Salmon River Central School District Annual Report June 30, 2017

Transcription

1 Annual Reprt June 0, 2017

2 Table f Cntents June 0,2017 Page Independent Auditr's Reprt 1- Management's Discussin and Analysis 4-15 Basic Financial Statements Statement f Net Psitin 16 Statement f Activities and Changes in Net Psitin 17 Balance Sheet - Gvernmental Funds 18 Statement f Revenues, Expenditures and Changes in Fund Balances - Gvernmental Funds 19 Statement f Fiduciary Net Psitin - Fiduciary Funds 20 Statement f Changes in Fiduciary Net Psitin - Fiduciary Funds 20 Recnciliatin f Gvernmental Funds Balance Sheet t Statement f Net Psitin Recnciliatin f Gvernmental Funds Statement f Revenues, Expenditures, and Changes in Fund Balances t Statement f Activities 2-24 and Changes in Net Psitin Ntes t Basic Financial Statements Required Supplementary Infrmatin Schedule f Revenues, Expenditures and Changes in Fund Balance - Budget (Nn-GAAP Basis) and Actual - General Fund Schedule f Funding Prgress - ther Pst Emplyment Benefits Plan 58 Schedule f Prprtinate Share f Net Pensin Asset/Liability-TRS 59 Schedule f Prprtinate Share f Net Pensin Liability-ERS 60 Schedule f District Cntributins-TRS Pensin Plan 61 Schedule f District Cntributins-ERS Pensin Plan 62

3 Supplementary Infrmatin Salmn River Central Schl District Table f Cntents June 0,2017 Schedule f Change frm Adpted Budget t Final Budget and the Real Prperty Tax Limit-General Fund 6 Schedule f Capital Prjects Fund - Prject Expenditures and Financing Resurces 64 Schedule f Revenues and Expenditures fr the Mhawk Schl - General Fund 65 Cmbined Balance Sheet-Nn-Majr Gvernmental Funds 66 Cmbined Statement f Revenues, Expenditures and Changes in Fund Balances-Nn-Majr Gvernmental Funds 67 Investment in Capital Assets, Net f Related Debt 68 Extraclassrm Activity Fund Independent Auditr's Reprt Statement f Assets and Liabilities Arising frm Cash Transactins 71 Schedule f Cash Receipts, Disbursements and Ending Balances 72 Ntes t Financial Statements 7 Federal Award Prgram Infrmatin Schedule f Expenditures f Federal Awards 74 Ntes t Schedule f Expenditures f Federal Awards 75 Reprt n Internal Cntrl ver Financial Reprting and n Cmpliance and ther Matters Based n an Audit f Financial Statements Perfrmed in Accrdance with Gvernment A uditing Standards Reprt n Cmpliance Fr Each Majr Federal Prgram; Reprt n Internal Cntrl ver Cmpliance; and Reprt n Schedule f Expenditures f Federal Awards Required by Unifrm Guidance Schedule f Findings and Questined Csts 81-8 Summary Schedule f Prir Year Audit Findings 84

4 Seyfarth & Seyfarth CPAs, P.C. 564 East Main Street Malne,NY 1295 (518) Carl A. Seyfarth Jr. CPA Ann E. Seyfarth CPA Independent Auditr's Reprt T the Bard f Educatin Salmn River Central Schl District Reprt n the Financial Statements We have audited the accmpanying financial statements f the gvernmental activities, each majr fund, and the aggregate remaining fund infrmatin f Salmn River Central Schl District as f and fr the year ended June 0, 2017, and the related ntes t the financial statements, which cllectively cmprise the District's basic financial statements as listed in the table f cntents. Management's Respnsibility fr the Financial Statements Salmn River Central Schl District's management is respnsible fr the preparatin and fair presentatin f these financial statements in accrdance with accunting principles generally accepted in the United States f America; this includes the design, implementatin, and maintenance f internal cntrl relevant t the preparatin and fair presentatin f financial statements that are free frm material misstatement, whether due t fraud r errr. Auditr's Respnsibility ur respnsibility is t express pinins n these financial statements based n ur audit. We cnducted ur audit in accrdance with auditing standards generally accepted in the United States f America and the standards applicable t financial audits cntained in Gvernment Auditing Standards issued by the Cmptrller General f the United States. Thse standards require that we plan and perfrm the audit t btain reasnable assurance abut whether the financial statements are free frm material misstatement. An audit invlves perfrming prcedures t btain audit evidence abut the amunts and disclsures in the financial statements. The prcedures selected depend n the auditr's judgment, including the assessment f the risks f material misstatement f the financial statements, whether due t fraud r errr. In making thse risk assessments, the auditr cnsiders internal cntrl relevant t the entity's preparatin and fair presentatin f the financial statements in rder t design audit prcedures that are apprpriate in the circumstances, but nt fr the purpse f expressing an pinin n the effectiveness f the entity's internal cntrl. Accrdingly, we express n such pinin. An audit als includes evaluating the apprpriateness f accunting plicies used and the reasnableness f significant accunting estimates made by management, as well as evaluating the verall presentatin f the financial statements. 1

5 We believe that the audit evidence we have btained is sufficient and apprpriate t prvide a basis fr ur audit pinins. pinins In ur pinin, the financial statements referred t abve present fairly, in all material respects, the respective financial psitin f the gvernmental activities, each majr fund, and the aggregate remaining fund infrmatin f Salmn River Central Schl District as f June 0, 2017 and the respective changes in financial psitin theref fr the year then ended in accrdance with accunting principles generally accepted in the United States f America. ther Matters Required Supplementary Infrmatin Accunting principles generally accepted in the United States f America require that the management's discussin and analysis n pages 4 thrugh 15 and the budgetary cmparisn and the funding prgress f the ther pst emplyment benefits plan, and ERS and TRS pensin plan infrmatin n pages 56 thrugh 62 be presented t supplement the basic financial statements. Such infrmatin, althugh nt a part f the basic financial statements, is required by the Gvernmental Accunting Standards Bard, wh cnsiders it t be an essential part f financial reprting fr placing the basic financial statements in an apprpriate peratinal, ecnmic, r histrical cntext. We have applied certain limited prcedures t the required supplementary infrmatin in accrdance with auditing standards generally accepted in the United States f America, which cnsisted f inquiries f management abut the methds f preparing the infrmatin and cmparing the infrmatin fr cnsistency with management's respnses t ur inquiries, the basic financial statements, and ther knwledge we btained during ur audit f the basic financial statements. We d nt express an pinin r prvide any assurance n the infrmatin because the limited prcedures d nt prvide us with sufficient evidence t express an pinin r prvide any assurance. ther Infrmatin ur audit was cnducted fr the purpse f frming pinins n the financial statements that cllectively cmprise the Salmn River Central Schl District's basic financial statements. The accmpanying infrmatin as cntained in the Reference Manual fr Audits f General Purpse Financial Statements f New Yrk State Schl Districts and the cmbining and individual nnmajr fund financial statements, are presented fr purpses f additinal analysis and are nt a required part f the basic financial statements. The schedule f expenditures f federal awards is presented fr purpses f additinal analysis as required by the audit requirements f Title 2 U.S. Cde f Federal Regulatins (CFR) Part 200, Unifrm Administrative Requirements, Cst Principles, and Audit Requirements fr Federal Awards (Unifrm Guidance), and is als nt a required part f the basic financial statements. The accmpanying infrmatin as cntained in the Reference Manual fr Audits f General Purpse Financial Statements f New Yrk State Schl Districts, the cmbining and individual nnmajr fund financial statements and the schedule f expenditures f federal awards are the respnsibility f management and were derived frm and relate directly t the underlying accunting and ther recrds used t prepare the basic financial statements. The infrmatin has been subjected t the auditing prcedures applied in the audit f the basic financial statements and certain additinal prcedures, including cmparing and recnciling such infrmatin directly t the underlying accunting and ther recrds used t prepare the basic financial statements r t the basic financial statements themselves, and ther additinal prcedures in accrdance with auditing standards generally accepted in the United States f America. In ur pinin, the 2

6 infrmatin is fairly stated in all material respects in relatin t the basic financial statements as a whle. ther Reprting Required by Gvernment Auditing Standards In accrdance with Gvernment Auditing Standards, we have als issued ur reprt dated September 26, 2017 n ur cnsideratin f Salmn River Central Schl District's internal cntrl ver financial reprting and n ur tests f its cmpliance with certain prvisins f laws, regulatins, cntracts, and grant agreements and ther matters. The purpse f that reprt is t describe the scpe f ur testing f internal cntrl ver financial reprting and cmpliance and the results f that testing, and nt t prvide an pinin n the internal cntrl ver financial reprting r n cmpliance. That reprt is an integral part f an audit perfrmed in accrdance with Gvernment Auditing Standards in cnsidering Salmn River Central Schl District's internal cntrl ver financial reprting and cmpliance. SeyTaJh & Seyfarth CP A, Malne, NY P.C. September 26, 2017

7 Management Discussin and Analysis Financial Statements Fr the Year Ended June 0, 2017

8 Management's Discussin and Analysis Fr the Fiscal Year Ended June 0, 2017 The fllwing is a discussin and analysis f the Schl District's financial perfrmance fr the fiscal year ended June 0, This sectin is a summary f the Schl District's financial activities based n currently knwn facts, decisins, r cnditins. It is als based n bth the gvernment-wide and fund-based financial statements. The results f the current year are discussed in cmparisn with prir year, with an emphasis placed n the current year. This sectin is nly an intrductin and shuld be read in cnjunctin with the Schl District's financial statements, which immediately fllw this sectin. Schl District verview and Highlights The Salmn River Central Schl District is lcated in nrthern New Yrk State n the Canadian Brder. Centralized in 195, the District prvides a public educatin t apprximately 1,600 students frm the twns f Bangr, Bmbay, Frt Cvingtn and Westville in Franklin Cunty, the twn f Brasher in St. Lawrence Cunty and the Saint Regis Mhawk Indian Reservatin. It encmpasses an area f apprximately 128 square miles with an estimated ppulatin f 6,800. The District is a mixture f residential and agricultural areas, with many f its residents cmmuting t Malne, Massena and Ptsdam fr emplyment. The District perates tw (2) facilities: the Campus Schl (pre k-12 th grade) lcated in the twn f Frt Cvingtn and the St. Regis Mhawk Schl (pre k - 5 th grades) lcated in the twn f Bmbay. Apprximately 59% f the Schl District ppulatin is cmprised f students frm families living n the St. Regis Mhawk Reservatin and 66% f the student bdy is f Native American heritage. Salmn River is als unique in that educatin is prvided t bth Canadian and New Yrk children frm the Reservatin via cntracts with the State f New Yrk t prvide transprtatin and educatin fr these students. The St. Regis Mhawk Schl (SRMS) is wned by the State f New Yrk, but perated by the District. As per the reservatin schl cntract with the State, all expenses generated by the St. Regis Mhawk Schl are funded thrugh State frmula aid with the balance due billed t and paid fr with special State purpse mnies. This cntract expires n June 0, The District currently btains a revenue anticipatin nte (RAN) t cver the expenditures fr the SRMS until the New Yrk State sends reimbursement. The amunt currently due is $4,42,784. Native Americans have a chice f Schl Districts they can attend when the reservatin brders mre than ne district. New Yrk State pays tuitin under an apprved frmula fr these students t attend Salmn River Central Schls since they are nt residents f the Schl District. The tuitin cntract expires n June 0, The amunt currently due is $4,98,75. New Yrk State als pays 100% f the transprtatin csts fr Native American students that chse t attend the Campus Schl. These csts are reimbursed based n the rati f bus runs used fr the Reservatin area cmpared t the ttal number f bus runs. The rati is apprximately 65.85% fr the year. The transprtatin cntract is an annual cntract that renews autmatically. The amunt currently due the District is $2,051,69. 4

9 The funds generated frm these cntracts, in cnjunctin with State Aid, the State's Schl Tax Relief (STAR) prgram and ur lcal schl tax cntributins prvide the basis fr the Schl District's financial structure. Access t State and Federal grants, alng with Native American Aid, has assisted the District in maintaining a very reasnable five (5) year average tax rate per thusand dllars f $11.64 n full prperty value. The State has calculated ur cmbined wealth measure t be T put this number int perspective, 1.0 equals the average wealth fr a District. This number cntinues t place us as the abslute prest schl district in the State as measured by ur incme and prperty wealth. Based n the State Aid Factrs data, the State average prperty value and incme behind each pupil was $567,500 and $201,000, respectfully. ur crrespnding figures were $95,754 and $7,46. As these figures clearly express, we are a District burdened with substantial pverty and a lack f wealth. The Schl District emplys apprximately 50 full and part time prfessinal and supprt staff. These emplyees are rganized int three () cllective bargaining units (teaching staff, supprt staff and administratin). The teaching staffs' cntract agreement was renewed this year and will expired n June 0, The administratrs' cntract negtiatins are set t begin during the summer f 2017 as the cntract expired n June 0, The supprt staff cntract is currently being negtiated as the cntract expired until June 0, Student enrllment held relatively steady this schl year at 1,50. The reasn fr this steady enrllment is due in part t the cnstructin f a new casin, htels and ther businesses n the St. Regis Mhawk Reservatin. Als, a revitalizatin f agriculture in the area is increasing ur ppulatin in the lcal twnships f the district. Enrllment prjectins based n data frm an FEH BCES study cnfirm cntinued steady enrllment fr several years t cme. The vters apprved a $6.5M capital prject in ctber 201. The prject began in April The prject will finish the renvatins that were started in the 2009 capital prject. The wrk will include replacement f 147,000 square ft f rfs, renvatin t the pen classrms in the elementary and an additin at the bus garage. The prject will als allw the District t cnnect t the Twn f Frt Cvingtn's water system and n lnger prduce and treat ur wn water. Funding fr the prject will include apprximately $18,720,000 in bnds and $16,70,000 in Native American Building Aid. The prject is expected t be cmpleted by ctber 1, verview f Financial Statements This annual reprt cnsists f three parts: MD&A (this sectin), the basic financial statements, and required supplementary infrmatin. The basic financial statements include tw kinds f statements that present different views f the Schl District: The first tw statements are district-wide financial statements that prvide bth shrt-term and lng-term infrmatin abut the Schl District's verall financial status. The remaining statements are fund financial statements that fcus n individual parts f the Schl District, reprting the Schl District's peratins in mre detail than the district-wide statements. The fund financial statements cncentrate n the Schl District's mst significant funds with all ther nn-majr funds listed in ttal in ne clumn. The gvernmental funds statements tell hw basic services, such as regular and special educatin, were financed in the shrt term as well as what remains fr future spending. 5

10 Fiduciary funds statements prvide infrmatin abut the financial relatinships in which the Schl District acts slely as a trustee r agent fr the benefit f thers. The financial statements als include ntes that explain sme f the infrmatin in the statements and prvide mre detailed data. The statements are fllwed by a sectin f required supplementary infrmatin that further explains and supprts the financial statements with a cmparisn f the Schl District's budget fr the year. The fllwing summarizes the majr features f the Schl District's financial statements, including the prtin f the Schl District's activities they cver and the types f infrmatin they cntain. The remainder f this verview sectin f MD&A highlights the structure and cntents f each f the statements. Scpe Required Financial Statements Majr Features f the District-Wide and Fund Financial Statements District-Wide Fund Financial Statements Gvernmental Funds Fiduciary Funds Entire District (except The activities f the Instances in which fiduciary funds) Schl District that the Schl District are nt fiduciary, such as administers resurces instructin, special educatin n behalf f smene else, and building maintenance such as schlarship prgrams and student activities' mnies 1. Statement f Net Psitin 2. Statement f Activities. Balance Sheet 4. Statement f Revenues, Expenditures, and Changes in Fund Balance 5. Statement f Fiduciary Net Psitin 6. Statement f Changes in Fiduciary Net Psitin Accunting Basis and Measurement Fcus Accrual accunting and ecnmic resurces fcus Mdified accrual accunting and current financial fcus Accrual accunting and ecnmic resurces fcus Type f Asset/Deferred utflws f resurces/liabilities/d eferred inflws f resurces infrmatin All assets, deferred utflws f resurces, liabilities, and deferred inflws f resurces bth financial and capital, shrtterm and lng-term Generally, assets and deferred utflws f resurces expected t be used up and liabilities and deferred inflws f resurces that cme due r available during the year r sn thereafter; n capital assets r lng-term liabilities included All assets, deferred utflws f resurces (if any), liabilities, and deferred inflws f resurces (if any) bth shrt-term and lngterm; funds d nt currently cntain capital assets, althugh they can Type f Inflw/ utflw Infrmatin All revenues and expenses during the year, regardless f when cash is received r paid Revenues fr which cash is received during r sn after the end f the year; expenditures when gds r services have been received and the related liability is due and payable Additins and deductins during the year, regardless f when cash is received r paid 6

11 District-Wide Statements: The district-wide statements reprt infrmatin abut the Schl District as a whle using accunting methds similar t thse used by private-sectr cmpanies. The statement f net psitin includes all f the Schl District's assets, deferred utflws f resurces, liabilities and deferred inflws f resurces. All f the current year's revenues and expenses are accunted fr in the statement f activities, regardless f when cash is received r paid. The tw district-wide statements reprt the Schl District's net psitin and hw it has changed. Net psitin the difference between the Schl District's assets, deferred utflws f resurces, liabilities and deferred inflws f resurces is ne way t measure the Schl District's financial health r psitin. ver time, increases r decreases in the Schl District's net psitin are an indicatr f whether its financial psitin is imprving r deterirating, respectively. T assess the Schl District's verall health, yu need t cnsider additinal nn-financial factrs such as changes in the Schl District's prperty tax base and the cnditin f schl buildings and ther facilities. In the district-wide financial statements, the Schl District's activities are shwn as Gvernmental activities. Mst f the Schl District's basic services are included here, such as regular and special educatin, transprtatin, and administratin. Prperty taxes and State frmula aid finance mst f these activities. Fund Financial Statements: The fund financial statements prvide mre detailed infrmatin abut the Schl District's funds, fcusing n its mst significant r "majr" funds nt the Schl District as a whle. Funds are accunting devices the Schl District uses t keep track f specific surces f funding and spending n particular prgrams: Sme funds are required by State law and by bnd cvenants. The Schl District establishes ther funds t cntrl and manage mney fr particular purpses (such as repaying its lng-term debts) r t shw that it is prperly using certain revenues (such as Federal grants). The District has tw kinds f funds: Gvernmental Funds: Mst f the Schl District's basic services are included in gvernmental funds, which generally fcus n (1) hw cash and ther financial assets can readily be cnverted t cash flw in and ut and (2) the balances left at year end that are available fr spending. Cnsequently, the gvernmental funds statements prvide a detailed shrt-term view that helps yu determine whether there are mre r fewer financial resurces that can be spent in the near future t finance Schl District prgrams. Because this infrmatin des nt encmpass the additinal lng-term fcus f the district-wide statements, additinal infrmatin at the bttm f the gvernmental funds statements explains the relatinship and/r differences between them. Fiduciary Funds: The Schl District is the trustee, r fiduciary, fr assets that belng t thers, such as the schlarship fund and the student activities funds. The Schl District is respnsible fr ensuring that the assets reprted in these funds are used nly fr their intended purpses and by thse t whm the assets belng. The Schl District excludes these activities frm the district-wide financial statements because it cannt use these assets t finance its peratins. 7

12 Financial Analysis f Schl District as a Whle Net assets may serve ver time as a useful indicatr f a gvernment's financial psitin. In the case f the District, liabilities exceeded assets by $12 millin at the clse f the mst recent fiscal year. The net assets reflect mainly reserved and unreserved fund balance. The Schl District's net assets als reflect its investment in capital assets less any related debt used t acquire thse assets that is still utstanding. Althugh the Schl District's investment in its capital assets is reprted net f related debt, it shuld be nted that the resurces needed t repay this debt must be prvided frm ther surces, since the capital assets themselves cannt be used t liquidate these liabilities. The debt is paid thrugh the use f state building aid, Native American aid and EXCEL aid. The remaining balance f unrestricted net assets may be used t meet the Schl District's nging activities. The current assets are shifting frm cash t capital assets. This reflects the payments made fr the capital prject in prgress. The fllwing schedule summarizes the Schl District's net assets. The cmplete Statement f Net Assets can be fund in the Schl District's basic financial statements. Cndensed Statement f Net Psitin: ASSETS: Current and ther assets Capital assets, net Ttal Assets: DEFERRED UTFLWS F RESURCES Ttal Assets and Deferred utflws f Resurces $2,649,297 $41,46,09 68,404,845 85, ,054, ,97,867,91,46 8,951, ,578 15,889,4 LIABILITIES: Current liabilities 22,895,557 47,692,470 Lng-term debt utstanding 86,616,25 94,799,610 Ttal Liabilities: 109,511, ,492,080 DEFERRED INFLWS F RESURCES 2,979, ,781 Ttal Liabilities and Deferred Inflws f Resurces 112,491,481 14,07,861 NET PSITIN: Invested in capital assets, net f related debt Restricted Unrestricted Ttal Net Psitin 4,44, ,87 ( ) $( ) 6,819,09 807,254 ( ) $ ( ) In general, current assets are thse assets that are available t satisfy current bligatins and current liabilities are thse liabilities that will be paid within ne year. Current assets cnsist primarily f cash equivalents f $27.8 millin, and state and federal aid receivable f $12.5 millin. The majr differences in the assets are the cash increase f $2.5 millin. 8

13 Assets Millins SI \z Current Assets Capital Assets The change in net liabilities is due largely t the implementatin f new GASB 45 rules requiring Districts t shw lng-term emplyment benefits as a liability. This is the ninth year we were required t recrd GASB 45. This represents mainly the lng term health insurance benefit fr ur retired and active emplyees. The impact t the statements this year was ver $10 millin fr GASB 45 and caused the unrestricted net assets t becme negative as there are nt enugh assets available t cver the $77 millin in ther pst emplyment benefits liabilities. This is nt uncmmn given that the liability is nt required t be fully funded. Liabilites and Net Assets Millins Current Liabilities Lng Term Liabilities Net Assets Restricted Net Assets Unrestricted 9

14 Liabilities cnsist primarily f lng-term debt f $15 millin, shrt-term payables f $1.9 millin, shrt-term bnds payable f $1 millin, and pst-emplyment benefits f $77 millin. The Statement f Activities shws the cst f prgram services net f charges fr services and grants ffsetting thse services. General revenues, including tax revenue, investment earnings, and unrestricted state and federal aid, must supprt the net cst f the Schl District's prgrams. The fllwing schedule summarizes the Schl District's activities. The cmplete Statement f Activities can be fund in the Schl District's basic financial statements Revenues Prperty and ther tax items $2,004,985 $2,048,992 Use f mney and prperty,555 11,965 Sale f prperty and cmpensatin fr lss (5,18) (15,689) Miscellaneus 20,81 455,12 State surces 26,50,11 45,261,0 Federal surces,087,971 2,98,577 Ttal Revenues $1,762,020 $50,700,010 Expenses General supprt $7,795,802 $7,859,998 Instructin 25,529,40 27,669,879 Pupil transprtatin,78,69 4,591,157 Debt service 868,465 1,090,076 Cmmunity service 47,981 0,978 Capital utlay - Mhawk Schl 0 0 Schl lunch prgram - cst f fd sales 79,17 52,546 Ttal Expenses $7,999,427 $41,594,64 Change in Net Assets $(6,27,407) $ 9,105,76 The Schl District is heavily dependent n State, Federal and Native American aid fr its funding. Tgether they accunt fr 95% f ur ttal revenue dllar. It shuld be nted that the district's tax levy cntributes nly 4% f ur ttal revenues r $2,048,992 with the STAR prgram. ur District has always made a strng effrt t keep taxes at a reasnable level. In the year the tax levy will increase 2%. The District remained within the 2% tax cap and residents will be eligible fr the tax freeze incentives issued by NYS. 10

15 Surces f Revenues fr ur District's expenses are predminantly related t instructin, which represents 66% f ur ttal csts. Als, like mst districts, ur rising emplyee benefits fees, increasing energy csts and under-funded schl lunch prgram cntinue t be financial challenges t ur budget. The District currently pays $24,096 fr a family health insurance plan and this is expected t cntinue t rise 8-10% per year. Within 5 years, the plan will cst ver $0,000 per family plan if there is n change in riders r emplyee cntributins. Currently all emplyees are cntributing t their health insurance plans. This will help reduce the verall cst f emplyee health insurance but mre is needed t help with the burden health insurance is placing n an already tight budget. Cmparisn f Expenditures and instructin General Supprt Transprtatin Debt Service ther 11

16 T manage ur future energy csts, the District included a ge thermal heating/cling system in ur building prject. This system has allwed the District t add 100,000 square feet t the building withut increasing the gallns f fuel used. ur transprtatin department has switched t a 5 year bus replacement plan t ensure that the District has a safe fleet f buses and utilizes the 90% transprtatin aid that is received. Each year between 4 buses will be replaced. Bnds are issued fr the replacement f the buses and aid flws n a similar schedule t the debt payments. The District has a lcked-in bid price fr fuel il and purchases electricity thrugh cperative purchasing, but prices fr these cmmdities fluctuate every year. The price f fuel is expected t remain steady next year. The financial statements als include the activity f the Special Aid funds, which are cmprised f a number f State and Federal grant prgrams and the schl lunch fund, als knwn as the cafeteria fund. General Fund Budget verview It shuld be explained that the District's general fund is cmprised f tw (2) individual budgets. The first is apprved by the vters in May and ttals $0,851,524. It cvers the peratin f the main campus schl in prek-12 th grade. The secnd budget is fr the peratin f the St. Regis Mhawk Elementary Schl. This is a prek-5 th grade building educating nly Native American children living n the St. Regis Mhawk Reservatin. This budget is negtiated annually with the State f New Yrk and ttaled $10,857,401. The revenues t supprt this building/prgram are ttally funded with state aid. Unfrtunately, the frmula aid that is attributable t the attendance f students at the St. Regis Mhawk Schl is very difficult t cmpute in a timely manner, causing lcal cash flw prblems and making it difficult t accurately reprt fund balance. Each year we take ut a RAN t cver ur spending in anticipatin f the Native American aid fr the Mhawk Schl. This administratin is challenged in its ability t accurately predict state aid. This is directly assciated with estimating state tuitin payments n eligible Native American students educated at the campus schl. The District and State representatives are scheduled t review the tuitin frmula and pertinent data in an attempt t better identify a just and realistic amunt fr this service. As ur percentage f Native American students increase, s will ur difficulty t predict revenues frm this surce. We must als remain vigilant in ur effrt t make sure educatinal funding fr Salmn River is bth adequate and equitable fr ur unique District. As the District cmpleted the year, its gvernmental funds reprted a General fund balance f $9,455,426. This amunt is abve the 4% limit specified by Real Prperty Tax Law. Hwever, as ur salary and perating expenses increase alng with the unpredictability f State Aid, the District feels it is necessary t cntinue t maintain strng reserves. The District has a lng range plan t use limited amunts frm ur reserves in the cming years t ffset the lss f the Fundatin Aid increases prmised by the State. 12

17 Analysis f the Schl District's ther Funds Capital Prjects Fund The vters apprved $6.5 millin in capital wrk in ctber 201. This wrk began in the spring f The wrk will finish the renvatins nt dne in the 2009 prject. This will include the bus garage, water treatment upgrades, renvatins t the elementary, middle schl and high schl. There will als be additinal ge-thermal wells installed and wrk dne n the baseball and lacrsse field. The wrk is expected t be cmpleted by ctber 1, Schl Lunch (Cafeteria) Fund The schl lunch prgram cntinues t be supprted by funds frm the general fund. Revenues generated frm the Natinal Schl Lunch Prgram and the District's lunch prgram is stable with healthy student participatin, but des nt meet expenses. It shuld be nted that labr, emplyees' retirement and health insurance csts cntinue t increase each year. The lack f financial resurces in the cmmunity and ur District's cmmitment t preparing quality fd has limited this prgram's ability t be self-sustaining, but we are making several changes t bring the prgram clse t self-sufficiency. The cafeteria decreased its deficit frm $164,629 in the previus year t $157,487 this schl year. The District has remained in the Universal Free Breakfast Prgram t help prmte mre children t eat breakfast in the mrning when it is ffered free f charge. Special Aid Funds The special aid fund prvides the district with a variety f instructinal prgrams supprted by State and Federal grants. Title I and Title VII prvides significant revenue fr the district. These grants allw us t create prgrams that cmplement the district's educatinal bjectives while allwing it t be sensitive t ur culturally diverse student ppulatin. The revenues fr ur Native American transprtatin cntract are included in this fund as well. This cntract with the State prvides revenue t the District t cver the cst f transprting Native American students t and frm the reservatin. The amunt f funds prvided is meant t cver all expenses related t this service. The special aid funds will cntinue t decline. When this happens, the general fund must pick up the differences because these prgrams cannt be cut. With the N Child Left Behind initiative, remediatin prgrams are mre imprtant than ever. Federal and State Aid budgets are persnnel driven like all f ur budgets. With the recrd increases in fringe benefits, decreases will cmpund the general fund impact. Any decrease in grants equates t a much larger lss when cntractual increases are figured in. Please nte that the grant fiscal year generally runs frm September t August, while the schl's fiscal year runs frm July t June. 1

18 Capital Assets By the end f June 2017, the District had invested apprximately $85,501,828 in a brad range f capital assets including schl buildings, the bus garage, schl buses, cmputers, audivisual and classrm equipment. The District purchased 4 buses in the schl year. Fr this cming year, we will be purchasing anther 4 new buses based n vter apprval in May We have a 5 year bus replacement plan t bring the District fleet mre up-t-date. Lng-Term Debt The District's utstanding debt as f June 0, 2017 was $48.7 millin. This represents a series f brrwings fr the $50 millin capital prject that started in 2009 and the $6.5 millin prject that started in In 2009 and 2011, the District was able t secure Quality Zne Academy Bnds (QZABs) that ffered the District refundable interest ver the life f the bnd. In essence, the District will pay apprximately 1.25% interest n these bnds. In 2011, the District als secured a Quality Schl Cnstructin Bnd (QSCB) that ffered the District with anther lw interest bnd with a rate f.8%. These lw interest bnds have helped minimize any lcal tax share fr the capital prject. Factrs Bearing n the District's Future At the time these financial statements were prepared and audited, the District was aware f the fllwing circumstances that culd significantly affect its financial health in the future: As mentined abve, this District is very heavily dependent n State Aid. During state budget preparatins fr next year, mst frmula aids were frzen, including Fundatin Aid. With the State cntinually decreasing aid and the prperty tax cap in place the District will have an extremely difficult time t maintain staffing and prgramming at the levels needed t educate ur children prperly. The District is currently supprting ur prgrams by cmmitting apprximately % f ur fund balance t supprt ur current level f staffing. In previus years, we have reduced ur staff by nt replacing retired staff and cutting teaching psitins. Prviding quality educatin with a shrinking staff and grwing student ppulatin is psing challenges t ur ability t prvide a sund basic educatin t ur students living in pverty. Their graduatin rates are drastically lwer than the State Average. The vters apprved a $6.5 millin capital prject in ctber 201. This prject has been n-ging during the schl year and cnstructin is expected t run thrugh ctber The prject has been financed with Native American Building aid alng with bnd anticipatin ntes until lng-term financing is needed in

19 Cntacting the Schl District's Financial Management This financial reprt is designed t prvide the Schl District's citizens, taxpayers, custmers, investrs, and creditrs with a general verview f the Schl District's finances and t demnstrate the Schl District's accuntability fr the mney it receives. If yu have questins abut this reprt r need additinal financial infrmatin, cntact: Natascha L. Jck, Schl Business Executive Salmn River Central Schl Frt Cvingtn, New Yrk 1297 (518) njck@srk12.rg 15

20 ASSETS Cash Salmn River Central Schl District Statement f Net Psitin June 0,2017 Unrestricted $ 26,974,416 Restricted 807,254 Receivables Taxes ther 1,151,747 Due frm fiduciary funds State and Federal aid 12,454,477 Inventries 48,145 verpayments and cllectins in advance Prepaid expenditures Capital assets, net 85,501,828 Net pensin asset-prprtinate share -_ Ttal Assets 126,97,867 DEFERRED UTFLWS F RESURCES Deferred gain n advance refunding f debt 4,160 Pensins 8,908,07 Ttal Deferred utflws f Resurces 8,951,467 LIABILITIES Payables Accunts payable 2,515,87 Accrued expenses 40,290 Due t ther gvernments,820 Accrued interest 92,652 Unearned revenues Ntes payable Bnd anticipatin 0,965,000 Revenue anticipatin 9,000,000 Lng-term liabilities Due and payable within ne year Bnds payable 2,986,495 Cmpensated absences payable 158,714 Due t Teachers' Retirement System 1,479,807 Due t Emplyees' Retirement System 149,855 Due and payable after ne year Bnds payable 14,758,196 Cmpensated absences payable 7 8,11 ther pst emplyment benefits 77,04,717 Net pensin liability-prprtinate share 2,268,584 Ttal Liabilities 142,492,080 DEFERRED INFLWS F RESURCES Deferred premium n debt issuance 16,258 Pensins 799,52 Ttal Deferred Inflws f Resurces 815,781 NET PSITIN Net investment in capital assets 6,819,09 Restricted 807,254 Unrestricted (deficit) (45,044,820) Ttal Net Psitin $ (7,418,527) See ntes t financial statements.

21 Statement f Activities and Changes in Net Psitin Fr the Year Ended June 0, 2017 FUNCTINS/PRGRAMS General supprt Instructin Pupil transprtatin Cmmunity service Debt service - interest Capital utlay - Mhawk Schl ther expenditures Schl lunch prgram Ttal Functins and Prgrams GENERAL REVENUES Real prperly taxes ther tax items Use f mney and prperty Sale f prperty and cmpensatin fr lss Miscellaneus State surces Federal surces Medicaid reimbursement Ttal General Revenues Change in Net Psitin Net Psitin-Beginning f year Ttal Net Psitin-End f year Expenses $ 7,977,262 7,510,264 4,685,58 0,978 1,090,076 Prgram Revenues Charges fr Services $ 117,264 9,840,85 94, , ,51 51,88,285 10,172,588 $ perating Grants 71,06 71,06 Net Revenue and Changes in Net Psitin $ 7,859,998 27,669,879 4,591,157 0,978 1,090,076 52,546 41,594,64 1,601, ,796 11,965 (15,689) 455,12 45,261,0 2,894,814 4,76 50,700,010 9,105,76 (16,52,90) $ (7,418,527) See ntes t financial statements. 17

22 Balance Sheet - Gvernmental Funds June 0, 2017 Ttal Special Recnstructin Gvernmental General Aid Capital Prject Nn-Majr Funds ASSETS Cash Unrestricted $ 7,299,498 $ 5,59 $ 19,669,05 $ 20 $ 26,974,416 Restricted 807, ,254 Receivables Taxes ther 1,151, ,151,747 Due frm ther funds 2,77, ,77,972 State and Federal aid 10,119,70 2,4, ,454,477 Inventries ,145 48,145 verpayments and cllectins in advance Deferred expenditures Ttal Assets $ 21,756,201 $ 2,40,40 $ 19,669,05 $ 48,165 $ 4,814,011 LIABILITIES Payables Accunts payable $ 1,265,07 $ 812 $ 1,249,988 $ $ 2,515,87 Accrued liabilities 8, ,766 40,290 Accrued interest 64, ,478 Due t ther funds - 2,4,121 1,010 42,841 2,77,972 Due t ther gvernments, ,820 Due t Teachers' Retirement System 1,479, ,479,807 Due t Emplyees' Retirement System 149, ,855 verpayments and cllectins in advance Ntes payable Bnd anticipatin - - 0,965,000-0,965,000 Revenue anticipatin 9,000, ,000,000 Ttal Liabilities 12,00,775 2,4,9 2,215,998 45,5 46,897,059 FUND BALANCES Nnspendable ,145 48,145 Restricted Wrkers' cmpensatin reserve 45, ,78 Reserve fr emplyee benefits and accrued liabilities 761, ,516 Assigned Assigned apprpriated fund balance 67, , ,418 Assigned unapprpriated fund balance General supprt 1, ,11 Instructin - 5, ,407 Unassigned fund balance 7,997,45 - (12,546,69) (48,145) (4,597,40) Ttal Fund Balances 9,455,426 5,407 (12,546,69) 2,812 (,08,048) Ttal Liabilities and Fund Balances $ 21,756,201 $ 2,40.40 $ 19,669,05 $ 48,165 $ 4,814,011 See ntes t financial statements. 18

23 Statement f Revenues, Expenditures and Changes in Fund Balance - Gvernmental Funds Fr the Year Ended June 0, 2017 Ttal Special Recnstructin Gvernmental General Aid Capital Prject Nn-Majr Funds REVENUES Real prperty taxes $ 1,601,196 $ $ $ $ 1,601,196 ther tax items 447, ,796 Charges fr services 5,005, ,005,41 Use f mney and prperty 144, ,478 Sale f prperty and cmpensatin fr lss 71, ,88 Miscellaneus 417,69 2, ,144 Interfund revenues 1, ,260 State surces 29,961,17 2,486,182 17,64,021 26,96 50,1 17,276 Medicaid reimbursement 4, ,76 Federal surces 0,10 1,756,411-85,00 2,894,814 Surplus fd ,06 71,06 Sales - schl lunch ,51 120,51 Ttal Revenues 7,997,405 4,266,68 17,64,021 1,054,7 60,961,527 EXPENDITURES General supprt 4,066, ,682 4,420,15 Indirect cst - 1, ,260 Instructin 17,501,707 2,276, ,778,466 Pupil transprtatin 660,285 2,025, ,008,10,179 Cmmunity service 19, ,677 Emplyee benefits 10,40, ,702 10,767,762 Debt service Principal,276, ,276,282 Interest 1,064, ,064,464 - Cst f sales , ,122 Capital utlay ,09,011-18,09,011 Ttal Expenditures 6,992,108 4,0,905 18,09,011 1,706,514 61,095,58 Excess (Deficiency) f Revenues ver Expenditures 1,005,297 (7,57) (449,990) (651,781) (14,011) THER FINANCING SURCES AND USES perating transfers in 2,992 27, ,98 257,141 perating transfers ut (2,149) (8,000) - (15,992) (257,141) Prceeds frm debt , ,000 BAN redeemed frm apprpriatins - - 5,000-5,000 Ttal ther Surces and Uses (209,157) 19,751 5, , ,000 Excess (Deficiency) f Revenues and ther Surces ver Expenditures and ther Uses 796,140 (17,786) (414,990) (2,75) 60,989 Fund Balances - Beginning f year 8,659,286 2,19 (12,11,70) 5,187 (,444,07) Fund Balances - End f year $ 9,455,426 $ 5,407 $ (12,546,69) $ 2,812 $ (,08,048) See ntes t financial statements. 19

24 Statement f Fiduciary Net Psitin - Fiduciary Funds June 0, 2017 Private Purpse Trusts Agency ASSETS Cash Due frm ther gvernments Ttal Assets $ 111,26 $ 10,57 $ 111,26 $ 10,57 LIABILITIES Due t gvernmental funds Extraclassrm activity balances ther liabilities Ttal Liabilities $ $ - 97,768-5,805 - $ 10,57 NET PSITIN Restricted fr ther purpses $ 111,26 Statement f Changes in Fiduciary Net Psitin - Fiduciary Funds Fr the Year Ended June 0, 2017 Private Purpse Trusts ADDITINS Investment earnings Gifts and cntributins DEDUCTINS Schlarships and awards Change in Net Psitin Net Psitin - Beginning f year Net Psitin - End f year 16 1,00 1,925 (609) 111,95 $ 111,26 See ntes t financial statements.

25 Recnciliatin f Gvernmental Funds Balance Sheet t Statement f Net Psitin June 0, 2017 Ttal Lng-Term Reclassificatins Statement f Gvernmental Assets, and Net Psitin Funds Liabilities Eliminatins Ttals ASSETS Cash $ 27,781,670 $ $ 27,781,670 Taxes receivable ther receivables 1,151, ,151,747 Due frm ther funds 2,77,972 - (2,77,972) - State and Federal aid 12,454, ,454,477 Inventries 48, ,145 verpayments and cllectins in advance - - Prepaid expenditures Capital assets, net - 85,501,828-85,501,828 Net pensin asset-prprtinate share Ttal Assets 4,814,011 85,501,828 (2,77,972) 126,97,867 DEFERRED UTFLWS F RESURCES Deferred gain n advance refunding f debt - 4,160-4,160 Pensins - 8,908,07-8,908,07 Ttal Deferrred utflws f Resurces - 8,951,467-8,951,467 Ttal Assets and Deferred utflws f Resurces $ 4,814,011 $94,45,295 $ (2,77,972) $ 15,889,4 LIABILITIES Accunts payable 2,515, ,515,87 Accrued liabilities 40, ,290 Due t ther funds 2,77,972 - (2,77,972) - Due t ther gvernments, ,820 Accrued interest 64,478 28,174-92,652 Due t Teachers' Retirement System 1,479, ,479,807 Due t Emplyees' Retirement System 149, ,855 verpayments and cllectins in advance Bnd anticipatin nte 0,965, ,965,000 Revenue anticipatin nte 9,000, ,000,000 Cmpensated absences payable - 896, ,827 Bnds payable - 17,744,691-17,744,691 ther pst emplyment benefits - 77,04,717-77,04,717 Net pensin liability-prprtinate share - 2,268,584-2,268,584 Ttal Liabilities 46,897,059 97,972,99 (2,77,972) 142,492,080 DEFERRED INFLWS F RESURCES Deferred premium n debt issuance - 16,258-16,258 Pensins - 799,52-799,52 Ttal Deferred Inflws f Resurces - 815, ,781 FUND EQUITY/NET PSITIN (,08,048) (4,5,479) (7,418,527) Ttal Liabilities, Deferred Inflws f Resurces and Fund Equity/Net Psitin $ 4,814,011 $ 94,45,295 $ (2,77,972) $ 15,889,4 See ntes t financial statements. 21

26 Recnciliatin f Gvernmental Funds Balance Sheet t the Statement f Net Psitin June 0, 2017 Fund Balances - ttal gvernmental funds Amunts reprted fr gvernmental activities in the Statement f Net Psitin are different because: $ (,08,048) Capital assets used in gvernmental activities are nt financial resurces and therefre are nt reprted in the gvernmental funds Gvernmental capital assets Less: accumulated depreciatin 104,59,424 (18,857,596) 85,501,828 Interest payable used in gvernmental activities is nt payable frm current resurces and therefre nt reprted in the gvernmental funds (28,174) Lng-term liabilities are nt due and payable in the current year and therefre are nt reprted in the gvernmental funds Lng-term debt Cmpensated absences (17,744,691) (896,827) (18,641,518) ther pst emplyment benefits are nt due and payable in the current perid and therefre are nt reprted in the funds (77,04,717) Prprtinate share f net pensin asset/liability are nt financial resurces and nt due and payable in the current year and therefre are nt reprted in the gvernmental funds Net pensin asset Net pensin liability (2,268,584) (2,268,584) Deferred utflws and inflws f resurces related t pensins are applicable t future perids and, therefre, are nt reprted in the gvernmental funds Deferred utflws related t pensins Deferred inflws related t pensins 8,908,07 (799,52) 8,108,784 Deferred utflws and inflws f resurces related t debt are applicable t future perids and, therefre, are nt reprted in the gvernmental funds Deferred gain n advance refunding f debt Deferred premiums n debt issuance 4,160 (16,258) 26,902 Net Psitin f Gvernmental Activities $ (7,418,527) See ntes t financial statements.

27 Recnciliatin f Gvernmental Funds Revenues, Expenditures, and Changes in Fund Equity t Statement f Activities Fr the Year Ended June 0, 2017 Ttal Lng-Term Reclassificatins Statement f Gvernmental Assets, and Activities Funds Liabilities Eliminatins Ttals REVENUES Real prperty taxes $ 1,601,196 $ $ $ 1,601,196 ther tax items 447, ,796 Charges fr services 5,005, ,005,41 Use f mney and prperty 144, ,478 Sale f prperty and cmpensatin fr lss 72,88 (16,606) - 56,277 Miscellaneus 441, ,144 Interfund revenues 1,260 - (1,260) - State surces 50,117, ,117,276 Medicaid reimbursement 4, ,76 Federal surces 2,894, ,894,814 Surplus fd 71, ,06 Sales - schl lunch and stre 120, ,51 Ttal Revenues 60,961,527 (16,606) (1,260) 60,94,661 EXPENDITURES General supprt 4,420,15 1,265,486 2,291,461 7,977,262 Indirect cst 1,260 - (1,260) - Instructin 19,778,466 2,174 17,729,624 7,510,264 Pupil transprtatin,10,179 (275,685) 1,81,089 4,685,58 Cmmunity service 19,677-11,01 0,978 Emplyee benefits 10,767,762 11,095,71 (21,86,475) - Debt service 4,40,746 (,250,670) - 1,090,076 Unallcated depreciatin Cst f sales 544, ,122 ther expenditures Capital utlay 18,09,011 (18,09,011) - - Ttal Expenditures 61,095,58 (9,255,99) (1,260) 51,88,285 Excess (Deficiency) f Revenues ver Expenditures (14,011) 9,29,87-9,105,76 THER SURCES AND USES Prceeds frm debt 460,000 (460,000) - - BAN redeemed frm apprpriatins 5,000 (5,000) - - perating transfers in 257,141 - (257,141) - perating transfers ut (257,141) - 257,141 - Ttal ther Surces and Uses 495,000 (495,000) - - Net Change fr the Year $ 60,989 $ 8,744,87 $ $ 9,105,76 See ntes t financial statements. 2

28 Recnciliatin f Gvernmental Funds Statement f Revenues, Expenditures, and Changes in Fund Balances t Statement f Activities Fr the Year Ended June 0, 2017 Net Change in Fund Balances - ttal gvernmental funds $ 60,989 Amunts reprted fr gvernmental activities in the Statement f Activities are different because: Revenues in the Statement f Activities that d nt prvide current resurces are nt reprted as revenues in the funds Dispsal f capital assets (16,606) Gvernmental funds reprt capital utlays as expenditures. Hwever, in the Statement f Activities, the cst f thse assets is depreciated ver their estimated useful lives: Expenditures fr capital assets Less: current year depreciatin Bnd prceeds prvide current financial resurces t gvernmental funds, but issuing debt increases lng-term liabilities in the Statement f Net Psitin. Repayment f bnd principal is an expenditure in the gvernmental funds, but the repayment reduces lng-term liabilities in the Statement f Net Psitin. ther csts related t debt issuance and retirement are expenditures in the gvernmental funds, but are deferred and amrtized n the Statement f Net Psitin Bnd premium amrtizatin Bnd prceeds Deferred refunding interest Repayment f bnds 18,801,007 (1,687,418) 17,11,589 9,658 (460,000) (7,88),241,282 2,75,057 Interest expense reprted in the Statement f Activities des nt require the use f current financial resurces and is therefre nt reprted as an expenditure in gvernmental funds 2,614 Cmpensated absences in the Statement f Activities des nt require the use f current financial resurces and is therefre nt reprted as an expenditure in gvernmental funds ther pst emplyment benefits in the Statement f Activities des nt require the use f current resurces and are therefre nt reprted as expenditures in the gvernmental funds Gvernmental funds reprt district pensin cntributins as expenditures. Hwever in the Statement f Activities, the cst f pensin benefits earned net f emplyee cntributins is reprted as pensin expense. Pensin cntributin expense Cst f benefits earned net f emplyee cntributins (12,55) (10,902,756) 1,941,1 (2,14,289) (192,958) Change in Net Psitin f Gvernmental Funds $ 9,105,76 See ntes t financial statements. 24

29 Ntes t Financial Statements June 0, 2017 Nte 1 - Summary f certain significant accunting plicies: The financial statements f the Salmn River Central Schl District (the "District") have been prepared in cnfrmity with generally accepted accunting principles (GAAP) as applied t gvernmental units. Thse principles are prescribed by the Gvernmental Accunting Standards Bard (GASB), which is the accepted standard-setting bdy fr establishing gvernmental accunting and financial reprting principles. Certain significant accunting principles and plicies utilized by the District are described belw: A) Reprting Entity: The Salmn River Central Schl District is gverned by the laws f New Yrk State. The District is an independent entity gverned by an elected Bard f Educatin cnsisting f 9 members. The President f the Bard serves as the chief fiscal fficer and the Superintendent is the chief executive fficer. The Bard is respnsible fr and cntrls all activities related t public schl educatin within the District. Bard members have authrity t make decisins, pwer t appint management, and primary accuntability fr all fiscal matters. The reprting entity f the District is based upn criteria set frth by GASB Statement 14, The Financial Reprting Entity, as amended by GASB Statement 9, Cmpnent Units. The financial reprting entity cnsists f the primary gvernment, rganizatins fr which the primary gvernment is financially accuntable, and ther rganizatins fr which the nature and significance f their relatinship with the primary gvernment are such that exclusin wuld cause the reprting entity's financial statements t be misleading r incmplete. The accmpanying financial statements present the activities f the District. The District is nt a cmpnent unit f anther reprting entity. The decisin t include a ptential cmpnent unit in the District's reprting entity is based n several criteria including legal standing, fiscal dependency, and financial accuntability. Based n the applicatin f these criteria, the fllwing is a brief descriptin f certain entities included in the District's reprting entity. 25

30 Ntes t Financial Statements June 0, 2017 i) Extraclassrm Activity Funds: The Extraclassrm Activity Funds f the District represent funds f the students f the District. The Bard f Educatin exercises general versight f these funds. The Extraclassrm Activity Funds are independent f the District with respect t its financial transactins and the designatin f student management. Separate audited financial statements (cash basis) f the Extraclassrm Activity Funds can be fund at the District's business ffice. The District accunts fr assets held as an agent fr varius student rganizatins in an agency fund. B) Jint Venture: The Salmn River Central Schl District is ne f 10 cmpnent schl districts in the Franklin-Essex-Hamiltn BCES. A BCES is a vluntary, cperative assciatin f schl districts in a gegraphic area that shares planning, services, and prgrams which prvide educatinal and supprt activities. There is n authrity r prcess by which a schl district can terminate its status as a BCES cmpnent. BCES are rganized under 1950 f the New Yrk State Educatin Law. A BCES Bard is cnsidered a crprate bdy. Members f a BCES Bard are nminated and elected by their cmpnent member bards in accrdance with prvisins f 1950 f the New Yrk State Educatin Law. All BCES prperty is held by the BCES Bard as a crpratin ( 1950(6)). In additin, BCES Bards are als cnsidered municipal crpratins t permit them t cntract with ther municipalities n a cperative basis under 119-n(a) f the New Yrk State General Municipal Law. A BCES' budget is cmprised f separate budgets fr administrative, prgram and capital csts. Each cmpnent district's share f administrative and capital cst is determined by resident public schl district enrllment, as defined in the New Yrk State Educatin Law, 1950(4)(b)(7). In additin, cmpnent districts pay tuitin r a service fee fr prgrams in which its students participate. C) Basis f Presentatin: i) District-Wide Statements: The Statement f Net Psitin and the Statement f Activities present financial infrmatin abut the District's gvernmental activities. These statements include the financial activities f the verall gvernment in its entirety, except thse that are fiduciary. Eliminatins have been made t minimize the duble cunting f internal transactins. Gvernmental activities generally are financed thrugh taxes, State aid, intergvernmental revenues, and ther exchange and nnexchange transactins. 26

31 Ntes t Financial Statements June 0, 2017 perating grants include perating-specific and discretinary (either perating r capital) grants, while the capital grants clumn reflects capital-specific grants. The Statement f Activities presents a cmparisn between prgram expenses and prgram revenues fr each functin f the District's gvernmental activities. Direct expenses are thse that are specifically assciated with and are clearly identifiable t a particular functin. Indirect expenses, principally emplyee benefits, are allcated t functinal areas in prprtin t the payrll expended fr thse areas. Prgram revenues include charges paid by the recipients f gds r services ffered by the prgrams, and grants and cntributins that are restricted t meeting the peratinal r capital requirements f a particular prgram. Revenues that are nt classified as prgram revenues, including all taxes, are presented as general revenues. ii) Fund Financial Statements: The fund statements prvide infrmatin abut the District's funds, including fiduciary funds. Separate statements fr each fund categry (gvernmental and fiduciary) are presented. The emphasis f fund financial statements is n majr gvernmental funds, each displayed in a separate clumn. All remaining gvernmental funds are aggregated and reprted as nn-majr funds. The District reprts the fllwing majr gvernmental funds: General Fund: This is the District's primaiy perating fund. It accunts fr all financial transactins that are nt required t be accunted fr in anther fund. Special Revenue Funds: These funds accunt fr the prceeds f specific revenue surces, such as federal and State grants, that are legally restricted t expenditures fr specified purpses, child nutritin and schl stre peratins r ther activities whse funds are restricted as t use. These legal restrictins may be impsed either by gvernments that prvide the funds, r by utside parties. Capital Prjects Funds: These funds are used t accunt fr the financial resurces used fr acquisitin, cnstructin, r majr repair f capital facilities. Fr these funds, each capital prject is assessed t determine whether it is a majr r nn-majr fund. Thse capital prjects that are determined t be majr are reprted in separate clumns in the financial statements. Thse that are determined t be nn-majr are reprted in the supplemental schedules either separately r in the aggregate. 27

32 Ntes t Financial Statements June 0, 2017 The District reprts the fllwing fiduciary funds: Fiduciary Funds Fiduciary activities are thse in which the District acts as trustee r agent fr resurces that belng t thers. These activities are nt included in the District-wide financial statements, because their resurces d nt belng t the District, and are nt available t be used. There are tw classes f fiduciary funds: Private purpse trust funds: These funds are used t accunt fr trust arrangements in which principal and incme benefits annual third party awards and schlarships fr students. Established criteria gvern the use f the funds and members f the District r representatives f the dnrs may serve n cmmittees t determine wh benefits. Agency funds: These funds are strictly custdial in nature and d nt invlve the measurement f results f peratins. Assets are held by the District as agent fr varius student grups r extraclassrm activity funds and fr payrll r emplyee withhlding. D) Measurement Fcus and Basis f Accunting: The District-wide and fiduciary fund financial statements are reprted using the ecnmic resurces measurement fcus and the accrual basis f accunting. Revenues are recrded when earned and expenses are recrded at the time liabilities are incurred, regardless f when the related cash transactin takes place. Nnexchange transactins, in which the District gives r receives value withut directly receiving r giving equal value in exchange, include prperty taxes, grants and dnatins. n an accrual basis, revenue frm prperly taxes is recgnized in the fiscal year fr which the taxes are levied. Revenue frm grants and dnatins is recgnized in the fiscal year in which all eligibility requirements have been satisfied. The gvernmental fund statements are reprted using the current financial resurces measurement fcus and the mdified accrual basis f accunting. Under this methd, revenues are recgnized when measurable and available. The District cnsiders all revenues reprted in the gvernmental funds t be available if the revenues are cllected within 90 days after the end f the fiscal year. Expenditures are recrded when the related fund liability is incurred, except fr principal and interest n general lng-term debt, claims and judgments, and cmpensated absences, which are recgnized as expenditures t the extent they have matured. General capital asset acquisitins are reprted as expenditures in gvernmental funds. Prceeds f general lng-term debt and acquisitins under capital leases are reprted as ther financing surces. 28

33 Ntes t Financial Statements June 0, 2017 E) Cash and Investments: The District's cash and cash equivalents cnsist f cash n hand, demand depsits, and shrt-term investments with riginal maturities f three mnths r less frm the date f acquisitin. New Yrk State law gverns the District's investment plicies. Resurces must be depsited in FDIC-insured cmmercial banks r trust cmpanies lcated within the State. Permissible investments include bligatins f the United States Treasury, United States Agencies, repurchase agreements and bligatins f New Yrk State r its lcalities. Cllateral is required fr demand and time depsits and certificates f depsit nt cvered by FDIC insurance. bligatins that may be pledged as cllateral are bligatins f the United States and its agencies and bligatins f the State and its municipalities and Districts. Investments are stated at fair value. F) Prperty Taxes: Real prperty taxes are levied annually by the Bard f Educatin n later than September 1, and became a lien n August 2, Taxes are cllected during the perid September 1, 2016 t Nvember, Uncllected real prperty taxes are subsequently enfrced by the Cunty in which the District is lcated. The Cunty pays an amunt representing uncllected real prperty taxes transmitted t the Cunty fr enfrcement t the District n later than the fllwing April 1. G) Accunts Receivable: Accunts receivable are shwn grss, with uncllectible amunts recgnized under the direct write-ff methd. N allwance fr uncllectible accunts has been prvided since it is believed that such allwance wuld nt be material. H) Inventries: Inventries f fd in the Schl Lunch Fund are recrded at cst n a first-in, first-ut basis, r in the case f surplus fd, at stated value which apprximates market. Purchases f inventriable items in ther funds are recrded as expenditures at the time f purchase and are cnsidered immaterial in amunt. A reserve fr inventries has been recgnized t signify that a prtin f fund balance is nt available fr ther subsequent expenditures. 29

34 Ntes t Financial Statements June 0, 2017 Due t/frm ther Funds: The peratins f the District include transactins between funds. These transactins may be temprary in nature, such as with interfund brrwings. The District typically lans resurces between funds fr the purpse f prviding cash flw. These interfund receivables and payables are expected t be repaid within ne year. Permanent transfers f funds include the transfer f expenditure and revenues t prvide financing r ther services. In the district-wide statements, the amunts reprted n the Statement f Net Psitin fr interfund receivable and payables represent amunts due between different fund types (gvernmental activities and fiduciary funds). Eliminatins have been made fr all interfund receivables and payables between the funds, with the exceptin f thse due frm r t the fiduciary funds. The gvernmental funds reprt all interfund transactins as riginally recrded. Interfund receivables and payables may be netted n the accmpanying gvernmental funds balance sheet when it is the District's practice t settle these amunts at a net balance based upn the right f legal ffset. Refer t Nte 10 fr a detailed disclsure by individual fund fr interfund receivables, payables, expenditures and revenues activity. Capital Assets: Capital assets are reprted at histrical cst if actual histrical cst is available, r estimated histrical cst if actual histrical cst is nt available. Dnated assets are reprted at estimated fair market value at the time received. Capitalizatin threshlds (the dllar value abve which asset acquisitins are added t the capital asset accunts), depreciatin methds, and estimated useful lives f capital assets reprted in the District-wide statements are as fllws: Capitalizatin Threshld Depreciatin Methd Estimated Useful Life Buildings Building Imprvements Furniture and Equipment Vehicles $ 15,000 15,000 5,000 5,000 Straight-line Straight-line Straight-line Straight-line 50 years 20 years 15 years 8 years 0

35 Ntes t Financial Statements June 0, 2017 K) Vested Emplyee Benefits: Cmpensated absences Cmpensated absences cnsist f unpaid accumulated annual sick leave, vacatin and sabbatical time. Sick leave eligibility and accumulatin is specified in negtiated labr cntracts and in individual emplyment cntracts. Upn retirement, resignatin r death, emplyees may cntractually receive a payment based n unused accumulated sick leave. District emplyees are granted vacatin in varying amunts, based primarily n length f service and service psitin. Sme earned benefits may be frfeited if nt taken within varying time perids. Cnsistent with GASB Statement 16, Accunting fr Cmpensated Absences, the liability has been calculated using the vesting/terminatin methd and an accrual fr that liability is included in the district-wide financial statements. The cmpensated absences liability is calculated based n the pay rates in effect at year-end. In the funds statements nly the amunt f the matured liabilities is accrued within the General Fund based upn expendable and available future resurces. These amunts are expensed n a pay-as-yu g basis. L) ther benefits: District emplyees participate in the New Yrk State Emplyees' Retirement System and the New Yrk State Teachers' Retirement System. In additin t prviding pensin benefits, the District prvides health insurance cverage and survivr benefits fr retired emplyees and their survivrs in accrdance with the prvisin f varius emplyment cntracts in effect at the time f retirement. Substantially all f the District's emplyees may becme eligible fr these benefits if they reach nrmal retirement age while wrking fr the District. Health care benefits are prvided thrugh plans whse premiums are based n the benefits paid during the year. The cst f prviding pst-retirement benefits is cvered by the District. The District recgnizes the cst f prviding health insurance by recrding its share f insurance premiums as an expenditure. 1

36 Ntes t Financial Statements June 0, 2017 M) Budgetary Prcedures and Budgetary Accunting: The District administratin prepares a prpsed budget fr apprval by the Bard f Educatin fr the fllwing gvernmental funds fr which legal (apprpriated) budgets are adpted: The vters f the District apprved the prpsed apprpriatin budget fr the General Fund. Apprpriatins are adpted at the prgram line item level. Apprpriatins established by the adptin f the budget cnstitute a limitatin n expenditures (and encumbrances) which may be incurred. Apprpriatins lapse at the end f the fiscal year unless expended r encumbered. Encumbrances will lapse if nt expended in the subsequent year. Apprpriatins authrized fr the current year are increased by the planned use f specific reserves, and budget amendments apprved by the Bard f Educatin as a result f selected new revenue surces nt included in the riginal budget (when permitted by law). These supplemental apprpriatins may ccur subject t legal restrictins if the Bard apprves them because f a need that exists which was nt determined at the time the budget was adpted. N supplemental apprpriatins ccurred during the year. Budgets are adpted annually n a basis cnsistent with GAAP. Apprpriatins authrized fr the year are increased by the amunt f encumbrances carried frward frm the prir year. Budgets are established and used fr individual capital prject funds expenditures as apprved by a special referendum f the District's vters. The maximum prject amunt authrized is based primarily upn the cst f the prject, plus any requirements fr external brrwings, nt annual apprpriatins. These budgets d nt lapse and are carried ver t subsequent fiscal years until the cmpletin f the prjects. Encumbrances Encumbrance accunting is used fr budget cntrl and mnitring purpses and is reprted as a part f the gvernmental funds. Under this methd, purchase rders, cntracts and ther cmmitments fr the expenditure f mnies are recrded t reserve applicable apprpriatins. utstanding encumbrances as f year-end are presented as restrictins r assignments f fund balance and d nt represent expenditures r liabilities. These cmmitments will be hnred in the subsequent perid. Related expenditures are recgnized at that time, as the liability is incurred r the cmmitment is paid. 2

37 Ntes t Financial Statements June 0,2017 N) Unearned Revenue: Unearned revenues are reprted when ptential revenues d nt meet bth the measurable and available criteria fr recgnitin in the current perid. Unearned revenues als arise when resurces are received by the District befre it has legal claim t them, as when grant mnies are received prir t the incidence f qualifying expenditures. In subsequent perids, when bth recgnitin criteria are met, r when the District has legal claim t the resurces, the liability fr unearned revenues is remved and revenues are recrded. ) Restricted Resurces: When an expense is incurred fr purpses fr which bth restricted and unrestricted net assets are available, the District's plicy cncerning which t apply first varies with the intended use and with assciated legal requirements, many f which are described elsewhere in these Ntes. P) Equity classificatins: District-wide statements: In the District-wide statements there are three classes f net psitin: Invested in capital assets, net f related debt - cnsists f net capital assets (cst less accumulated depreciatin) reduced by utstanding balances f related debt bligatins frm the acquisitin, cnstructin r imprvements f thse assets. Restricted net psitin - reprts net psitin when cnstraints placed n the assets r deferred utflws f resurces are either externally impsed by creditrs (such as thrugh debt cvenants), grantrs, cntributrs, r laws r regulatins f ther gvernments, r impsed by law thrugh cnstitutinal prvisins r enabling legislatin. Unrestricted net psitin - reprts all ther net psitin that d nt meet the definitin f the abve tw classificatins and are deemed t be available fr general use by the District.

38 Ntes t Financial Statements June 0, 2017 Fund statements: Beginning with the fiscal year 2011, the District implemented GASB 54 "Fund Balance Reprting and Gvernmental Type Definitins". This Statement prvides mre clearly defined fund balance categries t make the nature and extent f the cnstraints placed n a gvernment's fund balance mre transparent. The fllwing classificatins describe the relative strength f the spending cnstraints placed n the purpses fr which resurces can be used: Nnspendable fund balance - amunts that are nt in a spendable frm (such as inventiy) r are required t be maintained intact. Nnspendable fund balance includes the inventry recrded in the Schl Lunch Fund f $48,145. Restricted fund balance - amunts with cnstraints placed n the use f resurces either externally impsed by creditrs, grantrs, cntributrs, r laws r regulatins f ther gvernments; r impsed by law thrugh cnstitutinal prvisins r enabling legislatin. All encumbrances f funds ther than the General fund are classified as restricted fund balance. The Schl District has established the fllwing restricted fund balances: Wrkers' Cmpensatin Reserve Wrkers' Cmpensatin Reserve (GML 6-j) is used t pay fr cmpensatin benefits and ther expenses authrized by Article 2 f the Wrkers' Cmpensatin Law, and fr payment f expenses f administering this self-insurance prgram. The reserve may be established by Bard actin, and is funded by budgetary apprpriatins and such ther funds as may be legally apprpriated. Within sixty days after the end f any fiscal year, excess amunts may either be transferred t anther reserve r the excess applied t the apprpriatins f the next succeeding fiscal year's budget. The reserve is accunted fr in the General Fund. Emplyee Benefit Accrued Liability Reserve Reserve fr Emplyee Benefit Accrued Liability (GML 6-p) is used t reserve funds fr the payment f accrued emplyee benefits due an emplyee upn terminatin f the emplyee's service. This reserve may be established by a majrity vte f the Bard, and is funded by budgetary apprpriatins and such ther reserves and funds that may be legally apprpriated. The reserve is accunted fr in the General Fund. 4

39 Ntes t Financial Statements June 0, 2017 Restricted fund balance includes the fllwing: General Fund: Wrkers' Cmpensatin Reserve Emplyee Benefit Accrued Liability Reserve Ttal Restricted Funds $45, $ Cmmitted fund balance - amunts cnstrained t specific purpses by a gvernment itself, using its highest level f decisin-making authrity; t be reprted as cmmitted, amunts cannt be used fr any ther purpse unless the gvernment takes the same highest actin t remve r change the cnstraint. Assigned fund balance - amunts a gvernment intends t use fr a specific purpse; intent can be expressed by the gverning bdy r by an fficial r bdy t which the gvernment delegates authrity. All encumbrances f the General fund are classified as Assigned Fund Balance in the General Fund. Encumbrances reprted in the General Fund amunted t $1,11. Unassigned fund balance - amunts that are available fr any purpse; psitive amunts are reprted nly in the General Fund. NYS Real Prperty Tax Law 118 limits the amunt f unexpended surplus funds a schl district can retain t n mre than 4% f the Schl District's budget fr the General Fund fr the ensuing fiscal year. Nnspendable and restricted fund balance fr the General Fund are excluded frm the 4% limitatin. Amunts apprpriated fr the subsequent year and encumbrances are als excluded frm the 4% limitatin. rder f Use f Fund Balance: The District's plicy is t apply expenditures against nnspendable fund balance, restricted fund balance, cmmitted fund balance, assigned fund balance, and unassigned fund balance at the end f the fiscal year. Fr all funds, nnspendable fund balances are determined first and then restricted fund balances fr specific purpses are determined. Any remaining fund balance amunts fr funds ther than the General Fund are classified as restricted fund balance. In the general fund, cmmitted fund balance is determine next and then assigned. The remaining amunts are reprted as unassigned. Assignments f fund balance cannt cause a negative unassigned fund balance. 5

40 Ntes t Financial Statements June 0, 2017 Q) Accrued liabilities and lng-term bligatins: Payables, accrued liabilities and lng-term bligatins are reprted in the district-wide financial statements. In the gvernmental funds, payables and accrued liabilities are paid in a timely manner and in full frm current financial resurces. Claims and judgments, and cmpensated absences that will be paid frm gvernmental funds, are reprted as a liability in the funds financial statements nly t the extent that they are due fr payment in the current year. Bnds and ther lng-term bligatins that will be paid frm gvernmental funds are recgnized as a liability in the fund financial statements when due. Lng-term bligatins represent the District's future bligatins r future ecnmic utflws. The liabilities are reprted as due in ne year r due within mre than ne year in the Statement f Net Psitin. R) Deferred utflws and Inflws f Resurces In additin t assets, the Statement f Net Psitin will smetimes reprt a separate sectin fr deferred utflws f resurces. This separate financial statement element, deferred utflws f resurces, represents a cnsumptin f net psitin that applies t a future perid and s will nt be recgnized as an utflw f resurces (expense/expenditure) until then. The gvernment has three items that qualify fr reprting in this categry. First is the deferred charge n refunding reprted in the gvernment-wide Statement f Net Psitin. A deferred charge n refunding results frm the difference in the carrying value f refunded debt and its reacquisitin price. This amunt is deferred and amrtized ver the shrter f the life f the refunded r refunding debt. The secnd item is related t pensins reprted in the district-wide Statement f Net Psitin. This represents the effect f the net change in the District's prprtin f the cllective net pensin asset r liability and difference during the measurement perid between the District's cntributins and its prprtinate share f ttal cntributins t the pensin systems nt included in pensin expense. Lastly is the District cntributins t the pensin systems (TRS and ERS Systems) subsequent t the measurement date. In additin t liabilities, the Statement f Net Psitin will smetimes reprt a separate sectin fr deferred inflws f resurces. This separate financial statement element, deferred inflws f resurces, represents an acquisitin f net psitin that applies t a future perid(s) and s will nt be recgnized as an inflw f resurces (revenue) until that time. The District has ne item that qualifies fr reprting in this categry. This item is related t pensins reprted in the district-wide Statement f Net Psitin. This represents the effect f the net change in the District's prprtin f the cllective net pensin liability (ERS System) and difference during the measurement perids between the District's cntributins and its prprtinate share f ttal cntributins t the pensin systems nt included in pensin expense. 6

41 Ntes t Financial Statements June 0, 2017 Pensin bligatins New Yrk State and Lcal Emplyees' Retirement System (ERS) and the New Yrk State Teachers' Retirement (TRS) (the Systems). Plan Descriptin and Benefits Prvided Teachers' Retirement System (TRS) The District participates in the New Yrk State Teachers' Retirement System (TRS). This is a cst-sharing multiple-emplyer retirement system. The System prvides retirement benefits as well as, death and disability benefits t plan members and beneficiaries as authrized by the Educatin Law and the Retirement and Scial Security Law f the State f New Yrk. The System is gverned by a 10 member Bard f Trustees. System benefits are established under New Yrk State Law. Membership is mandatry and autmatic fr all full-time teachers, teaching assistants, guidance cunselrs and administratrs emplyed in New Yrk Public Schls and BCES wh elected t participate in TRS. nce a public emplyer elects t participate in the System, the electin is irrevcable. The New Yrk State Cnstitutin prvides that pensin membership is a cntractual relatinship and plan benefits cannt be diminished r impaired. Benefits can be changed fr future members nly by enactment f a State statute. Additinal infrmatin regarding the System, may be btained by writing t the New Yrk State Teachers' Retirement System, 10 Crprate Wds Drive, Albany, NY r by referring t the NYSSTR Cmprehensive Annual Financial reprt which can be fund n the System's website at Emplyees' Retirement System (ERS) The District participates in the New Yrk State and Lcal Emplyees' Retirement System (ERS). This is a cst-sharing multiple-emplyer retirement system. The System prvides retirement benefits as well as death and disability benefits. The net psitin f the System is held in the New Yrk State Cmmn Retirement Fund (the Fund), which was established t hld all net assets and recrd changes in plan net psitin allcated t the System. The Cmptrller f the State f New Yrk serves as the trustee f the Fund and is the administrative head f the System. System benefits are established under the prvisins f the New Yrk State Retirement and Scial Security Law (RSSL). nce a public emplyer elects t participate in the System, the electin is irrevcable. The New Yrk State Cnstitutin prvides that pensin membership is a cntractual relatinship and plan benefits cannt be diminished r impaired. Benefits can be changed fr future members nly by enactment f a State statute. The District als participates in the Public Emplyees' Grup Life Insurance Plan (GLIP), which prvides death benefits in the frm f life insurance. The System is included in the State's financial reprt as a pensin trust fund. That reprt, including infrmatin with regard t benefits prvided, may be fund at r btained by writing t the New Yrk State and Lcal Retirement System, 110 State Street, Albany, NY

42 Ntes t Financial Statements June 0,2017 Pensin Liabilities, Pensin Expense, Deferred utflws f Resurces and Deferred Inflws f Resurces Related t Pensins At June 0, 2017, the District reprted the fllwing asset/(liability) fr its prprtinate share f the net pensin asset /(liability) fr each f the Systems. The net pensin asset/(liability) was measured as f March 1, 2017 fr ERS and June 0, 2016 fr TRS. The ttal pensin asset/(liability) used t calculate the net pensin asset/(liability) was determined by an actuarial valuatin. The District's prprtin f the net pensin asset/(liability) was based n a prjectin f the District's lng-term share f cntributins t the Systems relative t the prjected cntributins f all participating members, actuarially determined. This infrmatin was prvided by the ERS and TRS Systems in reprts prvided t the District. ERS TRS Actuarial valuatin date March 1,2017 June 0,2016 Net pensin asset/(liability) $ (1,447,871) $ (820,71) District's prtin f the Plan's ttal net pensin asset/(liability) % % Fr the year ended June 0, 2017, the District recgnized pensin expense f $819,755 fr ERS and pensin expense f $1,14,54 fr TRS. At June 0, 2017, the District's reprted deferred utflws f resurces and deferred inflws f resurces related t pensins frm the fllwing surces: Deferred utflws f Resurces Deferred Inflws f Resurces ERS TRS ERS TRS Difference between expected and actual experience $ 6,282 $ - $ 219,867 $ 266,61 Change f assumptins 494,646 4,675,06 Net difference between prjected and actual investment earnings 289,199 1,845,95 Changes in prprtin and difference between the District's cntributins and prprtinate share f cntributins 19,195-40,40 272,640 District's cntributins subsequent t the measurement date 149,855 1,98,429 Ttal $ 989,177 $ 7,919,10 $ 260,270 $ 59,25 8

43 Ntes t Financial Statements June 0, 2017 District cntributins subsequent t the measurement date will be recgnized as a reductin f the net pensin liability in the year ended June 0, ther amunts reprted as deferred utflws f resurces and deferred inflws f resurces related t pensins will be recgnized in pensin expense as fllws: Year ended: ERS TRS 2017 $ 527, $ 264,44 527, ,44 1,961, ,916 1,515, (195,7) 671,587 Thereafter 778,118 Actuarial Assumptins The ttal pensin liability as f the measurement date was determined by using an actuarial valuatin as nted in the table belw, with update prcedures used t rll frward the ttal pensin liability t the measurement date. The actuarial valuatins used the fllwing actuarial assumptins: Significant actuarial assumptins used in the valuatins were as fllws: ERS TRS Measurement date Actuarial valuatin date Interest rate Salary scale Decrement tables March 1, 2017 April 1, %.8% April 1,2010- March1,2015 System Experience June 0,2016 June 0, % 1.90%-4.72% July 1,2009- June 0,2014 System Experience Inflatin rate 2.5% 2.5% 9

44 Ntes t Financial Statements June 0, 2017 Fr ERS, annuitant mrtality rates are based n April 1, March 1, 2015 System's experience with adjustments fr mrtality imprvements based n MP Fr TRS, annuitant mrtality rates are based n plan member experience with adjustments fr mrtality imprvements based n Sciety f Actuaries Scale MP2014, applied n a generatinal basis. Fr ERS, the actuarial assumptins used in the April 1, 2016 valuatin are based n the results f an actuarial experience study fr the perid April 1, March 1, Fr TRS, the actuarial assumptins used in the June 0, 2015 valuatin are based n the results f an actuarial experience study fr the perid July 1, June 0, The lng term rate f return n pensin plan investments was determined using a building blck methd in which best estimate ranges f expected future real rates f return (expected returns net f investment expense and inflatin) are develped fr each majr asset class. These ranges are cmbined t prduce the lng term expected rate f return by weighting the expected future real rates f return by each the target asset allcatin percentage and by adding expected inflatin. Best estimates f the arithmetic real rates f return fr each majr asset class included in the target asset allcatin are summarized belw: ERS TRS Measurement date March 1, 2017 June 0, 2016 Asset Type: Dmestic Equity Internatinal Equity Private Equity Real Estate Alternative Investments Dmestic Fixed Incme Securitie Glbal Fixed Incme Securities Mrtgages Shrt-term Abslute Return Strategies pprtunistic Prtfli Real Assets Cash Inflatin-Indexed Bnds 4.55% 6.5% 7.75% 5.80% 0.0% 0.0% 0.0% 1.1% 0.0% 4.00% 5.89% 5.54% 0.25% 1.50% 6.1% 7.% 9.2% 5.4% 0.0% 1.0% 0.8%.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 40

45 Ntes t Financial Statements June 0, 2017 Discunt Rate The discunt rate used t calculate the ttal pensin liability was 7.0% fr ERS and 7.5% fr TRS. The prjectin f cash flws used t determine the discunt rate assumes that cntributins frm plan members will be made at the current cntributin rates and that cntributins frm emplyers will be made at statutrily required rates, actuarially. Based upn the assumptins, the Systems' fiduciary net psitin was prjected t be available t make all prjected future benefit payments f current plan members. Therefre the lng term expected rate f return n pensin plan investments was applied t all perids f prjected benefit payments t determine the ttal pensin liability. Sensitivity f the Prprtinate Share f Net Pensin Asset/(Liability) t the Discunt Rate Assumptin The fllwing presents the District's prprtinate share f the net pensin asset/( 1 iabi 1 ity) calculated using the discunt rate f 7.0% fr ERS and 7.5% fr TRS, as well as what the District's prprtinate share f the net pensin asset/(liability) wuld be if it were calculated using a discunt rate that is 1-percentage pint lwer (6.0% fr ERS and 6.5% fr TRS ) r 1- percentage pint higher (8.0% fr ERS and 8.5% fr TRS) than the current rate : 1% Current 1% Decrease Assumptin Increase (6.0%) (7.0%) (8.0%) ERS Emplyer's prprtinate share f the net pensin asset (liability) $ (4,624,214) $ (1,447,871) $ 1,27,721 1% Current 1% Decrease Assumptin Increase (6.5%) (7.5%) (8.5%) TRS Emplyer's prprtinate share f the net pensin asset (liability) $(10,708,071) $ (820,71) $ 7,472,284 Pensin Plan Fiduciary Net Psitin The cmpnents f the current-year net pensin asset/(liability) f the emplyers as f the respective valuatin dates, were as fllws: 41

46 Ntes t Financial Statements June 0, 2017 Valuatin date (Dllars in Thusands) ERS TRS March 1, 2017 June 0, 2016 Emplyers' Ttal Pensin Asset/(Liability) Plan Net Psitin Emplyers' Net Pensin Asset/(Liability) $ (177,400) $ (108,577,184) 168, ,506,142 $ (9,96) $ (1,071,042) Rati f the Plan Net Psitin t the Emplyers' ttal pensin asset/(liability) 94.70% 99.01% Payables t the Pensin Plan Fr ERS, emplyer cntributins are paid annually based n the System's fiscal year which ends n March 1 st. Accrued retirement cntributins as f June 0, 2017 represent the prjected emplyer cntributin fr the perid f April 1, 2017 thrugh June 0, 2017 based n paid ERS wages multiplied by the emplyer's cntributin rate, by tier. Accrued retirement cntributins as f June 0, 2017 amunted t $149,855. Fr TRS, emplyer and emplyee cntributins fr the fiscal year ended June 0, 2017 are paid t the System in September, ctber and Nvember 2017 thrugh a state aid intercept. Accrued retirement cntributins as f June 0, 2017 represent emplyee and emplyer cntributins fr the fiscal year ended June 0, 2017 based n paid TRS wages multiplied by the emplyer's cntributin rate, by tier and emplyee cntributins fr the fiscal year as reprted t the TRS System. Accrued retirement cntributins as f June 0, 2017 amunted t $1,479,807. S) New Accunting Standards The District has adpted all current Statements f the Gvernmental Accunting Standards Bard (GASB) that are applicable as f June 0, GASB Statement N. 77, Tax Abatement Disclsures is effective fr the year ended June 0, 2017; hwever, the District has n tax abatements. T) Future Changes in Accunting Standards GASB has issued Statement N. 75, Accunting and Financial Reprting fr Pstemplyment Benefits ther than Pensins, effective fr the year ending June 0, This Statement replaces the requirements f Statements N. 45, Accunting and Financial Reprting by Emplyers fr Pstemplymen t Benefits ther Than Pensins, as amended, and N. 57, PEB Measurements by Agent Emplyers and Agent Multiple- Emplyer Plans, fr PEB. Statement N. 1 A, Financial Reprting fr Pstemplyment Benefit Plans ther Than Pensin Plans, establishes new accunting and financial reprting requirements fr PEB plans. 42

47 Ntes t Financial Statements June 0, 2017 The schl district will evaluate the impact each f these prnuncements may have n its financial statements and will implement them as applicable and when material. Nte 2 - Explanatin f Certain Differences Between Gvernmental Fund Statements and District-Wide Statements: Due t the differences in the measurement fcus and basis f accunting used in the gvernmental fund statements and the District-wide statements, certain financial transactins are treated differently. The basic financial statements cntain a full recnciliatin f these items. The differences result primarily frm the ecnmic fcus f the Statement f Activities, cmpared with the current financial resurces fcus f the gvernmental funds. A) Ttal fund balances f gvernmental funds vs. net psitin f gvernmental activities: Ttal fund balances f the District's gvernmental funds differ frm "net psitin" f gvernmental activities reprted in the Statement f Net Psitin. This difference primarily results frm the additinal lng-term ecnmic fcus f the Statement f Net Psitin versus the slely current financial resurces fcus f the gvernmental fund Balance Sheets. B) Statement f Revenues, Expenditures and Changes in Fund Balance vs. Statement f Activities: Differences between the gvernmental funds Statement f Revenues, Expenditures and Changes in Fund Balance and the Statement f Activities fall int ne f three brad categries. The amunts shwn belw represent: i) Lng-term revenue differences: Lng-term revenue differences arise because gvernmental funds reprt revenues nly when they are cnsidered "available", whereas the Statement f Activities reprts revenues when earned. Differences in lng-term expenses arise because gvernmental funds reprt n a mdified accrual basis, whereas the accrual basis f accunting is used n the Statement f Activities. 4

48 Ntes t Financial Statements June 0, 2017 ii) Capital related differences: Capital related differences include the difference between prceeds fr the sale f capital assets reprted n gvernmental fund statements and the gain r lss n the sale f assets as reprted n the Statement f Activities, and the difference between recrding an expenditure fr the purchase f capital items in the gvernmental fund statements and depreciatin expense n thse items as recrded in the Statement f Activities. iii) Lng-term debt transactin differences: Lng-term debt transactin differences ccur because bth interest and principal payments are recrded as expenditures in the gvernmental fund statements, whereas interest payments are recrded in the Statement f Activities as incurred, and principal payments are recrded as a reductin f liabilities in the Statement f Net Psitin. iv) Pensin differences: Pensin differences ccur as a result f changes in the District's prprtin f the cllective net pensin asset/liability and differences between the District's cntributins and its prprtinate share f the ttal cntributins t pensin expense. Nte - Stewardship, cmpliance and accuntability: The District's unreserved and undesignated fund balance was in excess f the New Yrk State Real Prperty Tax Law limit, which restricts it t an amunt nt greater than 4% f the District's budget fr the upcming schl year. Nte 4 - Custdial credit and cncentratin f credit: Custdial credit risk is the risk that in the event f a bank failure, the District's depsits may nt be returned t it. While the District des nt have a specific plicy fr custdial credit risk, New Yrk State statutes gvern the District's investment plicies, as discussed previusly in these Ntes. Restricted cash represents cash and cash equivalents where use is limited by legal requirements. These assets represent amunts required by statute t be reserved fr varius purpses. Restricted cash as f year-end includes $807,254 within the gvernmental funds and $111,26 in the fiduciary funds. 44

49 Ntes t Financial Statements June 0, 2017 Nte 5 - Participatin in BCES: During the year ended June 0, 2017, the District was billed $4,986,007 fr BCES administrative and prgram csts. Participating schl districts issue debt n behalf f BCES. During the year ended June 0, 2017, the District did nt issue serial bnds n behalf f BCES. n May 9, 2017, the District entered int a jint agreement with Franklin-Essex-Hamiltn BCES and all ther cmpnent schl districts f the BCES fr the cnstructin f imprvements t the BCES' Nrth Franklin Educatinal Center and the Adirndack Educatinal Center pursuant t Sectin 1950 f the Educatin Law. The prject was apprved by vters f the cmpnent districts in September The District will have a subsequent cmmitment fr a share f the capital prject csts based n ur RWADA rati, with a net prject cst t the District f $,185,86. The District's share f BCES aid amunted t $2,408,660. Financial statements fr the BCES are available frm the BCES administrative ffice. Nte 6 - Investments: The District did nt hld any investments during the year. 45

50 Ntes t Financial Statements June 0,2017 Nte 7 - Capital assets: Capital asset balances and activity fr the year ended June 0, 2017 were as fllws: Beginning Retirements/ Ending Balance Additins Reclassific. Balance Gvernmental activities: Capital assets that are nt depreciated: Land $ 118,242 $ $ $ 118,242 Cnstructin in prgress 12,11,70 18,09,011-0,224,714 Ttal nndepreciable histrical cst 12,249,945 18,09,011-0,42,956 Capital assets that are depreciated: Buildings 68,99,045 - (20,42) 68,918,70 Machinery and equipment 4,877, ,996 (488,201) 5,097,765 Ttal depreciable histrical cst 7,817, ,996 (508,54) 74,016,468 Less accumulated depreciatin: Buildings 14,67,212 1,28,008 (4,748) 15,699,968 Machinery and equipment,294,90 59,410 (487,189),167,124 Ttal accumulated depreciatin 17,662,115 1,687,418 (491,97) 18,857,596 Ttal depreciable histrical cst, net $ 68,404,845 $ 17,11,589 $ (16,606) $ 85,501,828 Depreciatin expense was charged t gvernmental activities as fllws: Administrative services $ 1,446,009 Regular instructin 25,09 Pupil transprtatin 216,16 $ 1,687,418 Nte 8 - Shrt-term debt: The District may issue Revenue Anticipatin Ntes and Tax Anticipatin Ntes, in anticipatin f the receipt f revenues. These ntes are recrded as a liability f the fund that will actually receive the prceeds frm the issuance f the ntes. The RANs and TANs represent a liability that will be extinguished by the use f expendable, available resurces f the fund. The District may issue budget ntes up t an amunt nt t exceed 5% f the amunt f the annual budget during any fiscal year fr expenditures fr which an insufficient r n prvisin is made in the annual budget. The budget nte must be repaid n later than the clse f the secnd fiscal year succeeding the year in which the nte was issued. 46

51 Ntes t Financial Statements June 0, 2017 The District may issue Bnd Anticipatin Ntes, in anticipatin f prceeds frm the subsequent sale f bnds. These ntes are recrded as current liabilities f the funds that will actually receive the prceeds frm the issuance f bnds. State law requires that BANs issued fr capital purpses be cnverted t lng-term financing within five years after the riginal issue date. Transactins in shrt-term debt fr the year are summarized belw: Beginning Ending Balance Issued Redeemed Balance BAN Maturing 7/22/16 at 2.00% $ 2,500,000 $ - $ 2,500,000 $ BAN Maturing 7/22/16 at 1.50% 2,000,000-2,000,000 RAN Maturing 6/16/17 at 1.11% 5,000,000-5,000,000 RAN Maturing 6/16/17 at 2.00% 4,000,000-4,000,000 BAN Maturing 7/21/17 at 0.99% - 8,000,000-8,000,000 BAN Maturing 7/21/17 at 2.00% - 9,965,000-9,965,000 BAN Maturing 7/21/17 at 1.14% - 1,000,000-1,000,000 RAN Maturing 6/28/18 at 2.00% - 9,000,000-9,000,000 Interest n shrt-term debt fr the year was cmpsed f: Interest paid $ 198,278 Less interest accrued in the prir year (6,161) Plus interest accrued in the current year 64,478 Ttal expense $ 499,595 47

52 Ntes t Financial Statements June 0, 2017 Nte 9 - Lng-term debt: Lng-term liability balances and activity fr the year are summarized belw: Amunts Beginning Ending Due Within Balance Issued Redeemed Balance ne Year Gvernment activities: Energy Perfrmance $ 425,97 $ $ 16,282 $ 289,691 $ 141,495 Serial Bnds ,000-95, , ,000 QZABs ,880, ,000 6,90, ,000 QZABs2011 6,20, ,000 5,450, ,000 QSCBs ,900, ,000 1,715, ,000 Serial Bnds ,000-55, ,000 55,000 Bus Bnd ,000-60,000 60,000 60,000 Serial Bnds , , Bus Bnd ,000-40,000 90,000 45,000 Bus Bnd ,000-40, ,000 40,000 Serial Bnds ,480, ,000 1,075, ,000 Bus Bnd ,000-85,000 65,000 90,000 Bus Bnd , ,000 85,000 Ttal bnds payable 20,525,97 460,000,241,282 17,744,691 2,986,495 ther liabilities Cmpensated absences 884,274 12,55-896,827 06,972 rtal lng-term liabilities $21,410,247 $ 472,55 $,241,282 $18,641,518 $,29,467 The General Fund has typically been used t liquidate lng-term liabilities such as cmpensated absences. 48

53 Ntes t Financial Statements June 0,2017 Existing serial and statutry bnd bligatins: Final Interest utstanding Descriptin f issue Issue Date Maturity Rate June 0, 2017 Energy Perfrmance % $ 289,691 Serial Bnds % 780,000 QZABs % 6,90,000 QZABs % 5,450,000 QSCBs % 1,715,000 Serial Bnds % 410,000 Bus Bnd % 60,000 Serial Bnds % - Bus Bnd % 90,000 Bus Bnd % 120,000 Serial Bnds % 1,075,000 Bus Bnd % 65,000 Bus Bnd % 460,000 $17,744,691 The fllwing is a summary f debt service requirements: Serial Bnds ther Debt Principal Interest Principal Interest Fiscal year ended June 0, 2018 $ 2,525,000 $ 465,52 $ 461,495 $ 1, ,580,000 40,807 41,196 14, ,455,000 1, ,000 7, ,280, ,58 190,000, ,40, ,295 95, ,180,000 14, $16,60,000 $ 1,778,442 $ 1,84,691 $ 57,920 ther debt cnsists f the Energy Perfrmance debt, Bus Bnd and installment purchase bligatin.

54 Ntes t Financial Statements June 0,2017 In prir years, the District defeased certain general bligatins and ther bnds by placing the prceeds f new bnds in an irrevcable trust t prvide fr all future debt service payments n the ld bnds. Accrdingly, the trust accunt assets and the liability fr the defeased bnds are nt included in the District's financial statements. $1,075,000 f bnds utstanding are cnsidered defeased. Interest n lng-term debt fr the year was cmpsed f: Interest paid $ 564,869 Amrtized bnd premium (9,658) Less interest accrued in the prir year (0,788) Plus interest accrued in the current year 28,174 amrtizatin f bnd csts 7,88 Ttal expense $ 590,481 Nte 10 - Interfund balances and activity: Interfund Receivable Interfund Payable General Fund $2,77,972 $ Special Aid Fund - 2,4,121 Schl Lunch Fund - 42,841 Capital Prjects Fund - 1,010 Ttal Gvernment Agencies 2,77,972 2,77,972 Fiduciary Agency Fund - - Ttals $2,77,972 $2,77,972 Interfund receivables and payables, ther than between gvernmental activities and fiduciary funds, are eliminated n the Statement f Net Psitin. The District typically lans resurces between funds fr the purpse f mitigating the effects f transient cash flw issues. All interfund payables are expected t be repaid within ne year. 50

55 Ntes t Financial Statements June 0, 2017 Nte 11 - Pst-emplyment (health insurance) benefits: The District prvides pst-emplyment health insurance cverage t retired emplyees in accrdance with the prvisins f varius emplyment cntracts. The benefit levels, emplyee cntributins and emplyer cntributins are gverned by the District's cntractual agreements. The District implemented GASB Statement #45, Accunting and Financial Reprting by emplyers fr Pst-emplyment Benefits ther than Pensins, in the schl year ended June 0, This required the District t calculate and recrd a net ther pst-emplyment benefit bligatin at year-end. The net ther pst-emplyment benefit bligatin is basically the cumulative difference between the actuarially required cntributin and the actual cntributins made. Currently, n retired emplyees have elected t use accumulated sick pay t finance health insurance payments under the District's grup plans. The District recgnizes the cst f prviding health insurance annually as expenditures in the General Fund f the funds financial statements as payments are made. Fr the year ended June 0, 2017, the District recgnized $2,2,162 fr its share f insurance premiums fr currently enrlled retirees. The District has btained an actuarial valuatin reprt as f June 0, 2017, which indicates that the ttal liability fr ther pst emplyment benefits is $77,04,717, which is reflected in the Statement f Net Psitin. Plan Descriptin The District participates in the Franklin-Essex-Hamiltn BCES Health Insurance Cnsrtium, a nn-risk-retained public entity risk pl fr its emplyee health and accident insurance cverage. The pl is perated fr the benefit f 10 individual gvernmental units lcated within the pl's gegraphic area and is cnsidered a self-sustaining risk pl that will prvide unlimited cverage fr its members per insured event. The pl btains independent cverage fr insured events, and the District has essentially transferred all related risk t the pl. Annual PEB Cst and Net PEB bligatin The District's annual ther pst-emplyment benefit (PEB) cst (expense) is calculated based n the annual required cntributin f the emplyer (ARC), an amunt actuarially determined in accrdance with the parameters f GASB Statement 45. The ARC represents a level f funding that, if paid n an nging basis, is prjected t cver nrmal cst each year and amrtize any unfunded actuarial liabilities (r funding excess) ver a perid nt t exceed thirty years. 51

56 Ntes t Financial Statements June 0,2017 The fllwing table shws the cmpnents f the District's annual PEB cst fr the year, the amunt actually cntributed t the plan, and changes in the District's net PEB bligatin t the health insurance plan: Annual required cntributin $ 16,0,646 Interest n net PEB bligatin 2,14,619 Adustment t annual required cntributin (4,212,770) Annual PEB cst (expense) 14,15,495 Cntributins made (,22,79) Increase in net PEB bligatin 10,902,756 Net PEB bligatin - beginning f year 66,11,961 Net PEB bligatin - end f year $ 77,04,717 The District's annual PEB cst, the percentage f annual PEB cst cntributed t the plan, and the net PEB bligatin fr 2017 and the tw preceding years were as fllws (dllar amunts in thusands): Percentage f Net PEB Annual PEB Annual PEB bligatin at Year End Cst Cst Cntributed Year End 6/0/2017 $ 14,15,495 6/0/ ,95,752 6/0/ ,80, % $ 77,04, % 66,11, % 56,891,697 Funded Status and Funding Prgress As f the mst recent actuarial valuatin date, the plan was unfunded. The status as f June 0, 2017, was as fllws: Actuarial valuatin date 7/1/2016 Actuarial accrued liability (AAL) $ 144,414,164 Actuarial value f plan assets -_ Unfunded actuarial accrued liability (UAAL) $ 144,414,164 Actuarial Value f Assets as a % f the AAL Cvered payrll (active members) $ 15,81,91 UAAL as a percentage f cvered payrll 91% 52

57 Ntes t Financial Statements June 0, 2017 Actuarial valuatins f an nging plan invlve estimates f the value f reprted amunts and assumptins abut the prbability f ccurrence f events far int the future. Examples include assumptins abut future emplyment, mrtality, and the healthcare cst trend. Amunts determined regarding the funded status f the plan and the annual required cntributins f the emplyer are subject t cntinual revisin as actual results are cmpared with past expectatins and new estimates are made abut the future. Actuarial Methds and Assumptins Prjectins f benefits fr financial reprting purpses are based n the substantive plan (the plan as understd by the emplyer and the plan members) and include the types f benefits prvided at the time f each valuatin and the histrical pattern f sharing f benefit csts between the emplyer and plan members t that pint. The actuarial methds and assumptins used include techniques that are designed t reduce the effects f shrt-term vlatility in actuarial accrued liabilities and the actuarial value f assets, cnsistent with the lng-term perspective f the calculatins. In the July 1, 2016, actuarial valuatin, the prjected unit credit methd was used. The actuarial assumptins included an annual healthcare cst trend rate f 6.5% initially and then reduced by decrements t an ultimate rate f.84%. Rates included a.5% inflatin assumptin. The actuarial value f assets was determined using techniques that spread the effects f shrt-term vlatility in the market value f investments ver a 0-year perid. The UAAL is being amrtized as a level percentage f prjected payrll n a clsed basis. The remaining amrtizatin perid at June 0, 2017, was 22 years. Nte 12 - Pensin plans: General infrmatin: The District participates in the New Yrk State Teachers' Retirement System (NYSTRS) and the New Yrk State Emplyees' Retirement System (NYSERS). These are cst-sharing multiple emplyer public emplyee retirement systems. The Systems ffer a wide range f plans and benefits, which are related t years f service and final average salary, vesting f retirement benefits, death, and disability. Prvisins and administratin: The New Yrk State Teachers' Retirement Bard administers NYSTRS. The System prvides benefits t plan members and beneficiaries as authrized by the Educatin Law and the Retirement and Scial Security Law f the State f New Yrk. NYSTRS issues a publicly available financial reprt that cntains financial statements and required supplementary infrmatin fr the System. The reprt may be btained by writing t NYSTRS, 10 Crprate Wds Drive, Albany, New Yrk

58 Ntes t Financial Statements June 0,2017 NYSERS prvides retirement benefits as well as death and disability benefits. New Yrk State Retirement and Scial Security Law gverns bligatins f emplyers and emplyees t cntribute and benefits t emplyees. The System issues a publicly available financial reprt that includes financial statements and required supplementary infrmatin. That reprt may be btained by writing t NYSERS, Gvernr Alfred E. Smith State ffice Building, Albany, New Yrk Funding plicies: The Systems are nncntributiy fr emplyees wh jined prir t July 27, Fr emplyees wh jined the Systems after July 27, 1976 and prir t January 1, 2010, emplyees cntribute % t.5% with the exceptin f ERS Tier V and VI emplyees. Emplyees in the Systems mre than ten years are n lnger required t cntribute. In additin, emplyee cntributins under ERS Tier VI vary based n a sliding scale. Fr NYSERS, the Cmptrller certifies the rates expressed as prprtins f members' payrll annually, which are used in cmputing the cntributins required t be made by emplyers t the pensin accumulatin fund. Pursuant t Article 11 f the Educatin Law, the New Yrk State Teachers' Retirement Bard establishes rates annually fr NYSTRS. The District is required t cntribute at an actuarially determined rate. The District cntributins made t the Systems were equal t 100% f the cntributins required fr each year. The required cntributins fr the current year and tw preceding years were: Year TRS ERS June 0,2017 $ 1,649,116 $ 581,970 June 0,2016 1,979, ,28 June 0,2015 1,78, ,951 Since 1989, the NYSERS billings have been based n Chapter 62 f the Laws f 1989 f the State f New Yrk. This legislatin requires participating emplyers t make payments n a current basis, while amrtizing existing unpaid amunts relating t the System's fiscal years ending March 1, 1988 and 1989 ver a 17-year perid, with an 8.75% interest factr added. Lcal gvernments were given the ptin t prepay this liability. The Salmn River Central Schl District elected t make the full payment. The State Legislature authrized lcal gvernments t make available retirement incentive prgrams. Nthing was charged t expenditures in the Gvernmental Funds in the current fiscal year. 54

59 Ntes t Financial Statements June 0, 2017 Nte 1 - Risk management: The Salmn River Central Schl District is expsed t varius risks f lss related t trts, theft, damage, injuries, errrs and missins, natural disasters, and ther risks. These risks are cvered by cmmercial insurance purchased frm independent third parties. Settled claims frm these risks have nt exceeded cmmercial insurance cverage fr the past tw years. The District participates in the Franklin-Essex-Hamiltn BCES Wrkers' Cmpensatin Insurance Cnsrtium, a risk-sharing pl, t insure Wrkers' Cmpensatin claims. This is a public entity risk pl created under Article 5 f the Wrkers' Cmpensatin Law, t finance liability and risks related t Wrkers' Cmpensatin claims. The Schl District has n liability as f June 0, Nte 14 - Cntingencies and cmmitments: The District has received grants which are subject t audit by agencies f the State and Federal gvernments. Such audits may result in disallwances and a request fr a return f funds. Based upn prir audits, the District's administratin believes disallwances, if any, will be immaterial. Nte 15 - Fund balances: Prtins f fund balances are reserved and nt available fr current expenses r expenditures, as reprted in the Gvernmental Funds Balance Sheet. The main campus capital prject fund had a deficit fund balance. This will be funded when the District btains permanent financing fr its current cnstructin prject. Nte 16 - Use f estimates: The preparatin f financial statements in cnfrmity with accunting principles generally accepted in the United States f America requires management t make estimates and assumptins that affect the reprted amunt f assets and liabilities and disclsure f cntingent assets and liabilities at the date f the financial statement and the reprted revenues and expenses during the reprting perid. Actual results culd differ frm thse estimates. Estimates and assumptins are made in a variety f areas, including cmputatin f encumbrances, cmpensated absences, ptential cntingent liabilities and useful lives f lng-lived assets. Nte 17 - Subsequent events: Subsequent events have been evaluated thrugh September 26, 2017, which is the date the financial statements were available t be issued. 55

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62 Schedule f Funding Prgress - ther Pst-Emplyment Benefits Plan Fr the Year Ended June 0, 2017 Actuarial Actuarial Actuarial Accrued Unfunded AAL Valuatin Value f Liability (AAL) (UAAL) Date Assets (in thusands) (in thusands) Funded Rati Cvered Payrll (in thusands) UAAL as a percentage f Cvered Payrll July 1,2016 $ July 1,2014 July 1,2012 July 1,2010 July 1, ,414 11,75 105,14 92,081 80, ,414 11,75 105,14 92,081 80, % 0.00% 0.00% 0.00% 0.00% $ 15,81 15,128 12,7 12,810 1,862 91% 749% 854% 719% 578% See paragraph n required supplementary infrmatin included in auditrs' reprt. 58

63 Salmn River Central Schl Distict Required Supplementary Infrmatin Prprtinate Share f Net Pensin Asset (Liability) -TRS June 0,2017 Measurement Date 6/0/14 6/0/15 6/0/16 District's prprtin f the net pensin asset (liability) % % % District's prprtinate share f the net pensin asset (liability) $ 7,945,807 $ 7,549,718 $ (820,71) District's cvered payrll $ 10,28,000 $ 10,57,000 $ 10,917,000 District's prprtinate share f the net pensin asset (liability) as a % f its cvered emplyee payrll 76.9% 71.65% 7.52% Plan fiduciary net psitin as a % f the ttal pensin asset (liability) % % 99.01% See paragraph n required supplementary infrmatin included in auditr's reprt.

64 Required Supplementary Infrmatin Prprtinate Share f Net Pensin Liability-ERS June 0, 2017 Measurement Date /1/15 /1/16 /1/17 District's prprtin f the net pensin liability % % % District's prprtinate share f the net pensin liability $ 497,261 $ 2,94,270 $ 1,447,871 District's cvered payrll $,796,000 $,759,000 $ 4,019,000 District's prprtinate share f the net pensin liability as a % f its cvered emplyee payrll 1.10% 6.69% 6.0% Plan fiduciary net psitin as a % f the ttal pensin liability 97.90% 90.70% 94.70% See paragraph n required supplementary infrmatin included in auditr's reprt. 60

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67 Schedule f Change frm Adpted Budget t Final Budget and the Real Prperty Tax Limit Fr the Year Ended June 0, 2017 CHANGE FRM ADPTED BUDGET T REVISED BUDGET Adpted budget $28,948,122 Add: Prir year's encumbrances 1,06 riginal budget 29,081,185 Budget revisin -_ Final budget $29,081,185 SECTIN 118 F REAL PRPERTY TAX LAW LIMIT CALCULATIN vter-apprved expenditure budget $0,851,524 Maximum allwed (4% f budget) 1,24,061 General Fund fund balance subject t Sectin 118 f Real Prperty Tax Law: Unrestricted fund balance: Cmmitted fund balance Assigned fund balance 650,77 Unassigned fund balance 7,997,45 Ttal unrestricted fund balance $ 8,648,172 Less: Apprpriated fund balance 67,606 Insurance recvery reserve Tax reductin reserve Encumbrances included in cmmitted and assigned fund balance 1,11 Ttal adjustments $ 650,77 General Fund fund balance subject t Sectin 118 f Real Prperty Tax Law $ 7,997,45 Actual percentage 25.92% See paragraph n supplementary schedules included in auditrs' reprt. 6

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69 Schedule f Revenues and Expenditures fr the Mhawk Schl - General Fund Fr the Year Ended June 0, 2017 REVENUES Charges fr services $ 8,677 Use f mney and prperty 1,628 Sale f prperty and cmpensatin fr lss 15 Miscellaneus 99,269 State surces 8,924,285 Federal surces - Ttal Revenues 9,04,17~4~ EXPENDITURES General supprt 1,125,082 Instructin 4,770,98 Cmmunity services Emplyee benefits 2,909,61 Debt service 169,019 Ttal Expenditures 8,974,652 Excess f Revenues ver Expenditures 59,522 THER FINANCING SURCES AND USES perating transfer in perating transfer ut (59,594) Ttal ther Surces and Uses (59,594) Excess (Deficiency) f Revenues and ther Surces ver Expenditures and ther Uses $ (72) See paragraph n supplementary schedules included in auditrs' reprt.

70 Cmbined Balance Sheet-Nn-Majr Gvernmental Funds June 0,2017 Ttal Schl Capital Nn-Majr Lunch Prjects Funds ASSETS Cash Unrestricted $ 20 $ - $ 20 Restricted... Receivables ther Due frm ther funds... State and Federal aid... Inventries 48,145 -_ 48,145 Ttal Assets $ 48,165 $ - $ 48,165 LIABILITIES Payables Accunts payable $ - $ - $ Accrued liabilities 1,766-1,766 Accrued interest - Due t ther funds 42,841-42,841 Due t ther gvernments Ntes payable Bnd anticipatin... Revenue anticipatin -_ - -_ Ttal Liabilities 45,5-45,5 DEFERRED INFLWS F RESURCES Deferred revenue Sale f future revenues Ttal Deferred Inflws f Resurces FUND BALANCES Nnspendable 48,145-48,145 Restricted Capital reserve... Assigned Assigned apprpriated fund balance 2,812-2,812 Assigned unapprpriated fund balance - Unassigned fund balance (48,145) - (48,145) Ttal Fund Balances 2,812 2,812 Ttal Liabilities and Fund Balances $ 48,165 $ $ 48,165 See paragraph n supplementary schedules included in auditrs' reprt.

71 Cmbined Statement f Revenues, Expenditures and Changes in Fund Equity-Nn-Majr Gvernmental Funds Fr the Year Ended June 0, 2017 Nn-Majr Ttal Schl Capital Nn-Majr Lunch Prjects Funds REVENUES Use f mney and prperty $ 4 $ $ 4 Sale f prperty and cmpensatin fr lss Miscellaneus State surces 26,96-26,96 Federal surces 85,00-85,00 Surplus fd 71,06-71,06 Sales - schl lunch 120,51-120,51 Ttal Revenues 1,054,7-1,054,7 EXPENDITURES General supprt 5,682-5,682 Instructin Pupil transprtatin - 444, ,008 Emplyee benefits 64,702-64,702 Cst f sales 544, ,122 Capital utlay Ttal Expenditures 1,262, ,008 1,706,514 Excess (Deficiency) f Revenues ver Expenditures (207,77) (444,008) (651,781) THER FINANCING SURCES AND USES perating transfers in 205,98-205,98 perating transfers ut - (15,992) (15,992) Prceeds frm debt - 460, ,000 BAN redeemed frm apprpriatins Ttal ther Surces and Uses 205,98 444, ,406 Excess (Deficiency) f Revenues and ther Surces ver Expenditures and ther Uses (2,75) - (2,75) Fund Balances - Beginning f year 5,187-5,187 Fund Balances - End f year $ 2,812 $ $ 2,812 See paragraph n supplementary schedules included in auditrs' reprt. 67

72 Investment in Capital Assets, Net f Related Debt June 0, 2017 Capital assets, net $ 85,501,828 Add: Unamrtized deferred gain n advance refunding f debt 4,160 Deduct: Bnd anticipatin ntes 0,965,000 Unamrtized premium n bnd issuance 16,258 Shrt-term prtin f bnds payable 2,986,495 Lng-term prtin f bnds payable 14,758,196 48,725,949 Investment in capital assets, net f related debt $ 6,819,09 See paragraph n supplementary schedules included in auditrs' reprt.

73 Seyfarth 8 Seyfarth CPAs, P.C. 564 East Main Street Malne,NY 1295 (518) Carl A. Seyfarth Jr. CPA Ann E. Seyfarth CPA Independent Auditrs' Reprt n the Extraclassrm Activity Fund T the Bard f Educatin Salmn River Central Schl District We have audited the accmpanying Statement f Assets and Liabilities Arising Frm Cash Transactins f the Extraclassrm Activity Fund f Salmn River Central Schl District as f June 0, 2017 and the related ntes. Management's Respnsibility fr the Financial Statement Management is respnsible fr the preparatin and fair presentatin f this financial statement in accrdance with the cash basis f accunting as described in Nte 1; this includes determining that the cash basis f accunting is an acceptable basis fr the preparatin f the financial statement in the circumstances. Management is als respnsible fr the design, implementatin, and maintenance f internal cntrl relevant t the preparatin and fair presentatin f the financial statement that is free frm material misstatement, whether due t fraud r errr. Auditr's Respnsibility ur respnsibility is t express an pinin n this financial statement based n ur audit. We cnducted ur audit in accrdance with auditing standards generally accepted in the United States f America and the Minimum Prgram fr Audits f Financial Recrds f New Yrk State Schl Districts. Thse standards require that we plan and perfrm the audit t btain reasnable assurance abut whether the financial statement is free f material misstatement. An audit invlves perfrming prcedures t btain audit evidence abut the amunts and disclsures in the financial statement. The prcedures selected depend n the auditr's judgment, including the assessment f the risks f material misstatement f the financial statement, whether due t fraud r errr. In making thse risk assessments, the auditr cnsiders internal cntrl relevant t the entity's preparatin and fair presentatin f the financial statement in rder t design audit prcedures that are apprpriate in the circumstances, but nt fr the purpse f expressing an pinin n the effectiveness f the entity's internal cntrl. Accrdingly, we express n such pinin. An audit als includes evaluating the apprpriateness f accunting plicies used and the reasnableness f significant accunting estimates made by management, as well as evaluating the verall presentatin f the financial statement. 69

74 We believe that the audit evidence we have btained is sufficient and apprpriate t prvide a basis fr ur audit pinin. pinin In ur pinin, the financial statement referred t in the first paragraph presents fairly, in all material respects, the assets and liabilities f the Extraclassrm Activity Fund f Salmn River Central Schl District as f June 0, 2017 in accrdance with the cash basis f accunting as described in Nte 1. Basis f Accunting We draw attentin t Nte 1 f the financial statement which describes the basis f accunting. The financial statement is prepared n the cash basis f accunting, which is a basis f accunting ther than accunting principles generally accepted in the United States f America. ur pinin is nt mdified with respect t that matter. Reprt n Supplementary Infrmatin ur audit was cnducted fr the purpse f frming an pinin n the Statement f Assets and Liabilities Arising Frm Cash Transactins. The accmpanying Schedule f Extraclassrm Activity Fund Cash Receipts, Disbursements and Ending Balances is presented fr purpses f additinal analysis and is nt a required part f the Statement f Assets and Liabilities Arising Frm Cash Transactins. Such infrmatin is the respnsibility f management and was derived frm and relates directly t the underlying accunting and ther recrds used t prepare the Statement f Assets and Liabilities Arising Frm Cash Transactins. The infrmatin has been subjected t the auditing prcedures applied in the audit f the Statement f Assets and Liabilities Arising Frm Cash Transactins and certain additinal prcedures, including cmparing and recnciling such infrmatin directly t the underlying accunting and ther recrds used t prepare the Statement f Assets and Liabilities Arising Frm Cash Transactins r t the Statement f Assets and Liabilities Arising Frm Cash Transactins itself, and ther additinal prcedures in accrdance with the cash basis f accunting as described in Nte 1. In ur pinin, the infrmatin is fairly stated in all material respects in relatin t the Statement f Assets and Liabilities Arising Frm Cash Transactins. AMJA^ 4 AMJJUJI CPAS, P. C. SeyTa^h & Seyfarth <8P$LS, P.C. Malne, NY September 26,

75 Statement f Assets and Liabilities Arising frm Cash Transactins Extraclassrm Activity Fund June 0, 2017 Assets Cash $ 97,768 Liabilities Extraclassrm Activity Balances $ 97,768 See ntes t financial statements - extraclassrm activity fund.

76 Schedule f Cash Receipts, Disbursements and Ending Balances - Extraclassrm Activity Fund Fr the Year Ended June 0, 2017 Beginning Ending Balance Balance Activity July 1,2016 Receipts Expenditures June 0,2017 Band Club $ 87 $ 6,250 $ 7,078 $ 9 CBWEP 10,91 1,84 1,79 10,576 Chrus 659 1,256 1, Drama Club,077,077,590 2,564 Class f ,525 2,520 40,045 - Class f 2018,2 12,229 9,0 6,528 Class f ,950 2,288 1,011 6,227 Class f 2020,9 59 1,799 Class f ,707 5,016 27,94 9,29 Class f ,957 1,797 1,160 FFA 9,214,984 6,195 7,00 French Club 1, ,498 Health Club Mhawk Club 574 6,967 5,49 2,048 Jr Natinal Hnr Sciety 880 4,49 4,856 7 Natinal Hnr Sciety Rbtics Spanish Club ,212 STEM - 6th Grade 6,141,524 (20) STEM - 7th Grade STEM - 8th Grade Student Cuncil 2, ,768 Student Cuncil Mhawk Schl 5,49 1,78 2,616 4,561 Yearbk Club 1,158 7,58 6,127 2,569 Students Wh Care 2,680 5,621 5,74 2,567 Varsity Club 0,9 46,88 45,925 0,856 Ttal $ 94,25 $ 179,44 $ 175,901 $ 97,768 See ntes t financial statements - extraclassrm activity fund.

77 Ntes t Financial Statements - Extraclassrm Activity Fund June 0, 2017 Nte 1 - Summary f Significant Accunting Plicies The transactins f the Extraclassrm Activity Funds are nt cnsidered part f the reprting entity f the Salmn River Central Schl District. Cnsequently, such transactins are nt included in the cmbined financial statements f the Schl District. The bks and recrds f the Salmn River Central Schl District's Extraclassrm Activities Funds are maintained n the cash basis f accunting. Under this basis f accunting, revenues are recgnized when cash is received and expenditures are recgnized when cash is disbursed. 7

78 Schedule f Expenditures f Federal Awards Fr the Year Ended June 0, 2017 Prgram Title US Department f Educatin Passed-thrugh NYS Educatin Department: Title I Cluster: Title I A&D Title I Schl Imprvement Title II Part A Special Educatin Cluster: IDEA-PartB Sectin 619 IDEA-Part B Sectin 611 Title VI PartB Title VII Innvative Appraches t Literacy Ttal US Dept. f Educatin US Department f Agriculture Passed-thrugh NYS Educatin Department: Child Nutritin Cluster: Nn-Cash Assistance (fd distributin) Natinal Schl Lunch Prgram Nn-Cash Assistance Subttal Cash Assistance Natinal Schl Lunch Prgram Natinal Schl Breakfast Prgram Snack Prgram fr Children Summer Fd Service fr Children Cash Assistance Subttal Ttal US Dept f Agriculture Child Nutritin Ttal Federal Awards Federal Pass-Thrugh CFDA Grantr's Number Number Expenditures $ 592, , ,50 * , , ,57 412, , S060A , S215G ,10 1,756, n/a 71,06 71, n/a 518, n/a 25, n/a 1, n/a 49,00 85,00 906,6 $ 2,662,774 * Majr Prgram See ntes t schedule f expenditures f Federal awards. 74

79 Ntes t Schedule f Expenditures f Federal Awards June 0,2017 Nte 1 - Basis f Presentatin: The accmpanying schedule f expenditures f federal awards (the Schedule) presents the activity f federal award prgrams administered by the District, which is described in Nte 1 t the District's accmpanying financial statements, fr the year ended June 0, Federal awards that are included in the schedule may be received directly frm federal agencies, as well as federal awards that are passed thrugh frm ther gvernment agencies. The infrmatin in this schedule is presented in accrdance with the requirements f Title 2 U.S. Cde f Federal Regulatins (CFR) Part 200, Unifrm Administrative Requirements, Cst Principles, and Audit Requirements f Federal Awards (Unifrm Guidance). Therefre, sme amunts presented in this schedule may differ frm amunts presented in, r used in the preparatin f, the financial statements. Nte 2 - Summary f Significant Accunting Plicies: Expenditures reprted n the Schedule are reprted using the mdified accrual basis f accunting. Such expenditures are recgnized fllwing the cst principles cntained in the Unifrm Guidance, wherein certain types f expenditures are nt allwable r are limited as t reimbursement. Indirect csts may be included in the reprted expenditures, t the extent that they are included in the federal financial reprts used as the surce fr the data presented. Certain f the District's federal award prgrams have been charged with indirect csts, based upn a rate established by New Yrk State. The District has elected nt t use the 10% de minimis indirect cst rate allwed under the Unifrm Guidance applied t verall expenditures. Matching csts (the District's share f certain prgram csts) are nt included in the reprted expenditures. The basis f accunting varies by federal prgram cnsistent with the underlying regulatins pertaining t each prgram. The amunts reprted as federal expenditures were btained frm the federal financial reprts fr the applicable prgram and perids. The amunts reprted in these reprts are prepared frm recrds maintained fr each prgram, which are recnciled with the District's financial reprting system. 75

80 Seyfarth & Seyfarth CPAs, P.C. 564 East Main Street Malne,NY 1295 (518) Carl A. Seyfarth Jr. CPA Ann E. Seyfarth CPA Reprt n Internal Cntrl ver Financial Reprting and n Cmpliance and ther Matters Based n an Audit f Financial Statements Perfrmed in Accrdance With Gvernment Auditing Standards T the Bard f Educatin Salmn River Central Schl District Independent Auditr's Reprt We have audited, in accrdance with the auditing standards generally accepted in the United States f America and the standards applicable t financial audits cntained in Gvernment Auditing Standards issued by the Cmptrller General f the United States, the financial statements f the gvernmental activities, each majr fund, and the aggregate remaining fund infrmatin f Salmn River Central Schl District as f and fr the year ended June 0, 2017, and the related ntes t the financial statements, which cllectively cmprise the Salmn River Central Schl District's basic financial statements and have issued ur reprt theren dated September 26, Internal Cntrl ver Financial Reprting In planning and perfrming ur audit f the financial statements, we cnsidered Salmn River Central Schl District's internal cntrl ver financial reprting (internal cntrl) t determine the audit prcedures that are apprpriate in the circumstances fr the purpse f expressing ur pinins n the financial statements, but nt fr the purpse f expressing an pinin n the effectiveness f Salmn River Central Schl District's internal cntrl. Accrdingly, we d nt express an pinin n the effectiveness f Salmn River Central Schl District's internal cntrl. A deficiency in internal cntrl exists when the design r peratin f a cntrl des nt allw management r emplyees, in the nrmal curse f perfrming their assigned functins, t prevent, r detect and crrect misstatements n a timely basis. A material weakness is a deficiency, r a cmbinatin f deficiencies, in internal cntrl such that there is a reasnable pssibility that a material misstatement f the entity's financial statements will nt be prevented, r detected and crrected n a timely basis. A significant deficiency is a deficiency, r a cmbinatin f deficiencies in internal cntrl that is less severe than a material weakness, yet imprtant enugh t merit attentin by thse charged with gvernance. 76

81 ur cnsideratin f internal cntrl was fr the limited purpse described in the first paragraph f this sectin and was nt designed t identify all deficiencies in internal cntrl that might be material weaknesses r significant deficiencies. Given these limitatins, during ur audit we did nt identify any deficiencies in internal cntrl that we cnsider t be material weaknesses. Hwever, material weaknesses may exist that have nt been identified. Cmpliance and ther Matters As part f btaining reasnable assurance abut whether Salmn River Central Schl District's financial statements are free frm material misstatement, we perfrmed tests f its cmpliance with certain prvisins f laws, regulatins, cntracts, and grant agreements, nncmpliance with which culd have a direct and material effect n the determinatin f financial statement amunts. Hwever, prviding an pinin n cmpliance with thse prvisins was nt an bjective f ur audit, and accrdingly, we d nt express such an pinin. The results f ur tests disclsed instances f nncmpliance r ther matters that are required t be reprted under Gvernment Auditing Standards and which are described in the accmpanying schedule f findings and questined csts as item Salmn River Central Schl District's Respnse t Findings Salmn River Central Schl District's respnse t the findings identified in ur audit is described in the accmpanying schedule f findings and questined csts. Salmn River Central Schl District's respnse was nt subjected t the auditing prcedures applied in the audit f the financial statements, and, accrdingly, we express n pinin n it. Purpse f This Reprt The purpse f this reprt is slely t describe the scpe f ur testing f internal cntrl and cmpliance and the results f that testing, and nt t prvide an pinin n the effectiveness f the District's internal cntrl r n cmpliance. This reprt is an integral part f an audit perfrmed in accrdance with Gvernment Auditing Standards in cnsidering the District's internal cntrl and cmpliance. Accrdingly, this cmmunicatin is nt suitable fr any ther purpse. SeyJkrfi & Seyfarth CP&sjP.C. V Malne, NY September 26,

82 Seyfarth 5 Seyfarth CPAs, P.C. 564 East Main Street Malne, NY 1295 (518) Carl A. Seyfarth Jr. CPA Ann E. Seyfarth CPA Reprt n Cmpliance Fr Each Majr Federal Prgram; Reprt n Internal Cntrl ver Cmpliance; and Reprt n Schedule f Expenditures f Federal Awards Required by the Unifrm Guidance T the Bard f Educatin Salmn River Central Schl District Independent Auditr's Reprt Reprt n Cmpliance fr Each Majr Federal Prgram We have audited Salmn River Central Schl District's cmpliance with the types f cmpliance requirements described in the MB Cmpliance Supplement that culd have a direct and material effect n each f Salmn River Central schl District's majr federal prgrams fr the year ended June 0, Salmn River Central Schl District's majr federal prgrams are identified in the summary f auditr's results sectin f the accmpanying schedule f findings and questined csts. Management's Respnsibility Management is respnsible fr cmpliance with the requirements f laws, regulatins, cntracts, and grants applicable t its federal prgrams. Auditr's Respnsibility ur respnsibility is t express an pinin n cmpliance fr each f Salmn River Central Schl District's majr federal prgrams based n ur audit f the types f cmpliance requirements referred t abve. We cnducted ur audit f cmpliance in accrdance with auditing standards generally accepted in the United States f America; the standards applicable t financial audits cntained in Gvernment Auditing Standards, issued by the Cmptrller General f the United States; and the audit requirements f Title 2 U.S. Cde f Federal Regulatins Part 200 Unifrm Administrative Requirements, Cst Principles, and Audit Requirements f Federal Awards (Unifrm Guidance). Thse standards and the Unifrm Guidance require that we plan and perfrm the audit t btain reasnable assurance abut whether nncmpliance with the types f cmpliance requirements referred t abve that culd have a direct and material effect n a majr federal prgram ccurred. An audit includes examining, n a test basis, evidence abut Salmn River Central Schl District's cmpliance with thse requirements and perfrming such ther prcedures as we cnsidered necessary in the circumstances. We believe that ur audit prvides a reasnable basis fr ur pinin n cmpliance fr each majr federal prgram. Hwever, ur audit des nt prvide a legal determinatin f Salmn River Central Schl District's cmpliance. 78

83 pinin n Each Majr Federal Prgram In ur pinin, Salmn River Central Schl District cmplied, in all material respects, with the types f cmpliance requirements referred t abve that culd have a direct and material effect n each f its majr federal prgrams fr the year ended June 0, Reprt n Internal Cntrl ver Cmpliance Management f Salmn River Central Schl District is respnsible fr establishing and maintaining effective internal cntrl ver cmpliance with the types f cmpliance requirements referred t abve. In planning and perfrming ur audit f cmpliance, we cnsidered Salmn River Central Schl District's internal cntrl ver cmpliance with the types f requirements that culd have a direct and material effect n each majr federal prgram t determine the auditing prcedures that are apprpriate in the circumstances fr the purpse f expressing an pinin n cmpliance fr each majr federal prgram and t test and reprt n internal cntrl ver cmpliance in accrdance with the Unifrm Guidance, but nt fr the purpse f expressing an pinin n the effectiveness f internal cntrl ver cmpliance. Accrdingly, we d nt express an pinin n the effectiveness f Salmn River Central Schl District's internal cntrl ver cmpliance. A deficiency in internal cntrl ver cmpliance exists when the design r peratin f a cntrl ver cmpliance des nt allw management r emplyees, in the nrmal curse f perfrming their assigned functins, t prevent, r detect and crrect, nncmpliance with a type f cmpliance requirement f a federal prgram n a timely basis. A material weakness in internal cntrl ver cmpliance is a deficiency, r cmbinatin f deficiencies, in internal cntrl ver cmpliance, such that there is a reasnable pssibility that material nncmpliance with a type f cmpliance requirement f a federal prgram will nt be prevented, r detected and crrected, n a timely basis. A significant deficiency in internal cntrl ver cmpliance is a deficiency, r a cmbinatin f deficiencies, in internal cntrl ver cmpliance with a type f cmpliance requirement f a federal prgram that is less severe than a material weakness in internal cntrl ver cmpliance, yet imprtant enugh t merit attentin by thse charged with gvernance. ur cnsideratin f internal cntrl ver cmpliance was fr the limited purpse described in the first paragraph f this sectin and was nt designed t identify all deficiencies in internal cntrl ver cmpliance that might be material weaknesses r significant deficiencies. We did nt identify any deficiencies in internal cntrl ver cmpliance that we cnsider t be material weaknesses. Hwever, material weaknesses may exist that have nt been identified. The purpse f this reprt n internal cntrl ver cmpliance is slely t describe the scpe f ur testing f internal cntrl ver cmpliance and the results f that testing based n the requirements f the Unifrm Guidance. Accrdingly, this reprt is nt suitable fr any ther purpse. 79

84 Reprt n Schedule f Expenditures f Federal Awards Required by the Unifrm Guidance We have audited the financial statements f the gvernmental activities, each majr fund, and the aggregate remaining fund infrmatin f Salmn River Central Schl District as f and fr the year ended June 0, 2017, and the related ntes t the financial statements, which cllectively cmprise Salmn River Central Schl District's basic financial statements. We issued ur reprt theren dated September 26, 2017, which cntained unmdified pinins n thse financial statements. ur audit was cnducted fr the purpse f frming pinins n the financial statements that cllectively cmprise the basic financial statements. The accmpanying schedule f expenditures f federal awards is presented fr purpses f additinal analysis as required by the Unifrm Guidance and is nt a required part f the basic financial statements. Such infrmatin is the respnsibility f management and was derived frm and relates directly t the underlying accunting and ther recrds used t prepare the basic financial statements. The infrmatin has been subjected t the auditing prcedures applied in the audit f the financial statements and certain additinal prcedures, including cmparing and recnciling such infrmatin directly t the underlying accunting and ther recrds used t prepare the basic financial statements r t the basic financial statements themselves, and ther additinal prcedures in accrdance with auditing standards generally accepted in the United States f America. In ur pinin, the schedule f expenditures f federal awards is fairly stated in all material respects in relatin t the basic financial statements as a whle. Malne, NY September 26,

85 Schedule f Findings and Questined Csts Fr the Year Ended June 0, 2017 Sectin I - Summary f Auditrs' Results Financial Statements Type f auditrs' reprt issued: Unmdified Internal Cntrl ver financial reprting: Material weakness identified? Yes x N Significant deficiencies identified? Yes x Nne reprted Nncmpliance material t financial statements nted? Yes x N Federal Awards Internal cntrl ver majr prgrams: Material weakness identified? Significant deficiencies identified? Yes x N Yes x Nne reprted Type f auditrs' reprt issued n cmpliance fr majr federal prgrams Unmdified Any audit findings disclsed that are required t be reprted in accrdance with 2 CFR (a) Identificatin f majr federal prgrams: CFDA Numbers Yes x N Name f Federal Prgram r Cluster Title I Cluster Dllar Threshhld used t distinguish between type A and type B prgrams $ 750,000 Auditee qualified as lw-risk auditee? Yes N

86 Schedule f Findings and Questined Csts Fr the Year Ended June 0, 2017 Sectin II - Financial Statement Findings Fund Balance Criteria: New Yrk State Real Prperty Tax Law requires schl districts t maintain their unrestricted fund balance at r belw 4 percent f the ensuing year's apprpriatins. Cnditin: The prtin f the District's fund balance subject t the New Yrk State Real Prperty Tax Law limit exceeded the amunt allwable. Cntext: This is a repeat finding fr the past several years. The unrestricted fund balance at June 0, 2017 is apprximately $6.76 millin ver the limit. Effect: Funds were nt used in a manner that benefitted taxpayers such as increasing legally adpted reserves, paying ff debt and reducing prperty taxes. Cause: The District adpted budgets with apprpriatins which exceeded the actual amunts needed. Recmmendatin: We recmmend that the District keep in mind the 4% rule when preparing future budgets. Management's Respnse: The Administratin will cntinue t wrk with the Bard f Educatin t prudently bring the District's fund balance int cmpliance with the Real Prperty Law 118. In the schl year, the District received a ne-time aid adjustment fr the Native American Tuitin. The District brught a miscalculatin t the attentin f NYS and wrked fr several years t have the frmula crrected. In June 2014, NYS agreed t pay the District fr previus years with an amended frmula. This resulted in the District adding $5,124,072 t the fund balance due t the timing f the payments. The District did nt knw the State was ging t apprve the frmula change during the budgeting fr the schl year, s it was nt included in the budget. During the year, the District did wrk t start replacing equipment and utilize ne-time purchases t start bringing the fund balance back dwn. In the cming schl year, the District plans t cntinue lking int ne-time purchases f prgrams and equipment. The District will als wrk with the Bard t lk at reducing future debt payments. 82