SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT ANNUAL FINANCIAL REPORT JUNE 30, 2015

Transcription

1 SAN RAMON VALLEY UNIFIED SCHOOL DISTRICT ANNUAL FINANCIAL REPORT JUNE 30, 2015

2 TABLE OF CONTENTS JUNE 30, 2015 FINANCIAL SECTION Independent Auditor's Report 2 Management's Discussion and Analysis 5 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position 15 Statement of Activities 16 Fund Financial Statements Governmental Funds - Balance Sheet 17 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 19 Governmental Funds - Statement of Revenues, Expenditures, and Changes in Fund Balances 20 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund 22 Balances to the Statement of Activities Proprietary Funds - Statement of Net Position 24 Proprietary Funds - Statement of Revenues, Expenses, and Changes in Fund Net Position 25 Proprietary Funds - Statement of Cash Flows 26 Fiduciary Funds - Statement of Net Position 27 Fiduciary Funds - Statement of Changes in Net Position 28 Notes to Financial Statements 29 REQUIRED SUPPLEMENTARY INFORMATION General Fund - Budgetary Comparison Schedule 70 Schedule of Other Postemployment Benefits (OPEB) Funding Progress 71 Schedule of the District's Proportionate Share of the Net Pension Liability 72 Schedule of District Contributions 73 SUPPLEMENTARY INFORMATION Schedule of Expenditures of Federal Awards 75 Local Education Agency Organization Structure 76 Schedule of Average Daily Attendance 77 Schedule of Instructional Time 78 Reconciliation of Annual Financial and Budget Report with Audited Financial Statements 79 Schedule of Financial Trends and Analysis 80 Combining Statements - Non-Major Governmental Funds Combining Balance Sheet 81 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 83 Note to Supplementary Information 85 SUPPLEMENTARY INFORMATION - UNAUDITED Assessed Valuation of Taxable Properties and Secured Tax School District Boundaries - Unaudited 88 Note to Supplementary Information - Unaudited 89 INDEPENDENT AUDITOR'S REPORTS Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on Audit of Financial Statements Performed in Accordance with Governmental Auditing Standards 91 Report on Compliance for Each Major Program and Report on Internal Control Over Compliance Required by the OMB Circular A Report on State Compliance 95 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Summary of Auditor's Results 99 Financial Statement Findings 100 Federal Awards Findings and Questioned Costs 101 State Awards Findings and Questioned Costs 102 Summary Schedule of Prior Audit Findings 103

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4 INDEPENDENT AUDITOR'S REPORT Governing Board San Ramon Valley Unified School District Danville, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the San Ramon Valley Unified School District (the District) as of and for the year ended June 30, 2015, 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; and the Guide for Annual Audits of K-12 Local Education Agencies and State Compliance Reporting, issued by the California Education Audit Appeals Panel as regulations. 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 District'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 District'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. 2

5 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 San Ramon Valley Unified School District, as of June 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter - Change in Accounting Principles As discussed in Note 1 to the financial statements, in 2015, the District adopted new accounting guidance, GASB Statement No. 68, Accounting and Financial Reporting for Pensions and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. Our opinion is not modified with respect to these matters. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the required supplementary information, such as management's discussion and analysis, budgetary comparison, other postemployment benefit, net pension liability, and District contribution information, as listed on the Table of Contents, 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 San Ramon Valley Unified School District's basic financial statements. The accompanying supplementary information such as the combining and individual nonmajor fund financial statements and Schedule of Expenditures of Federal Awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and the other supplementary information as listed on the Table of Contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying supplementary 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. 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 accompanying supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. 3

6 The assessed valuation of taxable properties and secured tax school district boundaries, as listed on the Table of Contents, has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 14, 2015, on our consideration of the San Ramon Valley Unified School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering San Ramon Valley Unified School District's internal control over financial reporting and compliance. Pleasanton, California December 14,

7 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 This section of San Ramon Valley Unified School District's 2015 annual financial report presents our discussion and analysis of the District's financial performance during the fiscal year that ended on June 30, Please read it in conjunction with the District's financial statements, which immediately follow this section. OVERVIEW OF THE FINANCIAL STATEMENTS The financial statements presented herein include all of the activities of the San Ramon Valley Unified School District (the District) using the integrated approach as prescribed by GASB Statement Number 34. The Government-Wide Financial Statements present the financial picture of the District from the economic resources measurement focus using the accrual basis of accounting. These statements include all assets of the District (including capital assets) as well as all liabilities (including long-term obligations). Additionally, certain eliminations have occurred as prescribed by the statement in regards to interfund activity, payables and receivables. The Fund Financial Statements include statements for two of the three categories of activities: governmental, and fiduciary. The District does not have business type activities. The Governmental Activities are prepared using the current financial resources measurement focus and modified accrual basis of accounting. The Fiduciary Activities include the retiree benefits trust fund and agency funds. The retiree benefits trust fund is prepared using the economic resources measurement focus and the accrual basis of accounting. The agency funds report a balance sheet and do not have a measurement focus. Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements is provided to explain the differences created by the integrated approach. The Primary unit of the government is the San Ramon Valley Unified School District. The District also has three blended component units, the San Ramon Valley Unified School District Financing Corporation, the San Ramon Valley Unified School District Educational Facilities Corporation and the San Ramon Valley Unified School District Joint Powers Financing Authority. Both the Financing Corporation and the Educational Facilities Corporation are inactive and have no assets or liabilities. REPORTING THE DISTRICT AS A WHOLE The Statement of Net Position and the Statement of Activities The Statement of Net Position and the Statement of Activities report information about the District as a whole and about its activities. These statements include all assets and liabilities of the District using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year's revenues and expenses are taken into account regardless of when cash is received or paid. These two statements report the District's net position and changes in it. Net position is the difference between assets and liabilities, one way to measure the District's financial health, or financial position. Over time, increases or decreases in the District's net position will serve as a useful indicator of whether the financial position of the district is improving or deteriorating. Other factors to consider are changes in the District's property tax base and the condition of the District's facilities. 5

8 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 The relationship between revenues and expenses is the District's operating results. Since the Board's responsibility is to provide services to our students and not to generate profit as commercial entities do, one must consider other factors when evaluating the overall health of the District. The quality of the education and the safety of our schools will likely be an important component in this evaluation. In the Statement of Net Position and the Statement of Activities, we report the District activities as follows: Governmental activities - All of the District's services are reported in this category. This includes the education of transition kindergarten through grade twelve students, adult education students, and the on-going effort to improve and maintain buildings and sites. Property taxes, state income taxes, user fees, interest income, federal, state and local grants, as well as general obligation bonds, finance these activities. REPORTING THE DISTRICT'S MOST SIGNIFICANT FUNDS Fund Financial Statements The fund financial statements provide detailed information about the most significant funds - not the District as a whole. Some funds are required to be established by State law or by bond covenants. However, management establishes many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants, and other money that it receives from the U.S. Department of Education. Governmental funds - Most of the District's basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detail short-term view of the District's general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the District's programs. The differences between the governmental fund financial statements and those in the government-wide financial statements are explained in a reconciliation following each governmental fund financial statement. Proprietary funds - When the District charges users for the services it provides, whether to outside customers or to other departments within the District, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Revenues, Expenses and Changes in Fund Net Position. We use internal service funds (a type of proprietary fund) to report activities that provide supplies and services for the District's other programs and activities - such as the District's Self-Insurance Fund. The internal service funds are reported with governmental activities in the government-wide financial statements. 6

9 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 THE DISTRICT AS TRUSTEE Reporting the District's Fiduciary Responsibilities The District is the trustee, or fiduciary, for funds held on behalf of others, like our funds for associated student body activities, scholarships, employee retiree benefits and pension. The District's fiduciary activities are reported in the Statements of Fiduciary Net Position and Statement of Revenues, Expenses, and Changes in Fund Net Position. We exclude these activities from the District's other financial statements because the District cannot use these assets to finance its operations. The District is responsible for ensuring that the assets reported in these funds are used for their intended purposes. FINANCIAL HIGHLIGHTS THE DISTRICT AS A WHOLE Net Position The District's net position was $484.8 million and $738.6 million for the fiscal years ended 2015 and 2014 respectively. Of this amount, ($231.5) million and $6.6 million were unrestricted for the fiscal years ended 2015, and 2014, respectively. Restricted net position is reported separately to show legal constraints from debt covenants and enabling legislation that limit the School Board's ability to use the net position for day-to-day operations. Our analysis below focuses on the net position (Table 1) and change in net position (Table 2) of the District's governmental activities. Table 1 Governmental Activities, Restated Current and other assets $ 275,354,401 $ 155,585,598 Capital assets 1,003,152,624 1,007,740,960 Total Assets 1,278,507,025 1,163,326,558 Deferred Outflows of Resourses 16,061,516 14,380,259 Current liabilities 44,062,466 16,666,188 Claims payable 279, ,956 Long-term debt 711,852, ,577,788 Total Liabilities 756,194, ,799,932 Deferred Iutflows of Resourses 53,525,954 - Net Position Net investment in capital assets 676,175, ,147,351 Restricted 40,176,298 37,904,978 Unrestricted (231,504,122) (231,145,444) Total Net Position $ 484,847,732 $ 500,906,885 The negative $231.5 million unrestricted net position of governmental activities represents the accumulated results of all past years' operations. 7

10 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 Statement of Activities The results of this year's operations for the District as a whole are reported in the Statement of Activities on Page 16. Table 2 takes the information from the Statement, and rearranges them slightly so you can see our total revenues for the year. Table 2 Revenues Program revenues Charges for services 7,124,625 Governmental Activities $ $ 6,447,916 Operating grants and contributions 42,223,558 50,171,964 Capital grants and contributions General revenues: Federal and State aid not restricted 78,990,811 67,992,127 Property taxes 170,661, ,157,909 Other general revenues 22,854,698 21,700,612 Total Revenues $ 321,855,534 $ 303,470,761 Expenses Instruction related $ 240,163,239 $ 217,574,298 Student support services 29,070,528 26,150,104 Administration 14,868,889 12,213,740 Maintenance and operations 33,776,199 32,332,618 Other 20,035,832 14,822,092 Total Expenses 337,914, ,092,852 Change in Net Position $ (16,059,153) $ 377,909 Governmental Activities As reported in the Statement of Activities on page 16, the cost of all of our governmental activities this year were $338 million and $303.1 million for the fiscal years ended 2015 and 2014, respectively. The cost paid by those who benefited from the programs was $7.1 million. Operating grants and contributions subsidized certain programs in the amount of $42.2 million. We paid for the remaining "public benefit" portion of our governmental activities with $170.7 million in taxes, unrestricted Federal and State aid of $79 million and other revenues of $22.9 million for the fiscal years ended

11 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 In Table 3, we have presented the net cost (total cost less revenues generated by the activities) of each of the District's largest functions - instruction related, student support services, administration, maintenance and operations, and other. As discussed above, net cost shows the financial burden that was placed on the District's taxpayers by each of these functions. Providing this information allows our citizens to consider the cost of each function in comparison to the benefits they believe are provided by that function. Table 3 Net Cost of Services Instruction Related $ 213,875,922 $ 185,726,491 Student Support services 16,513,878 13,633,317 Administration 14,793,470 12,142,347 Maintenance and operations 33,595,611 32,142,003 Other 9,787,623 2,828,581 Net Cost $ 288,566,504 $ 246,472,739 THE DISTRICT'S FUNDS As the District completed this year, our governmental funds reported a combined fund balance of $256.5 million, which is an increase of $110.3 million from the prior year. The primary changes are: a. The fund balance in the General Fund increased $2.1 million. This was due to receipt of one-time local revenues, additional prior year Special Education State funding, increased LCFF gap funding near year end and restricted general fund budget savings (primarily external donations). b. The Building Fund increased $100.3 million. This was primarily due to new bond issuance during the year. c. The Capital Facilities Fund decreased $185 thousand. This was due to the decrease in developer fees collection during the year and the need for facilities related to enrollment growth. d. Our Special Revenue Funds decreased $1.1 million. The Deferred Maintenance and Adult Education Funds were closed at year end and the remaining balances were transferred to the General Fund where these programs will be continued. The Cafeteria Fund decreased by $387 thousand due to increasing food and labor costs and reduced participation. This was partially offset by an increase of $1.2 million in the Special Reserve Fund for future QSCB debt service, Diablo Vista field replacement, Dougherty High CSA and future Child Care building purchases. e. The Debt Service Fund increased $9.1 million to meet debt service requirements. 9

12 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 General Fund Budgetary Highlights Over the course of the year, the District revises its budget as it attempts to deal with unexpected changes in revenues and expenditures. The final amendment to the budget was adopted on June 30, (A schedule showing the District's original and final budget amounts compared with amounts actually paid and received is provided in our annual report on page 70). The District originally projected an increase in general fund balance of $1.6 million. This was later revised to a decrease of $8.9 million which resulted in part by the close of the prior year books and budgeting of primarily restricted carryover and the inclusion of bargaining unit agreement costs settled during the year. Total revenues were also revised to include revenues not anticipated at the time of the original budget adoption (primarily donations). Likewise, with the increase in anticipated revenues, the expenditures were also increased. In comparing the revised budget to the original adopted budget, revenue is $8.0 million higher and expenditures were $17.1 million more than originally budgeted. Final Revenues after the books were closed exceeded the revised budget by $9.0 million. This variance was due to on-behalf revenue of $6.5 million (the state s contribution to PERS), increased LCFF gap funding and prior year revenue of $837 thousand and additional local revenue of $1.5 million. Expenditures were $456 thousand lower than budgeted due to the addition of $6.5 million in on-behalf expenditures (state PERS expense) which was more than offset by primarily by unspent restricted supplies and services and reduced certificated salaries and employee benefits. CAPITAL ASSET & DEBT ADMINISTRATION Capital Assets The District had $1,003.2 million and $1,007.7 million, net of accumulated depreciation, invested in a broad range of capital assets, including land, buildings, and furniture and equipment for the fiscal years ended 2015 and The current amount represents a net decrease (including additions, deductions and depreciation) of $4.6 million compared to the prior year. Table 4 Governmental Activities Land $ 336,607,628 $ 336,607,628 Land Improvements 64,772,371 61,391,607 Buildings & improvements 878,285, ,771,785 Equipment 18,597,374 16,811,331 Construction in progress 35,578,893 26,926,951 Total accumulated depreciation (330,689,560) (299,768,342) Totals $ 1,003,152,624 $ 1,007,740,960 10

13 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 This year's major additions to buildings and site improvements: Montevideo Relocatable $ 10,600 Monte Vista High Road Work 270,987 San Ramon Valley High Bleachers 1,828,699 San Ramon Valley High Stadium 169,019 Walt Disney Kindergarten 286,624 Monte Vista High Road Repair 1,101,222 Seismic Upgrades 4,900 San Ramon Valley High Pool 10,364 San Ramon Valley High dirt removal 40,565 Facilities transition and electrical upgrades 470,981 Tassajara Modernization 20,450 California High Modernization 1,338 Del Amigo Low Voltage 108,811 Dougherty Valley High Relocatable 1,808,305 Gale Ranch Relocatable 487,955 Golden View Roof 459,908 Golden View Kitchen 3,900 Los Cerros PD Center 35,194 Montair Kitchen 3,900 Monte Vista High Student Learning Ctr 7,590,769 Monte Vista High Pool 42,500 Neil Armstrong Seismic 874,075 Rancho Romero Kitchen 3,900 San Ramon Valley High Baseball netting 4,200 Sycamore Kitchen 3,900 Twin Creeks Library/Comp Lab 5,732 Freezers 242,198 Walt Disney Kitchen 3,900 Total $ 15,894,897 11

14 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 We present more detailed information about our capital assets in Note 4 to the financial statements. Long-Term Obligations At the end of this year, the District had $728.7 million in long-term obligations versus $407.5 million last year, an increase of 79 percent primarily due to new bond issued during the year and net pension liabilities as result of implementing GASB 68 during the year. These obligations consisted of: Governmental Activities, Restated General obligation bonds $ 452,773,774 $ 340,016,971 Early Retirement Incentive 113, ,929 Lease revenue bonds 19,795,000 21,410,000 Capitalized lease obligations 563, ,873 Net OPEB obligation 14,548,464 12,643,366 Net pension liabilities 201,776, ,114,751 Other 39,103,976 32,636,898 Totals $ 728,675,197 $ 659,577,788 The District's bond rating from Standard & Poor's is "AA." The State limits the amount of general obligation debt that Districts can issue to 2.5 percent of the assessed value of all taxable property within the District's boundaries. The District's outstanding general obligation debt of $452.8 million is significantly below this $970 million statutorily - imposed limit. Other obligations include compensated absences payable, and bond premium. We present more detailed information regarding our long-term obligations in Note 8 of the financial statements. Net Pension Liability (NPL) The District implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27, which required the District to recognize its proportionate share of the unfunded pension obligation for CalSTRS and CalPERS. The implementation resulted in a reduction of beginning net position of $237.7 million. As of June 30, 2015, the District reported Deferred Outflows from pension activities of $16.1 million, Deferred Inflows from pension activities of $53.5 million, and a Net Pension Liability of $201.8 million. SIGNIFICANT ACCOMPLISHMENTS OF FISCAL YEAR ARE NOTED BELOW: In November of 2012, The District passed a $260 Million General Obligation Bond known as Measure D. The first series of $74,995,000 of bonds was sold in March of The second series of $125,000,000 of bonds was sold in April of This bond measure will allow the district to build a new elementary school (Bella Vista Elementary, opening fall, 2016), modernize various campuses, improve energy management and improve classroom and infrastructure technology. This was the sixth year the District used funds from the parcel tax passed in April The tax is $144 per parcel for seven years and generated $6.8 million in revenue in the school year. In May of 2015, the District passed an extension to the parcel tax which maintains the $144 per parcel amount through

15 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES Although the district continues to experience enrollment growth, fewer and fewer students have been added over the past three years. Closely monitoring enrollment changes and trends and being prepared for a continued slowdown in growth will be critical in the years to come. In addition, Proposition 30 was passed by the voters in November of 2012 and generates approximately $7 billion in annual state revenues which translates to approximately $430/K-12 ADA. Proposition 30 is funded by temporary taxes, set to expire in 2016 and 2018 and how the state manages the expiration of these temporary taxes must also be monitored closely. In considering the District Budget for the year, the District Board and management used the following criteria: The key assumptions in our revenue projections were: LCFF Gap Funding of 53.08%. 8.22% unduplicated pupil count. $3,097,180 in LCFF Supplemental funding. Enrollment growth of 330 students over October, 2014 enrollment. Special Education COLA of 1.02% (State). Mandated Cost Block Grant funding (K-8, $28, 9-12, $56) Lottery revenue of $128/ADA (unrestricted), $34/ADA (restricted) Student attendance rate of 97.2%. The parcel tax provides the District with $6.8 million in revenue Federal Categorical funding reduced 4% from amounts. Certificated staffing expenditures are based on the following ratios which exclude SDC classes, Del Amigo Continuation School and Venture Independent Study: Staffing Ratio Grades transition kindergarten through third 24.5: 1 (average) Grades four and five 30: 1 Grades six through eight 29: 1 Grades nine through twelve 28: 1 The key assumptions in our expenditure forecast are: 1. Health & Welfare insurance rates include a projected increase of 10.0% effective with the January premium payment. 2. STRS employer rate of 10.73% (+1.85%) 3. PERS employer rate of % (+0.076%) 4. Restoring Routine Restricted Maintenance to 3.0% of expenditures, an increase of $2.4 million over the prior year 5. The 3% Reserve for Economic Uncertainties is maintained. 6. Local Control and Accountability Plan (LCAP) action plans are funded in accordance with the updated LCAP. 13

16 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2015 CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, students, and investors and creditors with a general overview of the District's finances and to show the District's accountability for the money it receives. If you have questions about this report or need any additional financial information, contact the Chief Business Officer at San Ramon Valley Unified School District, 699 Old Orchard Drive, Danville, California, 94526, or e- mail gtreible@srvusd.net. 14

17 STATEMENT OF NET POSITION JUNE 30, 2015 Governmental Activities ASSETS Deposits and investments $ 260,287,402 Receivables 14,630,757 Prepaid expenses 202,340 Stores inventories 233,902 Capital assets not depreciated 372,186,521 Capital assets, net of accumulated depreciation 630,966,103 Total Assets 1,278,507,025 DEFERRED OUTFLOWS OF RESOURCES Current year pension contribution 16,061,516 Total Deferred Outflows of Resources 16,061,516 LIABILITIES Overdrafts 5,747 Accounts payable 16,404,809 Claim liabilities 279,635 Interest payable 10,701,492 Unearned revenue 127,975 Current portion of long-term obligations other than pensions 16,822,443 Unamortized bond premiums 37,319,824 Noncurrent portion of long-term obligations other than pensions 472,756,520 Aggregate net pension liability 201,776,410 Total Liabilities 756,194,855 DEFERRED INFLOWS OF RESOURCES Difference between projected and actual earnings on pension plan investments 53,525,954 Total Deferred Inflows of Resources 53,525,954 NET POSITION Net investment in capital assets 676,175,556 Restricted for: Educational programs 7,247,777 Debt service 29,964,147 Capital projects 754,753 Other activities 2,209,621 Unrestricted (231,504,122) Total Net Position $ 484,847,732 The accompanying notes are an integral part of these financial statements. 15

18 STATEMENT OF ACTIVITIES Net (Expenses) Revenues and Changes in Program Revenues Net Position Charges for Operating Services and Grants and Governmental Functions/Programs Expenses Sales Contributions Activities Governmental Activities: Instruction $ 203,126,255 $ 744,988 $ 23,075,913 $ (179,305,354) Instruction-related activities: Supervision of instruction 9,424,321 63,840 1,849,788 (7,510,693) Instructional library, media, and technology 5,043,217 43, ,902 (4,697,558) School site administration 22,569,446 26, ,782 (22,362,317) Pupil services: Home-to-school transportation 5,599,771 41,629 2,451,463 (3,106,679) Food services 7,445,069 4,877, ,657 (1,799,782) All other pupil services 16,025,688 41,476 4,376,795 (11,607,417) General administration: Data processing 2,713,547 1,846 12,668 (2,699,033) All other general administration 12,155, ,460 (12,094,437) Plant services 33,776,199 11, ,059 (33,595,611) Ancillary services 3,739,765 80, ,509 (3,104,441) Community services 526, (526,674) Interest on long-term obligations 14,757, (14,757,285) Other outgo Total Governmental-Type 1,012,108 1,190,323 8,422,562 8,600,777 Activities $ 337,914,687 $ 7,124,625 $ 42,223,558 (288,566,504) General revenues and subventions: Property taxes, levied for general purposes 135,303,979 Property taxes, levied for debt service 27,414,479 Taxes levied for other specific purposes 7,943,384 Federal and State aid not restricted to specific purposes 78,990,811 Interest and investment earnings 161,537 Interagency revenues 91,120 Miscellaneous 22,602,041 Subtotal, General Revenues 272,507,351 Change in Net Position (16,059,153) Net Position - Beginning, as restated 500,906,885 Net Position - Ending $ 484,847,732 The accompanying notes are an integral part of these financial statements. 16

19 GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2015 Bond Interest General Building and Redemption Fund Fund Fund ASSETS Deposits and investments $ 34,700,761 $ 183,475,159 $ 29,957,478 Receivables 14,065,323 3,600 6,669 Due from other funds 1,850,707 1,977,728 - Prepaid expenditures 202, Stores inventories 54, Total Assets $ 50,873,852 $ 185,456,487 $ 29,964,147 LIABILITIES AND FUND BALANCES Liabilities: Overdrafts $ - $ - $ - Accounts payable 7,482,225 5,836,069 - Due to other funds 5,999,222 2,020 - Unearned revenue 127, Total Liabilities 13,609,422 5,838,089 - Fund Balances: Nonspendable 319, Restricted 7,247, ,618,398 29,964,147 Assigned 3,575, Unassigned 26,122, Total Fund Balances 37,264, ,618,398 29,964,147 Total Liabilities and Fund Balances $ 50,873,852 $ 185,456,487 $ 29,964,147 The accompanying notes are an integral part of these financial statements. 17

20 Non Major Governmental Funds Total Governmental Funds $ 10,205,275 $ 258,338, ,573 14,276,165 1,416,573 5,245, , , ,902 $ 12,001,602 $ 278,296,088 $ 5,747 $ 5, ,493 14,220,787 1,424,006 7,425, ,975 2,332,246 21,779, , ,242 4,621, ,451,842 4,868,655 8,444,107-26,122,140 9,669, ,516,331 $ 12,001,602 $ 278,296,088 18

21 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2015 Total Fund Balance - Governmental Funds $ 256,516,331 Amounts Reported for Governmental Activities in the Statement of Net Position are Different Because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported as assets in governmental funds. The cost of capital assets is $ 1,333,820,369 Accumulated depreciation is (330,668,275) Net Capital Assets 1,003,152,094 Expenditures relating to contributions made to pension plans were recognized on the modified accrual basis, but are not recognized on the accrual basis. 16,061,516 In governmental funds, unmatured interest on long-term debt is recognized in the period when it is due. On the government-wide statements, unmatured interest on long-term debt is recognized when it is incurred. (10,701,492) An internal service fund is used by the District's management to charge the costs of the health and welfare and property and liability insurance programs to the individual funds. The assets and liabilities of the internal service fund are included with governmental activities. 2,020,434 Long-term obligations, including bonds payable, are not due and payable in the current period and, therefore, are not reported as liabilities in the funds. The difference between projected and actual earnings on pension plan investments are not recognized on the modified accrual basis, but are recognized on the accrual basis as an adjustment to pension expense. (53,525,954) Long-term obligations at year end consist of: General Obligation bonds payable $ 452,773,774 Bond premiums/discounts, net of amortization 37,319,824 Lease revenue bonds payable 19,795,000 Capital leases payable 563,629 Compensated absences (vacations) 1,784,152 Net OPEB obligation 14,548,464 Early retirement incentive 113,944 Net pension liabilities 201,776,410 Total Long-Term Obligations (728,675,197) Total Net Position - Governmental Activities $ 484,847,732 The accompanying notes are an integral part of these financial statements. 19

22 GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES Bond Interest General Building and Redemption Fund Fund Fund REVENUES Local Control Funding Formula $ 206,748,980 $ - $ - Federal sources 6,337, Other state sources 35,920, ,874 Other local sources 33,401,983 2,592,761 27,306,277 Total Revenues 282,408,706 2,592,761 27,455,151 EXPENDITURES Current Instruction 179,363, Instruction-related activities: Supervision of instruction 8,425, Instructional library, media and technology 4,498, School site administration 20,177, Pupil services: Home-to-school transportation 4,977, Food services 4, All other pupil services 14,279, Administration: Data processing 2,427, All other administration 10,944, Plant services 27,204,507 77,537 - Facility acquisition and construction 27,382 26,951,649 - Ancillary services 3,345, Community services 471, Other outgo 1,012, Debt service Principal 388,394 1,618,933 13,935,000 Interest and other 14,798 1,841,162 12,285,050 Total Expenditures 277,563,335 30,489,281 26,220,050 Excess (Deficiency) of Revenues Over Expenditures 4,845,371 (27,896,520) 1,235,101 Other Financing Sources (Uses): Transfers in 1,314,199 2,638,225 - Other sources 443, ,602,579 7,905,660 Transfers out (4,503,718) - - Net Financing Sources (Uses) (2,745,575) 128,240,804 7,905,660 NET CHANGE IN FUND BALANCES 2,099, ,344,284 9,140,761 Fund Balance - Beginning 35,164,634 79,274,114 20,823,386 Fund Balance - Ending $ 37,264,430 $ 179,618,398 $ 29,964,147 The accompanying notes are an integral part of these financial statements. 20

23 Non Major Governmental Funds Total Governmental Funds $ 28,989 $ 206,777, ,996 7,060,032 34,925 36,104,506 6,600,461 69,901,482 7,387, ,843,989 27, ,390,966-8,425,670-4,498,088-20,177,542-4,977,668 6,651,527 6,656,452-14,279,774-2,427,705-10,944, ,526 27,894,570 1,803,196 28,782,227-3,345, ,337-1,012,108 82,860 16,025, ,141,349 9,177, ,450,623 (1,790,586) (23,606,634) 1,865,493 5,817, ,952,183 (1,314,199) (5,817,917) 551, ,952,183 (1,239,292) 110,345,549 10,908, ,170,782 $ 9,669,356 $ 256,516,331 21

24 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES Total Net Change in Fund Balances - Governmental Funds $ 110,345,549 Amounts Reported for Governmental Activities in the Statement of Activities are Different Because: Capital outlays to purchase or build capital assets are reported in governmental funds as expenditures; however, for governmental activities, those costs are shown in the Statement of Net Position and allocated over their estimated useful lives as annual depreciation expenses in the Statement of Activities. This is the amount by which depreciation exceeds capital outlays in the period. Depreciation expense $ (31,000,692) Capital outlays 26,426,218 Net Expense Adjustment (4,574,474) Loss on disposal of capital assets is reported in the government-wide Statement of Net Position, but is not recorded in the governmental funds. (49,862) Some of the capital assets acquired this year were financed with capital leases. The amount financed by the leases is reported in the governmental funds as a source of financing. On the other hand, the capital leases are not revenues in the Statement of Activities, but rather constitute long-term liabilities in the Statement of Net Position. (443,944) Proceeds received from the Sale of Bonds is a revenue in the governmental funds, but it increases long-term liabilities in the Statement of Net Position and does not affect the Statement of Activities. (133,508,239) In the Statement of Activities, certain operating expenses, such as compensated absences (vacations) are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid). Vacation used was more than the amounts earned. In the governmental funds, pension costs are based on employer contributions made to pension plans during the year. However, in the Statement of Activities, pension expense is the net effect of all changes in the deferred outflows, deferred inflows and net pension liability during the year. (1,470,356) Payment of principal on long-term obligations is an expenditure in the governmental funds, but it reduces long-term obligations in the Statement of Net Position and does not affect the Statement of Activities. General obligation bonds $ 13,935,000 Capital lease payable 475,188 Lease revenue 1,615,000 Early retirement incentive 46,985 16,072,173 6,867 The accompanying notes are an integral part of these financial statements. 22

25 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES (Continued) Amortization of premium relating to bonds are expenditures in the governmental funds, but increase the liability in the Statement of Net Position are amortized over the life of the bond in the Statement of Activities. 2,034,294 Interest on long-term obligation is recorded as an expenditure in the funds when it is due; however, in the Statement of Activities, interest expense is recognized as the interest accrues, regardless of when it is due. (2,650,230) In the Statement of Activities, unfunded Annual Required Contribution (ARC) is recognized as an expense, but is not recognized in the governmental funds. (1,905,098) An internal service fund is used by the District's management to charge the costs of the health and welfare and the property insurance program to the individual funds. The net income of the internal service fund is reported with governmental activities. 84,167 Change in Net Position of Governmental Activities $ (16,059,153) The accompanying notes are an integral part of these financial statements. 23

26 PROPRIETARY FUNDS STATEMENT OF NET POSITION JUNE 30, 2015 ASSETS Current Assets Governmental Activities - Internal Service Fund Deposits and investments $ 1,948,729 Receivables 353,804 Due from other funds 1,695 Total Current Assets 2,304,228 Noncurrent Assets Furniture and equipment (net) 1,318 Total Assets 2,305,546 LIABILITIES Current Liabilities Accounts payable 3,742 Due to other funds 1,735 Claim liabilities 279,635 Total Current Liabilities 285,112 NET POSITION Net investment in capital assets 1,318 Unrestricted 2,019,116 Total Net Position $ 2,020,434 The accompanying notes are an integral part of these financial statements. 24

27 PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION Governmental Activities - Internal Service Fund OPERATING REVENUES In District premiums $ 3,476,839 Other local sources 88,315 Total Operating Revenues 3,565,154 OPERATING EXPENSES Payroll costs 3,487,538 Other operating cost 2,260 Total Operating Expenses 3,489,798 Operating Income 75,356 NONOPERATING REVENUES Interest income 6,551 Total Nonoperating Revenues 6,551 Change in Net Position 81,907 Total Net Position - Beginning 1,938,527 Total Net Position - Ending $ 2,020,434 The accompanying notes are an integral part of these financial statements. 25

28 PROPRIETARY FUNDS STATEMENT OF CASH FLOWS Governmental Activities - Internal Service Fund CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers $ 3,547,446 Cash payments to employees for services (3,487,538) Cash payments for interfund services used, including payments in lie of taxes that are payments for, and equivalent to, services provided 151,081 Cash payments for other operating expenses (283,898) Net Cash Used for Operating Activities (72,909) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 6,551 Net Cash Provided by Investing Activities 6,551 Net Decrease in Cash and Cash Equivalents (66,358) Cash and Cash Equivalents - Beginning 2,015,087 Cash and Cash Equivalents - Ending $ 1,948,729 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income Adjustments to reconcile operating income to net cash $ 75,356 provided (used) by operating activities: Depreciation 2,260 Changes in assets and liabilities: Receivables (17,708) Due from other funds 149,810 Accounts payable (7,577) Claims liabilities (276,321) NET CASH USED FOR OPERATING ACTIVITIES $ (72,909) The accompanying notes are an integral part of these financial statements. 26

29 FIDUCIARY FUNDS STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2015 Retiree Agency Funds Benefits Warrant ASB Trust Clearing Funds ASSETS Deposits and investments $ 20,894,283 $ 13,579,974 $ 2,614,950 Receivables 450, ,193 - Due from other funds 2,180,601 15,354 - Total Assets 23,525,644 $ 14,114,521 $ 2,614,950 LIABILITIES Accounts payable $ 2,176,947 $ - $ - Due to student groups - - 2,614,950 Due to other funds ,118 - Due to others - 14,099,403 - Total Liabilities 2,177,504 $ 14,114,521 $ 2,614,950 NET POSITION Unrestricted 21,348,140 Total Net Position $ 21,348,140 The accompanying notes are an integral part of these financial statements. 27

30 FIDUCIARY FUND STATEMENT OF CHANGES IN NET POSITION Retiree Benefits ADDITIONS Trust District contributions $ 2,176,947 Net increase (decrease) in investments (30,337) Total Additions 2,146,610 DEDUCTIONS Other expenditures 2,714,598 Total Deductions 2,714,598 Change in Net Position (567,988) Net Position - Beginning 21,916,128 Net Position - Ending $ 21,348,140 The accompanying notes are an integral part of these financial statements. 28

31 NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial Reporting Entity The San Ramon Valley Unified School District (the District) was organized on July 1, 1965 under the laws of the State of California. The District operates under a locally elected five member Board form of government and provides educational services to grades K-12 as mandated by the State and/or Federal agencies. The District operates 21 elementary, eight middle, four high schools, a continuation school, an independent study school. A reporting entity is comprised of the primary government, component units, and other organizations that are included to ensure the financial statements are not misleading. The primary government of the District consists of all funds, departments, boards, and agencies that are not legally separate from the District. For San Ramon Valley Unified School District, this includes general operations, food service, and student related activities of the District. Component Units Component units are legally separate organizations for which the District is financially accountable. Component units may also include organizations that are fiscally dependent on the District, in that the District approves their budget, the issuance of their debt or the levying of their taxes. In addition, component units are other legally separate organizations for which the District is not financially accountable but the nature and significance of the organization's relationship with the District is such that exclusion would cause the District's financial statements to be misleading or incomplete. The District has three component units: the San Ramon Valley Unified School District Educational Facilities Corporation, the San Ramon Valley Unified School District Financing Corporation, and the San Ramon Valley Unified District Joint Powers Financing Authority. The first two component units are not presented in the financial statements as there are no activities and they are inactive. The last one is included in the Building fund financial statements. Basis of Presentation - Fund Accounting The accounting system is organized and operated on a fund basis. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. The District's funds are grouped into three broad fund categories: governmental, proprietary, and fiduciary. Governmental Funds Governmental funds are those through which most governmental functions typically are financed. Governmental fund reporting focuses on the sources, uses, and balances of current financial resources. Expendable assets are assigned to the various governmental funds according to the purposes for which they may or must be used. Current liabilities are assigned to the fund from which they will be paid. The difference between governmental fund assets and liabilities is reported as fund balance. The following are the District's major and non-major governmental funds Major Governmental Funds General Fund The General Fund is the chief operating fund for all districts. It is used to account for the ordinary operations of the District. All transactions except those accounted for in another fund are accounted for in this fund. 29