CAMPBELL UNION HIGH SCHOOL DISTRICT San Jose, California. FINANCIAL STATEMENTS June 30, 2011

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1 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 3-10 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Assets 11 Statement of Activities 12 Fund Financial Statements: Balance Sheet - Governmental Funds 13 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 14 Statement of Revenues, Expenditures and Change in Fund Balances - Governmental Funds 15 Reconciliation of the Statement of Revenues, Expenditures and Change in Fund Balances - Governmental Funds - to the Statement of Activities 16 Statement of Fund Net Assets - Proprietary Fund - Self-Insurance Fund 17 Statement of Revenues, Expenses and Change in Fund Net Assets - Proprietary Fund - Self-Insurance Fund 18 Statement of Cash flows - Proprietary Fund - Self-Insurance Fund 19 Statement of Fiduciary Net Assets - Trust and Agency Funds 20 Statement of Change in Fiduciary Net Assets - Trust Fund 21 Notes to Basic Financial Statements 22-43

3 FINANCIAL STATEMENTS WITH SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2011 TABLE OF CONTENTS (Continued) Page Required Supplementary Information: General Fund Budgetary Comparison Schedule 44 Schedule of Other Postemployment Benefits (OPEB) Funding Progress 45 Notes to Required Supplementary Information 46 Supplementary Information: Combining Balance Sheet - All Non-Major Funds 47 Combining Statement of Revenues, Expenditures and Change in Fund Balances - All Non-Major Funds 48 Combining Statement of Changes in Assets and Liabilities - All Agency Funds Organization 51 Schedule of Average Daily Attendance 52 Schedule of Instructional Time 53 Schedule of Expenditure of Federal Awards 54 Reconciliation of Unaudited Actual Financial Report with Audited Financial Statements 55 Schedule of Financial Trends and Analysis 56 Schedule of Charter Schools 57 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 63-64

4 FINANCIAL STATEMENTS WITH SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2011 TABLE OF CONTENTS (Continued) Page 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

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7 MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2011 The Management s Discussion and Analysis section of the audit provides Management s overall view of the District s financial condition and serves as a vehicle to convey important fiscal issues to the Board and the public. REPORTING OVERVIEW The Statement of Net Assets and the Statement of Activities The Statement of Net Assets reports summary financial information as of June 30, The Statement of Activities summarizes changes which have occurred in the past fiscal year. These statements include all assets and liabilities of the District using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year s revenues and expenses are taken into account regardless of when cash is received or paid. These two statements report the District s net assets and changes in them. Net assets are the difference between assets and liabilities, one way to measure the District s financial health, or financial position. Over time, increases or decreases in the District s net assets are one indicator of whether its financial health is improving or deteriorating. Other factors to consider are changes in the District s property tax base and the condition of the District s facilities. The relationship between revenues and expenses is the District s operating results. Since the Board s responsibility is to provide services to our students and not to generate profit as commercial entities do, one must consider other factors when evaluating the overall health of the District. The quality of the education and the safety of our schools will likely be an important component in this evaluation. In the Statement of Net Assets and the Statement of Activities, activities are separated as follows: Governmental activities - Most of the District s services are reported in this category. This includes the education of grade nine through grade twelve students, and the on-going effort to improve and maintain buildings and sites. Property taxes, state income taxes, user fees, interest income, federal, state and local grants, as well as general obligation bonds, finance these activities. Business-type activities - The District has no business-type activities. FINANCIAL HIGHLIGHTS FISCAL YEAR DISTRICT ASSETS Net Assets The District s net assets were $109,879,570 at the end of Fiscal year which ended June 30, Restricted net assets 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. Our analysis below focuses on the net assets (Table 1) and change in net assets (Table 2) of the District s governmental activities. 3

8 MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2011 Table 1 June 30, 2010 June 30, 2011 Current and other assets $ 89,657,467 $ 97,004,791 Capital Assets 167,207, ,973,693 Total Assets 256,865, ,978,484 Current liabilities 14,884,296 10,181,848 Long-term debt 137,349, ,917,066 Total Liabilities 152,233, ,098,914 Net Assets Invested in capital assets net of related debt 30,812,576 68,601,382 Restricted 60,678,726 28,835,892 Unrestricted 13,140,077 12,442,296 Total Net Assets $ 104,631,379 $ 109,879,570 NET ASSETS 300,000, ,000, ,000, ,000, ,000,000 50,000,000 - June 30, 2011 Total Assets Total Liabilities Total Net Assets June 30,

9 MANAGEMENT S 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 is representative of this report. Net Assets have increased $5,248,191. Table 2 Revenues June 30, 2010 June 30, 2011 Charges for services $ 632,549 $ 574,106 Operating grants & contributions 7,259,862 6,372,637 Capital grants and contributions 15,068,060 19,282 General revenues: State revenue limit sources - Property taxes 69,923,213 68,827,109 Other general revenues 11,443,033 12,390,575 Total Revenues 104,326,717 88,183,709 Expenses Instructional related 49,080,777 53,514,012 Student support services 5,191,773 5,690,259 Administration 5,136,461 4,543,493 Maintenance and operations 7,504,918 9,812,002 Other 14,556,817 9,375,752 Total Expenses 81,470,746 82,935,518 Change in Net Assets $ 22,855,971 $ 5,248,191 Statement of Activities 120,000, ,000,000 80,000,000 60,000,000 June 30, 2010 June 30, ,000,000 20,000,000 - Total Revenues Total Expenses Change in Net Assets 5

10 MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2011 The total cost of all our governmental activities this year was $82,935,518. The District s expenses are predominantly related to educating and caring for students (69%). Purely administrative activities of the District accounted for just 5.7% of total costs. District revenues surpassed expenses, increasing net assets by $5,248,191. In Table 3, we have presented the District s ten largest functions by cost - regular program instruction, guidance and counseling, school administration, student transportation services, school food services, district administration, maintenance and operations, ancillary services, and others. Providing this information allows our citizens to consider the cost of each function in comparison to the benefits they believe are provided by that function. Table 3 Cost Service by Function June 30, 10 June 30, 11 Instruction $ 48,074,315 $ 46,121,968 Guidance and Counseling 1,006,462 1,527,819 School Administration 5,136,461 5,864,225 Pupil Transportation 833, ,291 Food Services 1,093,283 1,175,351 All other pupill services 3,264,700 3,641,617 Administration 4,425,751 4,543,493 Maintenance and operations 7,504,918 8,327,515 Ancillary services 1,455,678 1,484,487 Other 8,675,388 9,375,752 Totals: $ 81,470,746 $ 82,935,518 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $- Cost of Services by Function DISTRICT FUNDS As the District completed this year, our governmental funds reported a combined fund balance of $84,260,139 which is a net increase of $12,582,881 year over year. Multiple factors influenced this fluctuation. 6

11 MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2011 General Fund Budgetary Highlights The General Fund accounts are for the primary operations of the District. The District s initial budget is adopted by July 1. Over the course of the year, the District s budget is revised several times to take into account revised and new categorical funding appropriations and related expenditures, and to update budgets for prior year carryover amounts. The following table summarizes the general fund budget to actual information for the year ended June 30, Adopted Budget Year-End Budget Actual Variance Year- End to Actual Total Revenues $63,943,590 $67,604,873 $68,397,660 $792,787 Total Expenditures $66,688,497 $66,628,980 $66,844,110 $(215,130) Total Other Uses $544,068 $627,600 $1,254,728 $(627,128) The budgets to actual differences were a result of a variety of normal fluctuations. CAPITAL ASSET & DEBT ADMINISTRATION Capital Assets At June 30, 2011, the District had $191,973,693 in a broad range of capital assets, including land, buildings, furniture, and equipment. This amount represents a net increase (including additions, deductions and depreciation) of $24,766,117 year over year. Table 4 Capital Assets at Year End (Net of Depreciation) Land $ 4,037,160 $ 4,037,160 Improvement of Sites 20,557,212 19,707,656 Buildings 108,869, ,892,533 Work In Progress 28,150,706 17,466,786 Machinery & Equipment 5,593,469 4,869,658 $160,000,000 $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 Total $ 167,207,576 $ 191,973,793 $

12 MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2011 Long-Term Liabilities At the end of this year, the District had $167,500,000 in General Obligation Bonds outstanding versus $136,395,000 outstanding last year. The Liability increase was due the net impact of the issuance of $35,000,000 bond and planned principal debt payments General Obligation Bonds $ 136,395,000 $ 167,500,000 Compensated Absences 241, ,519 Other Post Employment Benefits 712,587 1,171,547 Total $ 137,349,368 $ 168,917,066 The District s general obligation bond rating continues to be Aaa (Moody s) AAA (Standard and Poor s) FSA Insured. The State limits the amount of general obligation debt that Districts can issue to 5 percent of the assessed value of all taxable property within the District s boundaries. 8

13 MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2011 SIGNIFICANT ACCOMPLISHMENTS OF FISCAL YEAR ARE NOTED BELOW: Project Location and Description Investment Branham - Interim Housing $ 342 Branham - Modernization of Cafeteria 188,518 Branham - Modernization of Large & Small Gyms 4,094 Branham - Modernization of Library 21,447 Branham - Performing Arts Center 7,214,609 Branham - Science 8,698 Branham - Tennis Court Relocation 56,231 Branham - Program Management 8,570 Branham - Admin bldg/frontage/grove 18,300 Branham - School Modernization 403 Del Mar - Campus Sidewalk 8,333 Del Mar - Interim Housing 3,824 Del Mar - Metro Ed Building 1,983 Del Mar - Modernization of Cafeteria 1,893,076 Del Mar - Modernization of Large & Small Gyms 2,811 Del Mar - Modernization of Library 26,408 Del Mar - Performing Arts Center 7,026,958 Del Mar - School Modernization 350 Del Mar - Tennis Court 2,290 District Office - IT room 21,167 Leigh - Modernization of Large & Small Gyms 7,587 Leigh - Performing Arts Center 7,008,257 Leigh - Light Pool Replacement 65,757 Leigh - School Modernization 11,051 LTFIP Phase ,150 Program Management 659,202 Prospect - Interim Housing 342 Prospect - Modernization of Large & Small Gyms 2,101 Prospect - Modernization of Library 7,368 Prospect - Performing Arts Center 7,102,975 Prospect - Room 44/ED Classroom 45,604 Prospect - Tennis Court 1,100 Prospect - School Modernization 350 Westmont - Interim Housing 2,018 Westmont - Modernization of Cafeteria 1,739,956 Westmont - Modernization of Large & Small Gyms 3,857 Westmont - Performing Arts Center 7,320,840 Westmont - Science 5,743 Westmont - Tennis Court 3,640 Westmont - Scoreboard 18,366 Westmont - School Modernization 5,424 Total $ 40,629,098 9

14 MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2011 ECONOMIC FACTORS AND NEXT YEAR S BUDGETS AND RATES In considering the District Budget for the Fiscal Year, the District Board and management used the following assumptions: 1. Slight ADA decline. 2. Incremental Basic Aid Fair Share Hit Revenue Losses are projected. 3. Revenue Limit funding was calculated with a.41% property tax increase estimate. 4. Property Tax forecasts and Revenue Limit Estimates indicate maintenance of Basic Aid status. 5. Developer fee collections are based on approximate new housing units to be constructed. 6. Federal income is expected to decline relative to prior year. 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 Deputy Superintendent at Campbell Union High School District, San Jose, California, 95124, or pgaffney@.cuhsd.org 10

15 BASIC FINANCIAL STATEMENTS

16 STATEMENT OF NET ASSETS June 30, 2011 Governmental Activities ASSETS Cash and investments (Note 2) $ 91,780,690 Receivables 4,430,281 Prepaid expenditures 724,847 Stores inventory 68,973 Non-depreciable capital assets (Note 4) 21,503,946 Depreciable capital assets, net of accumulated depreciation (Note 4) 170,469,747 Total assets 288,978,484 LIABILITIES Accounts payable 8,016,153 Deferred revenue 44,877 Unpaid claims and claim adjustment expenses (Note 5) 2,120,818 Long-term liabilities (Note 6): Due within one year 4,511,686 Due after one year 164,405,380 Total liabilities 179,098,914 NET ASSETS Invested in capital assets, net of related debt 68,601,382 Restricted (Note 7) 28,835,892 Unrestricted 12,442,296 Total net assets $ 109,879,570 The accompanying notes are an integral part of these financial statements. 11

17 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 $ 46,121,968 $ 106,541 $ 4,538,241 $ 19,282 $ (41,457,904) Instruction-related services: Supervision of instruction 1,010, ,268 (912,164) Instructional library, media and technology 517,273 (517,273) School site administration 5,864, ,206 (5,631,425) Pupil services: Home-to-school transportation 873, ,642 (759,649) Food services 1,175, , ,401 (80,407) All other pupil services 3,641,617 1, ,566 (3,087,992) General administration: Data processing 978,484 (978,484) All other general administration 3,565,009 25,012 86,295 (3,453,702) Plant services 8,327,515 24, (8,303,235) Ancillary services 1,484, ,927 (1,424,935) Interest on long-term liabilities 7,083,959 (7,083,959) Other outgo 2,291,793 1,405 12,024 (2,278,364) Total governmental activities $ 82,935,518 $ 574,106 $ 6,372,637 $ 19,282 (75,969,493) General revenues: Taxes and subventions: Taxes levied for general purposes 53,433,466 Taxes levied for debt service 10,445,202 Taxes levied for other specific purposes 4,948,441 Federal and state aid not restricted to specific purposes 5,305,303 Interest and investment earnings 605,787 Interagency revenues 1,360,446 Miscellaneous 5,119,039 Total general revenues 81,217,684 Change in net assets 5,248,191 Net assets, July 1, ,631,379 Net assets, June 30, 2011 $ 109,879,570 The accompanying notes are an integral part of these financial statements. 12

18 BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2011 Bond Interest and All General Building Redemption Non-Major Fund Fund Fund Funds Total ASSETS Cash and investments: Cash in County Treasury $ 19,553,191 $ 35,670,385 $ 8,909,148 $ 16,746,716 $ 80,879,440 Cash awaiting deposit ,374 Cash in revolving fund 4, ,800 Investments 2,647,240 2,647,240 Receivables 3,250, ,917 7, ,460 4,414,115 Prepaid expenditures 724, ,847 Due from other funds , ,591 Stores inventory 38,881 30,092 68,973 Total assets $ 23,571,768 $ 38,806,542 $ 8,916,735 $ 18,290,335 $ 89,585,380 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 2,201,973 $ 1,821,777 $ 412,023 $ 4,435,773 Deferred revenue 44,877 44,877 Due to other funds 844, ,591 Total liabilities 3,091,302 1,821, ,162 5,325,241 Fund balances: Nonspendable 767,728 30, ,620 Restricted 2,321,874 36,984,765 $ 8,916,735 17,847,281 66,070,655 Assigned 15,324,293 15,324,293 Unassigned 2,066,571 2,066,571 Total fund balances 20,480,466 36,984,765 8,916,735 17,878,173 84,260,139 Total liabilities and fund balances $ 23,571,768 $ 38,806,542 $ 8,916,735 $ 18,290,335 $ 89,585,380 The accompanying notes are an integral part of these financial statements. 13

19 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS June 30, 2011 Total fund balances - Governmental Funds $ 84,260,139 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 $247,510,536 and the accumulated depreciation is $55,536,843 (Note 4). 191,973,693 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 6): General Obligation Bonds $ (167,315,000) Unamortized Bond Premiums (185,000) Compensated absences (245,519) Other postemployment benefits (Note 9) (1,171,547) (168,917,066) Unmatured interest is not recognized until it is due and, therefore, is not accrued as a payable in governmental funds. (3,484,524) Internal service funds are used to conduct certain activities for which costs are charged to other funds on a full cost-recovery basis. Net assets for the Self-Insurance Fund are: 6,047,328 Total net assets - governmental activities $ 109,879,570 The accompanying notes are an integral part of these financial statements. 14

20 STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended June 30, 2011 Bond Interest and All General Building Redemption Non-Major Fund Fund Fund Funds Total Revenues: Revenue limit sources: State apportionment $ (598,075) $ 250,966 $ (347,109) Local sources 53,186,425 53,186,425 Total revenue limit 52,588, ,966 52,839,316 Federal sources 3,364, ,256 3,983,096 Other state sources 5,039,978 $ 87,305 1,691,412 6,818,695 Other local sources 7,404,492 $ 1,914,302 11,745,208 3,478,599 24,542,601 Total revenues 68,397,660 1,914,302 11,832,513 6,039,233 88,183,708 Expenditures: Certificated salaries 31,581,569 1,220,534 32,802,103 Classified salaries 8,768,343 46, ,283 9,636,850 Employee benefits 14,004,931 28, ,563 14,778,248 Books and supplies 1,771,550 5, ,931 2,689,431 Contract services and operating expenditures 8,332, ,408 94,873 8,697,481 Capital outlay 248,980 24,358,059 5,069,382 29,676,421 Other outgo 2,136,537 2,136,537 Debt service: Principal retirement 4,080,000 4,080,000 Interest 6,213,756 6,213,756 Total expenditures 66,844,110 24,709,395 10,293,756 8,863, ,710,827 Excess (deficiency) of revenues over (under) expenditures 1,553,550 (22,795,093) 1,538,757 (2,824,333) (22,527,119) Other financing sources (uses): Operating transfers in 1,179,728 1,179,728 Operating transfers out (1,254,728) (1,254,728) Proceeds from issuance of long-term liabilities 35,185,000 35,185,000 Total other financing sources (uses) (1,254,728) 35,185,000 1,179,728 35,110,000 Net change in fund balances 298,822 12,389,907 1,538,757 (1,644,605) 12,582,881 Fund balances, July 1, ,181,644 24,594,858 7,377,978 19,522,778 71,677,258 Fund balances, June 30, 2011 $ 20,480,466 $ 36,984,765 $ 8,916,735 $ 17,878,173 $ 84,260,139 The accompanying notes are an integral part of these financial statements. 15

21 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 $ 12,582,881 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). $ 30,413,219 Depreciation of capital assets is an expense that is not recorded in the governmental funds (Note 4). (5,609,087) Gain or loss from disposal of capital assets: In governmental funds the entire proceeds from disposal of capital assets are reported as revenue. In the statement of activities, only the resulting gain or loss is reported (Note 4): (38,015) Proceeds from debt are recognized as other financing sources in the governmental funds, but increases the long-term liabilities in the statement of net assets (Note 6): (35,185,000) 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 6). 4,080,000 In governmental funds, interest on long-term liabilities is recognized in the period that it becomes due. Unmatured interest owing at the end of the period less matured interest paid during the period but owing from the prior period, was: (870,203) Internal service funds are used to conduct certain activities for which costs are charged to other funds on a full cost-recovery basis. Change in net assets for the Self-Insurance Fund was: 337,094 In governmental funds, other postemployment benefits are recognized when employers contributions are made. In the government-wide statements, other postemployment benefits are recognized on the accrual basis (Notes 6 and 9). (458,960) 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 6). (3,738) (7,334,690) Change in net assets of governmental activities $ 5,248,191 The accompanying notes are an integral part of these financial statements. 16

22 STATEMENT OF FUND NET ASSETS - PROPRIETARY FUND SELF-INSURANCE FUND June 30, 2011 ASSETS Cash and investments: Cash in County Treasury $ 7,044,692 Cash on hand and in banks 45,553 Cash with Fiscal Agent 110,000 Investments 1,047,591 Receivables 16,166 Total assets 8,264,002 LIABILITIES Accounts payable 95,856 Unpaid claims and claim adjustment expenses 2,120,818 Total liabilities 2,216,674 NET ASSETS Restricted $ 6,047,328 The accompanying notes are an integral part of these financial statements. 17

23 STATEMENT OF REVENUES, EXPENSES AND CHANGE IN FUND NET ASSETS - PROPRIETARY FUND SELF-INSURANCE FUND For the Year Ended June 30, 2011 Operating revenues: Self-insurance premiums $ 1,690,280 Operating expenses: Books and supplies 8,399 Contract services 1,571,377 Total operating expenses 1,579,776 Operating income 110,504 Non-operating revenues: Interest income 130,875 Net increase in fair value of investments 20,715 Operating transfers in 75,000 Total non-operating revenues 226,590 Change in net assets 337,094 Net assets, July 1, ,710,234 Net assets, June 30, 2011 $ 6,047,328 The accompanying notes are an integral part of these financial statements. 18

24 STATEMENT OF CASH FLOWS - PROPRIETARY FUND SELF-INSURANCE FUND For the Year Ended June 30, 2011 Cash flows from operating activities: Cash received from self-insurance premiums $ 1,848,808 Cash paid for employee benefits (1,433,804) Cash received from suppliers 15,499 Net cash provided by operating activities 430,503 Cash flows provided by investing activities: Interest income received 130,875 Increase in cash and investments 561,378 Cash and investments, July 1, ,638,867 Cash and investments, June 30, 2011 $ 7,200,245 Reconciliation of operating income to net cash provided by operating activities: Operating income $ 110,504 Adjustments to reconcile operating income to net cash provided by operating activities: Decrease in: Receivables 7,795 Prepaid expenses 733 Due from other funds 75,000 Increase in: Unpaid claims and claim adjustment expenses 137,573 Accounts payable 23,898 Operating transfers in 75,000 Total adjustments 319,999 Net cash provided by operating activities $ 430,503 The accompanying notes are an integral part of these financial statements. 19

25 STATEMENT OF FIDUCIARY NET ASSETS TRUST AND AGENCY FUNDS June 30, 2011 Agency Trust Fund Funds Student Scholarship Body Total ASSETS Cash on hand and in banks (Note 2) $ 178,206 $ 959,388 $ 1,137,594 LIABILITIES Due to student groups 959, ,388 NET ASSETS Restricted (Note 7) $ 178,206 $ - $ 178,206 The accompanying notes are an integral part of these financial statements. 20

26 STATEMENT OF CHANGE IN FIDUCIARY NET ASSETS TRUST FUND For the Year Ended June 30, 2011 Scholarship Donations $ 55,893 Net assets, July 1, ,313 Net assets, June 30, 2011 $ 178,206 The accompanying notes are an integral part of these financial statements. 21

27 NOTES TO BASIC FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Campbell Union High 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 Campbell Union High School 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. The District receives funding from local, state and federal governmental sources and must comply with all the requirements of these funding source entities. 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 focus on the major funds. Basis of Presentation - Government-Wide Financial Statements The Statement of Net Assets and the Statement of Activities display 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. 22

28 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 on 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 equity, revenues, and expenditures or expenses, as appropriate. 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 three broad categories which, in aggregate, include seven 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 capital improvement costs that are not paid through other funds are paid from 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 Adult Education, Cafeteria and Deferred Maintenance Funds. 3 - Capital Projects Funds: The Capital Projects Funds are used to account for resources used for the acquisition or construction of capital facilities and equipment by the District. This classification includes the Building, Capital Facilities, County School Facilities, and Special Reserve Funds. 23

29 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 Fund: The Bond Interest and Redemption Fund is used to account for the accumulation of resources for, and the payment of, general long-term liabilities principal, interest and related costs. B - Proprietary Fund Type 1 - Self-Insurance Fund: The Self-Insurance Fund is an internal service fund which is used to account for the District's self-insured property and liability claims, workers' compensation claims and dental insurance claims. C - Fiduciary Fund Types 1 - Trust Fund: The Scholarship Fund is a trust fund which is used to account for scholarship monies, for which the District acts as trustee. 2 - Agency Funds: Basis of Accounting The Agency Funds are used to account for the 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 basic 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, the proprietary and fiduciary fund financial statements are presented on the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred. 24

30 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. 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. Stores Inventory Inventories in the General and Cafeteria Funds consist mainly of consumable supplies, and are valued at average cost. Inventories are recorded as expenditures at the time individual inventory items are transferred from the warehouse to the schools and offices. 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 4-30 years depending on asset types. Compensated Absences Compensated absences benefits in the amount of $245,519 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 PERS employees when the employee retires. 25

31 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Deferred Revenue Revenue from federal, state and local special projects and programs is 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 portion 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 program revenues represents the portion of net assets restricted to specific program expenditures. The restriction for special revenues represents the portion of net assets restricted for special purposes. The restriction for capital projects represents the portion of net assets restricted for capital outlay. The restriction for debt retirement represents the portion of net assets available for the retirement of long-term liabilities. The restriction for self-insurance represents the portion of net assets restricted for the payment of insurance. The restriction for scholarships represents the portion of net assets restricted for the 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, prepaid expenditures 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, proprietary fund, and fiduciary trust fund statements. 26

32 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. 27

33 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 or before 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. 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. All encumbrances are liquidated as of June 30. Estimates The preparation of basic 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. 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. 28

34 2. CASH AND INVESTMENTS NOTES TO BASIC FINANCIAL STATEMENTS (Continued) Cash and investments at June 30, 2011 consisted of the following: Governmental Activities Governmental Proprietary Fiduciary Funds Fund Total Activities Pooled Funds: Cash in County Treasury $ 80,879,440 $ 7,044,692 $ 87,924,132 Cash awaiting deposit 1,374 1,374 Deposits: Cash on hand and in banks 45,553 45,553 $ 1,137,594 Cash in revolving fund 4,800 4,800 Investments: Cash with Fiscal Agent 110, ,000 Mutual funds 2,647,240 1,047,591 3,694,831 Total $ 83,532,854 $ 8,247,836 $ 91,780,690 $ 1,137,594 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 indicated that the Treasurer's 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 noninterest-bearing cash balances held in banks are fully insured by the Federal Deposit Insurance Corporation (FDIC) and are collateralized by the respective financial institution. At June 30, 2011, the carrying amount of the District's accounts was $1,187,947 and the bank balance was $1,179,629. $286,596 of the bank balance was FDIC insured and $893,033 remained uninsured. 29

35 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 2. CASH AND INVESTMENTS (Continued) Cash with Fiscal Agent Cash with Fiscal Agent in the Self-Insurance Fund represents a security deposit held by a third party. Mutual Funds For investments held by a broker who is a member of the Securities and Investor Protection Corporation (SIPC), the cash is insured up to $500,000. At June 30, 2011, the carrying amounts and bank balances of the District's accounts were $3,694,831. Of the bank balances, $500,000 was insured by the SIPC and $3,194,831 was uninsured but collateralized. 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. 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 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. 3. INTERFUND TRANSACTIONS Interfund Activity Transactions between funds of the District 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. 30

36 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 3. INTERFUND TRANSACTIONS (Continued) 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 $ 139 $ 844,452 Non-Major Funds: Adult Education 539, Deferred Maintenance 305,301 Interfund Transfers Interfund transfers for the fiscal year were as follows: $ 844,591 $ 844,591 Transfer from the General Fund to the Self-Insurance Fund to meet reserve requirement. $ 75,000 Transfer from the General Fund to the Adult Education Fund to account for Fair Share Reduction. 539,151 Transfer from the General Fund to the Deferred Maintenance Fund for deferred maintenance projects. 640,577 $ 1,254,728 31

37 4. CAPITAL ASSETS NOTES TO BASIC FINANCIAL STATEMENTS (Continued) A schedule of changes in capital assets for the year ended June 30, 2011 is shown below: Balance Balance July 1, June 30, 2010 Additions Deductions Transfers 2011 Non-depreciable: Land $ 4,037,160 $ 4,037,160 Work-in-process 28,150,706 $ 9,655,959 $ (20,339,879) 17,466,786 Depreciable: Improvement of sites 26,741, ,585 27,122,388 Buildings 148,731,980 20,065,788 20,339, ,137,647 Equipment 9,513, ,887 $ 77,946 9,746,555 Totals, at cost 217,175,263 30,413,219 77, ,510,536 Less accumulated depreciation: Improvement of sites (6,184,591) (1,230,141) (7,414,732) Buildings (39,862,951) (3,382,263) (43,245,214) Equipment (3,920,145) (996,683) (39,931) (4,876,897) Total accumulated depreciation (49,967,687) (5,609,087) (39,931) (55,536,843) Capital assets, net $ 167,207,576 $ 24,804,132 $ 38,015 $ - $ 191,973,693 Depreciation expense was charged to governmental activities as follows: Instruction $ 5,329,377 All other general administration 69,340 Plant services 210, SELF-INSURANCE Total depreciation expense $ 5,609,087 The District is self-insured for property and liability, workers' compensation and dental claims. The District has established a separate Self-Insurance Fund for accounting and reporting purposes. For the year ended June 30, 2011, the District provides coverage up to a maximum of $350,000 for each workers' compensation claim, $60,000 for each property claim and $25,000 for each general liability claim. The District purchases commercial insurance for claims in excess of coverage provided by the Fund and for all other risks of loss. Settled claims have not exceeded this commercial coverage in any of the past three fiscal years. The claims liability of $2,120,818 at June 30, 2011 was actuarially determined based on the requirements of Governmental Accounting Standards Board Cod. Sec C This liability was reported at present value using an expected future investment yield assumption of 2.0% and 5.0% for the workers' compensation and property and liability programs, respectively. 32

38 5. SELF-INSURANCE (Continued) NOTES TO BASIC FINANCIAL STATEMENTS (Continued) Changes in the District's claims liability amount for the year ended June 30, 2011 was as follows: Claims Claims Liability Incurred Claims Liability July 1 Claims Payments June /2010 $ 1,944,245 $ 1,094,591 $ 1,055,591 $ 1,983, /2011 $ 1,983,245 $ 1,493,895 $ 1,356,322 $ 2,120, LONG-TERM LIABILITIES General Obligation Bonds On December 9, 2010, the District issued an Election 2006, Series C General Obligation Bonds, in the aggregate principal amount of $35,000,000, for the purpose of financing the addition and modernization of school facilities. The bonds bear interest at rates ranging from 3.00% to 5.00% and are scheduled to mature through August 2040, as follows: Year Ending June 30, Principal Interest Total 2012 $ 2,045,027 $ 2,045, $ 585,000 1,836,363 2,421, ,000 1,818,512 2,423, ,000 1,797,037 2,417, ,000 1,771,737 2,416, ,685,000 8,373,675 12,058, ,705,000 7,332,938 12,037, ,035,000 5,962,269 11,930, ,810,000 4,120,550 11,930, ,310,000 1,548,763 11,858,763 $ 35,000,000 $ 36,606,871 $ 71,540,152 33

39 6. LONG-TERM LIABILITIES (Continued) NOTES TO BASIC FINANCIAL STATEMENTS (Continued) General Obligation Bonds (Continued) On May 20, 2009, the District issued a Series 2009 General Obligation Refunding Bonds, in the aggregate principal amount of $29,240,000, for the purpose of refunding an outstanding issue of General Obligation Bonds Election 1999, Series Repayment of the bonds is made from special parcel (valorem) tax revenues levied in connection with this bond issue. The bonds bear interest at rates ranging from 3.50% to 5.25% and are scheduled to mature through August 2030, as follows: Year Ending June 30, Principal Interest Total 2012 $ 900,000 $ 1,344,188 $ 2,244, ,000 1,307,388 2,247, ,000 1,268,988 2,248, ,020,000 1,228,988 2,248, ,060,000 1,182,088 2,242, ,100,000 5,153,215 11,253, ,645,000 3,571,283 11,216, ,920,000 1,298,800 11,218,800 $ 28,565,000 $ 16,354,938 $ 44,919,938 On March 20, 2008, the District issued a Series 2006 General Obligation Bonds, Series B totaling $30,000,000. Bond proceeds are being spent on renovating older classrooms, improving access for disabled students and teachers, modernizing libraries and homework centers, enhancing computer learning technology and improving facilities. Repayment of the bonds is made from special parcel (valorem) tax revenues levied in connection with this bond issue. The bonds bear interest at rates ranging from 4.13% to 5.25% and are scheduled to mature through August 2038, as follows: Year Ending June 30, Principal Interest Total 2012 $ 525,000 $ 1,368,484 $ 1,893, ,000 1,342,233 1,897, ,000 1,314,483 1,894, ,000 1,285,483 1,895, ,000 1,254,984 1,894, ,700,000 7,063,602 10,763, ,555,000 4,961,013 9,516, ,695,000 3,857,777 9,552, ,190,000 25,392,626 32,582, ,205, ,000 5,734,000 $ 29,255,000 $ 48,369,685 $ 77,624,685 34

40 6. LONG-TERM LIABILITIES (Continued) NOTES TO BASIC FINANCIAL STATEMENTS (Continued) General Obligation Bonds (Continued) On April 1, 2005 the District issued a Series 2005 General Obligation Refunding Bond, totaling $20,605,000. Bond proceeds are being spent on the repairs of existing schools and for alterations or acquisitions of school facilities. Repayment of the bonds is made from special parcel (valorem) tax revenues levied in connection with this bond issue. The bonds bear interest at rates ranging from 4.0% to 4.7% and are scheduled to mature through August 2029, as follows: Year Ending June 30, Principal Interest Total 2012 $ 620,000 $ 813,614 $ 1,433, , ,614 1,437, , ,864 1,439, , ,539 1,435, , ,364 1,443, ,265,000 2,957,365 7,222, ,285,000 1,953,680 7,238, ,170, ,422 5,795,422 $ 18,155,000 $ 9,291,462 $ 27,446,462 On August 1, 2003 the District issued a Series 2003 General Obligation Bond, Series C totaling $20,000,000. Bond proceeds are being spent on the repairs of existing schools and for alterations or acquisitions of school facilities. Repayment of the bonds is made from special parcel (valorem) tax revenues levied in connection with this bond issue. The bonds bear interest at rates ranging from 2.5% to 4.625% and are scheduled to mature through August 2032, as follows: Year Ending June 30, Principal Interest Total 2012 $ 500,000 $ 780,456 $ 1,280, , ,566 1,255, , ,356 1,255, , ,356 1,254, , ,456 1,257, ,155,000 3,115,280 6,270, ,915,000 2,327,597 6,242, ,980,000 1,235,750 6,215, ,355, ,125 2,474,125 $ 17,010,000 $ 10,495,942 $ 27,505,942 35

41 6. LONG-TERM LIABILITIES (Continued) NOTES TO BASIC FINANCIAL STATEMENTS (Continued) General Obligation Bonds (Continued) On August 1, 2004 the District issued a Series 2004 General Obligation Bond, Series D totaling $20,000,000. Bond proceeds are being spent on the repairs of existing schools and for alterations or acquisitions of school facilities. Repayment of the bonds is made from special parcel (valorem) tax revenues levied in connection with this bond issue. The bonds bear interest at rates ranging from 4.25% to 5.00% and are scheduled to mature through August 2034, as follows: Year Ending June 30, Principal Interest Total 2012 $ 440,000 $ 824,931 $ 1,264, , ,531 1,264, , ,151 1,271, , ,339 1,265, , ,739 1,265, ,890,000 3,443,211 6,333, ,620,000 2,712,200 6,332, ,600,000 1,733,120 6,333, ,515, ,864 5,063,864 $ 17,995,000 $ 12,399,086 $ 30,394,086 On April 10, 2007 the District issued a Series 2006 General Obligation Bond, Series A totaling $25,000,000. Bond proceeds are being spent on renovating older classrooms, improving access for disabled students and teachers, modernizing libraries and homework centers, enhancing computer learning technology and improving facilities. Repayment of the bonds is made from special parcel (valorem) tax revenues levied in connection with this bond issue. The bonds bear interest at rates ranging from 4.12% to 5.00% and are scheduled to mature through August 2031, as follows: Year Ending June 30, Principal Interest Total 2012 $ 1,275,000 $ 958,269 $ 2,233, , , , , , , , ,919 1,399, , ,244 1,563, ,600,000 3,821,294 8,421, ,630,000 2,791,819 8,421, ,935,000 1,357,100 8,292, ,575,000 70,875 1,645,875 $ 21,335,000 $ 12,544,158 $ 33,879,158 36

42 6. 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 as follows: Balance Balance Amounts July 1, June 30, Due Within 2010 Additions Deductions 2011 One Year General Obligation Bonds $ 136,395,000 $ 35,000,000 $ 4,080,000 $ 167,315,000 $ 4,260,000 Unamortized Bond Premiums 185, ,000 6,167 Compensated absences 241,781 3, , ,519 Other postemployment benefits (Note 9) 712, , ,084 1,171,547 $ 137,349,368 $ 35,827,782 $ 4,260,084 $ 168,917,066 $ 4,511,686 The payments for the General Obligation Bonds are made from the Bond Interest and Redemption Fund. Payments for the compensated absences and other postemployment benefits are made from the fund that the respective compensation was charged to. 7. NET ASSETS / FUND BALANCES The restricted net assets as of June 30, 2011 consist of the following: Governmental Activities Fiduciary Activities Restricted for: Revolving cash fund $ 4,800 Prepaid expenditures 724,847 Stores inventory 68,973 Unspent categorical program revenues 2,321,874 Special revenues 5,580,422 Capital projects 5,170,913 Debt retirement 8,916,735 Self-insurance 6,047,328 Scholarships $ 178,206 $ 28,835,892 $ 178,206 37

43 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 7. NET ASSETS / FUND BALANCES (Continued) Fund balances, by category, at June 30, 2011 consisted of the following: Bond Interest and All General Building Redemption Non-Major Fund Fund Fund Funds Total Nonspendable: Revolving cash fund $ 4,000 $ 800 $ 4,800 Prepaid expenses 724, ,847 Stores inventory 38,881 30,092 68,973 Subtotal nonspendable 767,728 30, ,620 Restricted: Unspent categorical revenues 2,321,874 2,321,874 Capital projects $ 36,984,765 12,266,859 49,251,624 Special programs 5,525,755 5,525,755 Food service operations 54,667 54,667 Debt service $ 8,916,735 8,916,735 Subtotal restricted 2,321,874 36,984,765 8,916,735 17,847,281 66,070,655 Assigned: Parcel taxes 6,777,270 6,777,270 Loss of State funding 8,547,023 8,547,023 Subtotal assigned 15,324,293 15,324,293 Unassigned: Undesignated 2,066,571 2,066,571 Total fund balances $ 20,480,466 $ 36,984,765 $ 8,916,735 $ 17,878,173 $ 84,260, EMPLOYEE RETIREMENT SYSTEMS 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). 38

44 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 8. EMPLOYEE RETIREMENT SYSTEMS (Continued) 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 7.00% 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 $768,366, $778,517 and $928,026, 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

45 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 required to contribute 8.00% 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 $2,635,426, $2,623,716 and $2,638,293, respectively, and equal 100% of the required contributions for each year. 9. OTHER POSTEMPLOYMENT BENEFITS The District's annual other postemployment 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 $ 649,770 Interest on net OPEB obligation 35,629 Adjustment to annual required contribution (46,355) Annual OPEB cost (expense) 639,044 Contributions made (180,084) Increase in net OPEB obligation 458,960 Net OPEB obligation - beginning of year 712,587 Net OPEB obligation - end of year $ 1,171,547 40

46 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 9. OTHER POSTEMPLOYMENT 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 preceding two years were as follows: Percentage of Annual Fiscal Year Annual OPEB Cost Net OPEB Ended OPEB Cost Contributed Obligation June 30, 2009 $ 652,127 32% $ 445,253 June 30, 2010 $ 571,339 53% $ 712,587 June 30, 2011 $ 639,044 28% $ 1,171,547 As of May 11, 2011, the most recent actuarial valuation date, the plan was unfunded. The actuarial accrued liability for benefits was $5,194,279, and the actuarial value of assets was zero, resulting in an unfunded actuarial accrued liability (UAAL) of $5,194,279. The covered payroll (annual payroll of active employees covered by the Plan) was $40,646,690, and the ratio of the UAAL to the covered payroll was 12.8 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, shown above, 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 May 11, 2011 actuarial valuation, the projected unit 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 7.0 percent. 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 on an open basis. The remaining amortization period at June 30, 2011, was 30 years. 41

47 10. JOINT POWERS AGREEMENTS Metropolitan Education District NOTES TO BASIC FINANCIAL STATEMENTS (Continued) The District participates in a Joint Powers Authority with the Metropolitan Education District ("MetroEd") which administers and operates the Regional Occupational, Vocational Education and Adult Education programs for member school districts. Each member school district has a representative on the Governing Board which is responsible for adopting an annual budget and overall management of MetroEd's activities. MetroEd receives most of its annual operating funds from each of the participating school district's Adult Education and General Funds. Condensed financial information of MetroEd for the year ended June 30, 2010 (the latest information available) is as follows: Total assets $ 49,088,070 Total liabilities $ 5,610,876 Total net assets $ 43,477,194 Total revenue $ 28,123,476 Total expenses $ 19,359,820 Change in net assets $ 8,763,656 The District's share of year-end assets, liabilities or fund equity has not been calculated by MetroEd. School Project for Utility Rate Reduction The District is a member with approximately 150 school districts, community college districts and county offices of education in a Joint Power Authority, School Project for Utility Rate Reduction (SPURR). SPURR was established in 1989 to provide for the direct purchase of gas, electricity, and other utility services. SPURR also provides advisory services relative to utilities. The following is a summary of the financial information for SPURR at June 30, 2010 (the latest information available): Total assets $ 13,604,232 Total liabilities $ 7,841,831 Total net assets $ 5,762,401 Total revenues $ 37,003,004 Total expenses $ 37,226,319 Net increase in net assets $ (223,315) The relationship between the District and the Joint Powers Authorities is such that the Joint Powers Authorities are not component units of the District for financial reporting purposes. 42

48 10. CONTINGENT LIABILITIES NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 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. The District has received federal and state funds for specific purposes that are subject to review and audit by the grantor agencies. Although such audits could result in expenditure disallowances under terms of the grants, it is management's opinion that any required reimbursements or future revenue offsets subsequently determined will not have a material effect on the District's financial position. 43

49 REQUIRED SUPPLEMENTARY INFORMATION

50 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 $ (437,569) $ (591,008) $ (598,075) $ (7,067) Local sources 54,120,761 53,543,457 53,186,425 (357,032) Total revenue limit 53,683,192 52,952,449 52,588,350 (364,099) Federal sources 1,719,357 3,390,718 3,364,840 (25,878) Other state sources 1,142,196 3,635,998 5,039,978 1,403,980 Other local sources 7,398,844 7,625,708 7,404,492 (221,216) Total revenues 63,943,589 67,604,873 68,397, ,787 Expenditures: Certificated salaries 31,662,917 31,569,031 31,581,569 (12,538) Classified salaries 9,071,475 8,858,435 8,768,343 90,092 Employee benefits 13,606,267 14,512,417 14,004, ,486 Books and supplies 1,925,197 1,676,057 1,771,550 (95,493) Contract services and operating expenditures 8,695,905 8,158,309 8,332,200 (173,891) Capital outlay 73, ,980 (175,535) Other outgo 1,726,736 1,781,286 2,136,537 (355,251) Total expenditures 66,688,497 66,628,980 66,844,110 (215,130) (Deficiency) excess of revenues (under) over expenditures (2,744,908) 975,893 1,553, ,657 Other financing uses: Operating transfers out (544,068) (627,600) (1,254,728) (627,128) Net change in fund balance (3,288,976) 348, ,822 (49,471) Fund balance, July 1, ,181,644 20,181,644 20,181,644 Fund balance, June 30, 2011 $ 16,892,668 $ 20,529,937 $ 20,480,466 $ (49,471) The accompanying notes are an integral part of these financial statements. 44

51 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 February 9, 2008 $ - $ 4,810,284 $ 4,810,284 0% $ 42,309, % 6/30/2010 February 9, 2008 $ - $ 4,810,284 $ 4,810,284 0% $ 40,119, % 6/30/2011 May 11, 2011 $ - $ 5,194,279 $ 5,194,279 0% $ 40,646, % The accompanying notes are an integral part of these financial statements. 45

52 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. Excess of expenditures over appropriations for the year ended June 30, 2011 were as follows: Fund Excess Expenditures General Fund: Certificated salaries $ 12,538 Books and supplies $ 95,493 Contract services and operating expenditures $ 173,891 Capital outlay $ 175,535 These excesses are not in accordance with Education Code 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. 46

53 SUPPLEMENTARY INFORMATION

54 COMBINING BALANCE SHEET ALL NON-MAJOR FUNDS June 30, 2011 Adult Deferred Capital County School Special Education Cafeteria Maintenance Facilities Facilities Reserve Fund Fund Fund Fund Fund Fund Total ASSETS Cash and investments: Cash in County Treasury $ (358,045) $ (23,593) $ 4,513,348 $ 3,304,141 $ 755,137 $ 8,555,728 $ 16,746,716 Cash awaiting deposit Cash in revolving fund Receivables 541, ,218 6,069 1,601 14, ,460 Due from other funds 539, , ,452 Stores inventory 30,092 30,092 Total assets $ 723,032 $ 110,517 $ 4,818,649 $ 3,311,025 $ 756,738 $ 8,570,374 $ 18,290,335 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 15,787 $ 24,958 $ 105,914 $ 105,316 $ 160,048 $ 412,023 Due to other funds Total liabilities 15,926 24, , , , ,162 Fund balances: Nonspendable 30,092 30,092 Restricted 707,106 55,467 $ 4,818,649 3,205, ,422 8,410,326 17,848,081 Total fund balances 707,106 85,559 4,818,649 3,205, ,422 8,410,326 17,878,173 Total liabilities and fund balances $ 723,032 $ 110,517 $ 4,818,649 $ 3,311,025 $ 756,738 $ 8,570,374 $ 18,290,335 The accompanying notes are an integral part of these financial statements. 47

55 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES ALL NON-MAJOR FUNDS For the Year Ended June 30, 2011 Adult Deferred Capital County School Special Education Cafeteria Maintenance Facilities Facilities Reserve Fund Fund Fund Fund Fund Fund Total Revenues: Revenue limit sources: State apportionment $ 250,966 $ 250,966 Federal sources 618, ,256 Other state sources $ 1,643,190 48,222 1,691,412 Other local sources 673, ,466 $ 318,510 $ 19,282 $ 2,039,233 3,478,599 Total revenues 2,316,298 1,345, ,510 19,282 2,039,233 6,039,233 Expenditures: Certificated salaries 1,220,534 1,220,534 Classified salaries 414, , ,283 Employee benefits 552, , ,563 Books and supplies 47, , , ,931 Contract services and operating expenditures (86,858) 18,323 60, ,983 94,873 Capital outlay 1,072,969 3,695, ,484 5,069,382 Total expenditures 2,148,343 1,170,533 1,133,394 3,695, ,367 8,863,566 Excess (deficiency) of revenues over (under) expenditures 167, ,377 (814,884) (3,676,647) 1,323,866 (2,824,333) Other financing sources: Operating transfers in 539,151 $ 640,577 1,179,728 Net change in fund balances 707, , ,577 (814,884) (3,676,647) 1,323,866 (1,644,605) Fund balances, July 1, 2010 (89,818) 4,178,072 4,019,995 4,328,069 7,086,460 19,522,778 Fund balances, June 30, 2011 $ 707,106 $ 85,559 $ 4,818,649 $ 3,205,111 $ 651,422 $ 8,410,326 $ 17,878,173 The accompanying notes are an integral part of these financial statements. 48

56 COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS For the Year Ended June 30, 2011 STUDENT BODY FUNDS Del Mar High School Balance Balance July 1, June 30, 2010 Additions Deductions 2011 Assets: Cash on hand and in banks $ 80,281 $ 19,094 $ 30,906 $ 68,469 Liabilities: Due to student groups $ 80,281 $ 19,094 $ 30,906 $ 68,469 Leigh High School Assets: Cash on hand and in banks $ 254,054 $ 94,335 $ 113,597 $ 234,792 Liabilities: Due to student groups $ 254,054 $ 94,335 $ 113,597 $ 234,792 Westmont High School Assets: Cash on hand and in banks $ 234,314 $ 176,656 $ 172,837 $ 238,133 Liabilities: Due to student groups $ 234,314 $ 176,656 $ 172,837 $ 238,133 Branham High School Assets: Cash on hand and in banks $ 116,712 $ 160,126 $ 100,198 $ 176,640 Liabilities: Due to student groups $ 116,712 $ 160,126 $ 100,198 $ 176,640 (Continued) 49

57 COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS (Continued) For the Year Ended June 30, 2011 STUDENT BODY FUNDS (Continued) Prospect High School Balance Balance July 1, June 30, 2010 Additions Deductions 2011 Assets: Cash on hand and in banks $ 231,442 $ 105,939 $ 96,027 $ 241,354 Liabilities: Due to student groups $ 231,442 $ 105,939 $ 96,027 $ 241,354 Total Agency Funds Assets: Cash on hand and in banks $ 916,803 $ 556,150 $ 513,565 $ 959,388 Liabilities: Due to student groups $ 916,803 $ 556,150 $ 513,565 $ 959,388 The accompanying notes are an integral part of these financial statements. 50

58 AUDIT ORGANIZATION For the Year Ended June 30, 2011 Campbell Union High School District was established on September 1, 1900 and is comprised of an area of approximately 28 square miles located in Santa Clara County. There were no changes in the boundaries of the District during the current year. At June 30, 2011, the District operated five comprehensive high schools and one alternative education school. The Board of Trustees of Campbell Union High School District is comprised of five members elected at large within the boundaries of the District. The Board and Administration manage and control the affairs of the District. BOARD OF TRUSTEES Name Office Term Expires Ms. Pam Parker President November 2014 Ms. Royce Peterson Clerk November 2014 Mr. Matthew Dean Member November 2014 Ms. Diane Gordon Member November 2012 Mr. Rick Costanzo Member November 2012 ADMINISTRATION Dr. Rhonda E. Farber Superintendent Mr. Patrick Gaffney Deputy Superintendent - Business Ms. Tanya Krause Assistant Superintendent - Human Resource Department Dr. Fal Asrani Assistant Superintendent - Curriculum & Instruction 51

59 AUDIT SCHEDULE OF AVERAGE DAILY ATTENDANCE For the Year Ended June 30, 2011 Second Period Report Annual Report Secondary: Regular Classes 6,207 6,165 Special Education Compulsory Continuation Education Home and Hospital Community Day School ,110 7,064 See accompanying notes to supplementary information. 52

60 AUDIT 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 Grade 9 64,800 63,780 69, In Compliance Grade 10 64,800 63,780 69, In Compliance Grade 11 64,800 63,780 69, In Compliance Grade 12 64,800 63,780 69, In Compliance See accompanying notes to supplementary information. 53

61 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 Ed - IDEA: LCI Growth, Part B, Sec $ 1,342, NCLB: Title IV, Safe and Drug Free Schools and Tobacco Use Prevention Education , NCLB: Title II, Part A, Improving Teacher Quality Local Grants , NCLB: Title III, Limited English Proficiency (LEP) Student Program , NCLB: Title III, English Language Acquisition Grants , Vocational Programs: Voc and Applied Technology Secondary I C, Sec 131 (Carl Perkins Act) , Education Jobs Fund (SB 847) ,630,080 Total U.S. Department of Education 3,364,840 U.S. Department of Agriculture - Passed through California Department of Education Child Nutrition: School Programs (NSL Sec 4) ,256 Total Federal programs $ 3,983,096 See accompanying notes to supplementary information. 54

62 AUDIT RECONCILIATION OF UNAUDITED ACTUAL FINANCIAL REPORT WITH AUDITED FINANCIAL STATEMENTS For the Year Ended June 30, 2011 There were no audit adjustments proposed to any funds of the District. See accompanying notes to supplementary information. 55

63 SCHEDULE OF FINANCIAL TRENDS AND ANALYSIS For the Year Ended June 30, 2011 General Fund (Budgeted) Revenues and other financing sources $ 63,517,611 $ 68,397,660 $ 71,215,135 $ 72,224,880 Expenditures 66,715,293 66,844,110 66,216,501 67,393,134 Other uses and transfers out 659,529 1,254, , ,433 Total outgo 67,374,822 68,098,838 66,646,064 67,987,567 Change in fund balance $ (3,857,211) $ 298,822 $ 4,569,071 $ 4,237,313 Ending fund balance $ 16,623,255 $ 20,480,466 $ 20,181,644 $ 15,612,573 Available reserves $ 2,066,571 $ 2,066,571 $ 5,576,147 $ 8,446,993 Designated for economic uncertainties $ - $ - $ 3,509,576 $ - Undesignated fund balance $ 2,066,571 $ 2,066,571 $ 2,066,571 $ 8,446,993 Available reserves as percentages of total outgo 3.07% 3.03% 5.27% 12.4% All Funds Total long-term liabilities $164,405,380 $168,917,066 $137,349,368 $140,606,074 Average daily attendance at P-2, excluding adult and ROP 7,188 7,110 7,253 7,282 The General Fund fund balance has increased by $9,105,206 over the past three fiscal years. The fiscal year budget projects a decrease of $3,857,211. For a district this size, the State of California recommends available reserves of at least 3% of total General Fund expenditures, transfers out, and other uses to be maintained. For the year ended June 30, 2011, the District has met this requirement. The District has incurred operating surpluses in each of the past three years, but anticipates incurring an operating deficit during the fiscal year. Total long-term liabilities have increased by $28,310,992 over the past two years. Average daily attendance has decreased by 172 over the past two years and is anticipated to increase by 78 during the year ending June 30, See accompanying notes to supplementary information. 56

64 SCHEDULE OF CHARTER SCHOOLS For the Year Ended June 30, 2011 Charter Schools Chartered by District Included in District Financial Statements, or Separate Report There are no charter schools operating under the District. See accompanying notes to supplementary information. 57

65 AUDIT 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 $ 3,983,096 Total Schedule of Expenditure of Federal Awards $ 3,983,096 D - Reconciliation of Unaudited Actual Financial Report with Audited Financial Statements This schedule provides the information necessary to reconcile the fund balances of all funds as reported on the Unaudited Actual Financial Report to the audited financial statements. 58

66 NOTES TO SUPPLEMENTARY INFORMATION (Continued) 1. PURPOSE OF SCHEDULES (Continued) E - Schedule of Financial Trends and Analysis This schedule provides trend information on the District's financial condition over the past three years and its anticipated condition for the fiscal year, as required by the State Controller's Office. 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 Section and For the fiscal year ended June 30, 2011, the District did not adopt such a program. 59

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