ROOSEVELT ELEMENTARY SCHOOL DISTRICT NO. 66

Transcription

1 ROOSEVELT ELEMENTARY SCHOOL DISTRICT NO. 66 Comprehensive Annual Financial Report Fiscal Year Ended June 30, South Seventh Street Phoenix, Arizona

2 PHOENIX, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2012 Issued by: Business and Finance Department

3 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal Organization Chart List of Principal Officials Page i vi vii FINANCIAL SECTION INDEPENDENT AUDITORS REPORT 1 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information) 5 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements: Statement of Net Assets 18 Statement of Activities 19 Fund Financial Statements: Balance Sheet Governmental Funds 22 Reconciliation of the Balance Sheet Governmental Funds to the Statement of Net Assets 25 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds 26 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds to the Statement of Activities 28 Statement of Fiduciary Assets and Liabilities 29 Notes to Financial Statements 30

4 TABLE OF CONTENTS (Cont d) FINANCIAL SECTION (Cont d) Page SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL (Required Supplementary Information) General Fund 54 Title I Grants Fund 55 Note to Required Supplementary Information 56 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Governmental Funds: Combining Balance Sheet All Non-Major Governmental Funds By Fund Type 60 Combining Statement of Revenues, Expenditures and Changes in Fund Balances All Non-Major Governmental Funds By Fund Type 61 Special Revenue Funds: Combining Balance Sheet 64 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 70 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual 74 Debt Service Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual 92 Capital Projects Funds: Combining Balance Sheet 94 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 95

5 TABLE OF CONTENTS (Cont d) FINANCIAL SECTION (Concl d) Page COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES (Concl d) Combining Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual 96 Agency Funds: Combining Statement of Fiduciary Assets and Liabilities 102 Combining Statement of Changes in Fiduciary Assets and Liabilities 104 STATISTICAL SECTION Financial Trends: Net Assets by Component 106 Expenses, Program Revenues, and Net (Expense)/Revenue 107 General Revenues and Total Changes in Net Assets 109 Fund Balances Governmental Funds 111 Governmental Funds Revenues 113 Governmental Funds Expenditures and Debt Service Ratio 115 Other Financing Sources and Uses and Net Changes in Fund Balances Governmental Funds 117 Revenue Capacity: Assessed Value and Estimated Actual Value of Taxable Property 118 Direct and Overlapping Property Tax Rates 119 Principal Property Taxpayers 120 Property Tax Levies and Collections 121

6 TABLE OF CONTENTS (Concl d) STATISTICAL SECTION (Concl d) Page Debt Capacity: Outstanding Debt by Type 122 Direct and Overlapping Governmental Activities Debt 123 Legal Debt Margin Information 124 Demographic and Economic Information: County-Wide Demographic and Economic Statistics 125 Principal Employers 126 Operating Information: Full-Time Equivalent District Employees by Type 127 Operating Statistics 129 Capital Assets Information 130

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8 INTRODUCTORY SECTION

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10 Schools: T. G. Barr School Bernard Black School M. O. Bush School C. C. Campbell School Cesar Chavez School I.G. Conchos School J. R. Davis School C. O. Greenfield School Amy Houston Academy C. J. Jorgensen School P. L. Julian School J. F. Kennedy School M. L. King E. C. Center V. H. Lassen School Ed & Verma Pastor School Rose Linda School Southwest School Sunland School Valley View School Board Members: Mrs. Norma Muñoz President Mrs. Betty Thompson Clerk Mrs. Catherine Miranda Member Mr. David Vera Member Mrs. Betty Ware Member March 15, 2013 Citizens and Governing Board Roosevelt Elementary School District No South Seventh Street Phoenix, Arizona State law mandates that school districts required to undergo an annual single audit publish a complete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America and audited in accordance with auditing standards generally accepted in the United States by a certified public accounting firm licensed in the State of Arizona. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of the Roosevelt Elementary School District No. 66 (District) for the fiscal year ended June 30, This report consists of management s representations concerning the finances of the District. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the District has established a comprehensive internal control framework that is designed both to protect the District s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the District s financial statements in conformity with accounting principles generally accepted in the United States of America. Because the cost of internal controls should not outweigh their benefits, the District s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free of material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. On the Path to Instructional Excellence! i

11 The District s financial statements have been audited by Heinfeld, Meech & Co., P.C., a certified public accounting firm. The goal of the independent audit was to provide reasonable assurance that the financial statements of the District for the fiscal year ended June 30, 2012, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditors concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the District s financial statements for the fiscal year ended June 30, 2012, are fairly presented in conformity with accounting principles generally accepted in the United States of America. The independent auditors report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the District was part of a broader, federally mandated Single Audit as required by the provisions of the Single Audit Act Amendments of 1996 and U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the District s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in a separately issued Single Audit Reporting Package. Accounting principles generally accepted in the United States of America require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The District s MD&A can be found immediately following the report of the independent auditors. PROFILE OF THE DISTRICT The District is one of 58 public school districts located in Maricopa County, Arizona. It provides a program of public education from pre-kindergarten through grade eight, with an estimated current enrollment of approximately 9,688 students. The District s Governing Board is organized under Section of the Arizona Revised Statutes (A.R.S.). Management of the District is independent of other state or local governments. The County Treasurer collects taxes for the District, but exercises no control over its expenditures/expenses. The membership of the Governing Board consists of five members elected by the public. Under existing statutes, the Governing Board s duties and powers include, but are not limited to, the acquisition, maintenance and disposition of school property; the development and adoption of a school program; and the establishment, organization and operation of schools. The Board also has broad financial responsibilities, including the approval of the annual budget, and the establishment of a system of accounting and budgetary controls. ii

12 The financial reporting entity consists of a primary government and its component units. A component unit is a legally separate entity that must be included in the reporting entity in conformity with generally accepted accounting principles. The District is a primary government because it is a special-purpose government that has a separately elected governing body, is legally separate, and is fiscally independent of other state or local governments. Furthermore, there are no component units combined with the District for financial statement presentation purposes, and the District is not included in any other governmental reporting entity. Consequently, the District s financial statements include only the funds of those organizational entities for which its elected governing board is financially accountable. The District s major operations include education, student transportation, construction and maintenance of District facilities, and food services. Roosevelt School District is located directly south of the downtown business district of Phoenix and encompasses an area of approximately 33 square miles. The Salt River forms the District s northern boundary which stretches for approximately eight miles, while the Phoenix South Mountain Park establishes its border to the south. Its east/west boundaries run from 35th Avenue in the west to 40th Street to the east. The District had experienced stable growth in its student enrollment in recent years, growing from an average daily enrollment of 8,849 in to approximately 13,021 in However, enrollment has declined from to by approximately 25.6% to 9,688 students. Roosevelt School District s ongoing mission is to seek excellence in instruction as a priority for ensuring student academic progress. As an urban, inner city, school district there is a deep commitment to providing exceptional educational opportunities for our students, many of whom come from disadvantaged living conditions. The vast majority of our students, well over 90%, qualify for free or reduced lunch prices, indicating a high number living in poverty. For the school year, the District is extensively focused on increasing instructional and leadership effectiveness, as well as, providing students and families with even greater opportunities for learning, cultural arts enrichment, and physical wellness. District teams have implemented plans to increase the District s outreach efforts in the community. The District has re-purposed two formerly closed school sites into a Parent Education and Resource Center/Staff Development Training Center, and a Community School which will be opened in collaboration with community agencies and organizations to provide after school and Saturday learning opportunities for students and families. These new initiatives are directly related to the District s goal of increasing system-wide accountability for meeting District and school improvement goals. In addition to an expanded academic focus, Roosevelt School District will provide students and parents with new and creative offerings in the use of technology, health and nutrition, and cultural experiences unlike any others in the South Mountain area. Roosevelt s collaborations with the City of Phoenix youth programs, higher education institutions, and community health agencies will bring exciting resources that Roosevelt families will certainly appreciate. iii

13 The annual expenditure budget serves as the foundation for the District s financial planning and control. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual expenditure budget approved by the District s Governing Board. The expenditure budget is prepared by fund for all Governmental Funds, and includes function and object code detail for the General Fund and some Special Revenue and Capital Projects Funds. The legal level of budgetary control (that is, the level at which expenditures cannot exceed the appropriated amount) is established at the individual fund level for all funds. Funds that are not required to legally adopt a budget may have over expenditures of budgeted funds. The budget for these funds is simply an estimate and does not prevent the District from exceeding the budget as long as the necessary revenue is earned. The District is not required to prepare an annual budget of revenue; therefore, a deficit budgeted fund balance may be presented. However, this does not affect the District s ability to expend monies. FACTORS AFFECTING FINANCIAL CONDITION The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the District operates. Local Economy. The Phoenix metropolitan area and the rest of Maricopa County have become one of the fastest growing regional markets in the United States. The number of manufacturing and wholesale businesses located in the metropolitan area is approaching 3,000. This growth has been stimulated by a combination of warm climate, a substantial well educated labor pool, a wide range of support industries, and a governmental climate that is supportive of economic growth and investment. Service is the largest employment sector in the County, partly fueled by the 2+ billion per year tourist industry. The County has excellent accommodations, diverse cultural and recreational activities, and a favorable climate attracting millions to the area annually. Wholesale and retail trade is the second largest employment category, employing over a quarter million people. The recent economic downturn has affected employment in the County. The economy of the District is comprised of industry and commerce. A substantial portion of the industrial activity within the District is related to the construction materials business because of the supply of sand and gravel in the bed of the Salt River which forms the District s northern boundary. The northeastern corner of the District, because of its proximity to transportation facilities, has attracted several industrial parks. Commerce in the District consists of the usual distribution of supermarkets, restaurants, taverns, service stations, automobile repair shops, and wholesale dealers. The climate, soil and water supply in this part of Maricopa County is very conducive to agriculture. Various crops are grown in the District on a year-round basis. The District draws its student population from lower socioeconomic households with 90 to 95 percent of the households generally qualifying for free and reduced-price lunches. The student population is made up of approximately 13 percent Black, 3 percent Anglo, 81 percent Hispanic with the remaining 3 percent Native American, Asian or other. iv

14 Long-term Financial Planning. The District continues the process to build up the fund balance in the General Fund. This has been a difficult task as the District has been on a continuum of a loss in students, resulting in several years of funding losses. District management has made it a priority to continue to grow the fund balance and continues to set aside funds, as feasible, to create a larger fund balance each year. The District s bonding capacity is currently at the cap, a result of the downturn in the economy that caused the assessed valuations to fall. The District s current capital plan is assessed on a yearly basis, with emphasis placed on safety and security issues as the top priority. AWARDS AND ACKNOWLEDGMENT Awards. The Association of School Business Officials International (ASBO) awards a Certificates of Excellence in Financial Reporting to Districts for their comprehensive annual financial reports. In order to be awarded this certificate, the District needs to publish an easily readable and efficiently organized comprehensive annual financial report. This report also needs to satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements. We believe that our current comprehensive annual financial report meets the programs requirements and we are submitting it to ASBO to determine its eligibility for the fiscal year certificate. Acknowledgments. The preparation of the comprehensive annual financial report on a timely basis was made possible by the dedicated service of the entire staff of the business and finance department. Each member of the department has our sincere appreciation for the contributions made in the preparation of this report. In closing, without the leadership and support of the Governing Board of the District, preparation of this report would not have been possible. Respectfully submitted, v

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16 LIST OF PRINCIPAL OFFICIALS GOVERNING BOARD Norma Muñoz President David Vera Member Betty Thompson Clerk Betty Ware Member Catherine Miranda Member ADMINISTRATIVE STAFF Jacqueline E Jackson, Ed. D. Superintendent Kerre Laabs Interim Chief Financial Officer vii

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18 FINANCIAL SECTION

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20 3033 N. Central Ave., Suite 300 Phoenix, Arizona Tel (602) Fax (602) INDEPENDENT AUDITORS REPORT Governing Board Roosevelt Elementary School District No. 66 We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Roosevelt Elementary School District No. 66 (District), as of and for the year ended June 30, 2012, which collectively comprise the District s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the District s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Roosevelt Elementary School District No. 66, as of June 30, 2012, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated March 15, 2013, on our consideration of Roosevelt Elementary School District No. 66 s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. TUCSON PHOENIX FLAGSTAFF ALBUQUERQUE

21 Accounting principles generally accepted in the United States of America require that the management s discussion and analysis on pages 5 through 14 and budgetary comparison information on pages 54 through 56 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District s financial statements as a whole. The accompanying supplementary information such as the introductory section, combining and individual fund financial statements and schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements. The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. HEINFELD, MEECH & CO., P.C. CPAs and Business Consultants March 15, 2013 Page 2

22 Page 3 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information)

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24 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 As management of the Roosevelt Elementary School District No. 66 (District), we offer readers of the District s financial statements this narrative overview and analysis of the financial activities of the District for the fiscal year ended June 30, We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found in the introductory section of this report. FINANCIAL HIGHLIGHTS The District s total net assets of governmental activities decreased 179,357 which represents a less than one percent decrease from the prior fiscal year. General revenues accounted for 70.4 million in revenue, or 72 percent of all current fiscal year revenues. Program specific revenue in the form of charges for services and grants and contributions accounted for 28.1 million or 28 percent of total current fiscal year revenues. The District had approximately 98.7 million in expenses related to governmental activities, a decrease of 11 percent from the prior fiscal year. Among major funds, the General Fund had 60.2 million in current fiscal year revenues, which primarily consisted of state aid and property taxes, and 61.8 million in expenditures. The General Fund s fund balance increase from 9.2 million at the prior fiscal year end to 9.8 million at the end of the current fiscal year was primarily due to a transfer of excess cash from the Unrestricted Capital Outlay Fund. OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the District s basic financial statements. The District s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the District s finances, in a manner similar to a private-sector business. The accrual basis of accounting is used for the government-wide financial statements. The statement of net assets presents information on all of the District s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. Page 5

25 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 OVERVIEW OF FINANCIAL STATEMENTS (Cont d) The statement of activities presents information showing how the District s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences). The government-wide financial statements outline functions of the District that are principally supported by property taxes and intergovernmental revenues. The governmental activities of the District include instruction, support services, operation and maintenance of plant services, student transportation services, operation of non-instructional services, and interest on long-term debt. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District can be divided into two categories: governmental funds and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements use the modified accrual basis of accounting and focus on near-term inflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the District s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the District s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General Fund, Title I Grants Fund, Debt Service Fund, and Unrestricted Capital Outlay Fund, all of which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements and schedules. Page 6

26 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 OVERVIEW OF FINANCIAL STATEMENTS (Concl d) Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the District. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the District s own programs. Due to their custodial nature, the fiduciary funds do not have a measurement focus. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found immediately following the basic financial statements. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the District s budget process. The District adopts an annual expenditure budget for all governmental funds. A schedule of revenues, expenditures and changes in fund balances budget and actual has been provided for the General Fund and Title I Grants Fund as required supplementary information. GOVERNMENT-WIDE FINANCIAL ANALYSIS Net assets may serve over time as a useful indicator of a government s financial position. In the case of the District, assets exceeded liabilities by 60.9 million at the current fiscal year end. The largest portion of the District s net assets reflects its investment in capital assets (e.g., land and improvements, buildings and improvements, vehicles, furniture and equipment and construction in progress), less any related debt used to acquire those assets that is still outstanding. The District uses these capital assets to provide services to its students; consequently, these assets are not available for future spending. Although the District s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. In addition, a portion of the District s net assets are restricted for special purposes, debt service repayment, and capital outlay investment. Page 7

27 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 GOVERNMENT-WIDE FINANCIAL ANALYSIS (Cont d) The following table presents a summary of the District s net assets for the fiscal years ended June 30, 2012 and June 30, As of As of June 30, 2012 June 30, 2011 (as restated) Current and other assets 41,577,963 40,787,402 Capital assets, net 106,921, ,878,939 Total assets, net 148,499, ,666,341 Current and other liabilities 11,335,391 12,150,732 Long-term liabilities 76,220,199 70,391,888 Total liabilities 87,555,590 82,542,620 Net assets: Invested in capital assets, net of related debt 38,602,118 43,501,855 Restricted 10,882,010 9,046,928 Unrestricted 11,460,236 8,574,938 Total net assets 60,944,364 61,123,721 At the end of the current fiscal year the District reported positive balances in all three categories of net assets. The same situation held true for the prior fiscal year. The District s financial position is the product of several financial transactions including the net result of activities, the acquisition and payment of debt, the acquisition and disposal of capital assets, and the depreciation of capital assets. The following are significant current year transactions that had an impact on the Statement of Net Assets. The principal retirement of 2.7 million of bonds. The issuance of 5.8 million of certificates of participation. The addition of 9.2 million in capital assets through the construction of new schools, and other school improvements and purchases of vehicles, furniture and equipment. Page 8

28 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 GOVERNMENT-WIDE FINANCIAL ANALYSIS (Cont d) Changes in net assets. The District s total revenues for the current fiscal year were 98.5 million. The total cost of all programs and services was 98.7 million. The following table presents a summary of the changes in net assets for the fiscal years ended June 30, 2012 and June 30, Fiscal Year Ended June 30, 2012 Fiscal Year Ended June 30, 2011 (as restated) Revenues: Program revenues: Charges for services 836, ,123 Operating grants and contributions 26,012,833 34,921,120 Capital grants and contributions 1,222,072 General revenues: Property taxes 29,965,649 35,570,518 Investment income 29,138 46,467 Unrestricted county aid 3,711,402 3,625,155 Unrestricted state aid 36,316,893 36,739,994 Unrestricted federal aid 416,936 1,471,193 Other 304,272 Total revenues 98,511, ,957,842 Expenses: Instruction 45,171,811 48,251,259 Support services students and staff 17,557,874 15,786,290 Support services administration 10,670,806 18,952,139 Operation and maintenance of plant services 10,530,056 14,248,193 Student transportation services 3,777,856 3,232,397 Operation of non-instructional services 6,745,113 6,734,824 Interest on long-term debt 4,236,921 3,331,902 Total expenses 98,690, ,537,004 Change in net assets (179,357) 2,420,838 Net assets, beginning 61,123,721 58,702,883 Net assets, ending 60,944,364 61,123,721 Page 9

29 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 GOVERNMENT-WIDE FINANCIAL ANALYSIS (Cont d) Expenses Millions FY FY The following are significant current year transactions that have had an impact on the change in net assets. The decrease in operating grants and contributions of 8.9 million due to a decrease in federal aid, grants and reimbursements. This was primarily related to a decrease in E-rate reimbursements. The decrease in unrestricted federal aid of 1.1 million due to a decrease in Education Jobs grant monies. The decrease in property tax revenue of 5.6 million due to decreased assessed value of properties surrounding the District. The following table presents the cost of the District s major functional activities. The table also shows each function s net cost (total cost less charges for services generated by the activities and intergovernmental aid provided for specific programs). The net cost shows the financial burden that was placed on the State and District s taxpayers by each of these functions. Page 10

30 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 GOVERNMENT-WIDE FINANCIAL ANALYSIS (Concl d) Year Ended June 30, 2011 Year Ended June 30, 2012 (as restated) Total Expenses Net (Expense)/ Revenue Total Expenses Net (Expense)/ Revenue Instruction 45,171,811 (35,801,847) 48,251,259 (36,923,513) Support services students and staff 17,557,874 (10,895,200) 15,786,290 (8,281,634) Support services administration 10,670,806 (9,454,472) 18,952,139 (12,772,034) Operation and maintenance of plant services 10,530,056 (9,311,905) 14,248,193 (13,607,039) Student transportation services 3,777,856 (3,713,847) 3,232,397 (2,983,690) Operation of non-instructional services 6,745, ,913 6,734, ,754 Interest on long-term debt 4,236,921 (2,152,017) 3,331,902 (1,577,605) Total 98,690,437 (70,619,375) 110,537,004 (75,336,761) The cost of all governmental activities this year was 98.7 million. Federal and State governments and charges for services subsidized certain programs with grants and contributions and other local revenues of 28.1 million. Net cost of governmental activities of 70.6 million was financed by general revenues, which are made up of primarily property taxes of 30.0 million and state and county aid of 40.0 million. FINANCIAL ANALYSIS OF THE DISTRICT S FUNDS As noted earlier, the District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the District s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the District s financing requirements. In particular, unassigned fund balance may serve as a useful measure of the District s net resources available for spending at the end of the fiscal year. The financial performance of the District as a whole is reflected in its governmental funds. As the District completed the year, its governmental funds reported a combined fund balance of 19.6 million, a decrease of 4.5 million due primarily to the District utilizing bond proceeds. Page 11

31 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 FINANCIAL ANALYSIS OF THE DISTRICT S FUNDS (Concl d) The General Fund comprises 50 percent of the total fund balance. Approximately 9.2 million, or 94 percent of the General Fund s fund balance constitutes unassigned fund balance. The General Fund is the principal operating fund of the District. The increase in fund balance of 624,030 to 9.8 million as of fiscal year end was a result of a transfer of excess cash from the Unrestricted Capital Outlay Fund. General Fund revenues decreased 10.1 million as a result of a decrease in state aid and grants and federal aid, grants and reimbursements of 10.2 million. The fund balance of the Debt Service Fund decreased 44,339 to 2.5 million. The fund balance of the Unrestricted Capital Outlay Fund increased 457,138 to 1.9 million primarily due to the issuance of 5.8 million of certificates of participation. BUDGETARY HIGHLIGHTS Over the course of the year, the District revised the General Fund annual expenditure budget for changes in student count. The difference between the original budget and the final amended budget was a 50,296 increase, or less than one percent. Significant variances for the final amended budget and actual revenues resulted from the District not being required by the State of Arizona to prepare a revenue budget. A schedule showing the original and final budget amounts compared to the District s actual financial activity for the General Fund is provided in this report as required supplementary information. The significant variances are summarized as follows: The favorable variance of 1.2 million in support services administration was a result of classified staff being more appropriately coded to support services students and staff during the fiscal year. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets. At year end, the District had invested million in capital assets, including school buildings, athletic facilities, buses and other vehicles, computers, and other equipment. This amount represents a net increase prior to depreciation of 8.7 million from the prior fiscal year, primarily due to a structural repair project. Total depreciation expense for the current fiscal year was 5.0 million. Page 12

32 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 CAPITAL ASSETS AND DEBT ADMINISTRATION (Concl d) The following schedule presents a summary of capital asset balances for the fiscal years ended June 30, 2012 and June 30, As of June 30, 2012 As of June 30, 2011 Capital assets non-depreciable 9,940,851 18,666,038 Capital assets depreciable, net 96,981,140 84,212,901 Total 106,921, ,878,939 The estimated cost to complete current construction projects is 3.4 million. Additional information on the District s capital assets can be found in Note 6. Debt Administration. At year end, the District had 71.7 million in long-term debt outstanding, 5.3 million due within one year. This represents a net increase of 3.5 million due to the issuance of 5.8 million in certificates of participation. The District s general obligation bonds are subject to two limits; the Constitutional debt limit (total debt limit) on all general obligation bonds (up to 15 percent of the total secondary assessed valuation) and the statutory debt limit on Class B bonds (the greater of 5 percent of the secondary assessed valuation or 1,500 per student). The current total debt limitation for the District is 97.0 million and the Class B debt limit is 32.3 million. Due to a decline in the District s secondary assessed valuation, the District does not have any current bonding capacity. Additional information on the District s long-term debt can be found in Notes ECONOMIC FACTORS AND NEXT YEAR S BUDGET AND RATES Many factors were considered by the District s administration during the process of developing the fiscal year budget. Among them: Fiscal year budget balance carry forward (250,000). District student population (9366). Total employee salary increases of 1.1 million. Also considered in the development of the budget is the local economy and inflation of the surrounding area. Budgeted expenditures in the General Fund increased less than one percent to 61.1 million in fiscal year State aid and property taxes are expected to be the primary funding sources. No new significant programs were added to the budget. Page 13

33 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A) YEAR ENDED JUNE 30, 2012 CONTACTING THE DISTRICT S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, and investors and creditors with a general overview of the District s finances and to demonstrate the District s accountability for the resources it receives. If you have questions about this report or need additional information, contact the Business and Finance Department, Roosevelt Elementary School District No. 66, 6000 South Seventh Street, Phoenix, Arizona, Page 14

34 Page 15 BASIC FINANCIAL STATEMENTS

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36 Page 17 GOVERNMENT-WIDE FINANCIAL STATEMENTS

37 STATEMENT OF NET ASSETS JUNE 30, 2012 ASSETS Current assets: Cash and investments Property taxes receivable Accounts receivable Deposits Due from governmental entities Prepaid items Inventory Total current assets Noncurrent assets: Deferred charges Land Land improvements Buildings and improvements Vehicles, furniture and equipment Construction in progress Accumulated depreciation Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Construction contracts payable Credit line payable Accrued payroll and employee benefits Compensated absences payable Accrued interest payable Unearned revenues Bonds payable Certificate of participation payable Total current liabilities Noncurrent liabilities: Non-current portion of long-term obligations Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for: Federal and state projects Food service Other local initiatives Debt service Capital outlay Unrestricted Total net assets Governmental Activities 17,922,149 3,929,399 86, ,725 18,223,512 99,720 79,481 40,525,986 1,051,977 4,318,565 5,183, ,205,200 28,389,236 5,622,286 (63,796,734) 107,973, ,499,954 1,504,663 2,397,679 5,152, ,013 1,503,643 1,750, ,831 4,220,000 1,070,000 18,129,034 69,426,556 69,426,556 87,555,590 38,602,118 1,738,717 3,237, ,900 2,679,774 2,898,474 11,460,236 60,944,364 Page 18 The notes to the basic financial statements are an integral part of this statement.

38 STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2012 Functions/Programs Governmental activities: Instruction Support services - students and staff Support services - administration Operation and maintenance of plant services Student transportation services Operation of non-instructional services Interest on long-term debt Total governmental activities Expenses 45,171,811 17,557,874 10,670,806 10,530,056 3,777,856 6,745,113 4,236,921 98,690,437 Charges for Services 585, , ,157 Program Revenues Operating Grants and Contributions 7,562,836 6,662,674 1,216,334 1,218,151 64,009 7,203,925 2,084,904 26,012,833 Capital Grants and Contributions 1,222,072 1,222,072 Net (Expense) Revenue and Changes in Net Assets Governmental Activities (35,801,847) (10,895,200) (9,454,472) (9,311,905) (3,713,847) 709,913 (2,152,017) (70,619,375) General revenues: Taxes: Property taxes, levied for general purposes Property taxes, levied for debt service Property taxes, levied for capital outlay Investment income Unrestricted county aid Unrestricted state aid Unrestricted federal aid Total general revenues Changes in net assets Net assets, beginning of year, as restated Net assets, end of year 23,617,576 5,401, ,830 29,138 3,711,402 36,316, ,936 70,440,018 (179,357) 61,123,721 60,944,364 Page 19 The notes to the basic financial statements are an integral part of this statement.

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40 Page 21 FUND FINANCIAL STATEMENTS

41 BALANCE SHEET - GOVERNMENTAL FUNDS JUNE 30, 2012 ASSETS Cash and investments Property taxes receivable Accounts receivable Deposits Due from governmental entities Due from other funds Prepaid items Inventory Total assets General 1,825,403 3,485,935 86,000 11,632,578 1,800,154 18,830,070 Title I Grants 1,579,586 81,250 1,660,836 Debt Service 7,270, , ,725 8,549,173 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Construction contracts payable Credit line payable Due to other funds Accrued payroll and employee benefits Deferred revenues Bonds payable Interest payable Certificate of participation payable Total liabilities 902,534 5,152,000 87,258 2,881,428 9,023, ,481 1,378, ,974 1,660, ,157 4,220,000 1,649,399 6,086,556 Fund balances (deficits): Nonspendable Restricted Assigned Unassigned Total fund balances 270, ,466 9,234,846 9,806,850 2,462,617 2,462,617 Total liabilities and fund balances 18,830,070 1,660,836 8,549,173 The notes to the basic financial statements are an integral part of this statement. Page 22

42 Unrestricted Capital Outlay 3,047,449 4, ,485 1,605,264 5,154,842 Non-Major Governmental Funds 5,778, , ,725 3,551,138 18,470 79,481 9,736,483 Total Governmental Funds 17,922,149 3,929,399 86, ,725 18,223,512 3,405,418 99,720 79,481 43,931,404 2,039,586 2, ,806 1,070,000 3,213, , ,093 2,027,037 69,781 1,380,561 4,324,120 1,504,663 2,397,679 5,152,000 3,405, ,013 4,481,989 4,220,000 1,750,205 1,070,000 24,307,967 1,941,607 1,941,607 79,481 6,503,916 (1,171,034) 5,412,363 79,481 11,178, ,466 8,063,812 19,623,437 5,154,842 9,736,483 43,931,404 Page 23

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44 RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS JUNE 30, 2012 Total governmental fund balances 19,623,437 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Governmental capital assets 170,718,725 Less accumulated depreciation (63,796,734) 106,921,991 Some revenues will not be available to pay for current period expenditures and, therefore, are deferred in the funds. Property taxes 3,142,284 Intergovernmental 1,134,874 4,277,158 Deferred items related to the net cost of issuance of bonds are amortized over the life of the associated bond issue in the government-wide statements but not reported in the funds. 1,051,977 Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds. Certificates of particpation payable (4,750,000) Compensated absences payable (4,259,664) Other postemployment benefits (275,535) Bonds payable (61,645,000) (70,930,199) Net assets of governmental activities 60,944,364 Page 25 The notes to the basic financial statements are an integral part of this statement.

45 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2012 Revenues: Other local Property taxes State aid and grants Federal aid, grants and reimbursements Total revenues General 4,180,161 23,717,190 31,850, ,936 60,164,879 Title I Grants 10,069,591 10,069,591 Debt Service 33,288 5,533,245 1,925,449 7,491,982 Expenditures: Current - Instruction Support services - students and staff Support services - administration Operation and maintenance of plant services Student transportation services Operation of non-instructional services Capital outlay Debt service - Principal retirement Interest and fiscal charges Issuance costs Total expenditures 30,007,680 10,020,058 8,438,458 9,793,291 3,050,913 3, ,113 61,777,996 3,466,798 4,691, ,977 46,876 44, ,059 9,528,500 4,220,000 3,332,716 7,552,716 Excess (deficiency) of revenues over expenditures (1,613,117) 541,091 (60,734) Other financing sources (uses): Transfers in Transfers out Issuance of certificates of participation Total other financing sources (uses): 2,309,990 2,309,990 (622,341) (622,341) 16,395 16,395 Changes in fund balances 696,873 (81,250) (44,339) Fund balances, beginning of year, as restated 9,182,820 2,506,956 Increase (decrease) in reserve for prepaid items Increase (decrease) in reserve for inventory (72,843) 81,250 Fund balances, end of year 9,806,850 2,462,617 Page 26 The notes to the basic financial statements are an integral part of this statement.