TOWNSHIP OF VOORHEES SCHOOL DISTRICT VOORHEES, NEW JERSEY

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1 TOWNSHIP OF VOORHEES SCHOOL DISTRICT VOORHEES, NEW JERSEY COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2013

2 24800 TOWNSHIP OF VOORHEES SCHOOL DISTRICT Table of Contents INTRODUCTORY SECTION Page Letter of Transmittal 2 Organizational Chart 9 Roster of Officials 10 Consultants and Advisors 11 FINANCIAL SECTION Independent Auditor's Report 13 Required Supplementary Information Part I Management s Discussion and Analysis 19 Basic Financial Statements A. District-Wide Financial Statements: A-1 Statement of Net Position 33 A-2 Statement of Activities 34 B. Fund Financial Statements: Governmental Funds: B-1 Balance Sheet 36 B-2 Statement of Revenues, Expenditures and Changes in Fund Balances 38 B-3 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 40 Proprietary Funds: B-4 Statement of Net Position 41 B-5 Statement of Revenues, Expenses and Changes in Fund Net Position 42 B-6 Statement of Cash Flows 43 Fiduciary Funds: B-7 Statement of Fiduciary Net Position 44 B-8 Statement of Changes in Fiduciary Net Position 45 Notes to the Financial Statements 46 Required Supplementary Information Part II C. Budgetary Comparison Schedules C-1 Budgetary Comparison Schedule General Fund 72 C-1a Combining Schedule of Revenues, Expenditures and Changes In Fund Balance Budget and Actual N/A C-1b Education Jobs Fund Program Budget and Actual N/A C-2 Budgetary Comparison Schedule Special Revenue Fund 80 Notes to the Required Supplementary Information C-3 Budget-to-GAAP Reconciliation 82

3 24800 TOWNSHIP OF VOORHEES SCHOOL DISTRICT Table of Contents (Cont d) Other Supplementary Information Page D. School Based Budget Schedules: D-1 Combining Balance Sheet N/A D-2 Blended Resource Fund Schedule of Expenditures Allocated by Resource Type Actual N/A D-3 Blended Resource Fund Schedule of Blended Expenditures Budget and Actual N/A E. Special Revenue Fund: E-1 Combining Schedule of Program Revenues and Expenditures Budgetary Basis 85 E-2 Preschool Education Aid Schedule(s) of Expenditures Budgetary Basis N/A F. Capital Projects Fund: F-1 Summary Schedule of Project Expenditures 89 F-2 Summary Schedule of Revenues, Expenditures, and Changes in Fund Balances Budgetary Basis 90 F-2a - Schedule(s) of Project Revenues, Expenditures, Project Balance and F-2e Project Status -Budgetary Basis 91 G. Proprietary Funds: Enterprise Fund: G-1 Combining Statement of Net Position 97 G-2 Combining Statement of Revenues, Expenses and Changes in Fund Net Position 98 G-3 Combining Statement of Cash Flows 99 Internal Service Fund: G-4 Combining Statement of Net Position N/A G-5 Combining Statement of Revenues, Expenses and Changes in Fund Net Position N/A G-6 Combining Statement of Cash Flows N/A H. Fiduciary Funds: H-1 Combining Statement of Fiduciary Net Position 101 H-2 Combining Statement of Changes in Fiduciary Net Position 102 H-3 Student Activity Agency Fund Schedule of Receipts and Disbursements 103 H-4 Payroll Agency Fund Schedule of Receipts and Disbursements 104

4 24800 TOWNSHIP OF VOORHEES SCHOOL DISTRICT Table of Contents (Cont d) Other Supplementary Information (Cont d) Page I. Long-Term Debt: I-1 Schedule of Serial Bonds 106 I-2 Schedule of Obligations under Capital Leases N/A I-3 Debt Service Fund Budgetary Comparison Schedule 107 Introduction to the Statistical Section STATISTICAL SECTION (Unaudited) Financial Trends J-1 Net Position by Component 110 J-2 Changes in Net Position 111 J-3 Fund Balances Governmental Funds 113 J-4 Changes in Fund Balances Governmental Funds 114 J-5 General Fund Other Local Revenue by Source 115 Revenue Capacity J-6 Assessed Value and Estimated Actual Value of Taxable Property 117 J-7 Direct and Overlapping Property Tax Rates 118 J-8 Principal Property Taxpayers 119 J-9 Property Tax Levies and Collections 120 Debt Capacity J-10 Ratios of Outstanding Debt by Type 122 J-11 Ratios of General Bonded Debt Outstanding 123 J-12 Direct and Overlapping Governmental Activities Debt 124 J-13 Legal Debt Margin Information 125 Demographic and Economic Information J-14 Demographic and Economic Statistics 127 J-15 Principal Employers 128 Operating Information J-16 Full-time Equivalent District Employees by Function/Program 130 J-17 Operating Statistics 131 J-18 School Building Information 132 J-19 Schedule of Required Maintenance Expenditures by School Facility 133 J-20 Insurance Schedule 134 SINGLE AUDIT SECTION K-1 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 16 K-2 Report on Compliance for Each Major Program And Report On Internal Control Over Compliance Required By OMB Circular A-133 and State Of New Jersey Circular OMB and State of New Jersey Circular OMB 136 K-3 Schedule of Expenditures of Federal Awards, Schedule A 138 K-4 Schedule of Expenditures of State Financial Assistance, Schedule B 140 K-5 Notes to the Schedules of Awards and Financial Assistance 142 K-6 Schedule of Findings and Questioned Costs 144 K-7 Summary Schedule of Prior Audit Findings 149

5 INTRODUCTORY SECTION

6 Raymond J. Brosel, Jr. VOORHEES TOWNSHIP PUBLIC SCHOOLS Superintendent ofschools E.T. Hamilton School Kresson School Frank T. DeBerardinis, Ed.D. 329 Route 73 Osage School Assistant Superintendent Voorhees, NJ Signal Hill School For Business/Board Secretary (856) Ext Voorhees Middle School November 18,2013 Honorable President and Members ofthe Board of Education Voorhees School District Camden County Voorhees, NJ Dear Board Members: The comprehensive annual financial report of the Voorhees School District for the fiscal year ended June 30, 2013 is hereby submitted. Responsibility for both the accuracy of the data and completeness and fairness of the presentation, including all disclosures, rests with the management ofthe Voorhees Township Board ofeducation. To the best ofour knowledge and belief, the data presented in this report is accurate in all material respects. It is reported in a manner designed to present fairly the financial position and results of operations of the various funds of the District. All disclosures necessary to enable the reader to gain an understanding of the District's financial activities have been included. The comprehensive annual financial report is presented in four sections: introductory, financial, statistical and single audit. The introductory section includes this transmittal letter, the District's organizational chart and a list of principal officials. The financial section includes the basic financial statements and schedules, as well as the auditor's report thereon. 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 ofthe OMB Circular A- 133, Audits of States, Local Governments and Non-Profit Organizations, and State ofnew Jersey Circular OMB, Single Audit Policy for Recipients offederal Grants, State Grants and State Aid. Information related to this single audit, including the auditor's report on the internal control structure and compliance with applicable laws and regulations and findings and recommendations, are included in the single audit section of this report. 2

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14 VOORHEES TOWNSHIP BOARD OF EDUCATION VOORHEES, NEW JERSEY ROSTER OF OFFICIALS JUNE 30, 2013 Members of the Board of Education TERM EXPIRES Richard Nelson, President 2015 Bruce Karpf, Vice President 2015 Dr. Gary Bennett 2014 Matthew Dortch 2015 Barbara Dunleavy 2016 Denise Kirkland 2016 Amy Lynch 2016 John Schmus 2014 Nancy Seigle 2014 Other Officials Raymond J. Brosel, Superintendent of Schools Frank T. DeBerardinis, Ed.D, Assistant Superintendent for Business/Board Secretary Howard Mendelson, Esq. Solicitor 10

15 VOORHEES TOWNSHIP BOARD OF EDUCATION CONSULTANTS AND ADVISORS Audit Firm Bowman and Company LLP 601 White Horse Road Voorhees, NJ Attorney Howard Mendelson Davis and Mendelson 1200 Laurel Oak Road, Suite 101 Voorhees, NJ Official Depository TD Bank Route 73 Voorhees, NJ

16 FINANCIAL SECTION

17 INDEPENDENT AUDITOR'S REPORT The Honorable President and Members of the Board of Education Township of Voorhees School District County of Camden Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Township of Voorhees School District, in the County of Camden, State of New Jersey, as of and for the fiscal year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the School 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; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and in compliance with audit requirements as prescribed by the Division of Administration and Finance, Department of Education, State of New Jersey. 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 School District 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 School District s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting principles 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. 13

18 24800 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 business-type activities, each major fund, and the aggregate remaining fund information of the Township of Voorhees School District in the County of Camden, State of New Jersey, as of June 30, 2013, and the respective changes in financial position and, where applicable, cash flows thereof for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1 to the financial statements, during the fiscal year ended June 30, 2013, the School District adopted the following new accounting standards issued by the Governmental Accounting Standards Board (GASB): Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position and Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis and budgetary comparison information as listed in the table of contents 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 Township of Voorhees School District s basic financial statements. The accompanying combining statements and related major fund supporting statements and schedules and Schedules of Expenditures of Federal Awards and State Financial Assistance, as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and State of New Jersey Circular OMB, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying combining statements and related major fund supporting statements and schedules and Schedules of Expenditures of Federal Awards and State Financial Assistance are the responsibility of management and were 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 combining statements and related major fund supporting statements and schedules and Schedules of Expenditures of Federal Awards and State Financial Assistance are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section and statistical section listed in the table of contents have 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 them. 14

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20 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 INDEPENDENT AUDITOR S REPORT The Honorable President and Members of the Board of Education Township of Voorhees School District County of Camden We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial statement audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and in compliance with audit requirements as prescribed by the Division of Administration and Finance, Department of Education, State of New Jersey, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Township of Voorhees School District, in the County of Camden, State of New Jersey, as of and for the fiscal year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the School District s basic financial statements, and have issued our report thereon dated November 15, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Township of Voorhees School District s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the School District s internal control. Accordingly, we do not express an opinion on the effectiveness of the Township of Voorhees School District s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the School District s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 16

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22 REQUIRED SUPPLEMENTARY INFORMATION PART I

23 Voorhees Township School District Management s Discussion and Analysis Year Ended June 30, 2013 This section of the Voorhees Township School District s annual financial report presents our discussion and analysis of the District s financial performance during the fiscal year that ended on June 30, Please read it in conjunction with the transmittal letter at the front of this report and the District s financial statements, which immediately follows this section. The Management s Discussion and Analysis (MD&A) is a element initiated as of June 30, 2003 as part of the Required Supplementary Information specified in the Governmental Accounting Standard Board s (GASB) Statement No. 34- Basic Financial Statements- and Management s Discussion and Analysis for State and Local Governments issued in June Certain comparative information between the current year ( ) and the prior year ( ) is required to be presented in the MD&A. FINANCIAL HIGHLIGHTS Key financial highlights for the fiscal year include the following: Net Position at June 30, 2013 for Governmental and Business-Type activities were $31,360,114 and $3,063,821 respectively. Net Position for both activities increased by $1,754,266 from July 1, 2012 to June 30, The General Fund fund balance as of June 30, 2013 was $8,315,519, an increase of $998,232 when compared with the beginning balance as of July 1, 2012 of $7,317,287. OVERVIEW OF THE FINANCIAL STATEMENTS The financial section of the annual report consists of four parts Independent Auditor s Report, required supplementary information which includes the management s discussion and analysis (this section), the basic financial statements, and supplemental information. The basic financial statements include two kinds of statements that present different views of the Voorhees Township School District. The first two statements are government-wide financial statements that provide both short-term and long-term information about the Voorhees Township School District s overall financial status. The remaining statements are fund financial statements that focus on individual parts of the Voorhees Township School District, reporting the Voorhees Township School District s operation 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 short term as well as what remains for future spending. Proprietary funds statements offer short-term and long-term financial information about the activities that the Voorhees Township School District operates like businesses. 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 to whom the resources belong. 19

24 Voorhees Township School District Voorhees, New Jersey Management s Discussion and Analysis (continued) Year Ended June 30, 2013 The financial statements also include notes that explain some of the information in the statements and provide more detailed data. Table A-1 summarizes the major features of the Voorhees Township School 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. Table A-1 MAJOR FEATURES OF THE GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Fund Financial Statements Scope Required Financial Statements Government-wide Statements Entire district (except fiduciary funds) Statements of net position Statement of activities Governmental Funds The activities of the district that are not proprietary or fiduciary, such as regular and special education, building maintenance and transportation Balance sheet Statement of revenue, expenditures and changes in fund balances Proprietary Funds Activities the district operates similar to private businesses: Food Service Fund, Community Education and Recreation Fund Statement of net position Statement of revenue, expenses and changes in fund net position Accounting Basis and measurement focus Type of asset/liability information Type of inflow/outflow information 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 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 Statement of cash flows Accrual accounting and economic resources focus All assets and liabilities, both financial and capital, and short-term and longterm All revenue and expenses during the year, regardless of when cash is received or paid Government-wide Statements The government-wide statements report information about the Voorhees Township School 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, deferred outflows of resources and liabilities. All of the current year s revenue and expenses are accounted for in the statement of activities regardless of when cash is received or paid. 20

25 Government-wide Statements (Cont d) Voorhees Township School District Voorhees, New Jersey Management s Discussion and Analysis (continued) Year Ended June 30, 2013 The two government-wide statements report the Voorhees Township School District s net position and how they have changed. Net position the difference between the district s assets, deferred outflows of resources and liabilities are a measure of the District s financial health or position. Over time, increases or decreases in the District s net position are an indicator of whether the financial position is improving or deteriorating, respectively. To assess the overall health of the district 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 shown in two categories: Governmental activities- Most of the District s basic services are included here, such as regular and special education, transportation, administration, and maintenance. Aid from the State of New Jersey and from the Federal government along with local property taxes finances most of these activities. Business-type activities-the District charges fees to customers to help it cover the costs of certain services it provides. The District s Food Service Fund and Community Education and Recreation Fund are included here. Fund Financial Statements The fund financial statements provide more detailed information about the District s funds focusing on the 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 uses other funds, established in accordance with the State of New Jersey Uniform Chart of Accounts, to control and manage money for particular purposes (e.g., repaying its long-term debts) or to show that it is properly using certain revenues (e.g., federal funds). The District has three kinds 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 to 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, we provide additional information at the bottom of the governmental funds statements that explain the relationship (or differences) between them. Proprietary funds - Services for which the District charges a fee are generally reported in proprietary funds. Proprietary funds are reported in the same way as the government-wide statements. Fiduciary funds The District is the trustee, or fiduciary, for assets that belong to others. 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. All of the District s fiduciary activities are reported in a separate statement of fiduciary net position and a statement of changes in fiduciary net position. We exclude these activities from the government-wide financial statements because the District cannot use these assets to finance its operations. 21

26 Voorhees Township School District Voorhees, New Jersey Management s Discussion and Analysis (continued) Year Ended June 30, 2013 FINANCIAL ANALYSIS OF THE VOORHEES TOWNSHIP SCHOOL DISTRICT AS A WHOLE Net Position. The District s net position for governmental and business-type activities were $31,360,114 and $3,063,821, respectively, as of June 30, (See Table A-2). Table A-2 Voorhees Township School District's Net Position Governmental Activities Business-Type Activities Total Current and Other Assets $ 13,003,785 $ 14,601,632 $ 2,949,728 $ 2,768,683 $ 15,953,513 $ 17,370,315 Capital Assets 32,080,422 30,560, , ,417 32,193,649 30,700,403 Total Assets 45,084,207 45,162,618 3,062,955 2,908,100 48,147,162 48,070,718 Deferred Loss on Defeasance of Debt 128, , , ,347 Total Deferred Outflow of Resources 128, , , ,347 Long-term Liabilities 11,731,922 13,590,637 48,432 55,378 11,780,354 13,646,015 Other Liabilities 2,120,497 1,795,632 (49,298) (40,596) 2,071,199 1,755,036 Total Liabilities 13,852,419 15,386,269 (866) 14,781 13,851,553 15,401,050 Net Position Net Investment in Capital Assets 20,340,144 17,176, , ,417 20,453,371 17,315,460 Restricted 9,976,843 11,572, ,976,843 11,572,242 Unrestricted 1,043,127 1,028,065 2,950,594 2,753,901 3,993,721 3,781,966 Total Net Position $ 31,360,114 $ 29,776,349 $ 3,063,821 $ 2,893,318 $ 34,423,934 $ 32,669,668 The District s financial position for governmental and business-type activities is the product of the following factors: Program revenues were $8,918,834. Charges for Services--$2,137,132. Operating Grants & Contributions--$6,781,702. General revenues, Special Items, Extraordinary Items and Transfers amounted to $47,537,943. Net Expenditures were $45,783,677. Total District revenues & beginning position are adjusted by net adjusted expenditures resulting in a calculation of net position of $34,423,934 as of June 30, General Revenues ($47,537,943) + Beginning position ($32,669,668) Net expenditures ($45,783,677) = Net Position of $34,423,

27 Voorhees Township School District Voorhees, New Jersey Management s Discussion and Analysis (continued) Year Ended June 30, 2013 Change in Net Position. Net position for governmental and business-type activities increased by $1,754,266 from July 1, 2012 to June 30, (See Table A-3). Table A-3 Voorhees Township School District's Changes in Net Position Increase/ (Decrease) Revenues Program revenues: Charges for services $ 2,137,132 $ 2,103,944 $ 33,188 Operating Grants and Contributions 6,781,702 5,673,067 1,108,635 General revenues Property taxes 41,410,628 41,732,063 (321,435) State and Federal Aid 5,989,632 5,639, ,990 Other 137, ,882 (49,198) Total revenues 56,456,778 55,335,597 1,121,181 Expenses Governmental Activities: Instruction: Regular 16,894,014 16,920,056 (26,042) Special Education 5,354,575 5,097, ,326 Other Instruction 1,080,186 1,077,415 2,771 Community Service Programs 30,638 30,638 - Support Services: Tuition 1,031,607 1,228,232 (196,625) Student & Instruction Related Services 4,530,977 4,523,609 7,368 School Administrative Services 1,404,185 1,424,243 (20,058) General and Business Administrative Services 1,823,079 1,754,383 68,696 Plant Operations and Maintenance 4,663,691 3,798, ,151 Pupil Transportation 2,081,620 2,064,459 17,161 Unallocated Benefits 12,892,085 11,385,516 1,506,569 Interest on Long-term Debt 488, ,487 (185,804) Other Administrative Services 181,524 27, ,501 Unallocated Depreciation 20,216 23,695 (3,479.00) Transfers Total Expenses--Governmental Activities 52,477,080 50,029,545 2,447,535 Business-Type Activities: Food Service 1,000, ,945 23,041 CER 1,224,446 1,179,293 45,153 Total Expenses--Business-Type Activities 2,225,432 2,157,238 68,194 Total Expenses 54,702,512 52,186,782 2,515,730 Net Increase/(Decrease) in Net Position 1,754,266 3,148,815 (1,394,549) Net Position July 1 32,669,668 29,520,853 3,148,815 Net Position June 30 $ 34,423,934 $ 32,669,668 $ 1,754,266 23

28 Voorhees Township School District Voorhees, New Jersey Management s Discussion and Analysis (continued) Year Ended June 30, 2013 Total revenues for the District were $56,456,778. Government funding was the source of 10.61% of the district s revenues. This includes the State of New Jersey and Federal sources. Property taxes of $41,410,628 provided 73.35% of revenues, down from 75.42% in Other miscellaneous revenues of $137,684 represent 0.25% of the district revenues. The District s expenses for government activities are predominantly related to instruction and support services. Instruction together with tuition totaled $24,391,020 (46.48%) of total expenditures. Student support services including transportation, exclusive of administration, totaled $6,612,597 (12.60%) of total expenditures. (See Table A-3). Total revenues exceeded expenses for governmental activities, increasing net position $1,583,764 from the beginning balance as of July 1, The District s net cost of services for governmental activities was $45,951,918 for the year ended June 30, (See Table A-4). Table A-4 Voorhees Township School District's Net Cost of Governmental Activities For the Year Ended June 30, 2013 Governmental Activities: Total Cost of Services Net Cost of Services Instruction: Regular $ 16,894,014 $ 15,742,167 Special Education 5,354,575 5,354,575 Other Instruction 1,080,186 1,080,186 Community Service Programs 30,638 30,638 Support Services: Tuition 1,031,607 1,031,607 Student & Instruction Related Services 4,530,977 4,384,586 School Administrative Services 1,404,185 1,404,185 General and Business Administrative Services 1,823,079 1,823,079 Plant Operations and Maintenance 4,663,691 4,663,691 Pupil Transportation 2,081,620 2,081,620 Unallocated Benefits 12,892,085 7,754,047 Interest on Long-term Debt 488, ,797 Other Administrative Services 181, ,524 Unallocated Depreciation 20,216 20,216 Total Governmental Activities $ 52,477,080 $ 45,951,918 24

29 Voorhees Township School District Voorhees, New Jersey Management s Discussion and Analysis (continued) Year Ended June 30, 2013 Activity Descriptions Instruction expenses include activities directly dealing with the teaching of pupils and the interaction between teacher and student. Tuition expenses include the cost to the District to send pupils with special needs living within the District to private schools and/or schools outside the District area. Student and instruction related services include the activities designed to assess and improve the well being of students and to supplement the teaching process. School Administrative and General and Business Administrative services include expenses associated with establishing and administering policy for the District including financial supervision. Plant operation and maintenance of plant activities involve keeping the school grounds, buildings and equipment in a safe and effective working condition. Pupil transportation includes activities involved with the conveyance of students to and from school, as well as to and from student activities as provided by State law and Board Policy. Unallocated benefits includes the cost of benefits for the District staff for social security, retirement contributions, worker s compensation, health benefits and other employee benefits. Interest on long-term debt and amortization of bond issuance costs involve the transactions associated with the payment of interest and other related charges to the debt of the District. Unallocated depreciation is used to report the depreciation expense on capital assets whose use cannot be specifically identified to one particular function. FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT S FUNDS The financial performance of the Voorhees Township School District as a whole is also reflected in the governmental funds which are accounted for using the modified accrual basis of accounting. As the District completed the year, its governmental funds reported a combined fund balance of $12,470,113. As of June 30, 2012, the fund balance was $13,882,876. The General Fund balance increased by $998,232. The Governor reduced State Aid to school districts during the school year and forced districts to draw on available financial resources to compensate for his initiatives. In essence, he utilized the financial strength and well managed local school districts to bail out the State. Over the subsequent three Budget years, the District has been able to return to a strong financial position by reinvesting funds in the emergency reserve for the general fund and the capital reserve for capital projects and repayment of debt. All governmental funds had total revenues of $54,067,369 and total expenditures of $55,473,606. GENERAL FUND BUDGETING HIGHLIGHTS The District s budget is prepared according to New Jersey law, and is based on accounting for certain transactions on a basis of cash receipts, disbursements, and encumbrances. The most significant budgeted fund is the General Fund. The General Fund includes the primary operations of the District in providing educational services to students from pre-kindergarten through grade 8 including pupil transportation activities and capital outlay projects. 25

30 Voorhees Township School District Voorhees, New Jersey Management s Discussion and Analysis (continued) Year Ended June 30, 2013 The following schedule (Table A-5) presents a summary of General Fund Revenues. The summary reflects the dollar and percent increase (decrease) from the prior year. Table A-5 Voorhees Township School District Summary of General Fund Revenues Year Ended June 30, 2013 Year Ended June 30, 2012 Amount of Increase (Decrease) Percent Increase (Decrease) Local sources: Local tax levy $ 41,353,295 $ 40,542,446 $ 810, % Miscellaneous 139, ,595 (22,544) -14.0% Total - Local Sources 41,492,346 40,704, , % State Sources 10,820,201 9,154,834 1,665, % Federal Sources 31, ,959 (209,377) -86.9% Total - Govt Sources 10,851,783 9,395,793 1,455, % Total Revenues $ 52,344,129 $ 50,099,834 $ 2,244, % The primary source of funding for the district is received from local property taxes that accounted for 79.00% of total revenues. State aid accounted for 20.67% of total revenues. Total General Fund revenues increased by $2,244,295 or 4.5% from the previous year. State aid revenue was supposed to be determined by a formula under the School Funding Reform Act of 2008 for the fiscal year. This new funding formula utilizes wealth in the calculation for special education aid moving this aid from categorical aid. This will result in future shortfalls in funding of over $3 million per year going forward if wealth had not been a determining factor. This is an irresponsible function of the new funding formula since the State determined the additional costs of special education is approximately $11,000 per student for all special education students throughout the state of New Jersey. However, during the fiscal year, the Governor continued to arbitrarily devise a new formula to reduce State Aid to local school districts to compensate for the State of New Jersey s deficit. 26

31 Voorhees Township School District Voorhees, New Jersey Management s Discussion and Analysis (continued) Year Ended June 30, 2013 The following schedule (Table A-6) presents a summary of General Fund expenditures. The summary reflects the dollar and percent increases (decreases) from the prior year. Table A-6 Voorhees Township School District Summary of General Fund Expenditures Year Ended June 30, 2013 Year Ended June 30, 2012 Amount of Increase/ (Decrease) Percent Increase/ (Decrease) Current: Regular Instruction $ 14,939,106 $ 14,938,446 $ % Special Education Instruction 5,354,575 5,097, , % Other Instruction 1,080,186 1,077,415 2, % Support Services and Undistributed Costs: Tuition 1,031,607 1,228,232 (196,625) -16.0% Student & Instruction Related Services 4,332,580 4,302,122 30, % School Administrative Services 1,362,198 1,382,425 (20,227) -1.5% Other Administrative Services 1,681,454 1,639,012 42, % Plant Operations and Maintenance 4,386,600 3,651, , % Pupil Transportation 2,081,621 2,064,459 17, % Unallocated Employee Benefits 12,875,523 11,300,972 1,574, % Capital Outlay 1,230, ,053 1,079, % Total Expenditures $ 50,356,029 $ 46,833,084 $ 3,522, % Total General Fund expenditures increased $3,522,945 or 7.5% from the previous year. This increase was due primarily to the effect of employee retirements, health benefit costs and the moderation of special education costs. The Voorhees Township School District values its fund balances as a vehicle for addressing unbudgeted and emergent needs that occur during the school year. The amounts of budgeted fund balance designated to support the subsequent year s budgets and provide tax relief were $1,279,073 for the school year and $1,215,402 for the school year. The District has continued the practice of returning surplus funds to taxpayers in the subsequent budget years. However, in June of 2004 the State of New Jersey passed legislation (SR1701) that weakened the financial position of all school districts. The legislation immediately reduced fund balance to a maximum of 3% as of June 30, 2004 and a maximum of 2% as of June 30, 2005 and each year thereafter. The District is left with a fund balance that will not cover one payroll which could result in a negative cash flow if local taxes, federal and state aid are not received in a timely manner. The State of New Jersey has gone from fiscal irresponsibility to fiscal chaos to fiscal ineptness. It appears the legislature is trying to financially weaken school districts as they have accomplished with the State of New Jersey. The Legislature, in June of 2011, passed Chapter 78, P.L. 2011, in an attempt to improve the solvency of the Pension Fund. In addition, Governor Christie allocated additional State Aid to be appropriated in or saved for subsequent budgets up to During the course of fiscal year 2013 the District modified the General Fund Budget as needed to ensure no line item was projected to be over-expended. 27

32 Voorhees Township School District Voorhees, New Jersey Management s Discussion and Analysis (continued) Year Ended June 30, 2013 DEBT SERVICE FUND The current year obligations for payment of debt service principal and interest amounted to $2,122,105, of which $57,333 in funding was provided by the local tax levy, $364,772 was received as aid from the State and $1,700,000 was budgeted fund balance. FOOD SERVICE FUND The Food Service Fund had net position of $687,678 as of June 30, This reflects a decrease of $88,300 from June 30, COMMUNITY EDUCATION AND RECREATION PROGRAM (CER) The CER Program had net position of $2,376,142 as of June 30, This reflects an increase of $258,802 from June 30, CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets Capital Assets are individual items purchased at a cost exceeding $2,000, have an extended useful life of one year or more and maintain their identity and structure when placed into service. At the end of 2013, the District had capital assets with a book value of $32,193,649. This consists of a broad range of capital assets, including land, school buildings, computer and audio-visual equipment, administrative offices, and construction in progress for renovations at various schools within the District. (See Table A-7). Total depreciation expense for the year was $1,381,768. Table A-7 Voorhees Township School District's Capital Assets Governmental Activities Business-Type Activities Total Land $ 6,399,000 $ 6,399,000 $ 6,399,000 $ 6,399,000 Construction in Progress 2,845,918 1,148,684 2,845,918 1,148,684 Buildings and Improvements 45,918,515 45,918,515 45,918,515 45,918,515 Furnishings and Equipment 6,186,984 4,983,014 $ 864,408 $ 858,773 7,051,392 5,841,787 Total Capial Assets 61,350,417 58,449, , ,773 62,214,825 59,307,986 Less: Accumulated Depreciation (29,269,995) (27,888,227) (751,181) (719,356) (30,021,176) (28,607,583) Net Capital Assets $ 32,080,422 $ 30,560,986 $ 113,227 $ 139,417 $ 32,193,649 $ 30,700,403 28

33 Voorhees Township School District Voorhees, New Jersey Management s Discussion and Analysis (continued) Year Ended June 30, 2013 Long-term Obligations At year-end, the District had $11,674,000 in general obligation bonds outstanding, a decrease of $1,605,000 from last year. (See Table A-8). The District had a $1,686,909 general liability for compensated absences. This liability represents the District s contractual obligation to compensate employees for accumulated unused sick leave entitlements upon retirement. The liability for Compensated Absences was calculated utilizing an expected retirement age of 55, which is the minimum retirement age with 25 years of service. In the future, this calculation will be revised as new pension laws are enacted, effecting minimum retirement age. Table A-8 Voorhees Township School District Long Term Debt Schedule Balance at Balance at Increase/ % Governmental Activity June 30, 2013 June 30, 2012 (Decrease) Change General Obligation Bonds Payable $ 11,674,000 $ 13,279,000 $ (1,605,000) -12.1% Compensated Absences 1,686,909 1,670,347 16, % Total $ 13,360,909 $ 14,949,347 $ (1,588,438) -10.6% THE FUTURE OUTLOOK Historical Perspective: The Governor has implemented financial measures to cope with the State of New Jersey s growing budget deficit. The result of these measures was a $4.3 million reduction in State Aid for the Voorhees Township School District during the school year. We were able to financially stabilize the District through appropriation of District reserves, a freeze in District spending during the school year, additional reductions in spending for the school year and a 3 tax increase for the budget. The tax increase was in line with past increases, but was not acceptable to the community during current economic conditions. However, the community approved a 3.6 tax increase for the budget in order to stabilize the District after a reduction in spending of $1.9 million, a salary freeze for all administrators, and a favorable Collective Bargaining Agreement supported by the Association. Future Outlook: We must now function within the newly enacted economic parameters established by the Governor and State Legislators. The Legislature passed a 2% cap on the tax levy, with limited exceptions. Our District must compensate for the one-time loss of $4.3 million in State Aid and the overall lowering of State Aid going forward while complying with the new, more restrictive 2% cap on the tax levy. In order to meet this extraordinary challenge, we have implemented a comprehensive solution which will have a significant impact on the way in which our District will function in the future. With input from the community, we clearly established the core services the District must provide to our students to ensure a superior education. We also challenged the community to define the overall educational environment they desired for their children through their vote on the budget approving a 3.6 tax increase. However, before we challenged the community, we challenged ourselves as demonstrated through the Board and Association negotiating a Collective Bargaining Agreement that will permit the District to continue to provide a superior education and the ability to meet the needs of all children. 29

34 Voorhees Township School District Voorhees, New Jersey Management s Discussion and Analysis (continued) Year Ended June 30, 2013 Notwithstanding the adoption of the fiscal plan for , the budget required continued fiscal austerity, especially in the area of collective bargaining and discretionary spending. The actions required to move the District into compliance with the new economic parameters and maintain a quality education are significant, but achievable. CONTACTING THE DISTRICT S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and investors 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 Frank T. DeBerardinis, Ed.D., Assistant Superintendent for Business/Board Secretary at: Voorhees Township School District, 329 Rt. 73, Voorhees, New Jersey

35 BASIC FINANCIAL STATEMENTS

36 GOVERNMENT-WIDE FINANCIAL STATEMENTS

37 24800 Exhibit A-1 TOWNSHIP OF VOORHEES SCHOOL DISTRICT Statement of Net Position June 30, 2013 ASSETS: Governmental Business-Type Activities Activities Total Cash and Cash Equivalents $ 2,316, $ 2,923, $ 5,239, Receivables, net (Note 4) 765, , , Interfund Accounts Receivable 6, , Inventory (Note 5) 8, , Prepaid Expenses 393, , Restricted Assets: Restricted Cash and Cash Equivalents 5,618, ,618, Capital Reserve Account - Cash 3,903, ,903, Capital Assets, net (Note 8) 32,080, , ,193, Total Assets 45,084, ,062, ,147, DEFERRED OUTFLOW OF RESOURCES: Deferred Loss on Defeasance of Debt 128, , LIABILITIES: Interfund Accounts Payable 77, (51,871.93) 26, Payable to State Government 62, , Unearned Revenue 2, , Accrued Interest on Bonds 157, , Noncurrent Liabilities (Note 9): Due within One Year 1,823, ,823, Due beyond One Year 11,731, , ,780, Total Liabilities 13,852, (865.95) 13,851, NET POSITION: Net Investment in Capital Assets 20,340, , ,453, Restricted for: Debt Service 845, , Capital Projects 7,055, ,055, Other Purposes 2,076, ,076, Unrestricted 1,043, ,950, ,993, Total Net Position $ 31,360, $ 3,063, $ 34,423, The accompanying Notes to Financial Statements are an integral part of this statement. 33