BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Curry County, Oregon FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION YEAR ENDED JUNE 30, 2012 WITH

Transcription

1 BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Curry County, Oregon FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION YEAR ENDED JUNE 30, 2012 WITH INDEPENDENT AUDITOR'S REPORT

2 BROOKINGS-HARBOR SCHOOL DISTRICT NO.17C Curry County, Oregon June 30, 2012 Administrative Office 629 Easy Street Brookings, Oregon BOARD OF DIRECTORS AS OF JUNE 30, 2012 Jamie Ryan - Chairperson Carol Slewing - Vice-Chair Bob Horel - Director Allene Fewell - Director Brad Peters - Director ADMINISTRATIVE STAFF Brian Hodges, Superintendent Don Sweeney, Business Manager

3 BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Curry County, Oregon Year Ended June 30, 2012 Table of Contents Page Independent Auditor's Report A1 A2 Management s Discussion and Analysis B1 B6 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets 1 Statement of Activities 2 Fund Financial Statements: Balance Sheet Governmental Funds 3 Reconciliation of Governmental Funds Balance Sheet to Statement of Net Assets 4 Statement of Revenues, Expenditures and Changes in Fund Balance Governmental Funds 5 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of Governmental Funds to the Statement of Activities 6 Notes to the Basic Financial Statements 7 24 Required Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual General Fund 25 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Special Programs Fund 26 Schedule of Funding Progress 27 Supplementary Information: Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Debt Service Fund 28 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Capital Projects Fund 29 Other Financial Schedules: Schedule of Property Tax Transactions 30 School District Financial Accounting Summaries Independent Auditor s Report Required by State Regulations 37 39

4 Table of Contents (continued) FINANCIAL SECTION (Continued) Page Items Required by the Single Audit Act Amendments of 1996 for Federal Awards Programs: Report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards Report on compliance with requirements applicable to each major program and internal control over compliance in accordance with OMB Circular A Schedule of Expenditures of Federal Awards Schedule of Findings and Questioned Costs 46 48

5 Member Division for CPA Firms AICPA MICHAEL L. PIELS CERTIFIED PUBLIC ACCOUNTANTS, LLP 940 Town Centre Drive, Medford, Oregon (541) FAX (541) INDEPENDENT AUDITOR'S REPORT Board of Directors Brookings-Harbor School District No. 17C Curry County, Oregon We have audited the accompanying financial statements of governmental activities and each major fund of Brookings-Harbor School District No. 17C (the District) as of and for the year ended June 30, 2012, 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 opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the financial statement presentation. We believe 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 and each major fund of the District as of June 30, 2012, 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 December 21, 2012, on our consideration of the District s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the result 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. A-1

6 Board of Directors Brookings-Harbor School District No. 17C Curry County, Oregon Accounting principles generally accepted in the United States of America require the Management s Discussion and Analysis, the General Fund, the Special Programs Fund budgetary comparison information, and the Schedule of Funding Progress Other Postemployment Benefits be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of the financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the Management s Discussion and Analysis and the Schedule of Funding Progress Other Postemployment Benefits 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 basics 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. The General Fund and Special Programs Fund budgetary comparison information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District s financial statements. The supplementary information, as listed in the Table of Contents, is presented for the purposes of additional analysis and is not a required part of the financial statements. The accompanying Schedule of Expenditures of Federal Awards, as listed in the Table of Contents, 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. The other supplementary information and the Schedule of Expenditures of Federal Awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information 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 in all material respects, in relation to the financial statements taken as a whole. Michael L. Piels CPAs, LLP December 21, 2012 A-2

7 MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2012 As management of Brookings-Harbor School District No. 17-C (the District), we offer readers of the District's financial statements this narrative overview and analysis of the financial activities for the fiscal year ended June 30, We encourage readers to consider the information presented here. FINANCIAL HIGHLIGHTS In the government-wide statements, the assets of the District exceeded its liabilities at June 30, 2012 by $9.89 million. Of this amount, $5.85 million represents the District s investment in capital assets, $1.87 million is restricted for debt service, $310 thousand is restricted for capital projects, and the balance, $1.86 million, is unrestricted and available to meet the District s ongoing obligations to citizens and creditors. The District s total net assets increased by $1.01 million during the year ended June 30, In the prior year, the District s total net assets decreased by $136 thousand. The District decreased its total expenditures from the prior year, $15.44 to $14.33 million. District revenues increased from the prior year, $15.30 to $15.35 million. The District s total debt had a net decrease of $867 thousand during the fiscal year as a result of scheduled principal payments and debt issued during the year. At the end of the fiscal year, the combined fund balances for all governmental funds was $6.85 million, a increase of $1.09 million in comparison to the prior year. Approximately $2.23 million of this amount is available for spending at the District s discretion. At the end of the fiscal year, unreserved fund balance for the General Fund was $2.23 million, up from $1.31 million in the prior year. Unreserved fund balance in the General Fund represents about 21.2 percent of total General Fund expenditures, up from 11.8 percent in the prior year. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the District s basic financial statements. The District s basic financial statements consist of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. This report also contains supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the District s finances, in a manner similar to a private-sector business. These statements include: The Statement of Net Assets. The statement of net assets presents information on all of the assets and liabilities of the District at year-end. Net assets are what remain after the liabilities have been paid or otherwise satisfied. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The Statement of Activities. The statement of activities presents information showing how the net assets of the District changed over the year by tracking revenues, expenses and other transactions that increase or reduce net assets. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). B-1

8 In the government-wide financial statements, the District s activities are shown in one category: Governmental activities. All of the District s basic functions are shown here, such as regular and special education, child nutrition services, transportation, administration, and facilities acquisition and construction. These activities are primarily financed through property taxes, Oregon s State School Fund, and other intergovernmental revenues. The government-wide financial statements can be found on pages 1 and 2 of this report. Fund financial statements. The fund financial statements provide more detailed information about the District s funds, focusing on its most significant or major 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, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District can be categorized as governmental funds. Governmental funds. The governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government s near-term financing decisions. Both the governmental fund Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balances are reconciled to the government-wide Statements of Net Assets and Activities. The District maintains four individual governmental funds. Information is presented separately in the governmental fund Balance Sheet and the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances for the General, Special Programs, Debt Service, and Capital Projects Funds, all of which are considered major funds. The District does not have any non-major governmental funds. The basic governmental fund financial statements can be found on pages 3 and 5 of this report. Notes to the basic financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the basic financial statements can be found on pages 7-24 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information displaying budgetary comparison schedules for all governmental funds. Required Supplementary Information can be found on pages of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator of a government s financial position. In the case of the District, assets exceeded liabilities by $9.89 million at June 30, At June 30, 2011 District assets were greater than liabilities by $8.88 million, a change of $1.01, or 11.4%. Capital assets, which consist of the District s land, buildings, building improvements, vehicles, and equipment, represent about 51 percent of total assets at June 30, The remaining assets consist mainly of investments, cash, inventories, prepaid pension benefit obligations, and grants and property taxes receivable. At June 30, 2011, capital assets represented approximately 53 percent of total assets. B-2

9 The District s largest liability (94.8 percent) is for the repayment of general obligation and PERS bonds. Current liabilities, representing about 7.3 percent of the District s total liabilities, consist almost entirely of payables on accounts, salaries and benefits, and the current portion of capital lease and bonded debt obligations. In the prior year, the repayment of general obligation bonds was also the District s largest liability and represented about 95.8 percent of total liabilities, while current liabilities represented about 4.2 percent of total liabilities. A large portion of the District s net assets (59 percent) reflects its investment in capital assets (e.g. land, buildings, vehicles and equipment); less any related debt used to acquire those assets that are still outstanding. In the prior year, the District s investment in capital assets, net of related debt, represented 53 percent of total net assets. The District uses these capital assets to provide services to students and other District residents; consequently these assets are not available for future spending. Although the District s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources (generally property taxes), since the capital assets themselves cannot be used to liquidate these liabilities. June 30, 2012 June 30, 2011 Current and other assets $ 7,948 $ 6,753 Other assets 7,130 7,587 Capital assets 15,736 16,138 Total assets 30,814 30,478 Current liabilities 1,924 1,634 Long-term debt 18,992 19,962 Total liabilities 20,916 21,596 Net assets: Net Assets Governmental Activities (in thousands) Invested in capital assets, net of related debt 5,853 5,544 Restricted for capital projects Restricted for debt serice 1,868 1,863 Unrestricted 1,867 1,166 Total net assets $ 9,898 $ 8,882 B-3

10 Changes in Net Assets For the fiscal years ended June 30, 2012 and 2011 Governmental Activities (in thousands) June 30, 2012 June 30, 2011 Revenues: Program revenues: Charges for service $ 119 $ 470 Operating grants and contributions 2,151 1,847 Capital grants and contributions - - General revenues: Property taxes 5,955 6,067 State school fund - general support 5,677 5,409 Other state and local sources 720 1,289 Earnings on investments Other Total revenues 15,351 15,304 Expenses: Instruction 8,668 8,758 Support Services 4,612 4,967 Enterprise and community services Facilities acquisition and construction Interest on long-term debt Total expenses 14,335 15,440 Change in nets assets 1,016 (136) Net Assets - July 1, ,882 9,018 Net assets - June 30, 2012 $ 9,898 $ 8,882 FINANCIAL ANALYSIS OF THE DISTRICT S FUNDS As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental funds. The focus of the District s governmental funds is to provide information on relatively shortterm cash flow and funding for future basic services. Such information is useful in assessing the District s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government s net resources available for spending at the end of a fiscal year. At June 30, 2012, the District s governmental funds reported combined ending fund balances of $6.85 million, an increase of $1.09 million in comparison with the prior year. About $2.23 million (32.6 percent) of the ending fund balance constitutes unreserved ending fund balance, which is available for spending at the District s discretion. An additional $1.87 million (27.3 percent) is reserved for debt service obligations. B-4

11 General Fund: The General Fund is the chief operating fund of the District. As of June 30, 2012, total fund balance was $2.23 million, up from $1.31 million in the prior year. As a measure of the fund s liquidity, it may be useful to compare total fund balance to total fund expenditures. Fund balance represents about 21.2 percent of total General Fund expenditures. Special Programs Fund: The Special Programs Fund accounts for the proceeds of specific revenue sources that are legally restricted to expenditure for specific purposes. Debt Service Fund: The Debt Service Fund has a total fund balance of $869 thousand, all of which is reserved for debt service of the first bond payment due in November Capital Projects Fund: The Capital Projects Fund has a total fund balance of $310 thousand, all of which is reserved for ongoing capital projects. The fund balance increased by $2,000 this was from interest on investment in the LGIP pool. GENERAL FUND BUDGETING HIGHLIGHTS The District s budget is prepared according to Oregon law and is based on the modified accrual basis of accounting. All funds are budgeted but the most significant budgeted fund is the General Fund. There was one change to the General Fund s adopted budget during the year. Budgeted amounts for the General Fund are as follows: General Fund Budget Original Final Actual Variance Instruction $ 6,520,464 $ 6,862,785 $ 6,571,200 $ 291,585 Support Services 4,413,576 4,413,576 3,972, ,498 Contingency 800, , ,000 Transfers 407, , ,410 - $ 12,141,450 $ 12,483,771 $ 10,950,688 $ 1,533,083 CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets. The District s investment in capital assets includes land, buildings and improvements, and vehicles and equipment. As of June 30, 2012, the District had invested $15.74 million in capital assets, net of depreciation. In the prior year, total capital assets, net of depreciation were about $16.14 million. The decrease is the net result of normal depreciation and the lease purchase of a new Bluebird bus valued at $100 thousand. Additional information of the District s capital assets can be found in Note 5 on page 15 of this report. Long-term debt. At the end of the current fiscal year, the District had total bonded debt outstanding of $19.70 million, consisting of general obligation debt net of unamortized premium/discount, compared to about $19.57 million in the prior year. The District also has capital lease/purchase agreements for busses, with debt outstanding of approximately $220 thousand as of June 30, 2012, compared to about $214 thousand in the prior year. During the current year, the District s total debt had a net decrease of $867 thousand. The net decrease resulted from the scheduled payments on long-term debt and the issuance of new debt. Additional information on the District s long-term debt can be found in Note 8 and 9 on pages of this report. B-5

12 CURRENT ECONOMIC FACTORS The two major economic factors facing the Brookings Harbor School District are declining enrollment and increasing PERS rates. Even though both of these factors really do not hit until the biennium they are major and will require advance planning in to maintain our current financial position. The senior class in is 50 kids larger than the incoming kindergarten class of , this represents a large drop in enrollment for the School District; additionally the predicted senior class in is 40 kids larger than the predicted incoming kindergarten class in The declining enrollment could lead to a $600,000 decrease in funding for the Brookings Harbor School District over the next three to four years. This declining enrollment is most likely linked to the shrinking of Curry County s population under the age of 18. The Brookings Harbor School district will start to explore options in to help expand enrollment. The increased PERS rates in will raise the PERS costs for Brookings Harbor by $288,000 annually. These two factors could lead to potential budget shortfalls in the upcoming years. The Brookings Harbor School District does not predict a budget shortfall for the school year and will attempt to end the year without using any of the School Districts carryover. In addition the Brookings Harbor School District is located within Curry County which is experiencing severe financial problems. The Brookings Harbor School District relies heavily on Curry County for funding. Any disruption of funds from Curry County could present a major hardship to the Brookings Harbor School District. In conclusion, with conservative fiscal budgeting and the current financial resources available to Brookings Harbor School District, the school district should be able to maintain the current high level of service to their student population. REQUESTS FOR INFORMATION This financial report is designed to present the user (citizens, taxpayers, investors, and creditors) with a general overview of the District s finances and to demonstrate the District s accountability. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the District s Director Fiscal Services, Don Sweeney, at 629 Easy Street, Brookings, Oregon B-6

13 BASIC FINANCIAL STATEMENTS

14 GOVERNMENT-WIDE FINANCIAL STATEMENTS

15 BROOKINGS-HARBOR SCHOOL DISTRICT 17C STATEMENT OF NET ASSETS June 30, 2012 Primary Government Governmental Activities ASSETS: Cash and investments $ 6,544,433 Receivables 1,354,023 Inventories 5,258 Prepaids 43,816 Prepaid pension benefit obligation 6,953,870 Bond issuance costs, net 176,287 Capital assets, net Land 224,401 Buildings and improvements 14,706,245 Vehicles and equipment 805,258 TOTAL ASSETS 30,813,591 LIABILITIES: Accounts payable 64,949 Accrued salaries and benefits 357,178 Accrued interest payable 27,494 Deferred revenue 730 Accrued compensated absences payable 25,545 Other post employment obligations 389,576 Capital lease payable: Due within one year 59,298 Due in more than one year 160,293 Bonds payable, net of unamortized premium/discount: Due within one year 998,869 Due in more than one year 18,831,375 TOTAL LIABILITIES 20,915,307 NET ASSETS: Invested in capital assets, net of related debt 5,853,468 Restricted 5 Restricted for debt service 1,868,393 Restricted for capital projects 310,080 Unrestricted 1,866,343 TOTAL NET ASSETS $ 9,898,284 See notes to basic financial statements 1

16 BROOKINGS-HARBOR SCHOOL DISTRICT 17C STATEMENT OF ACTIVITIES FISCAL YEAR ENDED JUNE 30, 2012 Charges for Functions/Programs Expenses Services Governmental activities: Program Revenues Operating Capital Grants and Grants and Contributions Contributions Net (Expense) Revenue and Change In Net Assets Instruction $ 8,667,523 $ $ 1,560,725 $ - $ (7,106,798) Supporting services 4,612,271 15, ,964 - (4,486,791) Enterprise and community services 618, , ,772 - (34,085) Facilities acquisition and construction 80 - (80) Interest on long-term debt 436,508 - (436,508) Total government activities $ 14,335,189 $ 119,466 $ 2,151,461 $ - (12,064,262) General revenues: Property taxes levied for general purposes 4,885,301 Property taxes levied for debt service 1,070,152 State school fund - general support 5,676,599 Common school fund 122,251 Federal forest fees 302,382 Unrestricted state and local sources 294,937 Earnings on investments 218,058 Miscellaneous 509,063 Gain (loss) on sale of capital assets 2,000 Total general revenues 13,080,743 CHANGE IN NET ASSETS 1,016,481 Net assets - July 1, ,881,803 Net Assets - June 30, 2012 $ 9,898,284 See notes to basic financial statements 2

17 FUND FINANCIAL STATEMENTS

18 BROOKINGS-HARBOR SCHOOL DISTRICT 17C BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2012 Special Debt Capital General Programs Service Projects Fund Fund Fund Fund Total ASSETS Equity in pooled cash and investments $ 2,437,850 $ 2,942,284 $ 854,219 $ 310,080 $ 6,544,433 Receivables 640, , ,671-1,354,023 Prepaids - 43, ,816 TOTAL ASSETS $ 3,078,833 $ 3,555,469 $ 997,890 $ 310,080 $ 7,942,272 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 48,198 $ 16,751 $ - $ - $ 64,949 Accrued salaries and benefits 255, , ,178 Deferred revenue 539, , ,423 TOTAL LIABILITIES 843, , ,366-1,090,550 Fund Balances: Restricted for grants Restricted for debt service 998, ,524-1,868,393 Restricted for capital projects , ,080 Committed - 1,922, ,922,541 Assigned - 515, ,117 Unassigned 2,235, ,235,586 Total fund balances 2,235,586 3,436, , ,080 6,851,722 TOTAL LIABILITIES AND FUND BALANCES $ 3,078,833 $ 3,555,469 $ 997,890 $ 310,080 $ 7,942,272 See notes to basic financial statements 3

19 BROOKINGS-HARBOR SCHOOL DISTRICT 17C RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET TO STATEMENT OF NET ASSETS June 30, 2012 TOTAL FUND BALANCES $ 6,851,722 Amounts reported for governmental activities in the Statement of Net Assets are different because: Inventory is not reported as a governmental fund asset under the purchase method of accounting for inventory 5,258 Prepaid pension benefit obligations are not a financial resource and therefore are not reported in the governmental funds 6,953,870 The unamortized portion of issuance costs is not available to pay for current period expenditures, and therefore, is not reported in the governmental funds. 176,287 Capital assets are not financial resources and therefore are not reported in the governmental funds: Cost $ 23,491,464 Accumulated depreciation (7,755,560) 15,735,904 A portion of the District's property taxes are collected after year-end but are not available soon enough to pay for the current year's operations, and therefore are not reported as revenue in the governmental funds. 667,693 Long-term liabilities not payable in the current year are not reported as governmental fund liabilities. Interest in long-term debt is not accrued in the governmental funds, but rather recognized as an expenditure when due. These liabilities consist of: Accrued interest payable (27,494) Early retirement benefits (389,576) Capital lease payable (219,591) Bonds payable (19,830,244) Compensated absences payable (25,545) (20,492,450) TOTAL NET ASSETS $ 9,898,284 See notes to basic financial statements 4

20 BROOKINGS-HARBOR SCHOOL DISTRICT 17C STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS FISCAL YEAR ENDED JUNE 30, 2012 General Fund Special Programs Fund Debt Service Fund Capital Projects Fund Total REVENUES Local Sources $ 4,953,331 $ 783,561 $ 1,075,571 $ 1,555 $ 6,814,018 Intermediate Sources 84,982 1, ,697 State Sources 6,286,209 31, ,317,608 Federal Sources 548,445 1,531, ,080,123 TOTAL REVENUES 11,872,967 2,348,353 1,075,571 1,555 15,298,446 EXPENDITURES Current Instruction 6,571,200 1,526, ,098,008 Support services 3,972, , ,403,563 Enterprise and community services - 590, ,243 Facilities acquisition and construction Debt service: Principal - 45, , ,640 Interest , ,675 TOTAL EXPENDITURES 10,543,278 2,594,176 1,171, ,309,209 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 1,329,689 (245,823) (96,104) 1, ,237 OTHER FINANCING SOURCES (USES): Transfers in - 407, ,410 Transfers out (407,410) (407,410) Proceeds from Capital Lease - 100, ,310 TOTAL OTHER FINANCING SOURCES (USES) (407,410) 507, ,310 NET CHANGE IN FUND BALANCES 922, ,897 (96,104) 1,475 1,089,547 FUND BALANCE, July 1, ,313,307 3,174, , ,605 5,762,175 FUND BALANCE, June 30, 2012 $ 2,235,586 $ 3,436,532 $ 869,524 $ 310,080 $ 6,851,722 See notes to basic financial statements 5

21 BROOKINGS-HARBOR SCHOOL DISTRICT 17C RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FISCAL YEAR ENDED JUNE 30, 2012 NET CHANGE IN FUND BALANCE $ 1,089,547 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds do not report inventory balances under the purchase method of accounting for inventory while the Statement of Net Assets does. This is the change in inventory in the current period (5,900) Early retirement benefits are recognized as an expenditure in the governmental funds when they are paid. In the Statement of Activities early retirement benefits are recongnized as an expenditure when earned. (146,916) Prepaid pension benefit obligations are reported as an asset on the Statement of Net Assets. These amounts are amortized in the Statement of Activities. (434,616) Government funds report capital outlay as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation exceeded capital outlay in the current period. Expenditures for capital assets 100,310 Less current year depreciation (502,706) (402,396) In the Statement of Activities interest is accrued on long-term debt, whereas in the governmental funds it is recorded as an interest expense when due. 880 Compensated absences are recognized as an expenditure in the governmental funds when they are paid. In the Statement of Activities compensated absences are recognized as an expenditure when earned. 18,120 Long-term debt proceeds are reported as other financing sources in governmental funds. In the Statement of Net Assets, however, issuing long-term debt increases liabilities. Similarly, repayment of principal is an expenditure in the governmental funds but reduces the liability in the Statement of Net Assets. This is the amount by which repayments exceeded proceeds: Principal paid on capital lease obligations 94,381 Debt principal repaid 1,302,366 Proceeds from issuing long-term debt (525,310) 871,437 Governmental funds report the effect of issuance costs, premiums, and discounts when debt is first issued, whereas these amounts are deferred and amortized in Statement of Activities. This amount is the net effect of these differences: Amortization of premium (discount) 11,652 Amortization of issuance costs (22,380) (10,728) Prepaid interest on refunding bond obligations are reported as an asset on the Statement of Net Assets. These amounts are amortized in the Statement of Activities. (16,171) Property taxes that do not meet the measurable and available criteria are not recognized as revenue in the current year in the governmental funds. In the Statement of Activities property taxes are recognized as revenue when levied. 53,224 CHANGE IN NET ASSETS $ 1,016,481 See notes to basic financial statements 6

22 NOTES TO BASIC FINANCIAL STATEMENTS

23 BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 Note 1 - Summary of Significant Accounting Policies The Reporting Entity Brookings-Harbor School District No. 17C (the District), Curry County, Oregon, was organized under provisions of Oregon Statutes pursuant to ORS Chapter 332 for the purpose of operating elementary and secondary schools. The District is governed by a separately elected five-member Board of Education (Board) who approves the administrative officials. The daily functioning of the District is under the supervision of the Superintendent. As required by generally accepted accounting principles, all activities of the District have been included in the basic financial statements. There are various governmental agencies and special service districts that provide services within the District s boundaries. However, the District is not financial accountable for any of these entities, and therefore, none of them are considered component units or included in these basic financial statements. The more significant of the District s accounting policies are described below. Basis of Presentation The financial statements of the District have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governments units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. Government-wide Financial Statements The Statement of Net Assets and the Statement of Activities display information about the District. These statements include the governmental financial activities of the overall District. Eliminations have been made to minimize the double counting of internal activities. Governmental activities are financed primarily through property taxes, intergovernmental revenues, and charges for services. The Statement of Activities presents a comparison between direct expenses and program revenues for each of its functions/programs. Direct expenses are those that are clearly identifiable with a function and, therefore, are clearly identifiable to that function. Eliminations have been made to minimize the double counting of internal activities in the Statement of Activities. Program revenues include: (1) charges to students or others for tuition, fees, rentals, material, supplies or services provided, (2) operating grants and contributions and (3) capital grants and contributions. Revenues that are not classified as program revenues, including property taxes and state support, are presented as general revenues. The District operates and reports only governmental funds. Therefore, financial statements have only been prepared for governmental funds. Net assets are reported as restricted when constraints placed on net asset use are either externally restricted, imposed by creditors (such as through grantors, contributors or laws) or through constitutional provisions or enabling resolutions. Fund Financial Statements The fund financial statements provide information about the District's funds. Separate statements for each fund category are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. All (if any) remaining governmental funds are aggregated and reported as other governmental funds. 7

24 BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 Note 1 - Summary of Significant Accounting Policies (continued) The District reports the following major governmental funds: General Fund - This is the District's primary operating fund and accounts for all revenues and expenditures except those required to be accounted for in another fund. Special Programs Fund - This fund accounts for revenues and expenditures of grants and other restricted for specific educational purposes and student related activities. Principal revenue sources are federal and state grants, fees and charges for activities. Debt Service Fund - This fund provides for the payment of principal and interest on general obligation bonded debt. Principal revenue source is property taxes. Capital Projects Fund - This fund accounts for the acquisition, construction and maintenance of improvements within the District. Principal revenue source is investment earnings. Measurement Focus and Basis of Accounting Government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Non-exchange transactions, in which the District receives value without giving equal value in exchange, include property taxes, grants, entitlements and donations. On the accrual basis of accounting, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements imposed by the provider have been met. Under terms of grant agreements, the District funds certain programs by a combination of specific cost-reimbursement grants and general revenues. Thus, when program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the District's policy to first apply cost-reimbursement grant resources to such programs and then general revenues. Governmental fund financial statements are reported using the current financial resources measurement focus and modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The District considers all revenues reported in the governmental funds to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within sixty days of the end of the current fiscal period. Property taxes and interest associated with the current fiscal period are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt and claims and judgments, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in the governmental funds and proceeds from general long-term debt and acquisitions under capital leases are reported as other financing sources. Private sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in the government-wide fund financial statements to the extent that these standards do not conflict or contradict the guidance of the Governmental Accounting Standards Board. Cash, Cash Equivalents and Investments The 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 the date of acquisition. Short-term investments are stated at cost which approximates fair value. 8

25 BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 Note 1 - Summary of Significant Accounting Policies (continued) The District's investments, authorized under state statute, consist of banker s acceptances, commercial paper, U.S. Government Agency securities, and the State of Oregon Treasurer s Local Government Investment Pool (LGIP). Banker s acceptances, commercial paper and U.S. Government Agency securities are stated at amortized cost which approximates fair value. The LGIP is stated at cost which approximates fair value. Fair value of the LGIP is the same as the District s value in the pool shares. The Oregon State Treasury administers the LGIP. It is an open-ended no-load diversified portfolio offered to any agency, political subdivision or public corporation of the State that by law is made the custodian of, or has control of, any fund. The LGIP is commingled with the State s short-term funds. In seeking to best serve local governments of Oregon, the Oregon legislature established the Oregon Short-Term Fund Board. The purpose of the Board is to advise the Oregon State Treasury in the management and investment options of the LGIP. The investments are regulated by the Oregon Short Term Fund Board and approved by the Oregon Investment Council (ORS to ). Property Taxes Receivable Ad valorem property taxes are levied on all taxable property as of January 1 preceding the beginning of the fiscal year. Property taxes become a lien on July 1 for personal property and real property. Property taxes are levied on July 1. Collection dates are November 15, February 15, and May 15. Discounts are allowed if the amount due is received by November 15. Taxes unpaid and outstanding on May 16 are considered delinquent. Uncollected property taxes are included in receivables on the Statement of Net Assets. Uncollected taxes are deemed to be substantially collectible or recoverable through liens; therefore, no allowance for uncollectible taxes has been established. Accounts and Other Receivables Accounts and other receivables are comprised primarily of State school support and claims for reimbursement of costs under various federal and state grants. Grants Unreimbursed grant expenditures due from grantor agencies are reflected in the basic financial statements as receivables and revenues. Grant revenues are recorded at the time eligible expenditures are incurred. Grant monies received prior to the occurrence of qualifying expenditures are recorded as deferred revenue. Inventories Inventories consist of supplies held for sale. Inventories are charged as expenditures when purchased and are stated at cost using the first-in, first-out (FIFO) method. A portion of the inventory consists of donated United States Department of Agriculture (USDA) commodities. Commodities are recorded as expenditures when purchased and are stated at their fair market value based on guidelines provided by the USDA. Capital Assets Capital assets are recorded at original or estimated original cost. Donated capital assets are recorded at their estimated fair market value on the date donated. The District defines capital assets as assets with 9

26 BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 Note 1 - Summary of Significant Accounting Policies (continued) an initial cost of more than $5,000 and an estimated life in excess of one year. Interest incurred during construction is not capitalized. Maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not capitalized. Capital assets are depreciated using the straight-line method over the following useful lives: Buildings and improvements - 10 to 50 years Equipment and vehicles - 5 to 30 years Retirement Plan Substantially all of the District's full time employees are participants in the State of Oregon Public Employees Retirement System (PERS). Contributions to PERS are made on a current basis as required by the plan and are charged as expenditures/expenses as funded. Compensated Absences It is the District's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. There is no liability for unpaid accumulated sick leave since the District does not have a policy to pay any amounts when employees separate from service with the District. All unused vacation pay is accrued when earned in the government-wide financial statements. A liability for these amounts is reported in the governmental funds only if they have matured, for example, as a result of employee resignation and retirements. Deferred Revenue The District reports deferred revenue on the Statement of Net Assets consisting of unearned revenue at fiscal year end. Deferred revenue on the Governmental Balance Sheet also includes unavailable revenue at fiscal year end. Long-term Debt In the government-wide financial statements, long-term debt is reported as a liability in the Statement of Net Assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method, which approximates the effective interest method. Bonds payable are reported net of the applicable bond premium or discount and applicable bond principal and interest on advance refundings. In the fund financial statements, bond premiums and discounts, as well as bond issuance costs, are recognized when incurred and not deferred. The face amount of the debt issued, premiums received on debt issuances, and discounts are reported as other financing sources and uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Fund Equity In the government-wide financial statements, equity is classified as net assets and displayed in three components: 1. Invested in capital assets, net of related debt Consists of net book value of all capital assets less the outstanding debt used to acquire, construct, or improve those assets. 2. Restricted net assets - Consists of net assets with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws and regulations of other governments; or (2) law through constitutional provisions or enabling legislation. 10

27 BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 Note 1 - Summary of Significant Accounting Policies (continued) 3. Unrestricted net assets - All other net assets that do not meet the definition of restricted. In the fund financial statements, governmental fund equity is classified in the flowing categories: Non-Spendable -- Includes items not immediately converted to cash, such as prepaid items and inventory. Restricted -- Includes items that are restricted by external creditors, grantors or contributors, or restricted by legal constitutional provisions. Committed -- Includes items committed by the District s Board of Education, by formal board action. Assigned -- Includes items assigned for specific uses, authorized by the District s Superintendent and/or Business Manager. Unassigned -- This is the residual classification used for those balances not assigned to another category. Budget A budget is prepared and legally adopted for each governmental fund type on the modified accrual basis of accounting. This budgetary basis of accounting is different than accounting principles generally accepted in the United States of America (GAAP). The major differences between the budgetary and GAAP basis of accounting are that capital outlay and other long-term assets, and debt principal and other long-term liabilities, are included as budgeted expenditures in the governmental fund types. The resolution authorizing appropriations for each fund sets the level by which expenditures cannot legally exceed appropriations. Appropriations are established at the major function level (instruction, support services, enterprise and community services, facilities acquisition and construction, debt service, contingency and transfers) for each fund. The detail budget document, however, is required to contain more specific, detailed information for the aforementioned expenditure categories. Unexpected additional resources may be added to the budget through the use of a supplemental budget and or appropriation resolution. Supplemental budgets less than 10% of a fund s original budget may be adopted by the Board at a regular meeting. A supplemental budget greater than 10% of a fund s original budget appropriation requires hearings before the public, publication in newspapers, and approval by the Board. Original and supplemental budgets may be modified by the use of appropriation transfers within a fund between the levels of control (major function levels) with Board approval. Budget amounts are as originally adopted and as amended by the Board of Directors. During the year, various resolutions were approved. Appropriations lapse at the end of each fiscal year. Use of Estimates The preparation of basic financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the basic financial statements and reported amounts of revenues and expenses/expenditures during the reporting period. Actual results could differ from those estimates. 11

28 BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 Note 2 - Equity in Pooled Cash and Investments Deposits. The Governmental Accounting Standards Boards has adopted accounting principles generally accepted in the United States of America (GAAP), which include standards to categorize deposits to give an indication of the level of custodial credit risk assumed by the District at June 30, If bank deposits at year end are not entirely insured or collateralized with securities held by the District or by its agent in the District s name, the District must disclose the custodial credit risk that exists. Deposits with financial institutions are comprised of bank demand deposits. For deposits in excess of federal depository insurance, Oregon Revised Statutes require depository institutions to be in compliance with ORS 295. For the fiscal year ended June 30, 2012, the carrying amounts of the District deposits in various qualifying financial institutions were $283,929 and the bank balances were $875,642. All deposits are held in the name of the District. At June 30, 2012 the District s deposits were covered by federal depository insurance and the State of Oregon shared liability structure for participating bank depositories in Oregon. Effective July 1, 2008, House Bill 2901 created a shared liability structure for participating bank depositories in Oregon. Barring any exceptions, a qualifying bank depository is required to pledge collateral valued at least 10% of their quarter-end public fund deposits if they are well capitalized, 25% of the quarter-end public fund deposits if they are adequately capitalized, or 110% of the quarter-end public fund deposits if they are undercapitalized or assigned to pledge 110% by the Office of State Treasurer. In the event of a bank failure, the entire pool of collateral pledged by all qualified Oregon public bank depositories is available to repay the deposits of public funds of governmental entities. Custodial Credit Risk - Custodial credit risk for deposits is the risk that, in the event of a bank failure, a government s deposits may not be returned to it. The District does not have a formal deposit policy for custodial credit risk. Investments - The Brookings Harbor School District has invested funds in the State Treasurer s Oregon Short-term Fund Local Government Investment Pool during fiscal year The Oregon Short-term Fund is the local government investment pool for local governments and was established by the State Treasurer. It was created to meet the financial and administrative responsibilities of federal arbitrage regulations. The investments are regulated by the Oregon Short-Term Fund Board and approved by the Oregon Investment Council (ORS to ). Local Government Investment Pool (LGIP) is an external investment pool managed by the State Treasurer s office, which allow governments within the state to pool their funds for investment purposes. The amounts invested in the pool are not classified by risk categories because they are not evidenced by securities that exist in physical or book entry form as defined by GASB statement No. 40. LGIP is not rated. In addition, the Oregon State Treasury LGIP distributes investment income on an amortized cost basis and participants equity in the pool is determined by the amount of participant deposits, adjusted for withdrawals and distributed income. Accordingly, the adjustment to fair value would not represent an expendable increase in the District s cash position. 12

29 BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 Note 2 - Equity in Pooled Cash and Investments (continued) Investments in the Oregon State Treasury LGIP are made under the provisions of ORS These funds are held in the District s name and are not subject to collateralization requirements or ORS Investments are stated at amortized cost, which approximated fair value. State of Oregon statutes restrict the types of investments in which the District may invest. Authorized investments include obligations of the United States Government and its agencies, certain bonded obligations of Oregon municipalities, bank repurchase agreements, bankers acceptances, time certificates of deposit, certain commercial paper, and the State of Oregon Treasurer s Local Government Investment Pool. As of June 30, 2012 and for the year then ended, the District was in compliance with the aforementioned State of Oregon statutes. Restricted Cash in Escrow - The District is responsible for Limited Tax Pension Obligations issued for financing payment of the District s Oregon Public Employee Retirement System (PERS) unfunded liability. The State of Oregon withholds a portion of the District s State School Funding payment and transfers this portion to a trustee escrow account administered by the State of Oregon for the purpose of repayment of scheduled bond principal and interest, as required since the bonds were issued through the Oregon School Boards Association. The amount held in the account for payment of future scheduled payments at June 30, 2012 was $33, which is held in Wells Fargo Bank. Credit Risk - State Statutes authorize the District to invest primarily in general obligations of the U.S. Government and its agencies, certain bonded obligations of Oregon municipalities, bank repurchase agreements, banker s acceptances, certain commercial papers, and the State Treasurer s Investment Pool, among others. The District has no formal investment policy that further restricts its investment choices. Concentration of Credit Risk. The District is required to provide information about the concentration of credit risk associated with its investments in one issuer that represents 5 percent or more of the total investments, excluding investments in external investment pools or those issued and explicitly guaranteed by the U.S. Government. The District has no such investments. Interest Rate Risk. The District has no formal investment policy that explicitly limits investment maturities as a means of managing its exposure to fair value loss arising from increasing interest rates. As of June 30, 2012, the District had the following investments: Investment Type Perentage Maturity of Portfolio Fair Value Local Government Investment Pool 1 day 73.04% $ 4,572,905 Government Securities 1 day 26.96% 1,687,566 Cash with Fiscal Agent 1 day 0.00% 33 Total Investments $ 6,260,504 13

30 BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 Note 2 - Equity in Pooled Cash and Investments (continued) A reconciliation of cash and investments as shown on the Statement of Net Assets is as follows: Carrying amounts of cash and investments: Demand deposits $ 283,929 Investments: Government Securities 1,687,566 Cash with Fiscal Agent 33 Local Government Investment Pool 4,572,905 Cash and investments are shown on the basic financial statements as: $ 6,544,433 Statement of Net Assets Cash and investments $ 6,544,433 Note 3 - Pension Assets Limited tax pension bonds of $10,671,455 were issued in 2002 and 2004 to provide funds for payment of the estimated unfunded Public Employees Retirement System (PERS) pension liability. The District participated as one of several Oregon school districts and education service districts in issuing limited tax pension bonds used to finance the estimated unfunded actuarial liability with PERS. The Oregon School Boards Association (OSBA) sponsored this pooled limited tax pension program. OSBA does not have a financial obligation in connection with the bonds issued under this program, except for the payment of its pension bond payments and additional charges when due. Each participating school district has no obligation or liability to any other participating school district s pension bonds or liabilities to PERS. The following is based upon amortization schedules with information and assumptions known at the time of bond issuance. However, this is a material estimate that will be subject to change in the near future when the Oregon Public Employee Retirement System issues new actuarial reports which contains new information and assumptions. Original Issue Prepaid at June 30, 2011 Amortization Prepaid at June 30, 2012 Prepaid Pension Expense $ 10,671,455 $ 7,388,486 $ 434,616 $ 6,953,870 Note 4 - Receivables Receivables are comprised of the following as of June 30, 2012: General Special Programs Debt Service Totals Accounts $ 36,169 $ 569,369 $ - $ 605,538 Taxes-Current 604, , ,485 Total Receivables $ 640,983 $ 569,369 $ 143,671 $ 1,354,023 14

31 Note 4 - Receivables (continued) BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 All non-current property taxes receivable are treated as deferred revenue in the fund financial statements. Other accounts and intergovernmental receivables are considered to be fully collectible. Accordingly, no provision for estimated uncollectibles has been established. Note 5 - Capital Assets The changes in capital assets for the year ended June 30, 2012, are as follows: Capital assets not being depreciated Balance Capital Balance July 1, 2011 Acquisitions Dispositions June 30, 2012 Land $ 224,401 $ - $ - $ 224,401 Total capital assets not being depreciated $ 224,401 $ - $ - $ 224,401 Capital assets being depreciated Buildings $ 19,804,444 $ - $ - $ 19,804,444 Building Improvements 1,550, ,550,697 Machinery & Equipment 509, ,310 Vehicles 1,338, ,310 (35,787) 1,402,612 Totals 23,202, ,310 (35,787) 23,267,063 Less accumulated depreciation for: Buildings (5,007,975) (373,465) - (5,381,440) Building Improvements (1,237,978) (29,478) - (1,267,456) Machinery & Equipment (390,749) (26,781) - (417,530) Vehicles (651,939) (72,982) 35,787 (689,134) Total (7,288,641) $ (502,706) $ 35,787 (7,755,560) Total net capital assets being depreciated 15,913,899 15,511,503 Total Capital Assets $ 16,138,300 $ 15,735,904 Depreciation expense for the year was charged to the following programs: Program Instruction $ 310,952 Supporting Services 169,090 Enterprise and Community Services 22,664 Total $ 502,706 15

32 Note 6 - Deferred Revenue BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. In addition, governmental funds report deferred revenue in connection with resources that have been received but not yet earned. At June 30, 2012, the various components of deferred revenue consisted of the following: Fund by type Unavailable Unearned Total Note 7 - Interfund Transfers Property taxes receivable: General fund $ 539,327 $ - $ 539,327 Debt service fund 128, ,366 Other receivables: Special revenue fund Total Deferred Revenue $ 667,693 $ 730 $ 668,423 The composition of interfund transfers as of June 30, 2012: Transfer In Transfer Out General Fund $ - $ 407,410 Special Revenue Fund 407,410 - Total Transfers $ 407,410 $ 407,410 The District made budgeted transfers from the General Fund to the Special Revenue fund included a routine transfer of $186,000 to the Student Activity program for support of activities, $7,000 to the Food Service program to support its operations, $66,410 to the transportation equipment program to support its operations, and $148,000 to the facility maintenance program to support its operations. Note 8 - Leases Operating Leases The District leases copiers and a postage machine under noncancellable operating leases. Total costs for such leases were $43,410 for the year ended June 30, The future minimum lease payments for these leases are as follows: Year Ending June 30, Amount 2013 $ 28, , ,325 Total $ 43,140 16

33 Note 8 - Leases (continued) Capital Leases BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 In prior years the District has entered into lease agreements as lessee for financing the acquisition of school buses. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of their future minimum lease payments as of the inception date. The buses are included in the District s capital assets. The total bus lease principal payments for the year ending June 30, 2012 were $94,381. The cost of the leased buses totaled $609,735, with accumulated depreciation of $126,943, and a net book value of $482,792 as of the year ended June 30, The District entered into a new capital lease for the purchase of a Bluebird school bus during the fiscal year ended June 30, The lease proceeds and purchase price of this equipment was $100,310 and is payable in five annual installments, beginning on July 1, 2012 and with a final installment due July 1, The school bus is included in the District s capital assets. The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2012, were as follows: Year Ending June 30: 2013 $ 67, , , ,817 Total minimum lease payments 240,933 Less: amount representing interest (21,342) Present value of minimum lease payments $ 219,591 During the fiscal year ended June 30, 2012, $9,826 of interest was charged to expense related to capitalized leases payable. Note 9 - Long-term Debt General Obligation Bonds. On December 1, 2000 the District issued general obligation bonds in the amount of $9,950,000 for repairs and new construction. The District shall levy annually as provided by law a direct ad valorem tax upon all taxable property within the District in a sufficient amount to pay the principal and interest on the bonds as they become due. On December 1, 2004, the portion of the bonds maturing December 15 in years 2013 through 2021 were refinanced (General Obligation Refunding Bonds, Series 2004). The remaining amount of $495,000 matured in the current year with an interest rate of 4.9%. 17

34 Note 9 - Long-term Debt (continued) BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 During the fiscal year ended June 30, 2012, $12,128 of interest was charged to expense related to this bond. General Obligation Bonds. On January 15, 2001 the District issued general obligation bonds in the amount of $4,050,000 for repairs and new construction. The District shall levy annually as provided by law a direct ad valorem tax upon all taxable property within the District in a sufficient amount to pay the principal and interest on the bonds as they become due. On December 1, 2004, the portion of the bonds maturing December 15 in years 2014 through 2021 were refinanced (General Obligation Refunding Bonds, Series 2004). The remaining amount of $480,000 matures in years 2012 through 2014 with interest rates of 4.25% to 4.5%. Year Ending June 30th Principal Interest Total Interest Rate 2013 $ 215,000 $ 7,629 $ 222, % ,000 1,462 66, % Total $ 280,000 $ 9,091 $ 289,091 During the fiscal year ended June 30, 2012, $16,581 of interest was charged to expense related to this bond Refunding of 2000 and 2001 G.O. Bonds. On December 1, 2004, the District refinanced a portion of its 2000 and 2001 General Obligation Bonds. The District shall levy annually as provided by law a direct ad valorem tax upon all taxable property within the District in a sufficient amount to pay the principal and interest on the bonds as they become due. The debt now matures in 2021, bearing interest rates of 4.25% to 5.25% payable semiannually on June 15 and December 15. Year Ending June 30th Principal Interest Total Interest Rate 2013 $ 595,000 $ 382,285 $ 977, % , ,035 1,162, % , ,410 1,233, % ,005, ,316 1,266, % ,070, ,875 1,291, % ,010, ,250 5,432, % Total $ 9,425,000 $ 1,938,171 $ 11,363,171 During the fiscal year ended June 30, 2012, $397,973 of interest was charged to expense related to this bond. Limited Tax Pension Bonds, Series 2002 and Series On October 9, 2002 and February 6, 2004, the District entered into an agreement to participate in the Oregon School Board Association Limited Tax Pension Bonds. Bonds were issued in the amount of $6,016,455 and $4,655,000 respectively, bearing interest at 2.06% to 6.1%, payable semiannually. The bonds mature in Some of the bonds with the maturity date of 2021 shall be subject to optional prepayment, in whole or in part on any date, at a prepayment price equal to par plus accrued interest. 18

35 Note 9 - Long-term Debt (continued) BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 Year Ending June 30th Principal Interest Total Interest Rate 2013 $ 177,217 $ 548,494 $ 725, % , , , % , , , % , , , % , , , % ,138,601 2,729,680 4,868, % ,615,000 1,180,136 6,795, % ,000 35, , % $ 9,566,112 $ 6,846,216 $ 16,412,328 During the fiscal year ended June 30, 2012, total payments of $546,869 of interest was charged to payroll benefit expense Refunding of 2002 Limited Tax Pension Bonds, Series On January 31, 2012, the District refinanced a portion of its Oregon School Board Association Limited Tax Pension Bonds, Series The refunded portion now matures in 2021, bearing an interest rate of 2.75% with interest payments payable semiannually on June 30 and December 30 and a one principal payment June 30, Year Ending June 30th Principal Interest Total Interest Rate 2013 $ - $ 11,687 $ 11, % ,687 11, % ,687 11, % ,687 11, % ,687 11, % ,000 46, , % $ 425,000 $ 105,188 $ 530,188 During the fiscal year ended June 30, 2012, total payments of $4,870 of interest was charged to payroll benefit expense. 19

36 Note 9 - Long-term Debt (continued) BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 The changes in long-term obligations for year ended June 30, 2012, are as follows: Outstanding Matured Outstanding Jully 1, and June 30, Interest Issue Date: 2011 Issued Redeemed 2012 Rates General Obligation 2000 Bond Payable $ 495,000 $ - $ (495,000) $ % General Obligation 2001 Bond Payable 480,000 - (200,000) 280, % PERS Bonds Payable 10,123, ,000 (557,366) 9,991, % 2004 Bond Refinancing 9,475,000 - (50,000) 9,425, % Total 20,573, ,000 (1,302,366) 19,696,112 Unamortized Interest on Advance Refunding (16,171) - 16,171 - Unamortized premium / (discount) 145,784 - (11,652) 134,132 20,703, ,000 (1,297,847) 19,830,244 Capital lease 213, ,310 (94,381) 219,591 $ 20,916,753 $ 525,310 $ (1,392,228) $ 20,049,835 The annual debt service requirements on long-term debt outstanding as of June 30, 2012 are as follows: Fiscal Year ending Bonds Capital Lease June 30, Principal Interest Principal Interest 2013 $ 987,217 $ 950,095 $ 59,298 $ 7, ,088, ,260 57,839 7, ,163, ,867 60,470 4, ,266, ,067 41,984 1, ,357, , ,573,600 3,198, ,615,000 1,180, ,000 35, $ 19,696,112 $ 8,898,666 $ 219,591 $ 21,342 20

37 Note 9 - Long-term Debt (continued) BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 Outstanding issues are callable as follows: January 15, at par plus accrued interest, if any, beginning December 15, 2011 October 9, not callable February 6, not callable December 1, at par plus accrued interest, if any, beginning December 15, 2015 For the fiscal year , the current portion of the bonds is as follows: Principal $ 987,217 Bond Discount 11,652 Total $ 998,869 Changes in Other Liabilities during the fiscal year ended June 30, 2012, the following changes occurred in liabilities reported in the Statement of Net Assets: Balance Reclassifications/ 6/30/2011 Additions Reductions Balance 6/30/2012 Due Within One Year Compensated absences $ 43,665 $ 36,640 $ (54,760) $ 25,545 $ 25,545 Note 10 - Other Post Employment Benefits Postemployment Health Insurance Subsidy The District implemented GASB Statement 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions (OPEB) for the fiscal year ended June 30, The implementation allows the District to report its liability for other post employment benefits consistent with established generally accepted accounting principles and to reflect an actuarially determined liability for the present value of projected future benefits for retired and active employees on the financial statements. The District does not issue a stand alone report for this plan. Plan Description. The District operates a singe-employer retiree benefit plan that provides postemployment health, dental and vision coverage and life insurance benefits to eligible employees and their spouses. There are 157 active and 20 retired members in the plan. This program was established in accordance with Oregon Revised Statutes (ORS) , which requires that all eligible retirees be allowed to continue receiving health insurance benefits, at their cost, until age 65 or they become otherwise eligible for Medicare. ORS stipulate that for the purpose of establishing healthcare premiums, the rate must be based upon all plan members, including active members and retirees. Due to medical premium rates being determined by blending both active employee and retiree experience, there is an implicit medical benefit to retirees because the medical premium rates charged for coverage typically are less than actual expected retiree claim costs. Qualified spouses, domestic partners, and children may qualify for coverage. The difference between retiree claims costs, which because of the effect of age is generally higher in comparison to all plan members, and the amount of retiree healthcare premiums resents the District s implicit employer contribution. Funding Policy. The benefits from this program are and paid by the District and retirees on a pay-asyou-go basis. There is no obligation on the part of the District to fund these benefits in advance. 21

38 BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 Note 10 - Other Post Employment Benefits (continued) Annual OPEB Cost and Net OPEB Obligation. The District s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 15 years. The following table shows the components of the District s annual OPEB cost for the year ending June 30, 2012, the amount actually contributed to the plan, and changes in the District s net OPEB obligation. Annual required contribution (ARC) and annual OPEB cost (expense) $ 253,154 Less: Implicit Benefit Payments (106,238) Increase in net OPEB obligation 146,916 Net OPEB obligation - beginning of year 242,660 Net OPEB obligation - end of year $ 389,576 The District s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for the fiscal years ending June 30, 2012 and 2011 are: Annual Funded Net OPEB Fiscal year OPEB Cost Contributions Ratio Obligation 2012 $ 253,154 $ 106,238 42% $ 389, $ 244,610 $ 120,212 49% $ 242, $ 238,382 $ 120,120 50% $ 118,262 Actuarial methods and assumptions. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. The actuarial assumptions included: (1) an assumed inflation rate of 4.% and an assumed health care inflation rate of 8.4% per year in grading down to 5.0% in 15 years, (2) range of retirement age for employees with fewer, and more, than 30 years of service, (3) turnover and disability rates by age and years of service, as developed by Oregon PERS, (4) marital status, (5) coverage of eligible children, (6) age 64 health claim costs, and the impact of age to the claims cost which range from 5% per year under age 40 to 4.2% per year for ages 60-64, and (7) and no investment return, due to lack of assets set aside to fund this program. Amounts determined regarding the funded status of the plan and the annual required contribution of the employer are subject to continual revision as actual results are compared with past expectation and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to actuarial accrued liabilities for benefits. The schedule of funding progress is required to report the last three actuarial valuations, however, the October 1, 2009 is the only valuation prepared to date. For the District s initial valuation the Projected Unit Credit Method was the valuation method used to determine the District s OPEB liability. The Projected Unit Credit Method is comprised of two components: normal cost, and amortization payments. In its application of this method the expected accrued benefit of each participant at benefit commencement (reflecting future expected increases in salaries and medical premiums) is allocated in equal proportion over the participant s years of service from hire to expected retirement. The normal cost is the present value of benefits expected to accrue in the current year. 22

39 BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 Note 10 - Other Post Employment Benefits (continued) The present value of benefits accrued in as of the valuation date is called the accrued liability. The difference between the accrued liability and the actuarial value of plan assets is called the unfunded actuarial accrued liability (UAAL). All changes in liability due to plan amendments, changes in actuarial assumptions, or changes in actuarial data are amortized separately. In additions, all gains or losses may be amortized each year. The UAAL is being amortized as a level percentage of payroll over future open periods. Funded Status and Funding Progress. As of October 1, 2009 the actuarial accrued liability for benefits was $1,702,225, and the actuarial value of assets was $0, resulting in a UAAL of $1,702,225. The covered payroll (annual payroll of active employees covered by the plan) was $6.9 million for fiscal year 2012 and the ratio of the UAAL to the covered payroll was 25%. Using a 15-year amortization period, the Annual Required Contribution (ARC) for 2012 has been actuarially determined to be $259,939. Note 11 - Pension Plan The District contributes to two pension plans administered by the Oregon Public Employees Retirement System (PERS). The Oregon Public Employees Retirement Fund (OPERF) applies to the District s contribution for qualifying employees who were hired before August 29, 2003, and is a cost-sharing multiple-employer defined benefit pension plan. The Oregon Public Service Retirement Plan (OPSRP) is a hybrid successor plan to the OPERF and consists of two programs: The Pension Program, the defined benefit portion of the plan, applies to qualifying District employees hired after August 29, 2003, and to inactive employees who return to employment following a six-month or greater break in service. Benefits are calculated by a formula for members who attain normal retirement age. The formula takes into account final average salary and years of service. Beginning January 1, 2004, all PERS member contributions go into the Individual Account Program (IAP), the defined contribution portion of the plan. PERS members retain their existing PERS accounts, but any future member contributions are deposited into the member s IAP, not the member s PERS account. Both PERS plans provide retirement and disability benefits, post employment healthcare benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. PERS is administered under Oregon Revised Statute Chapter 238, which establishes the Oregon Public Employees Retirement Board (OPERB) as the governing body of PERS. PERS issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to PERS, PO Box 23700, Tigard, OR, or by calling Covered employees are required by state statute to contribute 6.00% of their annual salary to the system, but the employer is allowed to pay any or all of the employees contribution in addition to the required employers contribution. The District is required by ORS to contribute at an actuarially determined rate for the qualifying employees under the OPERF plan, and a general service rate for the qualifying employees under the OPSRP plan. The OPERF and the OPSRP rates in effect for the year ended June 30, 2012 were 6.46% and 4.95% respectively. The contribution requirements for plan members are established by ORS Chapter 238 and may be amended by an act of the Oregon Legislature. The District s contributions to PERS for the years ending June 30, 2012, 2011, and 2010 were $1,032,179, $1,170,369, and $1,206,120, respectively, equal to the required contribution for the years. The District has included the prepaid pension assets in the Statement of Net Assets and will amortize the asset over 25 years effectively reducing the annual future pension required contribution to below the annual pension cost. 23

40 Note 12 - Contingencies BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C Notes to Basic Financial Statements June 30, 2012 Amounts received or receivable from grantor agencies are subject to compliance audits by grantors or their representatives. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time although the District expects such amounts, if any, to be immaterial. The District, in the regular course of business, is named as a defendant in various lawsuits. The likely outcome of these lawsuits is not presently determinable. The District s operations are concentrated within Curry County. In addition, substantially all the District s revenues for continuing operations are from federal, state, and local government agencies. In the normal course of operations, the District receives grant funds from various Federal and State agencies. The grant programs are subject to audit by agents of the granting authority, the purpose of which is to ensure compliance with conditions precedent to the granting of funds. Any liability for reimbursement which may arise as the result of these audits is not believed to be material. Note 13 - Risk Management The District is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the District carries commercial insurance. Worker s compensation insurance is also provided through a commercial carrier. There has been no significant reduction in insurance coverage from the prior year and the District has not been required to pay any settlements in excess of insurance coverage during the past three fiscal years ending June 30, Note 14 - Fund Balances In the Special Programs Fund, the District has committed funds for the PERS UAL Bond, Roof Maintenance, and Transportation Equipment. Also in the Special Programs Fund, the District has assigned for technology improvements, Food Service, Student Body Funds, maintenance equipment purchases, textbooks, and other miscellaneous programs. Note 15 - Subsequent Events Management of the District has evaluated events and transactions occurring after June 30, 2012 through the date of the financial statements were available for issuance, for recognition and/or disclosure in the financial statements. There were no additional events and/or transactions that required recognition and disclosure in the financial statements. 24

41 REQUIRED SUPPLEMENTARY INFORMATION

42 BROOKINGS-HARBOR SCHOOL DISTRICT 17C SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND FISCAL YEAR ENDED JUNE 30, 2012 Variance with Final Budget Budget Positive Adopted Final Actual (Negative) REVENUES Local sources $ 4,595,760 $ 4,595,760 $ 4,953,331 $ 357,571 Intermediate sources 83,800 83,800 84,982 1,182 State sources 6,125,190 6,467,511 6,286,209 (181,302) Federal sources 379, , , ,745 TOTAL REVENUES 11,184,450 11,526,771 11,872, ,196 EXPENDITURES Current Instruction 6,520,464 6,862,785 6,571, ,585 Support services 4,413,576 4,413,576 3,972, ,498 Contingency 800, , ,000 TOTAL EXPENDITURES 11,734,040 12,076,361 10,543,278 1,533,083 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (549,590) (549,590) 1,329,689 1,879,279 OTHER FINANCING SOURCES (USES): Transfers to other funds (407,410) (407,410) (407,410) - TOTAL OTHER FINANCING SOURCES (USES) (407,410) (407,410) (407,410) - NET CHANGE IN FUND BALANCE (957,000) (957,000) 922,279 1,879,279 FUND BALANCE, July 1, , ,000 1,313, ,307 FUND BALANCE, June 30, 2012 $ - $ - $ 2,235,586 $ 2,235,586 25

43 BROOKINGS-HARBOR SCHOOL DISTRICT 17C SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL SPECIAL PROGRAMS FUND FISCAL YEAR ENDED JUNE 30, 2012 Variance with Final Budget Budget Positive Adopted Final Actual (Negative) REVENUES Local sources $ 801,600 $ 801,600 $ 783,561 $ (18,039) Intermediate sources 6,000 6,000 1,715 (4,285) State sources 116, ,200 31,399 (91,801) Federal sources 1,344,000 1,355,722 1,531, ,956 TOTAL REVENUES 2,267,600 2,286,522 2,348,353 61,831 EXPENDITURES Current Instruction 1,863,700 1,882,622 1,526, ,814 Support services 496, , ,485 64,715 Enterprise and community services 622, , ,243 32,257 Debt Service 60,000 60,000 45,640 14,360 Contingency 150, , ,720 TOTAL EXPENDITURES 3,193,120 3,212,042 2,594, ,866 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (925,520) (925,520) (245,823) 679,697 OTHER FINANCING SOURCES (USES): Proceeds from Debt , ,310 Transfers In (Out) 407, , ,410 - TOTAL OTHER FINANCING SOURCES (USES) 407, , , ,310 NET CHANGE IN FUND BALANCE (518,110) (518,110) 261, ,007 FUND BALANCE, July 1, ,083,110 3,083,110 3,174,635 91,525 FUND BALANCE, June 30, 2012 $ 2,565,000 $ 2,565,000 $ 3,436,532 $ 871,532 26

44 BROOKINGS-HARBOR SCHOOL DISTRICT 17C Schedule of Funding Progress June 30, 2012 Schedule of Funding Progress Unfunded Actuarial Actuarial Valuation Accrued Accrued Funded Covered UAAL/ Date Assets Liability Liability Ratio Payroll Payroll 10/01/09 $ - $ 1,702,225 $ 1,702, % $ 6,946, % The above table represents the most recent actuarial valuation for the District's other postemployment benefits and provides information that approximates the funding progress of the pland The AAL reported above is comprised of: Implicit $ 1,702,225 27

45 OTHER SUPPLEMENTARY INFORMATION

46 BROOKINGS-HARBOR SCHOOL DISTRICT 17C SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL DEBT SERVICE FUND FISCAL YEAR ENDED JUNE 30, 2012 Variance with Final Budget Budget Positive Adopted Final Actual (Negative) REVENUES Local Sources $ 1,079,700 $ 1,079,700 $ 1,075,571 $ (4,129) EXPENDITURES Debt service: Principal 745, , ,000 - Interest 426, , , TOTAL EXPENDITURES 1,171,700 1,171,700 1,171, EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (92,000) (92,000) (96,104) (4,104) FUND BALANCE, July 1, , , ,628 73,628 FUND BALANCE, June 30, 2012 $ 800,000 $ 800,000 $ 869,524 $ 69,524 28

47 BROOKINGS-HARBOR SCHOOL DISTRICT 17C SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CAPITAL PROJECTS FUND FISCAL YEAR ENDED JUNE 30, 2012 Variance with Final Budget Budget Positive Adopted Final Actual (Negative) REVENUES Local Sources $ 1,500 $ 1,500 $ 1,555 $ 55 EXPENDITURES Facilities acquisition and construction 300, , ,920 TOTAL EXPENDITURES 300, , ,920 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (298,500) (298,500) 1, ,975 FUND BALANCE, July 1, , , ,605 10,105 FUND BALANCE, June 30, 2012 $ - $ - $ 310,080 $ 310,080 29

48 OTHER FINANCIAL SCHEDULES

49 BROOKINGS-HARBOR SCHOOL DISTRICT NO. 17C SCHEDULE OF PROPERTY TAX TRANSACTIONS FISCAL YEAR ENDED JUNE 30, 2012 GENERAL FUND: Tax Year Uncollected Levy as Collections Uncollected July 1, Extended by Discounts Per June 30, 2011 Assessor and Adjustments Interest Treasurer 2012 Current $ 4,973,425 $ (90,739) $ 3,065 $ (4,594,307) $ 291,444 Prior $ 462,660 (235,867) 10,335 (111,646) 125, ,350 (26,083) 9,362 (28,870) 86, ,368 (12,109) 13,696 (37,587) 81, ,233 (24,722) 5,573 (13,141) 7, ,003 (1,321) ,864 Prior 9,949 (1,995) 45 (45) 7,954 Total prior 767,563 - (302,097) 39,177 (191,273) 313,370 TOTAL GENERAL FUND $ 767,563 $ 4,973,425 $ (392,836) $ 42,242 $ (4,785,580) $ 604,814 DEBT SERVICE: Current $ 1,095,430 (19,990) $ 675 $ (1,011,927) $ 64,188 Prior $ 121,495 (61,970) 2,712 (29,302) 32, ,639 (6,629) 2,379 (7,338) 22, ,457 (2,826) 3,205 (8,795) 19, ,953 (5,495) 1,242 (2,929) 1, ,637 (431) ,265 Prior 1, (14) 2,420 Total prior 194,872 - (76,622) 9,606 (48,373) 79,483 TOTAL DEBT SERVICE FUND $ 194,872 $ 1,095,430 $ (96,612) $ 10,281 $ (1,060,300) $ 143,671 30

50 SCHOOL DISTRICT FINANCIAL ACCOUNTING SUMMARIES

51 DISTRICT AUDIT REVENUE SUMMARY Brookings Harbor School District No. 17C Revenue from Local Sources Fund 100 Fund 200 Fund 300 Fund 400 Fund 500 Fund 600 Fund Ad Valorem Taxes Levied by District $4,832,076 $1,070, Local Option Ad Valorem Taxes Levied by District 1130 Construction Excise Tax 1190 Penalties and Interest on Taxes Revenue from Local Governmental Units Other Than 1200 Districts 1311 Regular Day School Tuition - From Individuals 1312 Regular Day School Tuition - Other Dist Within State 1313 Regular Day School Tuition - Other Districts Outside 1320 Adult/Continuing Education Tuition 1330 Summer School Tuition 1411 Transportation Fees - From Individuals 1412 Transportation Fees - Other Dist Within State 1413 Transportation Fees - Other Districts Outside 1420 Summer School Transportation Fees 1500 Earnings on Investments $19,467 $191,620 $5,419 $1, Food Service $103, Extracurricular Activiies 1800 Community Services Activities 1910 Rentals $7,516 $8, Contributions and Donations From Private Sources 1930 Rental or Lease Payments From Private Contractors 1940 Services Provided Other Local Education Agencies 1950 Textbook Sales and Rentals 1960 Recovery of Prior Years' Expenditure $5,892 $ Services Provided Other Funds $61, Fees Charged to Grants 1990 Miscellaneous $88,380 $418,228 Total Revenue from Local Sources $4,953,331 $783,561 $1,075,571 $1,555 $0 $0 $0 Revenue from Intermediate Sources Fund 100 Fund 200 Fund 300 Fund 400 Fund 500 Fund 600 Fund County School Funds $84, General ESD Revenue 2103 Excess ESD Local Revenue 2105 Natural Gas, Oil, and Mineral Receipts 2110 Intermediate "I" Tax 2199 Other Intemediate Sources $1, Restricted Revenue 2800 Revenue in Lieu of Taxes 2900 Revenue for/on Behalf of the District Total Revenue from Intermediate Sources $84,982 $1,715 $0 $0 $0 $0 $0 Revenue from State Sources Fund 100 Fund 200 Fund 300 Fund 400 Fund 500 Fund 600 Fund State School Fund - General Support $5,676, State School Fund - School Lunch Match 3103 Common School Fund $122, State Managed County Timber 3106 State School Fund - Accrual 3199 Other Unrestricted Grants-in-Aid $145, Driver Education 3222 State School Fund (SSF) Transportation Equipment 3299 Other Restricted Grants-in-Aid $342,321 $31, Revenue in Lieu of Taxes 3900 Revenue for/on Behalf of the District Total Revenue from State Sources $6,286,209 $31,399 $0 $0 $0 $0 $0 Revenue from Federal Sources Fund 100 Fund 200 Fund 300 Fund 400 Fund 500 Fund 600 Fund 700 Unrestricted Revenue Direct From the Federal 4100 Government Unrestricted Revenue From the Federal Government 4200 Through the State 4300 Restricted Revenue From the Federal Government $71,722 Restricted Revenue From the Federal Government 4500 Through the State $246,063 $1,414,747 Grants-In-Aid From the Federal Government Through 4700 Other Intermediate Agencies $11, Federal Forest Fees $302, Impact Aid to School Districts for Operation (PL 874) 4803 Coos Bay Wagon Road Funds 4899 Other Revenue in Lieu of Taxes 4900 Revenue for/on Behalf of the District $33,312 Total Revenue from Federal Sources $548,445 $1,531,678 $0 $0 $0 $0 $0 Revenue from Other Sources Fund 100 Fund 200 Fund 300 Fund 400 Fund 500 Fund 600 Fund Long Term Debt Financing Sources $100, Interfund Transfers $407, Sale of or Compensation for Loss of Fixed Assets 5400 Resources - Beginning Fund Balance $1,313,307 $3,174,635 $965,628 $308,605 Total Revenue from Other Sources $1,313,307 $3,682,355 $965,628 $308,605 $0 $0 $0 Grand Totals (Sfda on 'ode-psbfs1.ode.state '; SHARED; AuditInfo; District Revenue & Expenditure Audit Summary.xls) $13,186,274 $6,030,708 $2,041,199 $310,160 $0 $0 $0 31

52 Fund: 100 General Fund Instruction Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Elementary, K-5 or K-6 $2,421,289 $1,518,590 $801,009 $27,183 $74, Elementary Extracurricular $ Middle/Junior High Programs $1,275,766 $847,491 $383,014 $18,549 $26,174 $ Middle/Junior High School Extracurricular $15,661 $12,001 $3,611 $ High School Programs $1,979,502 $1,281,180 $593,019 $21,225 $83,605 $ High School Extracurricular $21,589 $17,146 $4,358 $ Pre-Kindergarten Programs $ Programs for the Talented and Gifted $3,572 $3, Restrictive Programs for Students with Disabilities $94,547 $94, Less Restrictive Programs for Students with Disabilities $584,208 $329,604 $220,350 $23,569 $10, Treatment and Habilitation $ Remediation $ Title I $ Alternative Education $113,056 $69,106 $31,292 $10,952 $1, English Second Language Programs $62,010 $44,116 $17, Teen Parent Program $ Migrant Education $ Youth Corrections Education $ Other Programs $ Adult/Continuing Education Programs $ Summer School Programs $0 Total Instruction Expenditures $6,571,200 $4,119,234 $2,054,547 $196,110 $200,298 $0 $1,011 $0 Support Services Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Attendance and Social Work Services $ Guidance Services $91,198 $60,676 $28,564 $362 $1, Health Services $12,032 $1,672 $641 $9, Psychological Services $39,220 $38,919 $ Speech Pathology and Audiology Services $29,154 $4,623 $2,597 $18,802 $3, Other Student Treatment Services $ Service Direction, Student Support Services $154,930 $102,325 $49,914 $1,739 $87 $ Improvement of Instruction Services $58,277 $13,100 $5,181 $39, Educational Media Services $133,677 $66,489 $50,374 $1,208 $15, Assessment & Testing $ Instructional Staff Development $8,793 $8, Board of Education Services $79,425 $62,448 $2,472 $14, Executive Administration Services $217,256 $134,226 $71,613 $6,229 $2,972 $2, Office of the Principal Services $997,001 $644,705 $327,887 $10,686 $8,046 $5, Other Support Services - School Administration $2,151 $2, Direction of Business Support Services $ Fiscal Services $351,698 $110,477 $45,041 $114,601 $8,377 $73, Operation and Maintenance of Plant Services $1,040,564 $411,743 $247,995 $322,052 $55,774 $3, Student Transportation Services $599,257 $267,675 $197,456 $22,820 $95,903 $15, Internal Services $ Direction of Central Support Services $0 Planning, Research, Development, Evaluation Services, 2620 Grant Writing and Statistical Services $ Information Services $ Staff Services $ Technology Services $157,445 $69,419 $31,040 $38,389 $18, Records Management Services $ Other Support Services - Central $ Supplemental Retirement Program $0 Total Support Services Expenditures $3,972,078 $1,887,130 $1,058,303 $698,914 $212,863 $0 $114,868 $0 Enterprise and Community Services Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Food Services $ Other Enterprise Services $ Community Services $ Custody and Care of Children Services $0 Total Enterprise and Community Services Expenditures $0 $0 $0 $0 $0 $0 $0 $0 Facilities Acquisition and Construction Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Service Area Direction $ Site Acquisition and Development Services $ Building Acquisition, Construction, and Improvement $ Other Facilities Construction Services $0 Total Facilities Acquisition and Construction Expenditures $0 $0 $0 $0 $0 $0 $0 $0 Other Uses Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Debt Service $ Transfers of Funds $407,410 $407, Apportionment of Funds by ESD $ PERS UAL Bond Lump Sum $0 Total Other Uses Expenditures $407,410 $0 $0 $0 $0 $0 $0 $407,410 Grand Total $10,950,688 $6,006,364 $3,112,850 $895,024 $413,161 $0 $115,879 $407,410 (Sfda on 'ode-psbfs1.ode.state '; SHARED; AuditInfo; District Revenue & Expenditure Audit Summary.xls) DISTRICT AUDIT EXPENDITURE SUMMARY Brookings Harbor School District No. 17C 32

53 Fund: 200 Special Revenue Funds Instruction Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Elementary, K-5 or K-6 $228,502 $102,404 $47,809 $50,953 $27, Elementary Extracurricular $122 $ Middle/Junior High Programs $ Middle/Junior High School Extracurricular $91,444 $30,367 $7,023 $22,752 $31, High School Programs $20,130 $6,043 $2,451 $11, High School Extracurricular $387,277 $97,371 $21,930 $146,509 $116,244 $5, Pre-Kindergarten Programs $ Programs for the Talented and Gifted $ Restrictive Programs for Students with Disabilities $ Less Restrictive Programs for Students with Disabilities $345,751 $209,861 $111,837 $4,735 $19, Treatment and Habilitation $ Remediation $ Title I $427,357 $259,297 $168, Alternative Education $23,835 $23,240 $ English Second Language Programs $ Teen Parent Program $ Migrant Education $ Youth Corrections Education $ Other Programs $2,390 $974 $223 $1,057 $ Adult/Continuing Education Programs $ Summer School Programs $0 Total Instruction Expenditures $1,526,808 $706,317 $359,333 $249,246 $206,689 $0 $5,223 $0 Support Services Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Attendance and Social Work Services $509 $ Guidance Services $50,152 $35,363 $9,405 $1,013 $4, Health Services $6,877 $4,943 $1, Psychological Services $ Speech Pathology and Audiology Services $ Other Student Treatment Services $ Service Direction, Student Support Services $ Improvement of Instruction Services $50,254 $17,628 $6,191 $8,248 $18, Educational Media Services $ Assessment & Testing $ Instructional Staff Development $8,879 $8, Board of Education Services $ Executive Administration Services $ Office of the Principal Services $180 $ Other Support Services - School Administration $ Direction of Business Support Services $ Fiscal Services $5,000 $5, Operation and Maintenance of Plant Services $181,102 $138,389 $42, Student Transportation Services $100,310 $100, Internal Services $ Direction of Central Support Services $0 Planning, Research, Development, Evaluation Services, Grant 2620 Writing and Statistical Services $1,662 $1, Information Services $ Staff Services $ Technology Services $26,560 $2,453 $24, Records Management Services $ Other Support Services - Central $ Supplemental Retirement Program $0 Total Support Services Expenditures $431,485 $57,934 $17,530 $166,333 $89,378 $100,310 $0 $0 Enterprise and Community Services Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Food Services $590,243 $176,237 $115,407 $15,758 $282,736 $ Other Enterprise Services $ Community Services $ Custody and Care of Children Services $0 Total Enterprise and Community Services Expenditures $590,243 $176,237 $115,407 $15,758 $282,736 $0 $105 $0 Facilities Acquisition and Construction Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Service Area Direction $ Site Acquisition and Development Services $ Building Acquisition, Construction, and Improvement Services $ Other Facilities Construction Services $0 Total Facilities Acquisition and Construction Expenditures $0 $0 $0 $0 $0 $0 $0 $0 Other Uses Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Debt Service $45,640 $45, Transfers of Funds $ Apportionment of Funds by ESD $ PERS UAL Bond Lump Sum $0 Total Other Uses Expenditures $45,640 $0 $0 $0 $0 $0 $45,640 $0 Grand Total $2,594,176 $940,488 $492,270 $431,337 $578,803 $100,310 $50,968 $0 (Sfda on 'ode-psbfs1.ode.state '; SHARED; AuditInfo; District Revenue & Expenditure Audit Summary.xls) DISTRICT AUDIT EXPENDITURE SUMMARY Brookings Harbor School District No. 17C 33

54 Fund: 300 Debt Service Funds Instruction Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Elementary, K-5 or K-6 $ Elementary Extracurricular $ Middle/Junior High Programs $ Middle/Junior High School Extracurricular $ High School Programs $ High School Extracurricular $ Pre-Kindergarten Programs $ Programs for the Talented and Gifted $ Restrictive Programs for Students with Disabilities $ Less Restrictive Programs for Students with Disabilities $ Treatment and Habilitation $ Remediation $ Title I $ Alternative Education $ English Second Language Programs $ Teen Parent Program $ Migrant Education $ Youth Corrections Education $ Other Programs $ Adult/Continuing Education Programs $ Summer School Programs $0 Total Instruction Expenditures $0 $0 $0 $0 $0 $0 $0 $0 Support Services Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Attendance and Social Work Services $ Guidance Services $ Health Services $ Psychological Services $ Speech Pathology and Audiology Services $ Other Student Treatment Services $ Service Direction, Student Support Services $ Improvement of Instruction Services $ Educational Media Services $ Assessment & Testing $ Instructional Staff Development $ Board of Education Services $ Executive Administration Services $ Office of the Principal Services $ Other Support Services - School Administration $ Direction of Business Support Services $ Fiscal Services $ Operation and Maintenance of Plant Services $ Student Transportation Services $ Internal Services $ Direction of Central Support Services $0 Planning, Research, Development, Evaluation Services, Grant 2620 Writing and Statistical Services $ Information Services $ Staff Services $ Technology Services $ Records Management Services $ Other Support Services - Central $ Supplemental Retirement Program $0 Total Support Services Expenditures $0 $0 $0 $0 $0 $0 $0 $0 Enterprise and Community Services Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Food Services $ Other Enterprise Services $ Community Services $ Custody and Care of Children Services $0 Total Enterprise and Community Services Expenditures $0 $0 $0 $0 $0 $0 $0 $0 Facilities Acquisition and Construction Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Service Area Direction $ Site Acquisition and Development Services $ Building Acquisition, Construction, and Improvement Services $ Other Facilities Construction Services $0 Total Facilities Acquisition and Construction Expenditures $0 $0 $0 $0 $0 $0 $0 $0 Other Uses Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Debt Service $1,171,675 $1,171, Transfers of Funds $ Apportionment of Funds by ESD $ PERS UAL Bond Lump Sum $0 Total Other Uses Expenditures $1,171,675 $0 $0 $0 $0 $0 $1,171,675 $0 Grand Total $1,171,675 $0 $0 $0 $0 $0 $1,171,675 $0 (Sfda on 'ode-psbfs1.ode.state '; SHARED; AuditInfo; District Revenue & Expenditure Audit Summary.xls) DISTRICT AUDIT EXPENDITURE SUMMARY Brookings Harbor School District No. 17C 34

55 Fund: 400 Capital Projects Funds Instruction Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Elementary, K-5 or K-6 $ Elementary Extracurricular $ Middle/Junior High Programs $ Middle/Junior High School Extracurricular $ High School Programs $ High School Extracurricular $ Pre-Kindergarten Programs $ Programs for the Talented and Gifted $ Restrictive Programs for Students with Disabilities $ Less Restrictive Programs for Students with Disabilities $ Treatment and Habilitation $ Remediation $ Title I $ Alternative Education $ English Second Language Programs $ Teen Parent Program $ Migrant Education $ Youth Corrections Education $ Other Programs $ Adult/Continuing Education Programs $ Summer School Programs $0 Total Instruction Expenditures $0 $0 $0 $0 $0 $0 $0 $0 Support Services Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Attendance and Social Work Services $ Guidance Services $ Health Services $ Psychological Services $ Speech Pathology and Audiology Services $ Other Student Treatment Services $ Service Direction, Student Support Services $ Improvement of Instruction Services $ Educational Media Services $ Assessment & Testing $ Instructional Staff Development $ Board of Education Services $ Executive Administration Services $ Office of the Principal Services $ Other Support Services - School Administration $ Direction of Business Support Services $ Fiscal Services $ Operation and Maintenance of Plant Services $ Student Transportation Services $ Internal Services $ Direction of Central Support Services $0 Planning, Research, Development, Evaluation Services, Grant 2620 Writing and Statistical Services $ Information Services $ Staff Services $ Technology Services $ Records Management Services $ Other Support Services - Central $ Supplemental Retirement Program $0 Total Support Services Expenditures $0 $0 $0 $0 $0 $0 $0 $0 Enterprise and Community Services Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Food Services $ Other Enterprise Services $ Community Services $ Custody and Care of Children Services $0 Total Enterprise and Community Services Expenditures $0 $0 $0 $0 $0 $0 $0 $0 Facilities Acquisition and Construction Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Service Area Direction $ Site Acquisition and Development Services $ Building Acquisition, Construction, and Improvement Services $80 $ Other Facilities Construction Services $0 Total Facilities Acquisition and Construction Expenditures $80 $0 $0 $80 $0 $0 $0 $0 Other Uses Expenditures Totals Object 100 Object 200 Object 300 Object 400 Object 500 Object 600 Object Debt Service $ Transfers of Funds $ Apportionment of Funds by ESD $ PERS UAL Bond Lump Sum $0 Total Other Uses Expenditures $0 $0 $0 $0 $0 $0 $0 $0 Grand Total $80 $0 $0 $80 $0 $0 $0 $0 (Sfda on 'ode-psbfs1.ode.state '; SHARED; AuditInfo; District Revenue & Expenditure Audit Summary.xls) DISTRICT AUDIT EXPENDITURE SUMMARY Brookings Harbor School District No. 17C 35

56 OREGON DEPARTMENT OF EDUCATION Office of Finance and Administration 225 Capitol Street NE School Finance Unit Salem Oregon School District Business Managers and Auditors: BROOKINGS HARBOR SCHOOL DISTRICT NO. 17C SUPPLEMENTAL INFORMATION, This page is a required part of your annual audited financial statements. Please make sure it is included. Parts A is needed for computing Oregon s full allocation for ESEA, Title I & other Federal Funds for Education. A. Energy Bill for Heating - All Funds: Please enter your expenditures for electricity & heating fuel for these Functions & Objects. Objects 325 & 326 Function 2540 $215,995 Function 2550 $3482 B. Replacement of Equipment General Fund: Include all General Fund expenditures in object 542, except for the following exclusions: Exclude these functions: Exclude these functions: 1113, 1122 & 1132 Co-curricular Activities 4150 Construction 1140 Pre-Kindergarten 2550 Pupil Transportation 1300 Continuing Education 3100 Food Service 1400 Summer School 3300 Community Services $0 Form C (Rev 4/09) 36

57 Member Division for CPA Firms AICPA MICHAEL L. PIELS CERTIFIED PUBLIC ACCOUNTANTS, LLP 940 Town Centre Drive, Medford, Oregon (541) FAX (541) INDEPENDENT AUDITOR S REPORT REQUIRED BY OREGON STATE REGULATIONS We have audited the basic financial statements of the Brookings-Harbor School District No. 17C (the District) as of and for the year ended June 30, 2012, and have issued our report thereon dated December 21, 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 of the United States. Compliance As part of obtaining reasonable assurance about whether Brookings-Harbor School District No. 17C financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, including the provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules through of the Minimum Standards for Audits of Oregon Municipal Corporations, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not the objective of our audit, and accordingly, we do not express such an opinion. We performed procedures to the extent we considered necessary to address the required comments and disclosures but were not limited to the following: Deposit of public funds with financial institutions under ORS Chapter 295. Budgets legally required under ORS Chapter 294. Insurance and fidelity under bonds in force or required by law. Programs funded from outside sources. Investments of surplus funds authorized under ORS Chapter 294. Public contracts and purchasing under ORS Chapters 279A, 279B, 279C. Debt limitations under ORS Chapter In connection with our audit, nothing came to our attention that caused us to believe Brookings-Harbor School District No. 17C was not in substantial compliance with certain provisions of laws, regulations, contracts, and grants, including the provisions of Oregon Revised Statutes as specified in Oregon Administration Rules through of the Minimum Standards for Audits of Oregon Municipal Corporations. 37

58 Accounting Systems and Internal Controls The District's accounting and internal controls systems are adequate and the majority of the accounting records are properly maintained. However, there were significant deficiencies noted in the accompanying Schedule of Findings and Questioned Costs. Collateral Based on our review of the District s records, the District was in compliance with the provisions of ORS Chapter 295. The banks used by the District were considered qualified financial institutions for the year ended June 30, Budget Compliance We reviewed the preparation, adopting, and execution of the budget for the current year and the preparation and adoption of the ensuing year s budget. Based on our procedures, the District appears to have complied with statutory requirements for the current year and the ensuing year s budget. The District did not exceed its authorized appropriations for the year ended June 30, A resolution authorizing appropriations for each fund sets the level by which expenditures cannot legally exceed appropriations. Appropriations are established by major function (instruction, support services, enterprise and community services, facilities acquisition and construction, debt service, contingency and transfers) in each fund. Insurance and Fidelity Bond Coverage We reviewed the District s insurance policies and determined that such policies appeared to be in force at June 30, We are not competent by training to comment on the adequacy of the insurance policies covering District owned property at June 30, Based on the results of our tests, the District has complied with the provisions of ORS regarding the bonding of District personnel. Indebtedness The District s bonded indebtedness was in compliance with the provisions of ORS The District was in compliance with all debt covenants and all payments were made on a timely basis. Programs Funded From Outside Sources We selected and tested, to the extent deemed appropriate, transactions, records, and reports relative to programs funded wholly or partially by other governmental agencies. The results of our tests indicate, for the items tested, the District complied with the laws, rules, and regulations pertaining to programs funded wholly or partially by other governmental agencies, and for the items tested, financial reports and related data were in agreement with and supported by the accounting records, except as noted in the Schedule of Findings and Questioned Costs. Separate reports have been issued to report on compliance with appropriate laws and regulations pertaining to Federal Financial Assistance. Investments Based on our procedures, it appears that the District was in compliance with the legal requirements of ORS Chapter 294 pertaining to the investment of public funds. 38

59 Public Contracts and Purchasing Based on our procedures and our review of the minutes, the District appears to have complied with the legal requirements pertaining to the awarding of public contracts and the construction of public improvements as contained in ORS Chapter 279. State School Fund Distribution Factors Based on our procedures, the District appears to have complied with the legal requirements as stated in ORS and as further defined by the Oregon State Department of Education pertaining to the District s calculation and reporting of the factors used to compute the State School Fund distribution. Internal Control In planning and performing our audit, we considered the Brookings-Harbor School District No. 17C internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Brookings-Harbor School District No. 17C s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of Brookings-Harbor School District No. 17C s internal control over financial reporting or over compliance. We noted matters involving the internal control structure and its operation that we consider to be significant deficiencies which are reported in the Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. This report is intended solely for the information and use of the Board of Directors and management of Brookings-Harbor School District No. 17C and the State of Oregon, Division of Audits and is not intended to be and should not be used by anyone other than these specified parties. Michael L. Piels CPAs, LLP December 21,

60 Items required by the Single Audit Act Amendments of 1996 for Federal award programs

61 Member Division for CPA Firms AICPA MICHAEL L. PIELS CERTIFIED PUBLIC ACCOUNTANTS, LLP 940 Town Centre Drive, Medford, Oregon (541) FAX (541) REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Directors Brookings-Harbor School District No. 17C Curry County, Oregon We have audited the financial statements of the governmental activities and each major fund information of Brookings-Harbor School District No. 17C (the District), as of and for the year ended June 30, 2012, which collectively comprise the Brookings-Harbor School District s basic financial statements and have issued our report thereon dated December 21, 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. Internal Control Over Financial Reporting Management of the District is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the District s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the District s internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the District s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. However, we identified certain deficiencies in internal control over financial reporting, described in the accompanying Schedule of Findings and Questioned Costs that we consider to be significant deficiencies in internal control over financial reporting. [Findings and ]. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. 40

62 Board of Directors Brookings-Harbor School District No. 17C Curry County, Oregon Compliance and Other Matters As part of obtaining reasonable assurance about whether the District s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of the District in a separate letter dated December 21, The District s responses to the findings identified in our audit are described in the accompanying Schedule of Findings and Questioned Costs. We did not audit the District s responses and, accordingly, we express no opinion on them. This report is intended solely for the information and use of the audit committee, management, Board of Directors, the State of Oregon, Secretary of State, Division of Audits, federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Michael L. Piels CPAs, LLP December 21,

63 Member Division for CPA Firms AICPA MICHAEL L. PIELS CERTIFIED PUBLIC ACCOUNTANTS, LLP 940 Town Centre Drive, Medford, Oregon (541) FAX (541) INDEPENDENT AUDITOR S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Board of Directors Brookings-Harbor School District No. 17C Curry County, Oregon Compliance We have audited Brookings-Harbor School District No. 17C s (the District) compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the District s major federal programs for the year ended June 30, The District's major federal programs are identified in the summary of auditor s results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the District's management. Our responsibility is to express an opinion on the District's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of State, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the District's compliance with those requirements. In our opinion, the District complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30,