BELLWOOD-ANTIS SCHOOL DISTRICT FINANCIAL STATEMENTS AND AUDITOR'S REPORT ON BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2010

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1 FINANCIAL STATEMENTS AND AUDITOR'S REPORT ON BASIC FINANCIAL STATEMENTS ********* YEAR ENDED JUNE 30, 2010

2 CONTENTS Page INDEPENDENT AUDITOR'S REPORT REQUIRED SUPPLEMENTARY INFORMATION Management's Discussion and Analysis BASIC FINANCIAL STATEMENTS District-Wide Financial Statements: Statement of Net Assets Statement of Activities Fund Financial Statements Governmental Funds: Balance Sheet Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets Statement of Revenues, Expenditures, and Changes in Fund Balances Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities Proprietary Funds: Statement of Net Assets Statement of Revenues, Expenses, and Changes in Net Assets Statement of Cash Flows Fiduciary Funds: Statement of Net Assets Statement of Changes in Net Assets Notes to Financial Statements REQUIRED SUPPLEMENTARY INFORMATION (RSI) Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Capital Reserve Notes to Required Supplementary Information Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Defined Benefit Postemployment Healthcare Plan SUPPLEMENTARY INFORMATION Athletic Fund: Statement of Revenues, Expenditures, and Changes in Fund Balances Student Activities Fund: Statement of Assets and Liabilities Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards 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 that Could Have a Direct and Material Effect on Each Major Program and Internal Control over Compliance in Accordance with OMB Circular A-133 Schedule of Findings and Questioned Costs Summary Schedule of Prior Years' Findings Communication with Those Charged with Governance

3 INDEPENDENT AUDITOR'S REPORT The Board of Directors Bellwood-Antis School District Martin Street Bellwood, Pennsylvania We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the Bellwood-Antis School District as of and for the year ended June 30, 2010, which collectively comprise the District's basic financial statements as listed in the contents. These financial statements are the responsibility of the Bellwood-Antis School District's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Bellwood-Antis School District as of June 30, 2010, and the respective changes in financial position and cash flows, where applicable, 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 15, 2010 on our consideration of the Bellwood-Antis School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit Thirteenth Street P.O. Box Altoona, Pennsyilvaillia (814) 91 fax: (814) Members: American Institute of Certified Public Accountants Pennsyllvaniia Institute of Certified Public Accountants PKf North American Network

4 The management's discussion and analysis and budgetary comparison information and the defined benefit postemployment healthcare plan's schedule of funding progress on pages 3 through 11 and 52 through 54 are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Bellwood-Antis School District's basic financial statements. The individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements of the Bellwood-Antis School District. The individual Nonmajor fund financial statements and the schedule of expenditures of federal awards have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. December 15,

5 Bellwood-Antis School District Management Discussion and Analysis for the Fiscal Year Ended June 30, 2010 The Management, Discussion, andanalysis (MD&A) ofthe Bellwood-Antis School District provides a reader friendly insight into the fmancial condition and the financial performance ofthe School District for the fiscal year ended June 30, This MD&A looks at the District's financial performance on a district-wide basis as well as the major funds. Readers should review the fmancial statements to augment their understanding ofthe District's financial performance. Background The Management Discussion and Analysis (MD&A) is an element ofthe reporting model adopted by the Governmental Accounting Standards Board (GASB) in their Statement No. 34 Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments issued June Certain comparative information between the current year and the prior year is required to be presented. Previous standards (pre GASB 34) required modified accrual (no receivables/accruals beyond 60 days), no capital asset depreciation and no reports ofcombined net assets. GASB 34 requires fixed asset accounting, properly combining ofmultiple funds and the realization ofthe depreciation expense as part ofthe Statement ofnet Assets and Statement ofactivities. Various statements required under GASB 34 are: Statement ofnet Assets Statement ofactivities Balance Sheet ofgovernmental Funds Reconciliation ofthe Governmental Fund Balance Sheet to the Statement ofnet Assets Statement ofrevenues, Expenditures, and Changes in Fund Balances Reconciliation ofgovernmental Fund Statement ofrevenues, Expenditures and Changes in Fund Balance to the Statement ofactivities Statement ofrevenues, Expenditures and Changes in Fund equity - Budget vs. Actual- General Fund Overview ofthe Financial Statements This section ofthe comprehensive annual financial report consists ofthree parts - management's discussion and analysis, basic financial statements (district-wide and fund statements) including notes to the financial statements, and other required supplementary information. The basic financial statements consist oftwo kinds ofstatements that present different views ofthe district's financial activities. Entity-wide Statements: o The statement ofnet assets and statement of activities provide information on a districtwide basis. The statements present an aggregate view ofthe district's fmances. Districtwide statements contain useful long-term information as well as information for the justcompleted fiscal year. -3-

6 Fund Statements: o The remaining statements are fund financial statements that focus on individual parts of the district. Fund statements generally report operations in more detail than the districtwide statements. The notes to the fmancial statements provide further explanation ofsome ofthe information in the statements and additional disclosures so statement users have a complete picture ofthe district's financial activities and position. Required supplementmy information further explains and supports the financial statements by including a comparison ofthe district's budget data for the year. The major features ofthe district's financial statements, including the portion ofthe activities reported and the type of information contained is shown in the following table. -4-

7 Figure A-2 Major Features ofbellwood-antis School District's Entity-Wide and Fund Financial Statements Fund Statements Entitywide Statements Governmental Funds Proprietary Funds Fiduciary Funds Scope Entire District The activities ofthe Activities the Instances in which (except fiduciary District that are not District operates the District is the funds) proprietary or similar to private trustee or agent to fiduciary, such as business - Food someone else's education, Services resources - administration and Scholarship Funds community services & Activity Funds Required fmancial Statement ofnet Balance Sheet Statement ofnet Statement of statements assets Statement of assets fiduciary net assets Statement of revenues, Statement of Statement of activities expenditures, and revenues, changes in fiduciary changes in fund expenses and net assets balauce changes in net assets Statement ofcash flows Accounting basis Accrual Modified accrual Accrual Accrual accounting and measurement accounting and accounting and accounting and and economic focus economic current fmancial economic resources focus resources focus resources focus resources focus Type of All assets and Only assets expected All assets and All assets and asset/liability liabilities, both to be used up and liabilities, both liabilities, both information fmancial and liabilities that come fmancial and short-term and longcapital, and due during the year capital, and short- term short-term and or soon thereafter; no term and longlong-term capital assets term included Type ofinflow- All revenues and Revenues for which All revenues and All revenues and outflow expenses during cash is received expenses during expenses during information year, regardless during or soon after year, regardless of year, regardless of ofwhen cash is the end ofthe year; when cash is when cash is received or paid expenditures when received or paid received or paid goods or services have been received and payment is due during the year or soon thereafter Entity-Wide Statements The entity-wide statements report information about the district as a whole using accounting methods similar to those used by private-sector companies. The two entity-wide statements report the district's net assets and how they have changed. Net assets, the difference between the district's assets and liabilities, is one way to measure the district's overall financial position. Increases or decreases in the district's net assets is one indicator ofwhether its financial position is improving or deteriorating, respectively. To assess the overall fmancial condition ofthe district additional non-financial factors, such as changes in the district's property tax base and the condition of school buildings and other facilities, should be considered. -5-

8 In the entity-wide fmancial statements, the district's activities are divided into two categories: Governmental activities - Most ofthe district's basic services are included here, such as regular and special education, transportation, support services, community programs and administration. Property taxes and state fol11lula aid finance most ofthese activities. Business-type activities - The district charges fees and received federal and state reimbursements to cover the costs ofits food service operation. The fmancial activities ofthis program are reported as a business-type activity. Financial Highlights - Entity-Wide Statements The District's fmancial status, as reflected in total net assets, increased by $790,113 for the current fiscal period. Net assets ofgovernmental activities increased $832,282 while business-type activities decreased ($42,169). Total revenues were $16,002,078; program revenues accounted for $10,951,791 or 68.4% and general revenues accounted for $5,050,287 or 31.6% oftotal revenues. Business-type activities had a net decrease in capital assets of($14,659) as a result ofdepreciation outpacingacquisition ofnew equipment and the governmental activities had a net increase of$458,703 as a result ofacquisition ofnew equipment and construction in progress outpacing depreciation. The district repaid $1,215,000 of long-term debt reducing the total to $19,940,000. The overall liabilities were decreased by $1,203,772. The district had no short-term debt. In governmental activities, the district had a total of$14,513,788 of expenses and $15,346,070 of revenues that resulted in a $832,282 increase in net assets. Program revenues provided $10,186,873 or 66.4%, charges for services $109,204 or.7%, and general revenues, special and extraordinary items and transfers of $5,049,993 or 32.9%. In governmental activities, general tax revenues are primarily comprised ofreal estate taxes that accounted for $3,917,455 or 77.6% while all other taxes accounted for $1,132,538 or 22.4%. The school food service program, the district's only business-type activity, had a total $698,177 of expenses, ofwhich $351,726 was financed by charges for services, $303,988 with subsidies and $294 from general revenues resulting in a $($42,169) decrease to net assets. 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. Funds are accounting devices the district uses to keep track ofsources offunding and spending on particular programs and to demonstrate compliance with various regulatory requirements. Some funds are required by state law and by bond covenants. The district establishes other funds to control and manage money for particular purposes (like repaying its long-term debt) or to show that it is properly using certain revenues (like capital project funds). -6-

9 The District has three kinds offunds: Governmental funds - Most ofthe district's basic services are included in governmental funds, which generally focus on (1) how cash and other fmancial assets that can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for funding future basic services. Consequently, the government funds statements provide a detailed short-term view that helps determine whether there are more or fewer fmancial resources that can be spent in the near future to fmance the district's programs. Governmental fund information does not report on long-term commitments as is reported on the district-wide statements. Therefore an explanation ofthe differences between the governmental funds and the district-wide statements is included as a separate statement. Proprietary funds - The food service fund, and activity for which the district charges a fee and for which revenues are expected to cover all expenses is reported as a proprietary fund. Proprietary funds are reported in the same way as the district-wide statements. Fiduciary funds - The district serves as a trustee, or fiduciary, for student organizations. The assets ofthese organizations belong to the organization, and not the district. The district is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and only by those whom the assets belong. These activities are excluded from the district-wide financial statements because the district cannot use these assets to finance its operations. Financial Highlights - Fund Financial Statements The general fund ending unreserved - undesignated fund balance of $734,636 equates to 4.6% ofthe original operating budget of$16,061,993. These funds helped provide a balanced budget for Total general fund revenues exceeded the budget by $161,816 or 1.1%... Total general fund expenses were $397,660 or 2.6% less than budgeted. o The majority ofthe variance in expenditures occurred in the salary and benefit portion of the District's budget. Salaries and benefits are approximately 65.0% ofthe District's expenditures. Appropriations are provided for substitute employees that would be paid concurrent with existing employees ifthey are on a paid leave. Debt Service payments of $354,302 were budgeted for payment from the capital reserve account, however; payment was made from excess funds in the general fund. The net change in fund balance of all governmental funds was ($762,847). This is comprised ofthe results from general operations ofthe Athletic Account $2,609; General Fund Account $162,454; Capital Projects Account ($460,766) and the Capital Reserve Account ($467,144). The Capital Projects had an ending fund balance of $27,583. These funds are reserved for capital improvements, construction projects and acquisition ofland. The Capital Reserve fund had an ending fund balance of$1,606,464. This entire amount is committed to debt service payments and capital repairs or improvements. In the fiduciary funds, the private purpose trust fund balance had an ending balance of $119,609. This consisted ofthe General Scholarship fund. -7-

10 Government-wide Financial Analysis Net assets may serve over time as a useful indicator ofa government's fmancial position. The district's assets exceeded liabilities by $7,105,944 as ofjune 30, Capital assets of $25,076,178 accounted for 86.1% oftotal assets. The District uses capital assets to provide services; consequently, these assets are not available for future spending. Although the District's $5,118,113 investment in its capital assets is reported net ofrelated debt, it should be noted that the resources needed to repay the debt of$19,940,000 must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Table 1 summarizes the assets, liabilities, and net assets ofthe District at June 30, Table 1 Net Assets - (Entity-Wide) As ofjune 30, 2010 As ofjune 30, 2009 Governmental! BusineSS-Type! Governmental! Business-TypeI Activities Activities Total Activities Activities Total Assets Current & Other Assets $ 3,818,442 $ 217,145 $ 4,035,58 $ 4,676,251 $ 217,039 $ 4,893,290 Capital Assets 24, , ,371, ,983 24,629,134 Total Assets $ $ $ $ $ $ ,424 Liabilities Current Liabilities $ 2,704,397 $ 83,437 $ 2,787,834 $ 2,798,707 $ 55,821 $ 2,854,528 Long-Term Liabilities 19,214,987.Q ,352,065.Q 20,352,065 Total Liabilities $ 21,919,384 $ 83,437 $ $ 23,150,772 $ $ 23, Net Assets: Invested in Capital Assets $ 4,889,854 $ 228,259 $ 5,118,113 $ 3,216,150 $ 246,315 $ 3,462,465 Net ofrelated Debt Restricted for Capital Projects 27, , , ,349 Other Restrictions 1,606, ,606,46~ 2,073, ,073,608 Unrestricted 205, , ~ 118, Total Net Assets $ 6, $ 377,032 $ $ 5,896,630 $ 419,201 $ 6,315,831 Total Liabilities and Net Assets $ $ $ $ $ $

11 Government Activities The Statement ofactivities shows the cost ofprogram services, revenues from charges for those services and grants that directly offset those services. The table below reflects the cost ofprogram services and the net cost ofthose services after taking into account the program revenues for the governmental activities. General revenues (consist primarily oftax revenues) support the net cost ofthe District's services. Table 2 summarizes the changes in Net Assets for the year ended June 30, Table 2 Changes in Net Assets For the Year Ended June 30 (Entity-Wide) GovernmentalI' I Total GovernmentalI I Total Activities BUSIness-Type Activities Busmess-Type Program Revenues: Charges for services $ 109,204 $351,726 $ 460,930 $ 99,474 $336,779 $ 436,253 Operating grants and contributions 10,186, ,988 10,490,861 10,312, ,415 10,598,665 Capital grants and Contributions General Revenues: Property and other taxes 4,792, ,792,885 4,500, ,500,517 Investment earnings 48, , ,654 2, ,347 Special Items Q 208, , , Total Revenues: $ 15346,070 $656,008 $ $ $ $ Program Expenses: Instruction $ 8,375,436 $ 0 $ 8,375,436 $ 8,513,985 $ 0 $ 8,513,985 Instructional Student Support 1,609, ,609,981 1,772, ,772,756 Administrative Support 1,510, ,510,077 1,492, ,492,261 Operation and Maintenance 1,252, ,252,262 1,277, ,277,380 Pupil Transportation 507, , , ,176 Student Activities 481, , , ,854 Community Services 44, ,387 31, ,267 Interest on Long-Term Debt 732, , , ,969 Extraordinary Items Food Service Q 698, ,177 Q 669, ,053 Total Expenses $ 14, $ 698,177 $ 15,211,965 $ 14,990,648 $ 669,053 $ 15,659,701 Changes in Net Assets 832,282 (42,169) 790, , , ,296 Beginning Net Assets 5,896, , ,831 5,441, , Ending Net Assets $ $ 377,032 $ $ $ 419,201 $

12 Unresolved Significant Issues As ofoctober 31, 2010 there are no umesolved significant issues. Factors Bearing on the District's Future Currentlyknown circumstances that will impactthe district financial status in the future are: o The labor agreement with the Bellwood-Antis Education Association (representing teachers) covering the period through provides for the following: Fiscal Year Average Increase Total Per Teacher % Increase $2, $194, $2, $202, $2, $211,117 o The labor agreement with the National Conference offiremen and Oilers, Local #1201 (representing support staff) covering the period through provides for the following: Fiscal Year Average Increase Total Per Hour % Increase $ $ 26, $ $ 27, $ $ 28,871 o The district is mandated to participate in the Pennsylvania Public School Employees Retirement System. On average, for , the district received 57.2% state subsidy. The following reflects the rate, rate change and additional expense net ofstate subsidy applicable to preexisting wages for that fiscal year only: % Rate Effect on Preexisting Rate Change Wages Net of State Subsidy % 18.0% or $ 31, %.4% or $ % (33.2%) or $(90,533) % 10.4% or $ 19, % 37.7% or $ 51, % 10.9% or $ 14,152 Act 120 of2010 made the following changes to the pension plan: 1. Maintains the defined benefit plan but implemented a shared risk element for all new employees starting July 1,2011 and after. 2. Modified the actuarial calculation by extending the calculation ofunfunded accrued liability including re-amortizing the unfunded accrued liabilities over 24 years using a level-percentage ofpay. 3. Limited the increase in the employer contribution rate to 3% in ; 3.5% in ; and 4.5% in thus providing the maximum rates of8.91%, 9.22%, and 9.50%. Unless additional legislative action is taken, this will have a major impact on all school districts in Pennsylvania when the collar expires in

13 o The district is a member ofthe Blair County Health Consortium for the purpose ofproviding health insurance to employees in accordance with labor agreements. The following reflects the recent rate increases: % or $114, % or $105, % or $110, % or $110,460 Contacting the District Financial Management The financial report is designedto provide our citizens, taxpayers, parents, student, staff, investors and creditors with a general overview ofthe District's finances and to show the Board's accountability for the money it receives. Ifyou have questions about this report or wish to request additional financial information, please contact: Kenneth J. Swanson, SFO, PRSBA Business Manager/Board Secretary Bellwood-Antis School District 300 Martin Street Bellwood, Pennsylvania Phone: (814) kjs@blwd.k12.pa.us -11-

14 STATEMENT OF NET ASSETS JUNE 30, 2010 ASSETS Governmental Activities Business-Type Activities Current Assets Cash and Cash Equivalents Taxes Receivable, Net State Revenue Receivable Federal Revenue Receivable Other Intergovernmental Revenue Receivable Other Receivables Inventories Prepaid Expenses/Expenditures Total Current Assets Noncurrent Assets Land Site Improvernents Buildings and Building Improvements, Net Accumulated Depreciation Furniture and Equipment, Net of Accumulated Depreciation Construction in Progress Total Noncurrent Assets $ 2,381,183 $204,491 $ 2,585, , , , , , ,396 49, ,438 19,148 2,418 21, ,161 10, ,041 $ 3,818,442 $217,145 $ 4,035,587 $ 625,346 $ 0 $ 625, , ,950 8,305, ,305, , , ,635 15,520, ,520,199 $24,829,854 $243,324 $25,073,178 TOTAL ASSETS $28,648,296 $460,469 $29,108,765 LIABILITIES AND NET ASSETS Current Liabilities Internal Balances Accounts Payable Current Portion of Long-Term Debt Accrued Salaries and Benefits Payroll Deductions and Withholdings Deferred Revenues ($ 68,389) 239,730 1,400,000 1,131,937 14) 1,133 $ 68,389 8,049 oo o 6,999 $ 0 247,779 1,400,000 1,131,937 14) 8,132 Total Current Liabilities $ 2,704,397 $ 83,437 $ 2,787,834 Noncurrent Liabilities Bonds Payable Long-Term Portion of Compensated Absences Other Postemployment Benefits (OPEB) $18,540, , ,396 $ o oo $18,540, , ,396 Total Noncurrent Liabilities $19,214,987 $ o $19,214,987 Total Liabilities Net Assets Invested in Capital Assets, Net of Related Debt Capital Projects Other Restrictions Unrestricted Total Net Assets $21,919,384 $ 4,889,854 27,583 1,606, ,011 $ 6,728,912 $ 83,437 $22,002,821 $228,259 $ 5,118, , ,606, , ,784 $377,032 $ 7,105,944 TOTAL LIABILITIES AND NET ASSETS $28,648,296 $460,469 $29,108,765 See Accompanying Notes and Independent Auditor's Report -12-

15 STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2010 Expenses Functions/Programs Governmental Activities Depreciation - Unallocated Instruction Instructional Student Support Administrative and Financial Support Services Operation and Maintenance of Plant Services Pupil Transportation Student Activities Community Services Interest on Long-Term Debt Total Governmental Activities $ 0 8,375,436 1,609,981 1,510,077 1,252, , ,874 44, ,669 $14,513,788 Business-Type Activities Food Service $ 698,177 Total Primary Government $15,211,965 General Revenues Taxes: Property Taxes, Levied for General Purposes, net Other Taxes Levied Grants, Subsidies, Contributions Not Restricted Investment Earnings Special Item Extraordinary Items Total General Revenues, Special and Extraordinary Items, and Transfers Changes in Net Assets Net Assets - Beginning Net Assets - Ending See Accompanying Notes and Independent Auditor's Report -13-

16 STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2010 Program Revenues Net (Expenses) Revenues and Changes in Net Assets Charges for Services Operating Grants and Contributions Governmental Activities Business-Type Activities $ 0 $ 0 $ 0 $ 0 $ 0 9,046 8,693, , , ,661 ( 1,347,320) 0 ( 1,347,320) 35,349 61,456 ( 1,413,272) 0 ( 1,413,272) ,036 ( 1,221,526) 0 ( 1,221,526) 0 334,068 ( 173,034) 0 ( 173,034) 64,109 13,316 ( 404,449) 0 ( 404,449) 0 0 ( 44,387) 0 ( 44,387) 0 791,789 59, ,120 $109,204 $10,186,873 ($ 4,217,711) $ 0 ($ 4,217,711) $351,726 $ 303,988 $ o ($ 42,463) ($ 42,463) $460,930 $10,490,861 ($ 4,217,711) ($ 42,463) ($ 4,260,174) $ 3,917,455 $ 0 $ 3,917, , , , ,192 48, , ,252) 0 151,252) $ 5,049,993 $ 294 $ 5,050,287 $ 832,282 ($ 42,169) $ 790,113 5,896, ,201 6,315,831 $ 6,728,912 $377,032 $ 7,105,944 See Accompanying Notes and Independent Auditor's Report -13-

17 BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2010 Total Capital Capital Governmental General Reserve Athletic Projects Funds ASSETS Cash and Cash Equivalents $ 734,837 $1,606,464 $12,298 $ 27,583 $ 2,381,182 Taxes Receivable, Net 425, ,698 Due from Other Funds 72, ,536 Due from Other Governments 160, ,346 State Revenue Receivable 870, ,396 Federal Revenue Receivable 49, ,438 Other Receivables 19, ,148 Prepaid Expenses TOTAL ASSETS $2,333,365 $1,606,464 $12,298 $ 27,583 $ 3,979,710 LIABILITIES AND FUND BALANCES Liabilities Due to Other Funds $ 4,147 $ 0 $ 0 $ o $ 4,147 Accounts Payable 239, ,730 Accrued Salaries and Benefits 1,131, ,131,937 Payroll Deductions and Withholdings 13) 0 0 o ( 13) Deferred Revenues 222, ,928 Total Liabilities $1,598,729 $ 0 $ 0 $ o $ 1,598,729 Fund Balances Reserve for Capital Projects $ 0 $1,606,464 $ 0 $ 27,583 $ 1,634,047 Unreserved Undesignated 734, , ,934 Total Fund Balances $ 734,636 $1,606,464 $12,298 $ 27,583 $ 2,380,981 TOTAL LIABILITIES AND FUND BALANCES $2,333,365 $1,606,464 $12,298 $ 27,583 $ 3,979,710 See Accompanying Notes and Independent Auditor's Report -14-

18 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS YEAR ENDED JUNE 30, 2010 Total Fund Balances - Governmental Funds $ 2,380,981 Capital assets used in governmental activities are not financial resources, and, therefore, are not reported as assets in the governmental funds - net of depreciation. 24,829,854 Current year property taxes receivable that will be collected. 133,064 Long-term debt at year end. ( 19,940,000) Long-term compensated absences. 388,591) OPEB - other postemployment benefits as per GASB ,396) Total Net Assets - Governmental Activities $ 6,728,912 See Accompanying Notes and Independent Auditor's Report -15-

19 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30,2010 Total Capital Athleticl Capital Governmental General Reserve Activity Projects Funds Revenues Local Sources $ 5,020,475 $ 11,429 $ 64,158 $ 32,922 $ 5,128,984 State Sources 9,196, ,196,289 Federal Sources 1,108, ,108,892 Total Revenues $15,325,656 $ 11,429 $ 64,158 $ 32,922 $15,434,165 Expenditures Instruction $ 7,964,750 $ 0 $ 0 $ 0 $ 7,964,750 Support Services 4,815, ,815,799 Noninstructional Services 325, , ,013 Facilities Acquisition, Construction, and Improvements 0 478, , ,261 Debt Service 1,948, ,948,859 Refund of Prior Year Receipts 8, ,330 Total Expenditures $15,063,202 $ 478,573 $161,549 $ 493,688 $16,197,012 Excess (Deficiency) of Revenues Over Expenditures $ 262,454 ($ 467,144) ($ 97,391) ($ 460,766) ($ 762,847) Other Financing Sources (Uses) Transfers In $ 0 $ 0 $100,000 $ 0 $ 100,000 Sale/Compensation for Fixed Assets Transfers Out 100,000) ,000) Total Other Financing Sources (Uses) ($ 100,000) $ 0 $100,000 $ 0 $ 0 Net Change in Fund Balances $ 162,454 ($ 467,144) $ 2,609 ($ 460,766) ($ 762,847) Fund Balances - Beginning 572,182 2,073,608 9, ,349 3,143,828 Fund Balances - Ending $ 734,646 $1,606,464 $ 12,298 $ 27,583 $ 2,380,981 See Accompanying Notes and Independent Auditor's Report -16-

20 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2010 Total Net Change in Fund Balances - Governmental Funds ($ 762,847) Current Year Property Taxes Remaining to be Collected 175,681 Removal of Real Estate Taxes for Prior Years Collected this Year 105,144) Payment of Bond Principal 1,210,000 Adjustment for Interest Expense Accrual 6,190) Net Change in Long-Term Compensated Absences 4,840) Net Change in OPEB - Other Postemployment Benefits as per GASB ,082) Refinancing of Debt 5,000 Depreciation Expense 604,801 ) Construction in Progress 972,261 Capital Outlays 91,244 Change in Net Assets - Governmental Activities $ 832,282 See Accompanying Notes and Independent Auditor's Report -17-

21 STATEMENT OF NET ASSETS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2010 ASSETS Current Assets Cash and Cash Equivalents Due from Other Funds Other Receivables Inventories Prepaid Expenses Total Current Assets Noncurrent Assets Furniture and Equipment, Net Food Service $204,491 4,147 2,418 10, $221,292 $243,324 TOTAL ASSETS $464,616 LIABILITIES AND NET ASSETS Current Liabilities Due to Other Funds Accounts Payable Deferred Revenues Total Current Liabilities $ 72,536 8,049 6,999 $ 87,584 Total Liabilities Net Assets Invested in Capital Assets, net of related debt Unrestricted Total Net Assets $ 87,584 $228, ,773 $377,032 TOTAL LIABILITIES AND NET ASSETS $464,616 See Accompanying Notes and Independent Auditor's Report -18-

22 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS PROPRIETARY FUNDS YEAR ENDED JUNE 30,2010 Food Service Operating Revenues Food Service Revenue $351,726 Operating Expenses Salaries Employee Benefits Purchased Property Services Other Purchased Services Supplies Depreciation Total Operating Expenses $219,847 78,610 29, ,266 37,950 24,543 $698,177 Operating (Loss) Nonoperating Revenues Earnings on Investments State Sources Federal Sources Total Nonoperating Revenues ($346,451) $ , ,290 $304,282 Change in Net Assets Net Assets - Beginning Net Assets - Ending ($ 42,169) 419,201 $377,032 See Accompanying Notes and Independent Auditor's Report -19-

23 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30,2010 Cash Flows from Operating Activities Cash Received from Users Cash Payments to Employees for Services Cash Payments to Suppliers for Goods and Services Net Cash (Used for) Operating Activities Food Service $351,273 ( 298,457) ( 338,458) ($285,642) Cash Flows from Noncapital Financing Activities State Sources Federal Sources Operating Transfers In (Out) Net Cash Provided by Noncapital Financing Activities $ 44, ,753 ( 26,052) $300,186 Cash Flows from Capital and Related Financing Activities Facilities Acquisition, Construction and Improvements ($ 9,883) Cash Flows from Investing Activities Earnings on Investments $ 295 Net (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents - Beginning Cash and Cash Equivalents - Ending $ 4, ,535 $204,491 Reconciliation of Operating Income to Net Cash Provided by (Used for) Operating Activities Operating (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (Used for) Operating Activities: Depreciation and Net Amortization Other Adjustments (Increase) Decrease in Accounts Receivable (Increase) Decrease in Inventories (Increase) Decrease in Prepaid Expenses Increase (Decrease) in Accounts Payable Increase (Decrease) in Deferred Revenue Total Adjustments ($346,451) $ 24,542 35, ) 41) 75) 1,587 25) $ 60,809 Cash (Used for) Operating Activities ($285,642) See Accompanying Notes and Independent Auditor's Report -20-

24 STATEMENT OF NET ASSETS FIDUCIARY FUNDS YEAR ENDED JUNE 30,2010 Private Purpose Fiduciary Total Trust Activity Agency Funds ASSETS Cash and Cash Equivalents $119,609 $ 88,810 $ 11,515 $219,934 LIABILITIES AND NET ASSETS Liabilities Other Current Liabilities $ 0 $ 88,810 $ 11,515 $100,325 Net Assets Restricted for Legal Purposes $119,609 $ 0 $ 0 $119,609 TOTAL LIABILITIES AND NET ASSETS $119,609 $ 88,810 $ 11,515 $219,934 See Accompanying Notes and Independent Auditor's Report -21-

25 STATEMENT OF CHANGES IN NET ASSETS FIDUCIARY FUNDS YEAR ENDED JUNE 30,2010 Private Purpose Trust Additions Gifts and Contributions Other Additions Deductions Scholarships Awarded $ 42, ( 42,800) Change in Net Assets ($ 337) Net Assets - Beginning Net Assets - Ending 119,946 $119,609 See Accompanying Notes and Independent Auditor's Report -22-

26 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2010 Note 1: Summary of Significant Accounting Policies I. Reporting Entity The school board, a nine-member group constituting an on-going entity, is the level of government, which has governance responsibilities over all activities related to public elementary and secondary school education within the jurisdiction of the Bellwood Antis School District. The board receives funding from local, state, and federal government sources and must comply with the requirements of these funding source entities. However, the board is not included in any other governmental "reporting entity" as defined in Section 2100, Codification of Governmental Accounting and Financial Reporting Standards, since board members are elected by the public and have decision making authority, the power to designate management, the responsibility to significantly influence operations and primary accountability for fiscal matters. Governmental Accounting Standards Board Statement #14, The Financial Reporting Entity establishes criteria for determining which organizations should be included in a governmental financial reporting entity. The financial reporting entity consists of the primary government and any of its component units. The financial statements include only those of the Bellwood-Antis School District, which is the primary governmental entity. The criteria used in determining whether other organizations should be included in the School District's financial reporting entity are financial interdependency, selection of governing authority, designation of management, ability to significantly influence operations, accountability for fiscal matters, scope of public service and special financing relationships. As of June 30, 2010, it has been determined that there are no other organizations, authorities, or other governmental units that should be included as part of the reporting entity as component units. The following are not component units of the Bellwood-Antis School District and are not included in this report. Appalachia Intermediate Unit 8 is a separate legal entity. It was organized by a group of public school districts to provide them specific services. Each public school district appoints one member to serve on the Board of Directors of the Unit. The District contracts with the Unit for special education services for district students. Altoona Area Career and Technology Center is a separate legal entity. It was organized by a group of public school districts to provide specific services. Each of the public school districts appoints one member to serve on the Joint Operating Committee and each district has an ongoing financial responsibility to the Center. II. Summary of Significant Accounting Policies The financial statements of the School District have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to local governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial principles. The School District has elected not to apply Financial Accounting -23-

27 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2010 (CONTINUED) Note 1: Summary of Significant Accounting Policies (Continued) II. Summary of Significant Accounting Policies (Continued) Standards Board (FASB) Statements and Interpretations issued after November 30, 1989, to its business-type activities and its enterprise funds. The most significant of the School District's accounting policies are described below. A. Basis of Presentation The School District's basic financial statements consist of government-wide statements, including a statement of net assets and a statement of activities, and fund financial statements, which provide a more detailed level of financial information. Government-Wide Financial Statements The statement of net assets and the statement of activities display information about the School District as a whole. These statements include the financial activities of the primary government, except for fiduciary funds. The statements distinguish between those activities of the School District that are governmental and those that are considered business-type activities. The statement of net assets presents the financial condition of the governmental and business-type activities of the School District at year-end. The statement of activities presents a comparison between direct expenses and program revenues for each program or function of the School District's governmental activities and for one business-type activity of the School District. Direct expenses are those that are specifically associated with a service, program, or department and therefore clearly identifiable to a particular function. Program revenues include charges paid by the recipient of the goods or services offered by the program, grants and contributions that are restricted to meeting the operational or capital requirements of a particular program and interest earned on grants that is required to be used to support a particular program. Revenues, which are not classified as program revenues, are presented as general revenues of the School District, with certain limited exceptions. The comparison of direct expenses with program revenues identifies the extent to which each business segment or governmental function is self-financing or draws from the general revenues of the School District. Fund Financial Statements During the year, the School District segregates transactions related to certain School District functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Fund financial statements are designed to present financial information of the School District at this more detailed level. The focus of governmental and enterprise fund financial statements is on major funds. Each major fund is presented in a separate column. Nonmajor funds are aggregated and presented in a single column. The fiduciary fund is reported by type. B. Fund Accounting The School District uses funds to maintain its financial records during the year. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts. There are three categories of funds: governmental, proprietary, and fiduciary. -24-

28 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2010 (CONTINUED) Note 1: Summary of Significant Accounting Policies (Continued) II. Summary of Significant Accounting Policies (Continued) B. Fund Accounting (Continued) Governmental Funds Governmental funds are those through which most governmental functions typically are financed. Governmental fund reporting focuses on the sources, uses, and balances of current financial resources. Expendable assets are assigned to the various governmental funds according to the purposes for which they mayor must be used. Current liabilities are assigned to the fund from which they will be paid. The difference between governmental fund assets and liabilities is reported as fund balance. The following are the School District's major governmental funds: General Fund The general fund is the operating fund of the School District and is used to account for all financial resources except those required to be accounted for in another fund. Capital Reserve Fund This fund is used to account for moneys transferred during the year from appropriations made for any particular purpose which may not be needed or surplus moneys at the end of the year. The moneys in this fund may be expended only for capital improvements and for replacement of and additions to public works and improvements, and for deferred maintenance, and for the purchase or replacement of school buses, and for no other purpose. Capital Projects Fund This fund accounts for financial resources used to acquire or construct major capital facilities (other than those of proprietary funds or trust funds). All fund proceeds for capital projects should be accounted for in this fund. The most common source of revenue in this fund is from the sale of general obligation bonds. Proprietary Funds Proprietary funds focus on the determination of changes in net assets, financial position, and cash flows and are classified as either enterprise or internal service. The School District has no internal service fund. Enterprise Funds Enterprise funds may be used to account for any activity for which a fee is charged to external users for goods or services. The School District's major enterprise fund is: Food Service Fund This fund accounts for the financial transactions related to the food service operations of the School District. -25-

29 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2010 (CONTINUED) Note 1: Summary of Significant Accounting Policies (Continued) II. Summary of Significant Accounting Policies (Continued) B. Fund Accounting (Continued) Fiduciary Funds The School District's only fiduciary funds are a private purpose trust fund and an agency fund. The Private Purpose Trust fund is used to account for trust arrangements under which principal or interest benefit specific individuals, private organizations, or other governments - but not the reporting government. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations, Le. the Student Activity accounts. C. Measurement Focus Government-Wide Financial Statements The 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 when a liability is incurred, regardless of the timing of related cash flows. Property tax revenues are recognized in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Fund Financial Statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Most revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period (available if they are collected within 60 days of the end of the current fiscal period); however, certain grant revenue from other governmental units are considered available when the corresponding expenditures are incurred, even though collection might occur subsequent to sixty days after the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences are recorded only when payment is due. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Governmental fund financial statements, therefore, include reconciliation with brief explanations to better identify the relationship between the government-wide statements and the statements for governmental funds. Like the government-wide statements, all proprietary funds are accounted for on a flow of economic resources measurement focus. All assets and all liabilities associated with the operation of these funds are included on the statement of net assets. The statement of changes in fund net assets presents increases (Le., revenues) and decreases (Le., expenses) in net total assets. The statement of cash flows provides information about how the School District finances and meets the cash flow needs of its proprietary activity. -26-

30 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2010 (CONTINUED) Note 1: Summary of Significant Accounting Policies (Continued) II. Summary of Significant Accounting Policies (Continued) D. Basis of Accounting Basis of accounting determines when transactions are recorded in the financial records and reported on the financial statements. Government-wide financial statements are prepared using the accrual basis of accounting. Governmental funds use the modified accrual basis of accounting. Proprietary and fiduciary funds also use the accrual basis of accounting. Differences in the accrual and the modified accrual basis of accounting arise in the recognition of revenue, the recording of deferred revenue, and in the presentation of expenses versus expenditures. Revenues - Exchange and Nonexchange Transactions Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means that the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the School District, available means expected to be received within 60 days of fiscal year-end. Nonexchange transactions, in which the School District receives value without directly giving equal value in return, include income taxes, property taxes, grants, entitlements, and donations. Revenue from property taxes is recognized in the fiscal year for which the taxes are levied on the government-wide statement. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the School District must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the School District on a reimbursement basis. On a modified accrual basis, revenue from nonexchange transactions must also be available before it can be recognized on the fund financial statements. Under the modified accrual basis, the following revenue sources are considered to be both measurable and available at year-end: property taxes available within 60 days of year end, interest, tuition, grants, fees, and rentals. Deferred Revenue Deferred revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Property taxes for which there is an enforceable legal claim as of June 30, 2010, but which were levied to finance fiscal year 2011 operations, have been recorded as deferred revenue. Grants and entitlements received before the eligibility requirements are met are also recorded as deferred revenue. -27-