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1 REPORT ON AUDITED FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION JUNE 30, 2010

2 ================================= TABLE OF CONTENTS JUNE 30, 2010 Independent Auditor's Report Management's Discussion and Analysis PAGE(S) Basic Financial Statements: Statement Number 1 Statement of Net Assets - Governmental Activities 2 Statement of Activities Changes in Net Assets - Governmental Activities 3 Balance Sheet -Governmental Funds 3A Reconciliation of Governmental Funds Balance Sheet to the Statement of Net Assets 4 Statement of Revenues, Expenditures, and Changes in 4A 5 6 Fund Balances - Governmental Funds Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances Statement of Fiduciary Net Assets - Fiduciary Funds Statement of Changes in Fiduciary Net Assets - Fiduciary Funds Notes to Financial Statements Required Supplementary Information, Other Supplemental Schedules and Additional Information: Schedule SS-1 SS-2 SS-3 SS-4 SS-5 SS-6 SS-7 Required Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - General Fund Schedules of Change From Adopted Budget to Final Budget and Use of Unrestricted Fund Balance - General Fund Schedule of Project Expenditures - Capital Projects Funds Schedule of Certain Revenues and Expenditures Compared to ST-3 Data Investment in Capital Assets, Net of Related Debt Schedule of Funding Progress for "The Plan" Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. Report on Compliance with Requirements Applicable to Each Major Program and Internal Control over Compliance in Accordance with OMB Circular A-133 Schedule of Findings and Questioned Costs Summary Schedule of Prior Audit Findings Report on Extraclassroom Activity Funds 58-60

3 POULSEN & PODVIN, CPA, P.C. 145 Clinton St. Watertown NY INDEPENDENT AUDITOR'S REPORT To the President and Members of the Board of Education of the LaFargevilie Central School District We have audited the accompanying financial statements of the governmental activities and each major fund of the La Fargeville Central School District, as of and for the year ended June 30, 2010, which collectively comprise the School District's basic financial statements as listed in the table of contents. These financial statements are the responsibility of LaFargevilie Central School District'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, the Minimum Program for Audit of Financial Records of the New York State School Districts, and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the 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 and each major fund of the LaFargevilie Central School District, as of June 30, 2010, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated October 4, 2010, on our consideration of the LaFargevilie Central School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 1

4 Accounting principles generally accepted in the United States of America require that the management's discussion and analysis (pages 3-13), budgetary comparison information (page 45) and the Schedule of Funding Progress for "The Plan" (page 50) 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 LaFargevilie Central School District's financial statements, as a whole. The supplemental schedules SS-2 through SS-5, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards (supplemental schedule SS-7) is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the financial statements. The Schedule of Expenditures of Federal Awards is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respect in relation to the financial statements taken as a whole. October 4,

5 Management's Discussion and Analysis The following is a discussion and analysis of LaFargevilie Central School District's financial performance for the fiscal year ended June 30, This section is a summary of the School District's financial activities based on currently known facts, decisions, or conditions. It is also based on both the government-wide and fund-based financial statements. This section is only an introduction and should be read in conjunction with the School District's financial statements, which immediately follow this section. Responsibility for completeness and fairness of the information contained rests with the School District. FINANCIAL HIGHLIGHTS The School District's purpose is to educate all students to high levels of academic performance while fostering positive growth in social/emotional behaviors and attitudes. The board of education is the governing body elected by the residents of the School District. Their mission is to maintain certain standards in excellence set by the New York State Board of Regents. This has to be accomplished with the least economic impact to the local taxpayer. The following financial highlights are the School District's attempt at completing this mission. For the year ended June 30, 2010, total revenues of $9,286,449 were $486,238 less than $9,772,687 in expenses. This change in net assets of $(486,238) was added to the Net Assets beginning of the year balance of $5,343,889 for ending Net Assets of $4,857,651. The School District's portion of Unrestricted Net Assets designated to reduce real estate taxes in is $599,900. The General Fund Undesignated Fund Balance is $556,163 or 5.76% of the budget. The total property assessment for the School District in the school year was $397,264,515. The true value tax rate for was $7.65 per thousand of assessment. The School District employs about 100 full and part-time employees. The two unions, (Teacher's Union and Support Related Personnel) utilize collective bargaining agreements. The Teacher's Association has an agreement in place until June 30, The CSEA agreement expired June 30, 2010 and they are currently in negotiations. K-12 enrollment for the school year was 582 which was a increase of 3 students over the year. Projections for show an increase of 16 students for a K-12 enrollment of 598. The District has maintained standards set by the New York State Education Department for the testing of their students to achieve mastery in certain core subjects at or above the levels set by the State Education Department for the year ending June 30,

6 OVERVIEW OF FINANCIAL STATEMENTS This annual report consists of three parts: MD&A (this section), the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of the school district: The first two statements are district-wide financial statements that provide both shortterm and long-term information about the school district's overall financial status. The remaining statements are fund financial statements that focus on individual parts of the School District, reporting the School District's operations in more detail than the district-wide statements. The fund financial statements concentrate on the School District's most significant funds with all other non-major funds listed in total in one column. The governmental funds statements tell how basic services such as regular and special education were financed in the short term as well as what remains for future spending. Fiduciary funds statements provide information about the financial relationships in which the School District acts solely as a trustee or agent for the benefit of others. The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information (Supplemental schedule SS-1) that further explains and supports the financial statements with a comparison of the School District's budget and actual for the year. The following summarizes the major features of the School District's financial statements, including the portion of the School District's activities they cover and the types of information they contain. The remainder of this overview section of MD&A highlights the structure and contents of each of the statements. Major Features of the District-Wide and Fund Financial Statements Fund Financial Statements District-Wide Governmental Funds Fiduciary Funds Scope Entire District (except fiduciary The activities of the School Instances in which the School funds) District that are not proprietary District administers resources or fiduciary. such as special on behalf of someone else, education and building such as scholarship programs maintenance and student activities monies Required financial. Statement of net assets. Balance sheet. Statement of fiduciary net statements. Statement of activities. Statement of revenues, assets expenditures, and changes. Statement of changes in in fund balances fiduciary net assets Accounting basis and Accrual accounting and Modified accrual accounting Accrual accounting and measurement focus economic resources focus and current financial focus economic resources focus Type of asset/liability All assets and liabilities, both Generally, assets expected to All assets and liabilities, both information financial and capital, short- be used up and liabilities that short-term and long-term; term and long-term come due during the year or funds do not currently contain soon thereafter; no capital capital assets, although they assets or long-term liabilities can included Type of inflow/out flow All revenues and expenses Revenues for which cash is All additions and deductions information during year, regardless of received during or soon after during the year, regardless of when cash is received or paid the end of the year; when cash is received or paid expenditures when goods or services have been received and the related liability is due and payable 4

7 District-Wide Statements The district-wide statements report information about the School District as a whole using accounting methods similar to those used by private-sector companies. The statement of net assets includes all of the School District's assets and liabilities. All of the current year's revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two district-wide statements report the School District's net assets and how they have changed. Net assets, the difference between the School District's assets and liabilities, is one way to measure the School District's financial health or position. Over time, increases or decreases in the School District's net assets are in indicator of whether its financial position is improving or deteriorating, respectively. To assess the School District's overall health, you need to consider additional nonfinancial factors such as changes in the School District's property tax base and the condition of school buildings and other facilities. In the district-wide financial statements, the School District's activities are shown as Governmental activities: Most of the School District's basic services are included here, such as regular and special education, transportation, and administration. Property taxes and State and Federal aid finance most of these activities. Fund Financial Statements The fund financial statements provide more detailed information about the School District's funds, focusing on its most significant or "major" funds -not the School District as a whole. Funds are accounting devices the School District uses to keep track of specific sources of funding and spending on particular programs: Some funds are required by State law and by bond covenants. The School District establishes other funds to control and to manage money for particular purposes (such as repaying its long-term debts) or to show that it is properly using certain revenues (such as Federal grants). The District has two kinds of funds: 1) Governmental Funds: Most of the School District's basic services are included in governmental funds, which generally focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the School District's programs. Because this information does not encompass the additional longterm focus of the district- wide statements, additional information at the bottom of the governmental funds statements explains the relationship (or differences) between them. 5

8 2) Fiduciary Funds: The School District is the trustee, or fiduciary, for assets that belong to others, such as the scholarship fund and the student activities funds. The School District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The School District excludes these activities from the district-wide financial statements because it cannot use these assets to finance its operations. FINANCIAL ANALYSIS OF THE SCHOOL DISTRICT AS A WHOLE Net assets may serve over time as a useful indicator of a government's financial position. In the case of the School District assets exceeded liabilities by $4,857,651 at the close of the most recent fiscal year. The largest portion of the School District's net assets (73%) reflects its investment in capital assets less any related debt used to acquire those assets that is still outstanding. The School District used capital assets to provide services; consequently, these assets are not available for future spending. Although the School District's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The following schedule summarizes the School District's net assets. The complete Statement of Net Assets can be found in the School District's basic financial statements. CONDENSED STATEMENT OF NET ASSETS ASSETS 6/30/09 6/30/10 Current and other assets $4,449,608 $17,314,048 Capital assets, net Total Assets 9,148,977 25,285,588 LIABILITIES Current liabilities 2,650,500 18,691,895 Long-term liabilities Total liabilities 3,805,088 20,427,937 NET ASSETS Invested in capital assets, net of related debt 3,093,925 3,530,299 Restricted (251,356) (3,254,638) Unrestricted Total Net Assets $5,343,889 $4,857,651 6

9 In general, current assets are those assets that are available to satisfy current obligations and current liabilities and those liabilities that will be paid within one year. Current assets consist primarily of cash equivalents of $16,668,736 and state, federal and BOCES aid receivable of $634,770. Inventories account for the remaining $10,542. Current liabilities consist principally of BAN's payable totaling $17,866,754 as well as accounts payable and accrued expenses totaling $575,141 and the current portion of long-term debt totaling $250,000. The Statement of Activities shows the cost of program services net of charges for services and grants offsetting those services. General revenues including tax revenue, investment earnings and unrestricted state and federal aid must support the net cost of the School District's programs. The following schedule summarizes the School District's activities. The complete Statement of Activities can be found in the School' District's basic financial statements. CONDENSED STATEMENT OF ACTIVITIES 6/30/09 6/30/10 Revenues Program Revenues Charges for Services $111,746 $98,850 Operating Grants 563, ,933 General Revenues Property and other tax items 3,089,072 3,114,100 Use of money and property 102,429 57,896 Sale of property and compensation for loss 15,460 7,216 Miscellaneous 224, ,046 ' Federal sources 69, ,461 State sources Total Revenue 9,205,813 9,286,449 Expenses General Support 1,386,709 1,958,191 Instruction 5,697,864 6,603,788 Pupil Transportation 692, ,063 Debt Service - interest 117, ,842 Depreciation - unallocated 145, ,889 School Lunch Program - cost of food sales Total Expenses Change in Net Assets $962,046 $(486,238) i 7

10 Sources of Revenues for Year Ending June 30, 2010 Propert y <ll1 d other l ax items St ate & Federal So urces 55% - Opc' rat Il1g Grant" Other SCI"vices 3% 1% The School District is heavily dependent on both state and federal aid for its funding. State and Federal Grants and State and Federal General Revenues combined account for 63% of total revenues. General Tax Revenues account for 33% of revenues received for the year. These two areas make up for 96% of the total revenues received in the school year. Expenses for Fiscal Year Ending June 30, 2010 Instruction 68'('0 Gcner,)1 Support 20"1" School lunch program Ocprcci,)lIOll Pupil lransporlatl on 7'-':'u Instruction, transportation and general support account for 95% of the total expenses of the School District. 8

11 General Fund Budgetary Highlights The School District's total budget increase for was $257,013 or a 2.9% increase from the prior year budget. The School District's budget of $9,225,689 for was approved by referendum on May 19, 2009 by residents that voted. The school district's adjusted budget for the school year was $10,117,134. The adjusted budget includes $536,124 of encumbrances carried over from the prior year as well as $355,321 of Tax Certiorari Reserve dollars utilized in satisfying a tax judgment. Actual expenditures for totaled $8,572,167, which includes transfers out and debt service of $608,020. The school district under-expended its budget by $1,021,787 (net of encumbrances of $523,180). The graph below shows, in general terms, how the actual expenditures are distributed and compared to final budgeted appropriations: Actual Expenditures vs. Final Budgeted Amounts Instruction $4 284, ,856 GcncrJI Support EmployC'e Ben efi ts Transportcitioll Debt Scrv ice Tr,1Il sfers Ou l $34<),<)2 0 $34 <),<) 20 $258,100 $ ActuJI OJ BudgN When constructing the budget the number of special education students to budget for is an uncertainty as the enrollment is continually fluctuating therefore for budgetary control it is the district's custom to overestimate expenditures so as to maintain a favorable variance to be utilized in appropriating fund balance. Unspent appropriations provide cash flow at year-end when state aid is uncertain. Without this balance, the school district would have to borrow funds at year-end to meet its obligations. The only way appropriated fund balance can be lowered without raising the tax levy in the subsequent year is to increase other revenues (State Aid). The School District appropriated $599,900 of the fund balance to reduce taxes for the year ending June 30, 2010 and was able to maintain the $599,900 appropriation for All functional budget codes were under-expended in this year particularly due to an increased tightening of all expenditures. Bracing for potential mid-year State Aid cuts and delayed payments the district exercised great fiscal prudence. 9

12 The school district's general fund receives its funding from many sources. The graph below depicts the actual revenues relative to the final budgeted revenues. Actual Revenues vs. Final Budgeted Revenues Interful1d TrJl1sfers State Jilci Federal Sou rces Tax Items Miscell Jl1eous Use of Money Chll rge for SC'rvices SJle of Propert y ",i'8 «,esityempilljkmnhk & EMS * e(jj~ $ ,40~ ~ ,,~,~6~ ~---~------I ~!&i:tja $216 $10,247 ~ ~l~ b~ ActuJI.. Budget Revenues from Local, State and Federal Sources amounted to $223,398 less than final budget figures after factoring in the $355,321 transfer from the Tax Certiorari Reserve. State aid received was $229,507 less than budgeted. Federal Aid had a favorable variance of $64,553. ANALYSIS OF THE SCHOOL DISTRICT'S FUNDS General Fund General Funds are used to operate the schools daily educational and transportation programs and maintain the buildings and grounds of the facility for continued use. This is the only fund that relies on real property taxes for a portion of funding. Actual property taxes paid (less STAR Reimbursement) amounts to 32.9% of total General Fund revenues. The district settled tax litigation with TI Park during which made it necessary to utilize the tax certiorari reserve that had been established for specifically that purpose. $355,321 was transferred from the Tax Certiorari Reserve to the Fund Balance to cover the $366,493 judgment. The district was able to fund the tax certiorari reserve for with $50,000 to cover any further tax litigation. 10

13 Special Aid Fund The School District receives State and Federal grants which fund specific academic activities. These grants are written for specific purposes and include reading improvement, staff development, technology improvements and needs related to students with disabilities. It is important to note that most of these grants have a fiscal year which runs from September 1 to August 31, which differs from the school fiscal year of July 1 to June 30. The listing below shows the grant amounts recorded in the Special Aid Fund: 6/30/2009 6/30/2010 Title I ESEA - Basic Grant 165, ,844 ARRA Title I 41,825 IDEA Section 619 2,116 2,045 ARRA IDEA Section 619 3,257 Title II, Part D 1,748 1,647 IDEA Section , ,994 ARRA IDEA Section ,597 Title II, Part A 29,577 29,037 Drug Free Schools 3,781 3,076 REAP 14,648 10,852 Summer School District 14,024 33,916 UPK 79,157 77,378 Total Special Aid Funds 428, ,468 Debt Service Fund This fund is used to accumulate interest on capital fund proceeds earned during building projects. These funds have to be used to reduce the debt in the general fund in subsequent years. These funds will be transferred into the general fund in the future when needed. 11

14 School Lunch Fund The School lunch Program is totally funded through State and Federal Aid along with sale of lunch and breakfast items. The School Lunch Program showed an $18,259 gain for the year ending June 30,2009 and a gain of $14,168 for the year ending June 30, It should be noted that the general fund does cover the fringe benefits of the employees that work in the cafeteria program. The school breakfast and lunch prices continued without change in the school year; breakfast is set at.95 and lunch prices are set at $1.50 for elementary and $1.60 for high school. Capital Projects Fund The Capital Projects Fund showed a negative fund balance as a result of the new capital project and the subsequent issuance of short term bond anticipation notes. Capital Assets Land is valued at acquisition cost and the School district only has property with structures on or adjacent to it. Building & Improvements have various dates of construction from 1928 to Furniture & Equipment are recorded for the entire School District and include vehicles and school buses. A fixed asset policy was established by the School Board on July 14, 2008 to capitalize fixed assets of at least $5,000 and building improvements of $10,000. The net Capital Assets after depreciation are $7,971,540 at June 30, Capital Assets Not Depreciated: Beginning Balance Additions Retirements Ending Balance Construction in Progress $ 983,019 $ $ $ 4,316,916 Capital Assets Depreciated: Buildings 5,872,770 5,872,770 Furniture and Equipment 1,787, ,653 1,925,712 Total depreciated assets 7,660, ,439 60,653 7,798,482 Less - Accumulated Depreciation: Buildings 2,745, ,455 2,862,815 Furniture and Equipment 1,198, ,710 60,653 1,281,043 Total accumulated depreciation 3,944, ,165 60,653 4,143,858 Total depreciated assets, net $ 3 lj6 350 $ (6J l26) $ $

15 Long-Term Debt The School District has bonds outstanding on a capital project issued in The last date that bonds will be paid is June 15,2014. The last bond issue dated June 15, 2003 was the School District Refunding (Serial) Bonds, The School District refunded the 1994 bonds due to a change implemented by the New York State Legislature. The change resulted in building aid reimbursements from the State linked to the useful life of the project rather than the time table of the debt financing. The Long-Term Debt is broken down by current (within one year) and long term (after one year). At June 30, 2010 the School District had the following breakdown of debt. Due and payable within one year Due and payable after one year Total Long Term Debt $ 250, ,000 $ 1,065,000 FACTORS BEARING ON THE SCHOOL DISTRICT'S FUTURE At the time these financial statements were prepared and audited, the district was unaware of any existing litigation that could significantly affect its financial health in the future. The majority of school district revenues are procured through State Aid. With the uncertain times that we face nobody can predict if those funding levels will remain true or if mid-year reductions may become a possibility. Even after the State passes their budget, our funding stream may be disrupted and payments extended past the original schedule due to lack of cash flow from the State. The school system will need to continue to find ways to save money in years to come. The School District needs to maintain, at all costs the high academic standards of our students, as they are the future of the district and will become our witness as to how we have passed or failed our mission. CONTACTING THE SCHOOL DISTRICT'S FINANCIAL MANAGEMENT This report is designed to provide the School District's citizens, taxpayers, customers, investors, and creditors with a general overview of the School District's finances and to demonstrate the School District's accountability for the money it receives. If you have questions about this report or need additional information, contact the Treasurer at the following address: LaFargevilie Central School District PO Box 138 LaFargeville, New York,

16 STATEMENT # 1 ====================================== STATEMENT OF NET ASSETS GOVERNMENTAL ACTIVITIES JUNE 30, 2010 ASSETS Cash and cash equivalents: Unrestricted Restricted Receivables: Due from fiduciary funds State and federal aid Due from other governments Other Inventories Capital assets, net Total Assets LIABILITIES Payables: Accounts payable Retainage payable Accrued liabilities Compensated absences Due to Teachers' Retirement System Due to Employees' Retirement System Accrued bond interest payable Accrued BAN interest payable Bond anticipation note Long-term liabilities: Due and payable within one year Bonds payable Due and payable after one year Bonds payable Compensated absences payable Other postemployment benefits payable Total Liabilities NET ASSETS Investment in capital assets, net of related debt Restricted for: Debt service Capital Unrestricted Total Net Assets $ $ 16,186, , , ,916 21,107 10,542 7,971,540 25,285,588 20, ,630 59,991 48, ,842 18,967 1,888 61,815 17,866, , ,000 88, ,684 20,427,937 3,530, ,192 (3,364,830) 4,581,990 4,857,651 The accompanying notes are an integral part of these financial statements. 14

17 STATEMENT # 2 =================================== STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS GOVERNMENTAL ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2010 FUNCTIONS/PROGRAMS: Expenses... Program Revenues... Charges for Operating Services Grants Net (Expense) Revenue and Changes in Net Assets General support Instruction Pupil transportation Debt service Depreciation-unallocated School lunch program $ 1,958,191 $ 6,603,788 10, , , , ,914 88,603 $ 581, ,465 $ (1,958,191) (6,012,073) (731,063) (117,842) (156,889) 18,154 Total Functions and Programs $ 9,772,687 $ 98,850 $ 715,933 (8,957,904) GENERAL REVENUES: Real property taxes Other tax items Use of money and property Sale of property and compensation for loss Miscellaneous State sources Federal sources Total General Revenues Change in Net Assets Net Assets - Beginning of Year Net Assets - End of Year 2,762, ,139 57,896 7, ,046 4,663, ,461 8,471,666 (486,238) 5,343,889 $ 4,857,651 The accompanying notes are an integral part of these financial statements. 15

18 STATEMENT # 3 =================================== BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2010 ASSETS Cash and cash equivalents: Unrestricted Restricted Receivables: Due from other funds State and federal aid Due from other governments Other Inventories General Special Aid $ 1,376,744 $ 19, , , , , ,916 21,107 School Lunch $ 28,278 2,665 10,542 Total Debt Governmental Service Capital Funds $ 316,248 $ 14,446,180 $ 16,186, ,831 52, , , , ,916 21,107 10,542 Total Assets $ 2,510,135 $ 180,662 $ 41,485 $ 368,292 $ 14,704,280 $17,804,854 LIABILITIES Payables: Accounts payable Retainage payable Accrued liabilities Due to other funds Compensated absences Due to Teachers' Retirement System $ 14,000 $ 59,339 48, ,842 Due to Employees' Retirement System 18,967 Bond anticipation note 180,662 $ 652 $ $ 6,093 $ 20, , ,630 59, ,100 52, ,806 48, ,842 18,967 17,866,754 17,866,754 Total Liabilities 349, , ,100 18,080,521 18,868,998 FUND BALANCES (DEFICIT) Reserved for: Encumbrances 523,180 Supplies inventory Unemployment insurance 58,180 Property loss and liabilities 5,805 Capital reserve 11,411 Employee benefits 91,916 Retirement contributions 264,519 Tax certiorari 50,000 Debt Unreserved: Designated for next fiscal year 599,900 Undesignated, reported in: General Fund 556,161 Special Revenue Funds Capital 10,542 30, ,180 10,542 58,180 5,805 11,411 91, ,519 50, , , , ,161 30,291 (3,376,241 ) (3,376,241 ) Total Fund Balances (Deficit) 2,161,072 40, ,192 (3,376,241 ) (1,064,144) Total Liabilities and Fund Balances $ 2,510,135 $ 180,662 $ 41,485 $ 368,292 $ 14,704,280 $17,804,854 The accompanying notes are an integral part of these financial statements. 16

19 STATEMENT # 3A ==================================== RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS JUNE 30, 2010 Amounts reported for governmental activities in the statement of net assets are different because: Total Fund Balance (Deficit)- Governmental Funds $ (1,064,144) Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds: The cost of capital assets is Accumulated depreciation is $ 12,115,398 4,143,858 7,971,540 Long-term liabilities, including bonds payable and compensated absences, are not due in thp. current period and, therefore, are not reported as liabilities in the funds. Long-term liabilities, at year end, consist of: Bonds payable Accrued bond interest payable Accrued BAN interest payable Compensated absences payable Other postemployment benefits payable Total Net Assets - Governmental Activities $ 1,065,000 1,888 61,815 88, ,684 (2,049,745) $ 4,857,651 The accompanying notes are an integral part of these financial statements. 17

20 STATEMENT # 4 ===================================== STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2010 Total Special School Debt Governmental General Aid Lunch Service Capital Funds Revenues Real property taxes $ 2,762,961 $ $ $ $ $ 2,762,961 Other tax items 351, ,139 Charges for services 10,247 10,247 Use of money and property 39, ,873 57,896 Sale of property and compensation for loss 216 1,000 1,210 Miscellaneous 163, ,548 State sources 4,663, ,294 6,331 4,781,572 Federal sources 410, , , ,738 Surplus food 12,031 12,031 Sales - school lunch 88,603 88,603 Total Revenues 8,402, , ,219 17,873 9,225,951 Expenditures General support 1,661,698 76,925 1,738,623 Instruction 4,284, ,909 4,795,586 Pupil transportation 518,835 7, ,213 Employee benefits 1,498,936 63,181 5,137 1,567,254 Debt service: Principal 240, ,000 Interest 109, ,920 Cost of sales 127, ,989 Capital outlay 3,333,897 3,333,897 Total Expenditures 8,314, , ,051 3,333,897 12,439,482 Excess (Deficiency) of Revenues Over Expenditures 88,325 14,168 17,873 (3,333,897) (3,213,531 ) Other Financing Sources (Uses) Premium on BAN 54,498 54,498 Transfers in (out) (258,100) 258,100 Total Other Financing Sources (Uses) (258,100) 54, ,100 54,498 Excess (DefiCiency) of Revenues and Other Sources Over Expenditures and Other (Uses) (169,775) 14,168 72,371 (3,075,797) (3,159,033) Fund Balance (Deficit) - Beginning of Year 2,330,847 26,665 37,821 (300,444) 2,094,889 Fund Balance (DefiCit) - End of Year $ 2,161,072 $ $ 40,833 $ 110,192 $ (3,376,241) $ (1,064,144 ) The accompanying notes are an integral part of these financial statements. 18

21 STATEMENT # 4A =================================== RECONCILIATION OF GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2010 Net Change in Fund Balances--Total Governmental Funds $ (3,159,033) Amounts reporled for governmental activities in the Statement of Activities are different because: Capital outlays to purchase or build capital assets are reported in governmental funds as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. Capital outlays DepreCiation expense $ 3,532, ,165 3,272,171 Repayment of bond principal is an expenditure in the governmental funds, but the payment reduces long-term liabilities in the Statement of Net Assets and does not affect the Statement of Activities Interest on long-term debt in the Statement of Activities differs from the amount reported in the governmental funds because interest is recorded as an expenditure in the funds when it is paid, and thus requires the use of current financial resources. In the Statement of Activities, however, interest expense is recognized as the interest accrues, regardless of when it is paid. The interest reported in the Statement of Activities is decreased by the reduction in accrued interest on bonds and increased by the increase in accrued interest on BAN. In the Statement of Activities, certain operating expenses-post retirement health benefits - are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amount actually paid). Compensated absences in long-term debt are not recorded as an expense in the governmental funds but is recorded as an expense in the Statement of Net Assets. Change in Net Assets of Governmental Activities 240,000 (7,922) (832,684) 1,230 $ (486,238) The accompanying notes are an integral part of these financial statements. 19

22 STATEMENT # 5 =================================== STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2010 Private- Purpose Trust ASSETS Cash and cash equivalents $ 73,181 Total Assets $ 73,181 LIABILITIES Due to insurance $ Extraclassroom Activity balance Due to other funds Total Liabilities Agency Funds $ 67,241 $ 67,241 $ 16,402 50, $ 67,241 NET ASSETS Reserved for scholarships $ 73,181 The accompanying notes are an integral part of these financial statements. 20

23 STATEMENT #6 ==================================== STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS FOR THE YEAR ENDED JUNE 30, 2010 Private- Purpose Trust ADDITIONS Interest Donations Total Additions DEDUCTIONS Scholarships awarded Total Deductions Change in Net Assets Net Assets - Beginning of Year Net Assets - End of Year $ $ 1, ,513 1,570 1,570 (57) 73,238 73,181 The accompanying notes are an integral part of these financial statements. 21

24 ============================== NOTES TO FINANCIAL STATEMENTS JUNE 30, 2010 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of LaFargevilie Central School District (the "District") have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. Those principles are prescribed by the Governmental Accounting Standards Board (GASB), which is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. Significant accounting principles and policies used by the District are described below: A. Reporting Entity The LaFargevilie Central School District is governed by the laws of New York State. The District is an independent entity governed by an elected Board of Education consisting of five members. The President of the Board serves as the chief fiscal officer and the Superintendent is the chief executive officer. The Board is responsible for, and controls all activities related to public school education within the District. Board members have authority to make decisions, power to appoint management, and primary accountability for all fiscal matters. The reporting entity of the District is based upon criteria set forth by GASB Statement 14, The Financial Reporting Entity, as amended by GASB Statement 39, Component Units. The financial reporting entity consists of the primary government, organizations for which the primary government is financially accountable and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The accompanying financial statements present the activities of the District. The District is not a component unit of another reporting entity. The decision to include a potential component unit in the District's reporting entity is based on several criteria including legal standing, fiscal dependency, and financial accountability. Based on the application of these criteria, the following is a brief description of certain entities included in the District's reporting entity. 1. The Extraclassroom Activity Funds of the District represent funds of the students of the District. The Board of Education exercises general oversight of these funds. The Extraclassroom Activity Funds are independent of the District with respect to its financial transactions and the designation of student management. Separate audited financial statements (cash basis) of the Extraclassroom Activity Funds can be found at the District's business office. The District accounts for assets held as an agent for various student organizations in an agency fund. 22

25 ============================== NOTES TO FINANCIAL STATEMENTS JUNE 30, 2010 B. Joint Venture The District is one of 18 component school districts in the Jefferson-Lewis-Hamilton-Herkimer Oneida Counties Soard of Cooperative Educational Services (SOCES). A SOCES is a voluntary, cooperative association of school districts in a geographic area that shares planning, services, and programs which provide educational and support activities. There is no authority or process by which a school district can terminate its status as a SOCES component. SOCES are organized under 1950 of the New York State Education Law. A SOCES Soard is considered a corporate body. Members of a SOCES Soard are nominated and elected by their component member boards in accordance with provisions of 1950 of the New York State Education Law. All SOCES property is held by the SOCES Soard as a corporation ( 1950(6)). In addition, SOCES Soards also are considered municipal corporations to permit them to contract with other municipalities on a cooperative basis under 119-n (a) of the New York State General Municipal Law. A SOCES' budget is comprised of separate budgets for administrative, program and capital costs. Each component district's share of administrative and capital cost is determined by resident public school district enrollment, as defined in the New York State Education Law, 1950(4)(b)(7). In addition, component districts pay tuition or a service fee for programs in which its students participate. During the year, the District was billed $1,652,375 for SOCES administrative and program costs. The District's share of SOCES aid amounted to $443,478. Financial statements for the SOCES are available from the SOCES administrative office. c. Basis of Presentation y District-Wide Statements: The Statement of Net Assets and the Statement of Activities present financial information about the District's governmental activities. These statements include the financial activities of the overall government in its entirety, except those that are fiduciary. Eliminations have been made to minimize the double counting of internal transactions. Governmental activities generally are financed through taxes, State and Federal aid, intergovernmental revenues, and other exchange and non-exchange transactions. Operating grants include operating-specific and discretionary (either operating or capital) grants. 23

26 ============================== NOTES TO FINANCIAL STATEMENTS JUNE 30, 2010 The Statement of Activities presents a comparison between program expenses and revenues for each function of the District's governmental activities. Direct expenses are those that are specifically associated with and are clearly identifiable to a particular function. Indirect expenses, principally employee benefits, are allocated to functional areas in proportion to the payroll expended for those areas. Program revenues include charges paid by the recipients of goods or services offered by the programs, and 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, including all taxes, are presented as general revenues. y Funds Statements: The fund statements provide information about the District's funds, including fiduciary funds. Separate statements for each fund category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. The District reports the following major governmental funds: General Fund: This is the District's primary operating fund. It accounts for all financial transactions that are not required to be accounted for in another fund. Special Revenue Funds: These funds account for the proceeds of specific revenue sources, such as Federal and State grants, that are legally restricted to expenditures for specified purposes, child nutrition operations or other activities whose funds are restricted as to use. These legal restrictions may be imposed either by governments that provide the funds, or by outside parties. Capital Projects Funds: These funds are used to account for the financial resources used for acquisition, construction, or major repair of capital facilities. For these funds, each capital project is assessed to determine whether it is a major or non-major fund. Those capital projects that are determined to be major are reported in separate columns in the financial statements. Those that are determined to be non-major are reported in the supplemental schedules either separately or in the aggregate. Debt Service Fund: This fund accounts for the accumulation of resources and the payment of principal and interest on long-term general obligation debt of governmental activities. 24

27 ============================== NOTES TO FINANCIAL STATEMENTS JUNE 30, 2010 The District reports the following Fiduciary Funds: Fiduciary Funds Fiduciary activities are those in which the District acts as trustee or agent for resources that belong to others. These activities are not included in the District-wide financial statements, because their resources do not belong to the District, and are not available to be used. There are two classes of fiduciary funds: Private purpose trust funds: These funds are used to account for trust arrangements in which principal and income benefits annual third party awards and scholarships for students. Established criteria govern the use of the funds and members of the District or representatives of the donors may serve on committees to determine who benefits. Agency funds: These funds are strictly custodial in nature and do not involve the measurement of results of operations. Assets are held by the District as agent for various student groups or extraclassroom activity funds and for payroll or employee withholding. D. Measurement Focus and Basis of Accounting The District-wide 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 transaction takes place. Nonexchange transactions, in which the District gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. The fund statements 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 District considers all revenues reported in the governmental funds to be available if the revenues are collectible within 60 days after the end of the fiscal year. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, 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. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. 25