidance in accordance with Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, and apply resources in the following order: restricted, committed, assigned and unassigned. Assets, Liabilities And Fund Balance Cash and cash equivalents - The School considers all highly liquid investment purchases with an original maturity of three months or less to be cash equivalents. The carrying value of cash and cash equivalents approximates fair value because of the short maturities of those financial instruments. Receivables - Receivables consist primarily of amounts owed from state and local governments. They are reported at their gross value and, where appropriate, reduced by the estimated portion that is expected to be uncollectible. Page 10

17 Notes To Financial Statements (Continued) Prepaid Expenses - Payments made to vendors for services that will benefit future periods are recorded as prepaid expenses. An expenditure is reported in the year in which the services are consumed. Capital Assets - Capital assets, which include property and equipment, are reported in the governmental activities column in the government-wide financial statements. Capital assets are defined by the School as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset, or materially extend assets lives, are not capitalized. Property and equipment of the School is depreciated using the straight-line method over the estimated useful life of five years. Compensated absences - School employees are entitled to certain compensated absences based on length of employment. Upon termination, employees will be reimbursed for any unused compensated absences at rates depending on length of service. A liability for these amounts is reported in the governmental funds only if the amounts due at year-end have matured. Use Of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. 2. Stewardship, Compliance And Accountability Budgets And Budgetary Accounting A budget is adopted for all funds on a basis consistent with generally accepted accounting principles. Page 11

18 Notes To Financial Statements (Continued) School management submits a proposed budget for the fiscal year commencing the following July 1 to the Board of Directors. The budget is adopted by the Board prior to June 30. Expenditures may not exceed appropriations at the fund level. Revisions must be approved by the Board. The budget includes proposed expenditures and the means of financing them. All appropriations lapse at fiscal year-end. 3. Cash And Investments Deposits Custodial Credit Risk - Deposits Custodial credit risk is the risk that, in the event of a bank failure, the government s deposits may not be returned. The Colorado Public Deposit Protection Act (PDPA) requires all units of local government deposit cash in eligible public depositories. Eligibility is determined by state regulations. At June 30, 2013, state regulatory commissioners have indicated that all financial institutions holding deposits for the School are eligible public depositories. Amounts on deposit in excess of federal insurance levels must be collateralized by eligible collateral as determined by PDPA. PDPA allows the financial institution to create a single collateral pool for all public funds held. The pool is to be maintained by another institution, or held in trust for all the uninsured public deposits as a group. The market value of the collateral must be at least equal to 102% of the uninsured deposits. The School has no policy regarding custodial credit risk for deposits. At June 30, 2013, the School had deposits with financial institutions with a carrying amount of $457,493. The bank balances with the financial institutions were $464,315 The difference between the book and bank balances is due to outstanding checks and deposits not yet processed by the banks. At June 30, 2013, $214,315 was not covered by the Federal Deposit Insurance Corporation, but the remainder of the bank balance was collateralized with securities held by the pledging financial institution and covered by eligible collateral as determined by PDPA. Investments Interest Rate Risk The School does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Page 12

19 Notes To Financial Statements (Continued) Credit Risk Colorado statutes specify which instruments units of local government may invest in, which include: Obligations of the United States and certain U.S. government agency securities General obligation and revenue bonds of U.S. local government entities Bankers acceptances of certain banks Local government investment pools Written repurchase agreements collateralized by certain authorized securities Certain money market funds Guaranteed investment contracts The School had no investments at June 30, Capital Assets Following is a summary of the School s capital asset transactions for the year ended June 30, Balance Balance June 30, 2012 Additions Deletions June 30, 2013 Equipment $ 16,745 $ $ $ 16,745 Accumulated depreciation (10,496) (3,349) (13,845) $ 6,249 $ (3,349) $ $ 2, Accrued Salaries And Benefits Salaries and retirement benefits of certain contractually employed personnel are paid over a 12-month period from August to July, but are earned during a school year of approximately 9 months. The salaries and benefits earned, but unpaid, as of June 30, 2013, were $84,906. Page 13

20 Notes To Financial Statements (Continued) 6. Long-Term Liabilities Following is a summary of the School s long-term liability transactions for the year ended June 30, 2013: Balance Balance June 30, 2012 Additions Deletions June 30, 2013 Current Compensated absences $ 17,557 $ 17,819 $ (17,557) $ 17,819 $ 17, Defined Benefit Pension Plan Plan Description The School contributes to the School Division Trust Fund (SDTF), a cost-sharing multiple-employer defined benefit pension plan administered by the Public Employees Retirement Association of Colorado (PERA). SDTF provides retirement and disability, post-retirement annual increases and death benefits for members or their beneficiaries. All employees of the School are members of SDTF. Title 24, Article 51, of the Colorado Revised Statutes (CRS), as amended, assigns the authority to establish and amend benefit provisions to the state legislature. PERA issues a publicly available annual financial report that includes financial statements and required supplementary information for SDTF. That report may be obtained online at or by writing to Colorado PERA, 1301 Pennsylvania Street, Denver, Colorado or by calling PERA at or PERA (7372). Funding Policy The School is required to contribute member and employer contributions to PERA at a rate set by statute. The contribution requirements of plan members and the School are established under Title 24, Article 51, Part 4, of CRS, as amended. The member contribution rate is 8.0%. The contribution rate for the School for the year ended June 30, 2013 is 15.65% from July 1, 2012 to December 31, 2012 and 16.55% from January 1, 2013 to June 30, A portion of the School s contribution (1.02% of covered salary) is allocated to the Health Care Trust Fund (HCTF). If the School rehires a PERA retiree as an employee, or under any other work arrangement, it is required to report and pay employer contributions on the amounts paid for the retiree. Page 14

21 Notes To Financial Statements (Continued) The School is also required to pay an amortization equalization disbursement and a supplemental amortization equalization disbursement equal to 6.4% of the total payroll for the calendar year 2013 (5.5% of total payroll for the calendar year 2012 and 4.6% for calendar year 2011). These amounts are included in the contribution rates listed above. For the years ending June 30, 2013, 2012 and 2011, the School s employer contributions for SDTF were $168,281, $147,501 and $172,172, respectively, equal to its required contributions for the year. 8. Post-Employment Health Care Benefits Plan Description The School contributes to HCTF, a cost-sharing multiple-employer post-employment health care plan administered by PERA. HCTF provides a health care premium subsidy to PERA-participating benefit recipients and their eligible beneficiaries. Title 24, Article 51, Part 12, of CRS, as amended, assigns the authority to establish and amend HCTF benefit provisions to the state legislature. PERA issues a publicly available annual financial report that includes financial statements and required supplementary information for HCTF. That report may be obtained online at or by writing to Colorado PERA, 1301 Pennsylvania Street, Denver, Colorado or by calling PERA at or PERA (7372). Funding Policy The School is required to contribute at a rate of 1.02% of covered salary for all PERA members as set by statute. No member contributions are required. The contribution requirements for the School are established under Title 24, Article 51, Part 4, of CRS, as amended. The apportionment of the contribution to HCTF is established under Title 24, Article 51, Section 208, of CRS, as amended. For the years ending June 30, 2013, 2012 and 2011, the School s employer contributions to HCTF were $10,461, $9,635 and $12,298, respectively, equal to its required contributions for the year. 9. Related Parties New America School provides certain legal, management and advertising services to the School. The School agreed to pay a management fee for these services at 12.5% of per pupil revenues. For the year ended June 30, 2013, the School paid $345,201 under this agreement. As of June 30, 2013, the School owed New America Schools $54,773. Page 15

22 Notes To Financial Statements (Continued) On February 11, 2013, the New America Schools Management Organization formed the 89 th and Washington Facilities Organization (the Organization) with the sole purpose of leasing, holding, developing, constructing, operating, subleasing and maintaining the real property located at 8978 North Washington Street, Thornton, CO The Organization will lease the property from NAS Denver Property, LLC, which is the financer of the property. Once the project is complete, the building will house the School. As of June 30, 2013, there is not a sublease in place between the School and the Organization. 10. Commitments And Contingencies Operating Lease In July 2009, the School entered into an operating lease for its building. Monthly lease payments of $14,955 are due on this lease through July Beginning August 1, 2012, the School entered into a revised lease agreement with monthly payments of $14,955 through July Total rent expense for the year ended June 30, 2013 was $179,463. Claims And Judgments The School participates in a number of federal and state programs that are fully or partially funded by grants received from other governmental units. Expenditures financed by grants are subject to audit by the appropriate grantor government. If expenditures are disallowed due to noncompliance with grant program regulations, the School may be required to reimburse the grantor government. As of June 30, 2013, some grant expenditures have not been audited, but the School believes that disallowed expenditures, if any, based on subsequent audits will not have a material effect on the overall financial position of the School. TABOR Amendment In November 1992, Colorado voters passed the Taxpayer Bill of Rights (TABOR) Amendment to the State Constitution (the Amendment), which limits state and local government tax powers and imposes spending limitations. Fiscal year 1993 provides the basis for limits in future years to which may be applied allowable increases for inflation and student enrollment. Revenue received in excess of the limitations may be required to be refunded. The School believes it has complied with the Amendment. As required by the Amendment, the School established a reserve for emergencies. At June 30, 2013, the reserve of $82,070 was recorded as a restriction of fund balance in the General Fund. Page 16

23 Notes To Financial Statements (Continued) 11. Concentration Of Risk The School receives 89% of the applicable Per Pupil Funding for each full-time equivalent pupil in grades nine through twelve who is enrolled in the School on the day of the official membership count, as well as a proportionate share of categorical program revenue, from the District. The District provides certain administrative services on behalf of the School, for which it is allowed by law to withhold 5% of funding. The services include central administrative overhead costs, legal services, board of education and the Superintendent s office. 12. Risk Management The School is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; injuries to employees and natural disasters. The School purchases commercial insurance for these risks of loss. Amounts settled did not exceed insurance coverage in the last three years. 13. Subsequent Event Effective July 1, 2013, the School left the Adams County School District 1 and joined the Colorado Charter School Institute. This event will have no financial statement impact on fiscal year Page 17

24 Required Supplementary Information

25 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND For The Year Ended June 30, 2013 Variance Original Final Favorable Budget Budget Actual (Unfavorable) Revenues Local sources Per pupil operating revenue $ 2,626,870 $ 2,517,951 $ 2,704,929 $ 186,978 Grants and donations 40,000 40,000 (40,000) Other revenue 7,866 7,866 State and federal sources Grants and donations 87, , ,542 (32,638) Total Revenues 2,754,599 2,909,131 3,031, ,206 Expenditures Instruction Salaries 734, , ,587 (101,542) Employee benefits 207, , ,578 (43,826) Purchased services 76, ,286 59,903 44,383 Supplies and materials 136, ,450 33, ,318 Property 97 (97) Total Instruction 1,154,384 1,104,533 1,102,297 2,236 Supporting services Salaries 303, , ,316 89,548 Employee benefits 85, ,638 90,715 16,923 Purchased services 1,181,178 1,252,815 1,242,707 10,108 Supplies and materials 46,530 39,030 37,451 1,579 Property and other 7,500 10,571 (3,071) Contingency 84, , ,031 Total Supporting Services 1,700,842 1,999,878 1,682, ,118 Total Expenditures 2,855,226 3,104,411 2,785, ,354 Changes In Fund Balance $ (100,627) $ (195,280) 246,280 $ 441,560 Fund Balance - Beginning Of Year 195,278 Fund Balance - End Of Year $ 441,558 Notes To Required Supplementary Information The basis of the budget is the same as GAAP. See the accompanying independent auditors report. Page 18