AUBURN UNION SCHOOL DISTRICT Auburn, California. FINANCIAL STATEMENTS June 30, 2014

Transcription

1 Auburn, California FINANCIAL STATEMENTS June 30, 2014

2 FINANCIAL STATEMENTS WITH SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2014 TABLE OF CONTENTS Page Independent Auditor's Report 1 Management's Discussion and Analysis 3 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position 17 Statement of Activities 18 Fund Financial Statements: Balance Sheet - Governmental Funds 19 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 20 Statement of Revenues, Expenditures and Change in Fund Balances - Governmental Funds 21 Reconciliation of the Statement of Revenues, Expenditures and Change in Fund Balances - Governmental Funds - to the Statement of Activities 22 Statement of Fiduciary Assets and Liabilities - All Agency Funds 23 Notes to Financial Statements 24 Required Supplementary Information: General Fund Budgetary Comparison Schedule 43 Charter Schools Fund Budgetary Comparison Schedule 44 Schedule of Other Postemployment Benefits (OPEB) Funding Progress 45 Notes to Required Supplementary Information 46 Supplementary Information: Combining Balance Sheet - All Non-Major Funds 47

3 FINANCIAL STATEMENTS WITH SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2014 TABLE OF CONTENTS (Continued) Page Supplementary Information: (Continued) Combining Statement of Revenues, Expenditures and Change in Fund Balances - All Non-Major Funds 48 Combining Statement of Changes in Assets and Liabilities - All Agency Funds 49 Organization 50 Schedule of Average Daily Attendance 51 Schedule of Instructional Time 52 Schedule of Expenditure of Federal Awards 53 Reconciliation of Unaudited Actual Financial Report with Audited Financial Statements 54 Schedule of Financial Trends and Analysis - Unaudited 55 Schedule of Charter Schools 56 Notes to Supplementary Information 57 Independent Auditor's Report on Compliance with State Laws and Regulations 59 Independent Auditor's 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 62 Independent Auditor's Report on Compliance for Each Major Federal Program and Report on Internal Control over Compliance 64 Findings and Recommendations: Schedule of Audit Findings and Questioned Costs 66 Status of Prior Year Findings and Recommendations 70

4 INDEPENDENT AUDITOR'S REPORT Board of Trustees Auburn Union School District Auburn, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Auburn Union School District, as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise Auburn Union 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 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of Auburn Union School District, as of June 30, 2014, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.

5 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management s Discussion and Analysis on pages 3 to 16 and the General Fund Budgetary Comparison Schedule, Charter Schools Fund Budgetary Comparison Schedule, and the Schedule of Other Postemployment Benefits (OPEB) Funding Progress and on pages 43 through 45 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by 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. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Auburn Union School District s basic financial statements. The accompanying schedule of expenditure of federal awards as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and the supplementary information listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditure of federal awards and supplementary information as listed in the table of contents are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information, except for the Schedule of Financial Trends and Analysis, 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 schedule of expenditure of federal awards and supplementary information as listed in the table of contents, except for the Schedule of Financial Trends and Analysis, are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The Schedule of Financial Trends and Analysis has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 2, 2014 on our consideration of Auburn Union School District s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Auburn Union School District s internal control over financial reporting and compliance. Sacramento, California December 2, 2014 Crowe Horwath LLP

6 255 Epperle Lane, Auburn, CA (530) FAX - (530) MANAGEMENT DISCUSSION AND ANALYSIS Fiscal Year Ending June 30, 2014 This annual report consists of three parts Management s Discussion & Analysis, the basic financial statements and required supplementary information. The Management s Discussion and Analysis consists of six sections: Overview of the Financial Statements Serves as a guide to reading the financial statements provided in the sections following the Management s Discussion & Analysis. Financial Highlights Emphasizes significant actions implemented by the District, as well as significant factors affecting the District. Financial Analysis of the District as a Whole Illustrates the District s current, as well as, longterm assets and liabilities. Financial Analysis of the District s Funds Illustrates and compares the District s primary activities. Capital Asset and Debt Administration Illustrates the District s investment in capital assets and its level of debt. Economic Factors and Next Year s Budget Illustrates issues that management sees as relevant to the future financial health of the District. The following section provides an overview of the District s financial activities for the fiscal year ending June 30, It is management s view of the District s financial condition. It should be read in conjunction with the independent auditor s opinion, the basic financial statements, and the accompanying notes to those financial statements. 3

7 OVERVIEW OF THE FINANCIAL STATEMENTS The basic financial statements include two kinds of statements that present different views of the District: The first two statements are government-wide financial statements that provide both short-term and long-term information about the District s overall financial status. The remaining statements are fund financial statements that focus on individual parts of the District, reporting the District s operations in more detail than the government-wide statements. The fund financial statements can be further broken down into two types: Governmental funds statements illustrate how basic services (such as regular and special education) were financed in the short-term, as well as what remains for future spending. Fiduciary funds statements provide information about the financial relationships in which the district acts solely as trustee or agent for the benefit of others to whom the resources belong. The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements with a comparison of the District s budget for the fiscal year. The diagram presented here shows how the various parts of the annual financial report are arranged and relate to one another. Management s Discussion And Analysis Basic Financial Statements Required Supplementary Information Government-Wide Financial Statements Fund Financial Statements Notes to the Financial Statements Summary Detail The chart on the next page summarizes the major features of the District s financial statements, including the portion of the District s activities they cover and the types of information they contain. The remainder of this overview section of management s discussion and analysis highlights the structure and content of each of the statements. 4

8 Major Features of the Government-Wide and Fund Financial Statements Scope Required financial statements Accounting basis and measurement focus Type of asset / liability information Type of inflow / outflow information Government-Wide Statements Entire district, except fiduciary activities Statement of Net Position Statement of Activities Accrual accounting and economic resources focus All assets and liabilities, both financial and capital, short-term and longterm All revenues and expenses during the year, regardless of when cash is received or paid Government Funds The activities of the district that are not proprietary or fiduciary, such as special education and building maintenance Balance Sheet Statement of Revenues, Expenditures and Changes in Fund Balance Modified accrual accounting and current financial resources focus Only assets expected to be used up and liabilities that come due during the year or soon thereafter; no capital assets 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 payment is due during the year or soon thereafter Fund Statements Fiduciary Funds Instances in which the district administers resources on behalf of someone else, such as student activities monies Statement of Fiduciary Assets and Liabilities Accrual accounting and economic resources focus All assets and liabilities both shortterm and long-term; Standard funds do not currently contain non-financial assets, though they can All revenues and expenses during the year, regardless of when cash is received or paid Government-Wide Statements The government-wide statements report information about the District as a whole using accounting methods similar to those used by private-sector companies. The Statement of Net Position includes all of the District s assets and liabilities. All of the current year s revenues and expenses are accounted for in the Statement of Activities regardless of when cash is received or paid. 5

9 The two government-wide statements report the District s net position and how it has changed. Net position (the difference between the District s assets and liabilities) is one way to measure the District s financial health. Over time, increases or decreases in the District s net position is an indicator of whether its financial position is improving or deteriorating. To assess the overall health of the District, additional non-financial factors (including the condition of the District s school buildings and other facilities) must be considered. In the government-wide financial statements, the District s activities are reported as Governmental activities. Most of the District s services are included here, such as regular education, special education, transportation and administration. Funding received from the State of California through the revenue limit, along with categorical and special funding received from the federal and state governments finance most of these activities. Fund Financial Statements The fund financial statements provide more detailed information about the District s most significant funds not the District as a whole. Funds are accounting devices the District uses to keep track of specific sources of funding and spending on particular programs: Some funds are required by state law and by bond covenants. The District establishes other funds to control and manage money for particular purposes or to show that certain revenues have been properly used. There are two types of funds that the District utilizes: 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 in the determination of whether there are more or fewer financial resources that can be spent in the near future to finance the District s programs. This information does not encompass the additional long-term focus of the government-wide statements; therefore additional information at the bottom of the governmental funds statements is provided that explains the relationship (or differences) between them. Fiduciary funds The District is the trustee, or fiduciary, for assets that belong to others, such as the scholarship fund and the student activities funds. The District is responsible for ensuring that the assets in these funds are used only for their intended purposes and only by those to whom they belong. All of the District s fiduciary activities are reported in a separate Statement of Fiduciary Assets and Liabilities. These activities are excluded from the government-wide financial statements because the District cannot use these assets to finance operations. FINANCIAL HIGHLIGHTS The financial statements present the District s fiscal activity of expenditures, revenues, assets, liabilities, beginning, and ending fund balances. Fiscal year starts in July and ends in June. The financial statements reflect the District s educational policy into sound instructional programs and delivery systems through the prudent allocation of financial resources. 6

10 In 2010/11, the District converted E.V. Cain Middle School to the E.V. Cain 21 st Century S.T.E.M. Charter School, in spring 2013 the charter was granted a five year extension. In 2012/13 the District opened Alta Vista Community Charter School. In 2013/14 the E.V. Cain 21 st Century S.T.E.M. Charter School and Alta Vista Community Charter School operations are reported in Fund 09, Charter Schools Special Revenue Account. In 2013/14 the E.V. Cain 21 st Century S.T.E.M. Charter School had an average daily attendance (ADA) of , and Alta Vista Community Charter School had an average daily attendance (ADA) of In 2013/14 student with an equivalent of 8.98 ADA transferred to Alta Vista Community Charter School from the other schools in the District. Student ADA transferring from the Charter School back to other District Schools as.34. In 2013/14 the average daily attendance (ADA) for Auburn Union School District was 1,219.29, plus and an additional 9.16 ADA for students in County Programs and Non-Public Schools for a total of 1, The ratio of attendance to enrollment was approximately 96%. Beginning with the 2013/14 fiscal year the State made major changes to the way schools are funded in California. The Local Control Funding Formula (LCFF) is California s new formula for determining the level of state funding provided to local educational agencies to provide for state supported general and supplemental programs. Revenue Limit Funding and most State categorical programs are included in this new funding formula. LCFF is designed to provide local education agencies with flexibility to direct resources to meet student need, increase funding transparency and aid on a simple explanation of how funding is provided and used locally, it is intended to support equity through a student-focused formula, and focuses attention on performance by creation of the Local Control Accountability Plan (LCAP). The LCAP describes how resources are used, with a focus on eight State priorities, linking programs to local education agency budgets. Implementation of LCFF will take time. The Department of Finance estimates that this process will take eight years. During the transition period the funding will increase by a percentage of the difference between prior year funding and the target funding. The District utilized its federal and few remaining state categorical funds by continuing its supplemental educational programs. The District s number of English Language Learners and economically disadvantaged student population continues to increase from prior years. During 2013/14 Certificates of Participation (COP) payments were all from capital and debt service funds, which did not require General Fund resources to be used for COP purposes. As of June 30, 2014, the District and the Auburn Union Teachers Association and the California School Employees Association were settled through the current year. 7

11 FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE A review of the District as a whole can best be seen in the strength of the District s net position and the subsequent changes in net position. The computation of the District net position is presented by category in the table below: Government-Wide Statement of Net Position June 30, 2013 June 30, 2014 % Variance Assets: Cash $ 32,547,808 $ 33,411,023 Receivables 1,460,940 1,182,420 Prepaid Expenses ,254 Inventories 26,161 28,463 Capital Assets, net of Depreciation 13,765,371 12,864,614 Total Assets $ 47,800,577 $ 47,524, % Liabilities: Accounts Payable $ 1,621,685 $ 1,773,426 Unearned Revenue 37,202 22,124 Long-term Liabilities Current Portion 209, ,969 Non-Current Portion 38,696,018 38,610,548 Total Liabilities $ 40,564,548 40,762, % Net Position: Net investment in capital assets $ 3,081,047 $ 2,823,564 Restricted 2,153,810 2,848,698 Unrestricted 2,001,173 1,090,445 Total Net Position $ 7,236,030 $ 6,762, % Total net position decreased by $473,323 during the 2013/14 fiscal year. Capital assets net of depreciation decreased by a total of $900,757. Long term debt had a net decrease by $60,856 primarily a result of accruals relating to the District s Certificates of Participation. It should be noted that land is accounted for at purchase value, not market value, and is not depreciated. Most of the District s school sites have low values for today s market because the District acquired the land decades ago. This valuation of land is consistent with accounting rules set forth by the Government Accounting Standards Board (GASB). Although the land and buildings owned by the District contribute to its net position, they are not available as assets that could be liquidated because of the nature of the District s operations and the fact that the District will be utilizing these many of these assets fully for the foreseeable future. 8

12 Changes in Net Position A summary of total District revenues, expenses, and change in net position is presented in the table below: Government-Wide Activities 2012/ /14 % Variance Revenues Program: Charges for Services $ 597,930 $ 612,163 Operating Grants and Contributions 4,385,815 3,952,327 Revenues General: Taxes Levied for General Purposes 8,231,465 8,205,382 Taxes Levied for Other Debt Service 321, ,284 Taxes Levied for Other Specific Purposes 44,328 98,621 Unrestricted Federal and State Aid 4,812,469 6,001,493 Interest and Investment Earnings 1,896,496 1,948,202 Other General Revenues 90, ,701 Total Revenues $ 20,379,743 $ 21,344, % Expenses Instruction $ 11,892,665 $ 11,518,983 Instruction Related 1,682,773 1,794,768 Pupil Services 2,512,020 2,459,275 General Administration 1,216,749 1,329,277 Plant Services 2,070,909 2,143,249 Other Expenses 2,458,619 2,571,914 Total Expenses $ 21,833,735 $ 21,817, % Decrease in Net Position $ (1,453,992) $ (473,323) Net Position, Beginning of the Year 8,690,022 7,236,030 Net Position, End of the Year $ 7,236,030 $ 6,762, % FINANCIAL ANALYSIS OF THE DISTRICT S FUNDS Ending Fund Balances 2012/ /14 Difference % Change General (Unrestricted & Restricted) $ 2,953,326 $ 2,709,804 $ -243, % Charter Schools 986, ,656-81, % Cafeteria 559, ,027 82, % Building 17,569 17, % Building Fees 47, ,814 65, % County School Facilities % Special Reserve for Capital Outlay % Capital Projects (Mello Roos) % Debt Service (Mello Roos) 190, ,187 9, % Special Reserve 56 Debt Service 27,783,870 28,429, , % Total $ 32,538,753 $ 33,017,381 $ 478, % As the District completed the year, its funds reported a combined fund balance of $33,017,381 in 2013/14, which is illustrated above. 9

13 Following is a recap of the District s core General Fund: GENERAL FUND RECAP 2012/ /14 Unaudited Unaudited Description Actuals Actuals Difference Beginning Balance $ 3,741,587 $ 2,953, ,261 Revenues / Transfer In 13,168,995 13,277, ,154 Expenditure / Transfer Out 13,957,256 13,520, ,585 Ending Balance 2,953,326 2,709, ,522 GENERAL FUND RECAP (UNRESTRICTED) 2012/ /14 Unaudited Unaudited Description Actuals Actuals Difference Beginning Balance $ 3,325,035 $ 2,624, ,666 Revenues / Transfer In 6,937,415 7,974,260 1,036,845 Expenditure / Transfer Out 7,638,081 8,595, ,622 Ending Balance 2,624,369 2,002, ,443 The District receives funding for the General Fund from several sources. Following is a breakdown of major funding sources: General Purpose LCFF Sources $ 9,209,278 Federal Revenues 941,638 Other State Revenues 885,353 Other Local Revenues 1,200,128 Transfers In & Indirect Cost from Other Funds 1,040,752 Total $ 13,277,149 Revenue of General Fund is classified as Unrestricted and Restricted. Following is a recap of General Fund revenue by classification: Unrestricted Restricted LCFF Sources $ 9,000,746 $ 208,532 Federal Revenue 0 941,638 Other State Revenue 204, ,662 Other Local Revenue 229, ,080 Transfers In & Indirect Cost from Other Funds 1,040,752 0 Contributions -2,265,707 2,265,707 Total $ 8,209,530 $ 5,067,619 10

14 The General Fund is used for expenditures for many of the functions within the District, 75% of all expenditures are tied to salaries and related benefits. Combined General Fund Certificated Salaries $ 5,683,418 Classified Salaries 2,130,880 Employee Benefits 2,173,869 Books and Supplies 498,987 Other Operating Expenditures 2,269,804 Capital Outlay 16,468 Other Outgo/Transfers Out 747,245 Total Expenditures $ 13,520,671 The Unrestricted General Fund is used for expenditures for many of the functions within the District, 79.67% of all unrestricted expenditures are tied to salaries and related benefits. The 2013/14 cost of $7,036,060 for salaries and related benefits in the unrestricted general fund represents 79.67% of the revenues for the year after contributions to restricted programs. Unrestricted General Fund Certificated Salaries $ 4,334,312 Classified Salaries 1,185,079 Employee Benefits 1,516,669 Books and Supplies 327,484 Other Operating Expenditures 1,620,445 Capital Outlay 5,469 Other Outgo/Transfers Out -158,485 Total Expenditures $ 8,830,973 The Restricted General Fund is used for expenditures for many of the functions within the District, 62.95% of all restricted expenditures are tied to salaries and related benefits. Restricted General Fund Certificated Salaries $ 1,349,106 Classified Salaries 945,801 Employee Benefits 657,200 Books and Supplies 171,503 Other Operating Expenditures 649,359 Capital Outlay 10,999 Other Outgo/Transfers Out 905,730 Total Expenditures $ 4,689,698 11

15 The General Fund made the following financial contributions for the operations of programs that are important for the district and the community we serve: Programs Amount Auburn Youth Soccer Club $ 5,000 Restricted Maintenance Account 420,301 Special Education 1,840,516 Closeout expired restricted programs -110 Total Contributions $ 2,265,707 Following is a recap of the District s Charter Schools Fund: The District operates E. V. Cain Charter Middle School serving students is grade 6-8. Charter School Fund Recap E. V. Cain 21 st Century STEM Charter 2012/ /14 Unaudited Unaudited Description Actuals Actuals Difference Beginning Balance $ 1,036,446 $ 970,776-65,670 Revenues / Transfer In 4,083,653 4,306, ,983 Expenditure / Transfer Out 4,149,323 4,499, ,895 Ending Balance 970, , ,582 The Charter receives funding from several sources. Following is a breakdown of major funding sources: E. V. Cain Charter General Purpose LCFF Sources $ 3,952,156 Federal Revenues 0 Other State Revenues 319,082 Other Local Revenues 35,398 Total 4,306,636 The Charter School is used for expenditures for many of the functions, 70.27% of all expenditures are tied to salaries and related benefits. E. V. Cain Charter Certificated Salaries $ 2,161,136 Classified Salaries 343,824 Employee Benefits 656,531 Books and Supplies 166,784 Other Operating Expenditures 208,138 Other Outgo/Transfers Out 962,805 Total Expenditures $ 4,499,218 In 2012/13 the District began operating Alta Vista Community Charter School serving students in grades K-5. 12

16 Charter School Fund Recap Alta Vista Community Charter School 2012/ /14 Unaudited Unaudited Description Actuals Actuals Difference Beginning Balance $ 0 $ 15,389 $ 15,389 Revenues / Transfer In 581,194 1,172, ,159 Expenditure / Transfer Out 565,805 1,061, ,475 Ending Balance $ 15,389 $ 126,462 $ 110,073 The Charter receives funding from several sources. In 2013/14 the Charter School had a Federal Charter School Title V Grant; $374,163 of this grant was used for professional development and building leadership capacity. Following is a breakdown of major funding sources: Alta Vista Community Charter School General Purpose LCFF Sources $ 725,410 Federal Revenues 374,163 Other State Revenues 55,434 Other Local Revenues 17,346 Total $ 1,172,353 The Charter School is used for expenditures for many of the functions, 60.80% of all expenditures are tied to salaries and related benefits. Alta Vista Community Charter School Certificated Salaries $ 426,321 Classified Salaries 82,529 Employee Benefits 136,400 Books and Supplies 281,119 Other Operating Expenditures 97,584 Other Outgo/Transfers Out 37,327 Total Expenditures $ 1,061,280 General Fund Budgetary Highlights Budget revisions were made through-out the fiscal year. The items included in these revisions fell into four main categories: Increases to both estimated income and expenditures due to the receipt of new grant awards or donations. The budgeting of carryover balances from prior years. It is District policy not to budget carryover balances until after the end of the prior fiscal year. Increases / decreases in salaries as a result of salary negotiations Increases in appropriations to prevent budget overruns. 13

17 The District s 2013/14 General Fund operating budget was adopted by the Governing Board in June of As adopted, budgeted revenues totaled $13.14 million, and projected expenditures (appropriations) totaled $13.80 million. As a result of appropriations exceeding budgeted revenues, the District originally estimated a deficit of $661,556. While the adopted budget projected a deficit of $661,556, the actual results reflected a deficit of $243,522. This resulted in an ending fund balance of approximately $2.71 million, combined Unrestricted and Restricted Funds. Comparing the actual results to the 2013/14 adopted budget discloses the following information regarding the primary differences in the District s General Fund: With the change in the funding formula the District received a small variance, less than 0.05% more in State funding of LCFF. The District received $54,411 less in federal revenue earned than expected, a variance of -5.5 %. The District received more in state funds than originally expected due to unanticipated state funding. Sources for these funds are restricted and include CA Clean Energy Jobs planning funds $ , State Mental Health $122,238 and Common Core Implementation $265,874. Fund balances in these areas remain in Restricted Fund Balance. The District received $233,232 of additional primarily due insurance claims, donations and restricted RDA fees. In 2013/14 the District received transfers from the Charter Schools totaling $805,481. While the 2013/14 adopted budget projected an unrestricted deficit of $562,196, the actual results reflected a deficit of $621,443. This resulted in an unrestricted ending fund balance of approximately $2 million. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets at Year-End (Net of Depreciation) 2012/ /13 Difference Land $ 2,029,376 $ 2,029,376 $ 0 Improvement of Sites 90,232 90, Buildings 11,438,064 10,556, ,304 Equipment 207, ,644-20,055 Totals $ 13,765,371 $ 12,864,614 $ -900,757 The decrease in the District s capital assets consists of recognizing depreciation expense for the 2013/14 fiscal year in the amount of $937,735. The District purchased equipment and improved sites in the amount of $36,978 in 2013/14. 14

18 Outstanding Debt at Year-End 2012/ /13 Difference Certificates of Participation (COP) $ 37,578,580 $ 37,428,580 $ -150,000 COP Accreted Interest Payable 866, ,976 97,658 Compensated Absences 59,643 63,251 3,608 Retiree Health Benefits 401, , ,590 Totals $ 38,905,661 $ 38,966,517 $ 60,856 The District s long-term liabilities increased from 2012/13 to 2013/14 by $60,856 primarily a result of principle payments and accruals relating to the District s Certificates of Participation and increase liability for retiree health benefits. ECONOMIC FACTORS AND NEXT YEAR S BUDGET Factors impacting the 2013/14 District s budget include the following: The 2013/14 state budget changes the formula for school funding from revenue limits to the Local Control Funding Formula (LCFF). Most State programs are included in LCFF. The state s improved economic outlook has resulted in improved funding for education. Average daily attendance (ADA) for the District is estimated to be 1,214 including 11 for student in County Office of Education Programs. The ADA for the E.V. Cain Charter School is estimated to be The State Board of Education continues develop LCFF and Local Control Accountability Plan (LCAP) regulations. District developed a (LCAP) by June 30, Under LCFF the state will fund schools by grade span and student demographics with supplemental and concentration grants added on to base grants. Base grants will be by grade span: K-3, 4-6, 7-8 and A grade span adjustment on for K-3 will be added for districts making progress toward 24:1 ratio. Auburn Union School District remains at 24:1 or better, therefore meets this requirement. Supplemental grants of 20% will be added in the funding formula for unduplicated counts of students who are low income, English learners or Foster youth. An additional concentration grant will be added in the funding formula for districts with high student counts over 55% eligible for supplemental grants. Auburn Union School District demographics for 2013/14 represented 60% eligibility. 15

19 CONTACTING THE DISTRICT S FINANCIAL MANAGEMENT This financial report is designed to provide our parents, citizens, taxpayers, 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 any questions regarding this report or need additional financial information, contact: Monica Williams Chief Business Officer Auburn Union School District 255 Epperle Lane Auburn, CA (530)

20 BASIC FINANCIAL STATEMENTS

21 STATEMENT OF NET POSITION June 30, 2014 Governmental Activities ASSETS Cash and investments (Note 2) $ 33,411,023 Receivables 1,182,420 Prepaid expenses 38,254 Stores inventory 28,463 Non-depreciable capital assets (Note 4) 2,029,376 Capital assets, net of accumulated depreciation (Note 4) 10,835,238 Total assets 47,524,774 LIABILITIES Accounts payable 1,773,426 Unearned revenue 22,124 Long-term liabilities (Notes 5 and 8): Due within one year 355,969 Due after one year 38,610,548 Total liabilities 40,762,067 NET POSITION Net investment in capital assets 2,823,564 Restricted (Note 6) 2,848,698 Unrestricted 1,090,445 Total net position $ 6,762,707 The accompanying notes are an integral part of these financial statements. 17

22 STATEMENT OF ACTIVITIES For the Year Ended June 30, 2014 Net (Expense) Revenues and Changes in Program Revenues Net Position Charges Operating Capital for Grants and Grants and Governmental Expenses Services Contributions Contributions Activities Governmental activities: Instruction $ 11,518,985 $ 49,455 $ 2,133,884 $ - $ (9,335,646) Instruction-related services: Supervision of instruction 514,001 4, ,725 - (217,589) Instructional library, media and technology 66,284 13,489 3,648 - (49,147) School site administration 1,214,483 4,006 1,083 - (1,209,394) Pupil services: Home-to-school transportation 658,931-5,200 - (653,731) Food services 902, , ,999-86,616 All other pupil services 897, ,278 - (541,610) General administration: Data processing 163, (163,341) All other general administration 1,165,936 29, ,445 - (1,009,122) Plant services 2,143,249 1, (2,141,690) Ancillary services 34,595 23,144 6,258 - (5,193) Enterprise services 5, (5,551) Interest on long-term liabilities 1,883, (1,883,144) Other outgo 648, , ,474 - (124,437) Total governmental activities $ 21,817,468 $ 612,163 $ 3,952,326 $ - (17,252,979) General revenues: Taxes and subventions: Taxes levied for general purposes 8,205,352 Taxes levied for debt service 336,284 Taxes levied for other specific purposes 98,621 Federal and state aid not restricted to specific purposes 6,001,493 Interest and investment earnings 1,948,202 Miscellaneous 189,704 Total general revenues 16,779,656 Change in net position (473,323) Net position, July 1, ,236,030 Net position, June 30, 2014 $ 6,762,707 The accompanying notes are an integral part of these financial statements. 18

23 BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2014 Charter Special All Total General Schools Reserve 56 Non-Major Governmental Fund Fund Fund Funds Funds ASSETS Cash and investments: Cash in County Treasury $ 2,820,592 $ 1,325,227 $ 9,321 $ 872,691 $ 5,027,831 Cash awaiting deposit 5, ,761 10,645 Cash on hand and in banks ,541 18,541 Cash in revolving fund 2, ,500 Cash with Fiscal Agent ,351,506-28,351,506 Receivables 997,169 71, ,557 1,182,420 Due from other funds 1,091, ,767 69,033 10,709 1,878,964 Prepaid expenditures 30,534 7, ,254 Stores inventory ,463 28,463 Total assets $ 4,947,296 $ 2,113,238 $ 28,429,868 $ 1,048,722 $ 36,539,124 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 1,436,130 $ 168,716 $ - $ 15,809 $ 1,620,655 Unearned revenue 22, ,124 Due to other funds 779,238 1,039,866-59,860 1,878,964 Total liabilities 2,237,492 1,208,582-75,669 3,521,743 Fund balances: Nonspendable 33,034 7,720-28,463 69,217 Restricted 706, ,936 28,429, ,590 30,978,272 Assigned 77, ,144 Unassigned 1,892, ,892,748 Total fund balances 2,709, ,656 28,429, ,053 33,017,381 Total liabilities and fund balances $ 4,947,296 $ 2,113,238 $ 28,429,868 $ 1,048,722 $ 36,539,124 The accompanying notes are an integral part of these financial statements. 19

24 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION June 30, 2014 Total fund balances - Governmental Funds $ 33,017,381 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used for governmental activities are not financial resources and, therefore, are not reported as assets in governmental funds. The cost of the assets is $29,270,914 and the accumulated depreciation is $16,406,300 (Note 4). 12,864,614 Long-term liabilities are not due and payable in the current period and, therefore, are not reported as liabilities in the funds. Long-term liabilities at June 30, 2014 consisted of (Note 5): Certificates of Participation $ (37,428,580) Accreted interest (963,976) Other postemployment benefits (Note 8) (510,710) Compensated absences (63,251) (38,966,517) In governmental funds, interest on long-term liabilities is not recognized until the period in which it matures and is paid. In the government-wide statement of activities, it is recognized in the period that it is incurred. (152,771) Total net position - governmental activities $ 6,762,707 The accompanying notes are an integral part of these financial statements. 20

25 STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended June 30, 2014 Charter Special All Total General Schools Reserve 56 Non-Major Governmental Fund Fund Fund Funds Funds Revenues: Local Control Funding Formula (LCFF): State apportionment $ 4,140,073 $ 1,637,594 $ - $ - $ 5,777,667 Local sources 5,069,205 3,039, ,109,177 Total LCFF 9,209,278 4,677, ,886,844 Federal sources 941, , ,290 2,039,091 Other state sources 885, ,516-58,060 1,317,929 Other local sources 1,200,128 52,744 1,891, ,934 4,100,281 Total revenues 12,236,397 5,478,989 1,891,475 1,737,284 21,344,145 Expenditures: Certificated salaries 5,683,418 2,587, ,270,875 Classified salaries 2,130, , ,420 2,875,653 Employee benefits 2,173, , ,927 3,069,727 Books and supplies 498, , ,759 1,373,649 Contract services and operating expenditures 2,269, ,722-69,337 2,644,863 Capital outlay 16, ,510 36,978 Other outgo 648, ,624 Debt service: Principal retirement , ,000 Interest - - 1,749,098 46,050 1,795,148 Total expenditures 13,422,050 4,560,366 1,749,098 1,134,003 20,865,517 (Deficiency) excess of revenues (under) over expenditures (1,185,653) 918, , , ,628 Other financing sources (uses): Operating transfers in 1,040, ,621 8,271 1,552,644 Operating transfers out (98,621) (1,000,132) - (453,891) (1,552,644) Total other financing sources (uses) 942,131 (1,000,132) 503,621 (445,620) - Net change in fund balances (243,522) (81,509) 645, , ,628 Fund balances, July 1, ,953, ,165 27,783, ,392 32,538,753 Fund balances, June 30, 2014 $ 2,709,804 $ 904,656 $ 28,429,868 $ 973,053 $ 33,017,381 The accompanying notes are an integral part of these financial statements. 21

26 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDS - TO THE STATEMENT OF ACTIVITIES For the Year Ended June 30, 2014 Net change in fund balances - Total Governmental Funds $ 478,628 Amounts reported for governmental activities in the statement of activities are different because: Acquisition of capital assets is an expenditure in the governmental funds, but increases capital assets in the statement of net position (Note 4). 36,978 Depreciation of capital assets is an expense that is not recorded in the governmental funds (Note 4). (937,735) Repayment of principal on long-term liabilities is an expenditure in the governmental funds, but decreases the long-term liabilities in the statement of net position (Note 5). 150,000 Accreted interest is not recognized until due and, therefore, is not accrued as a payable in governmental funds (Note 5). (97,658) In governmental funds, compensated absences are measured by the amounts paid during the period. In the statement of activities, compensated absences are measured by the amounts earned. The difference between compensated absences paid and compensated absences earned (Note 5). (3,608) Unmatured interest is not recognized until it is due and, therefore, is not accrued as a payable in governmental funds. 9,662 In the statement of activities, expenses related to postemployment benefits and compensated absences are measured by the amounts earned during the year. In the governmental funds, expenditures are measured by the amount of financial resources used (Notes 5 and 8). (109,590) Change in net position of governmental activities $ (473,323) The accompanying notes are an integral part of these financial statements. 22

27 STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES ALL AGENCY FUNDS June 30, 2014 Student Body Total ASSETS Cash on hand and in banks (Note 2) $ 100,855 LIABILITIES Due to student groups $ 100,855 The accompanying notes are an integral part of these financial statements. 23

28 NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Auburn Union School District (the "District") accounts for its financial transactions in accordance with the policies and procedures of the California Department of Education's California School Accounting Manual. The accounting policies of the District conform to accounting principles generally accepted in the United States of America as prescribed by the Governmental Accounting Standards Board. The following is a summary of the more significant policies: Reporting Entity The Board of Trustees is the level of government which has governance responsibilities over all activities related to public elementary school education in the District. The District, Auburn Union School District Financing Corporation (the "Corporation") and Auburn/Foresthill Financing Authority (the "Authority") have a financial and operational relationship which meets the reporting entity definition criteria of Codification of Governmental Accounting and Financial Reporting Standards, Section 2100, for inclusion of the Corporation and the Authority as component units of the District. Accordingly, financial activities of the Corporation and the Authority have been included in the financial statements of the District as a blended component unit. The following are those aspects of the relationship between the District, the Corporation and the Authority which satisfy Codification of Governmental Accounting and Financial Reporting Standards, Section 2100, as amended by criteria: A - Manifestations of Oversight 1. The Corporation's and the Authority's Boards of Directors were appointed by the District's Board of Trustees. 2. The Corporation and the Authority have no employees. The District's Superintendent and Chief Business Officer function as agents of the Corporation and the Authority. Neither individual received additional compensation for work performed in this capacity. 3. The District exercises significant influence over operations of the Corporation and the Authority as it is anticipated that the District will be the sole lessee of all facilities owned by the Corporation and the Authority. B - Accounting for Fiscal Matters 1. All major financing arrangements, contracts, and other transactions of the Corporation and the Authority must have the consent of the District. 2. Any deficits incurred by the Corporation and the Authority will be reflected in the lease payments of the District. Any surpluses of the Corporation and the Authority revert to the District at the end of the lease period. 3. It is anticipated that the District's lease payments will be the sole revenue source of the Corporation and the Authority. 4. The District has assumed a "moral obligation," and potentially a legal obligation, for any debt incurred by the Corporation and the Authority. 24

29 NOTES TO FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Reporting Entity (Continued) C - Scope of Public Service and Financial Presentation 1. The Corporation and the Authority were created for the sole purpose of financially assisting the District. 2. The Corporation and the Authority are nonprofit, public benefit corporations incorporated under the laws of the State of California and recorded by the Secretary of State. The Corporation and the Authority were formed to provide financing assistance to the District for construction and acquisition of major capital facilities. When the Corporation's and the Authority's Certificates of Participation (COPs) have been paid with state reimbursements and the District's developer fees, title to all of the Corporation's and the Authority's property will pass to the District for no additional consideration. 3. The Corporation's and the Authority's financial activity is presented in the financial statements as the Special Reserve 56 Fund. COPs issued by the Corporation and the Authority are included in the District's long-term liabilities. Basis of Presentation - Financial Statements The basic financial statements include a Management's Discussion and Analysis section providing an analysis of the District's overall financial position and results of operations, financial statements prepared using full accrual accounting for all of the District's activities, including infrastructure, and a focus on the major funds. Basis of Presentation - Government-Wide Financial Statements The Statement of Net Position and the Statement of Activities displays information about the reporting government as a whole. Fiduciary funds are not included in the government-wide financial statements. Fiduciary funds are reported only in the Statement of Fiduciary Assets and Liabilities at the fund financial statement level. The Statement of Net Position and the Statement of Activities are prepared using the economic resources measurement focus and the accrual basis of accounting. Revenues, expenses, gains, losses, assets and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets and liabilities resulting from nonexchange transactions are recognized in accordance with the requirements of Governmental Accounting Standards Board Codification Section (GASB Cod. Sec.) N Program revenues: Program revenues included in the Statement of Activities derive directly from the program itself or from parties outside the District's taxpayers or citizenry, as a whole; program revenues reduce the cost of the function to be financed from the District's general revenues. Allocation of indirect expenses: The District reports all direct expenses by function in the Statement of Activities. Direct expenses are those that are clearly identifiable with a function. Depreciation expense is specifically identified by function and is included in the direct expense of each function. Interest on general long-term liabilities is considered an indirect expense and is reported separately on the Statement of Activities. 25