Indian Prairie Community Unit School District 204 Naperville, Illinois

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2 Naperville, Illinois Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2013 Prepared by: Mr. Jay Strang Assistant Superintendent for Business Ms. Molly Zientarski Comptroller

3 Contents INTRODUCTORY SECTION Transmittal Letter Certificate of Excellence in Financial Reporting Organizational Chart List of Principal Officials i v vi vii viii ix FINANCIAL SECTION Independent Auditor's Report 1 2 Required Supplementary Information Management s Discussion and Analysis (MD&A) 3 13 Basic Financial Statements Government-Wide Financial Statements (GWFS) Statement of Net Position 14 Statement of Activities 15 Fund Financial Statements (FFS) Governmental Funds: Balance Sheet Governmental Funds 16 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 17 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 18 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities 19 Fiduciary Funds: Statement of Fiduciary Net Position 20 Notes to Basic Financial Statements Required Supplementary Information Schedule of Funding Progress Illinois Municipal Retirement Fund 41 Schedule of Funding Progress Post Employment Healthcare Plan 42 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual General Fund Budgetary Basis 43 Note to Required Supplementary Information 44 Supplementary Information Combining Major Governmental Funds: Combining Balance Sheet General Fund, by Accounts 45 Combining Statement of Revenues, Expenditures and Changes in Fund Balance - General Fund, by Accounts 46 Combining Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Budgetary Basis General Fund, by by Accounts 47 48

4 Supplementary Information (Continued) Contents FINANCIAL SECTION (Continued) Nonmajor Governmental Funds Combining Balance Sheet 49 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 50 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: Transportation Fund 51 IMRF/Social Security Fund 52 Debt Service Fund 53 Capital Projects Fund 54 Statement of Changes in Net Position Agency Fund 55 Schedule of Debt Service Requirements STATISTICAL SECTION Net Position by Component 61 Expenses, Program Revenues, and Net (Expense) Revenue General Revenues and Total Change in Net Position 64 Fund Balances, Governmental Funds 65 Governmental Funds Revenues 66 Governmental Funds Expenditures and Debt Service Ratio Other Financing Sources and Uses and Net Changes in Fund Balances Governmental Funds 69 Assessed Value and Actual Value of Taxable Property 70 Direct and Overlapping Property Tax Rates Principal Property Tax Payers 73 Property Tax Levies and Collections 74 Outstanding Debt by Type 75 Computation of Direct and Overlapping Governmental Activities Debt 76 Legal Debt Margin Information 77 Demographic and Economic Statistics 78 Principal Employers 79 Full-Time Equivalent District Employees by Type 80 Operating Statistics 81 State of Illinois Standardized Test Summary 82 Capital Asset Information 83

5 Introductory Section

6 November 5, 2013 President and Members of the Board of Education and Citizens of Indian Prairie Community Unit School District No. 204 Naperville, Illinois The Comprehensive Annual Financial Report (CAFR) of (the District), Naperville, Illinois, as of and for the year ended June 30, 2013, is submitted herewith. Responsibility for the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the District. We believe the data, as presented, is accurate in all material aspects; that it is presented in a manner designed to fairly set forth the financial position and results of operations of the District as shown by the disclosure of all financial activity of its various funds; and that all disclosures necessary for public understanding of the District's financial status have been incorporated within this report. Management s discussion and analysis (MD&A) immediately follows the independent auditor s report and provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A complement this letter of transmittal and should be read in conjunction with it. Financial Statements The CAFR includes all funds and activities of the District and is presented in three sections: Introductory, Financial, and Statistical. The introductory section includes this transmittal letter, the District's organization chart, and a list of principal officers and elected officials. The financial section includes the independent auditor s report on financial statements and schedules, Management Discussion and Analysis (MD&A), basic financial statements, required supplementary information, and supplementary information such as the combining and individual fund financial statements and schedules. The statistical section includes selected financial and demographic information, generally presented on a multi-year basis. The District is required to undergo an annual single audit in conformity with the provisions of the U.S. Office of Management and Budget's (OMB) Circular A-133, "Audits of States, Local Governments, and Non-profit Organizations." Information related to this single audit, including a schedule of expenditures of federal awards and the independent auditor's reports on the internal control structure and on compliance with applicable laws and regulations, is included under separate cover. i

7 Reporting Entity The financial reporting entity of the District is to include the District, as the primary government, organizations for which the District is financially accountable and other organizations for which the nature and significance of their relationship with the District are such that exclusion would cause the District's financial statements to be misleading or incomplete. Based on these criteria there are no other organizations or agencies whose financial statements should be combined with the general purpose financial statements of the District. History of the District The Indian Prairie Community Unit School District Number 204 was formed on August 12, 1972 by combining three former districts, encompassing an area of 46.6 miles. The School District serves portions of the communities of Naperville, Aurora, and small portions of Bolingbrook and Warrenville. Other unincorporated areas of southwestern DuPage County and northwestern Will County are also served. The District is located 30 miles from downtown Chicago. The District offers instructional programs for students pre-kindergarten through high school, including early childhood, special education, alternative, gifted and career educational programs. Accounting Systems and Budgetary Control In developing and evaluating the District s accounting system, consideration is given to the adequacy of internal accounting controls. Such controls are designed to provide reasonable, but not absolute, assurance for the safeguarding of assets against loss from unauthorized use or disposition and the reliability of financial records for preparing financial statements and maintaining accountability for assets. We believe that our internal accounting controls adequately safeguard District assets and provide reasonable assurance of the proper recording of financial data. Budgetary control is maintained at line item levels and built up into program and cost centers before being combined to create fund totals. All actual activity compared to budget is reported to the District s Administrative team weekly and to the Board of Education monthly. These reports compare account balances to the annual budget accumulation to the cost center, fund and total District levels. Full disclosures are made if extraordinary variances appear during the year. The Board of Education has set a goal to have a balanced budget and each year strives to reach this goal. As a recipient of federal and state financial assistance, the District also is responsible for ensuring that an adequate internal control structure is in place to ensure compliance with applicable laws and regulations related to those programs. This internal control structure is subject to periodic evaluation by management. General Governmental Activities The general governmental activities include all services provided by the District. Included are the general, special revenue, debt service and capital project funds. The activities include all instructional, maintenance, and administrative costs of the District. Property taxes are the most significant revenue source of the District. The three factors that affect property tax revenues are assessed valuation, tax multiplier, and the tax rate. Other revenue sources consist of local revenues exclusive of property taxes. These include transportation fees, tuition, student activity fees, and building rentals. ii

8 The equalized assessed valuation of the District of $4,582,119,451 represents a decrease in the tax base of 5.7% over the preceding year. The tax multiplier is determined by a state agency which attempts to equalize the assessment on real property in order to determine the property value for taxing purposes. This increased value is referred to as the equalized assessed valuation (E.A.V.). Real estate tax bills in DuPage and Will Counties are payable in two unequal installments, with the larger second payment falling due and payable after the close of the fiscal year. Allocations of tax rates for the 2012 property tax levy for fiscal 2013 and the preceding two fiscal years are as follows (per $100 assessed value): Calendar Year General $ $ Special Revenue Debt Service Current and Future Initiative $ $ Financial management in the District continues to focus on producing a solid budget with the emphasis on quality education at a reasonable cost. The expense per pupil in our district is lower than most surrounding districts. The District has undertaken a technology initiative to upgrade and enhance the network infrastructure in preparation for the Partnership for Assessments of Readiness for College and Career (PARCC) tests which will be administrated by the State of Illinois. These upgrades will further allow students to bring and utilize their own technology devices for enhanced instruction. Debt Administration The ratio of general bonded debt to assessed valuation and the amount of bonded debt per capita are useful indicators of the District's debt position to District management, citizens, and investors. The District's ratio for the 2012 levy year has decreased over the 2011 levy year. General Fiscal Year Bonded Debt ($ 000) Debt to Assessed Valuation Per Capita $292, , $3,272 3, , ,585 The District's current bond rating by Moody s Investors Service is Aa1and by Standard and Poor s is AA. iii

9 Local Economy and Economic Outlook The School District s financial outlook for the future continues to be positive. The School District has a strong tax base with an estimated market value of $14.6 billion. The State of Illinois has designated a portion of Interstate I-88 passing through the District as Illinois Research and Development Corridor. This area had become an attractive location for many high tech firms such as Lucent Technologies, NICOR, and BP Naperville Complex. During the 1990s, the District was one of the fastest growing school systems in the country with annual increases in enrollment in some years exceeding 2,000 students. That pace has slowed as the District is approximately 90% built out. Enrollment projections suggest that outgoing 12 th grade classes will likely continue to be greater than the following year s incoming kindergarten class. A recent demographic study suggests that the District s K-12 enrollment will be stable over the next five years. Although the District has four schools built in the 1970s, the majority of the buildings are relatively young, as evidenced below: Decade # Schools Built 1970s s s s 7 The State of Illinois financial crisis has resulted in reductions in funding and significant delays in state payments. Further reductions and delays are likely in the future. The District has significantly reduced expenditures in order to address this crisis. Independent Audit The School Code of Illinois and the District require an annual audit of the financial statements of all funds of the District. The audit for the year ended June 30, 2013 was done by McGladrey LLP, independent certified public accountants, which were selected by the District's Board of Education. Their report has been included in the financial section of this report. Awards In order to be awarded this Certificate, the District must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. Such reports must satisfy generally accepted accounting principles and applicable legal requirements. A Certificate of Excellence is valid for a period of one year only. We believe that our current report conforms to the Certificate requirements and we are submitting it to ASBO to determine its eligibility for the Certificate. Acknowledgments We wish to thank the entire staff of the Business Office for their dedicated service in the preparation of the Comprehensive Annual Financial Report on a timely basis. We would also like to extend our appreciation to the members of the Board of Education for their interest and support in planning and conducting the financial operations of the District in a responsible and progressive manner. iv

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11 Association of School Business Officials International The Certificate of Excellence in Financial Reporting Award is presented to Indian Prairie Community Unit School District #204 For Its Comprehensive Annual Financial Report (CAFR) For the Fiscal Year Ended June 30, 2012 The CAFR has been reviewed and met or exceeded ASBO International s Certificate of Excellence standards Ron McCulley, CPPB, RSBO President John D. Musso, CAE, RSBA Executive Director vi

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14 INDIAN PRAIRIE COMMUNITY UNIT DISTRICT 204 DuPage and Will Counties Post Office Box 3990 Naperville, Illinois COMPREHENSIVE ANNUAL FINANCIAL REPORT for the year ended June 30, 2013 BOARD OF EDUCATION Name Position Term Expires Ms. Lori Price President April 2015 Ms. Cathy Piehl Vice President April 2017 Mr. Benjamin White Secretary April 2017 Dr. Maria Curry Member April 2017 Mr. Justin Karubas Member April 2015 Mr. Mike Raczak Member April 2017 Mr. Mark Rising Member April 2015 Principal Officials Name Dr. Kathryn Birkett Ms. Kathy Duncan Ms. Linda Rakestraw Ms. Kathy Pease Ms. Pam Shaw Mr. Jay Strang Dr. Karen Sullivan Mr. Stan Gorbatkin Position Superintendent Chief Academic Officer Assistant Superintendent, Leadership Services Secondary Assistant Superintendent, Leadership Services Elementary Executive Director of Student Services Assistant Superintendent, Business Assistant Superintendent, Human Resources Assistant Superintendent, Technology Services Officials Issuing Report Name Mr. Jay Strang Ms. Molly Zientarski Position Assistant Superintendent, Business Comptroller Department Issuing Report Name Business Office ix

15 Financial Section

16 Independent Auditor's Report Members of the Board of Education Naperville, Illinois Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the major fund, and the aggregate remaining fund information of the (the District), as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the District s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the major fund, and the aggregate remaining fund information of, as of June 30, 2013, and the respective changes in financial position, thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. 1

17 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the required supplementary information, such as management s discussion and analysis, schedules of funding progress and budgetary comparison information and related notes on pages 3-13 and 41-44, 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 financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District s basic financial statements. The accompanying supplementary information, such as the combining and individual fund financial statements, and schedule of debt service requirements, and the other information, such as the introductory and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying supplementary information as listed in the table of contents is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the accompanying supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The other information, including the introductory and statistical sections, has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Chicago, Illinois November 5,

18 Required Supplementary Information

19 Management s Discussion and Analysis (MD&A)

20 Management s Discussion and Analysis This section of s (District) annual financial report presents its discussion and analysis of the District s financial performance during the fiscal year ended June 30, Please read it in conjunction with the transmittal letter found in the introductory section and the District s financial statements. Financial Highlights Total net position increased 5.4 percent over the course of the year. Overall revenues were $365.4 million, $8.3 million more than expenses. Overview of the Financial Statements This annual report consists of three sections: the introductory section, financial section, and statistical section. The financial section includes the management s discussion and analysis (this section), the basic financial statements, required supplementary information and other supplementary information. The basic financial statements include two kinds of statements that present different views of the District: The first two statements are government-wide financial statements that provide both short-term and longterm information about the District s overall financial status. The remaining statements are fund financial statements that focus on individual parts of the District, reporting the District s operations in more detail than the government-wide statements. The governmental funds statements tell how basic services such as regular and special education were financed in the short term as well as what remains for future spending. Fiduciary funds statements provide information about the financial relationships in which the District acts solely as a trustee or agent for the benefit of others. The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements. 3

21 Management s Discussion and Analysis Figure A-1 shows how the various parts of the financial section of the report are arranged and related to one another. Figure A-1 Organization of Indian Prairie Community Unit District 204 Annual Financial Report Management s Discussion and Analysis Basic Financial Statements Required Supplementary Information Government- Wide Financial Statements Fund Financial Statements Notes to Basic Financial Statements Summary Detail This report also contains other supplemental information in addition to the basic financial statements. 4

22 Management s Discussion and Analysis Figure A-2 summarizes the major features of the District s financial statements, including the portion of the District s activities they cover and the types of information they contain. The remainder of this overview section of management s discussion and analysis highlights the structure and contents of each of the statements. Figure A-2 Major Features of the Government-Wide and Fund Financial Statements Scope Required financial statements Accounting basis and measurement focus Type of asset/liability information Type of inflow/outflow information Government-Wide Fund Financial Statements Statements Governmental Funds Fiduciary Funds Entire District (except fiduciary funds). Statements of net position. Statement of activities. Accrual accounting and economic resources focus. All assets and liabilities, both financial and capital, short-term and long-term. All revenues and expenses during year, regardless of when cash is received or paid. The activities of the District that are not proprietary or fiduciary, such as General, Special Revenue, Debt Service and Capital Projects. Balance sheet. Statement of revenues, expenditures, and changes in fund balance. Modified accrual accounting and current financial focus. Generally assets expected to be used up and liabilities that come due during the year or soon thereafter; no capital assets or long-term liabilities included. Revenues for which cash is received during or soon after the end of the year; expenditures when goods or services have been received and the related liability is due and payable. Instances in which the District administers resources on behalf of someone else, such as student activities monies. Statement of fiduciary net position. Statement of changes in fiduciary net position. Accrual accounting and economic resources focus. All assets and liabilities, both short-term and longterm; funds do not currently contain capital assets, although they can. All additions and deductions during the year, regardless of when cash is received or paid. 5

23 Management s Discussion and Analysis Government-Wide Statements The government-wide statements report information about the District as a whole using accounting methods similar to those used by private-sector companies. The statement of net position includes all of the District s assets and liabilities. All of the current year s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two government-wide statements report the District s net position and how they have changed. Net position, the difference between the District s assets and liabilities, is one way to measure the District s financial health or position. Over time, increases or decreases in the District s net position are an indicator of whether its financial position is improving or deteriorating, respectively. To assess the District s overall health, you need to consider additional non-financial factors such as changes in the District s property tax base and the condition of school buildings and other facilities. In the government-wide financial statements, the District s activities are all categorized as Governmental activities. All of the District s basic services are included here, such as regular and special education, transportation, and administration. Property taxes and state aid finance most of these activities. Fund Financial Statements The District s 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. Funds are accounting devices the District uses to keep track of specific sources of funding and spending on particular programs: Some funds are required by state law and by bond covenants. The District establishes other funds to control and manage money for particular purposes (such as repaying its long-term debts) or to show that it is properly using certain revenues. The District has two categories of funds: Governmental funds: Most of the District s basic services are included in governmental funds, which generally focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the District s programs. Because this information does not encompass the additional long-term focus of the government-wide statements, additional information following the governmental funds statements explains the relationship (or differences) between them. Fiduciary funds: The District is the trustee, or fiduciary, for assets that belong to others, such as the student activities funds. The District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The District excludes these activities from the government-wide financial statements because it cannot use these assets to finance its operations. 6

24 Management s Discussion and Analysis Financial Analysis of the District as a Whole Net position. The District s combined net position were more on June 30, 2013, than they were the year before, increasing 5.4 percent to $161.1 million. (See Figure A-3.) The District s current year financial position is the product of many factors. The largest factor can be attributed to the District paying down $24.0 million in long-term debt. This was offset by a net decrease in capital assets of $10.2 million as the District had minimal capital asset additions in the current year. In addition, there was a surplus in the operating funds in the current year. Figure A-3 Condensed Statement of Net Position (in millions of dollars) Governmental Activities Assets Current assets $ $ Noncurrent assets Capital assets Total assets Liabilities Current liabilities Long-term liabilities Total liabilities Net Position Invested in capital assets, net of related debt Restricted Unrestricted Total net position $ $ Changes in net position. The District s total revenues were $365.4 million. (See Figure A-4.) Real estate taxes accounted for most of the District s revenue, contributing about 71.4 cents of every dollar raised. (See Figure A-5.) Another 25.1 cents came from state and federal aid for specific programs and state formula aid and the remainder from fees charged for services and miscellaneous sources. 7

25 Management s Discussion and Analysis The total cost of all programs and services was $357.1 million. The District s expenses are predominantly related to instructing, caring for (pupil services) and transporting students (80.7 percent). (See Figure A-6.) The District s administrative and business activities accounted for 7.4 percent of total costs. Total revenues exceeded expenses, increasing net position by $8.3 million over last year. Figure A-4 Changes in Net Position from Operating Results (in millions of Dollars) Governmental Activities Percent Change Revenues Program revenues Charges for services $ 10.1 $ 10.7 (5.6)% Operating grants and contributions % General revenues Taxes % State aid-formula grants (20.2)% Other % Total revenues $ $ % Expenses Instruction $ $ % Pupil and instructional services % Administration and business (14.7)% Transportation % Operations and maintenance % Other (3.7)% Total expenses $ $ % Increase in net position $ 8.3 $ 2.3 Net position: Beginning Ending $ $

26 Management s Discussion and Analysis Figure A Government-Wide Revenues By Source Other 0.7% General State Aid 3.9% Charges for Services 2.8% Operating Grants and Contributions 21.2% Taxes 71.4% Figure A Government-Wide Expenses Administration and Business 7.4% Pupil and Instructional Services 9.8% Other 5.0% Operations and Maintenance 6.8% Instruction 67.0% Transportation 4.0% 9

27 Management s Discussion and Analysis Governmental Activities Revenues for the District s governmental activities were $365.4 million in Total expenses in 2013 were $357.1 million. Net position increased $8.3 million in The current District finances can be attributed to the following: Although real estate values have decreased, allowable annual tax increases led to continued strong property tax revenues in Operating grants and contributions for governmental activities increased by $6.2 million due to ability to collect sooner on government grants compared to recent years. General state aid, decreased by $3.6 million, due to the state decreasing the District s allotment in the current fiscal year. Increased expenditures can be attributed mainly to salaries, as well as increasing national costs in healthcare coverage. Figure A-7 presents the cost of six major District activities: instruction, pupil and instructional services, administration and business, transportation, operations and maintenance, and other. The table also shows each activity s net cost (total cost less fees generated by the activities and intergovernmental aid provided for specific programs). The net cost shows the financial burden placed on the District s taxpayers by each of these functions. Figure A-7 Net Cost of Governmental Activities (in millions of dollars) Percentage Percentage Total Cost of Services Change Net Cost of Services Change Instruction $ $ % $ $ % Pupil and instructional services % % Administration and business % % Transportation % % Operations and maintenance % % Other % % $ $ $ $ The cost of all governmental activities this year was $357.1 million. Some of the cost was financed by the users of the District s programs ($10.1 million). The federal and state governments subsidized certain programs with grants and contributions of $77.5 million. Most of the District s costs, however, were financed by District taxpayers. 10

28 Management s Discussion and Analysis Financial Analysis of the District s Funds As the District completed the year, its governmental funds reported combined fund balances of $108.4 million as of June 30, The General Fund experienced a current year operating surplus of $5.2 million after other financing uses. This surplus resulted in a year-end fund balance of $83.2 million. The surplus can mainly be attributed to cost control procedures being implemented by the District. Utility charges and snow removal were lower in the current year. The Nonmajor Governmental Funds experienced a current year deficit of $5.0 million after net other financing sources. This deficit can be mainly attributed to the debt service fund making principal payments for the outstanding long term notes. General Fund Budgetary Highlights Over the course of the year, the District did not amend its annual operating budget, which is prepared on the modified accrual basis of accounting. While the District s budget for the General Fund anticipated that revenues would exceed expenditures by $1.6 million, before net other financing uses of $0.3 million, resulting in a net surplus of $1.3 million, the actual result for the year was a $5.1 million surplus before net other financing sources of $0.1 million, resulting in a net surplus of $5.2 million. The excess surplus can be attributed to the ability to collect sooner on restricted state aid compared to recent years in addition to the lease proceeds in other financing sources and uses, which was unexpected by the District. Capital Assets By the end of 2013, the District had invested $527.9 million (before accumulated depreciation of $175.2) in a broad range of capital assets, including buildings (both school and administration facilities) property and equipment (computer, audio-visual, transportation and maintenance equipment and furniture), construction in progress and land. (See Figure A-8.) (More detailed information about capital assets can be found in Note 4 to the financial statements.) Depreciation expense for the year was $11.4 million and additions to equipment amounted to $1.2 million. Figure A-8 Capital Assets (net of depreciation) (in millions of dollars) Total Percentage Change Land $ 33.2 $ % Land improvements (8.5)% Buildings and improvements (2.8)% Equipment % TOTAL $ $ (2.8)% 11

29 Management s Discussion and Analysis Long-Term Obligations At year-end, the District had $317.0 million in general obligation bonds and other long-term obligations outstanding as shown in Figure A-9. (More detailed information about the District s long-term liabilities is presented in Note 5 to the financial statements.) Figure A-9 Outstanding Long-Term Obligations (in millions of dollars) Total Percentage Change General obligation bonds (financed with property taxes) $ $ (6.7)% Unamortized premiums, discounts, and deferrals (24.1)% Other long-term obligations % TOTAL $ $ (6.1)% The District continued to pay down its debt, retiring $21.9 million of outstanding bonds and leases. The state limits the amount of general obligation debt the District can issue to 13.8% of the assessed value of all taxable property within the District s limits. Outstanding debt is significantly below the current limit of $632.3 million. Other long-term liabilities increased by $2.4 million due to the annual increase in the OPEB obligation and issuance of a capital lease. 12

30 Management s Discussion and Analysis Factors Bearing on the District s Future At the time these financial statements were prepared and audited, the District was aware of the following existing circumstances that could significantly affect its financial health in the future. The Illinois General Assembly has previously imposed property tax legislation on school districts to give property taxpayers some relief by delaying tax increases each year. The legislation limits the levy increase to the lesser of the consumer price index (CPI) or 5 percent. This tax cap continues to limit the District s tax collection ability. Although all residential development has been slow in recent years, new residential development within the District s boundaries will ultimately cause continued growth in student population within the District. This growth translates into expanded enrollment. The District is continually projecting enrollment, anticipating building space and staffing levels. The current weak economy, in both the nation and the state, continues to affect the District s state funding levels and timing of state receipts. The District s certified staff are under contract through the 2015 fiscal year. Requests for Information This financial report is designed to provide the District s citizens, taxpayers, and creditors with a general overview of the District s finances and to demonstrate the District s accountability for the money it receives. If you have questions about this report, or need additional financial information, contact the Business Office, Administrative Center, 780 Shoreline Drive, Aurora, Illinois

31 Basic Financial Statements

32 Government-Wide Financial Statements (GWFS)

33 Statement of Net Position June 30, 2013 Governmental Activities Assets Current Assets Cash and investments $ 117,992,842 Receivables: Property taxes 133,205,755 Other 136,509 Prepaids 9,661,508 Due from other government units 25,187,280 Total current assets 286,183,894 Noncurrent Assets Unamortized bond issuance costs 1,352,035 Capital assets not being depreciated 33,216,076 Capital assets being depreciated, net 319,471,303 Total noncurrent assets 354,039,414 Total assets $ 640,223,308 Liabilities and Net Position Current Liabilities Accounts payable $ 8,155,168 Accrued liabilities 23,281,234 Accrued health claims 2,559,890 Unearned revenue 128,084,123 General obligation bonds 14,955,000 Capital leases 1,092,100 Total current liabilities 178,127,515 General obligation bonds, net of unamortized premium, discount, and deferred amounts on refunding 284,021,119 Capital leases 1,011,562 Other post employment benefits 15,940,901 Total long-term liabilities 300,973,582 Total liabilities 479,101,097 Net Position Net investment in capital assets 52,959,633 Restricted for: Tort 13,805 Transportation 20,226,672 Retirement benefits 5,147,134 Debt service 8,045,274 Capital projects 822,806 Unrestricted 73,906,887 Total net position 161,122,211 Total liabilities and net position $ 640,223,308 See Notes to Basic Financial Statements. 14

34 Statement of Activities Year Ended June 30, 2013 Net (Expense) Revenue and Changes in Program Revenue Net Position Operating Charges for Grants and Governmental Functions/Programs Expenses Services Contributions Activities Governmental activities: Instruction: Regular programs $ 175,443,159 $ 2,331,547 $ 36,103,804 $ (137,007,808) Special programs 47,334,828-27,033,710 (20,301,118) Other instructional programs 15,989,587 2,096,969 4,189,715 (9,702,903) Support services: Pupils 17,062, (17,062,440) Instructional staff 18,032, ,376 (17,317,206) General administration 3,794, (3,794,498) School administration 15,005, (15,005,765) Business 7,792,992 4,578,676 2,134,080 (1,080,236) Facility acquisition and construction services 381, (381,223) Transportation 14,386,305-7,337,055 (7,049,250) Operations and maintenance 24,260,051 1,127,756 - (23,132,295) Central 4,478, (4,478,258) Other support services 173, (173,585) Community services 74, (74,528) Payments to other governments 857, (857,277) Interest and charges 12,053, (12,053,166) Total governmental activities $ 357,120,244 $ 10,134,948 $ 77,513,740 (269,471,556) General revenues: Taxes: Property taxes, general purposes 230,164,243 Property taxes, debt service 28,237,325 Corporate property replacement taxes 2,458,742 State aid-formula grants 14,237,401 Grants and contributions not restricted to specific programs 93,167 Investment earnings 87,965 Miscellaneous 2,542,325 Total general revenues 277,821,168 Change in net position 8,349,612 Net position: July 1, ,772,599 June 30, 2013 $ 161,122,211 See Notes to Basic Financial Statements. 15

35 Fund Financial Statements (FFS)

36 Balance Sheet Governmental Funds June 30, 2013 Assets Major Fund Nonmajor Total General Governmental Governmental Fund Funds Funds Cash and investments $ 92,272,756 $ 25,720,086 $ 117,992,842 Receivables: Property taxes 112,333,999 20,871, ,205,755 Other 86,705 49, ,509 Prepaids 9,661,508-9,661,508 Due from other governmental units 16,149,822 9,037,458 25,187,280 Total assets $ 230,504,790 $ 55,679,104 $ 286,183,894 Liabilities and Fund Balances Liabilities Accounts payable $ 5,008,034 $ 3,147,134 $ 8,155,168 Accrued liabilities 23,281,234-23,281,234 Accrued health claims 1,360,516-1,360,516 Deferred revenues 117,602,268 27,327, ,929,810 Total liabilities 147,252,052 30,474, ,726,728 Fund balances Nonspendable: Prepaid items 9,661,508-9,661,508 Restricted for: Tort 13,805-13,805 Transportation - 11,189,214 11,189,214 Retirement benefits - 5,147,134 5,147,134 Debt service - 8,045,274 8,045,274 Capital projects - 822, ,806 Unassigned 73,577,425-73,577,425 Total fund balances 83,252,738 25,204, ,457,166 Total liabilities and fund balances $ 230,504,790 $ 55,679,104 $ 286,183,894 See Notes to Basic Financial Statements. 16

37 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2013 Total fund balances - governmental funds $ 108,457,166 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not current financial resources and therefore are not reported in the funds. 352,687,379 State grant revenues that are deferred in the fund financial statements because they are not available are recognized as revenue in the government-wide financial statements. 16,845,687 Premiums on bonds that are other financing sources in the fund financial statements are liabilities that are amortized over the life of the bonds in the government-wide financial statements. (10,004,789) Discounts on bonds that are other financing uses in the fund financial statements are assets that are amortized over the life of the bonds in the government-wide financial statements. 98,215 Bond issuance costs that are an expenditure in the fund financial statements are an asset that is amortized over the life of the bonds in the government-wide financial statements. 1,352,035 Deferred amounts on refunded debt that are other financing uses in the fund financial statements, are assets that are amortized over the life of the bonds in the government-wide statement of net position. 3,320,455 Some liabilities reported in the statement of net position do not require the use of current financial resources and, therefore, are not reported as liabilities in governmental funds: General obligation bonds (292,390,000) Capital lease (2,103,662) Other post employment benefits (15,940,901) Accrued incurred but not reported health claims (1,199,374) Net position of governmental activities $ 161,122,211 See Notes to Basic Financial Statements. 17

38 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Year Ended June 30, 2013 Major Fund Nonmajor Total General Governmental Governmental Fund Funds Funds Revenues: Property taxes $ 218,011,056 $ 40,390,512 $ 258,401,568 Corporate property replacement taxes 2,158, ,000 2,458,742 Charges for services 11,842, ,017 12,281,866 Unrestricted state aid 14,237,401-14,237,401 Restricted state aid 63,405,675 8,867,456 72,273,131 Restricted federal aid 10,148,800-10,148,800 Interest 56,048 31,917 87,965 Total revenues 319,860,571 50,028, ,889,473 Expenditures: Current: Instruction: Regular programs 171,206,643 1,433, ,639,681 Special programs 41,866,182 2,080,544 43,946,726 Other instructional programs 15,864, ,136 15,989,587 Support services: Pupils 16,632, ,396 17,053,812 Instructional staff 12,855, ,049 12,986,551 General administration 3,661, ,333 3,791,573 School administration 14,205, ,761 15,197,410 Business 7,372, ,529 7,577,499 Transportation - 14,367,681 14,367,681 Operations and maintenance 21,642,437 23,665 21,666,102 Central 4,016, ,543 4,411,883 Other support services 173, ,585 Community services 73, ,528 Payments to other governments 857, ,277 Capital outlay 4,316,548 18,624 4,335,172 Debt service: Principal - 21,892,601 21,892,601 Interest and charges - 13,917,150 13,917,150 Total expenditures 314,744,942 56,133, ,878,818 Excess (deficiency) of revenues over (under) expenditures 5,115,629 (6,104,974) (989,345) Other financing sources (uses): Lease proceeds 1,231,101-1,231,101 Transfer in - 1,105,210 1,105,210 Transfer (out) (1,105,210) - (1,105,210) Total other financing sources (uses) 125,891 1,105,210 1,231,101 Net change in fund balances 5,241,520 (4,999,764) 241,756 Fund balances: July 1, ,011,218 30,204, ,215,410 June 30, 2013 $ 83,252,738 $ 25,204,428 $ 108,457,166 See Notes to Basic Financial Statements. 18

39 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities Year Ended June 30, 2013 Net change in fund balances total governmental funds $ 241,756 Amounts reported for governmental activities in the statement of activities are different because: State grant revenues that are deferred in the fund financial statements because they are not available are recognized as revenue in the government-wide financial statements. Prior year deferred balance (21,265,305) Current year deferred balance 16,845,687 Governmental funds report capital outlays as expenditures while governmental activities report depreciation expense to allocate those expenditures over the lives of the assets. This is the amount by which depreciation expense exceeded capital outlays in the current period. Capital outlays 1,257,782 Depreciation expense (11,447,438) In governmental funds, long-term debt is considered other financing sources, but in the statement of net position, debt is reported as a liability. In the current period, proceeds were received from: Capital lease (1,231,101) Repayment of principal on long-term debt is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Bond principal retirement (including refunding) 20,915,000 Capital lease principal retirement 977,602 Premium on bonds is recorded as other financing sources in the fund financial statements, but the premium is recorded as a liability in the Statement of Net Position and is amortized over the life of the bonds. These are the amounts in the current period. Amortization premium on bonds 2,635,308 Discount on bonds is recorded as other financing uses in the fund financial statements, but the discount is recorded with liabilities in the Statement of Net Position and is amortized over the life of the bonds. This is the amount in the current period. Amortization discount on bonds (7,272) Bond issuance costs are recorded as an expenditure in the fund financial statements, but the cost is recorded with liabilities in the Statement of Net Position and is amortized over the life of the bonds. These are the amounts in the current period. Amortization bond issuance costs (220,032) Deferred amounts on refunded debt are recorded as an other financing use in the fund financial statements, but the loss is recorded as an asset in the Statement of Net Position and is amortized over the life of the bonds. These are the amounts in the current period. Amortization deferred amount on refunding (544,020) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. These activities consists of: Increase in other post employment benefits (2,238,279) Decrease in accrued incurred but not reported health claims. 2,429,924 Change in net position of governmental activities $ 8,349,612 See Notes to Basic Financial Statements. 19