DUPLIN COUNTY BOARD OF EDUCATION

Transcription

1 DUPLIN COUNTY BOARD OF EDUCATION KENANSVILLE, NORTH CAROLINA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDING JUNE 30, 2012

2 KENANSVILLE, NORTH CAROLINA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2012 PREPARED BY WENDEL CAMPBELL AND THE FINANCE DEPARTMENT

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4 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal... Board Members and Principal Officers... Organizational Chart... Certificate of Excellence in Financial Reporting ASBO... Certificate of Achievement for Excellence in Financial Reporting GFOA... Exhibit i iv v vi vii Page No. FINANCIAL SECTION Independent Auditors Report... 1 Management s Discussion and Analysis... 3 Basic Financial Statements: Government wide Financial Statements: 1 Statement of Net Assets Statement of Activities Fund Financial Statements: 3 Balance Sheet Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual General Fund and Annually Budgeted Major Special Revenue Funds 20 6 Statement of Net Assets Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds Statement of Cash Flows Proprietary Funds Statement of Fiduciary Net Assets Fiduciary Funds Statement of Changes in Fiduciary Net Assets Fiduciary Funds Notes to the Basic Financial Statements Combining and Individual Fund Statements and Schedules: A-1 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - General Fund B-1 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Capital Outlay Fund C-1 Schedule of Revenues and Expenditures Budget and Actual (Non-GAAP) Child Nutrition Fund C-2 Schedule of Revenues and Expenditures Budget and Actual (Non-GAAP) Liberty Hall Fund C-3 Schedule of Revenues and Expenditures Budget and Actual (Non-GAAP) After School Care Fund D-1 Combining Statement of Fiduciary Net Assets Fiduciary Fund D-2 Combining Statement of Changes in Fiduciary Net Assets Fiduciary Fund... 61

5 Statistical Section Statistical Section (Unaudited) Financial Perspective Governmental and Business-type Activities Fiscal year Net Assets by Component Change in Net Assets Governmental Funds Fund Balance Governmental Funds Changes in Fund Balance Operational Expenditures Per Pupil Expenditures by Function Proprietary Fund Food Services Operations Revenues by Source Proprietary Fund Food Service Operations Expenses by Category Ratios of Outstanding Debt by Type Average Daily Membership Student Statistics Full-Time Equivalent Governmental Employees by Function/Program Instructional Personnel School Building Data Duplin County, North Carolina 15 Demographic Statistics Principle Employers Ratios of Outstanding Debt by Type Principle Property Tax Payers Property Tax Levies and Current Collections... 91

6 Introductory Section

7 December 7, 2012 Members of the Duplin County Board of Education and Citizens of Duplin County, North Carolina: In compliance with the Public School Laws of North Carolina, the Comprehensive Annual Financial Report of the Duplin County Board of Education, operating as Duplin County Schools, for the fiscal year ended June 30, 2012, is herewith submitted. Responsibility for accuracy, completeness, and clarity of the report rests with the Superintendent and the Finance Officer. This report was prepared by the Finance Department in accordance with the requirements and guidelines promulgated by the Governmental Accounting Standards Board. We believe the data is accurate in all material respects and is presented in a manner designed to reflect fairly the financial position and results of operations of the Board. Disclosures necessary to enable the reader to gain maximum understanding of the Board s financial activity have been included. This letter of transmittal is designed to complement Management s Discussion and Analysis (MD&A) and should be read in conjunction with it. The MD&A can be found immediately following the report of the independent auditors. REPORTING ENTITY The Duplin County Board of Education (the Board ) is the level of government having oversight responsibility and control over activities related to public school education in Duplin County, North Carolina. For the fiscal year, the school system served approximately 9,200 students from kindergarten through 12th grade in 8 elementary schools, 3 middle schools, and 5 high schools. The oldest school in the District was built in 1947 while the newest school was constructed in The average age of all school buildings is 43 years. The school system provides general, special and vocational education services. The school system receives local, State, and federal government funding and must comply with the legal requirements of each funding source. While the Board does receive funding from Duplin County (the County ), the County is not entitled to share in any surplus nor is it required to finance any deficits. The Board, whose members are elected by the citizens of Duplin County, has the authority to designate management, make binding decisions, and significantly influence operations. However, the Board has no tax levying or borrowing authority and is required to maintain accounting records in a uniform State format. The Board has final approval over the budget and primary accountability for fiscal matters. Accordingly, the Duplin County Board of Education is not included in any other reporting entity. ECONOMIC CONDITION AND OUTLOOK Duplin County s economy has historically been based on agriculture. In the past, tobacco and row crops were the staples of agricultural production. In more recent years, poultry and livestock production has displaced crops as the primary source of agricultural based income for the County. According to the US Department of Agriculture, Duplin County was ranked #1 in 2011 in farming revenue in the State of North Carolina.

8 Letter of Transmittal (Continued) The production of alternative energy fuel crops is a future agribusiness growth opportunity for the County. Important research is being conducted locally on alternative crops for the production of ethanol and biodiesel fuels that would not compete with Midwestern corn supplies which are critical for local livestock production. Other fuel crops such as industrial sweet potatoes and canola are being evaluated at the North Carolina State University Williamsdale Research farm located in Duplin County. Manufacturing, including agricultural related processing, is an important segment of the County's employment. Approximately 30% of the County's workforce is employed in agricultural related processing and manufacturing. Of the ten largest companies in the County, five are engaged in agricultural production or processing. Due to the County's geographic proximity to the military installations of Camp Lejeune, Seymour Johnson Air Force Base, New River Air Station and Cherry Point Air Station, Duplin County is strategically positioned to support projected military growth. The County is especially well positioned to support the North Carolina Military Growth Task Force's "Feed the Force" and Fuel the Force" initiatives. MAJOR INITIATIVES The focus of the school system for the next several years will primarily be in the following areas: Promote the academic success for all students. Employ, retain and support distinguished leaders, teachers and personnel Provide safe and nurturing schools. Provide 21 st Century facilities to accommodate the academic, vocational, and life skills needs for all students. Create positive school and community partnerships. Create a culture that embraces change and promotes dynamic, continuous improvement. Ensure students have access to 21 st Century technology and learning tools. Duplin County Schools is one of two school districts in the nation following a District-Wide Early College Approach to Seamless Education. Through a partnership with James Sprunt Community College and the North Carolina New Schools Project, Duplin students are immersed in a college-going climate and culture beginning in Pre-Kindergarten. The goal for each child is college, career, and life success. For more information, visit duplinschools.net or call the Office of Public Information at FINANCIAL AND BUDGETARY CONTROLS The cost of public school education in North Carolina is financed primarily by the State, which establishes minimum programs. Local funds supplement the basic programs and are appropriated by the local board of county commissioners. Monthly reports on transactions of State and federal funds and details of disbursements from State funds are submitted to the North Carolina Department of Public Instruction for review. Interim financial reports are presented quarterly to the Board of Education. Financial activities throughout the year are controlled in accordance with the North Carolina School Budget and Fiscal Control Act, which requires a pre-audit procedure to ensure availability of funds prior to the issuance of purchase orders or payment of claims. Outstanding purchase orders at the end of the fiscal year related to normal operations are cancelled and renewed in the following fiscal year. ii

9 Letter of Transmittal (Continued) Internal accounting controls are given consideration in developing and improving the Board s accounting system. Internal controls are designed to provide reliability of financial records for preparing financial statements and maintaining accountability for assets and are to provide reasonable assurance regarding the safeguarding of assets from unauthorized use or disposition. We believe that the Board s internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. INDEPENDENT AUDIT Anderson Smith & Wike PLLC, independent certified public accountants, whose opinion is expressed on page one, have audited the financial statements. The Duplin County Board of Education complies with the requirements of the Single Audit Act for which separate reports are issued. Financial Reporting Awards For the fiscal year ended June 30, 2011, the Comprehensive Annual Financial Report of the Duplin County Board of Education earned the Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting and the Association of School Business Officials (ASBO) Certificate of Excellence in Financial Reporting Award. The awards are made only to governmental units that publish a comprehensive annual financial report, which is easily readable, efficiently organized, and conforms to program standards as well as satisfying generally accepted accounting principles. Awards are valid for one year only. We believe the accompanying report continues to conform to GFOA and ASBO requirements, and we will submit it for determination of eligibility for renewed awards. ACKNOWLEDGEMENTS The preparation of this report could not have been accomplished without the dedicated efforts of the finance staff and the Board s independent certified public accounting firm of Anderson Smith & Wike PLLC. We wish to express appreciation to all employees who assisted in the timely closing of the Duplin County Board of Education s fiscal records as well as the preparation of this report. We would also like to express appreciation to the members of the Board of Education for their support in planning and conducting the financial affairs of the school system in a responsible and professional manner. Respectfully submitted, Dr. Austin Obasohan Superintendent Wendel Campbell Chief Financial Officer iii

10 KENANSVILLE, NORTH CAROLINA JULY 1, 2011 JUNE 30, 2012 BOARD MEMBERS CHUCK FARRIOR, CHAIR HUBERT BOWDEN PAMELA EDWARDS WILLIE GILLESPIE REGINALD KENAN JENNINGS OUTLAW iv

11 DUPLIN COUNTY SCHOOLS Organizational Chart Executive Administrative Assistant to the Superintendent Sandy Rogers Assistant Superintendent for Curriculum and Operations Cary Powers Superintendent Dr. Austin Obasohan Principals Director of Public Relations and Grant Writing Dawn Craft Executive Director Career & Technical Education/Innovative Programs Tarla Smith Director-Exceptional Children s Programs Lynn Heath Finance Officer Wendel Campbell Executive Director Student Services, Policy, and Athletics Ben Thigpen Executive Director Human Resources Felicia Brown Director K-8 Curriculum Shawn Johnson Director Federal Programs (Open) Director-Technology Kristen Hall Director Food Services Sue Sloan Director Secondary Curriculum and District-Wide Early College (Open) Director-Maintenance Bobby Norwood Director-Transportation Jeff Thigpen Director Dropout Prevention and Parent Affairs Leon Kea Director-Testing and Student Data Management Kim Harvell v

12 Association of School Business Officials International The Certificate of Excellence in Financial Reporting Award is presented to Duplin County Board of Education For Its Comprehensive Annual Financial Report (CAFR) For the Fiscal Year Ended June 30, 2011 The CAFR has been reviewed and met or exceeded ASBO International s Certificate of Excellence standards Brian L. Mee, SFO, RSBA President John D. Musso, CAE, RSBA Executive Director vi

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15 Financial Section

16 A S W ANDERSON SMITH & WIKE PLLC Certified Public Accountants INDEPENDENT AUDITORS REPORT Duplin County Board of Education Kenansville, North Carolina We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the Duplin County Board of Education, as of and for the year ended June 30, 2012, which collectively comprise the Board s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Duplin County Board of Education s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Board s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our 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 Duplin County Board of Education, as of June 30, 2012, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General, State Public School and Federal Grants Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. Page 1

17 In accordance with Government Auditing Standards, we have also issued our report dated November 27, 2012 on our consideration of the Duplin County Board of Education s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion of the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Accounting principles generally accepted in the United States of America require that Management s Discussion and Analysis on pages 3 through 10 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements of Duplin County Board of Education as a whole. The combining and individual nonmajor fund financial statements and schedules, budgetary schedules and other schedules, as well as the accompanying schedule of expenditures of federal and State 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 State Single Audit Implementation Act are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The combining and individual nonmajor fund financial statements and schedules, budgetary schedules and other schedules, and the accompanying schedule of expenditures of federal and State awards have been subjected to the auditing procedures applied by us 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 combining and individual nonmajor fund financial statements and schedules, budgetary schedules and other schedules, and the accompanying schedule of expenditures of federal and State awards are fairly stated in all material respects in relation to the financial statements taken as a whole. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we express no opinion on them. November 27, 2012 Statesville, North Carolina (704) Page 2

18 MANAGEMENT S DISCUSSION AND ANALYSIS June 30, 2012 This section of the Duplin County Board of Education s (the Board) financial report represents our discussion and analysis of the financial performance of the Board for the year ended June 30, This information should be read in conjunction with the audited financial statements included in this report. Financial Highlights The Board experienced an increase in student enrollment of 2.38% from 8,945 students to 9,158 students. The Board received millions of dollars of American Recovery and Reinvestment Act (ARRA) revenue over the past three years. Virtually all ARRA funding has expired as of June 30, Overview of the Financial Statements The audited financial statements of the Duplin County Board of Education consist of three components. They are as follows: Independent Auditor s Report Management's Discussion and Analysis (Required Supplementary Information) Basic Financial Statements Required supplemental section The Basic Financial Statements include two types of statements that present different views of the Board s finances. The first is the Government-wide Statements. The government-wide statements are presented on the full accrual basis of accounting and include the Statement of Net Assets and the Statement of Activities. The Statement of Net Assets includes all of the Board s assets and liabilities. Assets and liabilities are classified in the order of relative liquidity for assets and due date for liabilities. This statement provides a summary of the Board's investment in assets and obligations to creditors. Liquidity and financial flexibility can be evaluated using the information contained in this statement. The Statement of Activities summarizes the Board s revenues and expenses for the current year. A net (expense) revenue format is used to indicate to what extent each function is selfsufficient. Page 3

19 MANAGEMENT S DISCUSSION AND ANALYSIS June 30, 2012 Overview of the Financial Statements (Continued) The second set of statements included in the basic financial statements is the Fund Financial Statements, which are presented for the Board s governmental, proprietary and fiduciary funds. These statements present the governmental funds on the modified accrual basis of accounting, measuring the near term inflows and outflows of financial resources and what is available at year-end to spend in the next fiscal year. The fund financial statements focus on the Board s most significant funds. Because a different basis of accounting is used in the government-wide statements, reconciliation from the governmental fund financial statements to the government-wide statements is required. The government-wide statements provide information about the Board as an economic unit, while the fund financial statements provide information on the financial resources of each of the Board s major funds. Government-wide Statements The government-wide statements report information about the unit as a whole using accounting methods similar to those used by private-sector companies. The Statement of Net Assets includes all of the Board s assets and liabilities. All of the current year s revenues and expenses are accounted for in the Statement of Activities regardless of when cash is received or paid. The two government-wide statements report the Board s net assets and how they have changed. Net assets are the difference between the Board s assets and liabilities. This is one way to measure the Board s financial health or position. Over time, increases or decreases in the Board s net assets are indicator of whether its financial position is improving or deteriorating. To assess the Board s overall health, one needs to consider additional non-financial factors such as changes in the County s property tax base and the condition of its school buildings and other physical assets. The unit s activities are divided into two categories in the government-wide statements: Governmental activities: Most of the Board s basic services are included here, such as regular and special education, transportation, and administration. County funding and State and federal aid finance most of these activities. Business-type activities: The Board charges fees to help it cover the costs of certain services it provides. Child nutrition, after school care services, and activities at Liberty Hall are included here. The government-wide statements are shown as Exhibits 1 and 2 of this report. Page 4

20 MANAGEMENT S DISCUSSION AND ANALYSIS June 30, 2012 Fund Financial Statements The fund financial statements provide more detailed information about the Board s funds, focusing on its most significant or major funds not the unit as a whole. Funds are accounting devices the Board uses to keep track of specific sources of funding and spending on particular programs. Some funds are required by State law, such as the State Public School Fund. The Board has established other funds to control and manage money for a particular purpose or to show that it is properly using certain revenues, such as in the Federal Grants Fund. Duplin County Board of Education has three types of funds: Governmental funds: Most of the Board s basic services are included in the governmental funds, which generally focus on two things how cash and other assets can readily be converted to cash flow in and out, and the balances left at year-end that are available for spending. As a result of this focus, the governmental funds statements provide a detailed short-term view that helps the reader determine whether there are more or fewer financial resources that can be spent in the near future to finance the Board s programs. Because this information does not encompass the additional long-term focus of the government-wide statements, additional information at the bottom of the governmental funds statements, in the form of a reconciliation, explains the relationship (or differences) between them. The Board has several governmental funds: the General Fund, the State Public School Fund, the Individual Schools Fund, the Capital Outlay Fund and the Federal Grants Fund. The governmental fund statements are shown as Exhibits 3, 4 and 5 of this report. Proprietary funds: Services for which the Board charges a fee are generally reported in the proprietary funds. The proprietary fund statements are reported on the same full accrual basis of accounting as the government-wide statements. Duplin County Board of Education has three proprietary funds all enterprise funds the Child Nutrition Fund, the After School Care Fund, and the Liberty Hall Fund. The proprietary fund statements are shown as Exhibits 6, 7, and 8 of this report. Fiduciary funds: Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Duplin County Board of Education has two fiduciary funds The Southeast Education Alliance Fund and the Dickson Loan Fund. The Board acts as the fiscal agent for the Southeast Education Alliance, an association of area school boards for the purpose of providing workshops and other activities for the benefit of teachers within each member district. The Board also recently began administering the Dickson Loan Fund, which provides loans to Duplin County students to continue their education after high school. These funds are accounted for as private purpose trust funds. The fiduciary fund statements are shown as Exhibits 9 and 10 of this report. Page 5

21 MANAGEMENT S DISCUSSION AND ANALYSIS June 30, 2012 Financial Analysis of the Schools as a Whole Net assets are an indicator of the fiscal health of the Board. Assets exceeded liabilities by $62,077,266 as of June 30, The largest component of net assets is invested in capital assets, net of related debt, of $48,231,395. It comprises 78% of the total net assets. Following is a summary of the Statement of Net Assets: Table 1 Condensed Statement of Net Assets As of June 30, 2012 and 2011 Governmental Acitivities Business-type Activities Total Primary Government 6/30/12 6/30/11 6/30/12 6/30/11 6/30/12 6/30/11 Current assets $ 14,620,697 $ 10,264,728 $ 4,539,133 $ 4,583,286 $ 19,159,830 $ 14,848,014 Capital assets 49,021,872 49,244, , ,140 49,289,527 49,515,475 Total assets 63,642,569 59,509,063 4,806,788 4,854,426 68,449,357 64,363,489 Current liabilities 3,525,477 2,763,074 61,714 63,020 3,587,191 2,826,094 Long-term liabilities 2,784,900 2,073, ,784,900 2,073,870 Total liabilities 6,310,377 4,836,944 61,714 63,020 6,372,091 4,899,964 Invested in capital assets, net of related debt 47,963,740 49,107, , ,140 48,231,395 49,378,161 Restricted net assets 1,306,762 1,496, ,306,762 1,496,346 Unrestricted net assets 8,061,690 4,068,752 4,477,419 4,520,266 12,539,109 8,589,018 Total net assets $ 57,332,192 $ 54,672,119 $ 4,745,074 $ 4,791,406 $ 62,077,266 $ 59,463,525 Note that net assets increased during the year, indicating an improvement in the financial condition of the unit. The increase in net assets of $2,613,741 was due primarily to the governmental activities. Revenues and expenditures remained relatively consistent from 2011 to As such, the increase in net assets between the two years remained constant as well. Also note that the Board carries capital assets for which Duplin County carries the offsetting debt. Page 6

22 MANAGEMENT S DISCUSSION AND ANALYSIS June 30, 2012 The following table shows the revenues and expenses for the Board for the current fiscal year. Table 2 Condensed Statement of Revenues, Expenses, and Changes in Net Assets For the Fiscal Years Ended June 30, 2012 and 2011 Revenues: Program revenues: 6/30/12 6/30/11 6/30/12 6/30/11 6/30/12 6/30/11 Charges for services $ 490,915 $ 571,587 $ 1,084,178 $ 1,115,389 $ 1,575,093 $ 1,686,976 Operating grants and contributions 61,300,880 61,402,598 4,544,082 4,384,956 65,844,962 65,787,554 Capital grants and contributions 78, ,326 - General revenues: Other revenues 17,929,038 17,862,195 16, ,542 17,945,770 18,388,737 Total revenues 79,799,159 79,836,380 5,644,992 6,026,887 85,444,151 85,863,267 Expenses: Governmental activities: Instructional services 59,583,949 60,262, ,583,949 60,262,412 System-wide support - services 17,037,224 15,655, ,037,224 15,655,930 Ancillary services 105,019 10, ,019 10,529 Non-programmed - charges 1,689 12, ,689 12,044 Depreciation 393,268 1,292, ,268 1,292,298 Business-type activities: - Child Nutrition - - 5,537,060 5,224,474 5,537,060 5,224,474 After School Care ,504 29,802 41,504 29,802 Liberty Hall , , , ,653 Total expenses 77,121,149 77,233,213 5,709,261 5,460,929 82,830,410 82,694,142 Transfers (17,937) (46,059) 17,937 46, Increase(decrease) in Governmental Activities Business-type Activities Total Primary Government net assets 2,660,073 2,557,108 (46,332) 612,017 2,613,741 3,169,125 Beginning net assets 54,672,119 52,115,011 4,791,406 4,179,389 59,463,525 56,294,400 Ending net assets $ 57,332,192 $ 54,672,119 $ 4,745,074 $ 4,791,406 $ 62,077,266 $ 59,463,525 Page 7

23 MANAGEMENT S DISCUSSION AND ANALYSIS June 30, 2012 Total governmental activities generated revenues of $79.8 million while expenses in this category totaled $77.1 million for the year ended June 30, Comparatively, revenues were $79.8 million and expenses totaled $77.2 million for the year ended June 30, The increase in net assets stands at $2,660,073 for governmental activities during the year ended June 30, 2012, compared to an increase of $2,557,108 in The increase in net assets was largely due to cost savings measures implemented by management in the previous year in an effort to build cash reserves. Instructional services comprised 77% of total governmental-type expenses while system-wide support services comprised 22% of those expenses for County funding comprised 12% of total governmental revenues while unrestricted State funding added another 3% for In 2011 county funding was 13% and unrestricted State funding added 3%. Much of the remaining 85% of total governmental revenue for 2012 consists of restricted State and federal grant funds. This revenue represented 84% of total revenue for Business-type activities generated revenue of $5.6 million and had expenses of $5.7 million. Net assets decreased by $46,332 in the business-type activities. Financial Analysis of the Board s Funds Governmental Funds: The focus of Duplin County Board of Education s governmental funds is to provide information on near-term inflows, outflows, and balances of usable resources. Such information is useful in assessing the Board s financing requirements. The Board s governmental funds reported a combined fund balance of $13,276,051 a $3,823,283 increase from last year. The General Fund recorded an increase in fund balance of $3,704,975, accounting for the largest portion of the increase in fund balance in governmental funds. The Capital Outlay Fund reported an increase in fund balance of $45,526. The increase in fund balance is attributable to increased funding from ARRA (American Recovery and Reinvestment Act of 2010) grants and cost savings measures implemented during the year in order to build fund balance in anticipation of probable, future reductions in funding from the state of North Carolina. Proprietary Funds: The Liberty Hall Fund reflected a small decrease in net assets of $31,276 over last year. The net assets of the Child Nutrition Fund had no change from the previous year. The After School Care Fund reported a decrease in net assets of $15,056. The After School Care program was closed during the year and all remaining assets within the After School Care Fund were transferred to the General Fund. Page 8

24 MANAGEMENT S DISCUSSION AND ANALYSIS June 30, 2012 The following chart summarizes governmental fund expenditures: $58,500,422 $423,566 Instructional Services Capital Outlay $1,554,512 System-Wide Support Services $16,449,405 Other Expenditures are presented on the modified accrual basis of accounting. General Fund Budgetary Highlights Over the course of the year, the Board revised the budget several times to account for changes in revenue expectations and to increase appropriations in light of the increased revenue estimates. Since several revenue sources are either unknown or uncertain at the beginning of the fiscal year when the original budget is adopted, budget revisions are necessary throughout the year to recognize these adjustments. Increases in estimated revenues and corresponding increases in appropriations were approximately $850,000 in the General Fund during the year ended June 30, Capital Assets Capital assets decreased by $225,948 (or 0.5%) from the previous year. This was due to depreciation expense exceeding capital asset acquisitions during the year. The following is a summary of the capital assets, net of depreciation, at year-end. Table 3 Summary of Capital Assets As of June 30, 2012 and 2011 Governmental Activities Business-type Activities Total Primary Government 6/30/12 6/30/11 6/30/12 6/30/11 6/30/12 6/30/11 Land $ 2,301,154 $ 2,301,154 $ 24,000 $ 24,000 $ 2,325,154 $ 2,325,154 Construction in progress 465, , , ,122 Buildings 31,424,198 32,463,795 26,278 31,402 31,450,476 32,495,197 Equipment and furniture 1,523,202 2,290, , ,738 1,740,579 2,506,633 Vehicles 3,279,642 2,771, ,279,642 2,771,948 Improvements 10,027,886 9,251, ,027,886 9,251,421 Total $ 49,021,872 $ 49,244,335 $ 267,655 $ 271,140 $ 49,289,527 $ 49,515,475 Page 9

25 MANAGEMENT S DISCUSSION AND ANALYSIS June 30, 2012 Debt Outstanding During the year, the Board entered into a new installment purchase contract of $999,698 for school buses and made payments of $78,880 on installment purchase contracts during the year. The State makes the required payments on the debt on behalf of the Board. The Board is limited by North Carolina General Statutes with regards to the types of debt it can issue and for what purpose that debt can be used. The County holds virtually all debt issued for school capital construction. More detailed information about the Board s outstanding debt is contained in the notes to the financial statements. Economic Factors The Board anticipates consistent enrollment over the next several years. However, we expect continual increases in the number of limited English-proficient (LEP) children. The impact of these factors will be a continuing need for additional classroom space, human resources, equipment, and supplies. The State s economic outlook directly affects the school district. We expect continued pressure on available funding at both the State and Federal level. County funding is also a major source of income for the Board; therefore, the County s economic outlook directly affects the school district. Some indicators of the County funding impact are: The unemployment rate of the County at June 30, 2012 was 9.1%. Property taxes are a major source of revenue for the County. The fiscal year 2012 tax rate is $0.71 per $100 valuation. Collection rates vary but are typically in the 94-96% range. Requests for Information This report is intended to provide a summary of the financial condition of Duplin County Board of Education. Questions or requests for additional information should be addressed to: Wendel Campbell Chief Finance Officer Duplin County Board of Education P.O. Box 128 Kenansville, NC Page 10

26 STATEMENT OF NET ASSETS June 30, 2012 Exhibit 1 Governmental Activities Primary Government Business-type Activities Total ASSETS Cash and cash equivalents $ 13,650,422 $ 1,201,465 $ 14,851,887 Investments - 3,278,849 3,278,849 Due from other governments 462, , ,952 Internal balances 166,069 (166,069) - Receivables (net) 98,409-98,409 Inventories 243, , ,733 Capital assets: Land, improvements, and construction in progress 2,766,944-2,766,944 Other capital assets, net of depreciation 46,254, ,655 46,522,583 Total capital assets 49,021, ,655 49,289,527 Total assets 63,642,569 4,806,788 68,449,357 LIABILITIES Accounts payable and accrued expenses 856,465 3, ,953 Unearned revenue 488,181 18, ,538 Long-term liabilities: Due within one year 2,180,831 39,869 2,220,700 Due in more than one year 2,784,900-2,784,900 Total liabilities 6,310,377 61,714 6,372,091 NET ASSETS Invested in capital assets, net of related debt 47,963, ,655 48,231,395 Restricted for: Individual school activities 650, ,959 Capital outlay 557, ,394 Stabilization by State statute 98,409-98,409 Unrestricted 8,061,690 4,477,419 12,539,109 Total net assets $ 57,332,192 $ 4,745,074 $ 62,077,266 The accompanying notes are an integral part of the basic financial statements. Page 11

27 STATEMENT OF ACTIVITIES For the Year Ended June 30, 2012 Exhibit 2 Program Revenues Operating Grants and Contributions Capital Grants and Contributions Functions/Programs Expenses Charges for Services Primary government: Governmental Activities: Instructional services: Regular instructional $ 35,040,864 $ - $ 31,844,675 $ - Special populations 7,930,976-7,905,814 - Alternative programs 6,964,892-5,570,615 - School leadership 3,496,208-3,069,307 - Co-curricular 681, School-based support 5,469,391-5,271,118 - System-wide support services: Support and development 1,482,700-1,168,903 - Special populations 257, Alternative programs 371, Technology support 1,578,209-1,060,335 - Operational support 11,258, ,915 4,375,059 78,326 Financial and human resource services 751, ,613 - Accountability 93,938-62,879 System-wide pupil support services 537,129-62,879 - Policy, leadership and public relations 707, ,460 - Ancilliary services 105,019-49,223 - Non-programmed charges 1, Unallocated depreciation expense* 393, Total governmental activities 77,121, ,915 61,300,880 78,326 Business-type activities: School food service 5,537,060 1,025,967 4,464,082 - Liberty Hall 130,697 7,129 80,000 - Child care 41,504 51, Total business-type activities 5,709,261 1,084,178 4,544,082 - Total primary government $ 82,830,410 $ 1,575,093 $ 65,844,962 $ 78,326 General revenues: Unrestricted county appropriations - operating Unrestricted county appropriations - capital Unrestricted State appropriations - operating Unrestricted State appropriations - capital Investment earnings, unrestricted Miscellaneous, unrestricted Transfers Total general revenues and transfers Change in net assets Net assets-beginning Net assets-ending * This amount excludes the depreciation that is included in the direct expenses of the various programs. Page 12

28 Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Activities Business-type Activities Total $ (3,196,189) $ - $ (3,196,189) (25,162) - (25,162) (1,394,277) - (1,394,277) (426,901) - (426,901) (681,618) - (681,618) (198,273) - (198,273) (313,797) - (313,797) (257,284) - (257,284) (371,120) - (371,120) (517,874) - (517,874) (6,313,930) - (6,313,930) (216,605) - (216,605) (31,059) - (31,059) (474,250) - (474,250) (381,936) - (381,936) (55,796) - (55,796) (1,689) - (1,689) (393,268) - (393,268) (15,251,028) - (15,251,028) - (47,011) (47,011) - (43,568) (43,568) - 9,578 9,578 - (81,001) (81,001) (15,251,028) (81,001) (15,332,029) 8,861,720-8,861, , ,217 1,158,761-1,158,761 1,051,444-1,051,444 42,973 16,732 59,705 5,857,923-5,857,923 (17,937) 17,937-17,911,101 34,669 17,945,770 2,660,073 (46,332) 2,613,741 54,672,119 4,791,406 59,463,525 $ 57,332,192 $ 4,745,074 $ 62,077,266 The accompanying notes are an integral part of the basic financial statements. Page 13

29 BALANCE SHEET - GOVERNMENTAL FUNDS June 30, 2012 Exhibit 3 State Public School Major Funds Individual Schools General Capital Outlay ASSETS Cash and cash equivalents $ 12,495,010 $ - $ 650,959 $ 504,453 Receivables (net) 98, Due from other governments ,642 Due from other funds 195, ,941 Inventories 243, Total assets $ 13,031,934 $ - $ 650,959 $ 1,020,036 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities $ 393,823 $ - $ - $ 462,642 Due to other funds 82, Deferred revenue 488, Total liabilities 964, ,642 Fund balances: Nonspendable: Inventories 243, Restricted: Stabilization by State statute 98, School capital outlay ,394 Individual schools ,959 - Assigned: Subsequent year's expenditures 4,022, Unassigned: 7,703, Total fund balances 12,067, , ,394 Total liabilities and fund balances $ 13,031,934 $ - $ 650,959 $ 1,020,036 Amounts reported for governmental activities in the statement of net assets (Exhibit 1) are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Some liabilities are not due and payable in the current period and therefore are not reported in the funds. Net assets of governmental activities Page 14

30 Major Fund Federal Grants Fund Total Governmental Funds $ - $ 13,650,422-98, , , ,155 $ - $ 14,702,929 $ - $ 856,465-82, ,181-1,426, ,155-98, , ,959 $ - 4,022,835-7,703,299-13,276,051-49,021,872 $ (4,965,731) 57,332,192 The accompanying notes are an integral part of the basic financial statements. Page 15

31 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS For For the the Year Year Ended June 30, 30, Exhibit 4 State Public School Major Funds Individual Schools Capital Outlay General REVENUES State of North Carolina $ 1,158,761 $ 53,207,483 $ - $ 1,051,444 Duplin County 8,861, ,217 U.S. Government 1,402, Other 2,815,037-1,607,621 16,862 Total revenues 14,238,256 53,207,483 1,607,621 2,024,523 EXPENDITURES Current: Instructional services: Regular instructional 457,602 31,092,658 1,562, ,987 Special populations 19,712 5,841, Alternative programs 1,389,505 2,991, School leadership 424,491 2,555, Co-curricular 681, School-based support 194,507 4,250, System-wide support services: Support and development 312, , Special populations 2, , Alternative programs 55,786 62, Technology support 517, , Operational support 5,821,859 3,740,166-1,061,060 Financial and human resource services 215, , Accountability 24,009 62, System-wide pupil support services 3,290 2, Policy, leadership and public relations 381, , Ancillary services: Community 9, Nutrition 46,461 46, Non-programmed charges 1, Capital outlay ,554,512 Debt service Principal ,880 Total expenditures 10,559,373 53,163,454 1,562,095 2,951,439 OTHER FINANCING SOURCES (USES) Transfer to other fund 26,092 (44,029) - - Installment purchase obligations issued ,698 Net change in fund balance 3,704,975-45,526 72,782 Fund balances-beginning 8,332, , ,612 Decrease in reserve for inventories 29, Fund balances-ending $ 12,067,698 $ - $ 650,959 $ 557,394 Page 16

32 Major Fund Federal Grants Fund Total Governmental Funds $ - $ 55,417,688-9,817,937 8,691,544 10,094,282-4,439,520 8,691,544 79,769, ,222 34,143,564 2,007,701 7,868,933 2,508,186 6,889, ,765 3,479, , ,488 5,437, ,089 1,463,671 99, , , ,187 66,196 1,576, ,486 11,240, ,126-86,888-5, ,336-9,198 2,293 95, , ,804-1,554,512-78,880 8,691,544 76,927,905 - (17,937) - 999,698-3,823,283-9,423,036-29,732 $ - $ 13,276,051 The accompanying notes are an integral part of the basic financial statements. Page 17

33 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS For the Year Ended June 30, 2012 Amounts reported for governmental activities in the statement of activities are different because: Exhibit 4 (Continued) Net changes in fund balances - total governmental funds $ 3,823,283 Change in fund balance due to change in reserve for inventory 29,732 Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation expense exceeded capital outlays in the current period. The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. (222,463) (920,818) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Compensated absences (49,661) Total changes in net assets of governmental activities $ 2,660,073 The accompanying notes are an integral part of the basic financial statements. Page 18

34

35 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND AND ANNUALLY BUDGETED MAJOR SPECIAL REVENUE FUNDS For the Year Ended June 30, 2012 Ended June 30, 2002 Exhibit 5 General Fund Original Final Actual Amounts Variance with Final Budget - Positive (Negative) Revenues: State of North Carolina $ 1,202,566 $ 1,285,926 $ 1,158,761 $ (127,165) Duplin County 8,861,720 8,861,720 8,861,720 - U.S. Government 1,390,765 1,390,765 1,402,738 11,973 Other 1,361,722 2,133,928 2,815, ,109 Total revenues 12,816,773 13,672,339 14,238, ,917 Expenditures: Current: Instructional services 5,454,615 5,686,145 3,166,963 2,519,182 System-wide support services 8,920,385 9,845,861 7,335,229 2,510,632 Ancillary services 11,076 71,076 55,659 15,417 Non-programmed charges 363,440 2,000 1, Total expenditures 14,749,516 15,605,082 10,559,373 5,045,709 Revenues over (under) expenditures (1,932,743) (1,932,743) 3,678,883 5,611,626 Other financing uses: Transfers to other funds ,092 (26,092) Revenues over (under) expenditures and other uses (1,932,743) (1,932,743) 3,704,975 5,637,718 Appropriated fund balance 1,932,743 1,932,743 - (1,932,743) Net change in fund balance $ - $ - 3,704,975 $ 3,704,975 Fund balances, beginning of year 8,332,991 Decrease in reserve for inventories 29,732 Fund balances, end of year $ 12,067,698 Page 20

36 State Public School Fund Federal Grants Fund Original Final Actual Amounts Variance with Final Budget - Positive (Negative) Original Final Actual Amounts Variance with Final Budget - Positive (Negative) $ 52,157,676 $ 53,970,544 $ 53,207,483 $ (763,061) $ - $ - $ - $ ,598,448 12,869,307 8,691,544 (4,177,763) ,157,676 53,970,544 53,207,483 (763,061) 11,598,448 12,869,307 8,691,544 (4,177,763) 47,377,181 47,413,722 46,732, ,707 7,585,000 8,163,812 6,782,362 1,381,450 4,736,423 6,465,679 6,384,509 81,170 2,472,201 2,139,967 1,668, ,360-47,071 46, ,470 2, ,541,247 2,563, ,282 2,324,776 52,113,604 53,926,472 53,163, ,018 11,598,448 12,869,307 8,691,544 4,177,763 44,072 44,072 44,029 (43) (44,072) (44,072) (44,029) $ - $ - - $ - $ - $ - - $ $ - $ - The accompanying notes are an integral part of the basic financial statements. Page 21

37 STATEMENT OF NET ASSETS - PROPRIETARY FUNDS June 30, 2012 Exhibit 6 Major Funds Non-major Fund Child Nutrition ASSETS Current assets: Cash and cash equivalents 1,092,002 Liberty Hall After School Care $ $ 109,463 $ - $ 1,201,465 Investments - 3,278,849-3,278,849 Due from other governments 106, ,310 Due from other funds 29, ,291 Inventories 118, ,578 Total current assets 1,346,181 3,388,312-4,734,493 Noncurrent assets: Capital assets, net 217,377 50, ,655 Total assets 1,563,558 3,438,590-5,002,148 LIABILITIES Current liabilities: Accounts payable - 3,488-3,488 Due to other funds 195, ,360 Compensated absences 39, ,869 Unearned revenue 18, ,357 Total current liabilities 253,586 3, ,074 NET ASSETS Invested in capital assets 217,377 50, ,655 Unrestricted 1,092,595 3,384,824-4,477,419 Total net assets $ 1,309,972 $ 3,435,102 $ - $ 4,745,074 Total The accompanying notes are an integral part of the basic financial statements. Page 22

38 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS - PROPRIETARY FUNDS For the Year Ended June 30, 2012 Exhibit 7 Major Funds Non-major Fund Child Nutrition After School Care Liberty Hall Total OPERATING REVENUES Food sales $ 1,025,967 $ - $ - $ 1,025,967 Child care fees ,082 51,082 Other - 7,129-7,129 Total operating revenues 1,025,967 7,129 51,082 1,084,178 OPERATING EXPENSES Food cost: Purchase of food 2,246, ,246,664 Salaries and benefits 2,484,177 40,180 39,903 2,564,260 Indirect costs 420, ,021 Materials and supplies 225, ,805 Repairs and maintenance 79,790 34, ,946 Depreciation 43,810 5,124-48,934 Contracted services 8,899-8,899 Scholarships and donations - 12,309-12,309 Other 27,894 38,928 1,601 68,423 Total operating expenses 5,537, ,697 41,504 5,709,261 Operating income (loss) (4,511,093) (123,568) 9,578 (4,625,083) NONOPERATING REVENUES Federal reimbursements 3,941, ,941,518 Federal commodities 285, ,987 State reimbursements 11, ,916 Investment income, net 2,982 12,292 1,458 16,732 Indirect costs not paid 224, ,661 Contributions and donations - 80,000-80,000 Total nonoperating revenues 4,467,064 92,292 1,458 4,560,814 Income (loss) before transfers (44,029) (31,276) 11,036 (64,269) Transfer from (to) other fund 44,029 - (26,092) 17,937 Change in net assets - (31,276) (15,056) (46,332) Total net assets - beginning 1,309,972 3,466,378 15,056 4,791,406 Total net assets - ending $ 1,309,972 $ 3,435,102 $ - $ 4,745,074 The accompanying notes are an integral part of the basic financial statements. Page 23

39 STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS For the Year Ended June 30, 2012 Exhibit 8 Major Funds Non-major Fund Child Nutrition Liberty Hall After School Care Total CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 1,067,420 $ 7,129 $ 51,082 $ 1,125,631 Cash paid for goods and services (2,491,421) (81,905) (1,601) (2,574,927) Cash paid to employees for services (2,484,578) (40,180) (39,903) (2,564,661) Net cash provided (used) by operating activities (3,908,579) (114,956) 9,578 (4,013,957) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Federal and State reimbursements 3,953, ,953,434 Contributions and donations - 80,000-80,000 Transfer related to closing of fund - - (26,092) (26,092) Decrease in due from other funds (164,006) - (238,774) (402,780) Net cash provided by noncapital financing activities 3,789,428 80,000 (264,866) 3,604,562 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets (45,449) - - (45,449) CASH FLOWS FROM INVESTING ACTIVITIES Invested in Sara G. Kenan Endowment Fund - (21,671) - (21,671) Investment income, net 2,982 12,292 1,458 16,732 Net cash provided (used) by investing activities 2,982 (9,379) 1,458 (4,939) Net decrease in cash and cash equivalents (161,618) (44,335) (253,830) (459,783) Balances-beginning of the year 1,253, , ,830 1,661,248 Balances-end of the year $ 1,092,002 $ 109,463 $ - $ 1,201,465 The accompanying notes are an integral part of the basic financial statements. Page 24

40 STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS For For the the Year Fiscal Ended Year June Ended 30, June , 2002 Exhibit 8 (Continued) Child Nutrition Major Funds Liberty Hall Non-major Fund After School Care Reconciliation of operating income (loss) to net cash provided (used) by operating activities Operating income (loss) $ (4,511,093) $ (123,568) $ 9,578 $ (4,625,083) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation 43,810 5,124-48,934 Donated commodities consumed 285, ,987 Salaries paid by the State Public School Fund 44, ,029 Indirect costs not paid 224, ,661 Changes in assets and liabilities: Decrease in due from other governments 23, ,956 Increase in due from other funds (29,291) - - (29,291) Decrease in accounts receivable 16, ,036 Increase in inventories (1,880) - - (1,880) Increase in unearned revenue 1, ,461 Increase (decrease) in accounts payable (5,854) 3,488 - (2,366) Decrease in compensated absences (401) - - (401) Total adjustments 602,514 8, ,126 Net cash provided (used) by operating activities $ (3,908,579) $ (114,956) $ 9,578 $ (4,013,957) Total Noncash investing, capital, and financing activities: The School Food Service Fund received donated commodities with a value of $285,987 during the fiscal year. The receipt of the commodities is recognized as a nonoperating revenue on Exhibit 7. The State Public School Fund paid salaries and benefits of $44,029 to administrative personnel of the School Food Service Fund during the fiscal year. The payment is reflected as a transfer in and an operating expense on Exhibit 7. The accompanying notes are an integral part of the basic financial statements. Page 25

41 STATEMENT OF FIDUCIARY NET ASSETS - FIDUCIARY FUNDS June 30, 2012 Exhibit 9 Private Purpose Trust Funds ASSETS Cash and cash equivalents $ 167,751 NET ASSETS Assets held in trust for private purposes $ 167,751 The accompanying notes are an integral part of the basic financial statements. Page 26

42 STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS - FIDUCIARY FUNDS For the Year Ended June 30, 2012 Exhibit 10 Private Purpose Trust Funds Additions: Memberships and other revenues $ 460,853 Interest income 787 Total additions 461,640 Deductions: Salaries and benefits 189,517 Workshops and related items 234,934 Other 35,266 Total deductions 459,717 Change in net assets 1,923 Beginning net assets 165,828 Ending net assets $ 167,751 The accompanying notes are an integral part of the basic financial statements. Page 27

43 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of Duplin County Board of Education conform to generally accepted accounting principles as applicable to governments. The following is a summary of the more significant accounting policies: Reporting Entity The Duplin County Board of Education (Board) is a Local Education Agency empowered by State law [Chapter 115C of the North Carolina General Statutes] with the responsibility to oversee and control all activities related to public school education in Duplin County, North Carolina. The Board receives State, local, and federal government funding and must adhere to the legal requirements of each funding entity. Basis of Presentation Government-wide Statements: The statement of net assets and the statement of activities display information about the Board. These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the effect of internal activities upon revenues and expenses. These statements distinguish between the governmental and business-type activities of the Board. Governmental activities generally are financed through intergovernmental revenues, and other non-exchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. The statement of activities presents a comparison between direct expenses and program revenues for the different business-type activities of the Board and for each function of the Board s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expense allocations that have been made in the funds have been reversed for the statement of activities. Program revenues include (a) fees and charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the Board s funds, including its fiduciary funds. Separate statements for each fund category governmental, proprietary, and fiduciary are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as non-major funds. The fiduciary funds are presented separately. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. Page 28

44 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The Board reports the following major governmental funds: General Fund. The General Fund is the general operating fund of the Board. The General Fund accounts for all financial resources except those that are required to be accounted for in another fund. This fund is the Local Current Expense Fund, which is mandated by State law [G.S. 115C-426]. State Public School Fund. The State Public School Fund includes appropriations from the Department of Public Instruction for the current operating expenditures of the public school system. Individual Schools Fund. The Individual Schools Fund includes revenues and expenditures of the activity funds of the individual schools. The primary revenue sources include funds held on the behalf of various clubs and organizations, receipts from athletic events, and proceeds from various fund raising activities. The primary expenditures are for athletic teams, club programs, activity buses, and instructional needs. Federal Grants Fund. The Federal Grants Fund includes appropriations from the U.S. Department of Education administered by the Department of Public Instruction for the current operating expenditures of the public school system. Capital Outlay Fund. The Capital Outlay Fund accounts for financial resources to be used for the acquisition and construction of major capital facilities (other than those financed by proprietary funds and trust funds). It is mandated by State law [G.S.115C-426]. Capital projects are funded by Duplin County appropriations, restricted sales tax moneys, proceeds of Duplin County bonds issued for public school construction, lottery proceeds as well as certain State assistance. The Board reports the following major enterprise funds: Child Nutrition Fund. The Child Nutrition Fund is used to account for the food service program within the school system. Liberty Hall Fund. The Liberty Hall Fund is used to account for the operations of Liberty Hall, a historic site located in Duplin County. The Board reports the following fiduciary funds: Southeast Education Alliance Fund. The Southeast Education Alliance Fund is used to account for the activity of the Southeast Education Alliance, an association of area school boards for the purpose of providing workshops and other activities for the benefit of teachers within each district. The Board acts as fiscal agent for the Alliance. Dickson Loan Fund. The fund, established by proceeds from the estate of Colonel Alexander Dickson, is to be used for the sole purpose of providing loans to help Duplin County students continue their education after high school. Page 29

45 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Measurement Focus and Basis of Accounting Government-wide, Proprietary, and Fiduciary Fund Financial Statements. The government-wide, proprietary, and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Non-exchange transactions, in which the Board gives (or receives) value without directly receiving (or giving) equal value in exchange, include grants and donations. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Governmental Fund Financial Statements. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The Board considers all revenues reported in the governmental funds to be available if the revenues are collected within 60 days after year-end. These could include federal, State, and county grants, and some charges for services. Expenditures are recorded when the related fund liability is incurred, except for claims and judgments and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Acquisitions under capital leases are reported as other financing sources. Under the terms of grant agreements, the Board funds certain programs by a combination of specific cost-reimbursement grants and general revenues. Thus when program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the Board s policy to first apply cost-reimbursement grant resources to such programs and then general revenues. All governmental and business-type activities and enterprise funds of the Board follow FASB Statements and Interpretations issued on or before November 30, 1989, Accounting Principles Board Opinions, and Accounting Research Bulletins, unless those pronouncements conflict with GASB pronouncements. Budgetary Data The Board s budgets are adopted as required by the North Carolina General Statutes. Annual budgets are adopted for all funds, except for the individual schools special revenue funds, as required by the North Carolina General Statutes. No budget is required by State law for individual school funds. All appropriations lapse at the fiscal year-end. All budgets are prepared using the modified accrual basis of accounting. Expenditures may not legally exceed appropriations at the functional level for all annually budgeted funds. The Board has authorized the Superintendent to transfer up to 25% of an appropriation between line items in the Current Expense Fund. Amendments that alter County appropriation or transfers moneys to or from the Capital Outlay Fund also require the approval of the Duplin County Commissioners. All amendments must be approved by the governing board. During the year, several amendments to the original budget were necessary. The budget ordinance must be adopted by July 1 of the fiscal year or the governing board must adopt an interim budget that covers that time until the annual ordinance can be adopted. Page 30

46 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities, and Fund Equity Deposits and Investments All deposits of the Board are made in board-designated official depositories and are secured as required by State law [G.S. 115C-444]. The Board may designate, as an official depository, any bank or savings association whose principal office is located in North Carolina. Also, the Board may establish time deposit accounts such as NOW and SuperNOW accounts, money market accounts, and certificates of deposit. The Board also has money credited in its name with the State Treasurer and may issue State warrants against these funds. State law [G.S. 115C-443] authorizes the Board to invest in obligations of the United States or obligations fully guaranteed both as to principal and interest by the United States; obligations of the State of North Carolina; bonds and notes of any North Carolina local government or public authority; obligations of certain non-guaranteed federal agencies; certain high quality issues of commercial paper and bankers' acceptances; the North Carolina Capital Management Trust (NCCMT), an SECregistered (2a-7) money market mutual fund; and the North Carolina State Treasurer s Short Term Investment Fund (STIF). The STIF consists of an internal portion and an external portion in which the Board participates. Investments are restricted to those enumerated in G.S State law [G.S. 115C-491] authorizes the Board to invest funds held in the Sarah Graham Kenan Foundation Trust Fund, an endowment fund held within the Liberty Hall Fund, in all forms of property, both real and personal, including, but not by way of limitation, all types of stocks, bonds, securities, mortgages and all types, kinds and subjects of investments of any nature and description. The board of trustees of this endowment fund may retain all contributions in the form in which they are made or sell any property at either public or private sale. The board of trustees is responsible for the prudent investment of any funds or moneys belonging to the endowment fund in the exercise of its sound discretion without regard to any statute or law relating to the investment of funds by fiduciaries. The Board s investments are reported at fair value as determined by quoted market prices. The NCCMT Cash Portfolio s securities are valued at fair value, which is the NCCMT s share price. The STIF securities are reported at cost and maintain a constant $1 per share value. Under the authority of G.S , no unrealized gains or losses of the STIF are distributed to external participants of the fund. Page 31

47 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Cash and Cash Equivalents The Board pools money from several funds to facilitate disbursement and investment and to maximize investment income. Therefore, all cash and investments, excluding investments held in the Sarah G. Kenan Endowment Fund, are essentially demand deposits and are considered cash and cash equivalents. Inventories The inventories of the Board are valued at cost and the Board uses the first-in, first-out (FIFO) flow assumption in determining cost. The inventories of the Board s General Fund consist of expendable materials and supplies, which are recorded as expenditures when purchased. The General Fund inventories do not reflect current appropriable resources and, thus, an equivalent portion of fund balance is reserved. Proprietary Fund inventories consist of food and supplies and are recorded as expenses when consumed. Capital Assets The Board's capital assets are recorded at original cost. Donated assets are listed at their estimated fair value at the date of donation or forfeiture. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets. It is the policy of the Board to capitalize all capital assets costing more than $5,000 with an estimated useful life of two or more years. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Capital assets are depreciated using the straight-line method over the following estimated useful lives: Years Buildings Equipment and furniture 7 10 Vehicles and buses 8 15 Computer equipment 5 Page 32

48 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Collections Collectibles and antiques maintained in the Enterprise Funds (Liberty Hall Fund) are not capitalized or recognized as revenues if donated. These collections are held for public exhibition and not for financial gain. Long-Term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities. Compensated Absences The Board follows the State s policy for vacation and sick leave. Employees may accumulate up to thirty (30) days earned vacation leave with such leave being fully vested when earned. For the Board, the current portion of the accumulated vacation pay is not considered to be material. The Board s liability for accumulated earned vacation and the salary-related payments as of June 30, 2012 is recorded in the government-wide and proprietary fund financial statements on a FIFO basis. An estimate has been made, based on prior years records, of the current portion of compensated absences. The sick leave policy of the Board provides for an unlimited accumulation of earned sick leave. Sick leave does not vest, but any unused sick leave accumulated at the time of retirement may be used in the determination of length of service for retirement benefit purposes. Since the Board has no obligation for accumulated sick leave until it is actually taken, no accrual for sick leave has been made. Net Assets/Fund Balances Net assets in the government-wide and proprietary fund financial statements are classified as invested in capital assets, net of related debt; restricted; and unrestricted. Restricted net assets represent constraints on resources that are either externally imposed by creditors, grantors, contributors, or the laws or regulations of other governments, or imposed by law through State statute. Fund Balances In the governmental fund financial statements, fund balance is composed of four classifications designed to disclose the hierarchy of constraints placed on how fund balance can be spent. Page 33

49 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The governmental fund types classify fund balances as follows: Nonspendable Fund Balance This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Inventories portion of fund balance that is not an available resource because it represents the year-end balance of ending inventories, which are not spendable resources. Restricted fund balance This classification includes amounts that are restricted to specific purposes externally imposed by creditors or imposed by law. Restricted for Stabilization by State statute - portion of fund balance that is restricted by State Statute [G.S. 115C-425(a)]. Restricted for School Capital Outlay - portion of fund balance that can only be used for school capital outlay. [G.S through 22] Restricted for Individual Schools revenue sources restricted for expenditures for the various clubs and organizations, athletic events, and various fund raising activities for which they were collected. Assigned fund balance portion of fund balance that the Board of Education intends to use for specific purposes. Subsequent year s expenditures portion of fund balance that is appropriated in the next year s budget that is not already classified in restricted. The Board of Education approves the appropriation. Unassigned fund balance the portion of fund balance that has not been restricted, committed, or assigned to specific purposes or other funds. The Board of Education has a management policy for revenue spending that provides guidance for programs with multiple revenue sources. The Finance Officer will use resources in the following hierarchy: bond proceeds, federal funds, State funds, local non-board of education funds, and lastly board of education funds. For purposes of fund balance classification, expenditures are to be spent from restricted fund balance first, followed in-order by committed fund balance, assigned fund balance and lastly unassigned fund balance. The Finance Officer has the authority to deviate from this policy if it is in the best interest of the Board of Education. Page 34

50 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Reconciliation of Government-wide and Fund Financial Statements A. Explanation of certain differences between the governmental fund balance sheet and the government-wide statement of net assets. The governmental fund balance sheet includes a reconciliation between fund balance - total governmental funds and net assets governmental activities as reported in the government-wide statement of net assets. The net adjustment of $44,056,141 consists of several elements as follows: Description Amount Capital assets used in governmental activities are not financial resources and are therefore not reported in the funds (total capital assets on government-wide statement in governmental activities column) $ 98,345,985 Less Accumulated Depreciation (49,324,113) Net capital assets 49,021,872 Liabilities that, because they are not due and payable in the current period, do not require current resources to pay and are therefore not recorded in the fund statements: Compensated Absences (3,907,599) Installment Purchases Payable (1,058,132) Total adjustment $ 44,056,141 B. Explanation of certain differences between the governmental fund statement of revenues, expenditures, and changes in fund balance and the government-wide statement of activities. The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. There are several elements of that total adjustment of $(1,163,210) as follows: Page 35

51 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Description Amount Capital outlay expenditures recorded in the fund statements but capitalized as assets in the statement of activities. $ 2,988,165 Depreciation expenses, the allocation of those assets over their useful lives, that is recorded on the statement of activities but not in the fund statements. (3,210,628) Principal payments on debt owed are recorded as a use of funds on the fund statements but again effect only the statement of net assets in the government-wide statements 78,880 The issuance of long-term debt provides current financial resources to governmental funds. The transaction has no effect on net assets. (999,698) Expenses reported in the statement of activities that do not require the use of current resources to pay are not recorded as expenditures in the fund statements. Compensated absences are accrued in the government-wide statements but not in the fund statements because they do not use current resources (49,661) Revenues reported in the statement of activities that do not provide current resources are not recorded as revenues in the fund statements. Adjustment due to the use of the consumption method of recording inventory in the government-wide statements 29,732 Total adjustment $ (1,163,210) Page 36

52 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures. Accordingly, actual results could differ from these estimates. NOTE 2 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY During the year ended June 30, 2012, the Board failed to adopt a budget for the After School Care Fund. This fund had $41,504 of expenditures during the year. The After School Care Fund was in violation of State law by spending funds that were not properly appropriated. NOTE 3 DETAIL NOTES ON ALL FUNDS Assets Deposits All of the Board's deposits are either insured or collateralized by using one of two methods. Under the Dedicated Method, all deposits exceeding the federal depository insurance coverage level are collateralized with securities held by the Board's agents in the unit s name. Under the Pooling Method, which is a collateral pool, all uninsured deposits are collateralized with securities held by the State Treasurer's agent in the name of the State Treasurer. Since the State Treasurer is acting in a fiduciary capacity for the Board, these deposits are considered to be held by the agent in the entity s name. The amount of the pledged collateral is based on an approved averaging method for non-interest bearing deposits and the actual current balance for interest-bearing deposits. Depositories using the Pooling Method report to the State Treasurer the adequacy of their pooled collateral covering uninsured deposits. The State Treasurer does not confirm this information with the Board or with the escrow agent. Because of the inability to measure the exact amount of collateral pledged for the Board under the Pooling Method, the potential exists for under-collateralization, and this risk may increase in periods of high cash flows. However, the State Treasurer of North Carolina enforces strict standards of financial stability for each depository that collateralizes public deposits under the Pooling Method. The Board has no policy regarding custodial credit risk for deposits. Page 37

53 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 3 DETAIL NOTES ON ALL FUNDS (continued) At June 30, 2012, the Board had deposits with financial institutions with a carrying amount of $6,217,471 and with the State Treasurer of $-0-. The bank balances with financial institutions and the State Treasurer were $6,375,179 and $1,543,213, respectively. Of these balances, $773,509 was covered by federal depository insurance and $7,144,883 was covered by collateral held by authorized escrow agents in the name of the State Treasurer. The Board has no formal policy for managing interest rate risk or credit risk. Investments At June 30, 2012, the Board had $8,802,167 invested with the State Treasurer in the Short Term Investment Fund and $3,278,849 invested in equities and bonds in the Sarah Graham Kenan Endowment Fund. Interest Rate Risk The Board of Education does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The Department of State Treasurer Short Term Investment Fund (STIF) has a weighted average of 1.5 years as of June 30, Credit Rating for Bonds The Board invests in certain mutual funds whose primary holdings are corporate and governmental bonds. The credit rating of the underlying bonds held within these mutual funds range from B to AAA as determined by Standard & Poor s. Concentration of Credit Risk The Board places no limit on the amount the Board may invest in any one issuer. The Board does not have any investments, other than the Short Term Investment Fund (STIF) and the Ridgeworth Intermediate Bond Fund, that account for more than 5% of total invested funds. The Board also maintains investments in the Sarah Graham Kenan Endowment Fund, for the benefit of Liberty Hall. The investments are authorized by G.S. 115C-491, which states that endowment funds created under G.S. 115C-490 may invest in all forms of property, both real and personal, including, but not by way of limitation, all types of stocks, bonds, securities, mortgages and all types, kinds, and subject of investments of any nature or description. Page 38

54 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 3 DETAIL NOTES ON ALL FUNDS (Continued) At June 30, 2012, the Board s investment balances in the Sarah Graham Kenan Endowment Fund were as follows: Cost Fair Value Cash and Cash Equivilants: Federated Money Market Government Obligations $ 175,064 $ 175,065 Equities: ABB Ltd. 14,551 13,170 Abbott Laboratories 27,021 37,328 Aberdeen Funds Equity Long Short Fund 67,151 68,666 Amgen Inc. 20,707 27,852 Apache Corp. 18,716 19,951 Apple, Inc. 31,179 83,512 Autodesk, Inc. 13,797 17,320 Bank America Corp. 10,085 14,217 Baxter International 20,544 19,453 BB&T Corp. 13,591 16,073 BE Aerospace, Inc. 22,827 26,807 Cameron Intl. Corp. 15,671 15,974 Capital One Financial Corp. 25,602 32,632 Chevron Corp. 22,583 31,967 Coach, Inc. 15,360 22,632 CVS Caremark Corp. 22,382 27,197 Darden Restaurants, Inc. 15,387 16,860 Ecolab, Inc. 16,475 18,846 EMC Corp. Mass. 16,911 24,169 Emerson Electric Co. 15,219 15,837 Express Scripts 13,761 24,733 Flowserve Corp. 13,911 18,131 Fluor Corp. 14,632 14,851 Forum FDS Absolute Strategies Fund 66,429 71,084 Freeport-McMoRan Copper and Gold 5,587 8,620 General Electric Co. 6,330 23,091 General Mills Inc. 20,389 21,004 Goldman Sachs Group 15,837 16,296 Google Inc. 23,152 31,324 Hartford Financial Service Group, Inc. 13,938 14,721 Page 39

55 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 3 DETAIL NOTES ON ALL FUNDS (Continued) Cost Fair Value Equities (continued): Home Depot 16,473 35,291 Hunt JB Transport Services 13,639 22,827 IBM Corp. 25,299 29,924 Intuit, Inc. 14,358 18,102 Invesco Ltd. 12,241 13,379 J.P. Morgan Chase and Co. 28,334 29,477 Janus Investment Fund 105, ,105 Macy's Inc. 25,669 32,667 Manning & Napier World Opportunities Fund 141, ,539 Mattel Inc. 18,183 17,842 Merk & Co. 32,790 40,623 Microsoft Corp. 15,965 16,060 Morgan Stanley 9,210 8,637 National Oilwell Varco, Inc. 21,167 20,556 Occidental Petroleum Corp. 26,281 30,791 Oppenheimer Developing Markets Fund 128, ,592 Oracle 20,226 27,205 Paccar Inc. 14,663 11,757 PepsiCo, Inc. 23,152 25,791 Pfizer Inc. 27,764 33,350 Philip Morris 25,199 43,019 Pimco Commodity Realreturn Strategy 67,526 68,405 PNC Financial Services Group 27,357 28,538 Praxair Inc. 12,703 18,919 Proctor & Gamble Co. 15,041 26,338 Qualcomm Corp. 22,382 22,272 Quanta SVCS, Inc. 15,137 16,608 Schlumberger Ltd. 24,033 24,925 Schroder US Small & Midcap Opportunities Fund 35,378 34,836 Sentinel Small Company Funds 76,128 91,935 SunTrust Banks, Inc. 33,536 13,569 Teradata Corp. 15,476 21,963 Teva Pharmaceutical Industries Ltd. 26,846 19,957 Texas Instruments 18,322 19,825 Union Pacific 9,613 18,612 United Parcel Service 11,684 16,540 Verizon Communications 21,948 31,419 Visa Inc. 18,950 30,908 Page 40

56 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 3 DETAIL NOTES ON ALL FUNDS (Continued) Cost Fair Value Equities (continued): Walt Disney Co. 22,297 33,999 Wells Fargo & Company 25,034 29,561 Williams Companies, Inc. 14,089 20,837 WPX Energy, Inc. 2,751 3,592 Bond Funds: Neuberger Berman High Income Bond Fund 81,245 84,021 Pimco FDS Corporate Bond Fund 94, ,491 Pimco FDS Foreign Bond Fund 66,000 66,183 Pimco FDS Low Duration 98,969 99,676 Ridgeworth Intermediate Bond Fund 287, ,915 Ridgeworth Seix Fltg Rt High Inc. 43,804 49,393 Ridgeworth Short Term Bond Fund 114, ,915 Templeton Income Global Fund 48,581 48,780 $ 2,892,963 $ 3,278,849 Accounts Receivable Receivables at the government-wide level at June 30, 2012 were as follows: Due from other governments Other Governmental activities: General Fund $ - $ 98,409 Other governmental activities 462,642 - Total $ 462,642 $ 98,409 Business-type actitities: Child Nutrition Fund $ 106,310 $ - Due from other governments consists of the following: Governmental activities: Capital Outlay Fund $ 462,642 Appropriations from Duplin County Business-type activities Child Nutrition Fund $ 106,310 Federal funds Page 41

57 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 3 DETAIL NOTES ON ALL FUNDS (Continued) Capital Assets Capital asset activity for the year ended June 30, 2012 was as follows: Beginning Balances Increases Decreases Ending Balances Governmental activities: Capital assets not being depreciated: Land $ 2,301,154 $ - $ - $ 2,301,154 Construction in progess 165, , , ,790 Total capital assets not being depreciated 2,466, , ,206 2,766,944 Capital assets being depreciated: Buildings 63,922, ,197-64,067,027 Equipment and furniture 3,762, ,494 46,639 4,087,954 Vehicles 9,426,360 1,038,313 28,285 10,436,388 Improvements 15,855,179 1,132,493-16,987,672 Total capital assets being depreciated 92,966,468 2,687,497 74,924 95,579,041 Less accumulated depreciation for: Buildings 31,459,035 1,183,794-32,642,829 Equipment and furniture 2,218, ,268 46,639 2,564,752 Vehicles 6,654, ,619 28,285 7,156,746 Improvements 5,856,839 1,102,947-6,959,786 Total accumulated depreciation 46,188,409 3,210,628 74,924 49,324,113 Total capital assets being depreciated, net 46,778,059 46,254,928 Governmental activity capital assets, net $ 49,244,335 $ 49,021,872 Page 42

58 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 3 DETAIL NOTES ON ALL FUNDS (Continued) Beginning Ending Balances Increases Decreases Balances Business-type activities: Child Nutrition Fund: Captial assets being depreciated: Food Service Equipment $ 953,916 $ 45,449 $ - $ 999,365 Less accumulated depreciation for: Food Service Equipment 738,178 43, ,988 Child Nutrirtion Capital Assets, net: $ 215,738 $ 217,377 Liberty Hall: Capital assets not being depreciated: Land $ 24,000 $ - $ - $ 24,000 Capital assets being depreciated: Buildings 202, ,700 Less Accumulated Depreciation for: Buildings 171,298 5, ,422 Total Capital Assets being depreciated, net: 31,402 26,278 Liberty Hall Capital Assets, net: $ 55,402 $ 50,278 Business-type Activity Capital Assets, net: $ 271,140 $ 267,655 Depreciation was charged to governmental functions as follows: Regular instructional services $ 2,286,741 System-wide support services 530,619 Unallocated depreciation 393,268 Total $ 3,210,628 Page 43

59 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 Construction Commitments At June 30, 2012, the Board s commitments with contractors for construction and renovations are as follows: Project Incurred to Date Remaining Commitment HVAC project $ 465,790 $ 543,034 Liabilities Pension Plan and Other Post-employment Obligations a. Teachers and State Employees Retirement System Plan Description. Duplin County Board of Education contributes to the statewide Teachers and State Employees Retirement System (TSERS), a cost-sharing multiple-employer defined benefit pension plan administered by the State of North Carolina. TSERS provides retirement benefits to plan members and beneficiaries. Article 1 of G.S. Chapter 135 assigns the authority to establish and amend benefit provisions to the North Carolina General Assembly. The Teachers and State Employees Retirement System is included in the Comprehensive Annual Financial Report (CAFR) for the State of North Carolina. The State s CAFR includes financial statements and required supplementary information for TSERS. That report may be obtained by writing to the Office of the State Controller, 1410 Mail Service Center, Raleigh, North Carolina , or by calling (919) Funding Policy. Plan members are required to contribute six percent of their annual covered salary and the Board is required to contribute at an actuarially determined rate. The current rate is 7.44% of annual covered payroll. The contribution requirements of plan members and Duplin County Board of Education are established and may be amended by the North Carolina General Assembly. The Board s contributions to TSERS for the years ended June 30, 2012, 2011, and 2010 were $3,193,479, $2,169,519, and $1,590,716, respectively, equal to the required contributions for each year. Page 44

60 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 3 DETAIL NOTES ON ALL FUNDS (Continued) b. Other Post-employment Benefits Post-employment Healthcare Benefits Plan Description. The post-employment healthcare benefits are provided through a multiple-employer cost-sharing defined benefit plan administered by the Executive Administrator and the Board of Trustees of the Comprehensive Major Medical Plan (the Plan ). The Executive Administrator and the Board of Trustees of the Plan establishes premium rates except as may be established by the General Assembly in an appropriation act. The Plan s benefit and contribution provisions are established by Chapter 135-7, Article 1, and Chapter 135, Article 3 of the General Statutes and may be amended only by the North Carolina General Assembly. By General Statute, the Plan accumulates contributions from employers and any earnings on those contributions in the Retiree Health Benefit Fund. These assets shall be used to provide health benefits to retired and disabled employees and their applicable beneficiaries. These contributions are irrevocable. Also by law, these assets are not subject to the claims of creditors of the employers making contributions to the Plan. The State of North Carolina issues a publicly available financial report that includes financial statements and required supplementary information for the State s Comprehensive Major Medical Plan (also, referred to as the State Health Plan). An electronic version of this report is available by accessing the North Carolina Office of the State Controller s Internet home page and clicking on Financial Reports, or by calling the State Controller s Financial Reporting Section at (919) Funding Policy. The Comprehensive Major Medical Plan is administered by the Executive Administrator and Board of Trustees of the Plan, which establishes premium rates except as may be established by the General Assembly in an appropriation act. The healthcare benefits for retired and disabled employees are the same as for active employees, except that the coverage becomes secondary when former employees become eligible for Medicare. For employees first hired on and after October 1, 2006, future coverage as retired employees is subject to the requirement that the future retiree have 20 or more years of retirement service credit in order to receive coverage on a noncontributory basis. Employees first hired on and after October 1, 2006 with 10 but less than 20 years of retirement service credit are eligible for coverage on a partially contributory basis. For such future retirees, the State will pay 50% of the State Health Plan s total noncontributory premium. For employees hired before October 1, 2006, healthcare benefits are provided to retirees (at no charge to the retirees) who have at least five years of contributing retirement membership prior to disability or retirement. In addition, persons who became surviving spouses of retirees prior to October 1, 1986, receive the same coverage as retirees at the State s expense. Page 45

61 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 3 DETAIL NOTES ON ALL FUNDS (Continued) Contributions are determined as a percentage of covered monthly payroll. Annually, the monthly contribution rates to the Plan, which are intended to finance benefits and administrative expenses on a pay-as-you-go basis, are determined by the General Assembly in the Appropriations Bill. For the fiscal years ended June 30, 2012, 2011, and 2010, the School Board paid all annual required contributions to the Plan for postemployment healthcare benefits of $2,146,155, $2,156,317, and $2,005,103, respectively. These contributions represented 5.0%, 4.9%, and 4.5% of covered payroll, respectively. 2. Other Employment Benefits In addition to providing pension and post employment healthcare benefits, the Board provides death benefits and disability benefits, in accordance with State statutes, to certain employees. Death Benefits Funding Policy. Death benefits are provided through the Benefit Plan for members of the Teachers and State Employees Retirement System (Death Benefit Plan), a multiple-employer Stateadministered cost-sharing plan funded on a one-year term cost basis. Employees who die in active service after one year of contributing membership service in the System, or who die within 180 days after retirement or termination of service and have at least one year of contributing membership service in the System at the time of death are eligible for death benefits. Lump sum death benefit payments to beneficiaries are equal to the employee s highest 12 months salary in a row during the 24 months prior to his/her death with a minimum benefit of $25,000 and a maximum of $50,000. Long-term Disability Benefits Plan Description. Short-term and long-term disability benefits are provided through the Disability Income Plan of North Carolina (DIPNC), a cost-sharing, multiple-employer defined benefit plan. The DIPNC is administered by the Board of Trustees of the Teachers and State Employees Retirement System. Long-term disability benefits are payable as another postemployment benefit from DIPNC after the conclusion of the short-term disability period or after salary continuation payments cease, whichever is later, for as long as an employee is disabled. Benefit and contribution provisions are established by Chapter 135, Article 6, of the General Statutes and may be amended only by the North Carolina General Assembly. The Plan accumulates contributions from employers and any earnings on those contributions in the Disability Income Plan Trust Fund. The plan does not provide for automatic post-retirement benefit increases. The State of North Carolina issues a publicly available financial report that includes financial statements and required supplementary information for the DIPNC. An electronic version of this report is available by accessing the North Carolina Office of the State Controller s Internet home page and clicking on Financial Reports, or by calling the State Controller s Financial Reporting Section at (919) Page 46

62 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 3 DETAIL NOTES ON ALL FUNDS (Continued) Funding Policy. An employee is eligible to receive long-term disability benefits provided the following requirements are met: (1) the employee has five or more years of contributing membership service in the Teachers and State Employees Retirement System of North Carolina, earned within 96 months prior to the end of the short-term disability period or cessation of salary continuation payments, whichever is later; (2) the employee must make application to receive long-term benefits within 180 days after the conclusion of the short-term disability period or after salary continuation payments cease or after monthly payments for Workers Compensation cease (excluding monthly payments for permanent partial benefits), whichever is later; (3) the employee must be certified by the Medical Board to be mentally or physically disabled for the further performance of his/her usual occupation; (4) the disability must have been continuous, likely to be permanent, and incurred at the time of active employment; (5) the employee must not be eligible to receive an unreduced retirement benefit from the Retirement System; and (6) the employee must terminate employment as a permanent, full-time employee. An employee is eligible to receive an unreduced retirement benefit from the Retirement System after (1) reaching the age of 65 and completing five years of creditable service, or (2) reaching the age of 60 and completing 25 years of creditable service, or (3) completing 30 years of creditable service, at any age. All short-term disability benefit payments are made by various State-administered plans. The Board has no liability beyond payment of monthly contributions except for short-term disability benefits, which are paid by the Board during the first six months of the short-term period. For members with five or more years of membership service as of July 31, 2007, the monthly long-term disability benefit is equal to 65% of one-twelfth of an employee s annual base rate of compensation last payable to the participant or beneficiary prior to the beginning of the short-term disability period, plus the like percentage of one twelfth of the annual longevity payment to which the participant or beneficiary would be eligible. The monthly benefits are subject to a maximum of $3,900 per month reduced by any primary Social Security disability benefits and by monthly payments for Workers Compensation to which the participant or beneficiary may be entitled. The monthly benefit shall be further reduced by the amount of any monthly payments from the Department of Veterans Affairs, any other federal agency or any payments made under the provisions of G.S.127A-108, to which the participant or beneficiary may be entitled on account of the same disability. Provided in any event, the benefits payable shall be no less than $10 a month. When an employee qualifies for an unreduced service retirement allowance from the Retirement System, the benefits payable from DIPNC will cease, and the employee will commence retirement under the TSERS. For members who obtain five years of membership service on or after August 1, 2007, the monthly long-term disability benefit is reduced by the primary Social Security retirement benefit to which the member might be entitled should the member become age 62 during the first 36 months. After 36 months of long-term disability, there will be no further payments from the DIPNC unless the member is approved for and is in receipt of primary Social Security disability benefits. It is payable so long as the member remains disabled and is in receipt of a primary Social Security disability benefit until eligible for an unreduced service retirement benefit. When an employee qualifies for an unreduced service retirement allowance from the Retirement System, the benefits payable from DIPNC will cease, and the employee will commence retirement under the TSERS. Page 47

63 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 3 DETAIL NOTES ON ALL FUNDS (Continued) The Board s contributions are established in the Appropriations Bill by the General Assembly. Benefit and contribution provisions are established by Chapter 135, Article 6, of the General Statutes and may only be amended by the N.C. General Assembly. The contributions cannot be separated between the amounts that relate to other post-employment benefits and employment benefits for active employees. Those individuals who are receiving extended short-term disability benefit payments cannot be separated from the number of members currently eligible to receive disability benefits as another post-employment benefit. For the fiscal years ended June 30, 2012, 2011, and 2010, the Board paid all annual required contributions to the DIPNC for disability benefits of $223,200, $228,834, and $231,700, respectively. These contributions represented 0.52%, 0.52%, and 0.52% or covered payroll, respectively. Accounts Payable Accounts payable at June 30, 2012 are as follows: Vendors Governmental Activities: General $ 393,823 Other Governmental 462,642 Total - Governmental Activities $ 856,465 Deferred Revenues The balance in deferred revenues at year-end is composed of the following elements: General Fund Child Nutrition Fund Grants not yet earned $ 488,181 $ - Prepaid meals - 18,357 Total $ 488,181 $ 18,357 Page 48

64 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 3 DETAIL NOTES ON ALL FUNDS (Continued) Risk Management The Board is exposed to various risks of losses related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Board participates in the North Carolina School Boards Trust (the Trust), a member funded risk management program administered by the North Carolina School Boards Association. Through the Trust, the Board maintains general liability and errors and omissions coverage of $1 million per claim. The State of North Carolina provides workers compensation for employees to the extent they are paid from State funds. The Trust has an annual aggregate limit for general liability of $2,550,000, and an annual aggregate limit of $2,550,000 for errors and omissions claims. The Trust is reinsured through commercial companies for losses in excess of $150,000 per claim for errors and omissions and general liability. Statutory workers compensation coverage is purchased through private insurers (or self-insured by the local board).coverage is provided to the extent employees are paid from federal or local funds. Workers compensation coverage is provided by the State of North Carolina through a self-insured fund, to the extent employees are paid from State funds. The Board also participates in the Public School Insurance Fund (the Fund), a voluntary, self-insured risk control and risk-financing fund administered by the North Carolina Department of Public Instruction, insuring the tangible property assets of the Board. Coverage is provided on an all risk perils contract. Buildings and contents are insured on a replacement cost basis. The Fund purchases excess reinsurance to protect the assets of the Fund in the event of a catastrophic event. The Fund maintains a self-insured retention of $10 million. Excess reinsurance is purchased through commercial insurers. A limit of $5 million per occurrence is provided on Flood, Earthquake, Business Interruption and Extra Expense. $10 million per occurrence is provided on Increased Cost of Construction. The Board also participates in the Teachers and State Employees Comprehensive Major Medical Plan (Plan), a self-funded risk financing pool of the State administered by Blue Cross and Blue Shield of North Carolina. Through the Plan, permanent full-time employees of the Board are eligible to receive health care benefits up to a $5 million lifetime limit. In accordance with G.S. 115C-442, the Board s employees who have custody of the Board s monies at any given time of the Board s funds are performance bonded through a commercial surety bond. The chief financial finance officer is bonded for $300,000. The school treasurers that have access to funds are bonded under a blanket bond for $375,000. The Board carries flood insurance on its property totaling $5,000,000 of losses or damage at any one location, not to exceed a total liability of $15,000,000 due to any one flood occurrence for all insured locations. For properties not in the Federal Flood Zone, the Board has a deductible of $25,000. The Board carries commercial coverage for all other risks of loss. There have been no significant reductions in insurance coverage from the prior year, and claims have not exceeded coverage in any of the past three fiscal years. Page 49

65 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 3 DETAIL NOTES ON ALL FUNDS (Continued) Contingent Liabilities At June 30, 2012, the Board was not a defendant to any lawsuits that, in the opinion of the Board s management and the Board s attorney, the ultimate effect of these legal matters would have a material adverse effect on the Board s financial position. Long-Term Obligations a. Installment Purchases The Board is authorized to finance the purchase of school buses under G.S. 115C-528(a). Session law , section 7.25 authorized the State Board of Education to allot monies for the payments on financing contracts entered into pursuant to G.S. 115C-528. The State has accepted the bid to purchase Thomas Built Buses through a special third party financing arrangement with various companies. In June 2012, the Board entered into installment purchase contracts to finance the purchases of three school buses. The Board entered into a similar agreement during the year ended June 30, These financing contracts require annual payments ranging from $58,008 to $249,925. The future minimum payments of the installment purchases as of June 30, 2012 are as follows: Year Ending June 30, Governmental Activities Principal 2013 $ 558, , ,925 Total $ 1,058,132 Page 50

66 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 3 DETAIL NOTES ON ALL FUNDS (Continued) b. Long-Term Obligation Activity The following is a summary of changes in the Board s long-term obligations for the fiscal year ended June 30, 2012: Balance Balance July 1, June 30, Current 2010 Increases Decreases 2011 Maturities Governmental activities: Installment purchases $ 137,314 $ 999,698 $ 78,880 $ 1,058,132 $ 558,282 Compensated absences 3,857,938 2,824,336 2,774,675 $ 3,907,599 1,622,549 Total $ 3,995,252 $ 3,824,034 $ 2,853,555 $ 4,965,731 $ 2,180,831 Business-type activities: Compensated absences $ 40,270 $ 108,625 $ 109,026 $ 39,869 $ 39,869 Compensated absences are typically liquidated by the general and other governmental funds. Interfund Balances and Activity Transfers to/from other funds at June 30, 2012 consist of the following: From the State Public School Fund to the Child Nutrition Fund for adminstrative costs $ 44,029 From the After School Care Fund to the General Fund to record the closing $ 26,092 of the After School Care Fund Balances due to/from other funds Due to the Capital Outlay Fund from the General Fund due to improper coding of insurance proceeds in the prior year $ 52,941 Due to the General Fund from the Child Nutrition Fund for indirect costs 195,360 Total $ 248,301 Page 51

67 NOTES TO THE BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2012 NOTE 3 DETAIL NOTES ON ALL FUNDS (Continued) Fund Balance The following schedule provides management and citizens with information on the portion of General fund balance that is available for appropriation. Total fund balance - General Fund $ 12,067,698 Less: Inventories (243,155) Stabilization by State statute (98,409) Appropriated Fund Balance in 2012 budget (4,022,835) Remaining fund balance $ 7,703,299 NOTE 4 SUBSEQUENT EVENT Subsequent to June 20, 2012, the Board entered into a Guaranteed Energy Savings Contract which resulted in the issuance of approximately $4.7 million of debt with the proceeds to be used for the purchase of energy efficient equipment such as heating and cooling units. NOTE 5 SUMMARY DISCLOSURE OF SIGNIFICANT CONTINGENCIES Federal and State Assisted Programs The Board has received proceeds from several federal and State grants. Periodic audits of these grants are required and certain costs may be questioned as not being appropriate expenditures under the grant agreements. Such audits could result in the refund of grant moneys to the grantor agencies. Management believes that any required refunds will be immaterial. No provision has been made in the accompanying financial statements for the refund of grant moneys. Page 52

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69 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND r For Ended the June Year 30, Ended 2002 June 30, 2012 Exhibit A-1 Revenues: State of North Carolina: Positive (Negative) Budget Actual Variance Smart Start $ 196,866 $ 196,319 $ (547) North Carolina Pre-Kindergarten Program 1,079, ,300 (140,860) Grassroots Art grant - 15,142 15,142 Gang Awareness grant 9,900 9,000 (900) Total 1,285,926 1,158,761 (127,165) Duplin County 8,861,720 8,861,720 - U.S. Government: Head Start 1,240,765 1,240,765 - FEMA - Hurricane Irene - 10,225 10,225 JROTC 150, ,748 1,748 Total 1,390,765 1,402,738 11,973 Other : Fines and forfeitures 500, ,011 (13,989) Refunds and reimbursements 971, ,366 (28,714) Facility rental and other fees 1, , ,915 Interest 115,000 42,973 (72,027) Insurance proceeds 250, ,463 41,463 Miscellaneous 46, ,986 55,138 Indirect cost allocated 250, , ,323 Total 2,133,928 2,815, ,109 Total revenues 13,672,339 14,238, ,917 Expenditures: Instructional services: Regular instructional 2,571, ,602 2,114,360 Special populations 28,273 19,712 8,561 Alternative programs 1,515,041 1,389, ,536 School leadership 492, ,491 68,503 Co-curricular 734, ,146 53,396 School-based support 343, , ,826 Total instructional services 5,686,145 3,166,963 2,519,182 Page 54

70 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND r For Ended the June Year 30, Ended 2002 June 30, 2012 Exhibit A-1 (Continued) Positive (Negative) Budget Actual Variance System-wide support services: Support and development 497, , ,668 Special populations support and development 6,962 2,415 4,547 Alternative programs and services support and development 91,150 55,786 35,364 Technology support 1,259, , ,622 Operational support 7,334,669 5,821,859 1,512,810 Financial and human resource services 223, ,513 7,836 Accountability 26,949 24,009 2,940 System-wide pupil support services 20,000 3,290 16,710 Policy, leadership and public relations 386, ,876 4,135 Total system-wide support services 9,845,861 7,335,229 2,510,632 Ancillary services: Community 17,000 9,198 7,802 Nutrition 54,076 46,461 7,615 Total ancillary services 71,076 55,659 15,417 Non-Programmed charges Payments to Charter Schools 2,000 1, Total expenditures 15,605,082 10,559,373 5,045,709 Revenues over (under) expenditures (1,932,743) 3,678,883 5,611,626 Other financing sources: Operating transfers in - 26,092 26,092 Revenues under expenditures and other uses (1,932,743) 3,704,975 5,637,718 Appropriated fund balance 1,932,743 - (1,932,743) Revenues, other financing sources and appropriated fund balance over expenditures $ - 3,704,975 $ 3,704,975 Fund balances: Beginning of year, July 1 8,332,991 Increase in reserve for inventory 29,732 End of year, June 30 $ 12,067,698 Page 55

71 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - CAPITAL OUTLAY FUND For the Year Ended June 30, 2012 Revenues: State of North Carolina: State appropriations - buses 78,326 Exhibit B-1 Variance Positive Budget Actual (Negative) $ $ 78,326 $ - State appropriations - lottery proceeds 688, , ,736 Total State of North Carolina 766,708 1,051, ,736 Duplin County 1,333, ,217 (376,829) Other - 16,862 16,862 Total revenues 2,099,754 2,024,523 (75,231) Expenditures: Current: Instructional services 366, , ,013 System-wide support services 1,080,374 1,061,060 19,314 Capital outlay 1,729,511 1,554, ,999 Debt Service Principal 78,326 78,880 (554) Total expenditures 3,254,211 2,951, ,772 Revenues over (under) expenditures (1,154,457) (926,916) 227,541 Other financing sources: Installment purchase obligations issued 999, ,698 - Revenues and other financing sources over (under) expenditures (154,759) 72, ,541 Appropriated fund balance 154,759 - (154,759) Revenues, other sources and appropriated fund balance over expenditures $ - 72,782 $ 72,782 Fund balance: Beginning of year, July 1 484,612 End of year, June 30 $ 557,394 Page 56

72 SCHEDULE OF REVENUES AND EXPENDITURES - BUDGET AND ACTUAL (NON- GAAP) - CHILD NUTRITION FUND For the Year Ended June 30, 2012 Exhibit C-1 Variance Positive Budget Actual (Negative) Operating revenues $ 1,212,500 $ 1,025,967 $ (186,533) Operating expenditures: Business support services 5,175,233 5,070, ,285 Capital outlay 88,267 45,449 42,818 Total operating expenditures 5,263,500 5,116, ,103 Operating loss (4,051,000) (4,090,430) (39,430) Nonoperating revenues: Federal reimbursements 3,800,000 3,941, ,518 Federal commodities 251, ,987 34,987 State reimbursements - 11,916 11,916 Interest earned - 2,982 2,982 Total nonoperating revenues 4,051,000 4,242, ,403 Revenues under expenditures $ - $ 151,973 $ 151,973 Reconciliation of modified accrual to full accrual basis: Revenues under expenditures $ 151,973 Depreciation (43,810) Capital outlay 45,449 Indirect costs (420,021) Indirect costs not paid 224,661 Transfer from other fund 44,029 Increase in inventories (1,880) Decrease in compensated absences (401) Change in net assets (full accrual) $ - Page 57

73 SCHEDULE OF REVENUES AND EXPENDITURES - BUDGET AND ACTUAL (NON- GAAP) - LIBERTY HALL FUND For the Year Ended June 30, 2012 Exhibit C-2 Variance Positive Budget Actual (Negative) Revenues: Other $ 4,658 $ 7,129 $ 2,471 Expenditures: Salaries and benefits 40,180 Repairs and maintenance 34,156 Contracted services - Scholarships and donations 12,309 Other 38,928 Total expenditures 212, ,573 86,585 Operating loss (207,500) (118,444) 89,056 Nonoperating revenues: Investment income, net - 12,292 12,292 Contributions and donations 207,500 80,000 (127,500) Total nonoperating revenues 207,500 92,292 (115,208) Revenues under expenditures $ - $ (26,152) $ (26,152) Reconciliation of modified accrual to full accrual basis: Revenues under expenditures $ (26,152) Depreciation (5,124) Change in net assets (full accrual) $ (31,276) Page 58

74 SCHEDULE OF REVENUES AND EXPENDITURES - BUDGET AND ACTUAL (NON- GAAP) - AFTER SCHOOL CARE FUND For the Year Ended June 30, 2012 Exhibit C-3 Variance Positive Budget Actual (Negative) Revenues: Child care fees $ - $ 51,082 $ 51,082 Expenditures: Salaries and benefits 39,903 Other 1,601 Total expenditures - 41,504 (41,504) Operating income - 9,578 9,578 Nonoperating revenues: Investment income, net - 1,458 1,458 Revenues over expenditures $ - $ 11,036 $ 11,036 Page 59

75 COMBINING STATEMENT OF FIDUCIARY NET ASSETS - FIDUCIARY FUNDS June 30, 2012 Exhibit D-1 Private Purpose Trust Funds Southeast Education Alliance Dickson Loan Fund Total ASSETS Cash and cash equivalents $ 86,758 $ 80,993 $ 167,751 NET ASSETS Assets held in trust for private purposes $ 86,758 $ 80,993 $ 167,751 Page 60

76 COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS - FIDUCIARY FUNDS For the Year Ended June 30, 2012 Exhibit D-2 Southeast Education Alliance Private Purpose Trust Funds Dickson Loan Fund Total Additions: Memberships and other revenues $ 460,853 $ - $ 460,853 Interest income Total additions 461, ,640 Deductions: Salaries and benefits 189, ,517 Workshops and related items 234, ,934 Other 35,266-35,266 Total deductions 459, ,717 Change in net assets 1, ,923 Beginning net assets 85,216 80, ,828 Ending net assets $ 86,758 $ 80,993 $ 167,751 Page 61

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78 Statistical Section

79 STATISTICAL SECTION (Unaudited) The Statistical Section of the District s Comprehensive Annual Financial Report (CAFR) presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the District s overall financial outlook. Financial Trends Sections These schedules contain trend information to help the reader understand how the District s financial performance and operations have changed over time. Revenue Capacity Since the District s local revenues are primarily provided by Duplin County, these schedules on the county s revenue sources are relevant to an understanding of Duplin County s most significant local revenue source, the property tax. Debt Capacity Since the District has no tax-levying or debt-issuing authority, the County of Duplin provides significant funding to the school system. Selected fiscal data from the County of Duplin has been included to help the reader better understand the school system and its financial operations. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the District s financial activities take place. County information is included. Operating Information These schedules contain service data to help the reader understand how the information in the District s financial report relates to the services the District provides and the activities it performs. Page 63

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81 Table 1 Financial Perspective Governmental and Business-type Activities For Year Ended June 30, 2012 State of North Carolina Revenue Sources Duplin County Instructional services Expenses Federal System-wide support services Other School food service Other School food service Unallocated depreciation State of North Carolina $ 55,417,688 Instructional services $ 59,583,949 Duplin County 9,817,937 System-wide support services 17,037,224 Federal 10,094,282 Unallocated depreciation 393,268 School food service 5,493,031 School food service 5,537,060 Other 4,621,213 Other 278,909 Total revenue sources $ 85,444,151 Total expenses $ 82,830,410 65

82 Table 2 Net Assets by Component Last Ten Fiscal Years Year Ended June Governmental activities: Invested in capital assets, net of related debt $ 51,189,514 $ 51,650,773 $ 51,293,389 $ 50,300,570 $ 50,065,463 $ 48,517,548 $ 48,075,722 $ 48,454,472 $ 49,107,021 $ 47,963,740 Restricted 881, , , ,385 1,047,008 1,025, , ,213 1,496,346 1,306,762 Unrestricted 5,148,494 3,695,351 1,962,327 1,024,207 1,628,826 3,390,126 1,586,781 2,999,326 4,068,752 8,061,690 $ 57,219,593 $ 56,229,278 $ 54,195,135 $ 52,237,162 $ 52,741,297 $ 52,933,544 $ 50,520,999 $ 52,115,011 $ 54,672,119 $ 57,332,192 Business-type activities: Invested in capital assets $ 419,371 $ 408,635 $ 469,235 $ 453,122 $ 393,385 $ 368,484 $ 324,832 $ 307,547 $ 271,140 $ 267,655 Unrestricted 3,839,257 4,449,536 4,611,640 4,441,473 4,670,755 3,875,001 3,558,975 3,871,842 4,520,266 4,477,419 $ 4,258,628 $ 4,858,171 $ 5,080,875 $ 4,894,595 $ 5,064,140 $ 4,243,485 $ 3,883,807 $ 4,179,389 $ 4,791,406 $ 4,745,074 District-wide: Invested in capital assets, net of related debt $ 51,608,885 $ 52,059,408 $ 51,762,624 $ 50,753,692 $ 50,458,848 $ 48,886,032 $ 48,400,554 $ 48,762,019 $ 49,378,161 $ 48,231,395 Restricted 881, , , ,385 1,047,008 1,025, , ,213 1,496,346 1,306,762 Unrestricted 8,987,751 8,144,887 6,573,967 5,465,680 6,299,581 7,265,127 5,145,756 6,871,168 8,589,018 12,539,109 $ 61,478,221 $ 61,087,449 $ 59,276,010 $ 57,131,757 $ 57,805,437 $ 57,177,029 $ 54,404,806 $ 56,294,400 $ 59,463,525 $ 62,077,266 Source: Duplin County Board of Education, North Carolina, Annual Financial Report for the year ended June 30,

83 Net Assets (millions) Table 2 Net Assets by Component District-wide $60 $50 $40 $30 $20 $10 $ Fiscal Year Ended June 30 Invested in capital assets, net of related debt Restricted Unrestricted 67

84 Table 3 Changes in Net Assets Last Ten Fiscal Years Year Ended June Expenses Governmental activities: Instructional services $ 40,570,854 $ 45,072,631 $ 48,775,707 $ 50,872,033 $ 53,557,631 $ 60,595,931 $ 62,357,999 $ 59,259,019 $ 60,262,412 $ 59,583,949 System-wide support services 11,996,772 14,088,109 14,892,194 15,444,693 17,149,371 12,541,318 15,292,300 14,214,337 15,655,930 17,037,224 Ancillary services 51,645 51,234 33,176 43,840 17,350 32,003 18,363 27,667 10, ,019 Non-programmed charges , ,536 12,044 1,689 Interest on long-term debt - - 1,249 5,844 1,669 12,516 14, Loss on disposal of capital assets Unallocated depreciation expense 1,726,612 1,832,656 1,900,832 1,892,739 1,914,720 2,147,465 2,220,719 2,274,343 1,292, ,268 Total governmental activities expenses 54,345,906 61,044,630 65,603,158 68,261,464 72,640,741 75,329,233 79,903,402 75,797,004 77,233,213 77,121,149 Business-type activities: School food service 3,619,253 3,890,881 4,407,054 4,983,345 5,069,854 5,399,399 4,976,774 5,101,388 5,224,474 5,537,060 Child care 147, , , , , , ,182 40,517 29,802 41,504 Liberty Hall 99, , , , , , , , , ,697 3,866,328 4,176,417 4,686,435 5,261,339 5,421,884 5,763,759 5,199,116 5,352,441 5,460,929 5,709,261 Total district-wide expenses $ 58,212,234 $ 65,221,047 $ 70,289,593 $ 73,522,803 $ 78,062,625 $ 81,092,992 $ 85,102,518 $ 81,149,445 $ 82,694,142 $ 82,830,410 Program Revenues Governmental activities: Charges for services: Regular instructional 11,513 9, Other 1,480,974 1,704,269 1,475,841 1,576,802 1,592,746 1,282,914 1,270,205 1,528, , ,915 Operating grants and contributions 43,543,471 47,763,701 51,051,041 53,270,642 56,826,713 58,513,558 59,556,392 60,057,385 61,402,598 61,300,880 Capital grants and contributions 14, , ,359 35,679 1,367,784-78,326 Total governmental activities program revenues 45,049,991 49,646,695 52,526,882 54,847,444 58,419,459 59,809,831 60,862,276 62,953,504 61,974,185 61,870,121 Business-type activities: Charges for services: Student meal services 1,068,429 1,169,920 1,203,345 1,253,529 1,346,540 1,150,158 1,161,955 1,146,580 1,067,573 1,025,967 Child care services 147, , , , , ,733 94,325 37,254 42,768 51,082 Liberty Hall 9,139 10,752 11,216 7,182 9,646 7,663 7,436 7,020 5,048 7,129 Operating grants and contributions 2,867,812 3,176,465 3,286,576 3,439,550 3,557,529 3,805,295 3,862,952 4,115,382 4,384,956 4,544,082 Total business-type activities program revenues 4,093,132 4,510,381 4,634,993 4,835,573 5,088,428 5,113,849 5,126,668 5,306,236 5,500,345 5,628,260 Total district-wide program revenues $ 49,143,123 $ 54,157,076 $ 57,161,875 $ 59,683,017 $ 63,507,887 $ 64,923,680 $ 65,988,944 $ 68,259,740 $ 67,474,530 $ 67,498,381 Net (Expense) Revenue Governmental activities $ (9,295,915) $ (11,397,935) $ (13,076,276) $ (13,414,020) $ (14,221,282) $ (15,519,402) $ (19,041,126) $ (12,843,500) $ (15,259,028) $ (15,251,028) Business-type activities 226, ,964 (51,442) (425,766) (333,456) (649,910) (72,448) (46,205) 39,416 (81,001) Total district-wide net (expense) revenue $ (9,069,111) $ (11,063,971) $ (13,127,718) $ (13,839,786) $ (14,554,738) $ (16,169,312) $ (19,113,574) $ (12,889,705) $ (15,219,612) $ (15,332,029) 68

85 Changes in Net Assets (continued) Last Ten Fiscal Years Table 3 (continued) Year Ended June General Revenues and Other Changes in Net Assets Governmental activities: Unrestricted county appropriations - operating $ 5,487,888 $ 5,597,646 $ 6,097,646 $ 6,097,646 $ 7,597,646 $ 7,347,646 $ 7,727,529 $ 7,727,529 $ 8,861,720 $ 8,861,720 Unrestricted county appropriations - capital 1,210,000 1,350,000 1,350,000 1,550,000 1,455,500 1,830,000 2,957,166 1,438,825 1,131, ,217 Unrestricted State appropriations - operating 2,119,209 2,182,375 2,288,178 2,832,617 3,887,356 4,064,792 3,817,012 3,714,655 1,390,017 1,158,761 Unrestricted State appropriations - capital 1,009, , , , , , ,805 59,590 1,495,180 1,051,444 Unrestricted Federal appropriations - capital 179, , Investment earnings, unrestricted 112, , , , , , ,171 55,037 48,454 42,973 Miscellaneous, unrestricted 563, , , ,482 1,213,996 1,549,294 1,693,287 1,534,346 4,935,807 5,857,923 Transfers (77,389) (92,470) (46,059) (17,937) Total governmental activities 10,681,191 10,407,620 11,042,133 11,456,047 14,725,417 15,417,086 16,628,581 14,437,512 17,816,136 17,911,101 Business-type activities: Investment earnings, unrestricted 31, , , , ,921 (170,745) (364,619) 249, ,542 16,732 Miscellaneous, unrestricted (4,822) - (11,776) (417) Transfers ,389 92,470 46,059 17,937 Total business-type activities 26, , , , ,001 (170,745) (287,230) 341, ,601 34,669 Total district-wide $ 10,707,810 $ 10,688,425 $ 11,316,279 $ 11,695,533 $ 15,228,418 $ 15,246,341 $ 16,341,351 $ 14,779,299 $ 18,388,737 $ 17,945,770 Change in Net Assets Governmental activities $ 1,385,276 $ (990,315) $ (2,034,143) $ (1,957,973) $ 504,135 $ (102,316) $ (2,412,545) $ 1,594,012 $ 2,557,108 $ 2,660,073 Business-type activities 253, , ,704 (186,280) 169,545 (820,655) (359,678) 295, ,017 (46,332) Total district-wide change in net assets $ 1,638,699 $ (375,546) $ (1,811,439) $ (2,144,253) $ 673,680 $ (922,971) $ (2,772,223) $ 1,889,594 $ 3,169,125 $ 2,613,741 Source: Duplin County Board of Education, North Carolina, Annual Financial Report for the year ended June 30, 2012 Note: Expenses for 2007 and before are not comparable to 2008 (and after) expenses due to a change in the Uniform Chart of Accounts required to be used by all Local Education Agencies in North Carolina. 69

86 Table 4 Governmental Funds Fund Balances Last Ten Fiscal Years Year Ended June General Fund Reserved $ 690,496 $ 908,029 $ 685,914 $ 599,076 $ 591,471 $ 1,149,549 $ 1,006,896 $ 909,811 $ - $ - Unreserved 4,817,774 3,765,566 2,563,061 2,024,686 3,303,969 3,646,219 3,079,105 4,063, Nonspendable , ,155 Restricted ,781 98,409 Assigned ,932,743 4,022,835 Unassigned ,736,044 7,703,299 Total General Fund $ 5,508,270 $ 4,673,595 $ 3,248,975 $ 2,623,762 $ 3,895,440 $ 4,795,768 $ 4,086,001 $ 4,973,419 $ 8,332,991 $ 12,067,698 All Other Governmental Funds Reserved $ 208,120 $ 912,255 $ 564,308 $ 190,913 $ 227,668 $ 336,004 $ 907,788 $ 1,071,254 $ - $ - Unreserved, reported in Special Revenue Funds 843, , , ,385 1,047,008 1,008, , , Capital Projects Fund 2,023,726 1,049,417 1,192,664 1,477,863 1,498,569 1,615, ,933 54, Restricted ,090,045 1,208,353 Total all other governmental funds $ 3,075,030 $ 2,773,358 $ 2,650,257 $ 2,581,161 $ 2,773,245 $ 2,960,202 $ 2,356,217 $ 1,786,981 $ 1,090,045 $ 1,208,353 Source: Duplin County Board of Education, North Carolina, Annual Financial Report for the year ended June 30, 2012 Note: Fund balances for 2010 and before are not comparable to 2011 fund balances due to the implementation of GASB 54 for the year ended June 30, The standard replaces the previous reserved and unreserved fund balance categories with the following five fund balance classifications: nonspendable, restricted, committed, assigned, and unassigned fund balance. 70

87 Fund Balance (millions) Fund Balance (millions) Table 4 Governmental Funds Fund Balances - Before GASB 54 Implementation $5 $5 $4 $4 $3 $3 $2 $2 $1 $1 $ Reserved, All Funds Unreserved, General Unreserved, Special Revenue Fund Unreserved, Capital Projects Fund Governmental Funds Fund Balances - After GASB 54 Implementation $8 $7 $6 $5 $4 $3 $2 $1 $ Restricted, All Funds Assigned, General Unassiged, General Nonspendable, General 71

88 Table 5 Governmental Funds Changes in Fund Balances Last Ten Fiscal Years Year Ended June Revenues State of North Carolina $ 41,002,202 $ 42,280,099 $ 43,942,115 $ 46,672,699 $ 52,483,447 Duplin County 6,697,888 6,947,646 7,447,646 7,647,646 9,053,146 U.S. Government 5,763,675 8,400,823 10,022,763 9,639,766 8,503,841 Other 2,541,820 2,759,077 2,568,105 2,811,342 3,242,464 Total revenues 56,005,585 60,387,645 63,980,629 66,771,453 73,282,898 Expenditures Instructional services 40,672,178 45,264,960 48,820,517 50,701,104 53,461,991 System-wide support services 11,638,094 13,621,285 14,439,515 14,716,273 16,444,058 Ancillary services 50,280 52,399 33,376 43,840 17,350 Non-programmed charges 34,846 81,443 51, , ,493 Debt service - 161, , , ,919 Capital outlay 2,391,626 2,875,200 2,158,453 1,681,769 2,193,148 Total expenditures 54,787,024 62,056,315 65,708,391 67,502,897 72,538,959 Revenues over (under) expenditures 1,218,561 (1,668,670) (1,727,762) (731,444) 743,939 Other financing sources Installment purchase obligations - 483, , ,878 Total other financing sources - 483, , ,878 Net change in fund balances $ 1,218,561 $ (1,185,588) $ (1,607,070) $ (731,444) $ 1,418,817 Ratio of debt service expenditures to total non-capital expenditures 0.00% 0.27% 0.32% 0.31% 0.39% Year Ended June Revenues State of North Carolina $ 55,381,733 $ 56,055,096 $ 53,095,779 $ 53,518,605 $ 55,417,688 Duplin County 9,177,646 10,684,695 9,166,354 9,992,737 9,817,937 U.S. Government 7,430,421 7,509,579 12,068,973 12,740,339 10,094,282 Other 3,224,561 3,387,556 2,978,247 4,583,883 4,439,520 Total revenues 75,214,361 77,636,926 77,309,353 80,835,564 79,769,427 Expenditures Instructional services 60,203,485 62,110,151 59,698,667 60,143,940 58,500,422 System-wide support services 12,685,612 14,021,017 15,618,974 15,127,513 16,449,405 Ancillary services 32,003 18,363 20,890 10, ,882 Non-programmed charges 136, ,824 21, , ,804 Debt service 233, ,805 59, ,980 78,880 Capital outlay 1,119,705 2,045,786 1,891,381 2,134,231 1,554,512 Total expenditures 74,410,767 78,569,946 77,311,038 77,903,538 76,927,905 Revenues over (under) expenditures 803,594 (933,020) (1,685) 2,932,026 2,841,522 Other financing sources (uses) Transfers to other funds - (77,389) (92,470) (46,059) (17,937) Installment purchase obligations ,029 82, ,698 Total other financing sources (uses) - (77,389) 139,559 36, ,761 Net change in fund balances $ 803,594 $ (1,010,409) $ 137,874 $ 2,968,720 $ 3,823,283 Ratio of debt service expenditures to total non-capital expenditures 0.32% 0.31% 0.08% 0.16% 0.10% Source: Duplin County Board of Education, North Carolina, Annual Financial Report for the year ended June 30, 2012 Note: Expenditures for 2007 and before are not comparable to 2008 (and after) expenditures due to a change in the Uniform Chart of Accounts required to be used by all Local Education Agencies in North Carolina. 72

89 Expenditures (millions) Revenues (millions) Table 5 Governmental Funds Revenues by Source $60 $50 $40 $30 $20 $10 $ Fiscal Year Ended June 30 State of North Carolina Duplin County U.S. Government Other Expenditures by Function $70 $60 $50 $40 $30 $20 $10 $ Fiscal Year Ended June 30 Instructional services System-wide support services Ancillary services Non-programmed charges Capital outlay 73

90 Table 6 Operational Expenditures Per Pupil Expenditures by Function Last Ten Fiscal Years EXPRESSED IN NOMINAL DOLLARS Year Ended June Average Daily Membership 8,653 8,680 8,759 8,896 8,833 Instructional $ 4,700 $ 5,215 $ 5,574 $ 5,699 $ 6,053 System-wide support 1,345 1,569 1,649 1,654 1,862 Ancillary Total expenditures per pupil $ 6,051 $ 6,790 $ 7,227 $ 7,358 $ 7,917 EXPRESSED IN NOMINAL DOLLARS Year Ended June Average Daily Membership 8,865 8,815 8,837 8,945 9,158 Instructional $ 6,791 $ 7,046 $ 6,756 $ 6,724 $ 6,388 System-wide support 1,431 1,591 1,767 1,691 1,796 Ancillary Total expenditures per pupil $ 8,226 $ 8,639 $ 8,525 $ 8,416 $ 8,195 EXPRESSED IN CONSTANT DOLLARS Year Ended June Instructional $ 2,559 $ 2,749 $ 2,866 $ 2,809 $ 2,905 System-wide support Ancillary Total expenditures per pupil $ 3,294 $ 3,579 $ 3,716 $ 3,626 $ 3,800 EXPRESSED IN CONSTANT DOLLARS Year Ended June Instructional $ 3,104 $ 3,267 $ 3,100 $ 2,979 $ 2,784 System-wide support Ancillary Total expenditures per pupil $ 3,760 $ 4,006 $ 3,912 $ 3,728 $ 3,572 Source: Duplin County Board of Education, North Carolina, Annual Financial Report for the year ended June 30, The above operational expenditures per pupil include all governmental funds. Note: Nominal dollars reflect actual dollars of the period of the transaction. Constant dollars reflect dollars having a constant general purchasing power as shown by the Consumer Price Index for All Urban Consumers (CPI-U) (Calendar years =100). Note: Expenditures for 2007 and before are not comparable to 2008 (and after) expenditures due to a change in the Uniform Chart of Accounts required to be used by all Local Education Agencies in North Carolina. 74

91 Per Pupil Expenditures (nominal dollars) Table 6 Operational Expenditures Per Pupil Expenditures by Function $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $ Fiscal Year Ended June 30 Instructional System-wide support Ancillary 75

92 Table 7 Proprietary Fund - Food Services Operations Revenues by Source Last Ten Fiscal Years EXPRESSED IN NOMINAL DOLLARS Year Ended June Food sales $ 1,067,570 $ 1,169,920 $ 1,198,846 $ 1,249,466 $ 1,337,835 Federal reimbursements 2,550,411 2,801,904 2,961,759 3,123,491 3,211,372 Federal commodities 166, , , , ,033 Other 8,804 23,253 26,513 36,848 42,144 Total revenues $ 3,793,186 $ 4,299,638 $ 4,401,925 $ 4,643,409 $ 4,852,384 EXPRESSED IN NOMINAL DOLLARS Year Ended June Food sales $ 1,150,158 $ 1,161,809 $ 1,145,792 $ 1,067,573 $ 1,025,967 Federal reimbursements 3,373,615 3,425,412 3,711,132 3,740,341 3,941,518 Federal commodities 281, , , , ,987 Other 20, ,949 2,318 34, ,559 Total revenues $ 4,826,112 $ 5,146,710 $ 5,103,492 $ 5,174,413 $ 5,493,031 EXPRESSED IN CONSTANT DOLLARS Year Ended June Food sales $ 581,149 $ 616,721 $ 616,373 $ 615,804 $ 642,103 Federal reimbursements 1,388,357 1,477,018 1,522,755 1,539,424 1,541,320 Federal commodities 90, , , , ,285 Other 4,793 12,258 13,631 18,161 20,227 Total revenues $ 2,064,882 $ 2,266,546 $ 2,263,200 $ 2,288,522 $ 2,328,935 EXPRESSED IN CONSTANT DOLLARS Year Ended June Food sales $ 525,630 $ 538,640 $ 525,677 $ 472,959 $ 447,087 Federal reimbursements 1,541,766 1,588,096 1,702,627 1,657,056 1,717,602 Federal commodities 128, , , , ,625 Other 9, ,763 1,063 15, ,393 Total revenues $ 2,205,567 $ 2,386,127 $ 2,341,426 $ 2,292,383 $ 2,393,707 Source: Duplin County Board of Education, North Carolina, Annual Financial Report for the year ended June 30, 2012 Note: Other revenue includes interest earned, State reimbursements, indirect costs not paid, and other revenue. Note: Nominal dollars reflect actual dollars of the period of the transaction. Constant dollars reflect dollars having a constant general purchasing power as shown by the Consumer Price Index for All Urban Consumers (CPI-U) (Calendar years = 100). 76

93 Revenues (nominal dollars in millions) Table 7 Proprietary Fund - Food Services Operations Revenues by Source $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $ Fiscal Year Ended June 30 Food sales Federal reimbursements Federal commodities Other 77

94 Table 8 Proprietary Fund - Food Services Operations Expenses by Category Last Ten Fiscal Years EXPRESSED IN NOMINAL DOLLARS Year Ended June Purchase of food $ 1,546,606 $ 1,709,349 $ 1,826,958 $ 2,049,807 $ 2,103,135 Salaries and benefits 1,514,295 1,623,826 1,810,930 2,069,178 2,305,637 Other 558, , , , ,082 Total expenses $ 3,619,253 $ 3,890,881 $ 4,407,054 $ 4,983,345 $ 5,069,854 EXPRESSED IN NOMINAL DOLLARS Year Ended June Purchase of food $ 2,437,245 $ 2,154,943 $ 2,058,017 $ 2,154,849 $ 2,246,664 Salaries and benefits 2,224,516 2,329,492 2,277,120 2,357,396 2,484,177 Other 737, , , , ,219 Total expenses $ 5,399,399 $ 5,242,221 $ 5,101,388 $ 5,224,474 $ 5,537,060 EXPRESSED IN CONSTANT DOLLARS Year Ended June Purchase of food $ 841,919 $ 901,080 $ 939,310 $ 1,010,255 $ 1,009,414 Salaries and benefits 824, , ,069 1,019,802 1,106,607 Other 303, , , , ,291 Total expenses $ 1,970,197 $ 2,051,071 $ 2,265,837 $ 2,456,060 $ 2,433,312 EXPRESSED IN CONSTANT DOLLARS Year Ended June Purchase of food $ 1,113,838 $ 999,079 $ 944,196 $ 954,647 $ 979,032 Salaries and benefits 1,016,620 1,080,004 1,044,718 1,044,380 1,082,534 Other 337, , , , ,327 Total expenses $ 2,467,564 $ 2,430,409 $ 2,340,462 $ 2,314,561 $ 2,412,893 Source: Duplin County Board of Education, North Carolina, Annual Financial Report for the year ended June 30, 2012 Note: Other expense includes indirect costs, materials and supplies, repairs and maintenance, depreciation, and other expenses. Note: Nominal dollars reflect actual dollars of the period of the transaction. Constant dollars reflect dollars having a constant general purchasing power as shown by the Consumer Price Index for All Urban Consumers (CPI-U) (Calendar years = 100). 78

95 Expenses (nominal dollars in millions) Table 8 Proprietary Fund - Food Services Operations Expenses by Category $2.5 $2.0 $1.5 $1.0 $0.5 $ Fiscal Year Ended June 30 Purchase of food Salaries and benefits Other 79