CALVERT COUNTY PUBLIC SCHOOLS Prince Frederick, Maryland. FINANCIAL STATEMENTS June 30, 2013

Transcription

1 Prince Frederick, Maryland FINANCIAL STATEMENTS

2 TABLE OF CONTENTS INDEPENDENT AUDITORS REPORT... 1 MANAGEMENT S DISCUSSION AND ANALYSIS... 3 FINANCIAL STATEMENTS Government wide Financial Statements: Statement of Net Position Statement of Activities Fund Financial Statements: Balance Sheet Governmental Funds Reconciliation of the Governmental Funds Balance Sheet with the Statement of Net Position Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Reconciliation of the Governmental Funds: Statement of Revenues, Expenditures and Changes in Fund Balances with the Statement of Activities Statement of Fiduciary Funds Net Position Notes to Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Other Post Employment Benefit Schedules General Fund Budgetary Basis Schedule of Revenues, Expenditures and Encumbrances: Budget and Actual Unrestricted and Restricted Budget and Actual Unrestricted Budget and Actual Restricted Reconciliation of Differences between Budgetary Inflows and Outflows and GAAP Basis Revenues and Expenditures General Fund OTHER SUPPLEMENTARY INFORMATION General Fund (Current Expense Fund) Budgetary Basis Schedule of Revenues, Expenditures, and Encumbrances Budget and Actual Schedule of Changes in Net Position School Activities Fund Agency Fund PAGE

3 CliftonLarsonAllen LLP INDEPENDENT AUDITORS' REPORT To the Board Of Education of Calvert County Calvert County Public Schools Prince Frederick, Maryland Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business type activities, each major fund, and the aggregate remaining fund information of Calvert County Public Schools (CCPS), a component unit of Calvert County, Maryland, as of and for the year ended, and the related notes to the financial statements, which collectively comprise CCPS s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to CCPS s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of CCPS s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. An independent member of Nexia International 1

4 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business type activities, each major fund, and the aggregate remaining fund information of Calvert County Public Schools as of, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis, other post employment benefit schedules, and budgetary comparison information as listed in the table of contents, respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information The Other Supplementary Information as listed in the table of contents are the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Other Supplementary Information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 28, 2013, on our consideration of Calvert County Public Schools 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 result of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Calvert County Public Schools internal control over financial reporting and compliance. a CliftonLarsonAllen LLP Baltimore, Maryland October 28,

5 MANAGEMENT S DISCUSSION AND ANALYSIS This section of the Calvert County Public Schools ( CCPS ) annual financial report includes a discussion and analysis of the school district s financial performance during the fiscal year that ended on. Please read it in conjunction with the CCPS s financial statements, which immediately follow this section. OVERVIEW PAST AND PRESENT The most recent, although dated, financial data and analysis provided by the Maryland State Department of Education (MSDE) for FY 2011 reflects a cost per pupil belonging to Calvert County of $12,697 ranked 11 th among 24 school districts in the State. During the two prior fiscal years, the CCPS cost rankings were 15 th for FY 2010 and 14 th for FY CCPS operates a cost efficient system whose student achievement indicators such as advance placement enrollment and test results, Maryland School Assessment results, and SAT results place CCPS in the top echelons of schools in Maryland. The Board of Education has never wavered from its goal of improving student achievement. The mission of Calvert County Public Schools (CCPS) is to produce graduates who are responsible citizens who are prepared for college and careers. To accomplish this mission, CCPS is committed to ensuring that through a collaborative, research based, decision making process students are provided effective, purposeful instruction which results in high levels of learning. Calvert County Public Schools actions and initiatives are directed toward accomplishing three major goals over the life of the Master Plan and beyond and are reflected in the annual budget adopted by the Board of Education: Goal 1 Achievement will increase for all students and gaps in achievement will close. Goal 2 All teachers will be highly qualified, highly skilled, and highly effective. Goal 3 Policy, procedure, processes and budget will be aligned to support teaching and learning. The annual crafting of the budget also takes into consideration the population of student enrollment. The percent of pupil growth rate is declining. Since FY 2000, our pupil growth rate (eligible for state aid) has declined as follows: Fiscal Year Pupil Growth Rate 3.56% 2.52% 3.09% 3.67% 2.28%.87%.02%.72%.37% 1.72%.22% 1.51% 1.47% 1.55% 3

6 MANAGEMENT S DISCUSSION AND ANALYSIS Thanks to the work of our total team of teachers, support personnel, and administration, we continue to be at the forefront in Maryland education circles with scores among the highest in the State on both HSA s and MSA s; and our Advance Placement results also continue to improve. At the elementary level, our reduced class size initiative in 1 st and 2 nd grades, our after school and summer intervention programs, and our elementary reading and math programs are yielding success. Our elementary and middle school learning specialists have helped us bring staff development directly to our teachers on a regular basis, and we brought the same to our high schools with our high school interventionists and subject area department heads. The Maryland Bridge to Excellence in the Public Schools Act, the federal No Child Left Behind Act, the Race to the Top grants, and Maryland s Elementary and Secondary Education Act Flexibility Request provide for the framework for the school system s Master Plan. This plan is updated annually and is submitted to the Maryland State Department of Education each October. A critical component of the Master Plan is documenting how restricted and unrestricted funds are allocated to improve student achievement, close achievement gaps, and ensure student progress. Maryland has adopted the Common Core State Standards, and Calvert County Public Schools is in the process of implementing that new curriculum. In 2014, new assessments that align with the new curriculum will be administered. Finally, beginning this year, all school systems in the state will be using new teacher and principal evaluation systems that use student growth as one component of the evaluation. No matter how differently individuals may feel about these laws and initiatives, these changes mandate a whole new way of doing business for school systems, in Maryland and across this country. A year long effort to assess our need, design our interventions, and align our budget results in an annually updated Master Plan to guide this school system. Each year this plan is reviewed by MSDE to gauge how successfully the system is meeting the annual measurable objective (AMO) on the state assessments and if all children are being successful in their learning. A vital part of the process of reporting our current state of affairs involves an overview of our progress on last year s countywide goals. This status report should provide much of the backdrop needed to understand our relative progress over the past school year and define some areas needing improvement. We need this sort of data to be able to adequately reflect on where we stand and where we need to go. We are anticipating that many, if not all, of these goals will be integrated into our soon to be developed master plan, which you will hear more about later. We also anticipate that these goals will continue to be a critical component of our school improvement efforts. We have been pioneers in the development of measurable goals open to public scrutiny, and we feel these goals have provided the kind of focus we need to continue our improvement efforts. Accordingly, we will take this opportunity to report our accountability and testing statistics for FY 2012/13. 4

7 MANAGEMENT S DISCUSSION AND ANALYSIS ACCOUNTABILITY & TESTING STATISTICS FOR CCPS SCHOOL YEAR 2012 SAT for the District: Average District SAT Score for 2012: 1517 Maryland Average SAT Score: 1487 National Average SAT Score: Advanced Placement Results for the District: Number of AP Courses offered District Wide: 24 Number of Students taking AP Courses District Wide: 1837 Total Seats taken in AP Courses District Wide: 3716 Increase/Decrease in Seats taken from 2011: +250 Total Tests given in AP Courses District Wide: 2950 Increase/Decrease in Tests given from 2011: +268 % of Students earning a 3 or higher: 61 % 2012 Attendance/Graduation Rate for the District: % Graduation Rate: % % Dropout Rate: 5.55 % 2013 Attendance Rate for the District: Grades 1 5: 95.0 % Grades 6 8: 95.0 % Grades 9 12: 94.3 % 2013 MSA Proficiency Math Reading Science Grade % 90.3% Grade % 94.2% Grade % 93.8% 85.2% Grade % 92.3% Grade % 92.5% Grade % 89.8% 86.8% 5

8 MANAGEMENT S DISCUSSION AND ANALYSIS 2012 HSA Status % of students who have taken all 4 tests and met graduation requirement through one of the three options (pass all four tests, earn a combined score of 1602 on the four tests, or complete Bridge Plan for Academic Validation projects): Grade % % of students who have passed each of the 4 tests: Algebra Biology English Government Grade 12 Students 95% 95% 95% 95% Grade 11 Students 95% 95% 95% N/A Calvert County Public Schools is financially secure. County, State, and Federal funding are the major factors contributing to the financial status of CCPS. In accordance with Maryland State Department of Education requirements, CCPS financial records are maintained on a budgetary basis. This basis is used for all budget to actual analysis. Outlays for new capital assets decreased during the year. The unrestricted portion of the Current Expense Fund had, on a budgetary accounting basis, an excess of revenues over expenditures in the amount of $1,392,453 for the year ended. Student enrollment decreased by 1.55%. (Total of 250 full time equivalent students.) As of, CCPS maintained a health insurance rate stabilization reserve in the amount of $4,077,375. 6

9 MANAGEMENT S DISCUSSION AND ANALYSIS OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of three parts: management s discussion and analysis (this section), the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of the district: The first two statements are CCPS government wide financial statements that provide both short term and long term information about the district s overall financial status. The remaining statements are fund financial statements that focus on individual parts of CCPS, reporting its operation in more detail than its government wide statements. The governmental funds statements tell how basic services such as regular and special education were financed in the short term as well as what remains for future spending. Fiduciary funds statements provide information about the financial relationships in which CCPS acts solely as a trustee or agent for the benefit of others. The financial statements also include notes that explain some of the information in the statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements with a comparison of CCPS budget for the year. 7

10 MANAGEMENT S DISCUSSION AND ANALYSIS Figure A 1 shows how the various parts of this annual report are arranged and related to one another. Figure A 1 Organization of CCPS Annual Financial Report Management s Discussion And Analysis Basic Financial Statements Required Supplementary Information Government wide Financial Statements Fund Financial Statements Notes to the Financial Statements Summary Detail 8

11 MANAGEMENT S DISCUSSION AND ANALYSIS Government wide Statements The school system s Government wide Financial Statements provide a broad view of the school system s operations in a manner similar to a private sector business enterprise. The statements provide both shortterm and long term information about the school system s financial position, which assists in assessing the school system s economic condition at year end. They are prepared using the economic resources focus and full accrual basis of accounting. These are methods similar to those used by most businesses. They take into account all revenues and expenses connected with the fiscal year even if the cash has not been received. The Government wide Financial Statements include two statements: The Statement of Net Position presents all of the school system s assets, liabilities, and deferred inflows/outflows of resources with the difference between these components reported as net position. The statement combines and consolidates all of the school system s current financial resources (short term spendable resources) with capital assets (net of accumulated depreciation) and liabilities, distinguishing between governmental and business type activities. The end result is net position segregated into three components: investment in capital assets net of related debt, restricted, and unrestricted net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the school system is improving or deteriorating. The Statement of Activities presents information showing how the school system s net position changed during the most recent fiscal year. All changes in net position 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 not result in cash flows until future fiscal periods (such as earned, but unused, vacation leave). This statement also presents a comparison between direct expenses and program revenues for each function of the board. The majority of the school system s revenue is general revenue, grants and contributions from other governments. In the government wide financial statements, CCPS activities are divided into two categories: Governmental activities: Most of CCPS basic services are included here, such as regular and special education, transportation, and administration. County appropriations and State formula aid finance most of these activities. Business type activities: CCPS charges fees to help it cover the costs of certain services it provides. The district s food services program is included here. Fund Financial Statements The fund financial statements focus on major funds and on individual parts of the school system s operations. All of the funds of the school system can be divided into two categories: governmental funds and fiduciary funds, each of which use different accounting approaches and should be interpreted differently. The two categories are as follows: 9

12 MANAGEMENT S DISCUSSION AND ANALYSIS Fund Financial Statements (continued) Governmental Funds Financial Statements Most of the basic services provided by the school system are accounted for in the governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government wide statements. However, unlike the government wide financial statements, the governmental fund financial statements focus on near term inflows and outflows of spendable resources. They also focus on balances of spendable resources at the end of the fiscal year. This approach is known as using the flow of current financial resources measurement focus and the modified accrual basis of accounting. The school system has three governmental funds: The General Fund (Current Expenses Fund) includes most of the school system s basic functions and generally follows the requirements of the Maryland State Department of Education. The Special Revenue Fund (Cafeteria Fund) captures the financial activities of the cafeteria operations. The Capital Projects Fund (School Construction Fund) tracks larger construction projects. This fund reports revenue and expenditures on a yearly basis. It should be noted that due to the longterm nature of most projects, the budgetary basis of this fund crosses fiscal years. 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. We describe the relationship (or differences) between governmental activities (reported in the Statement of Net Position and Statement of Activities) and governmental funds in reconciliations found on pages 23 and 25. Fiduciary Fund Financial Statements The fiduciary funds are used to account for resources held for the benefit of parties outside the school system. Fiduciary funds are not included in the government wide financial statements because the resources of those funds are not available to support the school system s own programs. Accordingly, there is no analysis of the board s fiduciary funds included in this Management s Discussion and Analysis. The accounting used for fiduciary funds is the accrual basis of accounting. The school system s fiduciary funds include an Agency Fund which reflects liabilities due to student groups that are earmarked for specific student groups at individual schools. 10

13 MANAGEMENT S DISCUSSION AND ANALYSIS Net Position: CCPS combined net position for Governmental Activities and Business type Activities (in millions of dollars) as of June 30, 2012 and 2013, are as follows: Governmental Activities Business type Activities Total Total %age Change FY 2012 FY 2013 FY 2012 FY 2013 FY 2012 FY 2013 FY Cash and Cash Equivalents $ 16.7 $ 19.8 $ 2.0 $ 2.1 $ 18.7 $ % Accounts Receivable % Inventories % Other Assets % Capital Assets less Accumulated Depreciation % Total Assets % Other Liabilities % Long term Obligations % Total Liabilities % Net Position Net Investment in Capital Assets % Restricted % Unrestricted (11.9) (18.0) (10.5) (16.6) 58.1% Total Net Position $ $ $ 1.6 $ 1.6 $ $ % CCPS s decline in financial position is predominantly the result of an increase in the noncurrent liabilities associated with the Net OPEB obligation. 11

14 MANAGEMENT S DISCUSSION AND ANALYSIS Capital Assets: By the end of Fiscal Year 2013, CCPS had invested $324,228,879 in a broad range of capital assets, including school building construction, equipment, and paving. (More detailed information about capital assets can be found in Note 5 to the financial statements.) Total depreciation expense for the year was $7,060,038 for Governmental Activities and $46,277 for Business type Activities. A summary of capital asset activity is as follows: Governmental Activities Balance at Decreases/ Balance at Percentage June 30, 2012 Increases Transfers of Change Land $ 3,757,711 $ $ $ 3,757, % Land improvements 4,657,877 4,657, % Construction in progress 2,669,441 11,402,311 (677,573) 13,394, % Buildings and improvements 293,725, , ,402, % Equipment 7,577, ,115 (72,683) 8,016, % Totals at historic cost $ 312,388,136 $ 11,913,426 $ (72,683) $ 324,228, % Business type Activities Balance at Decreases/ Balance at Percentage June 30, 2012 Increases Transfers of Change Equipment at historical cost $ 1,792,406 $ 91,093 $ (21,069) $ 1,862, % Outlays for construction in progress resulted in the significant increase of new capital assets. This increase is attributed to the new construction at Calvert High School and various other small projects within the school system. Additionally, capital funds were dedicated for the purposes of purchasing school and food services equipment and other major facility improvements. 12

15 MANAGEMENT S DISCUSSION AND ANALYSIS Statement of Activities: For the year ended, below is a schedule of changes in net position from operating results (in millions of dollars) derived from the CCPS statement of activities. Governmental Activities Business type Activities Total %age Change Total FY 2012 FY 2013 FY 2012 FY 2013 FY 2012 FY 2013 FY Program Revenues Charges for services $ 0.2 $ 0.2 $ 3.7 $ 3.6 $ 3.9 $ % Operating grants/contributions % Capital grants/contributions % General Revenues Local appropriations % State aid % Federal aid % Interest/investment earnings 0.0% Total revenues $ $ $ 5.7 $ 5.4 $ $ % Expenses Instruction $ $ $ $ $ $ % Administration % Mid level administration % Pupil personnel services % Health services % Pupil transportation % Oper. of plant & equipment % Maintenance of plant % Community services % Food services % Total expenses $ $ $ 5.5 $ 5.4 $ $ % Increase in net position $ (1.1) $ (1.1) $ 0.2 $ $ (0.9) $ (1.1) 13

16 MANAGEMENT S DISCUSSION AND ANALYSIS Factors influencing the change of the CCPS budget are as follows: Providing salaries necessary to retain and recruit highly qualified staff to serve the student population. Providing services to meet special education mandates and individual needs and to allow for an increase in achievement for students. Effective July 1, 2008, the Board of County Commissioners and the Board of Education entered into a four year funding agreement. For fiscal years 2009, 2010, 2011, and 2012, the County appropriation to CCPS will be based on the prior year s appropriation adjusted for the change in student enrollment, the Consumer Price Index (CPI), and an adjustment factor of 1.25%. In partnership with the County, we have established a stable and predictable revenue source that is incorporated in our long term planning process. Additionally, in planning for FY 2012, the funding agreement was modified to provide for additional funding in the form of a local collaborative grant allocation. In FY 2013, the Board of County Commissioners provided funding in an amount equal to Maintenance of Effort plus a local contribution towards the teachers pension as required by State Law. For FY 2014, the Board of County Commissioners provided funding in excess of the Maintenance of Effort plus a local contribution towards the teachers pension. FINANCIAL ANALYSIS OF FUNDS Historically, the Board of County Commissioners has provided for increased annual appropriations to the CCPS s Operating Budget. A significant portion of the CCPS State funding is subject to the State aid equalization formula. This formula attempts to overcome individual school district funding disparities. Based on each district s assessable wealth per student, this formula provides for the allocation of fewer dollars to higher wealth districts and more dollars to lower wealth districts. For FY 2013, the County Commissioners provided for funding in the amount of $110,284,424, a component of the local sources of funding recognized within the Current Expense Fund. Below is a summary (on budgetary basis) of Current Expense Fund increases: Decrease from FY 2012 FY 2012 FY 2013 Fund Revenues Revenues Amount Percent Unrestricted $ 192,944,882 $ 191,447,530 $ (1,497,352) 0.8% Restricted 11,127,900 10,801,464 (326,436) 2.9% Total $ 204,072,782 $ 202,248,994 $ (1,823,788) 0.9% 14

17 MANAGEMENT S DISCUSSION AND ANALYSIS Employees of CCPS have the option to select one of three (traditional, preferred provider network, or health maintenance organization HMO) health insurance plans. Employee co pays, deductibles, and health insurance benefits are negotiated. For FY 2013, employees paid 10% of the Individual Plan premium cost, 20% of the Family/Two Employee Plan premium cost, and 28% of the Parent/One Child, Husband/Wife, and Family Plan premium cost. CCPS pays 100% of the remaining plan cost. CCPS health insurance plans have modified retrospective funding arrangements with annual settlements. With these arrangements, premiums paid in excess of claim expenses are refunded to CCPS. Additionally, claim expenses in excess of paid premiums are subject to a 7% annual premium call. Annual settlements resulting in either refunds or premium calls may cause significant fluctuation in the annual general expense fund budget. In order to alleviate these fluctuations, CCPS has established a rate stabilization reserve. As of, $4,077,375 has been deposited into this reserve. At this funding level, this reserve has sufficiently been funded to meet the target of two years of annual premium calls. Food Services program revenues continue to be stable. The increase in fund balance for the year was $104,089. As of, the Food Services program reported a total net fund balance in the amount of $1,810,720. During FY 2013, State and County funds were appropriated for the construction of Calvert High School and for systemic renovations for several aging schools. The construction projects fund revenues in FY 2013 were $10,870,186 and $12,124,521 in FY In accordance with the Annotated Code of Maryland, annual school budgets must be submitted to their respective governing bodies county commissioners, county council, county executive or for Baltimore City, the Mayor and City Council of Baltimore City. Each governing body will establish annual appropriations and will set spending limits by category. Accordingly, all school districts including CCPS are financially dependent, thus lacking authority to borrow funds. FACTORS BEARING ON THE FUTURE OF CCPS At the time these financial statements were prepared and audited, CCPS was aware of several existing circumstances that could significantly affect its future financial status: The CCPS unrestricted budget increased by $3,195,361 for FY 2014, as a result of additional funding support from the Board of County Commissioners. The increase was dedicated to the cost sharing of the teachers pension. The cost sharing passed to the County was in the amount of $3,594,631. Our projections indicate that annual operating costs will continue to increase. Factors driving these increases predominantly include Federal and State mandates, employee costs, operating overhead, and the phased in teacher pension cost sharing. All costs are analyzed annually as local and State revenue projections become available to ensure a balanced budget. FY 2014 was the first year of a three year labor agreement with teachers and support staff. Due to the current economic situation, CCPS was unable to commit to the salary increases beyond FY Therefore, several articles of the contract may be opened for negotiations for purposes of the 2015 school year. 15

18 MANAGEMENT S DISCUSSION AND ANALYSIS Group health insurance rates continue to increase, the prior usage experience of CCPS is a determining factor used in negotiations with the health insurance provider, resulting in an increase in insurance rates for FY CCPS implemented Governmental Accounting Standards Board Statement #45 in FY This Statement generally requires that state and local governmental employers account for and report the annual cost of other post employment benefits (OPEB) and the outstanding obligations and commitments related to OPEB in essentially the same manner as pension obligations. Annual OPEB cost for most employers are based on actuarially determined amounts that, if paid on an ongoing basis, generally would provide sufficient resources to pay benefits as they come due. The following recent payments have been made on behalf of CCPS FY 2012: $8,566,168 and FY 2013: $1,955,708. The net cumulative OPEB obligation for CCPS has been fully reflected within these statements in the amount of $26,028,847. The Comprehensive Master Plan describes goals, objectives, and strategies that will be used to improve student achievement and meet State performance standards and local performance standards in each segment of the student population. This includes reform measures at each level: elementary, middle, and high schools. It obligates the system to approved strategies and outcomes. All data reported in the Master Plan Update shows that CCPS is a high performing school system that has demonstrated growth in many of the state and federally mandated reporting areas; yet we have a growing sense of urgency to move all students to their highest levels of achievement. An analysis of the data indicates that although there is a closing of the achievement gap for various student groups depending on the content and grade level, the achievement gap is also widening for the same student groups in other content areas and grade levels. In addition to focusing on increased rigor for all students, providing high quality professional development to all instructional staff to ensure that they are adequately trained to provide high quality instruction in all content areas, especially reading, is a priority focus. 16

19 MANAGEMENT S DISCUSSION AND ANALYSIS Transitioning to the Common Core State Standards (CCSS) has become another area of focus for Calvert County Public Schools. Three years prior to the Teacher Effectiveness Academies, CCPS had instituted an extensive professional development program in which administrators and teachers were trained on how to engage students in thinking based learning. The school system has welcomed the transition to the CCSS because its implementation is resulting in the infusion of thinking based learning into rigorous content so that students will be able to perform high level, complex, problem solving tasks. In addition, we have begun work on integrating curricular areas and integrating technology and Universal Design for Learning into instruction and the curriculum. HOW WE PLAN TO MEET THE LEARNING NEEDS OF OUR STUDENTS Although the school system has experienced success in all goal areas, many challenges remain. To address these challenges, the school system will continue to focus on its mission to produce graduates who are responsible citizens who are prepared for college and careers. Accomplishing this mission will require us to continue to focus on effective, purposeful instruction that increases rigor and high levels of learning for all students by addressing the following priorities: 1. Infusing thinking based learning into standard content instruction, ultimately increasing student learning to a level that allows them to perform high level complex, problem solving tasks by transitioning to the Maryland Common Core State Standard Curriculum (MCCSSC); 2. Differentiating instruction in a manner that is responsive to the needs of students to ensure that students are actively involved in thinking based learning; 3. Ensuring that teachers are competent to teach reading; 4. Ensuring the consistent implementation of research based interventions with fidelity for identified students; 5. Ensuring that all teachers develop positive, supportive relationships with students and utilize PBIS and LSCI strategies to assist with student achievement; 6. Analyzing data and identifying the reasons for the disproportionate number of African American for special education, receiving out of school suspensions, taking the SATs, enrolling in AP classes, taking AP exams, and placed in Honors classes; 7. Ensuring that all teachers are competent in providing effective and purposeful instruction to all students; 8. Ensuring system wide compliance with all federal, state, CCPS, and school laws, regulations, policies, procedures, and/or guidelines; 9. Infusing technology into instruction to enhance student learning; 10. Ensuring all students exit high school as technologically literate digital citizens; and 11. Ensuring a successful transition from the Maryland State Curriculum to the Common Core State Curriculum. 17

20 MANAGEMENT S DISCUSSION AND ANALYSIS CONTACT CALVERT COUNTY PUBLIC SCHOOLS MANAGEMENT This financial report is designed to provide our citizens, taxpayers, stakeholders and creditors with a general overview of CCPS finances and to demonstrate CCPS s accountability for the money it receives. If you have questions about this report or need additional financial information, please contact: Tammy McCourt Chief Budget & Business Officer Calvert County Public Schools 1305 Dares Beach Road Prince Frederick, Maryland You are also invited to visit our web site at 18

21 FINANCIAL STATEMENTS 19

22 STATEMENT OF NET POSITION Governmental Business Type Activities Activities Total Assets Current Assets Cash and cash equivalents $ 19,810,906 $ 2,049,564 $ 21,860,470 Due from Other Units of Government State of Maryland 5,662,229 99,189 5,761,418 Calvert County 10,598,729 10,598,729 Other 87,331 9,973 97,304 Total due from other units of government 16,348, ,162 16,457,451 Due from student activity funds 91,384 91,384 Prepaid costs 13,371 13,371 Inventories 92,030 22, ,638 Total current assets 36,355,980 2,181,334 38,537,314 Noncurrent Assets Capital assets 324,228,879 1,862, ,091,309 Less: Accumulated depreciation 100,673,412 1,631, ,304,890 Total noncurrent assets, net 223,555, , ,786,419 Total assets 259,911,447 2,412, ,323,733 Liabilities Current Liabilities Salaries, wages and payroll deductions 17,013, ,902 17,297,338 Accounts payable and other current liabilities 3,588,915 3,610 3,592,525 Unearned revenue 4,249,074 83,102 4,332,176 Current portion of long term obligations 2,072,000 25,500 2,097,500 Total current liabilities 26,923, ,114 27,319,539 Noncurrent Liabilities Noncurrent portion of long term obligations 1,359,651 7,671 1,367,322 Net OPEB Obligation 25,614, ,970 26,028,847 Total noncurrent liabilities 26,974, ,641 27,396,169 Total liabilities 53,897, ,755 54,715,708 Net Position Net investment in capital assets 223,555, , ,786,419 Restricted for Grants 488, ,467 Unrestricted (18,030,440) 1,363,579 (16,666,861) Total net position $ 206,013,494 $ 1,594,531 $ 207,608,025 The accompanying notes are an integral part of the financial statements. 20

23 STATEMENT OF ACTIVITIES Year Ended Net (Expenses) Revenue and Program Revenues Changes in Net Position Operating Capital Charges for Grants and Grants and Governmental Business Type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Governmental Activities Instruction Regular education $ 122,469,995 $ 237,249 $ 23,392,536 $ 10,870,186 $ (87,970,024) $ $ (87,970,024) Special education 35,039,104 10,413,372 (24,625,732) (24,625,732) Total instruction 157,509, ,249 33,805,908 10,870,186 (112,595,756) (112,595,756) Support Services Administration 6,552, ,695 (6,075,810) (6,075,810) Mid level administration 16,370,631 1,277,918 (15,092,713) (15,092,713) Pupil personnel services 1,716,597 94,682 (1,621,915) (1,621,915) Health services 2,017, ,217 (1,725,210) (1,725,210) Pupil transportation 14,451,102 5,744,987 (8,706,115) (8,706,115) Operation of plant and equipment 24,929,266 1,082,779 (23,846,487) (23,846,487) Maintenance of plant 4,288, ,055 (3,984,038) (3,984,038) Community services 1,334,173 1,352,261 18,088 18,088 Total support services 71,659,794 10,625,594 (61,034,200) (61,034,200) Total governmental activities 229,168, ,249 44,431,502 10,870,186 (173,629,956) (173,629,956) Business type Activities Food services 5,409,526 3,626,417 1,791,284 8,175 8,175 Total business type activities 5,409,526 3,626,417 1,791,284 8,175 8,175 Total school system $ 234,578,419 $ 3,863,666 $ 46,222,786 $ 10,870,186 (173,629,956) 8,175 (173,621,781) General Revenues Local appropriations 112,209,203 30, ,240,134 State aid 59,767,783 59,767,783 Federal aid 626, ,359 Interest and investment earnings 6,767 1,570 8,337 Total general revenues 172,610,112 32, ,642,613 Change in net position (1,019,844) 40,676 (979,168) Net position beginning of year 207,033,338 1,553, ,587,195 Net position end of year $ 206,013,494 $ 1,594,531 $ 207,608,025 The accompanying notes are an integral part of the financial statements. 21

24 BALANCE SHEET GOVERNMENTAL FUNDS Special Capital Projects General Fund Revenue Fund Fund (School Total (Current (Cafeteria Construction Governmental Expense Fund) Fund) Fund) Funds ASSETS Cash and cash equivalents $ 19,739,920 $ 2,049,564 $ 70,986 $ 21,860,470 Due from other units of government State of Maryland 2,298,858 99,189 3,363,371 5,761,418 Calvert County 10,450, ,729 10,598,729 Other 87,331 9,973 97,304 Total due from other units of government 12,836, ,162 3,512,100 16,457,451 Due from student activity funds 91,384 91,384 Due from construction fund 1,116,386 1,116,386 Prepaid costs 13,371 13,371 Inventories 92,030 22, ,638 TOTAL ASSETS $ 33,889,280 $ 2,181,334 $ 3,583,086 $ 39,653,700 LIABILITIES AND FUND BALANCES LIABILITIES Salaries, wages and payroll deductions $ 17,013,436 $ 283,902 $ $ 17,297,338 Accounts payable and other current liabilities 1,210,471 3,610 2,378,444 3,592,525 Due to General Fund 1,116,386 1,116,386 Unearned revenue 4,249,074 83,102 4,332,176 Total liabilities 22,472, ,614 3,494,830 26,338,425 FUND BALANCES Nonspendable 105,401 22, ,009 Restricted 488, ,467 Committed 5,481,748 5,481,748 Assigned 1,265,313 1,788,112 88,256 3,141,681 Unassigned 4,075,370 4,075,370 Total fund balances 11,416,299 1,810,720 88,256 13,315,275 TOTAL LIABILITIES AND FUND BALANCES $ 33,889,280 $ 2,181,334 $ 3,583,086 $ 39,653,700 The accompanying notes are an integral part of the financial statements. 22

25 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET WITH THE STATEMENT OF NET POSITION Amounts reported for governmental activities in the Statement of Net Position are different because: Total fund balance governmental funds $ 13,315,275 Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds: The cost of capital assets is $ 324,228,879 Accumulated depreciation is 100,673,412 Long term liabilities are not due and payable in the current period and therefore are not reported as liabilities in the governmental funds. Long term liabilities at year end consist of: Net OPEB Obligation (25,614,877) Compensated absences (3,431,651) 223,555,467 (29,046,528) The Cafeteria Fund is reported as a governmental fund in the fund financial statements and as a business type activity in the Statement of Net Position. Therefore, the total fund balance of the Cafeteria Fund is removed as follows: Total fund balance of Cafeteria Fund (1,810,720) Total net position governmental activities $ 206,013,494 Amounts reported for business type activities in the Statement of Net Position are different because: Total net position proprietary funds $ Capital assets used in business type activities are not financial resources and therefore are not reported as assets in the Cafeteria Fund: The cost of capital assets is $ 1,862,430 Accumulated depreciation is 1,631, ,952 The Cafeteria Fund is reported as a governmental fund in the fund financial statements and as a business type activity in the Statement of Net Position. Therefore, the total fund balance of the Cafeteria Fund is added as follows: Total fund balance of Cafeteria Fund 1,810,720 Long term liabilities are not due and payable in the current period and therefore are not reported as liabilities in the governmental funds. Long term liabilities at year end consist of: Net OPEB Obligation (413,970) Compensated absences (33,171) Total net position business type activities $ 1,594,531 The accompanying notes are an integral part of the financial statements. 23

26 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS Year Ended Special Capital Projects General Fund Revenue Fund Fund (School Total (Current (Cafeteria Construction Governmental Expense Fund) Fund) Fund) Funds REVENUES From local sources $ 114,188,927 $ 30,931 $ 3,042,160 $ 117,262,018 From state sources 95,550,410 38,220 7,827, ,416,575 From United States Government sources 626,359 1,537,298 2,163,657 From other sources: Students 1,039,264 1,039,264 Federal funds received through State 6,913,171 6,913,171 Donated commodities 215, ,766 Other 2,588, ,588,804 Total revenues 217,278,867 5,450,202 10,870, ,599,255 EXPENDITURES Current: Administration 5,029,909 5,029,909 Mid level administration 11,754,211 11,754,211 Instructional salaries 82,005,986 82,005,986 Textbooks and instructional supplies 2,317,451 2,317,451 Other instructional costs 2,784,733 2,784,733 Special education 25,692,384 25,692,384 Pupil personnel services 1,317,583 1,317,583 Health services 1,441,095 1,441,095 Pupil transportation 13,885,481 13,885,481 Operation of plant and equipment 15,735,570 15,735,570 Maintenance of plant 3,219,340 3,219,340 Fixed charges 49,331,205 49,331,205 Community services 991, ,367 Food services: Cafeteria salaries and wages 2,159,215 2,159,215 Contracted services 67,343 67,343 Food and supplies 2,176,317 2,176,317 Debt service Capital outlay 832, ,238 10,870,105 12,646,065 Total expenditures 216,339,037 5,346,113 10,870, ,555,255 Excess of revenues over expenditures 939, , ,044,000 NET CHANGE IN FUND BALANCES 939, , ,044,000 FUND BALANCE, BEGINNING OF YEAR 10,476,469 1,706,631 88,175 12,271,275 FUND BALANCE, END OF YEAR $ 11,416,299 $ 1,810,720 $ 88,256 $ 13,315,275 The accompanying notes are an integral part of the financial statements. 24

27 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUNDS BALANCES WITH THE STATEMENT OF NET POSITION Year Ended Amounts reported for governmental activities in the Statement of Activities are different because: Total net change in fund balances governmental funds $ 1,044,000 Capital outlays to purchase or build capital assets are reported in governmental funds as expenditures. However, for governmental activities, those costs are shown in the Statement of Net Position and allocated over their estimated useful lives as annual depreciation expenses in the statement of activities. This is the amount by which capital outlays exceed depreciation expense in the period. Capital outlays $ 11,913,426 Depreciation expense (7,060,038) 4,853,388 Upon disposal, the difference between the cost basis of capital assets and the accumulated depreciation is recorded as a loss in the Statement of Activities. For Governmental funds, all capital assets are initially recorded as expenditures and therefore, no loss is recognized upon disposal. This year, the cost basis of the disposed capital assets equaled the accumulated depreciation. Cost basis of the disposed capital assets 72,683 Accumulated depreciation (72,683) OPEB costs reported in the Statement of Activities do not require the use of current financial resources and, are not reported as expenditures in governmental funds. (6,820,135) In the Statement of Activities, compensated absences are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid). This year, amounts used exceeded vacation and sick leave earned. 6,992 In the statement of activities, the Cafeteria Fund is classified as a businesstype activity. However, for fund financial statement reporting, the Cafeteria Fund is classified as a special revenue fund (governmental fund). The net change in the governmental fund balance for the Cafeteria Fund is removed. (104,089) Change in net position of governmental activities $ (1,019,844) Amounts reported for business type activities in the Statement of Activities are different because: Total net change in the Cafeteria Fund balance $ 104,089 Capital outlays to purchase or build capital assets are reported in governmental funds as expenditures. However, for governmental activities, those costs are shown in the Statement of Net Position and allocated over their estimated useful lives as annual depreciation expenses in the statement of activities. This is the amount by which depreciation expense exceed capital outlay in the period. Capital outlays $ 91,093 Depreciation expense (46,277) 44,816 OPEB costs reported in the Statement of Activities do not require the use of current financial resources and, are not reported as expenditures in governmental funds. (109,601) In the Statement of Activities, compensated absences are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid). This year, amounts used exceeded vacation and sick leave earned. 1,372 Change in net position of business type activities $ 40,676 The accompanying notes are an integral part of the financial statements. 25