HUNTLEY SIGMON & ASSOCIATES CPAs, PLLC H S & A Certified Public Accountants

Transcription

1 HUNTLEY SIGMON & ASSOCIATES CPAs, PLLC H S & A Certified Public Accountants WILKES COUNTY BOARD OF EDUCATION WILKES, NORTH CAROLINA ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2015 CERTIFIED PUBLIC ACCOUNTANTS LENOIR, NORTH CAROLINA

2 Wilkes County Board of Education and Leadership Mr. Rudy Holbrook, Chairman Mrs. Sharron N. Huffman, Vice-Chairman Mr. Darren Shumate Mr. Rick Lankford Mr. Hardin Kennedy Dr. Marty Hemric - Superintendent Mark Byrd - Assistant Superintendent Anna Lankford Associate Superintendent Seth Prevette Chief Financial Officer

3 TABLE OF CONTENTS June 30, 2015 Exhibit Page No. Independent Auditor s Report 1-2 Management s Discussion and Analysis 3-7 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position 1 8 Statement of Activities Fund Financial Statements: Balance Sheet - Governmental Funds 3 11 Reconciliation of the Balance Sheet to the Statement of Net Position 3 11 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 4 12 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 5 13 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General and Annually Budgeted Major Special Revenue Fund Statement of Net Position - Proprietary Fund 7 16 Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Fund 8 17 Statement of Cash Flows - Proprietary Fund Notes to the Financial Statements Required Supplementary Information Schedule of the Proportionate Share of the Net Pension Liability 39 Schedule of Board Contributions 40 Combining and Individual Fund Statements and Schedules: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual, General Fund A Combining Balance Sheet-NonMajor Governmental Funds A-2 43 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance- NonMajor Governmental Funds A-3 44 Schedule of Revenues and Expenditures and Changes in Fund Balance- Budget and Actual-Federal Grants A-4 45 Schedule of Revenues and Expenditures and Changes in Fund Balance - Budget and Actual - Capital Outlay Fund A

4 Exhibit Page No. Schedule of Revenues and Expenditures - Budget and Actual (Non-GAAP) - School Food Service Fund A-6 48 Compliance Section: Report on Internal control over Financial Reporting and on Compliance and other matters based on an Audit of Financial Statements performed in accordance with Government Auditing Standards Report on Compliance with requirements applicable the each Major Federal Program and Internal Control over Compliance in accordance with OMB Circular A-133 and the State Single Audit Implementation Act Report on Compliance with requirements applicable the each Major State Program and Internal Control over Compliance in accordance with Applicable Sections of OMB Circular A-133 and the State Single Audit Implementation Act Schedule of Findings and Questioned Costs Summary Schedule of Prior Year Audit Findings 57 Schedule of Expenditures of Federal and State Awards 58-60

5 HUNTLEY, SIGMON & ASSOCIATES, CPAs, PLLC HS&A Certified Public Accountants Phone: (828) P.O. Box 1406 Fax: (828) Harper Avenue NW Lenoir, North Carolina Independent Auditor s Report To the Board of Education Wilkes County, North Carolina Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Wilkes County Board of Education, North Carolina as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the Board 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 of 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 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 financial statement 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, the business-type activities, each major fund, and the aggregate remaining fund information of the Wilkes County Board of Education as of June 30, 2015, and the respective changes in financial position and cash flows, where appropriate, thereof and the respective budgetary comparison for the General Fund and State Public School Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. 1

6 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management s Discussion and Analysis on pages 3-7 and the Schedule of the Proportionate Share of the Net Pension Liability and the Schedule of Board Contributions on pages 39 & 40, respectfully be presented to supplement the basic financial statements. Such information, although not a required 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. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements of the Wilkes County Board of Education. The combining and individual non-major fund financial statements and schedules, budgetary schedules, other schedules, as well as the accompanying schedule of expenditures of federal and State awards as required by the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and the State Single Audit Implementation Act, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual non-major fund statements, budgetary schedules, other schedules and the accompanying schedule of expenditures of federal and State awards are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, based on our audit and the procedures performed as described above, the combining and individual nonmajor fund statements, budgetary schedules, other schedules, and the accompanying schedule of expenditures of federal and State awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report date December 15, 2015 on our consideration of Wilkes County Board of Education s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grants agreements, and other matters. The purpose of the report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Wilkes County Board of Education s internal control over financial reporting and compliance. HUNTLEY, SIGMON & ASSOCIATES, CPAs, PLLC December 15,

7 Management Discussion and Analysis

8 Management s Discussion and Analysis Wilkes County Board of Education Management s Discussion and Analysis This section of the Wilkes County Board of Education s (the Board) financial report represents our discussion and analysis of the financial performance of the Board for the year ended June 30, This information should be read in conjunction with the financial statements included in this report. Financial Highlights A major construction project at Moravian Falls Elementary school is underway. As of June 30, 2015 the project was 90-94% complete with the remainder planned to be completed by the end of August Another major project, referred to as Project ADMIT is in the beginning stages. Local funding is being attained which will be coupled with a $900,000 grant from the Golden Leaf Foundation to build new facilities for CTE/Advanced manufacturing programs. Overview of the Financial Statements The financial statements of the Wilkes County Board of Education consist of four components. They are as follows: Independent Auditor's Report Management's Discussion and Analysis (required supplementary information) Basic Financial Statements Required supplemental section that presents combining and budgetary statements for non-major governmental funds and budgetary statement for enterprise fund, as well as information concerning the Board s progress in funding its obligation to provide pension benefits to its employees The Basic Financial Statements include two types of statements that present different views of the Board s finances. The first is the government-wide statements. The government-wide statements are presented on the full accrual basis of accounting and include the statement of net position and the statement of activities. The Statement of Net Position includes all of the Board s assets, deferred outflows of resources, liabilities and deferred inflows of resources. Assets and liabilities are classified in the order of relative liquidity for assets and due date for liabilities. This statement provides a summary of the Board's investment in assets, deferred outflows of resources, deferred inflows of resources, and obligations to creditors. Liquidity and financial flexibility can be evaluated using the information contained in this statement. The Statement of Activities summarizes the Board s revenues and expenses for the current year. A net (expense) revenue format is used to indicate to what extent each function is selfsufficient. The second set of statements included in the basic financial statements is the Fund Financial Statements, which are presented for the Board s governmental funds and proprietary fund. These statements present the governmental funds on the modified accrual basis of accounting, measuring the near term inflows and outflows of financial resources and what is available at year-end to spend in the next fiscal year. The proprietary fund is presented on the full accrual basis of accounting. The fund financial statements focus on the Board s most significant funds. Because a different basis of accounting is used in the government wide statements, reconciliation from the governmental fund financial statements to the government-wide statements is required. The government-wide statements provide information about the Board as an economic unit while the fund financial statements provide information on the financial resources of each of the Board s major funds. 3

9 Management s Discussion and Analysis Wilkes County Board of Education Government-wide Statements The government-wide statements report information about the unit as a whole using accounting methods similar to those used by private-sector companies. The Statement of Net Position includes all of the Board s assets, deferred outflows of resources, liabilities and deferred inflows of resources. All of the current year s revenues and expenses are accounted for in the Statement of Activities regardless of when cash is received or paid. The two government-wide statements report the Board s net position and how it has changed. Net position - the difference between the board s assets and deferred outflows and the total of liabilities and deferred inflows - is one way to measure the unit s financial health or position. Over time, increases or decreases in the Board s net position are an indicator of whether its financial position is improving or deteriorating. To assess the Board s overall health, you need to consider additional non-financial factors, such as changes in the County s property tax base and the condition of its school buildings and other physical assets. The unit s activities are divided into two categories in the government-wide statements: Governmental activities: Most of the Board s basic services are included here, such as regular and special education, transportation, and administration. County funding and state and federal aid finance most of these activities. Business-type activities: The Board charges fees to help it cover the costs of certain services it provides. School food service is included here. The government-wide statements are shown as Exhibits 1 and 2 of this report. Fund Financial Statements The fund financial statements provide more detailed information about the Board s funds, focusing on its most significant or major funds - not the unit as a whole. Funds are accounting devices the Board uses to keep track of specific sources of funding and spending on particular programs. Some funds are required by State law, such as the State Public School Fund. The Board has established other funds to control and manage money for a particular purpose or to show that it is properly using certain revenues, such as in the Federal Grants Fund. Wilkes County Board of Education has two types of funds: Governmental funds: Most of the Board s basic services are included in the governmental funds, which generally focus on two things - how cash and other assets can readily be converted to cash flow in and out, and the balances left at year-end that are available for spending. As a result of this focus, the governmental funds statements provide a detailed short-term view that helps the reader determine whether there are more or fewer financial resources that can be spent in the coming year to finance the Board s programs. Because this information does not encompass the additional long-term focus of the government-wide statements, additional information at the bottom of the governmental funds statements, in the form of a reconciliation, explains the relationship (or differences) between the government-wide and the fund financial statements. The Board has several governmental funds: the General Fund, the State Public School Fund, the Individual Schools Fund, the Capital Outlay Fund, and the Federal Grants Fund. The governmental fund statements are shown as Exhibits 3, 4, 5, and 6 of this report. Proprietary funds: Services for which the Board charges a fee are generally reported in the proprietary funds. The proprietary fund statements are reported on the same full accrual basis of accounting as the government-wide statements. Wilkes County Board of Education has one proprietary fund-an enterprise fund - the School Food Service Fund. The proprietary fund statements are shown as Exhibits 7, 8, and 9 of this report. 4

10 Management s Discussion and Analysis Wilkes County Board of Education Financial Analysis of the Schools as a Whole Net position is an indicator of the fiscal health of the Board. Assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $62,020,889 as of June 30, The largest component of net position is net investment in capital assets of $76,409,301. It comprises 123.2% of the total net position. Following is a summary of the Statement of Net Position: TABLE 1 Condensed Statement of Net Position Governmental Activities Business-type Activities Total Primary Government 6/30/2015 6/30/2014 6/30/2015 6/30/2014 6/30/2015 6/30/2014 Current assets $ 11,716,896 $ 13,658,978 $ 376,889 $ 681,900 $ 12,093,785 $ 14,340,878 Capital assets 76,641,495 76,537, , ,444 76,811,845 76,707,305 Total assets $ 88,358,391 $ 90,196,839 $ 547,239 $ 851,344 $ 88,905,630 $ 91,048,183 Deferrred outflows of resources $ 4,613,632 $ 4,106,505 $ 121,946 $ 108,542 $ 4,735,578 $ 4,215,047 Current liabilities $ 3,705,099 $ 3,352,417 $ 45,582 $ 44,345 $ 3,750,681 $ 3,396,762 Long-term liabilities 10,928,109 29,217, , ,477 11,318,229 30,123,609 Total liabilities $ 14,633,208 $ 32,569,549 $ 435,702 $ 950,822 $ 15,068,910 $ 33,520,371 Deferred inflows of resources $ 16,101,996 $ 16,211 $ 449,413 $ 37,270 $ 16,551,409 $ 53,481 Net investment in capital assets $ 76,238,951 $ 76,303,078 $ 170,350 $ 169,444 $ 76,409,301 $ 76,472,522 Restricted net position 2,552,451 4,496, ,552,451 4,496,908 Unrestricted net position (16,554,583) (19,082,402) (386,280) (197,650) (16,940,863) (19,280,052) Total net position $ 62,236,819 $ 61,717,584 $(215,930) $ (28,206) $ 62,020,889 $ 61,689,378 Note that net position increased during the year. As reflected in Table 2 below, governmental revenues and expenditures increased. The following table shows the revenues and expenses for the Board for the current fiscal year. TABLE 2 Condensed Statement of Revenues, Expenses, and Changes in Net Position Governmental Activities Business-type Activities Total Primary Government 6/30/2015 6/30/2014 6/30/2015 6/30/2014 6/30/2015 6/30/2014 Revenues: Program revenues: Charges for services $ 629,714 $ 661,017 $ 480,175 $ 1,675,571 $ 1,109,889 $ 2,336,588 Operating grants and contributions 65,472,555 61,525,664 5,480,072 4,435,004 70,952,627 65,960,668 Capital grants and contributions 896, , , ,690 General revenues: Other revenues 19,877,289 20,460, , ,650 19,984,183 20,596,299 Total revenues $ 86,876,044 $ 83,313,020 $ 6,067,141 $ 6,246,225 $ 92,943,185 $ 89,559,245 Expenses: Governmental activities: Instructional services $ 64,996,461 $ 64,574,771 $ 64,996,461 $ 64,574,771 System-wide support 5

11 Management s Discussion and Analysis Wilkes County Board of Education services 17,989,819 18,415,397 17,989,819 18,415,397 Ancillary service 19,697 16,838 19,697 16,838 Non-programmed charges 30,480 43,294 30,480 43,294 Interest on long-term debt Depreciation 3,320,352 3,272,959 3,320,352 3,272,959 Business-type activities: Food service $ 6,254,865 $ 5,998,609 6,254,865 5,998,609 Total expenses $ 86,356,809 $ 86,323,259 $ 6,254,865 $ 5,998,609 $ 92,611,674 $ 92,321,868 Increase (decrease) in net position $ 519,235 $ (3,010,239) $ (187,724) $ 247,616 $ 331,511 $ (2,762,623) Net position, beginning, previously reported $ 80,394,440 $ 83,404,679 $ 465,456 $ 217,840 $ 80,859,896 $ 83,622,519 Net position, beginning Restated $ 61,717,584 $ 83,404,679 $ (28,206) $ 217,840 $ 61,689,378 $ 83,622,519 Net position, ending $ 62,236,819 $ 80,394,440 $ (215,930) $ 465,456 $ 62,020,889 $ 80,859,896 Total governmental activities generated revenues of $86.9 million while expenses in this category totaled $86.4 million for the year ended June 30, Comparatively, revenues were 83.3 million and expenses totaled 86.3 million for the year ended June 30, The increase in net position stands at $519,235 at June 30, 2015, compared to a decrease of $3,010,239 in Instructional expenses comprised 75% of total governmental-type expenses while support services made up 20.8% of those expenses for County funding comprised 14.9% of total governmental revenue, while unrestricted State funding added another 3.03% for In 2014, county funding was 16% and unrestricted State funding added 3.3%. Much of the remaining 82.07% of total governmental revenue for 2015 consists of restricted State and federal money. This revenue represented 80.7% of total revenue in Businesstype activities generated revenue of $6.1 million and had expenses of $6.3 million. Net position decreased in the business-type activities by $187,724. Financial Analysis of the Board s Funds Governmental Funds: The focus of Wilkes County Board of Education s governmental funds is to provide information on near-term inflows, outflows, and balances of usable resources. Such information is useful in assessing the Board s financing requirements. The Board s governmental funds reported a combined fund balance of $8,000,902, a $2,289,448 decrease from last year. The Board s governmental funds had expenses that exceeded revenues, thus the decrease in total fund balance. State funding increased by $3,101,249. Expenditures increased by $6,929,638. Proprietary Funds: The School Food Service Fund reflected a decrease in net position from last year. Revenues decreased and expenses increased; non-operating revenue increased, brought about mostly by an increase in federal funding. General Fund Budgetary Highlights Over the course of the year, the Board revised the budget several times to account for changes in revenue expectations and to increase appropriations in light of the increased revenue estimates. Increases in estimated revenues and corresponding increases in appropriations totaled $766,745 in the General Fund. Capital Assets Capital assets increased by $104,540 from the previous year. The following is a summary of the capital assets, net of depreciation at year-end. 6

12 Management s Discussion and Analysis Wilkes County Board of Education TABLE 3 Summary of Capital Assets Governmental Activities Business-type Activities Total Primary Government 6/30/2015 6/30/2014 6/30/2015 6/30/2014 6/30/2015 6/30/2014 Land $ 6,096,988 $ 6,096,988 $ 6,096,988 $ 6,096,988 Assets not in service Construction in progress 2,776, ,837 2,776, ,837 Buildings 65,239,817 67,947,055 65,239,817 67,947,055 Equipment and furniture 674, ,422 $ 170,350 $ 169, , ,866 Vehicles 1,853,835 1,547,559 1,853,835 1,547,559 TOTAL $ 76,641,495 $ 76,537,861 $ 170,350 $ 169,444 $ 76,811,845 $ 76,707,305 Debt Outstanding During the year, the Board s outstanding debt increased by $167,762. The Board is limited by North Carolina General Statutes with regards to the types of debt it can issue and for what purpose that debt can be used. The County holds virtually all debt issued for school capital construction. Economic Factors Enrollment was once again nearly flat to previous years. In Wilkes County moved tiers within North Carolina's low wealth funding formula which resulted in approximately a $200,000 reduction in our low wealth funding. We took additional cuts of approximately $475,000 in Teacher Assistants and $250,000 in At-Risk Student funding. As a Local Education Agency one of our major hurdles is to get our Local Government funding in line with other districts in North Carolina. As a county, Wilkes has traditionally spent a below average percentage of its funds on education. Communications have been made with our Local Government in attempts to see this trend change for the positive. On average, districts similar to Wilkes County Schools would have received approximately 3.5% more of their county's funds. For Wilkes County Schools that equates to $2 million plus in funding we feel needs to come to public education to be on par with other counties. Should we receive this funding in the future we could begin taking care of major capital needs such as roofs and HVAC. Over the past several years fund balance has been used to balance our budget. Should Wilkes County Schools be able to attain the support from our Local Government, our use of fund balance could immediately halt. The funding levels from the state have still not returned to the pre-recession amounts and our County lags behind in funding education. Those factors negatively impact our systems ability to deliver quality educational experiences to students. Requests for Information This report is intended to provide a summary of the financial condition of Wilkes County Board of Education. Questions or requests for additional information should be addressed to: Seth Prevette, Finance Officer Wilkes County Board of Education North Wilkesboro, NC

13 BASIS FINANCIAL STATEMENTS

14 STATEMENT OF NET POSITION June 30, 2015 EXHIBIT 1 Governmental Activities Primary Government Business-type Activities Total ASSETS Cash and cash equivalents $ 8,828,048 $ 74,485 $ 8,902,533 Due from other governments 2,618, ,197 2,749,109 Receivables (net) 47,341 3,093 50,434 Internal balances (401) Inventories 199, , ,060 Other assets 23,649 23,649 Capital assets: Land, improvements, and construction in progress 8,873,224 8,873,224 Other capital assets, net of depreciation 67,768, ,350 67,938,621 Total capital assets $ 76,641,495 $ 170,350 $ 76,811,845 Total assets $ 88,358,391 $ 547,239 $ 88,905,630 DEFERRED OUTFLOWS OF RESOURCES $ 4,613,632 $ 121,946 $ 4,735,578 LIABILITIES Accounts payable and accrued expenses $ 338,851 $ 43 $ 338,894 Accrued salaries and wages payable 3,366,248 45,539 3,411,787 Long-term liabilities: Net pension liability 4,356, ,152 4,471,730 Due within one year 201, ,272 Due in more than one year 6,370, ,968 6,645,227 Total liabilities $ 14,633,208 $ 435,702 $ 15,068,910 DEFERRED INFLOWS OF RESOURCES $ 16,101,996 $ 449,413 $ 16,551,409 NET POSITION Net investment in capital assets $ 76,238,951 $ 170,350 $ 76,409,301 Restricted: Individual schools 846, ,828 Stabilization by State Statute 454, ,403 School capital outlay 1,251,220-1,251,220 Unrestricted (16,554,583) (386,280) (16,940,863) Total net position $ 62,236,819 $ (215,930) $ 62,020,889 The notes to the financial statements are an integral part of this statement. 8

15 STATEMENT OF ACTIVITIES For the Year Ended June 30, 2015 EXHIBIT 2 PAGE 1 OF 2 Program Revenues Functions/Programs Expenses Charges for Services Operating Grants and Contributions Capital Grants and Contributions Primary government: Governmental Activities: Instructional services: Regular instructional $ 33,013,224 $ - $ 35,274,075 $ - Special populations 10,102,477-10,426,386 - Alternative programs 7,057,542-4,837,818 - School leadership 4,656,958-2,600,872 - Co-curricular 3,550, School-based support 6,615,492-5,049,636 - System-wide support services: Support and development 1,865, , ,700 - Special population support and development 197, ,921 - Alternative programs and services support and development 197,334-95,594 - Technology support 1,359, ,795 - Operational support 11,536,844 54,416 5,804, ,486 Financial and human resources 1,671, ,380 - Accountability 52, System-wide pupil support 95, Policy, leadership and public relations 1,014, ,063 - Ancillary services 19, Non-programmed charges 30, ,941 - Interest on long-term debt Unallocated depreciation expense 3,320, Total governmental activities $ 86,356,809 $ 629,714 $ 65,472,555 $ 896,486 Business-type activities: School food service $ 6,254,865 $ 480,175 $ 5,480,072 $ - Total business-type activities $ 6,254,865 $ 480,175 $ 5,480,072 $ - Total primary government $ 92,611,674 $ 1,109,889 $ 70,952,627 $ 896,486 The notes to the financial statements are an integral part of this statement. 9

16 STATEMENT OF ACTIVITIES For the Year Ended June 30, 2015 EXHIBIT 2 PAGE 2 OF 2 Net (Expense) Revenue and Changes in Net Position Primary Government Functions/Programs Governmental Activities Business-type Activities Total Primary government: Governmental Activities: Instructional services: Regular instructional $ 2,260,851 $ - $ 2,260,851 Special populations 323, ,909 Alternative programs (2,219,724) - (2,219,724) School leadership (2,056,086) - (2,056,086) Co-curricular (3,550,768) - (3,550,768) School-based support (1,565,856) - (1,565,856) System-wide support services: Support and development (1,096,552) - (1,096,552) Special population support and development (95,817) - (95,817) Alternative programs and services support and development (101,740) - (101,740) Technology support (1,083,291) - (1,083,291) Operational support (4,781,928) - (4,781,928) Financial and human resources (1,475,884) - (1,475,884) Accountability (51,382) - (51,382) System-wide pupil support (95,859) - (95,859) Policy, leadership and public relations (610,076) - (610,076) Ancillary services (18,960) - (18,960) Non-programmed charges 181, ,461 Interest on long-term debt Unallocated depreciation expense (3,320,352) - (3,320,352) Total governmental activities $ (19,358,054) $ - $ (19,358,054) Business-type activities: School food service $ (294,618) (294,618) Total business-type activities $ - $ (294,618) $ (294,618) Total primary government $ (19,358,054) $ (294,618) $ (19,652,672) General revenues: Unrestricted county appropriations - operating $ 11,273,988 $ - $ 11,273,988 Unrestricted county appropriations - capital 1,666,252-1,666,252 Unrestricted State appropriations - operating 2,547,193-2,547,193 Unrestricted State appropriations - capital 87,000-87,000 Investment earnings, unrestricted 24, ,463 Miscellaneous, unrestricted 4,379,043 6,244 4,385,287 Transfers (100,643) 100,643 - Total general revenues, and transfers $ 19,877,289 $ 106,894 $ 19,984,183 Change in net position $ 519,235 $ (187,724) $ 331,511 Net position, beginning, previously reported $ 80,394,440 $ 465,456 $ 80,859,896 Restatement (18,676,856) (493,662) (19,170,518) Net position, beginning, restated $ 61,717,584 $ (28,206) $ 61,689,378 Net position, ending $ 62,236,819 $ (215,930) $ 62,020,889 The notes to the financial statements are an integral part of this statement. 10

17 BALANCE SHEET Governmental Funds June 30, 2015 EXHIBIT 3 Major Funds Non-major Funds General State Public School Capital Outlay Other Governmental Funds Total Governmental Funds ASSETS Cash and cash equivalents $ 6,542,769 $ - $ 1,396,453 $ 888,826 $ 8,828,048 Due from other funds 58,032-58,032 Due from other governments 253,723 2,051,434 71, ,097 2,618,912 Accounts receivable 21,341 26,000 47,341 Inventories 199, ,347 Other assets 23,649 23,649 Total assets $ 7,098,861 $ 2,051,434 $ 1,494,111 $ 1,130,923 $ 11,775,329 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities $ 172,956 $ 11,933 $ 145,333 $ 8,629 $ 338,851 Accrued salaries and wages payable 1,120,208 2,037, ,142 3,366,248 Due to other funds ,032 58,433 Total liabilities $ 1,293,565 $ 2,049,831 $ 145,333 $ 274,803 $ 3,763,532 Deferred inflows of resources: $ - $ 1,603 $ - $ 9,292 $ 10,895 Fund balances: Nonspendable: Inventories $ 199,347 $ - $ - $ - $ 199,347 Restricted: Stabilization by State Statute 356,745 97, ,403 School Capital Outlay 1,251,120 1,251,120 Individual Schools 846, ,828 Assigned: Subsequent years expenditures 1,863,304 1,863,304 Unassigned 3,385,900 3,385,900 Total fund balances $ 5,805,296 $ - $ 1,348,778 $ 846,828 $ 8,000,902 Total liabilities, deferred inflows of resources, and fund balances $ 7,098,861 $ 2,051,434 $ 1,494,111 $ 1,130,923 Amounts reported for governmental activities in the statement of net position (Exhibit 1) are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. 76,641,495 Deferred outflows of resources related to pensions 4,613,632 Some liabilities are not due and payable in the current period and therefore are not reported in the funds. (6,571,531) The notes to the financial statements are an integral part of this statement. Net pension liability (4,356,578) Deferred inflows of resources related to pensions (16,091,101) Net position of governmental activities $ 62,236,819 11

18 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES Governmental Funds For the Year Ended June 30, 2015 EXHIBIT 4 Major Funds Non-major Funds General State Public School Capital Outlay Other Governmental Funds Total Governmental Funds REVENUES State of North Carolina $ 2,928,053 $ 56,722,266 $ 788,840 $ - $ 60,439,159 Wilkes County Local Current Expense 11,273,988-1,666,252-12,940,240 Other U.S. Government 635, ,350,064 7,985,613 Contributions and donations ,176 4, ,075 Other 2,530,460-60,864 3,188,337 5,779,661 Total revenues $ 17,368,050 $ 56,722,266 $ 2,698,132 $ 10,543,300 $ 87,331,748 EXPENDITURES Current: Instructional services: Regular instructional $ 2,988,497 $ 32,234,488 $ - $ 618,207 $ 35,841,192 Special populations 414,432 6,374,092-3,263,267 10,051,791 Alternative programs 2,212,016 2,021,213-2,816,605 7,049,834 School leadership 1,476,620 3,171, ,647,865 Co-curricular 431,656-3,119,116 3,550,772 School-based support 1,602,225 4,860, ,712 6,664,972 System-wide support services: Support and development 1,571, ,849-4,685 1,872,987 Special populations support and development 95,807 56,058-45, ,728 Alternative programs and services support and development 113,588 19,688-75, ,182 Technology support 908, ,218-78,275 1,353,043 Operational support 4,383,802 5,675, ,060,087 Financial and human resource 888, ,805-30,806 1,760,380 Accountability 4,521 47, ,719 System-wide pupil support 44,315 49, ,951 Policy, leadership and public relations 410, ,520-1,353 1,019,301 Ancillary services 15,740 3, ,842 Non-programmed charges 75,319 (2,365) - 211, ,895 Debt service: Principal , ,327 Interest and other charges Capital outlay: Real property and buildings - - 3,191,554-3,191,554 Furniture and equipment , ,230 Vehicles , ,188 Total expenditures $ 17,637,738 $ 56,621,623 $ 5,614,299 $ 10,469,180 $ 90,342,840 Excess (deficiency) of revenues over expenditures $ (269,688) $ 100,643 $ (2,916,167) $ 74,120 $ (3,011,092) Other Financing Sources (Uses): Transfers to other funds $ - $ (100,643) $ - $ - $ (100,643) Installment purchase obligations issued $ - $ - 805,089 $ - $ 805,089 Total other financing sources (uses) $ - $ (100,643) $ 805,089 $ - $ 704,446 Net change in fund balance $ (269,688) $ - $ (2,111,078) $ 74,120 $ (2,306,646) Fund balances, beginning 6,057,786-3,459, ,708 10,290,350 Increase in reserve for inventories 17, ,198 Fund balances, ending $ 5,805,296 $ - $ 1,348,778 $ 846,828 $ 8,000,902 The notes to the financial statements are an integral part of this statement. 12

19 EXHIBIT 5 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, 2015 Amounts reported for governmental activities in the statement of activities are different because: Net changes in fund balances - total governmental funds $ (2,306,646) Change in fund balance due to change in reserve for inventory 17,198 Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay exceeded depreciation in the current period. 103,634 Contributions to the pension plan in the current fiscal year are not included on the Statement of Activities 4,613,632 The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction has any effect on net position. Also, governmental funds report the effect of premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. (167,762) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Pension Expense (1,770,823) Compensated absences 30,002 Total changes in net position of governmental activities $ 519,235 The notes to the financial statements are an integral part of this statement. 13

20 WILKES COUNTY BOARD OF EDUCATION General Fund and Annually Budgeted Major Special Revenue Fund Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the Year Ended June 30, 2015 EXHIBIT 6 PAGE 1 OF 2 General Fund Original Final Actual Amounts Variance with Final Budget - Positive (Negative) Revenues: State of North Carolina $ 2,268,300 $ 2,874,776 $ 2,928,053 $ 53,277 Wilkes County 11,273,988 11,273,988 11,273,988 - U.S. Government 467, , ,549 (151,786) Other 2,546,205 2,386,466 2,530, ,994 Total revenues $ 16,555,820 $ 17,322,565 $ 17,368,050 $ 45,485 Expenditures: Current: Instructional services: Regular $ 2,988,497 Special populations 414,432 Alternative programs 2,212,016 School leadership 1,476,620 Co-curricular 431,656 School-based support 1,602,225 Total instructional services $ 9,849,860 $ 9,476,121 $ 9,125,446 $ 350,675 System-wide support services: Support and development $ 1,571,453 Special population support and development 95,807 Alternative programs and services support and development 113,588 Technology support 908,550 Operational support 4,383,802 Financial and human resource 888,769 Accountability 4,521 System-wide pupil support 44,315 Policy, leadership and public relations 410,428 Total system-wide support services $ 8,521,778 $ 8,748,025 $ 8,421,233 $ 326,792 Ancillary services $ 6,000 $ 16,495 $ 15,740 $ 755 Non-programmed charges $ 75,673 $ 86,500 $ 75,319 $ 11,181 Total expenditures $ 18,453,311 $ 18,327,141 $ 17,637,738 $ 689,403 Revenues over (under) expenditures $ (1,897,491) $ (1,004,576) $ (269,688) $ 734,888 Other financing sources (uses): Appropriated fund balance $ 1,897,491 $ 1,004,576 $ - $ (1,004,576) Transfers to other funds Total other financing sources (uses) $ 1,897,491 $ 1,004,576 $ - $ (1,004,576) Net change in fund balance $ - $ - $ (269,688) $ (269,688) Fund balance, beginning 6,057,786 Increase in reserve for inventories 17,198 Fund balance, ending $ 5,805,296 The notes to the financial statements are an integral part of this statement. 14

21 WILKES COUNTY BOARD OF EDUCATION General Fund and Annually Budgeted Major Special Revenue Fund Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For the Year Ended June 30, 2015 EXHIBIT 6 PAGE 2 OF 2 State Public School Fund Original Final Actual Amounts Variance with Final Budget - Positive (Negative) Revenues: State of North Carolina $ 53,969,215 $ 56,752,681 $ 56,722,266 $ (30,415) Wilkes County U.S. Government Other Total revenues $ 53,969,215 $ 56,752,681 $ 56,722,266 $ (30,415) Expenditures: Current: Instructional services: Regular $ 32,234,488 Special populations 6,374,092 Alternative programs 2,021,213 School leadership 3,171,245 Co-curricular - School-based support 4,860,035 Total instructional services $ 47,072,693 $ 48,674,323 $ 48,661,073 $ 13,250 System-wide support services: Support and development $ 296,849 Special population support and development 56,058 Alternative programs and services support and development 19,688 Technology support 366,218 Operational support 5,675,841 Financial and human resources 840,805 Accountability 47,198 System-wide pupil support 49,636 Policy, leadership and pubic relations 607,520 Total system-wide support services $ 6,795,623 $ 7,974,356 $ 7,959,813 $ 14,543 Ancillary services $ - $ 3,103 $ 3,102 $ 1 Non-programmed charges $ - $ - $ (2,365) $ 2,365 Total expenditures $ 53,868,316 $ 56,651,782 $ 56,621,623 $ 30,159 Revenues over (under) expenditures $ 100,899 $ 100,899 $ 100,643 $ (256) Other financing sources (uses): Appropriated fund balance $ - $ - $ - $ - Transfers to other funds (100,899) (100,899) (100,643) 256 Total other financing sources (uses) $ (100,899) $ (100,899) $ (100,643) $ 256 Net change in fund balance $ - $ 0 $ - $ (0) Fund balance, beginning - Decrease in reserve for inventories - Fund balance, ending $ - The notes to the financial statements are an integral part of this statement. 15

22 STATEMENT OF NET POSITION Proprietary Fund June 30, 2015 EXHIBIT 7 Enterprise Fund Major Fund School Food Service Total ASSETS Current assets: Cash and cash equivalents $ 74,485 $ 74,485 Due from other governments 130, ,197 Due from other funds Receivables (net) 3,093 3,093 Inventories 168, ,713 Total current assets $ 376,889 $ 376,889 Noncurrent assets: Capital assets: Furniture and equipment, net $ 170,350 $ 170,350 Total noncurrent assets $ 170,350 $ 170,350 Total assets $ 547,239 $ 547,239 DEFERRED OUTFLOWS OF RESOURCES $ 121,946 $ 121,946 LIABILITIES Current liabilities: Accounts payable and accrued expenses $ 43 $ 43 Accrued salaries and wages payable 45,539 45,539 Total current liabilities $ 45,582 $ 45,582 Noncurrent liabilities: Net Pension liability $ 115,152 $ 115,152 Compensated absences 274, ,968 Total noncurrent liabilities $ 390,120 $ 390,120 Total liabilities $ 435,702 $ 435,702 DEFERRED INFLOWS OF RESOURCES $ 449,413 $ 449,413 NET POSITION Net investment in capital assets $ 170,350 $ 170,350 Unrestricted (386,280) (386,280) Total net position $ (215,930) $ (215,930) The notes to the financial statements are an integral part of this statement. 16

23 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION Proprietary Fund For the Year Ended June 30, 2015 EXHIBIT 8 Enterprise Fund Major Fund School Food Service Total OPERATING REVENUES Food sales $ 480,175 $ 480,175 Total operating revenues $ 480,175 $ 480,175 OPERATING EXPENSES Food cost: Purchase of food $ 2,361,028 $ 2,361,028 Donated commodities 311, ,050 Salaries and benefits 2,851,555 2,851,555 Indirect costs 392, ,902 Materials and supplies 245, ,842 Depreciation 57,046 57,046 Contracted services 24,507 24,507 Other 10,935 10,935 Total operating expenses $ 6,254,865 $ 6,254,865 Operating loss $ (5,774,690) $ (5,774,690) NONOPERATING REVENUES (EXPENSES) Federal reimbursements $ 4,749,553 $ 4,749,553 Federal commodities 298, ,781 State reimbursements 38,836 38,836 Interest earned 7 7 Indirect costs not paid 392, ,902 Miscellaneous 6,244 6,244 Total nonoperating revenue (expenses) $ 5,486,323 $ 5,486,323 Income (loss) before contributions and transfers $ (288,367) $ (288,367) Transfers from other funds 100, ,643 Change in net position $ (187,724) $ (187,724) Total net position, beginning $ 465,456 $ 465,456 Restatement (493,662) (493,662) Total net position, beginning, restated $ (28,206) $ (28,206) Total net position, ending $ (215,930) $ (215,930) The notes to the financial statements are an integral part of this statement. 17

24 STATEMENT OF CASH FLOWS Proprietary Fund For the Fiscal Year Ended June 30, 2015 EXHIBIT 9 PAGE 1 OF 2 Enterprise Fund Major Fund School Food Service Total CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 387,030 $ 387,030 Cash paid for goods and services (2,645,016) (2,645,016) Cash paid to employees for services (2,853,508) (2,853,508) Net cash used by operating activities $ (5,111,494) $ (5,111,494) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Federal reimbursements 4,749,553 $ $ 4,749,553 State reimbursements 38,836 38,836 Decrease in due from other funds 16,701 16,701 Miscellaneous 10,356 10,356 Net cash provided by noncapital financing activities $ 4,815,446 $ 4,815,446 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets $ (57,952) $ (57,952) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments $ 7 $ 7 Net increase in cash and cash equivalents $ (353,993) $ (353,993) Balances, beginning 428, ,478 Balances, ending $ 74,485 $ 74,485 The notes to the financial statements are an integral part of this statement. 18

25 STATEMENT OF CASH FLOWS Proprietary Fund For the Fiscal Year Ended June 30, 2015 EXHIBIT 9 PAGE 2 OF 2 Enterprise Fund Major Fund School Food Service Total Reconciliation of operating loss to net cash used by operating activities Operating loss (5,774,690) Adjustments to reconcile operating loss to net cash used by operating activities: Depreciation 57,046 $ $ (5,774,690) $ $ 57,046 Pension expense 46,806 46,806 Donated commodities consumed 311, ,050 Indirect costs not paid 392, ,902 Salaries paid by other funds 100, ,643 Changes in assets and liabilities: Increase in due from other governments (79,268) (79,268) Increase in accounts receivable (704) (704) Increase in inventory (2,092) (2,092) Decrease in accounts payable and accrued liabilities (612) (612) Increase in accrued salaries and wages payable 1,849 1,849 Increase in deferred outlfows of resources for pension plan contributions in current fiscal year (121,946) (121,946) Decrease in unearned revenue (13,173) (13,173) Decrease in long-term liabilities (29,305) (29,305) Total adjustments $ 663,196 $ 663,196 Net cash used by operating activities $ (5,111,494) $ (5,111,494) Noncash investing, capital, and financing activities: The State Public School Fund paid salaries and benefits of $ 100,643 to administrative personnel of the School Food Service Fund during the fiscal year. The payment is reflected by a transfer in and an operating expense on Exhibit 8. The School Food Service Fund received donated commodities with a value of $298,781 during the fiscal year. The receipt of the commodities is recognized as a nonoperating revenue. The Fund recorded the consumption of $311,050 worth of donated commodities during the fiscal year as an operating expense. These transactions are reported on Exhibit 8. Indirect costs of $392,902 that would be due to the General Fund were not paid. These unpaid costs are reflected as a nonoperating revenue and an operating expense on Exhibit 8. The notes to the financial statements are an integral part of this statement. 19

26 Notes to the Financial Statement

27 NOTES TO THE FINANCIAL STATEMENTS For the Fiscal Year Ended June 30, 2015 I. Summary of Significant Accounting Policies The accounting policies of Wilkes County Board of Education conform to generally accepted accounting principles as applicable to governments. The following is a summary of the more significant accounting policies: A. Reporting Entity Wilkes County Board of Education (Board) is a Local Education Agency empowered by State law [Chapter 115C of the North Carolina General Statutes] with the responsibility to oversee and control all activities related to public school education in Wilkes County, North Carolina. The Board receives State, local, and federal government funding and must adhere to the legal requirements of each funding entity. B. Basis of Presentation Government-wide Statements: The statement of net position and the statement of activities present information about the Board. These statements include the financial activities of the overall government. Eliminations have been made to minimize the effect of internal activities on revenues and expenses. These statements distinguish between the governmental and business-type activities of the Board. Governmental activities generally are financed through intergovernmental revenues, and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. The statement of activities presents a comparison between direct expenses and program revenues for the different business-type activities of the Board and for each function of the Board s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expense allocations that have been made in the funds have been reversed for the statement of activities. Program revenues include (a) fees and charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the Board s funds. Separate statements for each fund category - governmental and proprietary - are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each of which is displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as non-major funds. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. The Board reports the following major governmental funds: General Fund. The General Fund is the general operating fund of the Board. The General Fund accounts for all financial resources except those that are required to be accounted for in another fund. This fund is the Local Current Expense Fund, which is mandated by State law [G.S. 115C-426]. State Public School Fund. The State Public School Fund includes appropriations from the Department of Public Instruction for the current operating expenditures of the public school system. 20