LYONS ELEMENTARY SCHOOL DISTRICT 103 ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2018

Transcription

1 ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2018

2 ANNUAL FINANCIAL REPORT June 30, 2018 CONTENTS FINANCIAL SECTION Independent Auditor s Report Management s Discussion and Analysis Basic Financial Statements Government-Wide Financial Statements Statement of Net Position Statement of Activities Fund Financial Statements Governmental Funds Balance Sheet Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position Statement of Revenues, Expenditures and Changes in Fund Balances Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities Statement of Fiduciary Assets and Liabilities Agency Fund Notes to the Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Illinois Municipal Retirement Fund Schedule of Changes in the District s Net Pension Liability and Related Ratio s- General Fund Illinois Municipal Retirement Fund Schedule of District Contributions Teachers Retirement System Schedule of District s Proportionate Share of the Net Pension Liability and District s Contributions... 53

3 ANNUAL FINANCIAL REPORT June 30, 2018 CONTENTS (Continued) District Retiree Health Plan - Schedule of Funding Changes in the District s Total OPEB Liability and Related Ratios District Retiree Health Plan Schedule of District Contributions Teachers Health Insurance Security Fund Schedule of District s Proportionate Share of the Net OPEB Liability and District Contributions Schedule of Revenues, Expenditures and Changes in Fund Balance Budget to Actual - General Fund Non-GAAP Budgetary Basis Schedule of Revenues, Expenditures and Changes in Fund Balance Budget to Actual Operations and Maintenance Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget to Actual Transportation Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget to Actual Municipal Retirement/Social Security Fund Note to the Required Supplementary Information SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures and Changes in Fund Balance Budget to Actual Debt Service Fund Capital Projects Fund Fire Prevention and Life Safety Fund Combining Balance Sheet General Fund Combining Schedule of Revenues, Expenditures and Changes in Fund Balance - General Fund... 78

4 ANNUAL FINANCIAL REPORT June 30, 2018 CONTENTS (Continued) General Fund Accounts Schedule of Revenues, Expenditures and Changes in Fund Balance Budget to Actual Educational Accounts Non-GAAAP Budgetary Basis Tort Immunity and Judgment Accounts Working Cash Accounts Schedule of Changes in Assets and Liabilities - Agency Funds Five Year Summary of Assessed Valuations, Tax Rates and Extensions Operating Cost and Tuition Charge Schedule of Bonds Payable Issue May 10, Schedule of Bonds Payable Issue March 19,

5 FINANCIAL SECTION LYONS ELEMENTARY SCHOOL DISTRICT 103

6 INDEPENDENT AUDITOR S REPORT To the Board of Education Lyons Elementary School District 103 Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Lyons Elementary School District 103 as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the District s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Lyons Elementary School District 103 as of June 30, 2018, and the respective changes in financial position, for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As noted in note 14 to the financial statements, Lyons Elementary School District 103 implemented GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions which resulted in an adjustment to beginning net position. Our opinion is not modified with respect to this matter. 1

7 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis, schedule of changes in the District s net pension liability and related ratios, schedules of District contributions, schedule of the District s proportionate share of the collective net pension liability and District contributions, schedule of funding changes in the District s total OPEB liability and related ratios, schedule of District s proportionate share of the net OPEB liability and District contributions, and budgetary comparison information on pages 3-10 and be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Lyons Elementary School District 103 s basic financial statements. The supplementary information as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. The supplementary information is the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated in all material respects in relation to the basic financial statements as a whole. Prior Year Summarized Comparative Information Other Information We have previously audited the Lyons Elementary School District 103 s 2017 basic financial statements and we expressed an unmodified audit opinion on those audited financial statements in our report dated October 13, In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2017 is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 9, 2018, on our consideration of the Lyons Elementary School District 103 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 solely 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 effectiveness of the Lyons Elementary School District 103 s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Lyons Elementary School District 103 s internal control over financial reporting and compliance. Hillside, Illinois October 9, 2018, except as to Note 10, which is as of November 30,

8 Lyons Elementary School District 103 Management's Discussion and Analysis (Unaudited) As of and for the Year Ended June 30, 2018 The discussion and analysis of Lyons Elementary School District 103 s (the "District") financial performance provides an overall review of the District s financial activities as of and for the year ended June 30, The management of the District encourages readers to consider the information presented herein in conjunction with the basic financial statements to enhance their understanding of the District s financial performance. Certain comparative information between the current year and the prior is required to be presented in the Management s Discussion and Analysis (the MD&A ). Financial Position The liabilities and deferred inflows of resources of the District exceeded its assets and deferred outflows of resources at the close of the fiscal year by $730,759 (net position). The total net position of the District decreased by $1,413,125 during fiscal year 2018 from the restated beginning net position of $682,366. Beginning net position was restated as a result of the District implementing GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. As a result of the restatement, beginning equity decreased by $14,526,033. The District unrestricted net position is ($15,035,045). The District s governmental funds reported combined fund balances totaling $14,124,343, a decrease of $689,778 from $14,814,121 in fiscal year Governmental funds unassigned fund balance is $7,872,064. Expenditures exceeded revenues in the operating funds (General, Operation and Maintenance, Transportation, and Municipal Retirement/Social Security Fund) for the year by $844,340. Long-term general obligation bonds payable at the end of the fiscal year amounted to $9,208,867 after adding $252,885 and retiring $858,507 during the fiscal year. Moody s Investors Service rates the District s general obligation long-term debt as Aa3. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the District s basic financial statements. The basic financial statements are comprised of three components: Government-wide financial statements, Fund financial statements, and Notes to basic financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government-wide financial statements The government-wide financial statements are designed to provide readers with a broad overview of the District s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the District s assets/deferred outflows of resources and liabilities/deferred inflows of resources, with the difference between them reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. 3

9 Lyons Elementary School District 103 Management's Discussion and Analysis (Unaudited) As of and for the Year Ended June 30, 2018 The statement of activities presents information showing how the government s net position changed during the fiscal year being reported. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. The government-wide financial statements present the functions of the District that are principally supported by taxes and intergovernmental revenues (governmental activities). The District has no business-type activities; that is, functions that are intended to recover all or a significant portion of their costs through user fees and charges. The District s governmental activities include instructional services (regular education, special education and other), supporting services, operation and maintenance of facilities and transportation services. Fund financial statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District can be divided into two categories: governmental funds and fiduciary funds (the District maintains no proprietary funds). Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a school district s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains seven individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General Fund, Operations and Maintenance Fund, Transportation Fund, Municipal Retirement/Social Security Fund, Debt Service Fund, Capital Projects Fund, and Fire Prevention and Life Safety Fund, all of which are considered to be major funds. The District adopts an annual budget for each of the funds listed above. A budgetary comparison schedule has been provided for each fund to demonstrate compliance with this budget. Fiduciary funds are used to account for resources held for the benefit of parties outside the School District. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the District s own programs. The accounting used for fiduciary funds is much like that for the government-wide financial statements. Notes to basic financial statements The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. 4

10 Lyons Elementary School District 103 Management's Discussion and Analysis (Unaudited) As of and for the Year Ended June 30, 2018 Other information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the District s progress in funding its obligation to provide pension and other post-employment benefits to its non-certified employees. Government-Wide Financial Analysis The amounts in the 2017 column were adjusted to reflect the activity from the prior period adjustment related to the implementation of GASB Statement No. 75. The District s combined net position was lower on June 30, 2018, than it was the year before, decreasing 19.4% to ($7,321,110). Table 1 Condensed Statements of Net Position Assets: Current and other assets $ 27,027,635 $ 26,295,888 Capital assets 16,706,591 16,339,843 Total assets 43,734,226 42,635,731 Total deferred outflows of resources 1,821,733 1,275,801 Liabilities: Current liabilities 2,592,805 2,286,027 Long term debt outstanding 31,059,610 28,147,719 Total liabilities 33,652,415 30,433,746 Total deferred inflows of resources 11,221,178 14,208,545 Net position: Net investment in capital assets 9,039,541 9,232,904 Restricted 4,992,788 5,071,382 Unrestricted (13,349,963) (15,035,045) Total net position $ 682,366 $ (730,759) The most significant changes from the prior year were in intergovernmental receivables which decreased by about $0.9 million. Deferred outflows of resources as related to pensions and OPEB decreased by nearly $0.6 million. Long term debt decreased by about $2.9 million primarily due to a reduction of bonds payable of nearly $0.6 million and a net reduction among net pension of the retirement funds and net OPEB liabilities related to District employees of nearly $2.2 million. Deferred inflows of resources increased by nearly $3.0 million, mainly as a result of pension and OPEB activity. Finally, current liabilities decreased approximately $0.3 million due to an increase in insurance claims payable. 5

11 Lyons Elementary School District 103 Management's Discussion and Analysis (Unaudited) As of and for the Year Ended June 30, 2018 Table 2 Changes in Net Position Revenues: Program revenues: Charges for services $ 526,717 $ 606,973 Operating grants & contributions 14,853,491 15,488,208 Capital grants & contributions - - General revenues: Taxes 22,530,592 22,200,567 General state aid 6,023,292 7,754,585 Other 493, ,315 Total revenues 44,427,164 46,296,648 Expenses: Instruction 29,934,802 34,449,498 Pupil & instructional staff services 1,564,884 2,122,443 Administration & business 5,161,280 5,704,084 Transportation 1,469,691 1,671,038 Operations & maintenance 2,644,972 3,110,776 Other 786, ,934 Total expenses 41,562,277 47,709,773 Excess of revenues over expenses before special items 2,864,887 (1,413,125) Increase (decrease) in net position $ 2,864,887 $ (1,413,125) Total revenues increased about $1,870,000 or 4.2% from the prior year as a result of a $0.6 million increase in operating grants and contributions, a $0.3 million decrease in property taxes, and a $1.8 million increase in general state aid. Total expenses increased by $6.1 million or 14.7%. The largest percentage increase was in instruction, which increased by 15.1%. Instruction expenses account for 72% of District expenses. 6

12 Lyons Elementary School District 103 Management's Discussion and Analysis (Unaudited) As of and for the Year Ended June 30, 2018 The charts below display the 2018 revenues and expenditure categories listed on the previous pages in a pie chart. District-Wide Revenues by Source General state aid 17% Charges for services 1% Operating grants & contributions 33% Other 1% Taxes 48% Administration & business Pupil & 12% instructional staff services 4% District-Wide Expenses by Function Transportation 4% Operations & maintenance 7% Other 1% Instruction 72% 7

13 Lyons Elementary School District 103 Management's Discussion and Analysis (Unaudited) As of and for the Year Ended June 30, 2018 Financial Analysis of the District s Funds and Budgetary Highlights Total general fund revenues were up compared to the prior year by $753,000 or 2.9% and were up compared to budget by $1,225,000 or 4.8%. Local sources of revenue decreased by $0.2 million compared to last year and were $900,000 above budget. State sources of revenue were up $0.7 million compared to last year and $127,000 compared to budget. Total general fund expenditures were up by $3.4 million from last year and were $1.7 million or 6.0% above budget. The general fund decreased fund balance by $1.1 million. In the current year, the operations and maintenance fund decreased fund balance by $324,000. Capital Assets and Debt Administration Capital assets By the end of 2018, the District had compiled a total investment of $34,532,835 ($16,339,843 net of accumulated depreciation of $18,192,992) in a broad range of capital assets including buildings, land and equipment. Total depreciation expense for the year was $813,956. More detailed information about capital assets can be found in Note 5 of the basic financial statements. Table 3 Capital Assets (net of depreciation) Land $ 218,384 $ 218,384 Construction in progress - 276,254 Buildings 15,666,735 15,005,999 Equipment 821, ,206 Total $ 16,706,591 $ 16,339,843 Long-term debt The District retired $858,507 in general obligation bonds and retired $52,536 in capital leases. The District added $252,885 to indebtedness related to accretion on capital appreciation bonds. At the end of fiscal 2018, the District had a debt margin of $19,887,580. In the following chart, the 2017 amounts include the beginning net OPEB liability that was a result of the implementation of GASB Statement No. 75 in the current year. More detailed information on long-term debt can be found in Note 6 of the basic financial statements. 8

14 Lyons Elementary School District 103 Management's Discussion and Analysis (Unaudited) As of and for the Year Ended June 30, 2018 Table 4 Outstanding Long Term Debt General obligation bonds $ 9,814,489 $ 9,208,867 Capital leases and other 158, ,054 Net OPEB liability 17,069,466 16,866,618 Net pension liability 4,919,602 2,872,394 Total $ 31,962,147 $ 29,053,933 Factors Bearing on the District s Future At the time these financial statements were prepared and audited, the District was aware of the following circumstances that will significantly affect financial operations in the future: The current fiscal year has a $800,441 budget surplus when you total the District s operating funds as listed below. Fiscal Year 2019 Budget Fund Surplus/(Deficit) Education $ 15,743 Operations and Maintenance (794,579) Transportation 846,637 Illinios Municipal Retirement 366,579 Tort 177,838 Working Cash 188,223 Total Operating Funds $ 800,441 The District will manage the budget deficits in the Operations & Maintenance Fund and possibly the Education Fund by transferring funds from Transportation Fund to cover the budget shortfalls. The District faces the following challenges towards balancing future budgets. 1. Multi-year collective bargaining agreements that called for salary and benefits increases that exceeded the Consumer Price Index for the past two years. 2. The State legislature could enact a property tax freeze and/or shift the cost of teacher pension to the local school districts. 3. The District is funded approximately 29% by the State. The State s dire financial condition has negatively impacted the District s revenue from the State. The State is still running behind on some of its mandated categorical payments that include some special education programs. 9

15 Lyons Elementary School District 103 Management's Discussion and Analysis (Unaudited) As of and for the Year Ended June 30, 2018 Requests for Information This financial report is designed to provide the District s citizens, taxpayers, and creditors with a general overview of the District s finances and to demonstrate the District s accountability for the money it receives. If you have questions about this report, or need additional financial information, contact the Business Office: Lyons Elementary School District Joliet Avenue Lyons, IL

16 STATEMENT OF NET POSITION JUNE 30, 2018 Governmental Activities Assets Cash $ 40,196 Investments 14,421,543 Receivables (net of allowance for uncollectibles) Property taxes 10,524,796 Replacement taxes 336,169 Intergovernmental 973,184 Capital assets Land 218,384 Construction in progress 276,254 Capital assets, net of accumulated depreciation 15,845,205 Total assets 42,635,731 Deferred Outflows of Resources Deferred outflows related to pensions 746,781 Deferred outflows related to OPEB 529,020 Total deferred outflows of resources 1,275,801 Liabilities Accounts payable 549,886 Salaries and wages payable 146,871 Payroll deductions payable 17,089 Insurance claims payable 526,181 Property tax refund liability 119,070 Unearned student fees 8,758 Accrued interest payable 11,958 Long-term liabilities Other long-term liabilities - due within one year 906,214 Other long-term liabilities - due after one year 28,147,719 Total liabilities 30,433,746 Deferred Inflows of Resources Unearned revenue - property taxes 10,540,688 Deferred inflows related to pensions 1,878,099 Deferred inflows related to OPEB 1,789,758 Total deferred inflows of resources 14,208,545 Net Position Net Investment in capital assets 9,232,904 Restricted for Operations and maintenance 1,228,663 Student transportation 2,387,038 Debt service 814,668 Capital projects 641,013 Unrestricted (15,035,045) Total net position $ (730,759) See accompanying notes to financial statements 11

17 STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2018 Functions/Programs Expenses Charges for Services Program Revenues Operating Grants and Contributions Capital Grants and Contributions Net (Expense) Revenue and Changes in Net Position Governmental Activities Governmental Activities Instruction Regular programs $ 12,048,223 $ 419,589 $ - $ - $ (11,628,634) Special programs 7,052,876-2,141,745 - (4,911,131) Other instructional programs 3,723, ,506 - (3,508,167) State retirement contributions 11,624,726-11,624, Support services Pupils 1,290, (1,290,129) Instructional staff 832,314-19,320 - (812,994) General administration 1,467, (1,467,733) School administration 1,940, (1,940,631) Business 2,295, , ,309 - (1,455,146) Transportation 1,671, ,602 - (898,436) Operations and maintenance 3,110,776 61, (3,049,657) Central 219, (219,347) Community services 15, (15,091) Payments to other districts and government units - excluding special education 20, (20,470) Interest and fees 397, (397,026) Total governmental activities $ 47,709,773 $ 606,973 $ 15,488,208 $ - (31,614,592) General Revenues Taxes Real estate taxes, levied for general purposes 14,309,804 Real estate taxes, levied for specific purposes 4,914,868 Property taxes, levied for debts service 1,002,912 Personal property replacement taxes 1,972,983 State aid-formula grants 7,754,585 Investment income 218,723 Miscellaneous revenues 27,592 Total general revenues 30,201,467 Change in Net Position (1,413,125) Net Position - Beginning of Year (as restated) 682,366 Net Position - End of Year $ (730,759) See accompanying notes to financial statements 12

18 GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2018 WITH COMPARATIVE TOTALS AS OF JUNE 30, 2017 Total General Fund Operations and Maintenance Fund Transportation Fund Municipal Retirement/Social Security Fund Debt Service Fund Capital Projects Fund Fire Prevention and Life Safety Fund Assets Cash $ 40,196 $ - $ - $ - $ - $ - $ - $ 40,196 $ 67,338 Investments 7,871,776 1,626,393 2,270,904 1,187, , ,862 14,421,543 14,386,673 Receivables (net of allowance for uncollectibles) Property taxes 7,629, , , , , ,504 10,524,796 10,308,284 Replacement taxes 336, , ,712 Intergovernmental 779, , ,184 1,886,628 Total assets $ 16,656,569 $ 2,563,750 $ 3,193,696 $ 1,730,795 $ 1,337,283 $ 429 $ 813,366 $ 26,295,888 $ 27,027,635 Total Liabilities, Deferred Inflows of Resources and Fund Balances Liabilities Accounts payable $ 200,933 $ 285,467 $ 63,486 $ - $ - $ - $ - $ 549,886 $ 1,116,039 Salaries and wages payable 80,461 66, ,871 60,889 Payroll deductions payable 13,598 3, ,089 9,983 Insurance claims payable 495,304 30, , ,666 Property tax refund liability 93,214 11,895 13, , ,536 Unearned student fees 8, ,758 9,198 Total liabilities 892, ,730 77, ,367,855 1,678,311 Deferred inflows of resources Unearned revenue - property taxes 7,629, , , , , ,782 10,540,688 10,338,306 Unavailable state and federal aid receivable 263, , ,897 Total deferred inflows of resources 7,892, , , , , ,782 10,803,690 10,535,203 Fund balances Restricted - 1,228,663 2,387,038 1,180, , ,584 6,252,279 5,890,666 Unassigned 7,872, ,872,064 8,923,455 Total fund balances 7,872,064 1,228,663 2,387,038 1,180, , ,584 14,124,343 14,814,121 Total liabilities, deferred inflows of resources and fund balances $ 16,656,569 $ 2,563,750 $ 3,193,696 $ 1,730,795 $ 1,337,283 $ 429 $ 813,366 $ 26,295,888 $ 27,027,635 See accompanying notes to financial statements 13

19 RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2018 Total fund balances - governmental funds $ 14,124,343 Amounts reported for governmental activities in the statement of net position are different because: Net capital assets used in governmental activities and included in the statement of net position do not require the expenditure of financial resources and, therefore, are not reported in the governmental funds balance sheet. Capital assets 34,532,835 Accumulated depreciation (18,192,992) Net capital assets 16,339,843 Certain revenues receivable by the District and recognized in the Statement of Net Position do not provide current financial resources and are included as deferred inflows of resources in the governmental funds balance sheet, as follows: Federal grant revenue 263,002 Deferred outflows of resources related to pensions and other post-employment benefits do not relate to current financial resources and are not included in the governmental funds balance sheet. 1,275,801 Deferred inflows of resources related to pensions and other post-employment benefits do not relate to current financial resources and are not included in the governmental funds balance sheet. (3,667,857) Long-term liabilities applicable to the District's governmental activities are not due and payable in the current period, and accordingly, are not reported as fund liabilities. All liabilities, both current and long-term, are reported in the statement of net position. Bonds payable (9,130,054) Accrued interest payable (11,958) Unamortized premium (78,813) Net other post employment benefit liability (16,866,618) Net pension liability (2,872,394) Capital leases (106,054) Total liabilities (29,065,891) Net position of governmental activities $ (730,759) See accompanying notes to financial statements 14

20 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE TOTALS AS OF JUNE 30, 2017 Operations and Maintenance Fund Transportation Fund Municipal Retirement/Social Security Fund Capital Projects Fund Total Fire Prevention and Life Safety Fund General Fund Debt Service Fund Revenues Property taxes $ 14,309,804 $ 1,835,249 $ 1,710,258 $ 1,038,598 $ 1,002,912 $ - $ 330,763 $ 20,227,584 $ 20,133,825 Replacement taxes 1,775, , ,972,983 2,396,767 State aid 19,534,995 1,000, , ,307,597 19,355,126 Federal aid 1,869, ,869,091 1,619,797 Investment income 115,088 25,209 42,944 15,238 12, , , ,387 Other 568,386 61,119 5, , ,402 Total revenues 38,172,728 2,921,577 2,530,864 1,251,455 1,015, ,196 46,230,543 44,525,304 Expenditures Current Instruction Regular programs 11,456, , ,630,393 9,889,882 Special programs 6,556, , ,771,067 5,786,154 Other instructional programs 3,630, , ,723,673 3,652,394 State retirement contributions 11,624, ,624,726 10,302,042 Support services Pupils 1,194,851-15,212 46, ,256,681 1,192,275 Instructional staff 780, , , ,395 General administration 1,338, , ,361,330 1,227,317 School administration 1,560, , ,621,045 1,636,665 Business 1,357, , ,174 1,616,066 1,494,050 Transportation - - 1,667,608 3, ,671,038 1,469,691 Operations and maintenance - 2,883, , ,101,569 2,644,972 Central 202,049-12, , ,833 Community services 15, ,091 - Payments to other districts and gov't units - excluding special education 20, ,470 53,040 Debt service Principal , , ,099 Interest and other , , ,959 Capital outlay 85, , , ,165 Total expenditures 39,824,119 3,245,589 1,682, ,436 1,055, ,174 46,920,321 41,265,933 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,651,391) (324,012) 848, ,019 (39,466) 6 194,022 (689,778) 3,259,371 Other Financing Sources (Uses) Transfers in 600, ,000 1,800,000 Transfers (out) - - (600,000) (600,000) (1,800,000) Other sources - capital lease Total other financing sources (uses) 600,000 - (600,000) Net Change in Fund Balances (1,051,391) (324,012) 248, ,019 (39,466) 6 194,022 (689,778) 3,259,371 Fund Balance - Beginning of Year 8,923,455 1,552,675 2,138, , , ,562 14,814,121 11,554,750 Fund Balance - End of Year $ 7,872,064 $ 1,228,663 $ 2,387,038 $ 1,180,897 $ 814,668 $ 429 $ 640,584 $ 14,124,343 $ 14,814,121 See accompanying notes to financial statements 15

21 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2018 Net change in fund balances total governmental funds $ (689,778) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures while governmental activities report depreciation expense to allocate those expenditures over the life of the assets Capital outlay 447,208 Depreciation (813,956) Net capital outlay (366,748) Certain revenues included in the statement of activities do not provide current financial resources and, therefore, are included as deferred inflows of resources in the fund statements: Grant revenue 66,105 The issuance of long term debt (bonds, capital leases, etc.) provides current financial resources to the governmental funds, while its principal repayment consumes current financial resources of the governmental funds. Neither transaction, however, has any effect on net position. This is the amount by which current year principal repayments exceeded proceeds from current year longterm financing arrangements. 902,536 Governmental funds report the effects of premiums, discounts and similar items when the debt is issued. However, these amounts are deferred and amortized in the Statement of Activities. This is the amount of the current year, net effect of these differences. 8,506 Other transactions related to long term debt that increase/decrease net position but do not impact the governmental funds: Accretion of capital appreciation bonds (252,885) In the statement of activities, operating expenses are measured by the amounts incurred during the year. However, certain of these items are included in the governmental funds only to the extent that they require the expenditure of current financial resources: Other post employment benefits 202,848 Deferred outflows of resources due to OPEB 417,621 Deferred inflows of resources due to OPEB (1,789,758) Net pension liability 2,047,208 Deferred outflows of resources due to pensions (963,553) Deferred inflows of resources due to pensions (995,227) (1,080,861) Change in net position of governmental activities $ (1,413,125) See accompanying notes to financial statements 16

22 AGENCY FUND STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES JUNE 30, 2018 Student Activity Fund Assets Cash and investments $ 79,453 Total assets $ 79,453 Liabilities Due to student groups $ 79,453 Total liabilities $ 79,453 See accompanying notes to financial statements 17

23 Notes to financial statements June 30, 2018 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Lyons Elementary School District 103 (the District ) operates as a public school system governed by a sevenmember board. The District is organized under the School Code of the State of Illinois, as amended. The accounting policies of the District conform to accounting principles generally accepted in the United States of America, as applicable to local governmental units of this type. The following is a summary of the more significant accounting policies of the District. Reporting Entity This report includes all of the funds of the District. The reporting entity for the District consists of the primary government and its component units. Component units are legally separate organizations for which the primary government is financially accountable or other organizations for which the nature and significance of their relationship with the primary government are such that their exclusion would cause the reporting entity's financial statements to be misleading. The District has not identified any organizations that meet this criteria. Basis of Presentation Government-wide Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the District. The effect of interfund activity has been removed from these statements. The District s operating activities are all considered governmental activities, that is, activities normally supported by taxes and intergovernmental revenues. The District has no operating activities that would be considered business activities. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include: (1) amounts paid by the recipient of goods or services offered by the program and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues. Governmental Funds Financial Statements Governmental funds financial statements are organized and operated on the basis of funds and are used to account for the District's general governmental activities. Fund accounting segregates funds according to their intended purpose, and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. A fund is an independent fiscal and accounting entity with a self- balancing set of accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, reserves, fund balance, revenues and expenditures. The minimum number of funds is maintained consistent with legal and managerial requirements. 18

24 Notes to financial statements June 30, 2018 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Separate financial statements are provided for all governmental funds and fiduciary funds; the fiduciary funds are excluded from the government-wide financial statements. Measurement Focus and Basis of Accounting The government-wide financial statements are reported using the economic resources measurement focus, while the fiduciary fund statements do not have a measurement focus. The government-wide financial statements and the fiduciary fund financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue when all eligibility requirements have been met. Governmental fund financial statements are reported using the flow of current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both "measurable and available". "Measurable" means that the amount of the transaction can be determined, and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers all revenues available if they are collected within 60 days after year-end except for state aid. State aid received after 60 days are being considered as available as historically, state aid collected within 60 days have represented all state aid to be collected. Expenditures are recorded when the related fund liability is incurred. However, expenditures for unmatured principal and interest on general long-term debt are recognized when due; and certain compensated absences, claims and judgments are recognized when the obligations are expected to be liquidated with expendable available financial resources. Major Governmental Funds General Fund - the general operating fund of the District. It accounts for all financial resources except those required to be accounted for in another fund. This fund is primarily used for most of the instructional and administrative aspects of the District's operations. Revenues consist largely of local property taxes and state government aid. Special Revenue Funds - account for the proceeds of specific revenue sources that are legally restricted or committed to expenditures for specified purposes, other than those accounted for in the Debt Service Fund, Capital Projects Funds or Fiduciary Funds. Operations and Maintenance Fund - accounts for expenditures made for repair and maintenance of the District s buildings and land. Revenue consists primarily of local property taxes. Transportation Fund - accounts for all revenue and expenditures made for student transportation. Revenue is derived primarily from local property taxes and state reimbursement grants. 19

25 Notes to financial statements June 30, 2018 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Municipal Retirement/Social Security Fund - accounts for the District's portion of pension contributions to the Illinois Municipal Retirement Fund, payments to Medicare, and payments to the Social Security System for non-certified employees. Revenue to finance the contributions is derived primarily from local property taxes and personal property replacement taxes. Debt Service Fund - accounts for the accumulation of resources that are restricted, committed, or assigned for, and the payment of, long-term debt principal, interest and related costs. The primary revenue source is local property taxes levied specifically for debt service. Capital Project Funds - accounts for the financial resources that are restricted, committed, or assigned to be used for the acquisition or construction of, and/or additions to, major capital facilities. Capital Projects Fund - accounts for construction projects and renovations financed through bond issues and fund balance transfers. Fire Prevention and Life Safety Fund - accounts for State-approved life safety projects financed through serial bond issues or local property taxes levied specifically for such purposes. Other Fund Types Fiduciary Funds - account for assets held by the District in a trustee capacity or as an agent for individuals, private organizations, other governments or other funds. Agency Funds - include Student Activity Funds, Convenience Accounts and Other Agency Funds. These funds are custodial in nature and do not present results of operations or have a measurement focus. Although the Board of Education has the ultimate responsibility for Activity Funds, they are not local education agency funds. Student Activity Funds account for assets held by the District which are owned, operated and managed generally by the student body, under the guidance and direction of adults or a staff member, for educational, recreational or cultural purposes. Convenience Accounts account for assets that are normally maintained by a local education agency as a convenience for its faculty, staff, etc. On-behalf payments (payments made by a third party for the benefit of the district, such as payments made by the state to the Teachers' Retirement System) have been recognized in the financial statements. Property taxes, replacement taxes, certain state and federal aid, and interest on investments are susceptible to accrual. Other receipts become measurable and available when cash is received by the District and recognized as revenue at that time. Grant funds are considered to be earned to the extent of expenditures made under the provisions of the grant. Accordingly, when such funds are received, they are recorded as deferred revenues until earned. 20

26 Notes to financial statements June 30, 2018 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) All Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net Position or Equity Deposits and Investments State statutes authorize the District to invest in obligations of the U.S. Treasury, certain highly-rated commercial paper, corporate bonds, repurchase agreements, and the State Treasurer's Investment Pool. Investments are stated at fair value. Changes in fair value of investments are included as investment income. Receivables and Payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as "due to/from other funds". These amounts are eliminated in the governmental activities column in the statement of net position. Receivables are expected to be collected within one year. Unearned Revenue Governmental funds report unearned revenue in connection with resources that have been received, but not yet earned. Property Tax Revenues The District must file its tax levy resolution by the last Tuesday in December of each year. The District's 2017 levy resolution was approved during the December 18, 2017 board meeting. The District's property tax is levied each year on all taxable real property located in the District and it becomes a lien on the property on January 1 of that year. The owner of real property on January 1 in any year is liable for taxes of that year. The tax rate ceilings are applied at the fund level. These ceilings are established by state law subject to change only by the approval of the voters of the District. The PTELL limitation is applied in the aggregate to the total levy (excluding certain levies for the repayment of debt). PTELL limits the increase in total taxes billed to the lessor of 5% or the percentage increase in the Consumer Price Index (CPI) for the preceding year. The amount can be exceeded to the extent there is new growth in the District s tax base. The new growth consists of new construction, annexations and tax increment finance district property becoming eligible for taxation. The CPI rates applicable to the 2016 and 2017 tax levies were 2.1% and 2.1%, respectively. 21

27 Notes to financial statements June 30, 2018 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property taxes are collected by the Cook County Collector/Treasurer, who remits to the District its share of collections. Taxes levied in one year become due and payable in two installments: the first due on March 1 and the second due on the later of August 1 or 30 days after the second installment tax bill is mailed. The first installment is an estimated bill, and is fifty-five percent of the prior year's tax bill. The second installment is based on the current levy, assessment and equalization, and any changes from the prior year will be reflected in the second installment bill. Property taxes are normally collected by the District within 60 days of the due date. The 2017 property tax levy is recognized as a receivable in fiscal 2018, net of estimated uncollectible amounts approximating 1% and less amounts already received. The District considers that the first installment of the 2017 levy is to be used to finance operations in fiscal The District has determined that the second installment of the 2017 levy is to be used to finance operations in fiscal 2019 and has included the corresponding receivable as a deferred inflow of resources. Personal Property Replacement Taxes Personal property replacement taxes are first allocated to the Municipal Retirement/Social Security Fund, and the balance is allocated to the remaining funds at the discretion of the District. Capital Assets Capital assets, which include land, construction in progress, buildings and improvements, equipment, and vehicles are reported in the government-wide financial statements. Capital assets are defined by the District as assets with an initial individual cost of more than $2,000 and an estimated useful life of more than 1 year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at their acquisition value at the date of donation. Depreciation of capital assets is provided using the straight-line method over the following estimated useful lives: Buildings and improvements Equipment Vehicles years 5-25 years years In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Deferred Outflows of Resources A deferred outflow of resources represents a consumption of net position that applies to a future period and will not be recognized as an outflow of resources (expense/expenditure) until that future time. 22

28 Notes to financial statements June 30, 2018 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A deferred charge on refunding arises from advance refunding of debt. The difference between the cost of the securities placed in trust for future payment of refunded debt and the net carrying value of that debt is deferred and amortized as a component of interest expense over the shorter of the term of the refunding issue or the original term of the refunded debt. The unamortized amount is reported as a deferred outflow of resources in the government-wide statements. Compensated Absences Under terms of employment, employees are granted sick leave and vacations in varying amounts. Only benefits considered to be vested are disclosed in these statements. All vested vacation and sick leave pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements, or are payable with expendable available resources. Payments for vacation and sick leave will be made at rates in effect when the benefits are used. Accumulated vacation and sick leave liabilities at June 30, 2018 are determined on the basis of current salary rates and include salary related payments. Long-Term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the statement of net position. Bond premiums and discounts are deferred and amortized over the life of the applicable bonds using the effective interest method. The balance at year end for premiums/discounts is shown as an increase or decrease in the liability section of the statement of net position. In the fund financial statements, governmental funds recognize bond premiums and discounts during the period incurred. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Deferred Inflows of Resources A deferred inflow of resources represents an acquisition of net position that applies to a future period and therefore will not be recognized as an inflow of resources (revenue) until that future time. Equity Classifications Equity is classified as net position in the government-wide financial statements and displayed in three components: 23

29 Notes to financial statements June 30, 2018 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Net investment in capital assets - Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets less any unspent debt proceeds. Restricted net position - Consists of net position with constraints placed on its use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or, 2) law through constitutional provisions or enabling legislation. Unrestricted net position - All other net position that does not meet the definition of "restricted" or "net investment in capital assets." When both restricted and unrestricted resources are available for use, it is the District s policy to use restricted resources first and then unrestricted resources. Equity is classified as fund balance in the fund financial statements and displayed in five components: Nonspendable - includes amounts not in spendable form, such as inventory, or amounts required to be maintained intact legally or contractually (principal endowment) (e.g. inventory, pre-paid items, permanent scholarships). Restricted - includes amounts constrained for a specific purpose by external parties (e.g. Debt Service, Capital Projects, State and Federal Grant Funds). Committed - includes amounts constrained for a specific purpose by a government using its highest level of decision making authority, the Board of Education. This formal action (a resolution) must occur prior to the end of the reporting period, but the amount of the commitment, which will be subject to the constraints, may be determined in the subsequent period. Any changes to the constraints imposed require the same formal action of the Board of Education that originally created the commitment. Assigned - includes general fund amounts constrained for a specific purpose by the Board of Education or by an official that has been delegated authority to assign amounts. The Board of Education has declared that the Superintendent or the Superintendent's designee may assign amounts for a specific purpose. The Board of Education may also take official action to assign amounts. Additionally, all remaining positive spendable amounts in governmental funds, other than the General Fund, that are neither restricted nor committed are considered assigned. Assignments may take place after the end of the reporting period. Unassigned - includes residual positive fund balance within the General Fund which has not been classified within the other above mentioned categories. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed or assigned for those specific purposes. 24

30 Notes to financial statements June 30, 2018 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) In circumstances where an expenditure is to be made for a purpose for which amounts are available in multiple fund balance classifications, the order in which resources will be expended in the General Fund is as follows: restricted fund balance, followed by committed fund balance, assigned fund balance, and lastly, unassigned fund balance. In all other funds (Special Revenue, Debt Service, Capital Projects), assigned fund balance will be spent first, followed by committed fund balance, and then restricted fund balance. The restricted fund balances are for the purpose of the respective funds as described above in the Major Governmental Funds section. Comparative Data The financial statements include summarized prior-year comparative information. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the District's financial statements for the year ended June 30, 2017, from which such summarized information was derived. Eliminations and Reclassifications In the process of aggregating data for the government-wide financial statements, some amounts reported as interfund activity and balances were eliminated or reclassified. NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Expenditures and Revenues with Regards to the Budget For the year ended June 30, 2018, expenditures in the General Fund exceeded budget by $1,743,178, expenditures in the Operations & Maintenance Fund exceeded budget by $135,050, expenditures in the Transportation Fund exceeded budget by $173,720, expenditures in the Municipal Retirement/Social Security Fund exceeded budget by $31,506, and expenditures in the Debt Service Fund exceeded budget by $65,183. NOTE 3 - DEPOSITS AND INVESTMENTS Cash & Investments under the custody of the Township Treasurer Under the Illinois Compiled Statutes, the Lyons Township School Treasurer is the lawful custodian of all school funds. The Treasurer is appointed by the Township School Trustees, an independently elected body, to serve the school districts in the township. The Treasurer is the direct recipient of property taxes, replacement taxes and most state and federal aid and disburses school funds upon lawful order of the school board. The Treasurer invests excess funds at his discretion, subject to the legal restrictions discussed below. For these purposes, the Treasurer is permitted to combine monies from more than one fund of a single district and to combine monies of more than one district in the township. Monies combined under these circumstances, as well as investment earnings, are accounted for separately for each fund and/or district. 25

31 Notes to financial statements June 30, 2018 NOTE 3 - DEPOSITS AND INVESTMENTS (Continued) Cash and investments, other than the student activity and convenience accounts, petty cash, and imprest funds, are part of a common pool for all school districts and cooperatives within the township. The Treasurer maintains records that segregate the cash and investment balance by district or cooperative. Income from investments is distributed quarterly based upon the District's percentage participation in the pool. All cash for all funds, including cash applicable to the Debt Service Fund and the Illinois Municipal Retirement/Social Security Fund, is not deemed available for purposes other than those for which these balances are intended. The Treasurer's investment policies are established by the Lyons Township School Trustees as prescribed by the Illinois School Code and the Illinois Compiled Statutes. The Treasurer is authorized to invest in obligations of the U.S. Treasury, backed by the full faith and credit of the U.S. Government, certificates of deposit issued by commercial banks and savings and loan associations, and commercial paper rated within the three highest classifications by at least two standard rating services (subject to certain limitations). The Treasurer's Office operates as a non-rated, external investment pool. The fair value of the District's investment in the Treasurer's pool is determined by the District's proportionate share of the fair value of the investments held by the Treasurer's office. The weighted average maturity of all marketable pooled investments held by the Treasurer was at June 30, Other assets of the Treasurer's pool include money market type investments, certificates of deposits, other deposits with financial institutions, and a receivable from the Lyons Township School Treasurer. As of June 30, 2018, the fair value of all investments held by the Treasurer's office was $196,837,176 and the fair value of the District's proportionate share of the pool was $14,421,543. Because all cash and investments are pooled by a separate legal governmental agency (Treasurer), categorization by risk category is not determinable. Likewise, the classification of fair value measurements using level 1 (quoted prices in active markets), level 2 (a matrix pricing technique) or level 3 (discounted cash flow techniques) inputs is not determinable. Further information about whether investments are insured, collateralized, or uncollateralized, as well as information on the Treasurer's office operations, is available from the Treasurer's financial statements. Separate cash and investment accounts are not maintained for all District funds; instead, the individual funds maintain their invested and uninvested balances in the common checking and investment accounts, with accounting records being maintained to show the portion of the common account balance attributable to each participating fund. Occasionally certain funds participating in the common bank accounts will incur overdrafts (deficits) in the account. The overdrafts result from expenditures that have been approved by the Board of Education. 26

32 Notes to financial statements June 30, 2018 NOTE 3 - DEPOSITS AND INVESTMENTS (Continued) Cash & Investments in the custody of the District Deposits of the student activity and imprest funds, which are held in the District's custody, consist of deposits with financial institutions. The following is a summary of such deposits: Carrying Value Bank Balance Deposits with financial institutions $ 40,196 $ 37,478 Total $ 40,196 $ 37,478 Interest Rate Risk. The Treasurer will minimize the risk that the market value of securities in the portfolio will fall due to changes in general interest rates by (1) structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity, and (2) investing operating funds primarily in shorter-term securities, money market mutual funds, or similar investment pools. Custodial Credit Risk - Deposits. With respect to deposits, custodial credit risk refers to the risk that, in the event of a bank failure, the District s deposits may not be returned to it. The District s investment policy limits the exposure to deposit custodial credit risk by requiring all deposits in excess of FDIC insurable limits to be secured by collateral in the event of default or failure of the financial institution holding the funds. As of June 30, 2018, the bank balance of the District s deposit with financial institutions totaled $37,478; of which the entire amount was insured. NOTE 4 - INTERFUND TRANSFERS During the year, the Board approved one resolution. The transfer was approved by the board to transfer funds from the transportations fund to the general fund to enable payments of ordinary and necessary expenses. The transfer resulted in $600,000 being transferred out of the transportation fund into the general fund. State law allows for the above transfers. 27

33 Notes to financial statements June 30, 2018 NOTE 5 - CAPITAL ASSETS Capital asset activity for the District for the year ended June 30, 2018, was as follows: Beginning Balance Additions Deletions Ending Balance Capital assets not being depreciated Land $ 218,384 $ - $ - $ 218,384 Construction in progress - 276, ,254 Total capital assets not being depreciated 218, , ,638 Capital assets being depreciated Buildings 28,385,957 11,453-28,397,410 Equipment 5,318, ,501-5,478,064 Vehicles 162, ,723 Total capital assets being depreciated 33,867, ,954-34,038,197 Less accumulated depreciation Buildings 12,719, ,189-13,391,411 Equipment 4,591, ,891-4,722,539 Vehicles 68,166 10,876-79,042 Total accumulated depreciation 17,379, ,956-18,192,992 Net capital assets being depreciated 16,488,207 (643,002) - 15,845,205 Net governmental activities capital assets $ 16,982,845 $ (366,748) $ - $ 16,339,843 Depreciation expense was recognized in the operating activities of the District as follows: Governmental Activities Depreciation General administration $ 5,465 Business 697,899 Special programs 516 Central 4,557 Operations & maintenance 2,042 Regular programs 103,477 Total $ 813,956 28

34 Notes to financial statements June 30, 2018 NOTE 6 - LONG TERM LIABILITIES Changes in General Long-term Liabilities. The following is the long-term liability activity for the District for the year ended June 30, 2018: Beginning Balance Ending Due Within (As restated) Additions Deletions Balance One Year General obligation bonds $ 9,727,170 $ 252,885 $ 850,000 $ 9,130,055 $ 850,000 Unamortized premium 87,319-8,507 78,812 - Total bonds payable 9,814, , ,507 9,208, ,000 Capital leases 158,590-52, ,054 56,214 Net OPEB liability 17,069, , ,914 16,866,618 - Net pension liability 4,919,602-2,047,208 2,872,394 - Total long-term liabilitiesgovernmental activities $ 31,962,147 $ 370,951 $ 3,279,165 $ 29,053,933 $ 906,214 The net OPEB liabilities will be repaid from the General Fund. The obligations for the net pension liabilities will be repaid from the General and IMRF funds. General Obligation Bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the District. General obligation bonds currently outstanding are as follows: Original Face Carrying Purpose Interest Rates Indebtedness Amount Amount Series General Obligation Capital Appreciation Bond 2006 dated May 10, 2006 are due in annual installments through December 1, 2025 N/A $ 4,086,963 $ 7,680,000 $ 5,180,055 Series General Obligation Bond 2012 dated March 9, 2012 are due in annual installments through December 1, % % 4,200,000 4,050,000 3,950,000 Total $ 8,286,963 $ 11,730,000 $ 9,130,055 29

35 Notes to financial statements June 30, 2018 NOTE 6 - LONG TERM LIABILITIES (Continued) In prior years, the District defeased certain general obligation and other bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the District's financial statements. At June 30, 2018, $508,454 of bonds outstanding are considered defeased. Annual debt service requirements to maturity for general obligation bonds are as follows for governmental type activities: Fiscal Year Principal Interest Total 2019 $ 850,000 $ 143,500 $ 993, , , , , , , , , , , , , ,335, ,300 4,973, ,450,000 36,750 1,486,750 Totals $ 10,035,000 $ 1,392,550 $ 11,427,550 The District is subject to the Illinois School Code, which limits the amount of certain indebtedness to 6.9% of the most recent available equalized assessed valuation of the District. As of June 30, 2018, the statutory debt limit for the District was $29,017,635, providing a debt margin of $19,887,580. Capital Leases. The District has entered into a lease agreement as lessee for financing the acquisition of equipment. The lease agreement qualifies as a capital lease for accounting purposes and, therefore, the assets and obligations have been recorded at the present value of the future minimum lease payments as of the inception date. At June 30, 2015, $260,927 of amounts included in capital assets were acquired via capital leases. The obligations for the capital leases will be repaid from the Debt Service Fund through a transfer from the General Fund. The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2018, are as follows: Amount 2019 $ 61, ,403 Total minimum lease payments 113,086 Less amount representing interest (7,032) Present value of minimum lease payments $ 106,054 30

36 Notes to financial statements June 30, 2018 NOTE 7 - RISK MANAGEMENT The District is exposed to various risks of loss related to employee benefits; workers' compensation claims; theft of, damage to, and destruction of assets; and natural disasters. To protect from such risks, the District participates in the Lyons Elementary School Districts' Employee Benefit Cooperative and is insured through commercial policies for liability and workers compensation claims. There have been no significant reductions in insurance coverage in any of the past three fiscal years. NOTE 8 SELF-INSURANCE The District is self-insured for health, dental and prescription drugs for eligible employees and dependents. The District utilizes the General and Transportation funds to finance all claims paid, estimated future payments with respect to claims made, and estimated claims incurred but not reported. Participation begins the first day of full-time employment and ends at termination. Coverage can continue during an approved leave of absence or as a retiree. The District has appointed a third party administrator to process the plan s claims. A liability in the amount of $526,181 for claims incurred but not paid at June 30, 2018 was estimated from information provided to the District by its third party administrator. Total claims paid during the fiscal year ended June 30, 2018 were $3,938,512. Claims incurred but not paid Beginning Balance, July 1, 2017 $ 337,666 Claims Incurred 4,127,027 Claims Paid (3,938,512) Ending Balance, June 30, 2018 $ 526,181 NOTE 9 - JOINT AGREEMENTS The District is a member of LaGrange Area Department of Special Education (LADSE), a joint agreement that provides certain special education services to residents of many school districts. The District believes that because it does not control the selection of the governing authority, and because of the control over employment of management personnel, operations, scope of public service, and special financing relationships exercised by the joint agreement governing boards, these are not included as component units of the District. NOTE 10 - OTHER POST-EMPLOYMENT BENEFITS The other post-employment benefit (OPEB) plans of the District include the Teachers Health Insurance Security (THIS) Fund and the Retiree Health Plan. Most funding for THIS is provided through payroll withholdings of certified employees and contributions made by the District. The Retiree Health Plan is funded through available funds in the General Fund. Each retirement system is discussed below. 31

37 Notes to financial statements June 30, 2018 NOTE 10 - OTHER POST-EMPLOYMENT BENEFITS (Continued) For all plans, at June 30, 2018 the District s net OPEB liability was $16,866,618, the deferred outflows of resources were $529,020, the deferred inflows of resources were $1,789,758, and the OPEB expense for the year then ended was $1,326,653. Teachers' Health Insurance Security Plan Description. The District participates in the Teacher Health Insurance Security (THIS) Fund, a cost-sharing, multiple-employer defined benefit post-employment healthcare plan that was established by the Illinois legislature for the benefit of retired Illinois public school teachers employed outside the City of Chicago. The THIS Fund provides medical, prescription, and behavioral health benefits, but it does not provide vision, dental, or life insurance benefits to annuitants of the Teachers Retirement System (TRS). Annuitants not enrolled in Medicare may participate in the state-administered participating provider option plan or choose from several managed care options. Annuitants who are enrolled in Medicare Parts A and B may be eligible to enroll in a Medicare Advantage plan. Benefits Provided. The State Employees Group Insurance Act of 1971 (5 ILCS 375) outlines the benefit provisions of the THIS Fund and amendments to the plan can be made only by legislative action with the Governor s approval. Contributions. Effective July 1, 2012, in accordance with Executive Order 12-01, the plan is administered by the Illinois Department of Central Management Services (CMS) with the cooperation of TRS. Section 6.6 of the State Employees Group Insurance Act of 1971 requires all active contributors to TRS who are not employees of the state to make a contribution to the THIS Fund. The percentage of employer required contributions in the future will not exceed 105 percent of the percentage of salary actually required to be paid in the previous fiscal year. On behalf contributions to THIS. The State of Illinois makes employer retiree health insurance contributions on behalf of the District. State contributions are intended to match contributions to THIS Fund from active members which were 1.18 percent of pay during the year ended June 30, State of Illinois contributions were $165,042, and the District recognized revenues and expenditures of this amount during the year. State contributions intended to match active member contributions during the years ended June 30, 2017 and June 30, 2016 were 1.12 and 1.07 percent of pay, respectively. For these years, state contributions on behalf of District employees were $148,521 and $139,314, respectively. District contributions. The District also makes contributions to THIS Fund. The District's THIS Fund contribution was 0.88 percent during the year ended June 30, 2018 and 0.84 and 0.80 percent during the years ended June 30, 2017 and 2016, respectively. For the years ended June 30, 2018, 2017 and 2016 the District paid $123,083, $111,391, and $104,160 to the THIS Fund, respectively, which was 100 percent of the required contribution for those years. 32

38 Notes to financial statements June 30, 2018 NOTE 10 - OTHER POST-EMPLOYMENT BENEFITS (Continued) Net other post-employment benefits (OPEB) liability. At June 30, 2018, the District reported a liability for its proportionate share of the net OPEB liability (first amount shown below) that reflected a reduction for state OPEB support provided to the District. The state s support and total are for disclosure purposes only. The amount recognized by the District as its proportionate share of the net OPEB liability, the related state support, and the total portion of the net OPEB liability that was associated with the District were as follows: District's proportionate share of the collective net OPEB liability $ 14,959,450 State's proportionate share of the collective net OPEB liability associated with the District 19,645,562 Total $ 34,605,012 The collective net OPEB liability was measured as of June 30, 2017, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of June 30, The District s proportion of the collective net OPEB liability was based on a projection of all participating school districts, actuarially determined, and included in the Report on the Allocation of Other Post Employment Benefit Amounts from the Illinois Department of Central Management Services. That report was audited by other auditors and their report was originally dated May 30, However, the report was subsequently amended on November 6, 2018 in order to remove THIS premiums originally reported as employer contributions. At June 30, 2017, the District s proportion was percent, which was an increase of percent from its proportion measured as of June 30, 2016 ( percent). OPEB Expense and Deferred Outflows and Inflows of Resources. For the year ended June 30, 2018, the District recognized OPEB expense of $1,162,622. In addition, the District recognized an additional $1,394,039 as OPEB expense (and revenue) for it proportionate share of the State of Illinois contribution to the plan. At June 30, 2018, the District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflow of Inflow of Resources Resources Differences between expected and actual experience $ - $ 8,473 Net difference between projected and actual earnings on OPEB plan investments Changes in assumptions - 1,781,120 Changes in proportion and differences between employer contributions and share of contributions 405,938 - District contributions subsequent to the measurement date 123,082 - Total $ 529,020 $ 1,789,758 33

39 Notes to financial statements June 30, 2018 NOTE 10 - OTHER POST-EMPLOYMENT BENEFITS (Continued) Of the total amount reported as deferred outflows of resources related to OPEB, $123,082 resulting from District contributions subsequent to the measurement date and before the end of the fiscal year will be included as a reduction of the collective net OPEB liability in the year ended June 30, Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in the District s OPEB expense as follows: Year Ending June 30, Amount 2019 $ (212,583) 2020 (212,583) 2021 (212,583) 2022 (212,583) 2023 (212,542) Thereafter (320,946) Total $ (1,383,820) Actuarial assumptions. The total OPEB liability was determined by an actuarial valuation as of June 30, 2016, using the following assumptions, applied to all periods included in the measurement unless otherwise specified: Actuarial Valuation Date June 30, 2016 Actuarial Cost Method Entry Age Normal Assumptions Inflation Rate 2.75% Total Payroll Increases Investment Rate of Return Healthcare Cost Trend Rates Depends on service and ranges from 9.25% at 1 year of service to 3.25% at 20 or more years of service. Salary increase included a 3.25% wage inflation assumption. 0%, net of OPEB plan investment expense, including inflation, for all plan years. Non-Medicare coverage: Trend rate of 8.00% in fiscal year 2018, trending to an ultimate trend rate 5.09% in fiscal year Medicare coverage: Trend rate of 9.00% in fiscal year 2018 decreasing to an ultimate trend rate of 4.50% in Asset Valuation Method Market 34

40 Notes to financial statements June 30, 2018 NOTE 10 - OTHER POST-EMPLOYMENT BENEFITS (Continued) Mortality rates were based on the RP-2014 White Collar Annuitant Mortality Table, adjusted for TRS experience for retirement and beneficiary annuitants. Disabled annuitants were based upon the RP-2014 Disabled Annuitant Table. Pre-retirement annuitants were based upon the RP-2014 White Collar Table. All tables reflect future mortality improvements using Projection Scale MP Actuarial assumptions used in the June 30, 2016 actuarial valuation were based upon an experience-based table of rates that are specific to the type of eligibility condition, which was last updated for the valuation. Discount rate. The discount rate used to measure the total OPEB liability as of June 30, 2017 was 3.56 percent, which was a change from the discount rate of 2.85 percent that was used as of June 30, Because plan benefits are financed on a pay-as-you-go basis, the single discount rate is based on a tax-exempt municipal bond rate index of 20-year general obligation bonds with an average AA credit rating as of the measurement date. Sensitivity of the District s proportionate share of the collective net OPEB liability to changes in the discount rate. The following presents the District s proportionate share of the collective net OPEB liability, as well as what the District s proportionate share of the collective net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.56 percent) or 1-percentage-point higher (4.56 percent) than the current discount rate: Current 1% Decrease Discount Rate 1% Increase Net OPEB liability/(asset) $ 17,951,210 $ 14,959,450 $ 12,565,491 Sensitivity of the District s proportionate share of the collective net OPEB liability to changes in the healthcare cost trend rates. The following presents the District s proportionate share of the collective net OPEB liability, as well as what the District s proportionate share of the collective net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower (7.00 percent decreasing to 4.09 percent for non-medicare coverage and 8.00 percent to 3.50 percent for Medicare coverage) or 1- percentage-point higher (9.00 percent decreasing to 6.09 percent for non-medicare coverage and percent to 5.50 percent for Medicare coverage) than the current discount rate: Healthcare Cost 1% Decrease Trend Rates 1% Increase Net OPEB liability/(asset) $ 12,073,774 $ 14,959,450 $ 19,101,246 OPEB plan fiduciary net position. The publicly available financial report of the THIS Fund may be found on the website of the Illinois Auditor General: The 2013 through 2016 reports are listed under "Central Management Services." Prior reports are available under "Healthcare and Family Services." 35

41 Notes to financial statements June 30, 2018 NOTE 10 - OTHER POST-EMPLOYMENT BENEFITS (Continued) Retiree Health Plan Plan description. The District administers a single-employer defined benefit healthcare plan ("the Retiree Health Plan"). The plan provides health insurance contributions for eligible retirees and their spouses through the District's group health insurance plan which covers both active and retired members. The Retiree Health Plan does not set aside assets in a trust to fund the plan. Therefore, the Plan does not issue a publicly available financial report. Benefits provided. Benefit provisions are established through personnel policy guidelines. Retirees who participate in the Illinois Municipal Retirement Fund ( IMRF ) or the Teachers Retirement System ( TRS ) are eligible for participation in the Retiree Health Plan. See note 11 for the eligibility requirements for retirement under those plans. Retirees under IMRF may remain on the District insurance in retirement but will pay the full cost of coverage. However, custodians and secretaries under 75 years old with at least 15 years of service will receive a monthly stipend of $5 per each completed year of service (not to exceed the cost of insurance) for a period not to exceed 5 years. For TRS retirees with 15 years of full time service, the District will pay the TRS retiree health insurance premium for a maximum of 4 years at a rate not to exceed the single employee coverage rate. Membership. At June 30, 2018, membership consisted of: Active employees fully eligible 46 Active employees not yet eligible 230 Retired plan members 15 Disabled plan members 0 Total 291 Contributions. Contribution requirements are established through personnel policy guidelines and may be amended by the action of the governing body. The District contributes on a pay-as-you-go basis. For fiscal year 2018, the District contributed $45,965 to the plan. Actuarial assumptions. The District s net OPEB liability was measured as of June 30, 2018 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of June 30, The total OPEB liability was determined using the following actuarial methods and assumptions: 36

42 Notes to financial statements June 30, 2018 NOTE 10 - OTHER POST-EMPLOYMENT BENEFITS (Continued) Actuarial Valuation Date June 30, 2017 Actuarial Cost Method Entry Age Normal Assumptions Discount Rate 3.87% Long-Term Expected Rate of Return on Plan Assets N/A Total Payroll Increases 2.25% Healthcare Cost Trend Rates Asset Valuation Method 6.40% in fiscal year 2018, trending to 5.50% in fiscal year 2032, and an ultimate trend rate of 5.50% N/A Mortality rates were based on Sex Distinct Raw Rates as developed in the RP-2014 Study, with Blue Collar Adjustment for IMRF participants. These rates are improved generationally using MP-2016 improvement rates. For TRS participants, rates were based on Sex Distinct Raw Rates as developed in the RP-2014 Study, with White Collar Adjustment. These rates are improved generationally using MP-2016 improvement rates and weighted based on the TRS June 30, 2017 actuarial valuation. Spouse mortality rates follow Sex Distinct Raw Rates as developed in the RP-2014 Study. These rates are improved generationally using MP-2016 improvement rates. Retirement, termination and disability rates followed the rates used in pension specific actuarial valuations for IMRF and TRS employees performed in Assumptions were revised for expected increases in the medical costs assumption for HMO plans to 0.00 percent in the first year of the projection, based on known information, and 7.75 percent in the second year of the projection. Long-term, ultimate increases in medical costs have been set at 5.50 percent. Expected increases in the medical costs assumption for PPO plans were revised to 6.40 percent in the first year of the projection, based on known information, and 7.75 percent in the second year of the projection. Long-term, ultimate increases in medical costs have been set at 5.50 percent. Eligibility changes. The current valuation varied from the prior valuation as the total OPEB liability now includes aides. In the prior year, aides were only able to elect COBRA benefits if eligible, but are now able to 37

43 Notes to financial statements June 30, 2018 NOTE 10 - OTHER POST-EMPLOYMENT BENEFITS (Continued) remain on District insurance in retirement. This change in eligibility resulted in an increase in the actuarial liability in the current year of approximately $304,000. Discount rate. The discount rate used to measure the total OPEB liability as of June 30, 2018 was 3.87 percent, which was a change from the discount rate of 3.00 percent that was used as of June 30, Because plan benefits are financed on a pay-as-you-go basis, the single discount rate is based on a tax-exempt municipal bond rate index of 20-year general obligation bonds with an average AA credit rating as of the measurement date. Changes in the Net OPEB Liability Increase (Decrease) Total OPEB OPEB Plan Net OPEB Liability Net Position Liability/(Asset) (a) (b) (a) - (b) Balances at July 1, 2017 $ 1,789,102 $ - $ 1,789,102 Service cost 95,682-95,682 Interest on total OPEB liability 68,349-68,349 Differences between expected and actual experience of the total OPEB liability Change of assumptions Plan changes Benefit payments, including refunds of employee contributions (45,965) (45,965) - Contributions - employer - 45,965 (45,965) Contributions - employee Net investment income Other (net transfer) Balances at June 30, 2018 $ 1,907,168 $ - $ 1,907,168 Sensitivity of the District s net OPEB liability to changes in the discount rate. The following presents the District s net OPEB liability, as well as what the District s net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.87 percent) or 1-percentage-point higher (4.87 percent) than the current discount rate: Current 1% Decrease Discount Rate 1% Increase Total OPEB liability $ 2,072,723 $ 1,907,168 $ 1,754,762 OPEB plan net position Net OPEB liability/(asset) $ 2,072,723 $ 1,907,168 $ 1,754,762 38

44 Notes to financial statements June 30, 2018 NOTE 10 - OTHER POST-EMPLOYMENT BENEFITS (Continued) Sensitivity of the District s net OPEB liability to changes in the healthcare cost trend rates. The following presents the District s net OPEB liability, as well as what the District s net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower (5.40 percent decreasing to 4.50 percent) or 1-percentage-point higher (7.40 percent decreasing to 6.50 percent) than the current discount rate: Healthcare Cost 1% Decrease Trend Rates 1% Increase Total OPEB liability $ 1,605,574 $ 1,907,168 $ 2,308,709 OPEB plan net position Net OPEB liability/(asset) $ 1,605,574 $ 1,907,168 $ 2,308,709 OPEB Expense and Deferred Outflows and Inflows of Resources Related to OPEB. For the year ended June 30, 2018, the District recognized OPEB expense of $164,031. At June 30, 2018, the District did not report any deferred outflows of resources and deferred inflows related to OPEB. NOTE 11 - RETIREMENT SYSTEMS The retirement plans of the District include the Teachers Retirement System of the State of Illinois (TRS) and the Illinois Municipal Retirement Fund (IMRF). Most funding for TRS is provided through payroll withholdings of certified employees and contributions made by the State of Illinois on-behalf of the District. IMRF is funded through property taxes and a perpetual lien of the District s corporate personal property replacement tax. Each retirement system is discussed below. For all plans, at June 30, 2018 the District s net pension liability was $2,872,394, the deferred outflows of resources were $746,781, the deferred inflows of resources were $1,878,099, and the pension expense for the year then ended was $459,332 (net of on behalf contributions from the state of $10,065,645). Teachers' Retirement System Plan Description. The District participates in the Teachers Retirement System of the State of Illinois (TRS). TRS is a cost-sharing multiple-employer defined benefit pension plan that was created by the Illinois legislature for the benefit of Illinois public school teachers employed outside the City of Chicago. TRS members include all active nonannuitants who are employed by a TRS-covered employer to provide services for which teacher licensure is required. The Illinois Pension Code outlines the benefit provisions of TRS, and amendments to the plan can be made only by legislative action with the Governor s approval. The TRS Board of Trustees is responsible for the System s administration. TRS issues a publicly available financial report that can be obtained at by writing to TRS at 2815 W. Washington, PO Box 19253, Springfield, IL 62794; or by calling (888) , option 2. 39

45 Notes to financial statements June 30, 2018 NOTE 11 - RETIREMENT SYSTEMS (Continued) Benefits Provided. TRS provides retirement, disability, and death benefits. Tier I members have TRS or reciprocal system service prior to January 1, Tier I members qualify for retirement benefits at age 62 with five years of service, at age 60 with 10 years, or age 55 with 20 years. The benefit is determined by the average of the four highest years of creditable earnings within the last 10 years of creditable service and the percentage of average salary to which the member is entitled. Most members retire under a formula that provides 2.2 percent of final average salary up to a maximum of 75 percent with 34 years of service. Disability and death benefits are also provided. Tier II members qualify for retirement benefits at age 67 with 10 years of service, or a discounted annuity can be paid at age 62 with 10 years of service. Creditable earnings for retirement purposes are capped and the final average salary is based on the highest consecutive eight years of creditable service rather than the last four. Disability provisions for Tier II are identical to those of Tier I. Death benefits are payable under a formula that is different from Tier I. Essentially all Tier I retirees receive an annual 3 percent increase in the current retirement benefit beginning January 1 following the attainment of age 61 or on January 1 following the member s first anniversary in retirement, whichever is later. Tier II annual increases will be the lesser of three percent of the original benefit or one-half percent of the rate of inflation beginning January 1 following attainment of age 67 or on January 1 following the member s first anniversary in retirement, whichever is later. Public Act , enacted in 2017, creates an optional Tier 3 hybrid retirement plan, but it has not yet gone into effect. The earliest possible implementation date is July 1, Contributions. The State of Illinois maintains the primary responsibility for funding TRS. The Illinois Pension Code, as amended by Public Act and subsequent acts, provides that for years 2010 through 2045, the minimum contribution to the System for each fiscal year shall be an amount determined to be sufficient to bring the total assets of the System up to 90 percent of the total actuarial liabilities of the System by the end of fiscal year Contributions from active members and TRS contributing employers are also required by the Illinois Pension Code. The contribution rates are specified in the pension code. The active member contribution rate for the year ended June 30, 2018 was 9.0 percent of creditable earnings. The member contribution, which may be paid on behalf of employees by the District, is submitted to TRS by the District. On Behalf Contributions to TRS. The State of Illinois makes employer pension contributions on behalf of the District. For the year ended June 30, 2018, State of Illinois contributions recognized by the District were based on the state s proportionate share of the collective net pension liability associated with the District, and the District recognized revenue and expenditures of $10,065,645 in pension contributions from the State of Illinois. 2.2 Formula Contributions. Employers contribute 0.58 percent of total creditable earnings for the 2.2 formula change. The contribution rate is specified by statute. Contributions for the year ended June 30, 2018, were $84,390, and are deferred because they were paid after the June 30, 2017 measurement date. 40

46 Notes to financial statements June 30, 2018 NOTE 11 - RETIREMENT SYSTEMS (Continued) Federal and Trust Fund Contributions. When TRS members are paid from federal and special trust funds administered by the District, there is a statutory requirement for the District to pay an employer pension contribution from those funds. Under Public Act , the federal and special trust fund contribution rate is the total employer normal cost beginning with the year ended June 30, Previously, employer contributions for employees paid from federal and special trust funds were at the same rate as the state contribution rate to TRS and were much higher. For the year ended June 30, 2018, the District pension contribution was percent of salaries paid from federal and special trust funds. Contributions for the year ended June 30, 2018, were $13,138, which was equal to the District's required contribution. These contributions are deferred because they were paid after the June 30, 2017 measurement date. Early Retirement Option. Contributions that an employer is required to pay because of a TRS member retiring are categorized as specific liability payments. The District is required to make a one-time contribution to TRS for members retiring under the Early Retirement Option (ERO). The payments vary depending on the member s age and salary. The maximum employer ERO contribution under the current program is percent and applies when the member is age 55 at retirement. For the year ended June 30, 2018, the District made no payments to TRS for District ERO contributions. Salary increases over 6 percent. The District is also required to make a one-time contribution to TRS for members granted salary increases over 6 percent if those salaries are used to calculate a retiree s final average salary. For the year ended June 30, 2018, the District made no payments to TRS for employer contributions due on salary increases in excess of 6 percent. Excess sick leave. A one-time contribution is also required for members granted sick leave days in excess of the normal annual allotment if those days are used as TRS service credit. For the year ended June 30, 2018, the District made no payments to TRS for sick leave days granted in excess of the normal annual allotment. TRS Fiduciary Net Position. Detailed information about the TRS s fiduciary net position as of June 30, 2017 is available in the separately issued TRS Comprehensive Annual Financial Report. Net Pension Liability. At June 30, 2018, the District reported a liability for its proportionate share of the net pension liability (first amount shown below) that reflected a reduction for state pension support provided to the District. The state s support and total are for disclosure purposes only. The amount recognized by the District as its proportionate share of the net pension liability, the related state support, and the total portion of the net pension liability that was associated with the District were as follows: District's proportionate share of the collective net pension liability $ 2,105,741 State's proportionate share of the collective net pension liability associated with the District 102,277,333 Total $ 104,383,074 41

47 Notes to financial statements June 30, 2018 NOTE 11 - RETIREMENT SYSTEMS (Continued) The net pension liability was measured as of June 30, 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2016 and rolled forward to June 30, The District s proportion of the net pension liability was based on the District s share of contributions to TRS for the measurement year ended June 30, 2017, relative to the projected contributions of all participating TRS employers and the state during that period. At June 30, 2017, the District s proportion was percent, a decrease of from it proportion measured as of June 30, Summary of Significant Accounting Policies. For purposes of measuring the collective net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of TRS and additions to/deductions from TRS fiduciary net position have been determined on the same basis as they are reported by TRS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Actuarial Assumptions. The assumptions used to measure the total pension liability in the June 30, 2017 actuarial valuation included (a) 7.00% investment rate of return net of pension plan investment expense, including inflation, (b) projected salary increases assumptions vary by the amount of service credit and (c) inflation to 2.50%. For the 2017 and 2016 measurement years, the assumed investment rate of return was 7.0 percent, including an inflation rate of 2.5 percent and a real return of 4.5 percent. Salary increases were assumed to vary by service credit. For the 2015 measurement year, the assumed investment rate of return was 7.5 percent, including an inflation rate of 3.0 percent and a real return of 4.5 percent. Salary increases were assumed to vary by service credit. Various other changes in assumptions were adopted based on the experience analysis for the three-year period ending June 30, For the 2014 measurement year, the assumed investment rate of return was also 7.5 percent, including an inflation rate of 3.0 percent and a real return of 4.5 percent. However, salary increases were assumed to vary to age. Mortality. Mortality rates were based on the RP-2014 White Collar Table with adjustments as appropriate for TRS experience. The rates are used on a fully-generational basis using projection table MP The same assumptions were used in the June 30, 2016 actuarial valuation. Long-Term Expected Real Rate of Return. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class that were used by the actuary are summarized in the following table: 42

48 Notes to financial statements June 30, 2018 NOTE 11 - RETIREMENT SYSTEMS (Continued) Long-Term Asset Class Target Allocation Expected Real Rate of Return U.S. equities large cap 14.40% 6.94% U.S. equities small/mid cap 3.60% 8.09% International equities developed 14.40% 7.46% Emerging market equities 3.60% 10.15% U.S. bonds core 10.70% 2.44% International debt developed 5.30% 1.70% Real Estate 15.00% 5.44% Commodities (real return) 11.00% 4.28% Hedge funds (absolute return) 8.00% 4.16% Private equity 14.00% 10.63% Discount Rate. At June 30, 2017, the discount rate used to measure the total pension liability was 7.00 percent, which was a change from the June 30, 2016 rate of 6.83 percent. The projection of cash flows used to determine the discount rate assumed that employee contributions, employer contributions, and state contributions will be made at the current statutorily-required rates. Based on those assumptions, TRS s fiduciary net position at June 30, 2017 was projected to be available to make all projected future benefit payments of current active and inactive members and all benefit recipients. Tier I s liability is partially-funded by Tier II members, as the Tier II member contribution is higher than the cost of Tier II benefits. Due to this subsidy, contributions from future members in excess of the service cost are also included in the determination of the discount rate. All projected future payments were covered, so the long-term expected rate of return on TRS investments was applied to all periods of projected benefit payments to determine the total pension liability. At June 30, 2016, the discount rate used to measure the total pension liability was 6.83 percent. The discount rate was lower than the actuarially-assumed rate of return on investments that year because TRS s fiduciary net position and the subsidy provided by Tier II were not sufficient to cover all projected benefit payments. 43

49 Notes to financial statements June 30, 2018 NOTE 11 - RETIREMENT SYSTEMS (Continued) Discount Rate Sensitivity. The following presents the District s proportionate share of the net pension liability calculated using the discount rate of 7.00 percent, as well as what the District s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.00 percent) or 1-percentage-point higher (8.00 percent) than the current rate: Current 1% Decrease Discount Rate 1% Increase District's proportionate share of the collective net pension liability $ 2,587,178 $ 2,105,741 $ 1,711,404 Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. For the year ended June 30, 2018, the District recognized pension expense of $75,230 and on-behalf revenue and expenditures of $10,065,645 for support provided by the state. At June 30, 2018, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflow of Resources Deferred Inflow of Resources Differences between expected and actual experience $ 22,871 $ 972 Net difference between projected and actual earnings on pension plan investments 1,445 - Changes in assumptions 140,543 60,509 Changes in proportion and differences between District contributions and proportionate share of contributions 207, ,128 District contributions subsequent to the measurement date 97,528 - Total $ 469,440 $ 716,609 44

50 Notes to financial statements June 30, 2018 NOTE 11 - RETIREMENT SYSTEMS (Continued) The amount reported as deferred outflows resulting from contributions subsequent to the measurement date in the above table will be recognized as a reduction in the net pension liability for the year ending June 30, The remaining amounts reported as deferred outflows and inflows of resources related to pensions ($344,697) will be recognized in pension expense as follows: Year Ending June, 30 Amount 2018 $ (112,495) 2019 (26,797) 2020 (131,058) 2021 (69,480) 2022 (4,867) Total $ (344,697) Illinois Municipal Retirement Fund Plan Description. The District s defined benefit pension plan for Regular employees provides retirement and disability benefits, post retirement increases, and death benefits to plan members and beneficiaries. The District's plan is affiliated with the Illinois Municipal Retirement Fund (IMRF), an agent multiple-employer plan. Benefit provisions are established by statute and may only be changed by the General Assembly of the State of Illinois. IMRF issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained on-line at All employees hired in positions that meet or exceed the prescribed annual hourly standard must be enrolled in IMRF as participating members. Public Act created a second tier for IMRF s Regular Plan. IMRF assigns a benefit tier to a member when he or she is enrolled in IMRF. The tier is determined by the member s first IMRF participation date. If the member first participated in IMRF before January 1, 2011, they participate in Regular Tier 1. If the member first participated in IMRF on or after January 1, 2011, they participate in Regular Tier 2. For Regular Tier 1, pension benefits vest after eight years of service. Participating members who retire at or after age 60 with 8 years of service are entitled to an annual retirement benefit, payable monthly for life in an amount equal to 1 2/3% of their final rate (average of the highest 48 consecutive months earnings during the last 10 years) of earnings for each year of credited service up to 15 years and 2% for each year thereafter. For Regular Tier 2, pension benefits vest after ten years of service. Participating members who retire at or after age 67 with 10 years of service, or age 62 with 35 years of service are entitled to an annual retirement benefit as described above. IMRF also provides death and disability benefits. These benefit provisions and all other requirements are established by state statute. 45

51 Notes to financial statements June 30, 2018 NOTE 11 - RETIREMENT SYSTEMS (Continued) Plan Membership. At December 31, 2017, the measurement date, membership of the plan was as follows: Retirees and beneficiaries 85 Inactive, non-retired members 268 Active members 133 Total 486 Contributions. As set by statute, District employees participating in IMRF are required to contribute 4.50 percent of their annual covered salary. The statute requires the District to contribute the amount necessary, in addition to member contributions, to finance the retirement coverage of its own employees. The District's actuarially determined contribution rate for calendar year 2017 was percent of annual covered payroll. The District also contributes for disability benefits, death benefits and supplemental retirement benefits, all of which are pooled at the IMRF level. Contribution rates for disability and death benefits are set by the IMRF Board of Trustees, while the supplemental retirement benefits rate is set by statute. Net Pension Liability/(Asset). The net pension liability/(asset) was measured as of December 31, 2017, and the total pension liability used to calculate the net pension liability/(asset) was determined by an annual actuarial valuation as of that date. Summary of Significant Accounting Policies. For purposes of measuring the net pension liability/(asset), deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of IMRF and additions to/deductions from IMRF fiduciary net position have been determined on the same basis as they are reported by IMRF. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Actuarial Assumptions. The assumptions used to measure the total pension liability in the December 31, 2017 annual actuarial valuation included (a) 7.50% investment rate of return, (b) projected salary increases from 3.39% to 14.25%, including inflation, and (c) price inflation of 2.50%. The retirement age is based on experience-based table of rates that are specific to the type of eligibility condition. The tables were last updated for the 2017 valuation pursuant to an experience study of the period Mortality. For non-disabled retirees, an IMRF specific mortality table was used with fully generational projection scale MP-2017 (base year 2015). The IMRF specific rates were developed from the RP-2014 Blue Collar Health Annuitant Mortality Table with adjustments to match current IMRF experience. For disabled retirees, an IMRF specific mortality table was used with fully generational projection scale MP- 2017(base year 2015). The IMRF specific rates were developed from the RP-2015 Disabled Retirees Mortality Table applying the same adjustment that were applied for non-disabled lives. For active members, an IMRF specific mortality table was used with fully generational projection scale MP-2017 (base year 2015). The IMRF specific rates were developed from the RP-2014 Employee Mortality Table with adjustments to match current IMRF experience. 46

52 Notes to financial statements June 30, 2018 NOTE 11 - RETIREMENT SYSTEMS (Continued) Long-Term Expected Real Rate of Return. The long-term expected rate of return on pension plan investments was determined using an asset allocation study in which best-estimate ranges of expected future real rates of return (net of pension plan investment expense and inflation) were developed for each major asset class. These ranges were combined to produce long-term expected rate of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic and geometric real rates of return for each major asset class are summarized in the following table: Projected Returns/Risk Asset Class Target Allocation One Year Arithmatic Ten Year Geometric Equities 37.00% 8.30% 6.85% International equities 18.00% 8.45% 6.75% Fixed Income 28.00% 3.05% 3.00% Real Estate 9.00% 6.90% 5.75% Alternatives 7.00% Private equity 12.45% 7.35% Hedge funds 5.35% 5.05% Commodities 4.25% 2.65% Cash equivalents 1.00% 2.25% 2.25% Discount Rate. The discount rate used to measure the total pension liability for IMRF was 7.50%. The discount rate calculated using the December 31, 2016 measurement date was 7.50%. The projection of cash flows used to determine the discount rate assumed that member contributions will be made at the current contribution rate and that District contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on investments of 7.50% was used as the discount rate and did not need to be blended with the index rate of 3.31% for tax exempt 20-year general obligation municipal bonds with an average AA credit rating at December 31, 2017 to arrive at a discount rate to determine the total pension liability. 47

53 Notes to financial statements June 30, 2018 NOTE 11 - RETIREMENT SYSTEMS (Continued) Discount Rate Sensitivity. The following is a sensitivity analysis of the net pension liability/(asset) to changes in the discount rate. The table below presents the pension liability of the District calculated using the discount rate of 7.5% as well as what the net pension liability/(asset) would be if it were to be calculated using a discount rate that is 1 percentage point lower (6.5%) or 1 percentage point higher (8.5%) than the current rate: Current 1% Decrease Discount Rate 1% Increase Total pension liability $ 18,936,346 $ 16,680,885 $ 14,832,948 Plan fiduciary net position 15,914,231 15,914,231 15,914,231 Net pension liability/(asset) $ 3,022,115 $ 766,654 $ (1,081,283) Changes in Net Pension Liability/(Asset). The District's changes in net pension liability/(asset) for the calendar year ended December 31, 2017 was as follows: Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability/(Asset (a) (b) (a) - (b) Balances at December 31, 2016 $ 16,435,032 $ 13,824,068 $ 2,610,964 Service cost 445, ,246 Interest on total pension liability 1,227,251-1,227,251 Differences between expected and actual experience of the total pension liability (344,628) - (344,628) Change of assumptions (493,395) - (493,395) Benefit payments, including refunds of employee contributions (588,621) (588,621) - Contributions - employer - 434,202 (434,202) Contributions - employee - 173,328 (173,328) Net investment income - 2,343,344 (2,343,344) Other (net transfer) - (272,090) 272,090 Balances at December 31, 2017 $ 16,680,885 $ 15,914,231 $ 766,654 48

54 Notes to financial statements June 30, 2018 NOTE 11 - RETIREMENT SYSTEMS (Continued) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. For the year ended June 30, 2018, the District recognized pension expense of $384,102. The District reported deferred outflows and inflows of resources related to pension from the following sources: Deferred Outflow of Resources Deferred Inflow of Resources Differences between expected and actual experience $ 39,443 $ 220,755 Assumption changes - 334,874 Net difference between projected and actual earnings on pension plan investments - 605,861 Contributions subsequent to the measurement date 237,898 - Total $ 277,341 $ 1,161,490 The amount reported as deferred outflows resulting from contributions subsequent to the measurement date in the above table will be recognized as a reduction in the net pension liability/(asset) for the year ending June 30, The remaining amounts reported as deferred outflows and inflows of resources related to pensions ($1,122,047) will be recognized in pension expense as follows: Year Ending June 30, Amount 2019 $ (312,434) 2020 (301,468) 2021 (244,940) 2022 (263,205) Total $ (1,122,047) NOTE 12 - STATE AND FEDERAL AID CONTINGENCIES The District has received federal and state grants for specific purposes that are subject to review and audit by the grantor agencies. Such audits could lead to requests for reimbursements to the grantor agency for expenditures disallowed under the terms of the grants. Management believes such disallowance, if any, would be immaterial. NOTE 13 - CONTINGENT LIABILITIES The District is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of the District s attorneys, the resolution of these matters will not have a material adverse effect on the financial condition of the District. 49

55 Notes to financial statements June 30, 2018 NOTE 14 PRIOR PERIOD ADJUSTMENT During the current year, the District implemented GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. As a result of the conversion, the District reported prior period adjustments related to the elimination of net OPEB obligation balances as of the prior year-end and the establishment of net OPEB liability and deferred outflow balances related to the District s participation in the Teachers Health Insurance Security fund and the District s Retiree Health Plan. The schedule below details the effects of the prior period adjustments in the governmental activities within the government-wide financial statements. Governmental Activities Initial Beginning Net Position, July 1, 2017 $ 15,208,399 Elimination of beginning net OPEB obligation balances 2,432,034 Establishment of beginning net OPEB liability balances (17,069,466) Establishment of beginning deferred outflow of resources related to OPEB 111,399 Restated Beginning Net Position, June 30, 2018 $ 682,366 NOTE 15 - EFFECT OF NEW ACCOUNTING STANDARDS ON CURRENT-PERIOD FINANCIAL STATEMENTS The Governmental Accounting Standards Board (GASB) has approved GASB Statement No. 83, Certain Asset Retirement Obligations, GASB Statement No. 84, Fiduciary Activities, GASB Statement No. 87, Leases, GASB Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placement, GASB Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period, GASB Statement No. 90, Majority Equity Interests an amendment of GASB Statements No. 14 and No. 61. Application of these standards may restate portions of these financial statements. 50

56 REQUIRED SUPPLEMENTARY INFORMATION LYONS ELEMENATRY SCHOOL DISTRICT 103

57 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE DISTRICT'S NET PENSION LIABILITY AND RELATED RATIOS ILLINOIS MUNICIPAL RETIREMENT FUND JUNE 30, 2018 Last 10 Fiscal Years* Total Pension Liability Service cost $ 445,246 $ 452,486 $ 429,611 $ 470,736 $ - $ - $ - $ - $ - $ - Interest 1,227,251 1,139,781 1,073, , Changes of benefit terms Differences between expected and actual experience (344,628) 135,758 (154,400) (198,769) Changes of assumptions (493,395) (64,790) 41, , Benefit payments, including refunds of member (588,621) (520,157) contributions (428,508) (418,804) Net Change in Total Pension Liability 245,853 1,143, ,189 1,401, Total Pension Liability - Beginning 16,435,032 15,291,954 14,330,765 12,928, Total Pension Liability - Ending (a) $ 16,680,885 $ 16,435,032 $ 15,291,954 $ 14,330,765 $ - $ - $ - $ - $ - $ - Plan Fiduciary Net Position Contributions - employer $ 434,202 $ 437,034 $ 422,809 $ 434,730 $ - $ - $ - $ - $ - $ - Contributions - member 173, , , , Net investment income 2,343, ,509 65, , Benefit payments, including refunds of member contributions (588,621) (520,157) (428,508) (418,804) Other (272,090) 111,763 (398,484) 39, Net Change in Fiduciary Net Position $ 2,090,163 $ 1,072,909 $ (170,470) $ 960,511 $ - $ - $ - $ - $ - $ - Plan Fiduciary Net Position - Beginning 13,824,068 12,751,159 12,921,629 11,961, Plan Fiduciary Net Position - Ending (b) $ 15,914,231 $ 13,824,068 $ 12,751,159 $ 12,921,629 $ - $ - $ - $ - $ - $ - Net Pension Liability - Ending (a)-(b) $ 766,654 $ 2,610,964 $ 2,540,795 $ 1,409,136 $ - $ - $ - $ - $ - $ - Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 95.40% 84.11% 83.38% 90.17% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Covered-Employee Payroll $ 3,828,950 $ 3,816,885 $ 3,731,887 $ 3,648,335 $ - $ - $ - $ - $ - $ - Net Pension Liability as a Percentage of Covered- Employee Payroll 20.02% 68.41% 68.08% 38.62% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% *Information is presented for those years for which it was available See accompanying notes to required supplementary information 51

58 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF EMPLOYER CONTRIBUTIONS ILLINOIS MUNICIPAL RETIREMENT FUND JUNE 30, 2018 Last 10 Fiscal Years* Actuarially determined contribution $ 434,203 $ 437,033 $ 425,435 $ 421,018 $ - $ - $ - $ - $ - $ - Contributions in relation to the actuarially determined contribution 434, , , , Contribution deficiency (excess) 1 (1) 2,626 (13,712) Covered-employee payroll $ 3,828,950 $ 3,816,885 $ 3,731,887 $ 3,648,335 $ - $ - $ - $ - $ - $ - Contributions as a percentage of coveredemployee payroll 11.34% 11.45% 11.33% 11.92% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Notes to Schedule: Valuation Date: Actuarially determined contribution rates are calculated as of December 31 each year, which is 6 months prior to the beginning of the fiscal year in which contributions are reported Actuarial Cost Method: Aggregate entry age normal Amortization Method: Level percentage of payroll, closed Remaining Amortization Period: 26-year closed period Asset Valuation Method: 5-Year smoothed market; 20% corridor Inflation: 2.75% Salary Increases: 3.75% to 14.50% including inflation Investment Rate of Return: 7.50% Retirement Age: Experience-based table of rates that are specific to the type of eligibility condition. Last updated for the 2014 valuation pursuant to an experience study of the period Mortality: For non-disabled retirees - IMRF specific rates were developed from the RP-2014 Blue Collar Health Annuitant Mortality Table For disabled retirees - IMRF specific rates were developed from the RP-2014 Disabled Retirees Mortality Table For active members - IMRF specific rates were developed from the RP-2014 Employee Mortality Table Other Information: There were no benefit changes during the year *Information is presented for those years for which it was available See accompanying notes to required supplementary information 52

59 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF DISTRICT'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY AND DISTRICT CONTRIBUTIONS TEACHERS' RETIREMENT SYSTEM JUNE 30, 2018 Last 10 Fiscal Years* District's proportion of the net pension liability % % % % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% District's proportionate share of the net pension liability $ 2,105,741 $ 2,308,640 $ 2,674,643 $ 1,980,877 $ - $ - $ - $ - $ - $ - State's proportionate share of the net pension liability 102,277, ,389,930 87,072,377 82,034, Total net pension liability 104,383, ,698,570 89,747,020 84,015, Covered-employee payroll 13,986,598 13,260,843 13,019,983 13,447, District's proportionate share of the net pension liability as a percentage of covered payroll 13.40% 12.55% 14.51% 14.73% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Plan fiduciary net position as a percentage of the total pension liability 36.4% 36.4% 41.50% 43.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Contractually required contribution 90, , , , Contributions in relation to the contractually required contribution (97,528) (113,623) (113,265) (132,652) Contribution deficiency (excess) (7,009) (6,239) (98) 10, Contributions as a percentage of covered employee payroll % % % % % % % % % % Notes to Schedule: For the 2017 measurement year, the assumed investment rate of return was 7.0 percent, including an inflation rate of 2.5 percent and a real return of 4.5 percent. Salary increases were assumed to vary by service credit. For the 2016 measurement year, the assumed investment rate of return was 7.0 percent, including an inflation rate of 2.5 percent and a real return of 4.5 percent. Salary increases were assumed to vary by service credit. For the 2015 measurement year, the assumed investment rate of return was 7.5 percent, including an inflation rate of 3.0 percent and a real return of 4.5 percent. Salary increases were assumed to vary be service credit. Various other changes in assumptions were adopted based on the experience analysis for the three-year period ending June 30, For the 2014 measurement year, the assumed investment rate of return was also 7.5 percent, including an inflation rate of 3.0 percent and a real return of 4.5 percent. However, salary increases were assumed to vary by age. *Information is presented for those years for which it was available See accompanying notes to required supplementary information 53

60 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE DISTRICT'S TOTAL OPEB LIABILITY AND RELATED RATIOS DISTRICT RETIREE HEALTH PLAN JUNE 30, 2018 Last 10 Fiscal Years* Total OPEB Liability Service cost $ 95,682 $ - $ - $ - $ - $ - $ - $ - $ - $ - Interest 68, Changes of benefit terms Differences between expected and actual experience Changes of assumptions Benefit payments, including refunds of member contributions (45,965) Net Change in Total OPEB Liability 118, Total OPEB Liability - Beginning 1,789, Total OPEB Liability - Ending (a) $ 1,907,168 $ - $ - $ - $ - $ - $ - $ - $ - $ - OPEB Fiduciary Net Position Contributions - employer $ 45,965 $ - $ - $ - $ - $ - $ - $ - $ - $ - Contributions - member Net investment income Benefit payments, including refunds of member contributions (45,965) Other Net Change in OPEB Plan Net Position $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - OPEB Plan Net Position - Beginning OPEB Plan Net Position - Ending (b) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Employer Total OPEB Liability - Ending (a)-(b) $ 1,907,168 $ - $ - $ - $ - $ - $ - $ - $ - $ - Plan Fiduciary Net Position as a Percentage of the Total OPEB Liability 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Covered-Employee Payroll $ 16,891,664 $ - $ - $ - $ - $ - $ - $ - $ - $ - Total OPEB Liability as a Percentage of Covered- Employee Payroll 11.29% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% *Information is presented for those years for which it was available See accompanying notes to required supplementary information 54

61 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF EMPLOYER CONTRIBUTIONS DISTRICT RETIREE HEALTH PLAN JUNE 30, 2018 Last 10 Fiscal Years* Actuarially determined contribution N/A $ - $ - $ - $ - $ - $ - $ - $ - $ - Contributions in relation to the actuarially determined contribution Contribution deficiency (excess) N/A Covered-employee payroll $ 16,891,664 $ - $ - $ - $ - $ - $ - $ - $ - $ - Contributions as a percentage of coveredemployee payroll 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Notes to Schedule: Valuation Date: Actuarially determined contribution rates are calculated as of June 30 each year Actuarial Cost Method: Entry age normal Amortization Method: Level percentage of payroll Remaining Amortization Period: N/A Asset Valuation Method: N/A Inflation: N/A Healthcare Cost Trend Rate: 6.40% in fiscal year 2018, trending to 5.50% in fiscal year 2032 and an ultimate trend rate of 5.50% Investment Rate of Return: 3.87% Retirement Age: Various Mortality: IMRF participants - Sex distinct raw rates as developed in the RP-2014 Study, with Blue Collar Adjustment. These Rates are Improved Generationally using MP-2016 Improvement Rates. TRS pariticipants - Sex distinct raw rates as developed in the RP-2014 Study, with White Collar Adjustment. These Rates are Improved Generationally using MP-2016 Improvement Rates and Weighted Based on the TRS June 30, 2017 Actuarial Valuation. Spouse mortality follows the sex distinct raw rates as developed in the RP-2014 Study. These rates are improved generationally using MP-2016 Improvement Rates. Other Information: There were no benefit changes during the year *Information is presented for those years for which it was available 55

62 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF DISTRICT'S PROPORTIONATE SHARE OF THE NET OPEB LIABILITY AND DISTRICT CONTRIBUTIONS TEACHERS' HEALTH INSURANCE SECURITY FUND JUNE 30, 2018 Last 10 Fiscal Years* District's proportion of the net pension liability % % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% District's proportionate share of the net pension liability $ 14,959,450 $ 15,280,364 $ - $ - $ - $ - $ - $ - $ - $ - Total net pension liability 14,959,450 15,280, Covered-employee payroll 13,260,843 13,019, District's proportionate share of the net pension liability as a percentage of covered payroll 88.65% 85.21% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Plan fiduciary net position as a percentage of the total pension liability -0.2% -0.2% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Contractually required contribution 111, , Contributions in relation to the contractually required contribution (111,399) (104,158) Contribution deficiency (excess) Contributions as a percentage of covered employee payroll % % % % % % % % % % Notes to Schedule: For the 2017 measurement year, the discount rate was 4.5 percent, including an inflation rate of 2.75 percent. Healthcare trend rates for pre-medicare rates ranged from 5.09 to 8.0 percent, post-medicare rates ranged from 4.5 to 9.0 percent and retiree premium rates ranged from 4.5 to 5.0 percent. Salary increases were assumed to vary by service credit. *Information is presented for those years for which it was available 56

63 REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Revenues Local sources General levy $ 12,245,159 $ 12,976,712 $ 731,553 $ 12,484,270 Special education levy 1,326,021 1,333,092 7,071 1,356,206 Corporate personal property replacement taxes 1,734,558 1,775,364 40,806 2,232,984 Investment income 97, ,088 17,162 96,957 Sales to pupils - lunch 128, ,265 (2,450) 127,594 Admissions - athletic 22,131 15,657 (6,474) 21,912 Fees 64,721 54,081 (10,640) 64,092 Other pupil activity revenue 5,272 4,265 (1,007) 5,220 Contributions and donations from private sources - 32,824 32,824 - Refund of prior years' expenditures 1,042 - (1,042) 1,031 Payments of surplus monies from TIF districts 15,801 15,616 (185) 15,645 Other local fees 224, ,146 72, ,123 Other 2,600 22,532 19, ,710 Total local sources 15,868,529 16,768, ,113 16,974,744 State sources General state aid 5,472,500 6,754,585 1,282,085 5,023,292 Special education - private facility tuition 162, ,652 78, ,903 Special education - extraordinary 340,000 - (340,000) 339,556 Special education - personnel 598,000 - (598,000) 597,175 Special education - orphanage - individual 260, ,775 (72,225) 226,477 Special education - orphanage - summer 20,200 14,369 (5,831) 4,273 Special education - summer school 9,000 - (9,000) 15,588 CTE - secondary program improvement 1,500 1,231 (269) - Bilingual education - downstate - TPI 232,535 79,514 (153,021) 147,373 State free lunch and breakfast 7,000 9,651 2,651 6,676 Early childhood - block grant 595, ,184 (36,816) 594,913 Other restricted revenue from state sources 85,000 64,308 (20,692) 83,307 Total state sources 7,782,735 7,910, ,534 7,200,533 Federal sources National school lunch program 670, ,090 35, ,072 School breakfast program 100, ,597 7,597 97,333 Title I - Low income 707, ,446 79, ,214 See accompanying notes to required supplementary information 57

64 REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Federal - special education - IDEA - flow-through/low incident 3,908 29,371 25,463 3,869 Title III - english language acquisition 63,777 75,364 11,587 47,790 Title II - teacher quality 10,000 19,320 9,320 58,227 Medicaid matching funds - administrative outreach 116,003 57,600 (58,403) 53,839 Medicaid matching funds - fee-for-service program - 87,303 87,303 52,453 Total federal sources 1,671,499 1,869, ,592 1,619,797 Total revenues 25,322,763 26,548,002 1,225,239 25,795,074 Expenditures Instruction Regular programs Salaries 7,711,225 8,235, ,971 7,521,516 Employee benefits 2,167,550 2,129,247 (38,303) 1,554,221 Purchased services 209, ,222 14, ,942 Supplies and materials 523, ,901 18, ,555 Capital outlay 7,800 30,844 23,044 44,727 Other objects Non-capitalized equipment 104, , ,225 55,354 Total regular programs 10,725,324 11,487, ,261 9,755,615 Special education programs Salaries 2,308,140 2,387,255 79,115 2,251,883 Employee benefits 542, ,998 (8,577) 470,759 Purchased services 6,450 39,123 32,673 6,876 Supplies and materials 30,830 41,655 10,825 (1,985) Capital outlay 9,800 5,437 (4,363) 5,598 Non-capitalized equipment ,664 11,964 4,581 Total special education programs 2,898,495 3,020, ,637 2,737,712 Special education programs pre-k Salaries 381, ,884 9, ,073 Employee benefits 51,400 72,990 21,590 44,253 Purchased services - 32,143 32,143 - Supplies and materials 2,850 4,601 1,751 2,758 Other objects Total special education programs pre-k 435, ,618 64, ,084 Remedial and supplemental programs k-12 Salaries 970, ,605 (248,935) 944,860 Employee benefits 263, ,348 (47,452) 224,905 Purchased services 50,400 52,111 1,711 49,261 Supplies and materials 360, ,073 61, ,185 Total remedial and supplemental programs k-12 1,645,110 1,412,137 (232,973) 1,521,211 See accompanying notes to required supplementary information 58

65 REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Remedial and supplemental programs pre-k Salaries 486, ,533 64, ,508 Employee benefits 112, ,358 25,800 99,052 Purchased services 18,810 16,281 (2,529) 18,347 Supplies and materials 34,700 33,429 (1,271) 33,925 Other objects 1,100 1, ,040 Total remedial and supplemental programs pre-k 653, ,251 87, ,872 Interscholastic programs Salaries 476, ,629 21, ,298 Employee benefits 31,440 29,305 (2,135) 25,850 Purchased services 32,650 26,836 (5,814) 31,797 Supplies and materials 10,470 15,333 4,863 8,776 Other objects 1,600 1, ,500 Non-capitalized equipment 4,200 2,811 (1,389) 4,100 Total interscholastic programs 556, ,828 17, ,321 Summer school programs Salaries 9,030 3,496 (5,534) 8,840 Employee benefits (486) 493 Supplies and materials - 2,034 2,034 - Total summer school programs 9,530 5,544 (3,986) 9,333 Gifted programs Salaries 53,750 54, ,704 Employee benefits 1,950 1,088 (862) 1,057 Supplies and materials (100) - Total gifted programs 55,800 55,441 (359) 53,761 Bilingual programs Salaries 667, ,569 (8,291) 652,987 Employee benefits 167, ,898 (7,402) 143,367 Purchased services 200 3,926 3,726 (1,101) Supplies and materials 22,250 19,228 (3,022) 21,185 Total bilingual programs 857, ,621 (14,989) 816,438 Truant Alternative & Optional programs Other objects 413,000 - (413,000) - Total truant alternative & optional programs 413,000 - (413,000) - Special education programs k-12- private tuition Other objects - 617, , ,920 Total special education programs k-12 - private tuition - 617, , ,920 Total instruction 18,250,737 19,256,624 1,005,887 16,899,267 See accompanying notes to required supplementary information 59

66 REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Support services Pupils Attendance and social work services Salaries 348, ,746 12, ,488 Employee benefits 62,310 61,186 (1,124) 52,855 Purchased services (200) 170 Supplies and materials (21) 791 Total attendance and social work services 411, ,711 10, ,304 Health services Salaries 161, ,094 31, ,914 Employee benefits 20,880 37,519 16,639 19,250 Purchased services 83,190 85,517 2,327 76,954 Supplies and materials 8,000 2,320 (5,680) 7,594 Total health services 273, ,450 45, ,712 Psychological services Purchased services 2,300 - (2,300) 2,260 Total psychological services 2,300 - (2,300) 2,260 Speech pathology and audiology services Salaries 436, ,005 (55,095) 427,137 Employee benefits 70,550 62,878 (7,672) 64,410 Purchased services 2,270 8,210 5,940 2,225 Supplies and materials Other objects (37) 712 Total speech pathology and audiology services 510, ,690 (56,400) 494,918 Total pupils 1,197,630 1,194,851 (2,779) 1,154,194 Instructional staff Improvement of instructional services Salaries 52, , ,026 51,043 Employee benefits 10,470 36,981 26,511 9,256 Purchased services 67, ,398 68,198 64,320 Supplies and materials 1,663 37,509 35,846 1,438 Total improvement of instructional services 131, , , ,057 Educational media services Salaries 162, ,744 88, ,216 See accompanying notes to required supplementary information 60

67 REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Employee benefits 52,190 62,226 10,036 44,863 Purchased services 5,760 2,510 (3,250) 5,642 Supplies and materials 17,170 11,192 (5,978) 16,755 Total educational media services 237, ,672 88, ,476 Total instructional staff 369, , , ,533 General administration Board of education services Salaries 1,630 - (1,630) - Employee benefits 50,500 48,289 (2,211) 49,448 Purchased services 466, , , ,582 Supplies and materials 5,010 6,721 1,711 4,863 Other objects 19,200 19, ,750 Total board of education instructional services 542, , , ,643 Executive administration services Salaries 222, , ,845 Employee benefits 67,530 69,784 2,254 62,042 Purchased services 2,430 1,847 (583) 2,249 Supplies and materials (300) 282 Other objects 1,400 1, ,380 Termination Benefits Total executive administration services 293, ,364 2, ,798 Special area administration services Salaries 118, ,223 14, ,324 Employee benefits 45,420 26,996 (18,424) 41,465 Purchased services 1,130 1, ,114 Supplies and materials Other objects Total special area administration services 165, ,337 (3,083) 161,903 Tort expenditures Workers' Compensation or Workers' Occupational Disease Act payments 120, ,286 (18,714) 103,301 Unemployment insurance premiums 25,000 4,976 (20,024) 16,792 Property insurance (building & grounds) 160, ,907 (43,093) 159,956 Total general administration 305, ,169 (81,831) 280,049 Total general administration 1,306,860 1,338,693 31,833 1,205,393 See accompanying notes to required supplementary information 61

68 REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual School administration Office of the principal services Salaries 1,169,820 1,078,620 (91,200) 1,146,074 Employee benefits 454, ,804 17, ,534 Purchased services 7,440 2,478 (4,962) 6,723 Supplies and materials 6,300 6,300-6,100 Other objects 1,540 1,485 (55) 1,506 Total office of the principal services 1,639,670 1,560,687 (78,983) 1,575,937 Total school administration 1,639,670 1,560,687 (78,983) 1,575,937 Business Direction of business support services Salaries 220, ,876 8, ,097 Employee benefits 43,880 66,340 22,460 40,220 Purchased services 330 1, Supplies and materials Other objects - 1,395 1, Total direction of business support services 264, ,240 33, ,791 Fiscal Services Salaries 181, ,784 79, ,936 Employee benefits 44,810 50,875 6,065 46,748 Purchased services 3,620 4,689 1,069 3,806 Supplies and materials 1, (681) 1,217 Other objects - 5,339 5,339 - Total fiscal services 231, ,246 91, ,707 Operation and maintenance of plant services Purchased services - 2,135 2,135 (68) Capital outlay - 1,250 1,250 - Total operation and maintenance of plant services - 3,385 3,385 (68) Food services Salaries 254, ,076 (100,899) 147,629 Employee benefits 13,350 8,589 (4,761) 4,714 Purchased services 2,120 1,971 (149) 1,506 Supplies and materials 594, ,272 (27,008) 572,735 Non-capitalized equipment - 2,176 2,176 - Total food services 864, ,084 (130,641) 726,584 Total business 1,360,885 1,358,955 (1,930) 1,315,014 See accompanying notes to required supplementary information 62

69 REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Central Staff services Salaries 145, ,071 (22,399) 174,681 Employee benefits 31,940 55,410 23,470 28,395 Supplies and materials (220) 211 Total staff services 177, , ,287 Data processing services Capital oultay - 48,003 48,003 - Non-capitalized equipment - 23,568 23,568 - Total data processing services - 71,571 71,571 - Total central 177, ,052 72, ,287 Other support services Purchased services 45,480 - (45,480) - Total other support services 45,480 - (45,480) - Total support services 6,097,728 6,483, ,616 5,806,358 Community Services Community services Purchased services - 7,910 7,910 - Supplies and materials - 7,181 7,181 - Total community services - 15,091 15,091 - Payments to other districts and governmental units Payments for special education programs Purchased services 50,900 79,756 28,856 50,126 Other objects 174, ,939 (18,661) 169,562 Total payments for special education programs 225, ,695 10, ,688 Payments for regular programs - tuition Other objects 55,300 20,470 (34,830) 53,040 Total payments for regular programs - tuition 55,300 20,470 (34,830) 53,040 Payments for special education programs- tuition Other objects 1,826,950 2,188, ,219 1,787,807 Total payments for special education programs- tuition 1,826,950 2,188, ,219 1,787,807 See accompanying notes to required supplementary information 63

70 REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Total payments to other districts and governmental units 2,107,750 2,444, ,584 2,060,535 Total expenditures 26,456,215 28,199,393 1,743,178 24,766,160 Excess (Deficiency) of Revenues Over Expenditures (1,133,452) (1,651,391) (517,939) 1,028,914 See accompanying notes to required supplementary information 64

71 REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Other Financing Sources (Uses) Transfer among funds 1,500, ,000 (900,000) 1,500,000 Total other financing sources (uses) 1,500, ,000 (900,000) 1,500,000 Net Change in Fund Balance $ 366,548 (1,051,391) $ (1,417,939) 2,528,914 Fund Balance - Beginning of Year 8,923,455 6,394,541 Fund Balance - End of Year $ 7,872,064 $ 8,923,455 See accompanying notes to required supplementary information 65

72 REQUIRED SUPPLEMENTARY INFORMATION OPERATIONS AND MAINTENANCE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Revenues Local sources General levy $ 1,782,798 $ 1,835,249 $ 52,451 $ 1,807,889 Investment income 9,388 25,209 15,821 9,295 Rentals 1,111 61,119 60,008 1,100 Other 2,105 - (2,105) 2,084 Total local sources 1,795,402 1,921, ,175 1,820,368 State sources General state aid 1,000,000 1,000,000-1,000,000 Other restricted revenue from state sources 63,406 - (63,406) 62,778 Total state sources 1,063,406 1,000,000 (63,406) 1,062,778 Total revenues 2,858,808 2,921,577 62,769 2,883,146 Expenditures Support services Business Direction of business support services Capital outlay - 53,705 53,705 - Total direction of business Support services - 53,705 53,705 - Facilities acquisition and construction service Purchased services ,191 Capital outlay 15,510 81,077 65,567 - Total facilities acquisition and construction service 15,510 81,077 65,567 15,191 Operation and maintenance of plant services Salaries 1,189,500 1,256,183 66,683 1,153,692 Employee benefits 308, ,801 (32,499) 275,476 Purchased services 697, ,858 84, ,643 Supplies and materials 597, ,572 (39,820) 487,763 Capital outlay 299, ,892 (72,268) 200,840 Non-capitalized equipment 3,677 12,501 8,824 61,906 Total operation and maintenance of plant services 3,095,029 3,110,807 15,778 2,640,320 Total business 3,110,539 3,245, ,050 2,655,511 See accompanying notes to required supplementary information 66

73 REQUIRED SUPPLEMENTARY INFORMATION OPERATIONS AND MAINTENANCE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, Original/Final Budget Actual Variance Over (Under) Final Budget 2017 Actual Total support services 3,110,539 3,245, ,050 2,655,511 Total expenditures 3,110,539 3,245, ,050 2,655,511 Excess (Deficiency) of Revenues Over Expenditures (251,731) (324,012) (72,281) 227,635 Other Financing Sources (Uses) Transfer among funds 300,000 - (300,000) 300,000 Total other financing sources (uses) 300,000 - (300,000) 300,000 Net Change in Fund Balance $ 48,269 (324,012) $ (372,281) 527,635 Fund Balance - Beginning of Year 1,552,675 1,025,040 Fund Balance - End of Year $ 1,228,663 $ 1,552,675 See accompanying notes to required supplementary information 67

74 REQUIRED SUPPLEMENTARY INFORMATION TRANSPORTATION FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Revenues Local sources General levy $ 2,726,578 $ 1,710,258 $ (1,016,320) $ 2,107,156 Investment income 50,989 42,944 (8,045) 50,484 Other 32,210 5,060 (27,150) 31,891 Total local sources 2,809,777 1,758,262 (1,051,515) 2,189,531 State sources Transportation - regular/vocational 150, ,506 52, ,200 Transportation - special education 641, ,096 (70,904) 640,573 Total state sources 791, ,602 (18,398) 789,773 Total revenues 3,600,777 2,530,864 (1,069,913) 2,979,304 Expenditures Support services Pupils Other support services - pupils Salaries 16,250 15,212 (1,038) - Total other support services - pupils 16,250 15,212 (1,038) - Total pupils 16,250 15,212 (1,038) - Business Pupil transportation services Salaries 8,300 9,360 1,060 24,051 Employee benefits 6, (6,307) 98 Purchased services 1,478,150 1,658, ,005 1,442,306 Total pupil transportation services 1,492,850 1,667, ,758 1,466,455 Total business 1,492,850 1,667, ,758 1,466,455 Total support services 1,509,100 1,682, ,720 1,466,455 Total expenditures 1,509,100 1,682, ,720 1,466,455 Excess (Deficiency) of Revenues Over Expenditures 2,091, ,044 (1,243,633) 1,512,849 See accompanying notes to required supplementary information 68

75 REQUIRED SUPPLEMENTARY INFORMATION TRANSPORTATION FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, Original/Final Budget Actual Variance Over (Under) Final Budget 2017 Actual Other Financing Sources (Uses) Transfer among funds (1,800,000) (600,000) 1,200,000 (1,800,000) Total other financing sources (uses) (1,800,000) (600,000) 1,200,000 (1,800,000) Net Change in Fund Balance $ 291, ,044 $ (43,633) (287,151) Fund Balance - Beginning of Year 2,138,994 2,426,145 Fund Balance - End of Year $ 2,387,038 $ 2,138,994 See accompanying notes to required supplementary information 69

76 REQUIRED SUPPLEMENTARY INFORMATION MUNICIPAL RETIREMENT/SOCIAL SECURITY FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Revenues Local sources General levy $ 956,119 $ 764,315 $ (191,804) $ 753,134 Social security/medicare only levy - 274, , ,516 Corporate personal property replacement taxes 100, ,619 97, ,783 Investment income 8,522 15,238 6,716 8,531 Other Total local sources 1,064,641 1,251, ,814 1,187,964 Total revenues 1,064,641 1,251, ,814 1,187,964 Expenditures Instruction Regular programs 182, ,652 (9,318) 178,994 Special education programs 100, ,095 37, ,706 Special education program- pre-k 74,270 39,030 (35,240) 34,608 Remedial and supplemental programs k-12 37,130 37, ,227 Remedial and supplemental programs pre-k 26,100 33,897 7,797 27,845 Interscholastic programs 48,360 45,569 (2,791) 42,505 Summer school programs 500 1, ,254 Gifted programs (800) - Bilingual programs 14,220 12,101 (2,119) 13,854 Total instruction 485, ,926 (4,224) 471,993 Support services Pupils Attendance and social work services 4,970 5, ,863 Health services 27,700 36,099 8,399 27,134 Speech pathology and audiology services 6,200 5,392 (808) 6,084 Other support services - pupils 3,050 - (3,050) - Total pupils 41,920 46,618 4,698 38,081 Instructional staff Improvement of instructional services 5,730 8,335 2,605 5,659 Educational media services 2,250 2, ,203 Total instructional staff 7,980 10,600 2,620 7,862 See accompanying notes to required supplementary information 70

77 REQUIRED SUPPLEMENTARY INFORMATION MUNICIPAL RETIREMENT/SOCIAL SECURITY FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual General administration Executive administration services 14,700 15, ,456 Special area administration services 7,550 7,471 (79) 7,468 Total general administration 22,250 22, ,924 School administration Office of the principal services 62,200 60,358 (1,842) 60,728 Total school administration 62,200 60,358 (1,842) 60,728 Business Direction of business support services 14,400 41,189 26,789 14,140 Fiscal services 34,700 28,086 (6,614) 33,854 Operations and maintenance of plant services 209, ,654 7, ,492 Pupil transportation services 3,400 3, ,236 Food services 45,220 44,912 (308) 565 Total business 307, ,271 27, ,287 Central Staff services 9,900 12,026 2,126 51,546 Total central 9,900 12,026 2,126 51,546 Total support services 451, ,510 35, ,428 Total expenditures 936, ,436 31, ,421 Net Change in Fund Balance $ 127, ,019 $ 155, ,543 Fund Balance - Beginning of Year 897, ,335 Fund Balance - End of Year $ 1,180,897 $ 897,878 See accompanying notes to required supplementary information 71

78 LYONS ELEMENTARY SCHOOL DSITRICT 103 Note to the Required Supplementary Information June 30, 2018 NOTE 1 - BUDGET AND BUDGETARY ACCOUNTING Budgetary Data Except for the exclusion of on-behalf payments from other governments, discussed below, the budgeted amounts for the Governmental Funds are adopted on the modified accrual basis, which is consistent with accounting principles generally accepted in the United States of America. The Board of Education follows these procedures in establishing the budgetary data reflected in the general purpose financial statements. 1. The Administration submits to the Board of Education a proposed operating budget for the fiscal year commencing July 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted and the proposed budget is available for inspection to obtain taxpayer comments. 3. Prior to September 30, the budget is legally adopted through passage of a resolution. By the last Tuesday in December, a tax levy resolution is filed with the county clerk to obtain tax revenues. 4. Management is authorized to transfer budget amounts, provided funds are transferred between the same function and object codes. The Board of Education is authorized to transfer up to a legal level of 10% of the total budget between functions within any fund; however, any revisions that alter the total expenditures of any fund must be approved by the Board of Education, after following the public hearing process mandated by law. 5. Formal budgetary integration is employed as a management control device during the year for all governmental funds. 6. All budget appropriations lapse at the end of the fiscal year. Budget Reconciliations The Statement of Revenues, Expenditures and Changes in Fund Balance - Governmental Funds (GAAP basis) includes on-behalf payments received and made for the amounts contributed by the State of Illinois for the employer s share of the Teachers Retirement System pension. The District does not budget for these amounts in the Educational Accounts of the General Fund. The differences between the budget and GAAP basis are as follows: 72

79 LYONS ELEMENTARY SCHOOL DSITRICT 103 Note to the Required Supplementary Information June 30, 2018 NOTE 1 - BUDGET AND BUDGETARY ACCOUNTING (Continued) Revenues Expenditures General Fund Budgetary Basis $ 26,548,002 $ 28,199,393 To adjust for on-behalf payments received 11,624,726 - To adjust for on-behalf payments made - 11,624,726 General Fund GAAP Basis $ 38,172,728 $ 39,824,119 Excess of Expenditures Over Budget For the year ended June 30, 2018, expenditures in the General Fund exceeded budget by $1,743,178, expenditures in the Operations & Maintenance Fund exceeded budget by $135,050, expenditures in the Transportation Fund exceeded budget by $173,720, expenditures in the Municipal Retirement/Social Security Fund exceeded budget by $31,506, and expenditures in the Debt Service Fund exceeded budget by $65,

80 SUPPLEMENTARY INFORMATION LYONS ELEMENTARY SCHOOL DISTRICT 103

81 DEBT SERVICE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Revenues Local sources General levy $ 992,098 $ 1,002,912 $ 10,814 $ 1,012,428 Investment income 10,372 12,805 2,433 10,269 Total local sources 1,002,470 1,015,717 13,247 1,022,697 Total revenues 1,002,470 1,015,717 13,247 1,022,697 Expenditures Payments on long-term debt Interest 360, ,647 (207,353) 156,959 Principal 630, , , ,099 Total payments on long-term debt 990,000 1,055,183 65,183 1,051,058 Total debt services 990,000 1,055,183 65,183 1,051,058 Total expenditures 990,000 1,055,183 65,183 1,051,058 Excess (Deficiency) of Revenues Over Expenditures 12,470 (39,466) (51,936) (28,361) Other Financing Sources (Uses) Transfer of interest (9,100) - 9,100 - Total other financing sources (uses) (9,100) - 9,100 - Net Change in Fund Balance $ 3,370 (39,466) $ (42,836) (28,361) Fund Balance - Beginning of Year 854, ,495 Fund Balance - End of Year $ 814,668 $ 854,134 74

82 CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Revenues Investment income $ 5 $ 6 $ 1 $ 5 Total local sources Total revenues Expenditures Support services Business Facilities acquisition and construction service Capital outlay Total facilities acquisition and construction service Total business Total support services Total expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Sources (Uses) Transfer to capital projects fund Total other financing sources (uses) Net Change in Fund Balance $ 5 6 $ 1 5 Fund Balance - Beginning of Year Fund Balance - End of Year $ 429 $

83 FIRE PREVENTION AND LIFE SAFETY FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Revenues Local sources General levy $ 344,922 $ 330,763 $ (14,159) $ 350,226 Investment income 4,895 7,433 2,538 4,846 Total local sources 349, ,196 (11,621) 355,072 Total revenues 349, ,196 (11,621) 355,072 Expenditures Support services Business Facilities acquisition and construction service Purchased Services 20,000 6,857 (13,143) 2,947 Total facilities acquisition and construction service 20,000 6,857 (13,143) 2,947 Operation & maintenance of plant service Purchased services 230, ,317 (92,683) 112,339 Total operation & maintenance plant service 230, ,317 (92,683) 112,339 Total business 250, ,174 (105,826) 115,286 Total support services 250, ,174 (105,826) 115,286 Total expenditures 250, ,174 (105,826) 115,286 Excess (Deficiency) of Revenues Over Expenditures 99, ,022 94, ,786 Other Financing Sources (Uses) Transfer to capital projects fund Total other financing sources (uses) Net Change in Fund Balance $ 99, ,022 $ 94, ,786 Fund Balance - Beginning of Year 446, ,776 Fund Balance - End of Year $ 640,584 $ 446,562 76

84 GENERAL FUND COMBINING BALANCE SHEET JUNE 30, 2018 Educational Accounts Tort Immunity and Judgment Accounts Working Cash Accounts Total Assets Cash $ 40,196 $ - $ - $ 40,196 Investments 5,906, ,912 1,230,238 7,871,776 Receivables (net of allowance for uncollectibles) Property taxes 7,283, ,539 85,252 7,629,235 Replacement taxes 336, ,169 Intergovernmental 779, ,193 Total assets $ 14,345,628 $ 995,451 $ 1,315,490 $ 16,656,569 Total Liabilities, Deferred Inflows of Resources and Fund Balances Liabilities Accounts payable $ 200,933 $ - $ - $ 200,933 Salaries and wages payable 80, ,461 Payroll deductions payable 13, ,598 Insurance claims payable 495, ,304 Property tax refund liability 88,821 3,254 1,139 93,214 Unearned student fees 8, ,758 Total liabilities 887,875 3,254 1, ,268 Deferred inflows of resources Property taxes levied for a future period 7,283, ,539 85,252 7,629,235 Deferred inflow of resources - intergovernmental 263, ,002 Total deferred inflows of resources 7,546, ,539 85,252 7,892,237 Fund balances Unassigned 5,911, ,658 1,229,099 7,872,064 Total fund balances 5,911, ,658 1,229,099 7,872,064 Total liabilities, deferred inflows of resources and fund balances $ 14,345,628 $ 995,451 $ 1,315,490 $ 16,656,569 77

85 GENERAL FUND COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE YEAR ENDED JUNE 30, 2018 Revenues Educational Accounts Tort Immunity and Judgment Accounts Working Cash Accounts Property taxes $ 13,647,423 $ 496,478 $ 165,903 $ 14,309,804 Replacement taxes 1,775, ,775,364 State aid 19,534, ,534,995 Federal aid 1,869, ,869,091 Investment income 90,869 8,025 16, ,088 Other 568, ,386 Total revenues 37,486, , ,097 38,172,728 Total Expenditures Current Instruction Regular programs 11,456, ,456,741 Special programs 6,556, ,556,644 Other instructional programs 3,630, ,630,822 State retirement contributions 11,624, ,624,726 Support services Pupils 1,194, ,194,851 Instructional staff 780, ,106 General administration 1,115, ,169-1,338,693 School administration 1,560, ,560,687 Business 1,357, ,357,705 Central 202, ,049 Community services 15, ,091 Payments to other districts and gov't units - excluding special education 20, ,470 Capital outlay 85, ,534 Total expenditures 39,600, ,169-39,824,119 Excess (Deficiency) of Revenues Over (Under) Expenditures (2,114,822) 281, ,097 (1,651,391) Other Financing Sources (Uses) Transfers in 600, ,000 Total other financing sources (uses) 600, ,000 Net Change in Fund Balances (1,514,822) 281, ,097 (1,051,391) Fund Balance - Beginning of Year 7,426, ,324 1,047,002 8,923,455 Fund Balance - End of Year $ 5,911,307 $ 731,658 $ 1,229,099 $ 7,872,064 78

86 EDUCATIONAL ACCOUNTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Revenues Local sources General levy $ 11,606,376 $ 12,314,331 $ 707,955 $ 11,814,571 Special education levy 1,326,021 1,333,092 7,071 1,356,206 Corporate personal property replacement taxes 1,734,558 1,775,364 40,806 2,232,984 Investment income 83,531 90,869 7,338 82,704 Sales to pupils - lunch 128, ,265 (2,450) 127,594 Admissions - athletic 22,131 15,657 (6,474) 21,912 Fees 64,721 54,081 (10,640) 64,092 Other pupil activity revenue 5,272 4,265 (1,007) 5,220 Contributions and donations from private sources - 32,824 32,824 - Refund of prior years' expenditures 1,042 - (1,042) 1,031 Payments of surplus monies from TIF districts 15,801 15,616 (185) 15,645 Other local fees 224, ,146 72, ,123 Other 2,600 22,532 19, ,710 Total local sources 15,215,351 16,082, ,691 16,290,792 State sources General state aid 5,472,500 6,754,585 1,282,085 5,023,292 Special education - private facility tuition 162, ,652 78, ,903 Special education - extraordinary 340,000 - (340,000) 339,556 Special education - personnel 598,000 - (598,000) 597,175 Special education - orphanage - individual 260, ,775 (72,225) 226,477 Special education - orphanage - summer 20,200 14,369 (5,831) 4,273 Special education - summer school 9,000 - (9,000) 15,588 CTE - secondary program improvement 1,500 1,231 (269) - Bilingual education - downstate - TPI 232,535 79,514 (153,021) 147,373 State free lunch and breakfast 7,000 9,651 2,651 6,676 Early childhood - block grant 595, ,184 (36,816) 594,913 Other restricted revenue from state sources 85,000 64,308 (20,692) 83,307 Total state sources 7,782,735 7,910, ,534 7,200,533 79

87 EDUCATIONAL ACCOUNTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Federal sources National school lunch program 670, ,090 35, ,072 School breakfast program 100, ,597 7,597 97,333 Title I - Low income 707, ,446 79, ,214 Federal - special education - IDEA - flow-through/low incident 3,908 29,371 25,463 3,869 Title III - english language acquisition 63,777 75,364 11,587 47,790 Title II - teacher quality 10,000 19,320 9,320 58,227 Medicaid matching funds - administrative outreach 116,003 57,600 (58,403) 53,839 Medicaid matching funds - fee-for-service program - 87,303 87,303 52,453 Total federal sources 1,671,499 ######### # 197,592 1,619,797 Total revenues 24,669,585 25,861,402 1,191,817 25,111,122 Expenditures Instruction Regular programs Salaries 7,711,225 8,235, ,971 7,521,516 Employee benefits 2,167,550 2,129,247 (38,303) 1,554,221 Purchased services 209, ,222 14, ,942 Supplies and materials 523, ,901 18, ,555 Capital outlay 7,800 30,844 23,044 44,727 Other objects Non-capitalized equipment 104, , ,225 55,354 Total regular programs 10,725,324 11,487, ,261 9,755,615 Special education programs Salaries 2,308,140 2,387,255 79,115 2,251,883 Employee benefits 542, ,998 (8,577) 470,759 Purchased services 6,450 39,123 32,673 6,876 Supplies and materials 30,830 41,655 10,825 (1,985) Capital outlay 9,800 5,437 (4,363) 5,598 Non-capitalized equipment ,664 11,964 4,581 Total special education programs 2,898,495 3,020, ,637 2,737,712 80

88 EDUCATIONAL ACCOUNTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Special education programs pre-k Salaries 381, ,884 9, ,073 Employee benefits 51,400 72,990 21,590 44,253 Purchased services - 32,143 32,143 - Supplies and materials 2,850 4,601 1,751 2,758 Other objects Total special education programs pre-k 435, ,618 64, ,084 Remedial and supplemental programs k-12 Salaries 970, ,605 (248,935) 944,860 Employee benefits 263, ,348 (47,452) 224,905 Purchased services 50,400 52,111 1,711 49,261 Supplies and materials 360, ,073 61, ,185 Total remedial and supplemental programs k-12 1,645,110 1,412,137 (232,973) 1,521,211 Remedial and supplemental programs pre-k Salaries 486, ,533 64, ,508 Employee benefits 112, ,358 25,800 99,052 Purchased services 18,810 16,281 (2,529) 18,347 Supplies and materials 34,700 33,429 (1,271) 33,925 Other objects 1,100 1, ,040 Total remedial and supplemental programs pre-k 653, ,251 87, ,872 Interscholastic programs Salaries 476, ,629 21, ,298 Employee benefits 31,440 29,305 (2,135) 25,850 Purchased services 32,650 26,836 (5,814) 31,797 Supplies and materials 10,470 15,333 4,863 8,776 Other objects 1,600 1, ,500 Non-capitalized equipment 4,200 2,811 (1,389) 4,100 Total interscholastic programs 556, ,828 17, ,321 Summer school programs Salaries 9,030 3,496 (5,534) 8,840 Employee benefits (486) 493 Supplies and materials - 2,034 2,034 - Total summer school programs 9,530 5,544 (3,986) 9,333 Gifted programs Salaries 53,750 54, ,704 Employee benefits 1,950 1,088 (862) 1,057 Supplies and materials (100) - Total gifted programs 55,800 55,441 (359) 53,761 81

89 EDUCATIONAL ACCOUNTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Bilingual programs Salaries 667, ,569 (8,291) 652,987 Employee benefits 167, ,898 (7,402) 143,367 Purchased services 200 3,926 3,726 (1,101) Supplies and materials 22,250 19,228 (3,022) 21,185 Total bilingual programs 857, ,621 (14,989) 816,438 Truant Alternative & Optional programs Other objects 413,000 - (413,000) - Total truant alternative & optional programs 413,000 - (413,000) - Special education programs k-12- private tuition Other objects - 617, , ,920 Total special education programs k-12 - private tuition - 617, , ,920 Total instruction 18,250,737 19,256,624 1,005,887 16,899,267 Support services Pupils Attendance and social work services Salaries 348, ,746 12, ,488 Employee benefits 62,310 61,186 (1,124) 52,855 Purchased services (200) 170 Supplies and materials (21) 791 Total attendance and social work services 411, ,711 10, ,304 Health services Salaries 161, ,094 31, ,914 Employee benefits 20,880 37,519 16,639 19,250 Purchased services 83,190 85,517 2,327 76,954 Supplies and materials 8,000 2,320 (5,680) 7,594 Total health services 273, ,450 45, ,712 Psychological services Purchased services 2,300 - (2,300) 2,260 Total psychological services 2,300 - (2,300) 2,260 Speech pathology and audiology services Salaries 436, ,005 (55,095) 427,137 Employee benefits 70,550 62,878 (7,672) 64,410 Purchased services 2,270 8,210 5,940 2,225 Supplies and materials

90 EDUCATIONAL ACCOUNTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Other objects (37) 712 Total speech pathology and audiology services 510, ,690 (56,400) 494,918 Total pupils 1,197,630 1,194,851 (2,779) 1,154,194 83

91 EDUCATIONAL ACCOUNTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Instructional staff Improvement of instructional services Salaries 52, , ,026 51,043 Employee benefits 10,470 36,981 26,511 9,256 Purchased services 67, ,398 68,198 64,320 Supplies and materials 1,663 37,509 35,846 1,438 Total improvement of instructional services 131, , , ,057 Educational media services Salaries 162, ,744 88, ,216 Employee benefits 52,190 62,226 10,036 44,863 Purchased services 5,760 2,510 (3,250) 5,642 Supplies and materials 17,170 11,192 (5,978) 16,755 Total educational media services 237, ,672 88, ,476 Total instructional staff 369, , , ,533 General administration Board of education services Salaries 1,630 - (1,630) - Employee benefits 50,500 48,289 (2,211) 49,448 Purchased services 466, , , ,582 Supplies and materials 5,010 6,721 1,711 4,863 Other objects 19,200 19, ,750 Total board of education instructional services 542, , , ,643 Executive administration services Salaries 222, , ,845 Employee benefits 67,530 69,784 2,254 62,042 Purchased services 2,430 1,847 (583) 2,249 Supplies and materials (300) 282 Other objects 1,400 1, ,380 Total executive administration services 293, ,364 2, ,798 84

92 EDUCATIONAL ACCOUNTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Special area administration services Salaries 118, ,223 14, ,324 Employee benefits 45,420 26,996 (18,424) 41,465 Purchased services 1,130 1, ,114 Supplies and materials Other objects Total special area administration services 165, ,337 (3,083) 161,903 Total general administration 1,001,860 1,115, , ,344 School administration Office of the principal services Salaries 1,169,820 1,078,620 (91,200) 1,146,074 Employee benefits 454, ,804 17, ,534 Purchased services 7,440 2,478 (4,962) 6,723 Supplies and materials 6,300 6,300-6,100 Other objects 1,540 1,485 (55) 1,506 Total office of the principal services 1,639,670 1,560,687 (78,983) 1,575,937 Total school administration 1,639,670 1,560,687 (78,983) 1,575,937 Business Direction of business support services Salaries 220, ,876 8, ,097 Employee benefits 43,880 66,340 22,460 40,220 Purchased services 330 1, Supplies and materials Other objects - 1,395 1, Total direction of business support services 264, ,240 33, ,791 Fiscal Services Salaries 181, ,784 79, ,936 Employee benefits 44,810 50,875 6,065 46,748 Purchased services 3,620 4,689 1,069 3,806 Supplies and materials 1, (681) 1,217 Other objects - 5,339 5,339 - Total fiscal services 231, ,246 91, ,707 85

93 EDUCATIONAL ACCOUNTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Operation and maintenance of plant services Purchased services - 2,135 2,135 (68) Capital outlay - 1,250 1,250 - Total operation and maintenance of plant services - 3,385 3,385 (68) Food services Salaries 254, ,076 (100,899) 147,629 Employee benefits 13,350 8,589 (4,761) 4,714 Purchased services 2,120 1,971 (149) 1,506 Supplies and materials 594, ,272 (27,008) 572,735 Non-capitalized equipment - 2,176 2,176 - Total food services 864, ,084 (130,641) 726,584 Total business 1,360,885 1,358,955 (1,930) 1,315,014 Central Staff services Salaries 145, ,071 (22,399) 174,681 Employee benefits 31,940 55,410 23,470 28,395 Supplies and materials (220) 211 Total staff services 177, , ,287 Data processing services Capital outlay - 48,003 48,003 - Non-capitalized equipment - 23,568 23,568 - Total data processing services - 71,571 71,571 - Total central 177, ,052 72, ,287 Other support services Purchased services 45,480 - (45,480) - Total other support services 45,480 - (45,480) - Total support services 5,792,728 6,260, ,447 5,526,309 Community Services Community services Purchased services - 7,910 7,910 - Supplies and materials - 7,181 7,181 - Total community services - 15,091 15,091 - Payments to other districts and governmental units Payments for special education programs 86

94 EDUCATIONAL ACCOUNTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - NON-GAAP BUDGETARY BASIS YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Purchased services 50,900 79,756 28,856 50,126 Other objects 174, ,939 (18,661) 169,562 Total payments for special education programs 225, ,695 10, ,688 Payments for regular programs - tuition Other objects 55,300 20,470 (34,830) 53,040 Total payments for regular programs - tuition 55,300 20,470 (34,830) 53,040 Payments for special education programs- tuition Other objects 1,826,950 2,188, ,219 1,787,807 Total payments for special education programs- tuition 1,826,950 2,188, ,219 1,787,807 Total payments to other districts and governmental units 2,107,750 2,444, ,584 2,060,535 Total expenditures 26,151,215 27,976,224 1,825,009 24,486,111 Excess (Deficiency) of Revenues Over Expenditures (1,481,630) (2,114,822) (633,192) 625,011 Other Financing Sources (Uses) Transfer among funds 1,500, ,000 (900,000) 1,500,000 Total other financing sources (uses) 1,500, ,000 (900,000) 1,500,000 Net Change in Fund Balance $ 18,370 (1,514,822) $ (1,533,192) 2,125,011 Fund Balance - Beginning of Year 7,426,129 5,301,118 Fund Balance - End of Year $ 5,911,307 $ 7,426,129 87

95 TORT IMMUNITY AND JUDGMENT ACCOUNTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Revenues Local sources General levy $ 468,670 $ 496,478 $ 27,808 $ 495,730 Investment income 2,430 8,025 5,595 2,406 Total local sources 471, ,503 33, ,136 Expenditures Support Services Total revenues 471, ,503 33, ,136 General administration Workers' Compensation or Workers' Occupational Disease Act payments 120, ,286 (18,714) 103,301 Unemployment insurance premiums 25,000 4,976 (20,024) 16,792 Property insurance (building & grounds) 160, ,907 (43,093) 159,956 Total general administration 305, ,169 (81,831) 280,049 Total support services 305, ,169 (81,831) 280,049 Total expenditures 305, ,169 (81,831) 280,049 Net Change in Fund Balance $ 166, ,334 $ 115, ,087 Fund Balance - Beginning of Year 450, ,237 Fund Balance - End of Year $ 731,658 $ 450,324 88

96 WORKING CASH ACCOUNTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL YEAR ENDED JUNE 30, 2018 WITH COMPARATIVE ACTUAL FOR THE YEAR ENDED JUNE 30, 2017 Original/Final Budget 2018 Actual Variance Over (Under) Final Budget 2017 Actual Revenues Local sources General levy $ 170,113 $ 165,903 $ (4,210) $ 173,969 Investment income 11,965 16,194 4,229 11,847 Total local sources 182, , ,816 Expenditures Total revenues 182, , ,816 Total expenditures Excess (Deficiency) of Revenues Over Expenditures 182, , ,816 Other Financing Sources (Uses) Total other financing sources (uses) Net Change in Fund Balance $ 182, ,097 $ ,816 Fund Balance - Beginning of Year 1,047, ,186 Fund Balance - End of Year $ 1,229,099 $ 1,047,002 89

97 AGENCY FUNDS - STUDENT ACTIVITY FUNDS SCHEDULE OF CHANGES IN ASSETS AND LIABILITIES JUNE 30, 2018 Balance June 30, 2017 Additions Deletions Balance June 30, 2018 Assets Cash $ 84,755 $ 259,935 $ 265,237 $ 79,453 Total assets $ 84,755 $ 259,935 $ 265,237 $ 79,453 Total Liabilities, Deferred Inflows of Resources and Fund Balances Liabilities Due to activity fund organizations Costello School $ 13,431 $ 23,550 $ 24,514 $ 12,467 Edison School 27,927 54,925 54,685 28,167 Home School 1,084 14,663 14,408 1,339 Lincoln School 19,259 22,197 22,023 19,433 Robinson School 4,948 11,387 12,342 3,993 Washington School 18, , ,265 14,054 Total liabilities $ 84,755 $ 259,935 $ 265,237 $ 79,453 90

98 FIVE YEAR SUMMARY OF ASSESSED VALUATIONS, TAX RATES AND EXTENSIONS AS OF JUNE 30, Assessed Valuation $ 420,545,441 $ 358,308,140 $ 346,450,010 $ 353,858,065 $ 384,757,203 Tax Rates Educational Tort immunity Special education Operations and maintenance Debt service Transportation Municipal retirement Social security Life safety Working cash Total Tax Extensions Educational $ 13,351,897 $ 12,190,466 $ 12,125,750 $ 12,385,032 $ 13,435,721 Tort immunity 526, , , ,000 - Special education 1,378,968 1,393,196 1,385,800 1,415,432 1,514,100 Operations and maintenance 1,895,818 1,915,645 1,804,251 1,946,219 2,080,600 Debt service 1,043,175 1,043,175 1,039,763 1,042,519 1,042,519 Transportation 1,474,011 2,133,515 2,123,891 1,133,000 1,339,000 Municipal retirement 549, , , , ,950 Social security 549, , , , ,250 Life safety 344, , , Working cash 172, , ,225 62, ,520 Total $ 21,286,546 $ 20,768,578 $ 20,523,530 $ 19,169,532 $ 20,363,660 91

99 OPERATING COST AND TUITION CHARGE FOR THE YEAR ENDED JUNE 30, 2018 Operating Cost Per Pupil Average daily attendance (ADA) 2,029 2,116 Operating costs Educational $ 27,976,224 $ 24,486,111 Operations and maintenance 3,245,589 2,655,511 Debt service 1,055,183 1,051,058 Transportation 1,682,820 1,466,455 Municipal retirement/social security 968, ,421 Tort 223, ,049 Subtotal 35,151,421 30,848,605 Less revenues/expenditures of nonregular programs Tuition 617, ,920 Pre-k programs 1,314,796 1,107,409 Summer school 6,828 10,587 Community service 15,091 - Capital outlay 447, ,165 Non-capitalized equipment 378, ,941 Debt principal retired 902, ,099 Payments to other districts and governmental units 20,470 2,060,535 Subtotal 3,702,991 4,869,656 Operating costs $ 31,448,430 $ 25,978,949 Operating Cost Per Pupil- Based on ADA $ 15,499 $ 12,277 Tuition Charge Operating costs $ 31,448,430 $ 25,978,949 Less - revenues from specific programs, such as special education or lunch programs 3,784,193 4,564,717 Net operating costs 27,664,237 21,414,232 Depreciation allowance 851, ,452 Allowable tuition costs $ 28,516,053 $ 22,217,684 Tuition charge per pupil - based on ADA $ 14,054 $ 10,500 92

100 SCHEDULE OF BONDS PAYABLE - ISSUE MAY 10, 2006 AS OF JUNE 30, 2018 Working Cash Capital Appreciation School Bonds - Series 2006 Year Ended June 30, Principal Interest Total 2019 $ 850,000 $ - $ 850, , , , , , , , , , , , , , ,000 Total 6,085,000 $ - $ 6,085,000 Paying agent: JP Morgan Chase & Co. Principal payment date: December 1 Interest payment dates: June 1 and December 1 93

101 SCHEDULE OF BONDS PAYABLE - ISSUE MARCH 19, 2012 AS OF JUNE 30, 2018 General Obligation Limited Tax Bonds - Series 2012 Year Ended June 30, Principal Interest Total 2019 $ - $ 143,500 $ 143, , , , , , , , , , , , , , , , ,000 97, , ,000 61, , ,000 29, , ,000 7, ,500 Total $ 3,950,000 $ 1,329,550 $ 5,279,550 Paying agent: Depository Trust Company, New York Principal payment date: December 1 Interest payment dates: June 1 and December 1 94

102 SINGLE AUDIT YEAR ENDED JUNE 30, 2018

103 SINGLE AUDIT YEAR ENDED JUNE 30, 2018 CONTENTS Independent Auditor s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed In Accordance with Government Auditing Standards...1 Independent Auditor s Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; And Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance...3 Schedule of Expenditures of Federal Awards...6 Note to Schedule of Expenditures of Federal Awards 9 Schedule of Findings and Questioned Cost 10 Summary Schedule of Prior Audit Findings...20 Corrective Action Plan 22

104 INDEPENDENT AUDITOR S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Education Lyons Elementary School District 103 We have audited, in accordance with the 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, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Lyons Elementary School District 103 as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise Lyons Elementary School District 103 s basic financial statements and have issued our report thereon dated October 9, 2018 except as to Note 10 which is as of November 30, Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered Lyons Elementary School District 103 s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Lyons Elementary School District 103 s internal control. Accordingly, we do not express an opinion on the effectiveness of Lyons Elementary School District 103 s internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying schedule of findings and questioned costs as , , and to be material weaknesses. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompany schedule of findings and questioned costs as and to be significant deficiencies. 1

105 Compliance and Other Matters As part of obtaining reasonable assurance about whether Lyons Elementary School District 103 s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Lyons Elementary School District 103 s Response to Findings Lyons Elementary School District 103 s response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. Lyons Elementary School District 103 s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Hillside, Illinois October 9,

106 INDEPENDENT AUDITOR S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE AND THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE To the Board of Education Lyons Elementary School District 103 Report on Compliance for Each Major Federal Program We have audited Lyons Elementary School District 103 s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the Lyons Elementary School District 103 s major federal programs for the year ended June 30, Lyons Elementary School District 103 s major federal programs are identified in the summary of auditor s results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of Lyons Elementary School District 103 s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Lyons Elementary School District 103 s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Lyons Elementary School District 103 s compliance. Opinion on Each Major Federal Program In our opinion, Lyons Elementary School District 103 complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, Other Matters The results of our auditing procedures disclosed instances of noncompliance which are required to be reported in accordance with the Uniform Guidance and which are described in the accompanying schedule of findings and questioned costs as items Our opinion on each major federal program is not modified with respect to these matters. Lyons Elementary School District 103 s response to the noncompliance findings identified in our audit is described in the accompanying schedule of findings and questioned costs. Lyons Elementary School District 103 s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. 3

107 Report on Internal Control over Compliance Management of Lyons Elementary School District 103 is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Lyons Elementary School District 103 s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Lyons Elementary School District 103 s internal control over compliance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. However, as discussed below, we did identify certain deficiencies in internal control over compliance that we consider to be material weaknesses and significant deficiencies. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as item to be a material weakness. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as item through to be significant deficiencies. Lyons Elementary School District 103 s response to the internal control over compliance findings identified in our audit is described in the accompanying schedule of findings and questioned costs. Lyons Elementary School District 103 s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Lyons Elementary School District 103 as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise Lyons Elementary School District 103 s basic financial statements. We issued our report thereon dated October 9, 2018 except as to Note 10 which is as of November 30, 2018, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is 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 basic 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 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, 4

108 the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. Hillside, Illinois October 9,

109 Lyons Elementary School District SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ending June 30, 2018 ISBE Project # Receipts/Revenues Expenditure/Disbursements 4 Federal Grantor/Pass Through Grantor Year Year Final CFDA (1st 8 digits) Year Year Year 7/1/16 6/30/17 Year 7/1/17 6/30/18 Obligations/ Status Budget Program or Cluster Title and Number 2 or Contract # 3 7/1/16 6/30/17 7/1/17 6/30/18 7/1/16 6/30/17 Pass through to 7/1/17 6/30/18 Pass through to Encumb. (E)+(F)+(G) Major Program Designation (A) (B) (C) (D) (E) Subrecipients (F) Subrecipients (G) (H) (I) U.S Department of Education Through Illinois State Board of Education (ISBE): Title I - Low Income - PY 17 (M) Title I - Low Income - PY 18 (M) Subtotal A - Title I - Low Income A ,480 47, , , , , A , , , ,273 1,044, , , , , ,872 1,422,798 1,823,914 Title III -Lang Inst Prog - Limited English LIPLEP - PY A ,797 16,745 29, , , ,432 Title III -Lang Inst Prog - Limited English LIPLEP - PY A , , ,647 74, ,932 Subtotal A - Title III - LIPLEP 29,797 75,364 29, , , , ,364 Title II - Teacher Quality - PY 17 Title II - Teacher Quality - PY 18 Subtotal A - Title II - Teacher Quality A , , ,563 76, A , , ,320 19,320 57,563 19,320 57, , ,883 96,203 IDEA - Room & Board Subtotal A - IDEA - Room & Board (Special Education Cluster) Total ISBE Funding 527, , , , ,519 1,620,588 2,141,481 Through LaGrange Area Department of Special Education (LADSE): IDEA - Part B Flow Through , , ,533 13,663 Subtotal IDEA - Part B Flow Through (Special Education Cluster) 0 13, , ,533 13,663 IDEA - Part B Preschool , , ,629 22,645 Subtotal IDEA - Part B Preschool (Special Education Cluster) 0 15, , ,629 22,645 6

110 Page 40 Page 40 Total LADSE Funding 0 29, , ,162 36,308 Total Special Education Cluster 0 29, , ,261 36,308 TOTAL DEPARTMENT OF EDUCATION 527, , , , ,519 1,651,750 2,177,789 US DEPARTMENT OF AGRICULTURE Through Illinois State Board of Education (ISBE): National School Lunch Program - PY 17 (Child Nutrition Cluster) , , , , ,079 N/A National School Lunch Program - PY 18 (Child Nutrition Cluster) , , ,880 N/A Subtotal National School Lunch Program 513, , , , ,143,959 N/A National Breakfast Program - PY 17 (Child Nutrition Cluster) ,362 17,791 78, , ,153 N/A National Breakfast Program - PY 18 (Child Nutrition Cluster) , , ,807 N/A Subtotal National Breakfast Program 78, ,598 78, , ,960 N/A Non-Cash Food Commodities - PY 17 (Child Nutrition Cluster) , , ,842 N/A Non-Cash Food Commodities - PY 18 (Child Nutrition Cluster) , , ,076 N/A Subtotal Non-Cash Food Commodities 74,842 75,076 74, , ,918 N/A Subtotal Child Nutrition Cluster 667, , , , ,479,837 N/A TOTAL US DEPARTMENT OF AGRICULTURE 667, , , , ,479,837 N/A DEPARTMENT OF HEALTH AND HUMAN SERVICES Through Department of Healthcare and Family Services: Medicaid Matching Funds - Administrative - PY , , ,839 N/A Medicaid Matching Funds - Administrative - PY , , ,600 N/A Subtotal Medicaid Matching Funds - Admin 53,839 57,600 53, , ,439 N/A TOTAL DEPARTMENT OF HEALTH AND HUMAN SERVICES 53,839 57,600 53, , ,439 N/A 7

111 TOTAL ALL FEDERAL AWARDS 1,248,829 1,781,788 1,248, ,783, ,519 3,243,026 (M) Program was audited as a major program as defined by *Include the total amount provided to subrecipients from each Federal program (b)(4). The accompanying notes are an integral part of this schedule To meet state or other requirements, auditees may decide to include certain nonfederal awards (for example, state awards) in this schedule. If such nonfederal data are presented, they should be segregated and clearly designated as nonfederal. The title of the schedule should also be modified to indicate that nonfederal awards are included. When the CFDA number is not available, the auditee should indicate that the CFDA number is not available and include in the schedule the program's name and, if applicable, other identifying number. When awards are received as a subrecipient, the name of the pass through entity and identifying number assigned by the pass through entity must be included in the schedule (b)(2) 4 The Uniform Guidance requires that the value of federal awards expended in the form of non cash assistance, the amount of insurance in effect during the year, and loans or loan guarantees outstanding at year end be included in the schedule and suggests to include the amounts in the SEFA notes. 8

112 Note 1: Basis of Presentation 5 Lyons Elementary School District NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (SEFA) Year Ending June 30, 2018 The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of Lyons Elementary School District 103 and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of the Office o Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basicfinancial statements. Note 2: Indirect Facilities & Administration costs 6 Auditee elected to use 10% de minimis cost rate? YES X NO Note 3: Subrecipients Of the federal expenditures presented in the schedule, Lyons Elementary School District 103 provided federal awards to subrecipients as follows: Program Title/Subrecipient Name NONE Federal CFDA Number Amount Provided to Subrecipient Note 4: Non Cash Assistance The following amounts were expended in the form of non cash assistance by Lyons Elementary School District 103 and should be included in the Schedule of Expenditures of Federal Awards: NON CASH COMMODITIES (CFDA )**: $75,076 OTHER NON CASH ASSISTANCE DEPT. OF DEFENSE FRUITS & VEGETABLES $0 Total Non Cash $75,076 Note 5: Other Information Insurance coverage in effect paid with Federal funds during the fiscal year: Property Auto General Liability Workers Compensation Loans/Loan Guarantees Outstanding at June 30: District had Federal grants requiring matching expenditures No (Yes/No) ** The amount reported here should match the value reported for non cash Commodities on the Indirect Cost Rate Computation page. This note is included to meet the Uniform Guidance requirement that the schedule include notes that describe the significant accounting policies used in preparing the schedule. ( (b)(6)) The Uniform Guidance requires the Schedule of Expenditures of Federal Awards to note whether or not the auditee elected to use the 10% de minimis cost rate as covered in Indirect (F&A) costs (b)(6) 5 6 9

113 Lyons Elementary School District SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2018 SECTION I SUMMARY OF AUDITOR'S RESULTS FINANCIAL STATEMENTS Type of auditor's report issued: Unmodified (Unmodified, Qualified, Adverse, Disclaimer) INTERNAL CONTROL OVER FINANCIAL REPORTING: Material weakness(es) identified? X YES None Reported Significant Deficiency(s) identified that are not considered to be material weakness(es)? X YES None Reported Noncompliance material to the financial statements noted? YES X NO FEDERAL AWARDS INTERNAL CONTROL OVER MAJOR PROGRAMS: Material weakness(es) identified? X YES None Reported Significant Deficiency(s) identified that are not considered to be material weakness(es)? X YES None Reported Type of auditor's report issued on compliance for major programs: Unmodified (Unmodified, Qualified, Adverse, Disclaimer 7 ) Any audit findings disclosed that are required to be reported in accordance with (a)? X YES NO IDENTIFICATION OF MAJOR PROGRAMS: 8 CFDA NUMBER(S) NAME OF FEDERAL PROGRAM or CLUSTER 10 AMOUNT OF FEDERAL PROGRAM Title I Low Income 787,446 Total Amount Tested as Major $787,446 Total Federal Expenditures for 7/1/17 6/30/18 $1,783,678 % tested as Major 44.15% Dollar threshold used to distinguish between Type A and Type B programs: $750, Auditee qualified as low risk auditee? YES X NO If the audit report for one or more major programs is other than unmodified, indicate the type of report issued for each program. Example: "Unmodified for all major programs except for [name of program], which was modified and [name of program], which was a disclaimer." Major programs should generally be reported in the same order as they appear on the SEFA. When the CFDA number is not available, include other identifying number, if applicable. The name of the federal program or cluster should be the same as that listed in the SEFA. For clusters, auditors are only required to list 10

114 Lyons Elementary School District SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2018 SECTION II FINANCIAL STATEMENT FINDINGS 1. FINDING NUMBER: THIS FINDING IS: New X Repeat from Prior Year? Year originally reported? Criteria or specific requirement The District must have functioning internal controls over external reporting. 4. Condition The District does not have sufficient internal controls over external financial reporting to allow the District to prepare its financial statements, including modified and full accrual adjustments, and its schedule of expenditures of federal awards, but instead relies upon the auditor for this expertise. Material cash basis adjustments were also identified during the audit. 5. Context 12 It was determined that the District relies on its auditors to prepare external financial statements, to convert the general ledger to modified and full accrual for external reporting, and to prepare the schedule of expenditures of federal awards and to make any cash basis adjustments required. 6. Effect Management may not be able to detect material errors and omission to its financial statements. 7. Cause The finding was caused by a lack of internal controls over the external reporting process. The District relies upon the auditor for expertise in external reporting. 8. Recommendation We recommend that management receive training in external reporting that would allow them to be able to correctly prepare their own external reports. The District should evaluate whether this recommendation is cost beneficial. 9. Management's response 13 Like most school districts of this size, the district does not maintain an external financial reporting department because it is not cost beneficial to do so. The district will continue to look at the current process and make adjustments to staff duties to accommodate financial reporting requirements in the coming years. 11 A suggested format for assigning reference numbers is to use the digits of the fiscal year being audited followed by a numeric sequence of findings. For example, findings identified and reported in the audit of fiscal year 2018 would be assigned a reference number of , , etc. The sheet is formatted so that only the number need be entered (1, 2, etc.) 12 Provide sufficient information for judging the prevalence and consequences of the finding, such as relation to universe of costs and/or number of items examined and quantification of audit findings in dollars 13 See Management decision for additional guidance on reporting management's response. 11

115 Lyons Elementary School District SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2018 SECTION II FINANCIAL STATEMENT FINDINGS 1. FINDING NUMBER: THIS FINDING IS: New X Repeat from Prior Year? Year originally reported? Criteria or specific requirement Proper segregation of duties including controls over access to financial software is an essential part of an effective system of internal controls. 4. Condition The District does not have proper segregation of duties in its payroll and AP functions and has incompatible access levels within its financial software. The District's AP Clerk and Payroll Clerk have access to modules within the financial software that do not align with their job responsibilities. 5. Context 12 Since the prior year, the District has worked to rectify some, but not all, of the segregation of duties issues. Additionally, the payroll clerk no longer creates the profile of new employees. Instead, the HR department now creates such profiles. Lastly, the Business Manager does not have access to all modules, but serves as a backup for several functions and would need to obtain access in case of an emergency. With the installation of a new IT department and director, segregation of duties will continue to be discussed and best practices will be explored. 6. Effect Management may not be able to detect material errors and omissions to its financial statements. 7. Cause The finding was caused by a lack of IT controls over review of user access levels. 8. Recommendation Management should perform an assessment of the applications required for various job functions including the AP Clerk, Payroll Clerk, and Business Manager with an eye towards proper segregation of duties. System access within the financial software should then be restricted accordingly. 9. Management's response 13 The Business Department will work with I/T Leads to complete this plan. 11 A suggested format for assigning reference numbers is to use the digits of the fiscal year being audited followed by a numeric sequence of findings. For example, findings identified and reported in the audit of fiscal year 2018 would be assigned a reference number of , , etc. The sheet is formatted so that only the number need be entered (1, 2, etc.). 12 Provide sufficient information for judging the prevalence and consequences of the finding, such as relation to universe of costs and/or number of items examined and quantification of audit findings in dollars. 13 See Management decision for additional guidance on reporting management's response. 12

116 Lyons Elementary School District SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2018 SECTION II FINANCIAL STATEMENT FINDINGS 1. FINDING NUMBER: THIS FINDING IS: New X Repeat from Prior Year? Year originally reported? Criteria or specific requirement Payments made by activity funds do not appear to have a standardized process to signify approval of, or support for, payments. 4. Condition Per testing, 6 of the 40 payments did not appear to have clearly documented approvals on invoices. Additionally, 6 of the 40 payments lacked a copy of the check for the records. Lastly, 5 payments lacked any supporting invoice or receipt. 5. Context 12 The payments lacking clearly identified approvals came from 3 of the 6 schools (Costello, Robinson, and Lincoln). Edison, George Washington, and Home schools utilize formalized approval documentation featuring a separate area for the principal to clearly note their approval through a signature. 6. Effect The lack of clearly identified approvals or supporting documentation could lead to a misappropriation of funds. 7. Cause Three of the six schools do not appear to follow a formalized process regarding the approval of, or support for, activity fund purchases. 8. Recommendation The 3 schools identified should consider utilizing a formalized document to note approval by a member of school management (i.e. the principal) to provide assurance that funds are utilized for appropriate school business purposes. In addition, invoices, check copies and/or other support should be retained to provide an appropriate audit trail. 9. Management's response 13 The Business Manager met with all building secretaries in November 2017 and all are currently booking and recording on a consistent basis, including completing monthly bank reconciliations. 11 A suggested format for assigning reference numbers is to use the digits of the fiscal year being audited followed by a numeric sequence of findings. For example, findings identified and reported in the audit of fiscal year 2018 would be assigned a reference number of , , etc. The sheet is formatted so that only the number need be entered (1, 2, etc.) 12 Provide sufficient information for judging the prevalence and consequences of the finding, such as relation to universe of costs and/or number of items examined and quantification of audit findings in dollars 13 See Management decision for additional guidance on reporting management's response. 13

117 Lyons Elementary School District SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2018 SECTION II FINANCIAL STATEMENT FINDINGS 1. FINDING NUMBER: THIS FINDING IS: New X Repeat from Prior Year? Year originally reported? Criteria or specific requirement Capital assets balances should be supported by detailed asset ledgers where assets are identified by type with cost and accumulated depreciation values totaled. Useful lives and annual depreciation expenses would also be useful information to include. 4. Condition The District does not appear to have a capital asset listing that matches to previous audited financial statement balances for both cost and accumulated depreciation. Furthermore, a listing that details whether or not assets are purchased with federal funds does not appear to exist. 5. Context 12 The District does have annual appraisal reports completed with insurance replacement values. However, cost and accumulated depreciation amounts do not match to what was tested and to previous audited financial statements. Additionally, capital asset additions and deletions are not tracked annually by the District for the purpose of being audited. 6. Effect The capital asset balance may be the most material balance on the District's books and without proper supporting documentation, the value of such assets cannot be accurately determined. 7. Cause The lack of a proper listing does not allow for proper valuation of accumulated assets from previous years 8. Recommendation The District should consider performing a physical inventory to accurately detail capital assets that remain in District possession. The result of the inventory should then provide a listing/database of base values for the District's individual assets to be based upon for financial reporting purposes. Along with the inventory, historical documents should be used to assign proper acquisition costs and dates which will allow for proper calculation of depreciation expenses going forward. Annually, general ledger accounts should be reviewed for property and equipment purchases on an annual basis so that additions can be added to the listing/database. Also on an annual basis, capital asset deletions should be tracked and taken off of the listing/database as necessary. 9. Management's response 13 The Business Office will work with the Tech Department to identify other options to report and track fixed assets. 11 A suggested format for assigning reference numbers is to use the digits of the fiscal year being audited followed by a numeric sequence of findings. For example, findings identified and reported in the audit of fiscal year 2018 would be assigned a reference number of , , etc. The sheet is formatted so that only the number need be entered (1, 2, etc.) 12 Provide sufficient information for judging the prevalence and consequences of the finding, such as relation to universe of costs and/or number of items examined and quantification of audit findings in dollars 13 See Management decision for additional guidance on reporting management's response. 14

118 Lyons Elementary School District SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2018 SECTION II FINANCIAL STATEMENT FINDINGS 1. FINDING NUMBER: THIS FINDING IS: X New Repeat from Prior Year? Year originally reported? 3. Criteria or specific requirement As a part of having an actuarial valuation performed for other post employment benefits, the District is responsible for submitting accurate census data to the hired actuarial firm in order for an accurate valuation to be calculated. 4. Condition During census data testing for the District's retiree health plan, it was noted that out of 30 employees tested, one employee's birth date did not trace between the data provided to the actuary and payroll records and six employees had different start dates between the data provided and payroll records. While the actuary stated that the resulting calculations from the errors were immaterial to the valuation, the errors signaled an apparent lack of controls in ensuring the information provided to the actuary was materially correct. 5. Context 12 Census data should be derived directly from payroll records and should not have any deviations from such information. 6. Effect Errors in census data supplied to actuaries has the potential to cause materially misstated net OPEB liabilities and related deferred inflows and outflows which are to be reported on the District's financial statements. 7. Cause The District did not appear to have controls in place to ensure that the information supplied to the actuary was generated from supporting documentation. 8. Recommendation The District should establish a process to ensure that information provided to an actuary for a valuation is reviewed for accuracy and completeness before it is submitted. 9. Management's response 13 This district had issues with start date and hire date in the past. This issue has been resolved with the hiring of an HR Director. 11 A suggested format for assigning reference numbers is to use the digits of the fiscal year being audited followed by a numeric sequence of findings. For example, findings identified and reported in the audit of fiscal year 2018 would be assigned a reference number of , , etc. The sheet is formatted so that only the number need be entered (1, 2, etc.). 12 Provide sufficient information for judging the prevalence and consequences of the finding, such as relation to universe of costs and/or number of items examined and quantification of audit findings in dollars. 13 See Management decision for additional guidance on reporting management's response. 15

119 Lyons Elementary School District SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2018 SECTION III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 1. FINDING NUMBER: THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Title I Low Income 4. Project No.: ; CFDA No.: A 6. Passed Through: 7. Federal Agency: Illinois State Board of Education U.S. Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) Compliance requirement L Reporting 9. Condition 15 The District's functional classification of expenditures in the general ledger for certain functions did not match the functions that were reported to ISBE for drawing down Title I funds creating misstatements in the District's Statement of Activities and Statement of Revenues, Expenditures and Changes in Fund Balances. 10. Questioned Costs 16 N/A 11. Context 17 All Title I expenditures were posted to function 1250 on the District's general ledger for items that were reported to ISBE as being paid from functions 2210, 2220, 2230, and Effect Failure to record expenditures in the same function used to report expenditures to ISBE causes misstatements in the financial statements which could potentially be viewed as misleading in an attempt to stay within the confines of the District's budget. Additionally, reporting errors to pass through entities and possible noncompliance could arise as the incorrect expenditures may be selected for reimbursement or could be duplicated for reimbursement among multiple functions. 13. Cause While separate accounts in function 1250 were used to track Title I expenditures that aligned with the amount reported to ISBE in different functions, there were no reclassifications made to ensure that functions matched. 14. Recommendation The District should ensure that all expenditures are properly recorded in the function that is ultimately reported to ISBE as to not misstate the functions on the District's Statement of Activities and Statement of Revenues, Expenditures and Changes in Fund Balances. 15. Management's response 18 Library/Media Title I expenses will now be reported in the correct budgeted functions. For ISBE Review Date: Initials: Resolution Criteria Code Number Disposition of Questioned Costs Code Letter 14 See footnote Include facts that support the deficiency identified on the audit finding ( (b)(3)) 16 Identify questioned costs as required by (a)(3 4). 17 See footnote To the extent practical, indicate when management does not agree with the finding, questioned cost, or both

120 Lyons Elementary School District SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2018 SECTION III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 1. FINDING NUMBER: THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Title I Low Income 4. Project No.: ; CFDA No.: A 6. Passed Through: 7. Federal Agency: Illinois State Board of Education U.S. Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) A. Activities Allowed or Unallowed 9. Condition 15 Out of 40 expenditures tested, 3 payroll related payments did not have signification of supervisory approval. Additionally, one of those expenditures did not have any supporting documentation provided. 10. Questioned Costs 16 N/A 11. Context 17 Supporting documentation should be maintained and such documentation should feature supervisory approval. 12. Effect Inconsistencies in maintaining and approving supporting documentation can lead to a potential misuse of grant funding. 13. Cause The finding is the result of the failure to consistently follow District policies and procedures regarding the maintenance and approval of supporting documentation. 14. Recommendation Grant administration should put into place policies and procedures to ensure that all grant related expenditures are maintained and appropriately approved. 15. Management's response 18 The Business Department will continue to educate the employees on current policies and procedures. For ISBE Review Date: Initials: Resolution Criteria Code Number Disposition of Questioned Costs Code Letter 14 See footnote Include facts that support the deficiency identified on the audit finding ( (b)(3)). 16 Identify questioned costs as required by (a)(3 4). 17 See footnote To the extent practical, indicate when management does not agree with the finding, questioned cost, or both. 17

121 Lyons Elementary School District SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2018 SECTION III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 1. FINDING NUMBER: THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Title I Low Income 4. Project No.: ; CFDA No.: A 6. Passed Through: 7. Federal Agency: Illinois State Board of Education U.S. Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) I. Procurement, Suspension and Debarrment 9. Condition 15 The District does not appear to check SAM.gov to confirm that vendors are not suspended or debarred. As a result, the District does not keep documentation that vendors are not suspended or debarred. 10. Questioned Costs 16 N/A 11. Context 17 Although the District does not check SAM.gov and maintain such documentation of a review, it does not appear that there have been transactions with a suspended or disbarred vendor. 12. Effect Failure to review the SAM.gov website puts the District at risk of utilizing improper vendors to carryout Federal programs. 13. Cause Failure to implement a control structure with appropriate supporting documentation to ensure the control procedure has taken place. 14. Recommendation The District should consider coming up with a form to document the vendor's review and the date the website was visited with a signature detailing who performed such a review. 15. Management's response 18 A new form was created and added an additional check for the Accounts Payable Department. For ISBE Review Date: Initials: Resolution Criteria Code Number Disposition of Questioned Costs Code Letter 14 See footnote Include facts that support the deficiency identified on the audit finding ( (b)(3)). 16 Identify questioned costs as required by (a)(3 4). 17 See footnote To the extent practical, indicate when management does not agree with the finding, questioned cost, or both. 18

122 Lyons Elementary School District SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ending June 30, 2018 SECTION III FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 1. FINDING NUMBER: THIS FINDING IS: X New Repeat from Prior year? Year originally reported? 3. Federal Program Name and Year: Title I Low Income 4. Project No.: ; CFDA No.: A 6. Passed Through: 7. Federal Agency: Illinois State Board of Education U.S. Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation) A. Activities Allowed or Unallowed 9. Condition 15 While the District appeared to use grant funding in alignment with the budgeted activities communicated to ISBE under a schoolwide plan, the District was unable to provide evidence that a schoolwide plan was in place for any of the six Title I school buildings participating in the Title I grant. 10. Questioned Costs 16 N/A 11. Context 17 Schools with over 40 percent poverty can operate a schoolwide program to upgrade the instructional program in the whole school. A schoolwide plan is required to be documented and must have required core elements and components such as a comprehensive needs assessment of the entire school, a comprehensive plan based on data from the needs assessment, and an annual evaluation of the results achieved by the schoolwide program and revision of the schoolwide plan based on that evaluation. Addtiionally, the plan must have schoolwide reform strategies, instruction by highly qualified professional staff, strategies to increase parental involvement, additional support to students experiencing difficulty, and transition plans for assisting preschool children in the successful transition to the schoolwide plan. 12. Effect Electing to use Title I funding in the context of a schoolwide plan without having formalized schoolwide plans documented for each participating school could lead to funding being frozen in the future. 13. Cause The District's Title I application submitted to ISBE stated that an approved schoolwide plan was in place for each of the six schools participating in the plan. Howeve, the District could not provide evidence supporting the implementation of a schoolwide plan for any of the school buildings participating in the Title I grant. 14. Recommendation The District should prepare a schoolwide plan for each school based upon a review of the following Code of Federal Regulations: 34 CFR Core elements of a schoolwide program, 34 CFR Development of a schoowide program plan, and 34 CFR Schoolwide program components. After the plan has been established, an annual evaluation should be conducted to enhance the plan and determine its effectiveness. 15. Management's response 18 A schoolwide plan has been developed by building principals for each Title I building for fiscal year For ISBE Review Date: Initials: Resolution Criteria Code Number Disposition of Questioned Costs Code Letter 14 See footnote Include facts that support the deficiency identified on the audit finding ( (b)(3)). 16 Identify questioned costs as required by (a)(3 4). 17 See footnote To the extent practical, indicate when management does not agree with the finding, questioned cost, or both 19

123 Lyons Elementary School District SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS 19 Year Ending June 30, 2018 [If there are no prior year audit findings, please submit schedule and indicate NONE] Finding Number Condition Current Status The District does not have functioning internal controls over external financial reporting precluding the District from preparing its financial statement, including modified and full accrual adjustments, and its schedule of expenditures of federal awards, but instead relies upon the auditor for this expertise. Material cash basis adjustments were also identified during the audit. District Response: The District doesn t have a financial reporting department and will continue to look at ways to accommodate financial reporting. (Auditor Response: Finding repeated at ) The District's AP Clerk, Payroll Clerk, and Business Manager have access to everything within the financial software. District Response: Some of the segregation of duties have been rectified. Payroll has access to clear liabilities, with no access to clear or produce purchase orders (POs). Likewise, the Business does not have access all modules; this position is normally the back up for most of the roles and would need to have access in case of emergencies. Additionally, the Payroll Clerk no longer creates the profile of new employee. That duty has been segregated and is now done by the HR department. Since, we have a new I/T Department and new Director, we will continue to discuss segregation of duties and the best practice for our current systems. (Auditor Response: Finding repeated at ) Per testing, 30 of the 40 activity fund payments did not appear to have clearly documented approvals on invoices. Additionally, 14 of the 40 lacked a copy of the check for the records. 1 of the checks lacked any supporting invoice or receipt. 1 check only had an for support. 2 payments lacked any documentation In the previous year, the variance in this account was $1,084. It increased to $1, this year. It appears that the main reason for the increase is that the School does not record fees throughout the year. However, with no reconciliation or identified reconciling items, the school leaves this fund susceptible to potential misuse Manual journal entries are mostly generated by and entered into the system by the District's accountant without oversight by management. District Response: All invoices must have supporting document before approved for payment. (Auditor Response: Issues with payments were noted in the current year see finding ) District Response: The Business department requires each building to reconcile monthly. The District is currently doing review twice a year. (Auditor Response: No repeat issues were noted in the current year finding not repeated.) District Response: The Business Manager reviews and approves all journal entries. (Auditor Response: No repeat issues were noted in the current year finding not repeated.) 20

124 In relation to expenditures reviewed that were paid by funds from the imprest account, it was noted that one check had a date before the approval was given and two checks did not have adequate support and documentation. District Response: Accounts Payable is careful about dates and approval processes and having correct support continues to be important. These practices are carefully followed, especially for the imprest account. (Auditor Response: No repeat issues were noted in the current year finding not repeated.) During testing of the District credit card expenditures there were three invoices that lacked backup information for the payment. District Response: We do not have many credit cards and are reviewing credit card transactions on a regular basis. We continue to educate on current policies and procedures. (Auditor Response: No repeat issues were noted in the current year finding not repeated.) The District does not appear to have a capital asset listing that matches to previous audited financial statement balances for both cost and accumulated depreciation. Furthermore, a listing that details whether or not assets are purchased with federal funds does not appear to exist. District Response: The district was waiting to hire an I/T Director before looking into purchasing a capital asset system, since the majority are tech related. We hope to select a new system to report and track fixed asset. (Auditor Response: Finding repeated at ) The District's monthly Claim for Reimbursements were not reviewed by secondary personnel prior to submission to ISBE. District Response: These are now reviewed by the Business Manager. (Auditor Response: No repeat issues were noted in the current year finding not repeated.) When possible, all prior findings should be on the same page 19 Explanation of this schedule (b) 21

125 Lyons Elementary School District 103 Serving the communities of Brookfield, Forest View, Lyons, McCook and Stickney Working Together to Expand Student Opportunities Dr. Sherry Reynolds Whitaker Business Manager 4100 S. Joliet Avenue Lyons, Illinois (708) (708) fax CORRECTIVE ACTION PLAN FOR CURRENT YEAR AUDIT FINDINGS 21 Year Ending June 30, 2018 RCDTS Code: Corrective Action Plan Finding No.: Conditions: The District does not have sufficient internal controls over external financial reporting to allow the District to prepare its financial statements, including modified and full accrual adjustments, and its schedule of expenditures of federal awards, but instead relies upon the auditor for this expertise. Material cash basis adjustments were also identified during the audit. Plan: The district will look at other ways to book expenses and revenue accruals for 2019, instead of having the Auditors make the entries. Anticipated Date of Completion: June 30, 2019 Name of Contact Person: Dr. Sherry Reynolds Whitaker, Business Manager/CSBO Management Response: Like most school districts of this size, the district does not maintain an external financial reporting department because it is not cost beneficial to do so. The district will continue to look at the current process and make adjustments to staff duties to accommodate financial reporting requirements in the coming years. Finding No.: Conditions: Proper segregation of duties including controls over access to financial software is an essential part of an effective system of internal controls. Plan: The district recently hired a Tech Director. The Tech Director will work with the Business Manager to identify roles and responsibilities for accessing the Skyward financial system. Once the roles are clearly identified, segregation of systems access will be accomplished. Anticipated Date of Completion: June 30, 2019 Name of Contact Person Dr. Sherry Reynolds Whitaker, Business Manager/CSBO 1 22