MOUNT PLEASANT ELEMENTARY SCHOOL DISTRICT San Jose, California. FINANCIAL STATEMENTS June 30, 2011

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1 MOUNT PLEASANT ELEMENTARY SCHOOL DISTRICT San Jose, California FINANCIAL STATEMENTS June 30, 2011

2 FINANCIAL STATEMENTS WITH SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2011 TABLE OF CONTENTS Page Independent Auditors' Report 1-2 Management's Discussion and Analysis 3-15 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Assets 16 Statement of Activities 17 Fund Financial Statements: Balance Sheet - Governmental Funds 18 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 19 Statement of Revenues, Expenditures and Change in Fund Balances - Governmental Funds 20 Reconciliation of the Statement of Revenues, Expenditures and Change in Fund Balances - Governmental Funds - to the Statement of Activities 21 Combining Statement of Fiduciary Net Assets - Trust and Agency Funds 22 Statement of Change in Fiduciary Net Assets - Trust Fund 23 Notes to Basic Financial Statements Required Supplementary Information: General Fund Budgetary Comparison Schedule 41 Schedule of Other Postemployment Benefits (OPEB) Funding Progress 42 Notes to Required Supplementary Information 43 Supplementary Information: Combining Balance Sheet - All Non-Major Funds 44

3 FINANCIAL STATEMENTS WITH SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2011 TABLE OF CONTENTS (Continued) Page Supplementary Information: (Continued) Combining Statement of Revenues, Expenditures and Change in Fund Balances - All Non-Major Funds 45 Combining Statement of Changes in Assets and Liabilities - All Agency Funds Organization 48 Schedule of Average Daily Attendance 49 Schedule of Instructional Time 50 Schedule of Expenditure of Federal Awards Reconciliation of Unaudited Actual Financial Report with Audited Financial Statements 53 Schedule of Financial Trends and Analysis 54 Schedule of Charter Schools 55 Notes to Supplementary Information Independent Auditors' Report on Compliance with State Laws and Regulations Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditors' Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A Findings and Recommendations: Schedule of Audit Findings and Questioned Costs Status of Prior Year Findings and Recommendations 71-72

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6 MANAGEMENT DISCUSSION AND ANALYSIS JUNE 30, 2011 The Management Discussion and Analysis (MD&A) section of the Mount Pleasant Elementary School District's annual financial report presents District management's view of the District's financial performance during the fiscal year ending June 30, This MD&A section should be read in conjunction with the District's financial statements, which immediately follow this section. DISTRICT PROFILE Mount Pleasant Elementary School District (the "District") - established as an elementary school district in is located in the midst of Santa Clara County's Silicon Valley. The District encompasses a seven square mile area and serves several portions of San Jose. The District maintains four elementary schools, one middle school, and a district office site. One of the four elementary schools was converted into a charter school in The Board of Trustees is the level of government, which has governance responsibilities over all activities related to the public school education in the District. The District's General Fund includes the Administrative Unit (AU) of the Southeast Special Education Local Plan Area (SELPA). The SELPA Administrative Unit is the agency through which funds pass from the California Department of Education to the districts within the SELPA and expenditures for County operated Special Education programs pass from the Santa Clara County Office of Education to the districts within the SELPA. The activities of the SELPA Administrative Unit are under direction of the Executive Council, which is represented equally by all districts within the SELPA. The Management Discussion and Analysis pertains to the District's operations for the fiscal year that ended on June 30, 2011, excluding the operations of the SELPA Administrative Unit. OVERVIEW OF THE FINANCIAL STATEMENTS The Basic Financial Statements The basic financial statements presented herein include all of the activities of Mount Pleasant Elementary School District using the integrated approach as prescribed by Governmental Accounting Standards Board Codification Section (GASB Cod. Section) N The Government-Wide Financial Statements present the financial picture of the District from the economic resources measurement focus using the accrual basis of accounting. These statements include all assets of the District (including infrastructure) as well as all liabilities (including long-term liabilities). Additionally, certain eliminations have occurred as prescribed by the statement in regards to interfund activity, payables and receivables. The Fund Financial Statements include statements for each of the two categories of activities: governmental and fiduciary. The governmental funds statements tell how basic services like general and special education were financed in the short-term as well as what remains for future spending. The fiduciary funds statements provide information about the financial relationships in which the District acts solely as a trustee or agent for the benefit of others to whom the resources belong. The Governmental Activities are prepared using the current financial resources measurement focus and modified accrual basis of accounting. 3

7 MANAGEMENT DISCUSSION AND ANALYSIS JUNE 30, 2011 Figure A-1 summarizes the major features of the District's basic financial statements, including the portion of the District's activities they cover and the types of information they contain. The remainder of this overview section of management's discussion and analysis highlights the structure and contents of each of the statements. Figure A-1 Major Features of the District wide and Fund Financial Statements Type of Statements District-wide Governmental Funds Fiduciary Funds Scope Required financial statements Entire District, except fiduciary activities Statement of net assets Statement of activities The activities of the District that are not proprietary or fiduciary, such as special education and building maintenance Balance sheet. Statement of revenues, expenditures & changes in fund balances Reconciliation to government wide financial statements Instances in which the District administers resources on behalf of someone else, such as student body activities Statement of fiduciary net assets. Statement of changes in fiduciary net assets Accounting basis and Measurement focus Accrual accounting and economic resources focus Modified accrual accounting and current financial resources focus Accrual accounting and economic resources focus Type of asset/liability information All assets and liabilities both financial and capital, short-term and long-term Only assets expected to be used up and liabilities that come due during the year or soon thereafter; no capital assets included All assets and liabilities, both short-term and longterm; standard funds do not currently contain nonfinancial assets, though they can Type of inflow/outflow information All revenues and expenses during the year, regardless of when cash is received or paid Revenues for which cash is received during or soon after the end of the year; expenditures when goods or services have been received and payment is due during the year or soon thereafter All revenue and expenses during the year, regardless of when cash is received or paid 4

8 MANAGEMENT DISCUSSION AND ANALYSIS JUNE 30, 2011 FINANCIAL HIGHLIGHTS OF THE PAST YEAR Revenue Limit District Since fiscal year , State school districts have operated under general-purpose revenue limits established by the State Legislature. In general, the revenue limits are calculated for each school district by multiplying (1) the actual daily attendance ("ADA") for each such district by (2) a base revenue limit per unit of ADA. The revenue limit calculations are adjusted annually in accordance with a number of factors designed primarily to provide cost of living increases and to equalize revenues among all State school districts of the same type. In the District's base revenue limit per unit of ADA was $6,085.87; however, funded revenue limit per ADA was only $4,992.67, or a loss of funding per ADA of $1, The District's revenue limit funding is accomplished by a mix of (1) local property taxes and (2) State apportionments of basic and equalization aid. Generally, the State apportionments amount to the difference between the District's revenue limit and the local property tax revenues. In , the District (excluding the SELPA Administrative Unit) received $13.8 million from revenue limit sources, accounting for approximately 58.8% of General Fund revenues. Of this, local property taxes accounted for 25.0% of General Fund revenues (see Chart-1). The percentage of property taxes received was less than the level of 31.9% due to a decline in property taxes. Total revenue limit revenue increased by only $130,511 from Other State, $5,961,510, 25% Chart 1 Mount Pleasant Elementary School District General Fund Revenues FY Other Local, $1,500,708, 6% Revenue Limit State, $7,906,037, 34% Federal, $2,211,880, 10% Revenue Limit Property Taxes, $5,871,919, 25% 5

9 MANAGEMENT DISCUSSION AND ANALYSIS JUNE 30, 2011 Net Assets THE DISTRICT AS A WHOLE The District's total assets were $31.4 million for the fiscal year ended June 30, 2011 (see Table 1). Restricted net assets of $6.7 million are reported separately to show legal constraints from debt covenants and enabling legislation that limit the School Board's ability to use those net assets for day-to-day operations. All District net assets are the result of governmental activities. Table 1 Mount Pleasant Elementary School District FY Net Assets (in millions of dollars) Governmental Activities Governmental Activities (Restated) Current and other assets $ 16.6 $ 15.7 Capital assets Total Assets Current liabilities Long-term debt Total Liabilities Net assets Restricted Unrestricted * Total Net Assets * A portion of the Unrestricted Net Assets is invested in Capital Assets. The increase in current assets in is primarily due to the increase in federal revenues. The increase in current liabilities in reflects a year end increase in deferred revenue caused by the carryover of federal funding. The decrease in long-term debt in reflects the payments made on General Obligation Bonds. 6

10 MANAGEMENT DISCUSSION AND ANALYSIS JUNE 30, 2011 Changes in Net Assets The results of this year's operations for the District as a whole are reported in the Statement of Activities. Table 2 takes the information from the Statement, rounds off the numbers, and rearranges them slightly so you can see our total revenues and expenses for the year. Table 2 Mount Pleasant Elementary School District Governmental Activities excluding Pass-throughs Changes in Net Assets (in millions of dollars) Revenues Charges for services $ 0.2 $ 0.3 Operating grants & contribution General Revenues: Federal & State Aid, Unrestricted Property Taxes Other general revenues Total Revenues Expenses Instructional related Student support services Administration Maintenance and operations Other Outgo Total Expenses Change in Net Assets $ 0.2 $ 1.6 Total revenues and expenses increased in primarily due to the use of one-time Federal Stimulus Funds. Total revenues were less than total expenses in causing a decrease in net assets by $0.5 million. 7

11 MANAGEMENT DISCUSSION AND ANALYSIS JUNE 30, 2011 Governmental Activities The total cost of all our governmental activities this year was $26.6 million. The District's expenses are predominantly related to educating and caring for students. In Table 3, we have presented the cost of each of the District's ten largest functions regular program instruction, guidance and counseling, school administration, student transportation services, school food services, other pupil services, district administration, maintenance and operations, interest on long-term liabilities, and others. Providing this information allows our community to consider the cost of each function in comparison to the benefits they believe are provided by that function. Table 3 Mount Pleasant Elementary School District Total Cost of Services (in millions of dollars) Instruction $ 15.3 $ 13.9 Guidance and Instructional Media School Administration Pupil Transportation Food Services All other Pupil Services Administration Maintenance and operations Interest on Long-term Liabilities Other Outgo (including SELPA in ) Total $ 87.6 * $ 23.5 * - With out SELPA cost, Other Cost is $29.0 million ($87.6 minus $58.6 million) In , Governmental Activities expenditures for the District (excluding SELPA Administrative Unit expenditures of $61.7 million) were $29.0 million which results in an increase above the fiscal year General Fund expenditures ($23.5 million) by $5.5 million. As reported in the Statement of Activities on page, the cost of all of our governmental activities was $29.0 million. However, the amount that our taxpayers ultimately financed for these activities through local taxes was only $7.5 million because a portion of the cost was paid by those who benefited directly from the programs ($.2 million) or by other governments and organizations who subsidized certain programs with grants and contributions ($10.1 million). We received additional funding totaling $11.2 million from a variety of sources including state funds, a parcel tax, interest and other sources. 8

12 MANAGEMENT DISCUSSION AND ANALYSIS JUNE 30, 2011 General Fund Charts 2 and 3 provide a breakdown of the General Fund expenditures, both by Object code and by Function. As is common with virtually all school districts, the majority of expenditures in the general fund are for salaries and benefits (approximately 85.10%). From a functional cost standpoint, Chart 3 shows that approximately 79.79% of total general fund expenditures go for instruction and instructionrelated activities. The District must spend at least 60% of its total certificated salary component on classroom instruction activities. For the current fiscal year, the District spent 64.43% of certificated salaries on classroom instruction activity. Services, Other Operating Exp., $2,463,314, 11% Chart 2 Mount Pleasant Elementary School District General Fund Expenditures by Object FY Books and Supplies, $1,020,405, 4% Other Outgo, $32,089, 0% Capital Outlay, $32,000, 0% Employee Benefits, $4,563,231, 20% Certificated Salaries, $11,625,791, 50% Classified Salaries, $3,611,993, 15% 9

13 MANAGEMENT DISCUSSION AND ANALYSIS JUNE 30, 2011 General Admin, $113, 0% Chart 3 Mount Pleasant Elementary School District General Fund Expenditures by Function FY Community Services, $10, 0% Plant Services, $1,557,415, 7% Other Outgo, $1,689,130, 7% Ancillary Services, $22,173, 0% Pupil Services, $1,433,516, 6% Instruction, $15,048,706, 65% Instruction Related, $3,515,713, 15% THE DISTRICT'S FUNDS As the District completed this year, our governmental funds reported a combined fund balance of $12.5 million (see Table 4 and Chart-4). The District is required to maintain available reserves of 3% of total general fund expenditures for economic uncertainties. This 3% reserve of the Unaudited Actuals amounts to $660 thousand. Table 4 Mount Pleasant Elementary School District Government Ending Fund Balance (in millions of dollars) Total Governmental Funds Total Governmental Funds General Fund $ 7.5 $ 7.4 Building Fund Non-Major Governmental Funds Total Fund Balances $ 12.5 $

14 MANAGEMENT DISCUSSION AND ANALYSIS JUNE 30, 2011 Non Major Governmental Funds, $1,987,895, 16% Building Fund, $2,971,760, 24% Chart 4 Mount Pleasant Elementary School District Governmental Funds Balance FY General Fund, $7,532,722, 60% General Fund Budgetary Highlights The original Adopted Budget projected a general fund deficit of approximately $.5 million. The year-end Final Budget projected an operating deficit of $2.3 million. Our actual results showed a deficit of $.5 million, resulting in a positive variance from the Final Budget of $1.8 million. See Table 5. The primary reason for the positive variance from Final Budget is due to the unspent restricted entitlements and site carryover balances. The District had a carryover balance of $.9 million from restricted categorical funds (excluding SELPA), and $.4 million of unrestricted general funds reserved for encumbrances and liabilities. In addition, the final budget for includes projected expenditures that were not required as of year-end. 11

15 MANAGEMENT DISCUSSION AND ANALYSIS JUNE 30, 2011 Table 5 Mount Pleasant Elementary School Distrixct General Fund Budget to Actuals Comparison (in millions of dollars) Adopted Budget Final Budget Actuals Beginning Fund Balance $ 4,174,584 $ 4,174,584 $ 7,434,529 Total Revenues and Transfers-in 19,847,625 25,422,849 23,502,011 Total Expenditures and Other Outgo (20,860,482) (24,130,822) (23,403,818) Net Increase/(Decrease) in Fund Bal. $ (1,012,857) $ 1,292,027 $ 98,193 Ending Fund Balance 3,161,727 5,466,611 7,532,722 Ending Fund Balance, General Fund $ 3,161,727 $ 5,466,611 $ 7,532,722 Restricted $ 1,556,297 Assigned 3,236,496 Nonspendable 2,500 Unassigned $ 2,737,429 Note: Actual Beginning Fund Balance includes Funds 17 and 20 CAPITAL ASSET & DEBT ADMINISTRATION Capital Assets At June 30, 2011, the District had $14.80 million in a broad range of capital assets, including land, buildings, and furniture and equipment (net of accumulated depreciation of $11.62 million). See Table 6. This amount represents a net decrease (including additions, deductions and depreciation) of $.03 million from as the depreciation expense exceeded additions to assets in Land is accounted for at purchase cost, not market value, and is not depreciated. Our school sites have low values for today's market because the District acquired the land many decades ago. School buildings and site improvements are valued at their historical construction cost less accumulated depreciation. 12

16 MANAGEMENT DISCUSSION AND ANALYSIS JUNE 30, 2011 Table 6 Mount Pleasant Elementary School Distrixct Capital Assets as of June 30, 2011 (Net of Accumulated Depreciation) (in millions of dollars) Governmental Activities Land Governmental Activities $ $ 0.53 Buildings and improvements Work In-Progress * Equipment Totals $ $ * Work-in-Progress in relates to the addition of three classroom portables at Valle Vista Elementary School. The District has substantially completed construction and modernization projects relating to the issuance of the 1998 General Obligation Bonds. The remaining G.O. Bonds funds are set aside for school sites improvements as needed and approved by the Board of Trustees. Long-Term Liabilities At the end of this year, the District had $8.2 million in bonds outstanding, with $790 thousand due within one year. The District has now issued all of the $12.00 million bonds that were authorized by voters in April The State limits the amount of general obligation debt (bonding capacity) that districts can issue to 1.25% of the assessed value of all taxable property within the district's boundaries for a union school district, and 2.50% for a unified school district. The District's outstanding general obligation debt of $8.2 million is significantly below the statutorily imposed limit. 13

17 MANAGEMENT DISCUSSION AND ANALYSIS JUNE 30, 2011 Other obligations include compensated absences payable, other post employment benefits (including health benefits for retirees) and other long-term liabilities. Currently the District is paying other post employment benefits out of the General Fund and Food Service Fund using a "Pay as you go" approach based on actual expenses incurred annually. See table below for Retirees statistic. Table 7 Mount Pleasant Elementary School District Other Post Employement Benefits (OPEB) Obligations Number Group of Retirees FTE's Expenditures Funding Source Certificated $ 357,425 General Fund Classified $ 255,109 G/F and Cafeteria Management $ 63,306 General Fund Total retirees with benefits $ 675,840 We present more detailed information regarding our long-term liabilities in Note 5 and 6 of the financial statements. 14

18 MANAGEMENT DISCUSSION AND ANALYSIS JUNE 30, 2011 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES In considering the District Budget for the year, the District Board and management used the following criteria. Key assumptions in the budget projections are: 1. REVENUE LIMIT DISTRICT: Cost of Living Adjustment (COLA) is 2.24% with a deficit funding factor of %. Base revenue limit amount of $6, is expected to be funded only at $4, per ADA. Funded revenue limit is $1, less per ADA than what the district is entitled. Average Daily Attendance (ADA) is budgeted at 2, ADA for both general and special education and ADA for the one charter school in the district. 2. Federal income is projected to decrease by 21%; while State categorical income was projected to decrease by 9%. The projected decreases in federal and state revenues are due to an assumption at budget adoption that all revenues would be spent by year-end, allowing for no carryovers into Also, federal revenues for include one-time federal stimulus funds which must be spent by September 30, No COLA has been projected for salaries and benefits; while a net change based on step and column is approximately 1.5% increase. Contracts with all bargaining units were rolled over for one year in The District sunshined contract openers with all units at the end of with proposed zero increase to the salary schedules for The District is in Year 3 of PI (performance improvement) status as an LEA (local education agency) and the Mount Pleasant Elementary School site is in Year 2 of PI status for In addition to other requirements as a result of PI designation, the District must set aside 10% of Title I funds for parental involvement and update the LEA Plan, which the District already does annually expenditures are based on the following forecasts: Grade Level Staffing Ratio Regular Enrollment Charter Enrollment Grade kindergarten 31: First Grade 24: Grades second through third 31: Grades four through six 31: Grades seven through eight 33: Special education (SDC) 14:1 135 N/A CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, students, and investors and creditors with a general overview of the District's finances and to show the District's accountability for the money it receives. If you have questions about this report or need any additional financial information, contact the Business Office, Mount Pleasant Elementary School District, at 3434 Marten Avenue, San Jose, California,

19 BASIC FINANCIAL STATEMENTS

20 STATEMENT OF NET ASSETS June 30, 2011 Governmental Activities ASSETS Cash and investments (Note 2) $ 12,233,723 Receivables 4,103,579 Prepaid expenditures 210,014 Stores inventory 7,261 Non-depreciable capital assets (Note 4) 619,305 Depreciable capital assets, net of accumulated depreciation (Note 4) 14,178,449 Total assets 31,352,331 LIABILITIES Accounts payable 3,759,572 Deferred revenue 157,173 Long-term liabilities (Note 5): Due within one year 819,285 Due after one year 8,657,716 Total liabilities 13,393,746 NET ASSETS Invested in capital assets, net of related debt 6,549,059 Restricted (Note 7) 6,728,466 Unrestricted 4,681,060 Total net assets $ 17,958,585 The accompanying notes are an integral part of these financial statements. 16

21 STATEMENT OF ACTIVITIES For the Year Ended June 30, 2011 Net (Expense) Revenues and Changes in Program Revenues Net Assets Charges Operating Capital for Grants and Grants and Governmental Expenses Services Contributions Contributions Activities Governmental activities (Note 4): Instruction $ 15,314,739 $ 12,539 $ 5,979,913 $ (9,322,287) Instruction-related services: Supervision of instruction 2,051,798 2,537 1,550,964 (498,297) Instructional library, media and technology 282,101 7,107 30,946 (244,048) School site administration 1,359, ,285 (1,341,599) Pupil services: Home-to-school transportation 462, ,231 (219,264) Food services 1,249, ,846 1,104,627 38,390 All other pupil services 971, ,421 (164,553) General administration: Data processing 120, (119,871) All other general administration 1,759,239 7, ,565 (1,470,087) Plant services 2,006,160 8,279 95,843 (1,902,038) Ancillary services 22, (21,775) Community services 10,244 7 (10,237) Enterprise activities 3, , Interest on long-term liabilities 352,278 (352,278) Other outgo 3,067,890 (3,067,890) Total governmental activities $ 29,032,550 $ 222,152 $ 10,114,656 $ - (18,695,742) General revenues: Taxes and subventions: Taxes levied for general purposes 5,871,919 Taxes levied for debt service 1,273,630 Taxes levied for other specific purposes 483,951 Federal and state aid not restricted to specific purposes 10,493,742 Interest and investment earnings 117,521 Miscellaneous 614,451 Total general revenues 18,855,214 Change in net assets 159,472 Net assets, July 1, 2010, as previously reported 6,919,198 Restatement (Note 10) 10,879,915 Net assets, July 1, 2010, as restated 17,799,113 Net assets, June 30, 2011 $ 17,958,585 The accompanying notes are an integral part of these financial statements. 17

22 BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2011 All Total General Building Non-Major Governmental Fund Fund Funds Funds ASSETS Cash and investments: Cash in County Treasury $ 7,486,386 $ 2,974,012 $ 1,735,687 $ 12,196,085 Cash awaiting deposit 24,172 10,023 34,195 Cash on hand and in banks Revolving cash fund 2, ,600 Receivables 3,892,128 5, ,071 4,103,579 Due from other funds 54,995 54,995 Stores inventory 7,261 7,261 Total assets $ 11,405,186 $ 2,979,392 $ 2,014,980 $ 16,399,558 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 3,660,296 $ 7,632 $ 27,085 $ 3,695,013 Deferred revenue 157, ,173 Due to other funds 54,995 54,995 Total liabilities 3,872,464 7,632 27,085 3,907,181 Fund balances (Note 7): Nonspendable 2,500 7,361 9,861 Restricted 1,556,297 2,971,760 1,980,534 6,508,591 Assigned 3,236,496 3,236,496 Unassigned 2,737,429 2,737,429 Total fund balances 7,532,722 2,971,760 1,987,895 12,492,377 Total liabilities and fund balances $ 11,405,186 $ 2,979,392 $ 2,014,980 $ 16,399,558 The accompanying notes are an integral part of these financial statements. 18

23 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS June 30, 2011 Total fund balances - Governmental Funds $ 12,492,377 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used for governmental activities are not financial resources and, therefore, are not reported as assets in governmental funds. The cost of the assets is $26,416,276 and the accumulated depreciation is $11,618,522 (Note 4). 14,797,754 In governmental funds, interest on long-term debt is not recognized until the period in which it matures and is paid. In the government-wide statement of activities, it is recognized in the period that it is incurred. (64,559) In governmental funds, debt issuance costs are recognized as expenditures in the period they are incurred. In the government-wide statements, debt issuance costs are amortized over the life of the debt. 210,014 Long-term liabilities are not due and payable in the current period and, therefore, are not reported as liabilities in the funds. Long-term liabilities at June 30, 2011 consisted of (Note 5): General Obligation Bonds $ (7,559,992) Accreted interest (688,703) Other post-employment benefits (Note 6) (1,199,021) Compensated absences (29,285) (9,477,001) Total net assets - governmental activities $ 17,958,585 The accompanying notes are an integral part of these financial statements. 19

24 STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended June 30, 2011 All Total General Building Non-Major Governmental Fund Fund Funds Funds Revenues: Revenue limit sources: State apportionment $ 7,906,037 $ 7,906,037 Local sources 5,871,919 5,871,919 Total revenue limit 13,777,956 13,777,956 Federal sources 2,211,880 $ 1,104,754 3,316,634 Other state sources 5,961, ,735 6,070,245 Other local sources 1,500,708 $ 25,550 1,480,128 3,006,386 Total revenues 23,452,054 25,550 2,693,617 26,171,221 Expenditures: Certificated salaries 11,625,791 11,625,791 Classified salaries 3,611,993 80, ,992 4,025,501 Employee benefits 4,563,231 27, ,905 4,754,319 Books and supplies 1,020,405 24, ,840 1,477,447 Contract services and operating expenditures 2,463,314 8, ,579 2,878,684 Capital outlay 32, ,382 3, ,382 Other outgo 32,089 32,089 Debt service: Principal retirement 870, ,000 Interest 314, ,044 Total expenditures 23,348, ,074 2,523,360 26,388,257 Excess (deficiency) of revenues over (under) expenditures 103,231 (490,524) 170,257 (217,036) Other financing sources (uses): Operating transfers in 49,957 54, ,952 Operating transfers out (54,995) (49,957) (104,952) Total other financing sources (uses) (5,038) 5,038 Net change in fund balances 98,193 (490,524) 175,295 (217,036) Fund balances, July 1, ,434,529 3,462,284 1,812,600 12,709,413 Fund balances, June 30, 2011 $ 7,532,722 $ 2,971,760 $ 1,987,895 $ 12,492,377 The accompanying notes are an integral part of these financial statements. 20

25 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDS - TO THE STATEMENT OF ACTIVITIES For the Year Ended June 30, 2011 Net change in fund balances - Total Governmental Funds $ (217,036) Amounts reported for governmental activities in the statement of activities are different because: Acquisition of capital assets is an expenditure in the governmental funds, but increases capital assets in the statement of net assets (Note 4). $ 455,387 Depreciation of capital assets is an expense that is not recorded in the governmental funds (Note 4). (709,594) Repayment of principal on long-term liabilities is an expenditure in the governmental funds, but decreases the long-term liabilities in the statement of net assets (Note 5). 870,000 In the governmental funds, interest on long-term debt is recognized in the period that it becomes due. In the government-wide statement of activities, it is recognized in the prior that it is incurred. 170,170 Accreted interest is an expense that is not recorded in the governmental funds (Note 5). (208,404) In the statement of activities, expenses related to compensated absences are measured by the amounts earned during the year. In the governmental funds, expenditures are measured by the amount of financial resources used (Note 5). (5,473) In governmental funds, debt issue costs are recognized as expenditures in the period they are incurred. In the government-wide statements, debt issue costs are amortized over the life of the debt. (15,000) In the statement of activities, expenses related to other postemployment benefits are measured by the amounts earned during the year. In the governmental funds, expenditures are measured by the amount of financial resources used (Note 5). (180,578) 376,508 Change in net assets of governmental activities $ 159,472 The accompanying notes are an integral part of these financial statements. 21

26 COMBINING STATEMENT OF FIDUCIARY NET ASSETS TRUST AND AGENCY FUNDS June 30, 2011 Trust Agency Fund Funds Memorial Student Scholar- Body ship Accounts Total ASSETS Cash on hand and in banks (Note 2) $ 1,087 $ 26,426 $ 27,513 LIABILITIES Due to student groups 26,426 26,426 NET ASSETS Net assets (Note 7) $ 1,087 $ - $ 1,087 The accompanying notes are an integral part of these financial statements. 22

27 STATEMENT OF CHANGE IN FIDUCIARY NET ASSETS TRUST FUND For the Year Ended June 30, 2011 Memorial Scholarship Net assets, July 1, 2010 $ 1,087 Net assets, June 30, 2011 $ 1,087 The accompanying notes are an integral part of these financial statements. 23

28 NOTES TO BASIC FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Mount Pleasant Elementary School District (the "District") accounts for its financial transactions in accordance with the policies and procedures of the California Department of Education's California School Accounting Manual. The accounting policies of the District conform to accounting principles generally accepted in the United States of America as prescribed by the Governmental Accounting Standards Board. The following is a summary of the more significant policies: Reporting Entity The Board of Trustees is the level of government which has governance responsibilities over all activities related to public school education in the District. The Board is not included in any other governmental "reporting entity" as defined by the Governmental Accounting Standards Board since Board members have decision-making authority, the power to designate management, the responsibility to significantly influence operations and primary accountability for fiscal matters. Basis of Presentation - Financial Statements The basic financial statements include a Management's Discussion and Analysis (MD & A) section providing an analysis of the District's overall financial position and results of operations; financial statements prepared using full accrual accounting for all of the District's activities, including infrastructure; and a change in the fund financial statements to focus on the major funds. Basis of Presentation - Government-Wide Financial Statements The Statement of Net Assets and the Statement of Activities displays information about the reporting government as a whole. Fiduciary funds are not included in the government-wide financial statements. Fiduciary funds are reported only in the Statement of Fiduciary Net Assets and the Statement of Change in Fiduciary Net Assets at the fund financial statement level. The Statement of Net Assets and the Statement of Activities are prepared using the economic resources measurement focus and the accrual basis of accounting. Revenues, expenses, gains, losses, assets and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets and liabilities resulting from nonexchange transactions are recognized in accordance with the requirements of Governmental Accounting Standards Board Codification Section (GASB Cod. Sec.) N Program revenues: Program revenues included in the Statement of Activities derive directly from the program itself or from parties outside the District's taxpayers or citizenry, as a whole; program revenues reduce the cost of the function to be financed from the District's general revenues. 24

29 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Presentation - Government-Wide Financial Statements (Continued) Allocation of indirect expenses: The District reports all direct expenses by function in the Statement of Activities. Direct expenses are those that are clearly identifiable with a function. Depreciation expense is specifically identified by function and is included in the direct expense of each function. Interest on general long-term liabilities is considered an indirect expense and is reported separately in the Statement of Activities. Basis of Presentation - Fund Accounting The accounts of the District are organized on the basis of funds or account groups, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund balances, revenues and expenditures. District resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. The District's accounts are organized into two broad categories which, in aggregate, include six fund types as follows: A - Governmental Fund Types 1 - General Fund: The General Fund is the general operating fund of the District and accounts for all revenues and expenditures of the District not encompassed within other funds. All general tax revenues and other receipts that are not allocated by law or contractual agreement to some other fund are accounted for in this fund. General operating expenditures and the capital improvement costs that are not paid through other funds are paid from the General Fund. For financial reporting purposes, the current year activity and year end balances of the Special Reserve for Other than Capital Outlay Projects and Special Reserve for Postemployment Benefits Funds are combined with the General Fund. 2 - Special Revenue Funds: The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. This classification includes the Cafeteria and Deferred Maintenance Funds. 3 - Capital Projects Funds: The Capital Projects Funds are used to account for resources used for the acquisition of capital facilities by the District. This classification includes the Building and Capital Facilities Funds. 25

30 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Presentation - Fund Accounting (Continued) A - Governmental Fund Types (Continued) 4 - Debt Service Funds: The Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long-term liabilities principal, interest, and related costs. This classification includes the Bond Interest and Redemption Fund. B - Fiduciary Fund Types 1 - Trust Fund: The Trust Fund is used to account for assets held by the District as Trustee. The District maintains one Trust Fund, the Memorial Scholarship Trust Fund. 2 - Agency Funds: Basis of Accounting Agency Funds are used to account for assets of others for which the District acts as an agent. The District maintains five Agency Funds, one for each school's student body organization. Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. Accrual Governmental activities in the government-wide financial statements and the fiduciary fund financial statements are presented on the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred. Modified Accrual The governmental funds financial statements are presented on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; i.e., both measurable and available. "Available" means collectible within the current period or within 60 days after year end. Expenditures are generally recognized under the modified accrual basis of accounting when the related liability is incurred. The exception to this general rule is that principal and interest on general obligation long-term liabilities, if any, is recognized when due. 26

31 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Budgets and Budgetary Accounting By state law, the Board of Trustees must adopt a final budget by July 1. A public hearing is conducted to receive comments prior to adoption. The Board of Trustees complied with these requirements. Capital Assets Capital assets purchased or acquired, with an original cost of $5,000 or more, are recorded at historical cost or estimated historical cost. Contributed assets are reported at fair market value as of the date received. Additions, improvements and other capital outlay that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Capital assets are depreciated using the straight-line method over 4-50 years depending on asset types. Stores Inventory Stores inventory in the Cafeteria Fund consists mainly of consumable supplies and is valued at average cost. Inventory is recorded as an expenditure at the time individual inventory items are transferred from the warehouse to the schools. Compensated Absences Compensated absences in the amount of $29,285 are recorded as a liability of the District. The liability is for the earned but unused benefits. Accumulated Sick Leave Sick leave benefits are not recognized as liabilities of the District. The District's policy is to record sick leave as an operating expenditure in the period taken since such benefits do not vest nor is payment probable; however, unused sick leave is added to the creditable service period for calculation of retirement benefits for certain STRS and CalPERS employees, when the employee retires. Encumbrances Encumbrance accounting is used in all budgeted funds to reserve portions of applicable appropriations for which commitments have been made. Encumbrances are recorded for purchase orders, contracts and other commitments when they are written. Encumbrances are liquidated when the commitments are paid. All encumbrances are liquidated at June

32 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Deferred Revenue Revenues from federal, state and local special projects and programs are recognized when qualified expenditures have been incurred. Funds received but not earned are recorded as deferred revenue until earned. Restricted Net Assets Restrictions of the ending net assets indicate the portions of net assets not appropriable for expenditure or amounts legally segregated for a specific future use. The restrictions for revolving cash fund, prepaid expenditures and stores inventory reflect the portions of net assets represented by revolving fund cash, prepaid expenditures and stores inventory, respectively. These amounts are not available for appropriation and expenditure at the balance sheet date. The restriction for unspent categorical revenues represents the portion of net assets restricted to specific program expenditures. The restriction for special revenue programs represents the portion of net assets restricted for special purposes. The restriction for capital projects represents the portion of net assets restricted for capital projects. The restriction for debt service represents the portion of net assets available for the retirement of debt. The restriction for scholarship payments represents the portion of net assets available for payment of scholarships. Fund Balance Classifications Governmental Accounting Standards Board Codification Sections 1300 and 1800, Fund Balance Reporting and Governmental Fund Type Definitions (GASB Cod. Sec and 1800) implements a five-tier fund balance classification hierarchy that depicts the extent to which a government is bound by spending constraints imposed on the use of its resources. The five classifications, discussed in more detail below, are nonspendable, restricted, committed, assigned and unassigned. A - Nonspendable Fund Balance: The nonspendable fund balance classification reflects amounts that are not in spendable form, such as revolving fund cash and stores inventory. B - Restricted Fund Balance: The restricted fund balance classification reflects amounts subject to externally imposed and legally enforceable constraints. Such constraints may be imposed by creditors, grantors, contributors, or laws or regulations of other governments, or may be imposed by law through constitutional provisions or enabling legislation. These are the same restrictions used to determine restricted net assets as reported in the government-wide and fiduciary trust fund statements. 28

33 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fund Balance Classifications (Continued) C - Committed Fund Balance: The committed fund balance classification reflects amounts subject to internal constraints self-imposed by formal action of the Board of Trustees. The constraints giving rise to committed fund balance must be imposed no later than the end of the reporting period. The actual amounts may be determined subsequent to that date but prior to the issuance of the financial statements. Formal action by the Board of Trustees is required to remove any commitment from any fund balance. At June 30, 2011, the District had no committed fund balances. D - Assigned Fund Balance: The assigned fund balance classification reflects amounts that the District's Board of Trustees has approved to be used for specific purposes, based on the District's intent related to those specific purposes. The Board of Trustees can designate personnel with the authority to assign fund balances, however, as of June 30, 2011, no such designation has occurred. E - Unassigned Fund Balance: In the General Fund only, the unassigned fund balance classification reflects the residual balance that has not been assigned to other funds and that is not restricted, committed, or assigned to specific purposes. In any fund other than the General Fund, a positive unassigned fund balance is never reported because amounts in any other fund are assumed to have been assigned, at least, to the purpose of that fund. However, deficits in any fund, including the General Fund that cannot be eliminated by reducing or eliminating amounts assigned to other purposes are reported as negative unassigned fund balance. Fund Balance Policy The District has an expenditure policy relating to fund balances. For purposes of fund balance classifications, expenditures are to be spent from restricted fund balances first, followed in order by committed fund balances (if any), assigned fund balances and lastly unassigned fund balances. While GASB Cod. Sec and 1800 do not require Districts to establish a minimum fund balance policy or a stabilization arrangement, GASB Cod. Sec and 1800 do require the disclosure of a minimum fund balance policy and stabilization arrangements, if they have been adopted by the Board of Trustees. At June 30, 2011, the District has not established a minimum fund balance policy nor has it established a stabilization arrangement. 29

34 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property Taxes Secured property taxes are attached as an enforceable lien on property as of March 1. Taxes are due in two installments on December 10 and April 10. Unsecured property taxes are due in one installment on or before August 31. The County of Santa Clara bills and collects taxes for the District. Tax revenues are recognized by the District when received. Eliminations and Reclassifications In the process of aggregating data for the Statement of Net Assets and the Statement of Activities, some amounts reported as interfund activity and balances in the funds were eliminated or reclassified. Interfund receivables and payables were eliminated to minimize the "grossing up" effect on assets and liabilities within the governmental activities column. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Accordingly, actual results may differ from those estimates. 2. CASH AND INVESTMENTS Cash at June 30, 2011 consisted of the following: Governmental Activities Fiduciary Funds Pooled Funds: Cash in County Treasury $ 12,196,085 Cash awaiting deposit 34,195 Deposits: Cash on hand and in banks 843 $ 27,513 Revolving cash fund 2,600 Total $ 12,233,723 $ 27,513 30

35 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 2. CASH AND INVESTMENTS (Continued) Pooled Funds In accordance with Education Code Section 41001, the District maintains substantially all of its cash in the Santa Clara County Treasury. The County pools and invests the cash. These pooled funds are carried at cost which approximates fair value. Interest earned is deposited quarterly into participating funds. Any investment losses are proportionately shared by all funds in the pool. Because the District's deposits are maintained in a recognized pooled investment fund under the care of a third party and the District's share of the Pool does not consist of specific, identifiable investment securities owned by the District, no disclosure of the individual deposits and investments or related custodial credit risk classifications is required. In accordance with applicable state laws, the Santa Clara County Treasurer may invest in derivative securities. However, at June 30, 2011, the Santa Clara County Treasurer has represented that the Pooled Investment Fund contained no derivatives or other investments with similar risk profiles. Deposits - Custodial Credit Risk The District limits custodial credit risk by ensuring uninsured balances are collateralized by the respective financial institution. Under Section 343 of the Dodd- Frank Wall Street Reform and Consumer Protection Act, interest-bearing cash balances held in banks are insured up to $250,000 and non-interest bearing cash balances held in banks are fully insured by the Federal Depository Insurance Corporation (FDIC). At June 30, 2011, the carrying amount of the District's accounts were $37,638, and the bank balances were $37,406. All of the bank balances were insured by the FDIC. Investment Interest Rate Risk The District does not have a formal investment policy that limits cash and investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. At June 30, 2011, the District had no significant interest rate risk related to cash and investments held. Investment Credit Risk The District does not have a formal investment policy that limits its investment choices other than the limitations of state law. Concentration of Investment Credit Risk The District does not place limits on the amount it may invest in any one issuer. At June 30, 2011, the District had no concentration of credit risk. 31

36 3. INTERFUND TRANSACTIONS Interfund Activity NOTES TO BASIC FINANCIAL STATEMENTS (Continued) Transactions between funds of the District for goods and services are recorded as interfund transfers. The unpaid balances at year end, as a result of such transactions, are shown as due to and due from other funds. Interfund Receivables/Payables Individual fund interfund receivable and payable balances at June 30, 2011 were as follows: Interfund Interfund Fund Receivables Payables Major Fund: General $ 54,995 Non-Major Fund: Deferred Maintenance $ 54,995 Interfund Transfers $ 54,995 $ 54,995 Interfund transfers consist of operating transfers from funds receiving revenue to funds through which the resources are to be expended. Interfund transfers for the fiscal year were as follows: Transfer from the General Fund to the Deferred Maintenance Fund for project costs. $ 54,995 Transfer from the Cafeteria Fund to the General Fund to allocate indirect costs. 49,957 $ 104,952 32

37 4. CAPITAL ASSETS MOUNT PLEASANT ELEMENTARY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (Continued) A schedule of changes in capital assets for the year ended June 30, 2011 is shown below: Balance Transfers Transfers Balance July 1, and and June 30, 2010 Additions Deductions 2011 Non-depreciable: Land $ 531,951 $ 531,951 Work-in-process 390,001 $ 87,354 $ 390,001 87,354 Depreciable: Buildings 22,736, ,885 23,305,609 Equipment 1,085, ,947 1,250,215 Improvement of sites 1,216,945 24,202 1,241,147 Totals, at cost 25,960, , ,001 26,416,276 Less accumulated depreciation: Buildings (9,211,758) (592,889) (9,804,647) Equipment (497,752) (113,010) (610,762) Improvement of sites (1,199,418) (3,695) (1,203,113) Total accumulated depreciation (10,908,928) (709,594) (11,618,522) Capital assets, net $ 15,051,961 $ 135,794 $ 390,001 $ 14,797,754 Depreciation expense was charged to governmental activities as follows: Instruction $ 427,339 Library 20,633 School site administration 23,872 Food services 9,412 Data processing 34,488 Plant services 35,497 Community services 10,234 Supervision and administration 264 All other general administration 147,855 Total depreciation expense $ 709,594 33

38 5. LONG-TERM LIABILITIES MOUNT PLEASANT ELEMENTARY SCHOOL DISTRICT NOTES TO BASIC FINANCIAL STATEMENTS (Continued) General Obligation Bonds, Series D On January 25, 2005, the District issued General Obligation Refunding Bonds (Series D) in the amount of $3,390,000 for the effect of refunding of certain outstanding general obligation bonds of the District. The Bonds mature during succeeding years through The Bonds were issued at varying rates from 2.5% to 5.5%. Year Ending June 30, Principal Interest Total 2012 $ 130,000 $ 127,106 $ 257, , , , , , , , , , , , , ,095, ,349 1,511, ,010, ,075 1,151,075 General Obligation Bonds, Series E $ 2,855,000 $ 1,147,218 $ 4,002,218 On May 3, 2007, the District issued General Obligation Refunding Bonds (Series E) in the amount of $6,169,992 for the effect of refunding of certain outstanding general obligation bonds of the District. The Bonds mature during succeeding years through The Bonds were issued at varying rates from 4% to 5%. Year Ending June 30, Principal Interest Total 2012 $ 660,000 $ 161,900 $ 821, , ,500 1,025, ,000 91,000 1,056, , ,713 1,122, , ,755 1,147, ,255, ,540 2,045,500 $ 4,704,992 $ 2,514,408 $ 7,219,400 34

39 5. LONG-TERM LIABILITIES (Continued) NOTES TO BASIC FINANCIAL STATEMENTS (Continued) Schedule of Changes in Long-Term Liabilities A schedule of changes in long-term liabilities for the year ended June 30, 2011 is shown as follows: Balance Balance Amounts July 1, Restatement June 30, Due Within 2010 (Note 10) Additions Deductions 2011 One Year General Obligation Bonds $ 8,429,992 $ 870,000 $ 7,559,992 $ 790,000 Accreted interest 480,299 $ 208, ,703 Other post-employment benefits (Note 6) 11,898,358 $ (10,879,915) 856, ,840 1,199,021 Compensated absences 23,812 5,473 29,285 29,285 $ 20,832,461 $ (10,879,915) $ 1,070,295 $ 1,545,840 $ 9,477,001 $ 819,285 Payments on the General Obligation Bonds are made from the Bond Interest and Redemption Fund. Payments on the other post-employment benefits and compensated absences are made from the fund for which the related employee worked. 6. OTHER POST-EMPLOYMENT BENEFITS The District's annual other post-employment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Cod. Sec. P The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the District's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the District's net OPEB obligation: Annual required contribution $ 873,857 Interest on net OPEB obligation 50,922 Adjustment to annual required contribution (68,361) Annual OPEB cost (expense) 856,418 Contributions made (675,840) Increase in net OPEB obligation 180,578 Net OPEB obligation - beginning of year, as previously reported 11,898,358 Restatement (Note 10) (10,879,915) Net OPEB obligation - beginning of year, as restated 1,018,443 Net OPEB obligation - end of year $ 1,199,021 35

40 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 6. OTHER POST-EMPLOYMENT BENEFITS (Continued) The District's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the year ended June 30, 2011 and the preceding two years were as follows: Percentage of Annual Fiscal Year Annual OPEB Cost Net OPEB Ended OPEB Cost Contributed Obligation June 30, 2009 $ 1,363, % $ 772,862 June 30, 2010 $ 873, % $ 1,018,443 June 30, 2011 $ 856, % $ 1,199,021 As of July 1, 2010, the most recent actuarial valuation date, the plan was not funded. The actuarial accrued liability for benefits was $11,417,716, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $11,417,716. The covered payroll (annual payroll of active employees covered by the Plan) was $14,837,318, and the ratio of the UAAL to the covered payroll was 76.9 percent. The OPEB plan is currently operated as a pay-as-you-go plan. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the July 1, 2010 actuarial valuation, the entry age actuarial cost method was used. The actuarial assumptions included a 5.0 percent investment rate (net of administrative expenses), which is a blended rate of the expected long-term investment returns on plan assets and on the employer's own investments calculated based on the funded level of the plan on the valuation date, and an annual healthcare cost trend rate of 8.5 percent initially, reduced by decrements to an ultimate rate of 5.5 percent after 11 years. Both rates included a 5.0 percent inflation assumption. The actuarial value of assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a five-year period. The UAAL is being amortized as a level percentage of projected payroll over a 30-year period. 36

41 7. NET ASSETS / FUND BALANCES NOTES TO BASIC FINANCIAL STATEMENTS (Continued) The restricted net assets as of June 30, 2011 consisted of the following: Governmental Activities Fiduciary Funds Restricted for revolving cash fund $ 2,600 Restricted for prepaid expenditures 210,014 Restricted for stores inventory 7,261 Restricted for unspent categorical revenues 1,556,297 Restricted for special program revenues 994,518 Restricted for capital projects 3,014,622 Restricted for debt service 943,154 Restricted for scholarship payments $ 1,087 Fund balances, by category, at June 30, 2011 consisted of the following: $ 6,728,466 $ 1,087 All General Building Non-Major Fund Fund Funds Total Nonspendable: Revolving cash fund $ 2,500 $ 100 $ 2,600 Stores inventory 7,261 7,261 Subtotal nonspendable 2,500 7,361 9,861 Restricted: Unspent categorical revenues 1,556,297 1,556,297 Capital projects $ 2,971,760 42,862 3,014,622 Food service operations 652, ,541 Deferred maintenance 341, ,977 Debt service 943, ,154 Subtotal restricted 1,556,297 2,971,760 1,980,534 6,508,591 Assigned: Tier III flexibility 1,145,256 1,145,256 Postemployment benefits 2,091,240 2,091,240 Subtotal assigned 3,236,496 3,236,496 Unassigned: Designated for economic uncertainty 1,854,567 1,854,567 Undesignated 882, ,862 Subtotal unassigned 2,737,429 2,737,429 Total fund balances $ 7,532,722 $ 2,971,760 $ 1,987,895 $ 12,492,377 37

42 8. EMPLOYEE RETIREMENT SYSTEMS NOTES TO BASIC FINANCIAL STATEMENTS (Continued) Qualified employees are covered under multiple-employer defined benefit pension plans maintained by agencies of the state of California. Certificated employees are members of the State Teachers' Retirement System (STRS), and classified employees are members of the California Public Employees' Retirement System (CalPERS). Plan Description and Provisions California Public Employees' Retirement System (CalPERS) Plan Description The District contributes to the School Employer Pool under the California Public Employees' Retirement System (CalPERS), a cost-sharing multiple-employer public employee retirement system defined benefit pension plan administered by CalPERS. The plan provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefit provisions are established by state statutes, as legislatively amended, within the Public Employees' Retirement Law. CalPERS issues a separate comprehensive annual financial report that includes financial statements and required supplementary information. Copies of the CalPERS annual financial report may be obtained from the CalPERS Executive Office, 400 Q Street, Sacramento, California Funding Policy Active plan members are required to contribute 7% of their salary, and the District is required to contribute an actuarially determined rate. The actuarial methods and assumptions used for determining the rate are those adopted by the CalPERS Board of Administration. The required employer contribution rate for fiscal year was % of annual payroll. The contribution requirements of the plan members are established by state statute. The District's contributions to CalPERS for the fiscal years ending June 30, 2009, 2010 and 2011 were $320,427, $322,456 and $385,108, respectively, and equal 100% of the required contributions for each year. State Teachers' Retirement System (STRS) Plan Description The District contributes to the State Teachers' Retirement System (STRS), a costsharing multiple-employer public employee retirement system defined benefit pension plan administered by STRS. The plan provides retirement, disability and survivor benefits to beneficiaries. Benefit provisions are established by state statutes, as legislatively amended, within the State Teachers' Retirement Law. STRS issues a separate comprehensive annual financial report that includes financial statements and required supplementary information. Copies of the STRS annual financial report may be obtained from the STRS Executive Office, 100 Waterfront Place, West Sacramento, California

43 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 8. EMPLOYEE RETIREMENT SYSTEMS (Continued) Plan Description and Provisions (Continued) State Teachers' Retirement System (STRS) (Continued) Funding Policy Active plan members are not required to contribute a portion of their salary. The required employer contribution rate for fiscal year was 8.25% of annual payroll. The contribution requirements of the plan members are established by state statute. The District's contributions to STRS for the fiscal years ending June 30, 2009, 2010 and 2011 were $994,752, $922,676 and $927,346, respectively, and equal 100% of the required contributions for each year. 9. JOINT POWERS AGREEMENTS Santa Clara County Schools Insurance Group The District participates in a Joint Powers Agreement with Santa Clara County Schools Insurance Group (SCCSIG). SCCSIG arranges for and provides workers' compensation, property and liability, dental and vision insurance for its members. SCCSIG is governed by a board consisting of a representative from each member district. The board controls the operations of SCCSIG, including selection of management and approval of operating budgets, independent of any influence by the member districts beyond their representation on the board. Each member district pays a premium commensurate with the level of coverage requested and shares surpluses and the deficits proportionately to its participation in SCCSIG. The following is a summary of audited financial information of SCCSIG at June 30, 2010 (the latest information available): Total assets $ 16,586,785 Total liabilities 6,933,969 Net assets $ 9,652,816 Total revenues $ 32,040,179 Total expenses 34,021,867 Change in net assets $ (1,981,688) The District's share of year-end assets, liabilities, or net assets has not been calculated by SCCSIG. 39

44 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 9. JOINT POWERS AGREEMENTS (Continued) East Valley Schools Transportation Agency The District is a member with other school districts of a Joint Powers Authority, East Valley Schools Transportation Agency, for the operation of transportation services. Each member district has two representatives on the Governing Board. Each member of that Board has equal voting rights. The Governing Board has decision-making authority which includes the power to designate management and the ability to significantly influence operations. The following is a summary of audited financial information of East Valley Schools Transportation Agency Joint Powers Authority at June 30, 2011: Total assets $ 522,266 Total liabilities 253,242 Net assets $ 269,024 Total revenues $ 2,340,164 Total expenses 2,340,164 Change in net assets $ - The relationship between Mount Pleasant Elementary School District and the Joint Powers Authorities is such that the Joint Powers Authorities are not component units of the District for financial reporting purposes. 10. RESTATEMENT During the year ended June , it was determined that the Other Postemployment Benefits (OPEB) liability was overstated by $10,879,915 as of June 30, Accordingly, the OPEB liability was decreased and the Net Assets were increased by this amount as of July 1, 2010 for the correction of this error. 11. CONTINGENCIES The District is subject to legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, the amount of ultimate liability with respect to these actions will not materially affect the financial position or results of operations of the District. Also, the District has received state and federal funds for specific purposes that are subject to review or audit by the grantor agencies. Although such audits could generate expenditure disallowances under terms of the grants, it is believed that any required reimbursements will not be material. 40

45 REQUIRED SUPPLEMENTARY INFORMATION

46 GENERAL FUND BUDGETARY COMPARISON SCHEDULE For the Year Ended June 30, 2011 Budget Variance Favorable Original Final Actual (Unfavorable) Revenues: Revenue limit sources: State apportionment $ 5,587,418 $ 7,906,037 $ 7,906,037 Local sources 7,128,028 5,871,919 5,871,919 Total revenue limit 12,715,446 13,777,956 13,777,956 Federal sources 1,455,712 2,614,846 2,211,880 $ (402,966) Other state sources 4,905,834 7,484,252 5,961,510 (1,522,742) Other local sources 770,633 1,495,838 1,500,708 4,870 Total revenues 19,847,625 25,372,892 23,452,054 (1,920,838) Expenditures: Certificated salaries 9,979,999 11,625,791 11,625,791 Classified salaries 2,880,760 3,611,993 3,611,993 Employee benefits 4,040,562 4,563,263 4,563, Books and supplies 901,677 1,740,005 1,020, ,600 Contract services and operating expenditures 3,028,216 2,470,404 2,463,314 7,090 Capital outlay 32,000 32,000 Other outgo 29,268 32,371 32, Total expenditures 20,860,482 24,075,827 23,348, ,004 (Deficiency) excess of revenues (under) over expenditures (1,012,857) 1,297, ,231 (1,193,834) Other financing sources (uses): Operating transfers in 49,957 49,957 Operating transfers out (54,995) (54,995) Total other financing sources (uses) (5,038) (5,038) Net change in fund balance (1,012,857) 1,292,027 98,193 (1,193,834) Fund balance, July 1, ,174,584 4,174,584 7,434,529 3,259,945 Fund balance, June 30, 2011 $ 3,161,727 $ 5,466,611 $ 7,532,722 $ 2,066,111 The accompanying notes are an integral part of these financial statements. 41

47 SCHEDULE OF OTHER POSTEMPLOYMENT BENEFITS (OPEB) FUNDING PROGRESS For the Year Ended June 30, 2011 Schedule of Funding Progress Unfunded UAAL as a Actuarial Actuarial Percentage Fiscal Actuarial Actuarial Accrued Accrued of Year Valuation Value of Liability Liability Funded Covered Covered Ended Date Assets (AAL) (UAAL) Ratio Payroll Payroll 6/30/2009 January 1, 2008 $ - $ 13,992,633 $ 13,992,633 0% $ 14,247, % 6/30/2010 July 1, 2010 $ - $ 11,417,716 $ 11,417,716 0% $ 15,980, % 6/30/2011 July 1, 2010 $ - $ 11,417,716 $ 11,417,716 0% $ 14,837, % The accompanying notes are an integral part of these financial statements. 42

48 NOTES TO REQUIRED SUPPLEMENTARY INFORMATION 1. PURPOSE OF SCHEDULES A - Budgetary Comparison Schedule The District employs budget control by object codes and by individual appropriation accounts. Budgets are prepared on the modified accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America as prescribed by the Governmental Accounting Standards Board. The budgets are revised during the year by the Board of Trustees to provide for revised priorities. Expenditures cannot legally exceed appropriations by major object code. The originally adopted and final revised budgets for the General Fund are presented as Required Supplementary Information. The basis of budgeting is the same as GAAP. B - Schedule of Other Postemployment Benefits Funding Progress The Schedule of Funding Progress presents multi-year trend information which compares, over time, the actuarially accrued liability for benefits with the actuarial value of accumulated plan assets. 43

49 SUPPLEMENTARY INFORMATION

50 COMBINING BALANCE SHEET ALL NON-MAJOR FUNDS June 30, 2011 Bond Deferred Interest Main- Capital and Cafeteria tenance Facilities Redemption Fund Fund Fund Fund Total ASSETS Cash in County Treasury $ 463,819 $ 286,633 $ 42,787 $ 942,448 $ 1,735,687 Cash awaiting deposit 10,023 10,023 Cash on hand and in banks Revolving cash fund Receivables 204, ,071 Due from other funds 54,995 54,995 Stores inventory 7,261 7,261 Total assets $ 686,987 $ 341,977 $ 42,862 $ 943,154 $ 2,014,980 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 27,085 $ 27,085 Fund balances: Nonspendable 7,361 7,361 Restricted 652,541 $ 341,977 $ 42,862 $ 943,154 1,980,534 Total fund balances 659, ,977 42, ,154 1,987,895 Total liabilities and fund balances $ 686,987 $ 341,977 $ 42,862 $ 943,154 $ 2,014,980 The accompanying notes are an integral part of these financial statements. 44

51 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES ALL NON-MAJOR FUNDS For the Year Ended June 30, 2011 Bond Deferred Interest Main- Capital and Cafeteria tenance Facilities Redemption Fund Fund Fund Fund Total Revenues: Federal sources $ 1,104,754 $ 1,104,754 Other state sources 91,730 $ 17, ,735 Other local sources 204,555 $ 1,715 $ 13,439 1,260,419 1,480,128 Total revenues 1,401,039 1,715 13,439 1,277,424 2,693,617 Expenditures: Classified salaries 332, ,992 Employee benefits 163, ,905 Books and supplies 424,041 8, ,840 Contract services and operating expenditures 340,891 56,710 8, ,579 Capital outlay 3,000 3,000 Debt service: Principal retirement 870, ,000 Interest 314, ,044 Total expenditures 1,261,829 56,710 20,777 1,184,044 2,523,360 Excess (deficiency) of revenues over (under) expenditures 139,210 (54,995) (7,338) 93, ,257 Other financing sources (uses): Operating transfers in 54,995 54,995 Operating transfers out (49,957) (49,957) Total other financing sources (uses) (49,957) 54,995 5,038 Net change in fund balances 89,253 (7,338) 93, ,295 Fund balances, July 1, , ,977 50, ,774 1,812,600 Fund balances, June 30, 2011 $ 659,902 $ 341,977 $ 42,862 $ 943,154 $ 1,987,895 The accompanying notes are an integral part of these financial statements. 45

52 COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS For the Year Ended June 30, 2011 Balance Balance July 1, June 30, 2010 Additions Deductions 2011 Robert Sanders Elementary School Assets: Cash on hand and in banks $ (7) $ 20,631 $ 20,029 $ 595 Liabilities: Due to student groups $ (7) $ 20,631 $ 20,029 $ 595 Ida Jew Elementary Assets: Cash on hand and in banks $ 3,879 $ 14,352 $ 15,923 $ 2,308 Liabilities: Due to student groups $ 3,879 $ 14,352 $ 15,923 $ 2,308 Mount Pleasant Elementary Assets: Cash on hand and in banks $ 5,091 $ 4,423 $ 5,249 $ 4,265 Liabilities: Due to student groups $ 5,091 $ 4,423 $ 5,249 $ 4,265 Valle Vista Elementary Assets: Cash on hand and in banks $ 4,787 $ 13,671 $ 13,261 $ 5,197 Liabilities: Due to student groups $ 4,787 $ 13,671 $ 13,261 $ 5,197 August Boeger Middle School Assets: Cash on hand and in banks $ 15,945 $ 28,874 $ 30,758 $ 14,061 Liabilities: Due to student groups $ 15,945 $ 28,874 $ 30,758 $ 14,061 (Continued) 46

53 COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS (Continued) For the Year Ended June 30, 2011 Balance Balance July 1, June 30, 2010 Additions Deductions 2011 Total Student Body Assets: Cash on hand and in banks $ 29,695 $ 81,951 $ 85,220 $ 26,426 Liabilities: Due to student groups $ 29,695 $ 81,951 $ 85,220 $ 26,426 The accompanying notes are an integral part of these financial statements. 47

54 ORGANIZATION June 30, 2011 Mount Pleasant Elementary School District was established in 1865 and is comprised of an area of approximately seven square miles located in Santa Clara County. There were no changes in the boundaries of the District during the current year. The District is currently operating three elementary schools, one charter school and one middle school. GOVERNING BOARD Name Office Term Expires Darrell Koide President December 2012 Nancy F. Hopkins Vice President December 2012 Bob Ramirez Board Clerk December 2014 Gail A. Tremaine Member December 2014 Betty Martinez Member December 2014 ADMINISTRATION Mariann Engle Superintendent Elida MacArthur Assistant Superintendent of Instructional Services Mark Martinelli * Assistant Superintendent, Business & Operations Cynthia Shieh ** Chief Business Officer * Mark Martinelli assumed this position within the District effective September 1, The position was vacant as of June 30, ** Cynthia Shieh terminated her position within the District effective July 1, The position is currently vacant. 48

55 SCHEDULE OF AVERAGE DAILY ATTENDANCE For the Year Ended June 30, 2011 Second Period Report Annual Report Elementary and Middle Kindergarten First through Third Fourth through Sixth Seventh and Eighth Special Education County Supplement Subtotal Elementary and Middle 2,225 2,219 Charter School - Classroom-based Kindergarten First through Third Fourth through Sixth Subtotal Charter School - Classroom-based District Totals 2,547 2,540 See accompanying notes to supplementary information. 49

56 SCHEDULE OF INSTRUCTIONAL TIME For the Year Ended June 30, Number Minutes of Days Require- Actual Actual Traditional Grade Level ment Minutes Minutes Calendar Status District: Kindergarten 36,000 31,500 40, In Compliance Grade 1 50,400 46,810 52, In Compliance Grade 2 50,400 46,810 52, In Compliance Grade 3 50,400 46,810 52, In Compliance Grade 4 50,400 47,740 54, In Compliance Grade 5 54,000 47,740 54, In Compliance Grade 6 54,000 47,740 54, In Compliance Grade 7 54,000 56,335 56, In Compliance Grade 8 54,000 56,335 56, In Compliance Ida Jew Academies: Kindergarten 36,000 N/A 49, In Compliance Grade 1 50,400 N/A 50, In Compliance Grade 2 50,400 N/A 50, In Compliance Grade 3 50,400 N/A 50, In Compliance Grade 4 50,400 N/A 54, In Compliance Grade 5 54,000 N/A 54, In Compliance Grade 6 54,000 N/A 54, In Compliance See accompanying notes to supplementary information. 50

57 SCHEDULE OF EXPENDITURE OF FEDERAL AWARDS For the Year Ended June 30, 2011 Pass- Through Federal Entity Federal Catalog Federal Grantor/Pass-Through Identifying Expend- Number Grantor/Program or Cluster Title Number itures U.S. Department of Education - Passed through California Department of Education Special Education Cluster: Special Ed IDEA: Basic Local Assistance Entitlement, Part B, Section 611 (Formerly PL ) $ 588, A Preschool Local Entitlement, Part B, Section 611 (AGE 3-4-5) , Preschool Grants, Part B, Section 619 (Age 3-4-5) , A Preschool Staff Development, Part B, Sec Special Ed: ARRA IDEA Part B, Sec 611, Basic Local Assistance , Special Ed: ARRA IDEA Part B, Sec 611, Preschool Local Entitlement ,180 Subtotal Special Education Cluster 747,831 Title II Cluster: NCLB: Title II, Part D, Enhancing Education Through Technology , NCLB: ARRA Title II, Part D, Enhancing Education Through Technology ,433 Subtotal Title II, Part D Cluster 3, NCLB: Title I, Part C, Migrant Ed (Regular and Summer Program) , NCLB: Title II, Part A, Improving Teacher Quality Local Grants , Education Job Funds Act AB , NCLB: Title I, Part A, Basic Grants Low-Income and Neglected , NCLB: Title III, Immigrant Education Program (Also see Resource 4203, LEP Student Program) , NCLB: Title IV, Part A, Safe & Drug Free Schools and Communities, Formula Grants , NCLB: Title IV, Part B, 21st Century Community Learning Centers Program , ARRA: State Fiscal Stabilization Fund ,659 Total U.S. Department of Education 2,097,154 (Continued) 51

58 SCHEDULE OF EXPENDITURE OF FEDERAL AWARDS (Continued) For the Year Ended June 30, 2011 Pass- Through Federal Entity Federal Catalog Federal Grantor/Pass-Through Identifying Expend- Number Grantor/Program or Cluster Title Number itures U.S. Department of Health and Human Services - Passed through California Department of Education Dept of Health Care Services (DHCS): Medi-Cal Billing Option $ 116,939 U.S. Department of Agriculture - Passed through California Department of Education Child Nutrition: School Programs (NSL Sec 4) ,104,754 Total Federal Programs $ 3,318,847 See accompanying notes to supplementary information. 52

59 RECONCILIATION OF UNAUDITED ACTUAL FINANCIAL REPORT WITH AUDITED FINANCIAL STATEMENTS For the Year Ended June 30, 2011 There were no adjustments proposed to any funds of the District. See accompanying notes to supplementary information. 53

60 SCHEDULE OF FINANCIAL TRENDS AND ANALYSIS For the Year Ended June 30, 2011 General Fund (Budget) Revenues and other financing sources $ 22,342,404 $ 23,502,011 $ 22,609,956 $ 24,890,790 Expenditures 22,755,282 23,348,823 23,016,703 24,780,070 Other uses and transfers out 263,226 54, ,444 Total outgo 23,018,508 23,403,818 23,121,147 24,780,070 Change in fund balance $ (676,104) $ 98,193 $ (511,191) $ 110,720 Ending fund balance $ 6,856,618 $ 7,532,722 $ 7,434,529 $ 7,945,720 Available reserves $ 2,584,944 $ 2,737,429 $ 3,529,908 $ 3,021,714 Designated for economic uncertainties $ 1,900,122 $ 1,854,567 $ 1,815,164 $ 1,987,546 Undesignated fund balance $ 684,822 $ 882,862 $ 1,714,744 $ 1,034,168 Available reserves as percentages of total outgo 11.2% 11.7% 15.3% 12.2% Total Funds Total long-term liabilities $ 8,657,716 $ 9,477,001 $ 9,952,546 $ 10,305,788 Average daily attendance at P-2 2,187 2,225 2,692 2,854 For purposes of the Schedule of Financial Trends and Analysis, the District has combined the Special Reserve for Other than Capital Projects Outlay and the Special Reserve for Postemployment Benefits Funds with the General Fund. The combined General Fund fund balance has decreased by $302,278 over the past three fiscal years. The District projects a decrease of $676,104 for the fiscal year ending June 30, For a district this size, the State of California recommends available reserves of at least 3 percent of total General Fund expenditures, transfers out, and other uses be maintained. For the year ended June 30, 2011, the District was in compliance with this requirement. The District has incurred operating surpluses in two of the past three years, and anticipates incurring an operating deficit during the fiscal year ending June 30, Total long-term liabilities have decreased by $828,787 over the past two years. Average daily attendance has decreased by 629 over the past two years. The District anticipates a decrease of 38 ADA during the fiscal year ending June 30, See accompanying notes to supplementary information. 54

61 SCHEDULE OF CHARTER SCHOOLS For the Year Ended June 30, 2011 Ida Jew Academies Charter Schools Chartered by District Included in District Financial Statements, or Separate Report Included in District financial statements, in the General Fund See accompanying notes to supplementary information. 55

62 NOTES TO SUPPLEMENTARY INFORMATION 1. PURPOSE OF SCHEDULES A - Schedule of Average Daily Attendance Average daily attendance is a measurement of the number of pupils attending classes of the District. The purpose of attendance accounting from a fiscal standpoint is to provide the basis on which apportionments of state funds are made to school districts. This schedule provides information regarding the attendance of students at various grade levels and in different programs. B - Schedule of Instructional Time The District has received incentive funding for increasing instructional time as provided by the Incentives for Longer Instructional Day. This schedule presents information on the amount of instructional time offered by the District, and whether the District complied with the provisions of Education Code Sections through C - Schedule of Expenditure of Federal Awards OMB Circular A-133 requires a disclosure of the financial activities of all Federally funded programs. This schedule was prepared to comply with A-133 requirements, and is presented on the modified accrual basis of accounting. The following schedule provides a reconciliation between revenues reported on the Statement of Revenues, Expenditures and Change in Fund Balances and the related expenditures reported on the Schedule of Expenditure of Federal Awards. The reconciling amounts represent Federal funds that have been recorded as revenues that have not been expended by June 30, CFDA Description Number Amount Total Federal revenues, Statement of Revenues, Expenditures and Change in Fund Balances $ 3,316,634 Add: Medi-Cal Billing Funds spent from prior year awards ,213 Total Schedule of Expenditure of Federal Awards $ 3,318,847 D - Reconciliation of Unaudited Actual Financial Report with Audited Financial Statements This schedule provides the information necessary to reconcile the Unaudited Actual Financial Report to the audited financial statements. 56

63 NOTES TO SUPPLEMENTARY INFORMATION (Continued) 1. PURPOSE OF SCHEDULES (Continued) E - Schedule of Financial Trends and Analysis This schedule discloses the District's financial trends by displaying past years' data along with current year budget information. These financial trend disclosures are used to evaluate the District's ability to continue as a going concern for a reasonable period of time. F - Schedule of Charter Schools This schedule provides information for the California Department of Education to monitor financial reporting by Charter Schools. 2. EARLY RETIREMENT INCENTIVE PROGRAM Education Code Section requires certain disclosure in the financial statements of districts which adopt Early Retirement Incentive Programs pursuant to Education Code Sections and For the fiscal year ended June 30, 2011, the District did not adopt this program. 57

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