For the Year Ended June 30, 2010

Transcription

1 CITY SCHOOL DISTRICT OF THE CITY OF ROME, NEW YORK MANAGEMENT'S DISCUSSION AND ANALYSIS AND BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2010

2 TABLE OF CONTENTS AUDITOR'S REPORTS Independent Auditor's Report MANAGEMENT'S DISCUSSION AND ANALYSIS BASIC FINANCIAL STATEMENTS District-Wide Financial Statements Statement of Net Assets Statement of Activities Fund Financial Statements Balance Sheet - Govermnental Funds 15 Statement of Revenues, Expenditures, and Changes in Fund Balances - Govermnental Funds 16 Reconciliation of the Statement of Revenues and Expenditures of the Govermnental Funds to the Statement of Activities 17 Fiduciary Fund Financial Statements Statement of Fiduciary Net Assets 18 Statement of Changes in Fiduciary Net Assets 19 Notes to Basic Financial Statements REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT'S DISCUSSION AND ANALYSIS Schedules of Change from Original Budget to Revised Budget and Use of Unreserved Fund Balance - General Fund 37 Schedule of Project Expenditures - Capital Projects Fund 38 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual- General Fund Schedule of Certain Revenues and Expenditures Compared to ST-3 Data 41 Investment in Capital Assets, Net of Related Debt 42 Schedule of Funding Progress of the Other Postemployment Benefits 43 SINGLE AUDIT REPORTS AND SCHEDULES 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 44 Report on Compliance With Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance With OMB Circular A Schedule of Expenditures of Federal Awards 47 Notes to Schedule of Expenditures of Federal Awards 48 Schedule of Findings and Questioned Costs - Federal Compliance Requirements Status of Prior Year's Findings and Questioned Costs - Federal Compliance Requirements 51 (Continued)

3 TABLE OF CONTENTS (Continued) EXTRACLASSROOM ACTIVITY FUND Independent Auditor's Report Statement of Assets, Liabilities, and Fund Equity - Cash Basis Statement of Revenues, Expenditures, and Changes in Fund Equity- Cash Basis Supplemental Schedule of Cash Receipts and Disbursements - Cash Basis Notes to Financial Statements

4 DArcangelo&Co LLP Certified Public Accountants & Consultants 200 E. Garden St., P.O. Box 4300, Rome, NY Fax: Independent Auditor's Report Board of Education City School District of the City of Rome, New York We have audited the accompanying fmancial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City School District of the City of Rome, New York, as of and for the year ended June 30, 2010, which collectively comprise the School District's basic financial statements as listed in the table of contents. These financial statements are the responsibility of City School District of the City of Rome, New York'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 10 financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perfonn 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 opimons. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City School District of the City of Rome, New York, as of June 30, 2010, and the respective changes in financial position, thereof for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated October 18, 2010, on our consideration of the 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 fmancial 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 on Pages 3 through 12 and supplementary information on Pages 37 through 43 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 and the New York State Education Department. 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. Mid-Hudson Utica/Rome Westchester 1

5 DArcangelo&Co,LLP Certified Public!\ccountant.<; & C',onsult.anLS Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City School District of the City of Rome, New York's 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 not a required part of the basic financial statements. The schedule of expenditures of Federal awards is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The infonnation has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such infonnation directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. October 18, 20 I 0 Rome, New York 2

6 MANAGEMENT'S DISCUSSION & ANALYSIS (Continued) The City School District of the City of Rome, New York's discussion and analysis of financial performance provides an overall review of the District's fmancial activities for the fiscal years ended June 30, 2010 and The intent of this discussion and analysis is to look at the District's financial performance as a whole. This should be read in conjunction with the fmancial statements, which immediately follow this section. 1. FINANCIAL HIGHLIGHTS Key fmancial highlights for fiscal year 2010 are as follows: The District's total net assets, as reflected in the District-wide financial statements, decreased by $8,501,713. This decrease was mainly due to the $13,623,011 expense for the third year of the amortization of the actuarial determined liability for other post-employment benefits (GASB 45). The District's expenses for the year, as reflected in the District-wide fmancial statements, totaled $115,128,489. This amount was offset by $1,051,531 from program charges for services, $13,228,210 from operating grants, and $265,500 from a capital grant. General revenues of $92,081,534 covered the balance of program expenses leaving the present deficit. The general fund's total fund balance, as reflected in the fund fmaneial statements on pages 15 and 16, increased by $2,695,817 to $16,786,156. This was due to an excess of revenues over expenditures based on the modified accrual basis of accounting. Non-grant State and Federal revenue decreased by $4,019,213 to $58,496,950 in 2010 from $62,516,163 in This decrease was partially offset by the new grant for the American Reinvestment and Recovery Act for $3,490, OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of four parts - Management's Discussion and Analysis (MD&A), the basic financial statements, required supplementary inf01mation, and other supplementary information. The basic fmandal statements consist of district-wide fmancial statements, fund financial statements, and notes to the fmancial statements. A graphic display of the relationship of these statements follows: r BASIC FINANCIAL STATEMENT MATRIX._.. _.. _.. _.. _.. _.. _.. _.. _.. _.. _.. _.. _.. -', Management's Discussion & Analysis Required Supplementary Infonnation Other Supplementary Information 3

7 MANAGEMENT'S DISCUSSION & ANALYSIS For the Year Ended Jnne 30, 2010 (Continued) A. District-wide Financial Statements The District-wide financial statements are organized to provide an understanding of the fiscal performance of the District as a whole in a manner similar to a private sector business. There are two District-wide fmancial statements - the Statement of Net Assets and the Statement of Activities. These statements provide both an aggregate and long-term view of the District's fmances. These statements utilize the accrual basis of accounting. This basis of accounting recognizes the financial effects of events when they occur, without regard to the timing of cash flows related to the events. The Statement of Net Assets The Statement of Net Assets presents information on all of the District's assets and liabilities, with the difference between the two reported as net assets. Increases or decreases in net assets may serve as a useful indicator of whether the financial position of the District is improving or deteriorating, respectively. The Statement of Activities The Statement of Activities presents information showing the change in net assets during the fiscal year. All changes in net assets are recorded at the time the underlying financial event occurs. Therefore, revenues and expenses are reported in the statement for some items that will result in cash flow in future fiscal periods. B. Fnnd Financial Statements The fund fmancial statements provide more detailed information about the District's funds, not the District as a whole. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District also uses fund accounting to ensure compliance with finance-related legal requirements. The funds of the District are reported in the govermnental funds and the fiduciary funds. These statements utilize the modified accrual basis of accounting. This basis of accounting recognizes revenues in the period that they become measurable and available. It recognizes expenditures in the period that they become measurable, funded through available resources and payable within a current period. Govermnental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the Districtwide financial statements. However, the governmental fund financial statements focus on shorter tenn inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year for spending in future years. Consequently, the govermnental fund statements provide a detailed short-term view of the District's operations and the services it provides. Because the focus of governmental funds is narrower than that of District-wide financial statements, it is useful to compare the infonnation presented for govenunental funds with similar infonnation presented for governmental activities in the Districtwide financial statements. By doing so, you may better understand the long-tenn impact of the District's near-tenn financing decisions. Both the govermnental fund Balance Sheet and the govermnental fund Statement of Revenues, Expenditures, and Changes in Fund Balance provide a reconciliation to facilitate this comparison between goverrunental funds and governmental activities. The District maintains five individual govermnental funds, general fund, school lunch fund, special aid fund, debt service fund, and capital projects fund, each of which is considered to be a major fund and is presented separately in the fund financial statements. Fiduciarv Funds Fiduciary funds are used to acconnt for assets held by the District in its capacity as agent or trustee. All of the District's fiduciary activities are reported in a separate Statement of Fiduciary Net Assets. The fiduciary activities have been excluded from the District's District-wide financial statements because the District can not lise these assets to finance its operations. 4

8 MANAGEMENT'S DISCUSSION & ANALYSIS (Continued) 3. FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE A. Net Assets The Districts total net assets decreased $8,501,713 between fiscal year 2009 and A snnnnary of the District's Statement of Net Assets for June 30, 2010 and 2009, is as follows: Assets Current and Other Assets Capital Assets, (Net of Depreciation) Total Assets 2010 $ 68,605,926 75,044,648 $ $ 37,753,736 61,169,017 $ Increase (Decrease) Percentage Change $ 30,852, % 13,875, % $ % Liabilities Non-Current Liabilities Other Liabilities Total Liabilities $ 118,243,327 43,319,561 $ $ 90,704,772 17,628,582 $ $ 27,538, % 25,690, % $ % Net Assets Invested in Capital Assets (Net of Related Debt) Restricted Unrestricted (Deficit) Total Net Assets (Deficit) $ 11,169,805 2,957,897 (32,040,016) $ (l ) $ 11,416,067 2,755,869 (23,582,537) $ ( ) $ (246,262) -(2.2%) 202, % (8,457,479) (26.4%) $ ( ) (90.3%) Current and other assets increased by $30,852,190 as compared to the prior year. The increase is primarily due to an increase in the District's cash balances. Capital assets increased by $13,875,631 as compared to the prior year. This increase is primarily due to amounts expended for additions exceeding depreciation. Note 6 to the Financial Statements provides additional information. Non-current liabilities increased by $27,538,555, as compared to the prior year. This is primarily the result of an increase in the District's Other Post Employment Benefit Liability and the issuance of $17,955,000 in serial bonds. Other liabilities increased by $25,690,979 as compared to the prior year. This is primarily a result of the issuance ofa bond anticipation note for $23,160,000. The net assets invested in capital assets net of related debt is calculated by subtracting the amount of outstanding debt used for construction from the total cost of all asset acquisitions, net of accumulated depreciation. The total cost of these acquisitions includes expenditures to purchase land, construct and improve buildings and purchase vehicles, equipment and furniture to support District operations. The unrestricted net assets at June 30, 2010, is a deficit $32,040,016, which represents the amount by which the District's liabilities, excluding debt related to capital construction, exceeded the District's assets other than capital assets. This deficit is primarily the result of the implementation of the requirement to accrue Other Post Employment Benefits. This requirement has been in effect for the last three years. The accumulated accrued liability for this obligation is $52,858,197 at June 30,

9 MANAGEMENT'S DISCUSSION & ANALYSIS (Continued) B. Changes in Net Assets The results of this year's operations as a whole are reported in the Statement of Activities in a programmatic format in the accompanying financial statements. In the accompanying financial statements STAR (school tax relief) revenue is included in the other tax items line. However, in this MD&A, STAR revenue has been combined with property taxes. A summary of this statement for the years ended June 30, 2010 and 2009 is as follows. Revenues Program Revenues Charges for Services Operating Grants Capital Grants General Revenues Property Taxes and STAR S tate and Federal Sources Other Total Revenues 2010 $ 1,051,531 13,228, ,500 30,798,046 58,496,950 2,786, ,626,775 $ ,302,909 9,376,886 29,558,513 62,516,163 3,544, ,299,195 $ Increase (Decrease) (251,378) 3,851,324 1,239,533 (4,019,213) (758,186) 327,580 Percentage Change (19.3%) 41.1% 4.2% (6.4%) (21.4%) 0.3% Expenses General Support Instruction Pupil Transportation Community Service Debt Service-Unallocated Interest Food Service Program Total Expenses $ 18,877,763 81,696,045 8,913,946 2,900,170 2,740, , $ 19,628,116 80,749,212 9,640,551 11,545 2,836,400 2,975, ,840,964 $ (750,353) 946,833 (726,605) (11,545) 63,770 (234,575) ( ) (3.8%) 1.2% (7.5%) (100.0%) 2.2% (7.9%) (0.6%) Total Change in Net Assets $ (8 5Ql 114) $ ( ) $ I ,9% The District's revenues increased by $327,580 in The major factors that contributed to the increase were: Property tax and STAR revenues increased by $1,239,533. The District received less general State aid and Federal aid of$4,019,213, The District received additional operating grants during for the American Recovery and Reinvestment Act of The Grant was received in the General Fund for $3,490,866. The District's expenses for the year decreased by $712,475. The major factor that contributed to this increase is: Due to the uncertainty of the NYS budget, the District was able to achieve savings through deferring certain costs, 6

10 MANAGEMENT'S DISCUSSION & ANALYSIS For the Year Ended Juue 30, 2010 (Continued) A graphic display of the distribution of revenues for the two years follows: Property Taxes and STAR 29.0% S tate and Federal Sources 55.0% Operating Grants 12.4% Charges for Services 1.0% Other 2.6% For the Year Ended June 30, 2009 Property Taxes and STAR 27.8% State and Federal Sources 58.8% Operating Grants _ % Charges for Services 1.2% Other 3.3% 7

11 MANAGEMENT'S DISCUSSION & ANALYSIS For the Year Ended Jnne 30,2010 (Continned) A graphic display of the distribution of expenses for the two years follows: Debt Service Unallocated Interest 2.5% Food Service Program 2.4% Pupil Transportation 7.7% General Support 16.4% Instruction 71.0% For the Year Ended June 30, 2009 Community Service 0.0% Debt Service Unallocated Interest 2.4% Food Service Program 2.6% General Support 16.9% Pupil ransportation 8.3% Instruction 69.7% 8

12 MANAGEMENT'S DISCUSSION & ANALYSIS For the Year Ended Jnne 30, 2010 (Continued) 4. FINANCIAL ANALYSIS OF THE DISTRICT'S FUND BALANCES At June 30, 2010, the District's governmental funds reported a combined fund balance of $22,337,273 which is an increase of $6,354,465 over the prior year. This increase is due to an excess of revenues over expenditures for the year. A summary of the change in fund balance by fund is as follows: Increase General Fund (Decrease) Reserve for: Encumbrances $ 941,842 $ 977,915 $ (36,073) Workers' Compensation 315, ,731 40,269 Unemployment Insurance 200,000 50, ,000 Employee Benefit Accrued Liability 1,709,098 1,709,098 Retirement Contribution 1,000, , ,000 Insurance 250, ,000 Tax Certiorari 300, ,000 Liability 2,918,000 3,000,000 (82,000) Unreserved - Designated for Subsequent Year's Expenditures 2,722,071 1,000,000 1,722,071 Unreserved - Undesignated 6,430,145 5,828, ,550 16,786,156 14,090,339 2,695,817 School L nnch Fund Reserve for Inventory 42,926 34,161 8,765 Unserved - Undesignated 311,577 85, , , , ,583 Special Aid Fund Reserve for Encumbrances 411, ,213 (138,777) Unserved - Undesignated (2,450,240) (2,589,017) 138,777 (2,038,804) (2,038,804) Debt Service Fund Reserve for Debt 2,957,897 2,755,869 2Q2,028 2,957,897 2,755, ,028 Capital Projects Fund Reserve for Encumbrances 3,430,834 3,430,834 Unserved - Undesignated 846,687 1,055,484 (208,797) 4,277,521 1,055,484 3,222,037 Total Fund Balance $ $ $ Combined increases of $408,269 to the general fund's legal reserved fund balances during the year ended June 30, 2010, includes transfers approved by the Board of Education and interest earnings on existing balances. 9

13 MANAGEMENT'S DISCUSSION & ANALYSIS For the Year Ended June 30,2010 (Continued) 5. GENERAL FUND BUDGETARY IDGHLIGHTS A Budget The District's general fimd adopted budget for the year ended June was $95,872,690. This is an increase of $875,313 over the prior years adopted budget. The majority of the District's fimding sources were $30,364,145 in estimated property taxes and STAR and State Aid in the amount of $61,590,242. B. Change in General Fund's Unreserved - Undesignated Fund Balance (Budget to Actual) The general fund's unreserved - undesiguated fimd balance is the component of total fund balance that is the residual of prior years' excess revenues over expenditures, net of transfers to reserves and designations to fund the subsequent year's budget. It is this balance that is commonly referred to as the "fund balance". The change in this balance demonstrated through a comparison of the actual revenues and expenditures for the year compared to budget follows: Opening, Unreserved - Undesiguated Fund Balance $ 5,828,595 Revenues Under Budget and Appropriated Fund Balance (2,364,780) Carry over Encumbrances from June 30, ,915 Expenditures under Budget 4,118,755 Increase in Appropriated Fund Balance (1,722,071) Net Increase to Reserved Funds (408,269) Closing, Unreserved - Undesignated Fund Balance $ 6 '130 ]45 Opening, Unreserved - Undesignated Fund Balance The $5,828,595 shown in the table is the portion of the District's June 30, 2009, fund balance that was retained undesiguated. This was 6.1 % of the District's approved operating budget. Revenues Under Budget and Appropriated Fund Balance The budget for revenues was $94,872,690. The actual revenues received for the year were $94,485,825. The actual revenue under estimated and budgeted appropriated fimd balance was $2,364,780. This variance contributes directly to the change to the undesiguated portion of the general fund balance from June 30, 2009 to June 30, Expenditures and Encumbrances Under Budget The final budget for expenditures was $96,850,605. The actual expenditures and encumbrances were $92,731,850. The final budget was under expended by $4,118,755. This under expenditure contributes to the change to the undesignated portion of the general fund balance from June 30, 2009 to June 30,

14 MANAGEMENT'S DISCUSSION & ANALYSIS For the Year Ended Jnne 30, 2010 (Continued) Appropriated Fund Balance The District has chosen to use $2,722,071 of its available June 30, 2010, fund balance to partially fund its approved operating budget. Closing, Unreserved - Undesignated Fund Balance Based upon the sununary changes shown in the above table, the District will begin the fiscal year with an undesignated fund balance of$6,430,145. This was 6.6% of the District's approved operating budget. This is a increase of$601,550 over the undesignated balance from the prior year as of June 30, CAPITAL ASSET AND DEBT ADMINISTRATION A. Capital Assets At June 30, 20 I 0, the District had invested in a broad range of capital assets, including land, buildings and improvements and equipment. The net increase in capital assets is due to capital additions less depreciation recorded for the year ended June 30, A summary of the District's capital assets, net of accnmulated depreciation at June 30, 2010 and 2009, is as follows: Increase (Decrease) Land $ 1,404,489 $ 1,404,489 $ Construction in Process 18,242,720 2,036,791 16,205,929 Land Improvements 2,306,059 2,776,791 (470,732) Buildings 51,634,168 53,217,985 (1,583,817) Vehicles, Furniture, and Equipment 1,457,212 1,732,961 (275,749) Capital Assets, Net $ $ $ B. Debt Administration At June 30, 2010, the District had total bonds payable of $64,315,198. At June 30, 2010, the District utilized 86.8% of its NYS Constitntional Debt Limit. A summary of the outstanding debt at June 30, 2010 and 2009, is as follows: Date of Date of Interest Increase Descri2tion Issue Matnrit}' Rate (Decrease) Staley - QZAB* / % $ 360,000 $ 410,000 $ (50,000: General Construction % 2,280,000 2,485,000 (205,000: Energy Performance 10/27/2003 7/30/ % 3,355,198 3,632,234 (277,036: General Construction 6/15/ % 3,650,000 3,940,000 (290,000: RF A Construction / % 26,310,000 28,600,000 (2,290,000: General Construction 7/15/ / % 2,610,000 2,845,000 (235,000: Revenue Bond-EPC 6125/ % 7,795,000 8,330,000 (535,000: General Construction 6/ /1/ % 17,955,000 17,955,000 Total Bonds Payable $ 64,315,198 $ 50,242,234 $ 14,072,964 11

15 MANAGEMENT'S DISCUSSION & ANALYSIS (Continued) 6. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET The voters approved the budget in the amount of $97, for the school year. This budget has taken measures to reduce salaries by working together with our Unions to open contract negotiations early. Through the renegotiating of these contracts for one year, the District achieved a total savings of approximately $ Included in the above budget are American Recovery and Reinvestment Act (ARRA) funds in the amount of $3,490,866. These funds will be used to retain existing teachers, turn around the lowest performing schools and improve results for all students. In January 2010, the District voters passed a Capital Project proposition in the amount of$30 million. This project will enable the District to improve its elementary schools. 7. CONTACTING THE DISTRICT This financial report is designed to provide the School District's citizens, taxpayers, customers, investors, and creditors with a general overview of the School District's fmances and to demonstrate the School District's accountability for the money it receives. If you have questions about this report or need additional fmancial information, contact the Business Office, at: Rome City School District 409 Bell Road Rome, New York

16 STATEMENT OF NET ASSETS June 30, 2010 Assets Cash and Cash Equivalents Restricted Cash and Cash Equivalents Receivables Tax Receivables Accounts Receivable Other Governments Due from Fiduciary Funds Inventory Capital Assets (Net) Total Assets $ 46,035,798 9,635,999 2,246, ,318 9,628, ,050 42,926 75,044,648 $ Liabilities Payables Accounts Payable Accrued Liabilities Accrued Health Insurance Claims Lag Due to Other Governments Due to Teacher 1 s Retirement System Due to Employees' Retirement System Deferred Revenue - Premium on Obligations Short-Term Notes Payables Revenue Anticipation Notes Bond Anticipation Notes Noncurrent Liabilities Net Assets Due Within One Year Due in More Than One Year Total Liabilities Investment in Capital Assets (Net of Related Debt) Restricted For Debt Service Unrestricted (Deficit) Total Net Assets (Deficit) Total Liabilities and Net Assets $ 2,581,182 2,847, , ,385 2,705, ,698 1,207,466 10,000,000 23,160,000 4,531, ,711, ,562,888 11,169,805 2,957,897 (32,040,016) m,912,314) $ The Accompanying Notes are an Integral Part of These Financial Statements. 13

17 STATEMENT OF ACTIVITIES Functions/Programs General Support Instruction Pupil Transportation Debt Service - Unallocated Interest School Lunch Program Total FunctionsiPrograms Expenses $ 18,877,763 $ 81,696,045 8,913,946 2,900,170 2, $ $ Charges for Services 381, ] 531 General Revenues Real Property Taxes Other Real Property Tax Items Use of Money and Property State and Federal Sources Miscellaneous Compensation for Loss Total General Revenue Change in Net Assets $ $ Program Revenues Operating Grants and Contributions 11,444,810 1,783, Capital Grants Net (Expense) Revenue and Changes in Net Assets $ $ (18,877,763) 265,500 (69,604,136) (8,913,946) (2,900,170) (287233) $ 26S ,583,248) 22,273,727 8,524, ,457 58,496,950 2,250,485 21,596 92, (8,501,714) Net Assets, Beginning of Year Net Assets, End of Year (9,410600) $ (l ) The Accompanying Notes are an Integral Part of These Financial Statements. 14

18 BALANCE SHEET-GOVERNMENTAL FUNDS (INCLUDING THE RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCE TO NET ASSETS OF GOVERNMENTAL ACTIVITIES) June 30, 2010 Assets School Special Debt General Lunch Aid Service CaEital Cash and Cash Equivalents 18,873, ,776 $ 410,433 $, 26,577,97'2 Restricted Cash and Cash Equivalents 6,692,098 2,943,901 Receivables Tax Receivables 2,246,317 Account Receivable 175,337 33,981 Other Governments 5,779, ,301 3,700,174 Due from Other Funds 7,688, ,255 1,921,279 13,996 2,316,780 Inventory Total Assets 41 : Z!.l:~?32 6Q3188~ ' ? '1 Total 46,035,798 9,635,999 2,246, ,318 9,628,518 12,245, ~QQ~681 Liabilities Payables Accounts Payable 1,508,042 $ 1,421 $ 48,291, 1,023,428 Accrued Liabilities 2,707,087 10,659 4,146 Accrued Health Insurance Claims Lag 400,000 Due To Other Governments 79,000 1, ,073 Other Funds 4,783, ,344 5,883, ,803 Teacher's Retirement System 2,705,026 Employees' Retirement System 230,698 Short-Term Notes Payable Bond Anticipation Notes 23,160,000 Revenue Anticipation Note 10,000,000 Compensated Absences 529,099 Deferred Revenue 1726 III Total Liabilities Fund Balance (Deficit) Fund Balance - Reserved Special Reserves 6,692,098 42,926 2,957,897 Reselve for Encumbrances 941, ,436 3,430,834 Fund Balance - Unreserved Designated for Subsequent Year's Expenditures 2,722,071 Undesignated (Deficit) ( ) Total Fund Balance (Deficit) ( ) $ 2,581,182 2,7'21, , ,385 11,438,761 2,705, ,698 23,160,000 10,000, , ,692,921 4,784,112 2,722,071 ~ 138 l Total Liabilities and Fund Balance (Deficit) :II gs421j 70S 232!m ~86 '1 2S7 82Z ' ~'1 Amounts reported for governmental activities in the statement of net assets are different due to the following: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Other long-tenn assets are not available to pay current-period expenditures and, therefore, are deferred in the funds. 75,044,648 3,753,371 Deferred Revenue - Premium on Obligations Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds. Serial Bonds Unamortized Issuance Cost Compensated Absences Other Liabilities Accrued Interest OPES Liability Net Assets of Governmental Activities (1,207,466) (64,315,198) 440,355 (828,187) (153,001) (125,912) ( ) o:z ) The Accompanying Notes are an Integral Pal1 of These Financial Statements. [5

19 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUNDS School Special Debt General Lunch Aid SelVice CaEital Total Revenues Real Property Taxes Other Real Property Tax Items Charges for SelVices Use of Money and Property Sale of Property and Compensation for Loss Miscellaneous Interfund Revenues State Aid Federal Aid School Lunch Sales Total Revenues $ 21,868,362 $ $ $ 8,524, , ,429 21,596 1,352,969 19, ,620 36,735 58,316,072 71,295 1,180,471 3,671,744 1,712,105 6,773, , $ $ 21,868,362 8,524, ,599 1,207,466 1,721,923 21,596 2,213,748 36, ,500 59,833,338 12,157, Expenditures General Support Instruction Pupil Transportation School Lunch Program Employee Benefits Debt SClVice - Principal Debt Service - Interest Total Expenditures 11,125,792 49,335,546 9,175,564 6,372,740 1,959,279 17,833, ,629 3,882, ,205,929 27,331,721 58,511,110 6,372,740 1,959,279 18,112,437 3,882, Excess (Deficit) Revenues Over Expenditures (380000) ( ) ( ) Other Financing Sources (Uses) Proceeds of Debt Transfers from Other Funds Transfers to Other Funds Total Other Financing Sources (Uses) 380,000 (380000) (380000) ,955,000 17,955, ,000 (380000} Excess (Deficit) Revenues Over Expenditures and Other Financing Sources (Uses) 2,695, , ,028 3,222,037 6,354,465 Fund Balance (Deficit), Beginning of Year ( ) Fund Balance (Deficit), End of Year $ 16Z861~fi! 35;1 ~m! (2 g3~ 8~l! 2 2~Z 821 $ :l~zz~~l I,~ JlZ,ZJ The Accompanying Notes are an Integral Part of These Financial Statements. 16

20 RECONCILIATION OF THE STATEMENT OF REVENUES AND EXPENDITURES OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Net Changes in Fund Balance - Total Governmental Funds $ 6,354,465 Capital Outlays to purchase or build capital assets are reported in governmental funds as expenditures. However, for governmental activities, those costs are shown in the statement of net assets and allocated over their useful lives as depreciation expenses in the statement of activities. This is the amount by which capital outlays exceeds depreciation in the period. Depreciation Expense Capital Outlays (2,477,170) 16,352,802 13,875,632 Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-tenn liabilities in the statement of net assets. Repayments of bond principal is an expenditure in governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. This is the amount by which proceeds exceeded repayments. Amortized Issue Costs Bond Proceeds Repayment Bond Principal (48,929) (17,955,000) 3,882,036 (14,121,893) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the governmental funds. 405,365 Certain expenses in the statement of activities do not require the use of current fmancial resources and therefore are not reported as expenditures in governmental funds. Accrued Interest on Serial Bonds Deferred Revenue - Premium on Obligations Compensated Absences 8,845 (1,207,466) (193,651) Other Post Employment Benefits (GASB 45) (13,623,011l 05,015,283) Change in Net Assets Governmental Activities $ ) The Accompanying Notes are an Integral Part of These Financial Statements. 17

21 STATEMENT OF FIDUCIARY NET ASSETS June 30,2010 Assets Private Purpose Trusts Cash and Cash Equivalents - Unrestricted $ $ Cash and Cash Equivalents - Restricted 296,108 Due from Other Funds Total Assets $ $ Agenc;[ 1,830,968 3,380 I Liabilities Payables Due to Other Funds $ $ Agency Liabilities Awards Payable 12,250 ExtracJassroom Activity Balances 12,250 $ 810, , ,904 J Net Assets Restricted for Scholarships 283,858 Total Net Assets 283,858 Total Liabilities and Net Assets $ 226 lq8 The Accompanying Notes are an Integral Part of These Financial Statements. 18

22 STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS June 30, 2010 Additions Use of Money and Property Donations Total Additions Deductions Scholarships and Awards Change in Net Assets Net Assets, Beginning of Year Private Purpose Trusts $ 625 7,600 8,225 18,600 (10,375) 294,233 Net Assets, Eud of Year $ The Accompanying Notes are an Integral Part of These Financial Statements. 19

23 NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended Jnne 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City School District of the City of Rome, New York (the School District) have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as they apply to govermnental units. Those principles are prescribed by the Govermnental Accounting Standards Board (GASB), which is the accepted standard-setting body for establishing governmental accounting and fmancial reporting principles. Certain significant accounting principles and policies utilized by the School District are described below: Reporting Entity The School District is governed by the laws of New York State. The School District is an independent entity governed by an elected Board of Education consisting of 9 members. The President of the Board serves as the chief fiscal officer and the Superintendent is the chief executive officer. The Board is responsible for, and controls all activities related to public school education within the School District. Board members have authority to make decisions, power to appoint management, and primary accountability for all fiscal matters. The reporting entity of the School District is based upon criteria set forth by GASB. The financial reporting entity consists of the primary govennnent, organizations for which the primary government is fmancially accountable, and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The accompanying fmancial statements present the activities of the School District. The School District is not a component unit of another reporting entity. The decision to include a potential component unit in the School District's reporting entity is based on several criteria including legal standing, fiscal dependency, and financial accountability. Based on the application of these criteria, the following is a brief description of certain entities included in the School District's reporting entity. (aj Extraclassroom Activity Funds The Extraclassroom Activity Funds of the School District represent funds of the students of the School District. The Board of Education exercises general oversight of these funds. The Extraclassroom Activity Funds are independent of the School District with respect to its fmancial transactions and the designation of student management. Separate audited financial statements (cash basis) of the Extraclassroom Activity Funds can be found at the School District's business office. The School District accounts for assets held as an agent for various student organizations in an agency fund. Joint Venture The School District is one of nine (9) participating school districts in the Madison-Oneida Board of Cooperative Educational Services (BOCES). A BOCES is a voluntary, cooperative association of school districts in a geographic area that shares planning, services, and programs, which provide educational and support activities. There is no authority or process by which a school district can terminate its status as a BOCES component. BOCES are organized under 1950 of the New York State Education Law. A BOCES' Board is considered a corporate body. Members of a BOCES' Board are nominated and elected by their component member boards in accordance with provisions of 1950 of the New York State Education Law. All BOCES' property is held by the BOCES' Board as a corporation [ 1950(6)]. In addition, BOCES' Boards also are considered municipal corporations to permit them to contract with other municipalities on a cooperative basis under 119-n(a) of the New York State General Municipal Law. A BOCES' budget is comprised of separate budgets for administrative, program, and capital costs. Each component district's share of administrative and capital cost is determined by resident public school district enrollment, as defined in the New York State Education Law, 1950(4)(b)(7). In addition, component districts pay tuition or a service fee for programs in which its students participate. 20

24 NOTES TO BASIC FINANCIAL STATEMENTS Basis of Presentation (a) District-Wide Statements The Statement of Net Assets and the Statement of Activities present financial information about the School District's governmental activities. These statements include the financial activities of the overall government in its entirety, except those that are fiduciary. Eliminations have been made to minimize the double COUilting of internal transactions. Governmental activities generally are financed through taxes, State aid, intergovernmental revenues, and other exchange and non-exchange transactions. Operating grants include operating-specific and discretionary grants. The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the School District's governmental activities. Direct expenses are those that are specifically associated with and are clearly identifiable to a particular function. Indirect expenses, principally employee benefits, are allocated to functional areas in proportion to the payroll expended for those areas. Program revenues include charges paid by the recipients of goods or services offered by the programs, and 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. (b) Fund Financial Statements The fund statements provide information about the School District's funds, including fiduciary funds. Separate statements for each fund category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. AIl funds of the School District are displayed as major funds. The School District reports the following major governmental funds: Governmental Funds: General Fund - is the general operating fund and is used to account for all financial transactions except those required to be accounted for in another fund. Special Aid Fund - is used to account for the proceeds of specific revenue sources such as federal and state grants that are legally restricted to expenditures for specified purposes. These legal restrictions may be imposed by either governments that provide the funds or outside parties. School Lunch Fund - is used to account for the activities of the school lunch operations. Debt Service Fund - accounts for the accumulation of resources and the payment of principal and interest on long-term general obligation debt of governmental activities. Capital Projects Fund ~ is used to account for the fmancial resources used for acquisition, construction, or major repair of capital facilities. (c) Fiduciary Funds This fund is used to account for fiduciary activities. Fiduciary activities are those in which the School District acts as trustee or agent for resources that belong to others. These activities are not included in the district-wide financial statements, because their resources do not belong to the School District, and are not available to be used. There are two classes of fiduciary funds: Private Purpose Trust Funds - These funds are used to account for trust arrangements in which principal and income benefits annual third party awards and scholarships for students. Established criteria govern the use of the funds and members of the School District or representatives of the donors may serve on committees to detennine who benefits. Agency Funds - These funds are strictly custodial in nature and do not involve the measurement of results of operations. Assets are held by the School District as agent for various student groups or extraclassroom activity funds and for payroll or employee withholding. 21

25 NOTES TO BASIC FINANCIAL STATEMENTS Measurement Focus and Basis of Accounting The district-wide and fiduciary fund fmancial statements are reported using the economic resources measurement focus and 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 transaction takes place. Nonexchange transactions, in which the School District gives or receives value without directly receiving or giving equal value in exchange, include property taxes, State aid, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from State aid, grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. The governmental fund statements 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 School District considers all revenues reported in the governmental funds to be available if the revenues are collected within 90 days after the end of the fiscal year. 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 generallong-tenn debt and acquisitions under capital leases are reported as other fmancing sources. Estimates The preparation of fmancial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are made in a variety of areas, including computation of encumbrances, compensated absences, potential contingent liabilities, and useful lives of long-lived assets. Cash and Cash Equivalents The School District's cash and cash equivalents consist of cash on hand, demand deposits, and short-term investments with original maturities of three months or less from date of acquisition. New York State law governs the School District's investment policies. Resources must be deposited in Federal Deposit Insurance Corporation (FDIC) insured commercial banks or trust companies located within the State. Permissible investments include obligations of the United States Treasury, United States Agencies, repurchase agreements and obligations of New York State or its localities. Collateral is required for demand and time deposits and certificates of deposit not covered by FDIC insurance. Obligations that may be pledged as collateral are obligations of the United States and its agencies and obligations of the State and its municipalities and Districts. Property Taxes Real property taxes are levied annually by the Board of Education no later than September I. Taxes are collected in two equal installments due October I and April I. Uncollected real property taxes are enforced by the City of Rome, New York, and the County of Oneida. An amount representing uncollected real property taxes must be transmitted by the City and the County within two years from the return of unpaid taxes to such the City with the exception of real property taxes due on State and County lands. Real property taxes receivable expected to be collected within 90 days subsequent to June 30 are recognized as revenues. Otherwise, real property taxes receivable are offset by deferred revenue to be recognized in the subsequent year. Receivables Receivables are shown gross, with uncollectible amounts recognized under the direct write-off method. No allowance for uncollectible accounts has been provided since it is believed that such allowance would not be material. 22

26 NOTES TO BASIC FINANCIAL STATEMENTS Interfund Transactions The operations of the District include transactions between funds. These transactions may be temporary in nature, such as with interfund borrowings. The District typically loans resources between funds for the purpose of providing cash flow. These interfund receivables and payables are expected to be repaid within one year. Pennanent transfers of funds include the transfer of expenditure and revenues to provide fmancing or other services. In the district-wide statements, the amounts reported on the Statement of Net Assets for interfund receivables and payables represent amounts due between different fund types (governmental activities and fiduciary funds). Eliminations have been made for all interfund receivables and payables between the funds, with the exception of those due from or to the fiduciary funds. The governmental funds report all interfund transactions as originally recorded. Interfund receivables and payables are netted on the accompanying govennnental funds balance sheet when it is the District's practice to settle these amounts at a net balance based upon the right oflegal offset. A detailed disclosure by individual fund for interfund receivables, payables, expenditures and revenues activity is provided subsequently in these Notes to Financial Statements. Inventories The inventories offood and/or supplies in the School Lunch Fund are recorded at cost on a first-in, first-out basis, or in the case of surplus food, at stated value, which approximates cost. Purchases of inventoriable items in other funds are recorded as expenditures at the time of purchase, and year-end balances are not maintained. Capital Assets Capital assets are reported at actual cost. Donated assets are reported at estimated fair market value at the time received. The School District uses capitalization thresholds of $5,000, (the dollar value above which asset acquisitions are added to the capital asset accounts for grouped like assets or individual assets). Depreciation methods and estimated useful lives of capital assets reported in the district-wide statements are as follows: Land Improvements Furniture and Equipment Buildings Licensed Vehicles Compensated Absences Lives 20 Years 5-20 Years Years 8-10 Years Depreciation Method Straight Line Straight Line Straight Line Straight Line The School District employees are granted vacation in varying amounts, based primarily on length of service and service position. Some earned benefits may be forfeited if not taken within varying time periods. Sick leave eligibility and accumulation is specified in negotiated labor contracts and in individual employment contracts. Upon retirement, resignation or death, employees may receive a payment based on unused accumulated sick leave, based on contractual provisions. Consistent with GASB, an accrual for accumulated sick leave is included in the compensated absences liability at year end. The compensated absences liability is calculated based on the pay rates in effect at year-end. In the fund statements, only the amonnt of matured liabilities is accrued within the General Fund based upon expendable and available fmancial resources. 23