ROANOKE RAPIDS GRADED SCHOOL DISTRICT Roanoke Rapids, North Carolina. Financial Statements For the Fiscal Year Ended June 30, 2017

Transcription

1 ROANOKE RAPIDS GRADED SCHOOL DISTRICT Roanoke Rapids, North Carolina Financial Statements For the Fiscal Year Ended June 30, 2017

2 TABLE OF CONTENTS Exhibit Page No. Independent Auditors Report... 1 Management s Discussion and Analysis... 3 Basic Financial Statements: Government-wide Financial Statements: 1 Statement of Net Position Statement of Activities Fund Financial Statements: 3 Balance Sheet - Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General Fund and Annually Budgeted Major Special Revenue Funds Statement of Net Position - Proprietary Fund Types Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Fund Types Statement of Cash Flows - Proprietary Fund Types Notes to the Financial Statements Required Supplementary Information Schedule of the Board s Proportionate Share of the Net Pension Liability Schedule of Board Contributions Individual Fund Schedules: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances - Individual Schools Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Capital Outlay Fund Schedule of Revenues and Expenditures - Budget and Actual (Non-GAAP) School Food Service Fund Schedule of Revenues and Expenditures - Budget and Actual (Non-GAAP) Child Care Fund Compliance Section... 48

3 A S W ANDERSON SMITH & WIKE PLLC Certified Public Accountants INDEPENDENT AUDITORS REPORT To the Roanoke Rapids Graded School District Roanoke Rapids, North Carolina 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 the Roanoke Rapids Graded School District, as of and for the year ended June 30, 2017 and the related notes to the financial statements, which collectively comprise the Board 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. Auditor s 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 of 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 auditor s 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 the entity 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 the entity 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. 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 the Roanoke Rapids Graded School District as of June 30, 2017, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General, State Public School, Federal Grants and Other 1

4 Special Revenue funds for the year then ended in conformity 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 Management s Discussion and Analysis on pages 3 through 9 and the Schedule of the Board s Proportionate Share of the Net Pension Liability and the Schedule of Board Contributions on pages 41 and 42, 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. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Roanoke Rapids Graded School District s basic financial statements. The individual nonmajor fund schedules, budgetary schedules and the accompanying schedule of expenditures of federal and State awards as required by the Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and the State Single Audit Implementation Act, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The individual nonmajor fund schedules, budgetary schedules and the accompanying schedule of expenditures of federal and State awards 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. 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 themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the individual nonmajor fund schedules, budgetary schedules and the accompanying schedule of expenditures of federal and State awards are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated August 21, 2017 on our consideration of the Roanoke Rapids Graded School District s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 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 Roanoke Rapids Graded School District s internal control over financial reporting and compliance. August 21, 2017 West End, North Carolina (910)

5 MANAGEMENT S DISCUSSION AND ANALYSIS This section of the Roanoke Rapids Graded School District s (the "Board") financial report represents our discussion and analysis of the financial performance of the Board for the year ended June 30, This information should be read in conjunction with the audited financial statements included in this report. Financial Highlights For the fiscal year ended June 30, 2017, the Board s total government-wide net position decreased by $1,012,000, or 6.5%. Governmental activities net position decreased by $1,069,000, or 7.2%, and business-type activities net position increased by $57,000, or 7.6%. The Board s average daily membership (ADM) for the fiscal year ended June 30, 2017 was 2,888 students, an increase of 24 students from the 2016 ADM of 2,864. Total government-wide net investment in capital assets increased by $24,000, or 0.2%, from the prior year. Governmental activities net investment in capital assets decreased by $7,000, or 0.04%, and business-type activities net investment in capital assets increased by $31,000, or 32.0%. Total restricted net position decreased by $10,000, or.8%. Restricted net position is found only in the governmental activities. The Board s total government-wide unrestricted net position at June 30, 2017 decreased by $1,025,000 from the prior year. Governmental activities unrestricted net position decreased by $1, while business-type activities unrestricted net position increased by $26,000 over the prior year. Overview of the Financial Statements The audited financial statements of the Roanoke Rapids Graded School District consist of four components. They are as follows: Independent Auditors' Report Management's Discussion and Analysis (required supplementary information) Basic Financial Statements Required supplemental section that presents budgetary statements for nonmajor governmental funds and budgetary statements for enterprise funds. The Basic Financial Statements include two types of statements that present different views of the Board s finances. The first is the Government-wide Statements. The government-wide statements are presented on the full accrual basis of accounting and include the statement of net position and the statement of activities. The statement of net position includes all of the Board s assets, deferred outflows of resources, liabilities and deferred inflows of resources. Assets and liabilities are classified in the order of relative liquidity for assets and due date for liabilities. This statement provides a summary of the Board's investment in assets, deferred outflows of resources, deferred inflows of resources and obligations to creditors. Liquidity and financial flexibility can be evaluated using the information contained in this statement. The statement of activities summarizes the Board s revenues and expenses for the current year. A net (expense) revenue format is used to indicate to what extent each function is selfsufficient. 3

6 MANAGEMENT S DISCUSSION AND ANALYSIS The second set of statements included in the basic financial statements is the Fund Financial Statements, which are presented for the Board s governmental funds and proprietary funds. These statements present the governmental funds on the modified accrual basis of accounting, measuring the near term inflows and outflows of financial resources and what is available at year-end to spend in the next fiscal year. The proprietary funds are presented on the full accrual basis of accounting. The fund financial statements focus on the Board s most significant funds. Because a different basis of accounting is used in the government-wide statements, reconciliation from the governmental fund financial statements to the government-wide statements is required. The government-wide statements provide information about the Board as an economic unit while the fund financial statements provide information on each of the financial resources of each of the Board s major funds. Government-wide Statements The government-wide statements report information about the unit as a whole using accounting methods similar to those used by private-sector companies. The statement of net position includes all of the Board s assets and liabilities. All of the current year s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two government-wide statements report the Board s net position and how it has changed. Net position is the difference between the Board s assets and liabilities. This is one way to measure the unit s financial health or position. Over time, increases or decreases in the Board s net position are an indicator of whether its financial position is improving or deteriorating. To assess the Board s overall health, you need to consider additional non-financial factors such as changes in the County s and City s property tax bases and the condition of its school buildings and other physical assets. The unit s activities are divided into two categories in the government-wide statements: Governmental activities: Most of the Board s basic services are included here, such as regular and special education, transportation, and administration. County and city funding along with state and federal aid finance most of these activities. Business-type activities: The Board charges fees to help it cover the costs of certain services it provides. School food service is included here. The government-wide statements are shown as Exhibits 1 and 2 of this report. Fund Financial Statements The fund financial statements provide more detailed information about the Board s funds, focusing on its most significant or major funds - not the unit as a whole. Funds are accounting devices the Board uses to keep track of specific sources of funding and spending on particular programs. Some funds are required by State law, such as the State Public School Fund. The Board has established other funds to control and manage money for a particular purpose or to show that it is properly using certain revenues, such as in the Federal Grants Fund. 4

7 MANAGEMENT S DISCUSSION AND ANALYSIS Roanoke Rapids Graded School District has two types of funds: Governmental funds: Most of the Board s basic services are included in the governmental funds, which generally focus on two things 1) how cash and other assets that can readily be converted to cash flow in and out, and 2) the balances left at year-end that are available for spending. As a result of this focus, the governmental funds statements provide a detailed short-term view that helps the reader determine whether there are more or fewer financial resources that can be spent in the coming year to finance the Board s programs. Because this information does not encompass the additional long-term focus of the government-wide statements, additional information at the bottom of the governmental fund statements, in the form of a reconciliation, explains the relationship (or differences) between the government-wide and the fund financial statements. The Board has several governmental funds: the General Fund, the State Public School Fund, the Federal Grants Fund, the Other Special Revenue Fund, the Capital Outlay Fund and the Individual Schools Fund. The governmental fund statements are shown as Exhibits 3, 4, 5 and 6 of this report. Proprietary funds: Services for which the Board charges a fee are generally reported in the proprietary funds. The proprietary fund statements are reported on the same full accrual basis of accounting as the government-wide statements. The Roanoke Rapids Graded School District has two proprietary funds - both enterprise funds the School Food Service Fund and the Child Care Fund. The proprietary fund statements are shown as Exhibits 7, 8, and 9 of this report. Financial Analysis of the Board as a Whole Net position is an indicator of the fiscal health of the Board. Assets exceeded liabilities by $14.6 million as of June 30, 2017 as compared to $15.6 million as of June 30, 2016, a decrease of $1.0 million. The largest component of net position is net investment in capital assets of $15.7 million, which comprises 108% of the total net position. Following is a summary of the Statement of Net Position: 5

8 MANAGEMENT S DISCUSSION AND ANALYSIS Table 1 Condensed Statement of Net Position As of June 30, 2017 and 2016 Governmental Acitivities Business-type Activities Total Primary Government 6/30/17 6/30/16 6/30/17 6/30/16 6/30/17 6/30/16 Current assets $ 4,210,182 $ 4,761,898 $ 855,775 $ 812,633 $ 5,065,957 $ 5,574,531 Capital assets 15,598,162 15,605, ,560 96,631 15,725,722 15,701,804 Total assets 19,808,344 20,367, , ,264 20,791,679 21,276,335 Deferred outflows of resources 6,429,912 1,407, ,151 47,823 6,658,063 1,454,868 Current liabilities 1,935,633 1,790,345 48,725 47,042 1,984,358 1,837,387 Long-term liabilities 10,071,876 4,283, , ,143 10,413,736 4,416,852 Total liabilities 12,007,509 6,074, , ,185 12,398,094 6,254,239 Deferred inflows of resources 459, ,440 16,313 29, , ,684 Net investment in capital assets 15,598,162 15,605, ,560 96,631 15,725,722 15,701,804 Restricted net position 1,200,072 1,210, ,200,072 1,210,210 Unrestricted net position (3,027,236) (1,975,761) 677, ,027 (2,350,208) (1,324,734) Total net position $ 13,770,998 $ 14,839,622 $ 804,588 $ 747,658 $ 14,575,586 $ 15,587,280 The net position of the Board s governmental activities decreased $1,069,000 during the year, from $14.8 million at June 30, 2016 to $13.8 million at June 30, 2017, indicating a decline in the financial condition of the Board. Restricted net position decreased by $10,000, primarily due to decreased fund balance in the Capital Outlay Fund. Unrestricted net position decreased $1,051,000 compared to the prior year, due primarily to the increase in pension expense. Net investment in capital assets decreased $7,000 due to an excess of depreciation expense over capital additions for the year. The net position of the Board s business-type activities increased $57,000 from $748,000 at June 30, 2016 to $805,000 at June 30, This increase of $57,000 is the combined net profit generated by our school food service and child care operations during the 2017 fiscal year. The following table shows the revenues and expenses for the Board for the current and prior fiscal years: 6

9 MANAGEMENT S DISCUSSION AND ANALYSIS Table 2 Condensed Statement of Activities For the Fiscal Years Ended June 30, 2017 and 2016 Governmental Activities Business-type Activities Total Primary Government 6/30/17 6/30/16 6/30/17 6/30/16 6/30/17 6/30/16 Revenues: Program revenues: Charges for services $ 475,254 $ 523,406 $ 714,046 $ 651,924 $ 1,189,300 $ 1,175,330 Operating grants and contributions 19,241,795 18,971,885 1,342,287 1,311,223 20,584,082 20,283,108 General revenues: Other revenues 6,820,030 6,766,813 4,110 9,842 6,824,140 6,776,655 Total revenues 26,537,079 26,262,104 2,060,443 1,972,989 28,597,522 28,235,093 Expenses: Governmental activities: Instructional services 21,301,895 19,626, ,301,895 19,626,147 System-wide support services 6,167,975 5,637, ,167,975 5,637,129 Ancillary services 15,742 7, ,742 7,897 Unallocated depreciation 57,650 66, ,650 66,856 Business-type activities: School food service - - 1,944,665 1,754,073 1,944,665 1,754,073 Child care , , , ,507 Total expenses 27,543,262 25,338,029 2,065,954 1,878,580 29,609,216 27,216,609 Transfers in (out) (62,441) (61,634) 62,441 61, Increase (decrease) in net position (1,068,624) 862,441 56, ,043 (1,011,694) 1,018,484 Beginning net position 14,839,622 13,977, , ,615 15,587,280 14,568,796 Ending net position $ 13,770,998 $ 14,839,622 $ 804,588 $ 747,658 $ 14,575,586 $ 15,587,280 For the year ended June 30, 2017, total governmental activities generated revenues of $26.5 million, expenses of $27.5 million and transfers out of $62,000 resulting in a decrease in net position of $1,069,000. Comparatively, revenues were $26.3 million, expenses totaled $25.3 million and transfers out were $62,000 for the year ended June 30, 2016, resulting in an increase in net position of $862,000. The board experienced an increase in revenues of $275,000; however expenses increased $2.2 million, including an increase in pension expense of $1.5 million. The Board s primary sources of revenues were funding from the State of North Carolina, Halifax County, and the United States Government, which respectively comprised 68.0%, 9.0% and 7.5% of our total revenues. As would be expected, the major component of our expenditures was instructional services which accounted for 75.3% of our total expenditures during the most recent fiscal year. Of the remaining 24.7% of our total expenditures, 20.0% was attributable to system-wide support services. 7

10 MANAGEMENT S DISCUSSION AND ANALYSIS Our business-type activities generated revenues of $2.1 million, while expenses in this category totaled $2.1 million for the year ended June 30, For the year, net position increased by $57,000 (including transfers in of $62,000). Comparatively, revenues and expenses were $2.0 million and $1.9 million respectively with transfers in of $62,000 for the year ended June 30, 2016, resulting in an increase in net position of $156,000. Financial Analysis of the Board s Funds Governmental Funds: The focus of Roanoke Rapids Graded School District s governmental funds is to provide information on near-term inflows, outflows, and balances of usable resources. Such information is useful in assessing the Board s financing requirements. The Board s governmental funds reported a combined fund balance of $3.3 million at June 30, 2017, a decrease of $740,000 from the amount reported at June 30, The Board s Individual Schools fund reported revenues over expenditures for the year ended June 30, 2017 of $20,000, while the General, Other Special Revenue and Capital Outlay funds reported decreases in fund balance of $629,000, $113,000 and $19,000, respectively. Overall, total governmental fund revenues increased by $284,000, or 1.1%, from the prior year, while total expenditures increased by $746,000, or 2.8%. Proprietary Funds: The Board s business-type funds, the School Food Service Fund and the Child Care Fund, reported a combined increase in net position of $57,000 for the fiscal year ended June 30, 2017 compared to an increase of $156,000 for the same 2016 period. Net income in the School Food Service Fund (including transfers in) was $67,000 for the fiscal year ended June 30, 2017 compared to $154,000 for 2016, a decline of $87,000. The Child Care Fund reported a net loss of $10,000 in 2017 compared to net income of $2,000 in 2016, a decline of $12,000. General Fund Budgetary Highlights Over the course of the year, the Board revised the budget several times to account for changes in revenue expectations and program allocations. Since several revenue sources are either unknown or uncertain at the beginning of the fiscal year when the original budget is adopted, budget revisions are necessary throughout the year to recognize these adjustments. Capital Assets Total primary government capital assets were $15.7 million at June 30, 2017 compared to $15.7 million at June 30, 2016, an increase of $24,000. More detailed information about the Board s capital assets is contained in the notes to the financial statements. The following is a summary of the Board s capital assets, net of depreciation, at June 30, 2017 and Table 3 Summary of Capital Assets As of June 30, 2017 and 2016 Governmental Acitivities Business-type Activities Total Primary Government 6/30/17 6/30/16 6/30/17 6/30/16 6/30/17 6/30/16 Land $ 1,345,514 $ 1,345,514 $ - $ - $ 1,345,514 $ 1,345,514 Construction in progress 807, , , ,483 Buildings and improvements 12,909,816 13,322, ,909,816 13,322,077 Equipment and furniture 337, , ,560 96, , ,672 Vehicles 197, , , ,058 Total $ 15,598,162 $ 15,605,173 $ 127,560 $ 96,631 $ 15,725,722 $ 15,701,804 8

11 MANAGEMENT S DISCUSSION AND ANALYSIS Economic Factors County and City funding are a major source of income for the Board; therefore, the local area s economic outlook directly affects that of the Board s. Roanoke Rapids and Halifax County continue to feel the effects of the national recession. Our unemployment rate was 7.0% at June 30, 2017 while the State and national rates were 4.2% and 4.4%, respectively. Our local school district s supplemental tax provides approximately 34.6% of our funding for local budgets. These funds are critical for the effective operation of the school district. The Board has maintained a healthy fund balance over the years, but if State funding continues to decline and federal ARRA stimulus grant revenues are not replaced, the district will continue to face some challenging funding decisions in the future. Requests for Information This report is intended to provide a summary of the financial condition of Roanoke Rapids Graded School District. Questions or requests for additional information should be addressed to: Andrea Midgette, Finance Officer Roanoke Rapids Graded School District 536 Hamilton Street Roanoke Rapids, NC

12 Exhibit 1 STATEMENT OF NET POSITION June 30, 2017 Governmental Activities Primary Government Business-type Activities Total Assets Cash and cash equivalents $ 3,420,848 $ 673,329 $ 4,094,177 Due from other governments 789,011 98, ,238 Receivables ,082 20,405 Inventories - 64,137 64,137 Capital assets: Land and construction in progress 2,153,002-2,153,002 Other capital assets, net of depreciation 13,445, ,560 13,572,720 Total capital assets 15,598, ,560 15,725,722 Total assets 19,808, ,335 20,791,679 Deferred Outflows of Resources 6,429, ,151 6,658,063 Liabilities Accounts payable and accrued expenses 228,815 5, ,489 Accrued salaries and wages payable 668, ,580 Unearned revenue 943 6,338 7,281 Long-term liabilities: Net pension liability 9,476, ,271 9,813,266 Due within one year 1,037,295 36,713 1,074,008 Due in more than one year 594,881 5, ,470 Total liabilities 12,007, ,585 12,398,094 Deferred Inflows of Resources 459,749 16, ,062 Net position Net investment in capital assets 15,598, ,560 15,725,722 Restricted for: Stabilization by State statute 124, ,743 School capital outlay 880, ,434 Instructional services 41,772-41,772 Individual schools activities 153, ,123 Unrestricted (3,027,236) 677,028 (2,350,208) Total net position $ 13,770,998 $ 804,588 $ 14,575,586 The notes to the basic financial statements are an integral part of this statement. 10

13 Exhibit 2 STATEMENT OF ACTIVITIES 11 Program Revenues Net (Expense) Revenue and Changes in Net Position Primary Government Functions/Programs Expenses Charges for Services Operating Grants and Contributions Capital Grants and Contributions Governmental Activities Business-type Activities Total Primary government: Governmental activities: Instructional services: Regular instructional $ 12,669,101 $ - $ 10,667,173 $ - $ (2,001,928) $ - $ (2,001,928) Special populations 3,102,498-3,054,456 - (48,042) - (48,042) Alternative programs 1,889,869-1,586,452 - (303,417) - (303,417) School leadership 1,504, ,879 - (722,135) - (722,135) Co-curricular 635, , (163,614) - (163,614) School-based support 1,500,835-1,191,455 - (309,380) - (309,380) System-wide support services: Support and development 271, ,865 - (145,342) - (145,342) Special population support and development 232, ,263 - (31,756) - (31,756) Alternative programs and services support and development 175,841-13,268 - (162,573) - (162,573) Technology support 566,829-63,163 - (503,666) - (503,666) Operational support 3,569, ,034 - (2,571,283) - (2,571,283) Financial and human resource services 625,292 3, ,163 - (472,839) - (472,839) System-wide pupil support 93,553-43,855 - (49,698) - (49,698) Policy, leadership and public relations 633, ,780 - (343,137) - (343,137) Ancillary services 15,742-4,158 - (11,584) - (11,584) Non-programmed charges ,831-71,831-71,831 Unallocated depreciation expense** 57, (57,650) - (57,650) Total governmental activities 27,543, ,254 19,241,795 - (7,826,213) - (7,826,213) Business-type activities: School food service 1,944, ,564 1,342, Child care 121, , (9,807) (9,807) Total business-type activities 2,065, ,046 1,342, (9,621) (9,621) Total primary government $ 29,609,216 $ 1,189,300 $ 20,584,082 $ - (7,826,213) (9,621) (7,835,834) General revenues: Unrestricted county and city appropriations - operating 4,382,451-4,382,451 Unrestricted county appropriations - capital 477, ,437 Unrestricted State appropriations - operating 1,276,845-1,276,845 Investment earnings, unrestricted 17,791 2,411 20,202 Miscellaneous, unrestricted 665,506 1, ,205 Transfers (62,441) 62,441 - **This amount excludes the depreciation that is included in the direct expenses of the various programs. Total general revenues 6,757,589 66,551 6,824,140 Change in net position (1,068,624) 56,930 (1,011,694) Net position - beginning 14,839, ,658 15,587,280 Net position - ending $ 13,770,998 $ 804,588 $ 14,575,586 The notes to the basic financial statements are an integral part of this statement.

14 Exhibit 3 BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2017 State Public School Major Funds Other Special Revenue Non-major Fund Individual Schools Total Governmental Funds General Federal Grants Capital Outlay Assets Cash and cash equivalents $ 756,109 $ - $ - $ 1,527,666 $ 983,950 $ 153,123 $ 3,420,848 Due from other governments 76, ,218 43,607 99,678 11, ,011 Accounts receivable Total assets $ 832,668 $ 558,218 $ 43,607 $ 1,627,344 $ 995,222 $ 153,123 $ 4,210, Liabilities, deferred inflows of resources and fund balances Liabilities: Accounts payable and accrued liabilities $ 114,027 $ - $ - $ - $ 114,788 $ - $ 228,815 Accrued salaries and wages payable 19, ,218 43,607 46, ,580 Unearned revenue Total liabilities 134, ,218 43,607 46, , ,338 Deferred inflows of resources 51, ,494 Fund balances: Restricted: Stabilization by State statute 25, , ,743 School capital outlay , ,434 Instructional services , ,772 Individual schools , ,123 Assigned: Subsequent year's expenditures ,114, ,114,051 Special revenues , ,972 Unassigned 621, ,255 Total fund balances 646, ,580, , ,123 3,260,350 Total liabilities, deferred inflows of resources and fund balances $ 832,668 $ 558,218 $ 43,607 $ 1,627,344 $ 995,222 $ 153,123 Amounts reported for governmental activities in the statement of net position (Exhibit 1) are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Deferred outflows of resources related to pensions Other long-term assets (taxes receivable) are not available to pay for current period expenditures and therefore are deferred in the funds. Some liabilities, including those for compensated absences, are not due and payable in the current period and therefore are not reported in the funds. Net pension liability Deferred inflows of resources related to pensions 15,598,162 6,429,912 51,494 (1,632,176) (9,476,995) (459,749) Net position of governmental activities $ 13,770,998 The notes to the basic financial statements are an integral part of this statement.

15 Exhibit 4 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS 13 Major Funds Non-major Fund General State Public School Federal Grants Other Special Revenue Capital Outlay Individual Schools Total Governmental Funds Revenues: State of North Carolina $ - $ 17,888,918 $ - $ 285,614 $ - $ - $ 18,174,532 Halifax County 2,033, ,698-2,391,250 U.S. Government - - 1,844, , ,003,503 Other 2,071, , , ,964 4,141,162 Total revenues 4,105,018 17,888,918 1,844,629 1,441, , ,964 26,710,447 Expenditures: Current: Instructional services: Regular instructional 1,082,856 10,737, , , ,093,595 Special populations 56,854 2,289, , , ,062,457 Alternative programs 53, , , , ,866,790 School leadership 95,416 1,275, , ,482,663 Co-curricular , , ,681 School-based support 38,839 1,055,060 11, , ,480,623 System-wide support services: Support and development 42, ,486-58, ,563 Special population support and development 25, ,718 83,545 2, ,743 Alternative programs and services support and development 118,754 30,959 19,343 4, ,465 Technology support 455, , ,623 Operational support 1,838, ,441 14,152 8, ,782,850 Financial and human resource services 404, , ,312 System-wide pupil support - 92, ,266 Policy, leadership and public relations 270, , ,798 Ancillary services - - 4,158 11, ,742 Non-programmed charges , ,831 Capital outlay ,227,086-1,227,086 Total expenditures 4,483,548 17,826,477 1,844,629 1,554,288 1,227, ,060 27,388,088 Revenues over (under) expenditures (378,530) 62,441 - (112,944) (268,512) 19,904 (677,641) Other financing sources (uses): Transfers from (to) other funds (250,000) (62,441) ,000 - (62,441) Net change in fund balance (628,530) - - (112,944) (18,512) 19,904 (740,082) Fund balances: Beginning of year 1,274, ,693, , ,219 4,000,432 End of year $ 646,320 $ - $ - $ 1,580,473 $ 880,434 $ 153,123 $ 3,260,350 The notes to the basic financial statements are an integral part of this statement.

16 Exhibit 5 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Amounts reported for governmental activities in the statement of activities are different because: Net changes in fund balances - total governmental funds $ (740,082) Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. (7,011) Contributions to the pension plan in the current fiscal year are not included on the Statement of Activities 1,570,816 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Supplemental taxes (1,537) Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Pension expense (1,832,447) Compensated absences (58,363) Total changes in net position of governmental activities $ (1,068,624) The notes to the basic financial statements are an integral part of this statement. 14

17 Exhibit 6 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND AND ANNUALLY BUDGETED MAJOR SPECIAL REVENUE FUNDS General Fund Variance With Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: State of North Carolina $ - $ - $ - $ - Halifax County 2,461,932 2,461,932 2,033,552 (428,380) U.S. Government Other 2,030,710 2,031,710 2,071,466 39,756 Total revenues 4,492,642 4,493,642 4,105,018 (388,624) Expenditures: Current: Instructional services 1,084,802 1,358,585 1,327,363 31,222 System-wide support services 3,475,616 3,287,788 3,156, ,603 Ancillary services Nonprogrammed charges Total expenditures 4,560,418 4,646,373 4,483, ,825 Revenues over (under) expenditures (67,776) (152,731) (378,530) (225,799) Other financing uses: Transfers to other funds - (250,000) (250,000) - Fund balance appropriated 67, ,731 - (402,731) Net change in fund balance $ - $ - (628,530) $ (628,530) Fund balances: Beginning of year 1,274,850 End of year $ 646,320 The notes to the basic financial statements are an integral part of this statement. 15

18 Exhibit 6 (continued) STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND AND ANNUALLY BUDGETED MAJOR SPECIAL REVENUE FUNDS State Public School Fund Variance With Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: State of North Carolina $ 17,541,455 $ 18,344,094 $ 17,888,918 $ (455,176) Halifax County U.S. Government Other Total revenues 17,541,455 18,344,094 17,888,918 (455,176) Expenditures: Current: Instructional services 15,403,837 16,150,604 15,719, ,346 System-wide support services 2,076,852 2,130,798 2,107,219 23,579 Ancillary services Nonprogrammed charges Total expenditures 17,480,689 18,281,402 17,826, ,925 Revenues over (under) expenditures 60,766 62,692 62,441 (251) Other financing uses: Transfers to other funds (60,766) (62,692) (62,441) 251 Fund balance appropriated Net change in fund balance $ - $ - - $ - Fund balances: Beginning of year - End of year $ - The notes to the basic financial statements are an integral part of this statement. 16

19 Exhibit 6 (continued) STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND AND ANNUALLY BUDGETED MAJOR SPECIAL REVENUE FUNDS Federal Grants Fund Variance With Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: State of North Carolina $ - $ - $ - $ - Halifax County U.S. Government 2,322,919 2,336,335 1,844,629 (491,706) Other Total revenues 2,322,919 2,336,335 1,844,629 (491,706) Expenditures: Current: Instructional services 1,958,978 2,075,483 1,651, ,883 System-wide support services 193, , ,040 34,882 Ancillary services 5,000 5,000 4, Nonprogrammed charges 165, ,930 71,831 32,099 Total expenditures 2,322,919 2,336,335 1,844, ,706 Revenues over (under) expenditures Other financing uses: Transfers to other funds Fund balance appropriated Net change in fund balance $ - $ - - $ - Fund balances: Beginning of year - End of year $ - The notes to the basic financial statements are an integral part of this statement. 17

20 Exhibit 6 (continued) STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND AND ANNUALLY BUDGETED MAJOR SPECIAL REVENUE FUNDS Other Special Revenue Fund Variance With Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: State of North Carolina $ 277,820 $ 277,820 $ 285,614 $ 7,794 Halifax County - - # - - U.S. Government 154, , ,874 3,864 Other 910, , ,856 71,856 Total revenues 1,342,720 1,357,830 1,441,344 83,514 Expenditures: Current: Instructional services 1,484,716 1,503,939 1,468,528 35,411 System-wide support services 90,249 86,136 74,176 11,960 Ancillary services 11,678 11,678 11, Nonprogrammed charges Total expenditures 1,586,643 1,601,753 1,554,288 47,465 Revenues over (under) expenditures (243,923) (243,923) (112,944) 130,979 Other financing uses: Transfers to other funds Fund balance appropriated 243, ,923 - (243,923) Net change in fund balance $ - $ - (112,944) $ (112,944) Fund balances: Beginning of year 1,693,417 End of year $ 1,580,473 The notes to the basic financial statements are an integral part of this statement. 18

21 Exhibit 7 STATEMENT OF NET POSITION PROPRIETARY FUND TYPES June 30, 2017 Assets Enterprise Major Fund Non-major Fund School Food Child Service Care Totals Current assets: Cash and cash equivalents $ 592,639 $ 80,690 $ 673,329 Due from other governments 98,227-98,227 Receivables 19, ,082 Inventories 64,137-64,137 Total current assets 774,508 81, ,775 Noncurrent assets: Capital assets: Furniture, equipment and vehicles, net 127, ,560 Total assets 902,068 81, ,335 Deferred Outflows of Resources 205,834 22, ,151 Liabilities Current liabilities: Accounts payable and accrued liabilities 5,674-5,674 Compensated absences 31,999 4,714 36,713 Unearned revenue 6,338-6,338 Total current liabilities 44,011 4,714 48,725 Noncurrent liabilities: Net pension liability 303,377 32, ,271 Compensated absences 4, ,589 Total noncurrent liabilities 308,362 33, ,860 Total liabilities 352,373 38, ,585 Deferred Inflows of Resources 14,717 1,596 16,313 Net position Net investment in capital assets 127, ,560 Unrestricted 613,252 63, ,028 Total net position $ 740,812 $ 63,776 $ 804,588 The notes to the basic financial statements are an integral part of this statement. 19

22 Exhibit 8 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUND TYPES Enterprise Major Fund Non-major Fund School Food Child Service Care Totals Operating revenues: Food sales $ 602,564 $ - $ 602,564 Child care fees - 111, ,482 Total operating revenues 602, , ,046 Operating expenses: Food cost: Purchase of food 748, ,942 Donated commodities 102, ,638 Salaries and benefits 908, ,452 1,025,611 Indirect costs 100, ,000 Materials and supplies 6,140 1,825 7,965 Repairs and maintenance 5,633-5,633 Depreciation 12,181-12,181 Non-capitalized equipment 28,386-28,386 Contracted services 28,594-28,594 Other 3,992 2,012 6,004 Total operating expenses 1,944, ,289 2,065,954 Operating income (loss) (1,342,101) (9,807) (1,351,908) Nonoperating revenues: Federal reimbursements 1,237,147-1,237,147 Federal commodities 102, ,638 State reimbursements 2,502-2,502 Interest earned 2, ,411 Other 1,699-1,699 Total nonoperating revenues 1,346, ,346,397 Income (loss) before transfers and contributions 4,106 (9,617) (5,511) Transfers from other funds 62,441-62,441 Change in net position 66,547 (9,617) 56,930 Net position, beginning of year 674,265 73, ,658 Net position, end of year $ 740,812 $ 63,776 $ 804,588 The notes to the basic financial statements are an integral part of this statement. 20

23 Exhibit 9 STATEMENT OF CASH FLOWS PROPRIETARY FUND TYPES Enterprise Major Fund Non-major Fund School Food Child Service Care Totals Cash flows from operating activities: Cash received from customers $ 592,800 $ 111,275 $ 704,075 Cash paid for goods and services (936,719) (3,923) (940,642) Cash paid to employees for services (826,791) (122,635) (949,426) Net cash provided (used) by operating activities (1,170,710) (15,283) (1,185,993) Cash flows from noncapital financing activities: Federal and State reimbursements 1,241,020-1,241,020 Other 1,699-1,699 Net cash provided by noncapital activities 1,242,719-1,242,719 Cash flows from capital and related financing activities: Purchase of capital assets (43,110) - (43,110) Cash flows from investing activities: Interest earned on investments 2, ,411 Net increase in cash and cash equivalents 31,120 (15,093) 16,027 Cash and cash equivalents, beginning of year 561,519 95, ,302 Cash and cash equivalents, end of year $ 592,639 $ 80,690 $ 673,329 Reconciliation of operating loss to net cash used by operating activities: Operating loss $ (1,342,101) $ (9,807) $ (1,351,908) Adjustments to reconcile operating loss to net cash used by operating activities: Depreciation 12,181-12,181 Donated commodities 102, ,638 Salaries paid by special revenue fund 62,441-62,441 Changes in assets and liabilities: Increase in accounts receivable (8,296) (207) (8,503) Increase in inventories (19,983) - (19,983) Increase (decrease) in accounts payable and accrued liabilities 4,951 (86) 4,865 Decrease in unearned revenue (1,468) - (1,468) Increase in pension liability 188,062 19, ,394 Increase in deferred outflow - pension (163,043) (17,285) (180,328) Decrease in deferred inflow - pension (11,450) (1,481) (12,931) Increase (decrease) in compensated absences payable 5,358 (5,749) (391) Total adjustments 171,391 (5,476) 165,915 Net cash used by operating activities $ (1,170,710) $ (15,283) $ (1,185,993) NONCASH OPERATING AND NONCAPITAL FINANCING ACTIVITIES: The School Food Service Fund received donated commodities with a value of $102,638 during the fiscal year. The receipt of these commodities is reflected as a nonoperating revenue on Exhibit 8. The consumption of these commodities is recorded as an operating expense. The State Public School Fund paid salaries and benefits of $62,441 to administrative personnel of the School Food Service Fund during the fiscal year. The payment is reflected as a transfer in and an operating expense on Exhibit 8. The notes to the basic financial statements are an integral part of this statement. 21

24 NOTES TO THE FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of Roanoke Rapids Graded School District conform to generally accepted accounting principles as applicable to governments. The following is a summary of the more significant accounting policies: A. Reporting Entity The Roanoke Rapids Graded School District (Board) is a Local Education Agency empowered by State law [Chapter 115C of the North Carolina General Statutes] with the responsibility to oversee and control all activities related to public school education in Roanoke Rapids, North Carolina. The Board receives State, local, and federal government funding and must adhere to the legal requirements of each funding entity. The Board has no component units. B. Basis of Presentation Government-wide Statements: The statement of net position and the statement of activities display information about the Board. These statements include the financial activities of the overall government. Eliminations have been made to minimize the effect of internal activities upon revenues and expenses. These statements distinguish between the governmental and business-type activities of the Board. Governmental activities generally are financed through intergovernmental revenues and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. The statement of activities presents a comparison between direct expenses and program revenues for the different business-type activities of the Board and for each function of the Board s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expense allocations that have been made in the funds have been reversed for the statement of activities. Program revenues include (a) fees and charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the Board s funds. Separate statements for each fund category governmental and proprietary are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. All expenses are considered to be operating expenses. The Board reports the following major governmental funds: General Fund. The General Fund is the general operating fund of the Board. The General Fund accounts for all financial resources except those that are accounted for in another fund. State Public School Fund. The State Public School Fund includes appropriations from the Department of Public Instruction for the current operating expenditures of the public school system. 22

25 NOTES TO THE FINANCIAL STATEMENTS Federal Grants Fund. The Federal Grants Fund includes appropriations from the U.S. Government for the current operating expenditures of the public school system. Other Special Revenue Fund. The Other Special Revenue Fund is used to account for revenues from reimbursements, including indirect costs, fees for actual costs, tuition, sales tax refunds, gifts and grants restricted as to use, federal and State grants restricted as to use, federal and State appropriations made directly to local school administrative units, funds received for prekindergarten programs and special programs. Capital Outlay Fund. The Capital Outlay Fund accounts for financial resources to be used for the acquisition and construction of major capital facilities (other than those financed by proprietary funds and trust funds). It is mandated by State law [G.S.115C-426]. Capital projects are funded by Halifax County appropriations, restricted sales tax moneys, proceeds of county debt issued for public school construction, lottery proceeds as well as certain State assistance. The Board reports the following nonmajor governmental funds: Individual Schools Fund. The Individual Schools Fund includes revenues and expenditures of the activity funds of the individual schools. The primary revenue sources include funds held on the behalf of various clubs and organizations, receipts from athletic events, and proceeds from various fund raising activities. The primary expenditures are for athletic teams, club programs, activity buses, and instructional needs. The Board reports the following major enterprise fund: School Food Service Fund. The School Food Service Fund is used to account for the food service program within the school system. C. Measurement Focus and Basis of Accounting Government-wide and Proprietary Fund Financial Statements. The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Non-exchange transactions, in which the Board gives (or receives) value without directly receiving (or giving) equal value in exchange, include grants and donations. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Governmental Fund Financial Statements. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The Board considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. These could include federal, State, and county grants, and some charges for services. Expenditures are recorded when the related fund liability is incurred, except for claims and judgments and compensated absences which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Acquisitions under capital leases are reported as other financing sources. Under the terms of grant agreements, the Board funds certain programs by a combination of specific cost-reimbursement grants and general revenues. Thus, when program expenses are incurred, there is both restricted and unrestricted net position available to finance the program. It is the Board s policy to first apply cost-reimbursement grant resources to such programs and then general revenues. Halifax County levies, on behalf of the Roanoke Rapids Graded School District, a special property tax (the school supplemental tax). The tax levy on real and personal property is twenty-one cents per $100 23