WYALUSING AREA SCHOOL DISTRICT FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION FISCAL YEAR ENDED JUNE 30, 2018

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1 FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION FISCAL YEAR ENDED JUNE 30, 2018 WITH REPORT OF CERTIFIED PUBLIC ACCOUNTANTS

2 TABLE OF CONTENTS 2018 FINANCIAL STATEMENTS Transmittal Letter... 1 Schedule of Report Distribution... 2 Independent Auditor s Report Management s Discussion and Analysis Government-wide Financial Statements Statements of Net Position Statements of Activities Financial Statements Combined Balance Sheets - All Governmental Funds Combined Statements of Revenue, Expenditures and Changes in Fund Equity - All Governmental Funds Statement of Revenue, Expenditures and Changes in Fund Equity - Budget and Actual - General Fund Statements of Net Position - Fiduciary Funds Statements of Changes in Net Position - Fiduciary Fund Statements of Net Position - Proprietary Fund Statements of Revenue, Expenses and Changes in Net Position - Proprietary Fund Statements of Cash Flows - Proprietary Fund Reconciliation of Governmental Funds Balance Sheet to the Statement of Net Position Reconciliation of Governmental Funds Revenue, Expenditures and Changes in Fund Equity to the Statement of Activities Notes to the Financial Statements Supplementary Information Comparative Statements of Revenue and Expenditures - General Fund Statement of Cash Receipts and Disbursements - Activity Fund Schedule of Changes in the Districts Net OPEB Liability and Related Ratios District Plan Schedule of Changes in the Districts Net OPEB Liability and Related Ratios PSERS Plan Schedule of District s Contributions OPEB District Plan Schedule of District s Contributions OPEB PSERS Plan Schedule of the District s Proportionate Share of the Net Pension Liability Schedule of District s Contributions Pension Notes to the Schedule of Expenditures of Federal Awards Schedule of Expenditures of Federal Awards Independent Auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards Independent Auditor s Report on Compliance for Each Major Federal Program and on Internal Control over Compliance Required by the Uniform Guidance Schedule of Findings and Questioned Costs Page

3 Schedule of Prior Audit Findings and Questioned Costs Management Letter

4 TRANSMITTAL LETTER Pennsylvania Department of Education Bureau of Budgets and Fiscal Management Bureau Director 333 Market Street 4 th Floor Harrisburg, PA Gentlemen: Enclosed you will find the audit package for the Wyalusing Area School District for the year ended June 30, We have audited the financial statements of the Wyalusing Area School District for the year ended June 30, 2018 and have issued our report thereon dated December 6, These financial statements are the responsibility of the District's management. Our responsibility is to express an opinion 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, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. In addition, we have issued a management letter dated December 6, 2018, which is included in the audit package. BUFFAMANTE WHIPPLE BUTTAFARO, P.C. Olean, New York December 6, Member of the American Institute of Certified Public Accountants Private Companies Practice Section

5 SCHEDULE OF REPORT DISTRIBUTION Agency No. of Copies Board of Education Wyalusing Area School District Wyalusing, Pennsylvania PA Pennsylvania Department of Education Bureau of Budgets and Fiscal Management Bureau Director 333 Market Street 4 th Floor Harrisburg, Pennsylvania Single Audit Clearinghouse 1201 E. 10 th Street Jeffersonville, Indiana

6 INDEPENDENT AUDITOR S REPORT To the President and Members of The Board of Education Wyalusing Area School District Wyalusing, Pennsylvania We have audited the accompanying financial statements of the governmental activities, business-type activities and each major fund of Wyalusing Area School District as of and for the year ended June 30, 2018, and the related notes to the financial statements which collectively comprise the Wyalusing Area School District s basic financial statements as listed in the accompanying table of contents. We have also audited the fiduciary fund types of the Wyalusing Area School District as of June 30, 2018 as displayed in the District s basic financial statements. 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 these 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 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 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 principles used and the reasonableness of significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we 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, business-type activities, each major fund and aggregate remaining fund information of Wyalusing Area School District as of June 30, 2018, and the respective changes in financial position and the respective budgeting comparison of the General Fund and the cash flows of the business-type activities for the year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle As discussed in Note 18 of the financial statements, the District implemented Governmental Accounting Standards Board Statement Number 75 in the current fiscal year which resulted in a prior period adjustment. Our opinion is not modified with respect to this matter. -3- Member of the American Institute of Certified Public Accountants Private Companies Practice Section

7 Report on Summarized Comparative Information We have previously audited the financial statements of Wyalusing Area School District as of June 30, 2017, and our report dated January 24, 2018, expressed unmodified opinions on the respective financial statements of the governmental activities, business-type activities and aggregate remaining fund information. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2017, is consistent, in all material respects, with the audited financial statements from which is has been derived. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management s Discussion and Analysis on pages 5 through 12, Schedule of Changes in the District s Net OPEB Liability and Related Ratios District Plan on pages 46, Schedule of Changes in the District s Net OPEB Liability and Related Ratios PSERS Plan on page 47, Schedule on the Districts Contributions OPEB District Plan on page 48, Schedule of District s Contributions OPEB PSERS Plan on page 49, Schedule of the District s Proportionate Share of the Net Pension Liability on page 50, and the Schedule of District s Contributions - Pension on page 51 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 Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Wyalusing Area School District s basic financial statements. The supplementary information including the Comparative Statements of Revenue and Expenditures - General Fund, Statement of Cash Receipts and Disbursements - Activity Fund and the Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements of Federal Awards, and is also not a required part of the basic financial statements. The supplementary information including the Comparative Statements of Revenue and Expenditures - General Fund, Statement of Cash Receipts and Disbursements - Activity Fund and the Schedule of Expenditures of Federal Awards are the responsibility of management and were derived from and related 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 financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Comparative Statements of Revenue and Expenditures - General Fund, Statement of Cash Receipts and Disbursements - Activity Fund and the Schedule of Expenditures of Federal Awards are fairly stated in all material respects relation to the 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 December 6, 2018 on our consideration of Wyalusing Area School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants 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 Wyalusing Area School District's internal control over financial reporting and compliance. BUFFAMANTE WHIPPLE BUTTAFARO, P.C. Olean, New York December 6,

8 MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Page 5 I. Discussion and Analysis II. The following is a discussion and analysis of the Wyalusing Area School District s financial performance for the year ended June 30, The section is a summary of the District s financial activities based on currently known facts, decisions, or conditions. It is based on both the government-wide and fund-based financial statements. The results of the current year are discussed in comparison with the prior year, with an emphasis placed on the current year. This section is only an introduction and should be read in conjunction with the District s financial statements, which follows this section. Financial Highlights The following items are the financial highlights experienced by the Wyalusing Area School District during the fiscal year ended June 30, 2018: Overall net position from operations of the District increased $2,278,000 during the fiscal year ended June 30, This consisted of an increase in governmental activities in the amount of $2,209,000 and an increase in business-type activities $69,000. The District s total revenue decreased approximately $194,000 from $24,226,000 during year ended June 30, 2017 to $24,032,000 during June 30, This decrease is attributable to the District receiving a new fitness center and equipment which was donated by the Wyalusing Area Education Foundation and was recognized as contribution revenue in the prior year of $1,334,000, partially offset by an increase in the tax levy and State retirement subsidy. The District s total expenses decreased approximately $461,000 from $22,215,000 during the year ended June 30, 2017 to $21,754,000 during the year ended June 30, This decrease is attributable to decreases in the actuarial calculated pension expense. The District had capital additions during the current fiscal year in the amount of $57,000, which was all recorded in governmental activities. In the current year, the District had purchases of a utility vehicle and technology equipment during the current year. In addition, there were $10,000 in equipment purchases in the business-type activities during the current year. III. Overview of the Financial Statements A. Reporting the School District as a Whole (Districtwide Financial Statements): This annual report consists of three parts: MD&A (this section), the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of Wyalusing Area School District. The district-wide statements report information about the School District as a whole using accounting methods similar to those used by private-sector companies. Activities that are fiduciary in nature are not included in these statements. 1. Statement of Net Position The Statement of Net Position (page 13) shows the School District s assets, deferred outflows of resources, liabilities, deferred inflows of resources and the net position. The Statement categorizes assets to show that some assets are very liquid, such as cash and cash equivalents. Some assets are restricted for certain purposes or reserved for emergencies and cash flow purposes. Some assets are invested in fixed or capital assets, such as buildings, equipment and other long-lived property; and some assets are available to fund budgets of the following year. 2. Statement of Activities The Statement of Activities (page 14) shows amounts of program-specific and general District revenue used to support the various functions. The Statement of Net Position and Statement of Activities divide the activities of the District into two categories: governmental activities (the school functions, including instruction, support services, non-instructional services, etc.; property taxes, state and federal revenue usually support most of these functions) and proprietary activities. The two district-wide statements report the School District s net position and how they have changed. Net position the difference between the District s assets and deferred outflows of resources and the District s liabilities and deferred inflows of resources is one way to measure the District s financial health or position. Over time, increases or decreases in the District s net position are an indicator of whether its financial position is improving or deteriorating, respectively. To assess the District s overall health, you need to consider additional nonfinancial factors such as changes in the District s property tax base and the condition of school buildings and other facilities.

9 MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Page 6 III. Overview of the Financial Statements (continued) B. Reporting the District s Most Significant Funds (Fund Financial Statements): The fund financial statements provide more detailed information about the District s funds, focusing on its most significant or major funds not the District as a whole. Funds are accounting devices the District uses to keep track of specific sources of funding and spending on particular programs. Significance of funds is determined based on the proportional size of the funds, the relative importance of the activities of the funds to the District s operations, and the existence of legal budget requirements. Internal Service funds are never reported as major funds, but are combined and presented in a separate column. The District has two kinds of funds: 1. Governmental Funds Most of the District s basic services are included in governmental funds, which generally focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and the balances left at year-end that are available for spending. Consequently the governmental funds statements provide a detailed short-term III. Overview of the Financial Statements (continued) B. Reporting the District s Most Significant Funds (Fund Financial Statements) (continued): 1. Governmental Funds (continued) view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the District s programs. Because this information does not encompass the additional long-term focus of the district-wide statements, additional information at the bottom of the governmental funds statements explains the relationship (or differences) between them. 2. Fiduciary Funds The District is the trustee, or fiduciary, for assets that belong to others, such as the scholarship fund and the student activities funds. The District is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and by those to whom the assets belong. The District excludes these activities from the district-wide financial statements because it cannot use these assets to finance its operations. Figure A-1 - Major Features of the District-Wide Statements and Fund Financial Statements Scope Required financial statements Accounting basis and measurement focus Type of asset/deferred outflows of resources /liability/deferred inflows of resources information Type of inflow/outflow information Fund Financial Statements District-Wide Governmental Funds Fiduciary Funds The activities of the District that are not proprietary or fiduciary, such as special education and building maintenance Entire district (except fiduciary funds) Statement of Net Position (Deficit) Statement of Activities Accrual accounting and economic resources focus All assets, deferred outflows of resources, liabilities, and deferred inflows of resources both financial and capital, short-term and long-term All revenues and expenses during the year, regardless of when cash is received or paid Balance Sheet Statement of Revenue, Expenditures, and Changes in Fund Balances Modified accrual accounting and current financial focus Generally, assets and deferred outflows of resources expected to be used up and liabilities and deferred inflows of resources that come due during the year or soon thereafter; no capital assets or longterm liabilities included Revenues for which cash is received during or soon after the end of the year; expenditures when goods or services have been received and the related liability is due and payable Instances in which the District administers resources on behalf of someone else, such as scholarship programs and student activities monies Statement of Net Position Statement of Changes in Net Position Accrual accounting and economic resources focus All assets, deferred outflows of resources (if any), liabilities, and deferred inflows of resources (if any) both short-term and longterm; funds do not currently contain capital assets, although they can All additions and deductions during the year, regardless of when cash is received or paid

10 MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Page 7 Figure A-2 - Required Components of the District s Annual Financial Report IV. Financial Analysis of School District as a Whole Figure A-3 Condensed Statement of Net Position (Deficit) Net Position The District s total reporting entity net deficit was approximately $11,751,000 as of June 30, The components of net deficit include: net investment in capital assets, net of related debt of $15,553,000; restricted net position for capital reserve and debt service in the amount of $182,000 and unrestricted net deficit of $27,486,000. Changes in Net Position Wyalusing Area School District Condensed Statement of Net Position (in thousands of dollars) The District s total government-wide revenue decreased by -1% to $24,032,000. Approximately 43%, 24% and 31% of total revenue is derived from the property taxes, operating grants and state sources, respectively. The remaining 2% comes from federal aid, interest earned, local sources, charges for services and other sources. The total cost of all programs and services of the District decreased 2% to $21,754,000. The District s expenses cover a range of services, with 61% related to instruction and 32% related to support services. Governmental Activities Business-type Activities Total % Change % Change % Change Assets Current and other assets $ 7,309 $ 5,815 26% $ 400 $ % $ 7,709 $ 6,126 26% Capital assets 36,053 37,336-3% % 36,305 37,608-3% Total assets 43,362 43,151 0% % 44,014 43,734 1% Deferred Outflows of Resources Deferred outflows related to pensions and OPEB 6,900 8,320-17% - - n/a 6,900 8,320-17% Deferred outflows of resources and assets $ 50,262 $ 51,471-2% $ 652 $ % $ 50,914 $ 52,054-2% Liabilities Other liabilities $ 2,775 $ 2,575 8% $ 41 $ 41 0% $ 2,816 $ 2,616 8% Long-term debt outstanding 55,844 58,191-4% - - n/a 55,844 58,191-4% Total liabilities 58,619 60,766-4% % 58,660 60,807-4% Deferred Inflows of Resources Deferred inflows related to pensions and OPEB 4,005 1, % - - n/a 4,005 1, % Deferred inflows of resources and liabilities 62,624 62,569 0% % 62,665 62,610 0% Net position Net invested in capital assets 15,301 14,531 5% % 15,553 14,803 5% Restricted % - - n/a % Unrestricted (deficit) (27,845) (25,716) 8% % (27,486) (25,446) 8% Total net positon (deficit) (12,362) (11,098) 11% % (11,751) (10,556) 11% Total liabilities and net position (deficit) $ 50,262 $ 51,471-2% $ 652 $ % $ 50,914 $ 52,054-2%

11 MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Page 8 Figure A-4 Changes in Net Position from Operating Results Wyalusing Area School District Changes in Net Assets from Operating Results (in thousands of Dollars) Governmental Activities Business-type activities Total % Change % Change % Change Revenue Program revenue Charges for services $ 120 $ 96 25% $ 176 $ 174 1% $ 296 $ % Operating grants and contributions 5,396 5,097 6% % 5,811 5,511 5% General revenue Taxes 10,273 9,593 7% - - n/a 10,273 9,593 7% Interest earned % - - n/a % Sale of property & comp for loss n/a - - n/a n/a Local sources % - - n/a % State sources 7,400 7,389 0% - - n/a 7,400 7,389 0% Federal sources % - - n/a % Contribution - capital assets - 1, % - - n/a - 1, % Total revenue 23,441 23,638-1% % 24,032 24,226-1% Expenses Instruction 13,187 13,802-4% - - n/a 13,187 13,802-4% Support services 7,064 6,885 3% - - n/a 7,064 6,885 3% Non-instructional services % - - n/a % Other uses Debt service - interest % - - n/a % Business-type (food service fund) - - n/a % % Total expenses 21,232 21,689-2% % 21,754 22,215-2% Change in net assets $ 2,209 $ 1,949 $ 69 $ 62 $ 2,278 $ 2,011 IV. Financial Analysis of the School District as a Whole (continued) Figure A-5 through figure A-8 and the narrative that follows considers the operations of governmental activities, along with revenue and net costs percentages for governmental activities. Governmental Activities - Revenue Revenue of the District s governmental activities decreased 1%, while total expenses decreased 2%. The District s total net position increased from operations approximately $2,209,000 during the fiscal year ended June 30, Figure A-4 presents the major sources of revenue of the District s governmental activities. Total revenue of the District was approximately $23,441,000 for the fiscal year ended June 30, The most significant changes in the District s governmental revenue are more thoroughly discussed as follows: Tax revenue which represents approximately 43% of the District s total revenue for governmental activities increased 7% during the year ended June 30, 2018 related to an increase in tax levy. The District s state sources which represent $7,400,000 or 31% of total governmental revenue increased approximately 0% in comparison with the prior year. IV. Financial Analysis of the School District as a Whole (continued) Governmental Activities - Revenue (continued) During the year ended June 30, 2018, the District saw an increase in program revenue, which mostly resulted in an increase in operating grants and contributions which increased $299,000 over prior year revenue, along with an increase in charges for services in the amount of $24,000. The increase in operating grants and contributions was primarily related to an increase in State retirement subsidy. In the prior year, the District received a new fitness center and equipment which was donated by the Wyalusing Area Education Foundation with an estimated value of $1,334,0000. Governmental Activities - Expenses Figure A-8 presents the cost of each of the District s five largest expenditure-type, which include; instruction, support services, noninstructional services, debt service and food service; as well as each expenditure-type s net cost (total cost less fees generated by the activities and intergovernmental aid). The net cost shows the financial burden that was placed on the District s taxpayers and Commonwealth of Pennsylvania by each of these functions. Total costs of the District s governmental activities were $21,232,000.

12 MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Page 9 IV. Financial Analysis of the School District as a Whole (continued) Governmental Activities - Expenses (continued) IV. Financial Analysis of the School District as a Whole (continued) Governmental Activities - Expenses (continued) The most significant changes in the District s governmental expenses are more thoroughly discussed as follows: The District s instruction costs decreased by approximately $615,000 or 4% which was primarily due to a decrease in pension expense as calculated by actuaries for GASB 68 purposes. The District s support services costs increased by approximately $179,000 or 3% during the year ended June 30, 2018 primarily due to an increase in health insurance and costs associated with the moving of the administrative offices to the elementary building and costs associated with the front entrance. The District s other financing uses decreased $40,000 during the current year ended June 30, 2018 which primarily resulted from Interest payments on the District s serial bonds. For governmental activities, the District received approximately $5,516,000 of operating grants and charges for services from its state and federal grants which subsidized certain programs of the District. Most of the District s net costs ($15.7 million) were financed by real property taxes and state aid. Non-instructional costs of the District increased approximately $19,000 or 5% during the year ended June 30, Figure A-5 District-wide Sources of Revenue Figure A-6 District-wide Expenses Wyalusing Area School District Sources of revenue Wyalusing Area School District Expenses State sources 31% Sale of propeprty 1% Federal sources 0% Charges for services 1% Operating grants and contributions 24% Refund of prior year revenue 0% Non-instructional services 2% Debt Service - Interest 3% Food service expenses 2% Local sources 0% Taxes 43% Support services 32% Instruction 61% For the year ended June 30, 2018 For the year ended June 30, 2018

13 MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Page 10 Figure A-7 Expenditures Supported with Program Revenue Wyalusing Area School District Expenditures supported with program revenue (in thousands of dollars) Governmental Activities Business-type Activities Total Expenditures supported with general revenue (from taxes & other sources) $ 15,716 74% $ 16,496 76% $ (69) -13% $ (62) -12% $ 15,647 72% $ 16,434 74% Expenditures supported with program revenue 5,516 26% 5,193 24% % % 6,107 28% 5,781 26% Total expenditures related to governmental activities $ 21, % $ 21, % $ % $ % $ 21, % $ 22, % Figure A-8 Net Cost of Governmental Activities Wyalusing Area School District Net Cost of District-wide expenses (in thousands of dollars) Total cost of services Net cost of services Change Change Instruction $ 13,187 $ 13,802 $ (615) $ 10,284 $ 10,956 $ (672) Support services 7,064 6, ,243 5,302 (59) Non-instructional services (11) Debt service - interest (40) (129) (91) (38) Food service (4) (69) (62) (7) Total $ 21,754 $ 22,215 $ (461) $ 15,647 $ 16,434 $ (787) V. Financial Analysis of the School District s Funds It is important to note that variances between years for the governmental fund financial statements (Balance Sheets and Statement of Revenue, Expenditures and Changes in Fund Equity) are not the same as variances between years for the District-wide financial statements (Statement of Net Position (Deficit) and Statement of Activities). The District s governmental funds are presented on the current financial resources measurement focus and the modified accrual basis of accounting, while the statement of net position are presented on the full accrual method of accounting. Therefore, governmental funds do not include longterm debt liabilities for the funds projects and capital assets purchased by the funds. Governmental funds will include the proceeds received from the issuance of debt, the current payments for capital assets, and the current payments for debt. Below is a description of the most significant changes to the fund financial statements from that reported in the previous year. General Fund The District s general fund revenue and other sources exceeded its expenditures and other uses by approximately $1,141,000. V. Financial Analysis of the School District s Funds (continued) General Fund (continued) The District s general fund unassigned fund balance equated to approximately $2,881,000 as of June 30, The District had assigned fund balance as of June 30, 2018 in the amount of $287,000. The District had combined fund balance as of June 30, 2018 in the amount of $920,000. The District s total assets increased approximately $1,384,000 while liabilities and deferred inflows of resources increased $243,000 during the year ended June 30, The increase in assets was primarily due to an increase in cash and investments, while the increase in liabilities and deferred inflows of resources was associated with an increase in accrued salaries and benefits and deferred inflows delinquent real estate taxes. Total revenue in the District s general fund increased $1,129,000 which was primarily related to increase in the tax levy and state subsidies. Total expenditures and other uses increased $919,000, which resulted from an increase in salaries and benefits.

14 MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Page 11 V. Financial Analysis of the School District s Funds Special Revenue Fund During the current year, The District had revenue in the special revenue fund in the amount of $23,367 related to contributions and charges for the fitness center. The District had expenditures in the special revenue fund of $6,310 in the current year. Capital Projects Fund During the current year, the District had expenditures in its capital projects fund in the amount of $110,336. These expenditures were primarily related to the move of the administration offices to the elementary school and other small construction projects. Additionally the Capital Projects fund received a transfer of $205,000 from the General Fund, which included proceeds received from the sale of the Administrative Building ($125,000) during the current year. VI. General Fund Budgetary Highlight Over the course of the year, the District makes many budget transfers. After such transfers, the revised budget presents actual expenditures being approximately $1,017,000 below the revised budget. The most significant variances were in instruction and support services which were $812,000 and $403,000, below that budgeted, respectively. On the other hand, resources available for appropriations were approximately $125,000 above the final budgeted amount. Significant variance of revenue items consisted of local sources which totaled $316,000 below the revised budget and State Sources which were $$330,000 above the revised budget. Figure A-9 General Fund Budget vs. Actual Wyalusing Area School District General Fund - Budget vs Actual Comparison (in thousands of dollars) Revised Budget Actual Difference % Revenue Local sources $ 10,969 $ 10,653 $ (316) -3% State sources 11,865 12, % Federal sources (14) -3% Other sources n/a Total revenue $ 23,260 $ 23,385 $ 125 1% Expenditures Instruction $ 13,257 $ 12,445 $ 812 6% Support services 6,994 6, % Non-instructional services (0) 0% Other uses Debt service 2,615 2, % Transfer to other funds (204) n/a Total expenditures $ 23,261 $ 22,244 $ 1,017 4% VII. Capital Asset and Debt Administration Capital Assets As depicted in Figure A-10, as of June 30, 2018, the District had invested $36,305,000 in a broad range of capital assets, including reconstruction projects and other equipment. Capital additions made during the year ended June 30, 2018, totaled approximately $66,000 and was related to the purchase of a utility vehicle and technology equipment purchases. More detailed information about the District s capital assets is presented in the notes of the financial statements. Long-term Debt As depicted in Figure A-11, as of June 30, 2018, the District had approximately $55,844,000 in bonds, net pension liability, other post-employment benefits, and compensated absences. The overall outstanding balance decreased approximately $2,346,000 as compared with the previous year. This decrease was primarily the result of the District making payments on its serial bonds, along with a decrease in the net pension liability. These decreases were partially offset by the recording of other post-employment benefits in accordance with GASB 75. Figure A-10 Capital Assets Wyalusing Area School District Capital Assets (net of depreciation) Governmental Activities & Total District-wide Change Land and site improvements $ 6,543,978 $ 6,795,842-4% Building and constructionin-progress 29,486,665 30,481,196-3% Furniture and equipment 274, ,999-17% Total Capital Assets, net $ 36,305,123 $ 37,608,037-3% Figure A-11 Outstanding Long-term Debt Wyalusing Area School District Outstanding Long-Term Debt and Liabilities Governmental Activities & Total District-wide Change Bonds payable $ 20,635,000 $ 22,680,000-9% Net pension liability 31,609,000 35,433,000-11% Compensated absences 67,318 77,550-13% Other post employment benefits 3,533,026 - n/a Total Long-Term Liabilities $ 55,844,344 $ 58,190,550-4%

15 MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2018 Page 12 VIII. Factors Bearing on the District s Future At the time these financial statements were prepared and audited, the District was aware of the following circumstances that could significantly affect its financial health in the future: The District is aware of and continues to prepare for anticipated increases in the PSERS retirement rates. The District continues to monitor the uncertainty surrounding future state subsidy levels. IX. Contacting the District s Financial Management This financial report is designed to provide citizens, taxpayers, customers and investors and creditors with a general overview of the finances of the District and to demonstrate our accountability with the money we receive. If you have any questions about this report or need additional financial information, please contact: Wyalusing Area School District District Administrative Offices Ms. Stephanie Heller, Business Manager Wyalusing-New Albany Rd Wyalusing, Pennsylvania 18853

16 STATEMENTS OF NET POSITION AS OF JUNE 30, 2018 Page Governmental Business-Type 2017 Activities Activities Total Total Assets Cash and Investments Unrestricted $ 5,130,440 $ 324,073 $ 5,454,513 $ 3,381,377 Restricted 182, ,100 87,429 Receivables Taxes, net 946, , ,240 State and federal aid 1,047,906 62,617 1,110,523 1,820,258 Other receivables Due from business-type activities 1,756-1,756 1,756 Inventories - 13,328 13,328 12,684 Capital assets, net 36,053, ,678 36,305,123 37,608,037 Total assets 43,362, ,696 44,013,960 43,734,180 Deferred Outflows of Resources Deferred outflows related to pension 6,721,635-6,721,635 8,319,685 Deferred outflows related to OPEB 178, ,659 - Total deferred outflows of resources 6,900,294-6,900,294 8,319,685 Total assets and deferred outflows of resources $ 50,262,558 $ 651,696 $ 50,914,254 $ 52,053,865 Liabilities Current liabilities Accounts payable $ 555,173 $ 25,699 $ 580,872 $ 568,837 Accrued liabilities 2,102,689-2,102,689 1,907,819 Accrued interest 117, , ,000 Due to governmental activities - 1,756 1,756 1,756 Unearned revenue ,328 13,453 12,809 Long-term liabilities Portion due or payable within one year Bonds payable 2,085,000-2,085,000 2,045,000 Portion due or payable after one year Bonds payable, net 18,550,000-18,550,000 20,635,000 Net pension liability 31,609,000-31,609,000 35,433,000 Compensated absences 67,318-67,318 77,550 Other post employment benefits 3,533,026-3,533,026 - Total liabilities 58,619,331 40,783 58,660,114 60,806,771 Deferred Inflows of Resources Deferred inflows related to pension 3,806,000-3,806,000 1,803,000 Deferred inflows related to OPEB 199, ,000 - Total deferred inflows of resources 4,005,000-4,005,000 1,803,000 Total liabilities and deferred inflows of resources 62,624,331 40,783 62,665,114 62,609,771 Net Position Net investment in capital assets 15,301, ,678 15,553,123 14,803,037 Restricted for Capital 182, ,100 87,429 Unrestricted (deficit) (27,845,318) 359,235 (27,486,083) (25,446,372) Total net position (deficit) (12,361,773) 610,913 (11,750,860) (10,555,906) Total liabilities, deferred inflows of resources and net position $ 50,262,558 $ 651,696 $ 50,914,254 $ 52,053,865 See accompanying independent auditor s report and notes to financial statements.

17 STATEMENTS OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2018 Page Net (Expense) Indirect Program Revenues Net (Expense) Revenue and Changes in Net Position Revenue and Expenses Charges for Operating Governmental Business-Type Changes in Expenses Allocation Services Grants Activities Activities Total Net Position Functions/Programs Governmental Activities: Instruction $ 12,329,506 $ 857,831 $ 55,548 $ 2,848,869 $ (10,282,920) $ - $ (10,282,920) $ (10,955,626) Instructional student support 1,857, , ,990 (1,625,456) - (1,625,456) (1,665,912) Administrative and financial support services 1,721, , ,101 (1,625,924) - (1,625,924) (1,715,910) Operation and maintenance of plant services 1,517,558 97,984 7,881 47,912 (1,559,749) - (1,559,749) (1,478,584) Pupil transportation 1,511, ,964-1,184,637 (432,197) - (432,197) (441,873) Student activities 391,455 27,150 56,173 49,157 (313,275) - (313,275) (328,844) Community services 6, ,600 (4,996) - (4,996) (112) Debt service 556, , , ,606 90,540 Depreciation 1,339,652 (1,339,652) Total governmental activities 21,231, ,602 5,396,367 (15,715,911) - (15,715,911) (16,496,321) Business-type activities: Food services 522, , ,078-68,725 68,725 61,777 Total functions and programs $ 21,753,984 $ - $ 295,353 $ 5,811,445 (15,715,911) 68,725 (15,647,186) (16,434,544)

18 General Revenues Real property taxes, levied for general purposes 8,540,798-8,540,798 7,992,765 Other taxes levied 1,731,718-1,731,718 1,599,854 Interest earnings 52, ,035 19,324 Sale of property and compensation for loss 125, ,000 - Contribution - capital assets ,334,000 Other local sources 69,353-69, ,528 State sources 7,399,678-7,399,678 7,388,984 Federal sources 5,729-5,729 6,332 Total general revenues 17,925, ,925,311 18,445,787 Change in net position 2,209,279 68,846 2,278,125 2,011,243 Net position (deficit) - beginning of year (11,097,973) 542,067 (10,555,906) (12,567,149) Prior period adjustments (3,473,079) - (3,473,079) - Net position (deficit) - end of year $ (12,361,773) $ 610,913 $ (11,750,860) $ (10,555,906) See accompanying independent auditor s report and notes to financial statements.

19 COMBINED BALANCE SHEETS - ALL GOVERNMENTAL FUNDS AS OF JUNE 30, 2018 Page 15 Assets Special Capital (Memo only) (Memo only) General Revenue Projects Total Total Unrestricted cash and cash equivalents $ 1,215,149 $ - $ - $ 1,215,149 $ 696,438 Restricted cash - 31, , , ,415 Investments 3,869, ,870,289 2,414,206 Taxes receivable 1,004, ,004, ,442 Intergovernmental receivables 1,047, ,047,906 1,763,065 Due from other funds 1, ,756 1,756 Other receivables Total assets $ 7,139,661 $ 31,635 $ 196,100 $ 7,367,396 $ 5,872,721 Liabilities, Deferred Inflows of Resources and Fund Equity Liabilities Accounts payable $ 540,798 $ 375 $ 14,000 $ 555,173 $ 542,459 Accrued salaries and benefits 2,081, ,081,871 1,903,100 Payroll deductions and withholdings 20, ,818 4,719 Unearned revenue Total liabilities 2,643, ,000 2,657,987 2,450,403 Deferred Inflows of Resources Deferred inflows - delinquent real estate taxes 408, , ,000 Fund Equity Restricted , ,100 87,429 Committed 920, ,000 - Assigned 286,564 31, ,824 14,216 Unassigned 2,881, ,881,485 2,946,673 Total fund equity 4,088,049 31, ,100 4,301,409 3,048,318 Total liabilities, deferred inflows of resources and fund equity $ 7,139,661 $ 31,635 $ 196,100 $ 7,367,396 $ 5,872,721 See accompanying independent auditor s report and notes to financial statements.

20 COMBINED STATEMENTS OF REVENUE, EXPENDITURES AND CHANGES IN FUND EQUITY - ALL GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2018 Page Special Capital (Memo only) (Memo only) General Revenue Projects Total Total Revenue Local sources $ 10,653,319 $ 23,367 $ 7 $ 10,676,693 $ 9,988,715 State sources 12,195, ,195,269 11,851,774 Federal sources 411, , ,191 Other sources Sale of fixed assets 125, ,000 - Interfund transfers , ,000 - Total revenue and other sources 23,385,160 23, ,007 23,613,534 22,270,680 Expenditures Instruction 12,445, ,445,369 12,149,274 Support services 6,589, ,589,753 6,196,118 Noninstructional services 394,180 6, , ,628 Facility acquisition, construction, and improvement services , ,336 31,035 Other financing uses Debt service 2,609, ,609,495 2,615,475 Interfund transfers 205, ,000 - Total expenditures and other financing uses 22,243,797 6, ,336 22,360,443 21,356,530 Excess of revenue and other sources over expenditures and other financing uses 1,141,363 17,057 94,671 1,253, ,150 Fund equity, beginning of year 2,946,686 14,203 87,429 3,048,318 2,134,168 Fund equity, end of year $ 4,088,049 $ 31,260 $ 182,100 $ 4,301,409 $ 3,048,318 See accompanying independent auditor s report and notes to financial statements.

21 STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND EQUITY - BUDGET AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2018 Page 17 Favorable Current (Unfavorable) Original Revised Year's Revised Budget Budget Actual Budget Revenues Local sources $ 10,969,925 $ 10,968,938 $ 10,653,319 $ (315,619) State sources 11,864,597 11,864,597 12,195, ,672 Federal sources 426, , ,572 (14,443) Other sources Proceeds from refunding of debt , ,000 Total revenue 23,260,539 23,259,550 23,385, ,610 Expenditures Instruction Regular programs 9,532,522 9,418,625 8,748, ,406 Special programs 2,726,065 2,834,978 2,672, ,653 Vocational education programs 910, , ,219 (71,914) Other instructional programs 93,900 93,900 42,606 51,294 Total instruction 13,262,792 13,257,808 12,445, ,439 Support Services Pupil personnel 991, , ,720 44,897 Instructional staff 997,666 1,031, , ,485 Administration 1,207,659 1,207,659 1,138,556 69,103 Pupil health 222, , ,288 64,540 Business 606, , ,818 (8,375) Operation and maintenance 1,538,049 1,538,649 1,437, ,420 Student transportation services 1,423,662 1,420,112 1,507,129 (87,017) Central support services - (4,326) 4,326 (8,652) Other support services 500 (250) - (250) Total support services 6,988,139 6,993,904 6,589, ,151 Noninstructional services Student activities 393, , ,894 (773) Community services 1,000 1, Total noninstructional services 394, , ,180 (59) Other financing uses Debt service 2,615,000 2,615,000 2,609,495 5,505 Interfund transfers ,000 (204,500) Total other financing uses 2,615,500 2,615,500 2,814,495 (198,995) Total expenditures and other financing uses 23,260,552 23,261,333 22,243,797 1,017,536 Excess of revenue and other sources over expenditures and other financing uses $ (13) $ (1,783) 1,141,363 $ 1,143,146 Fund equity, beginning of year 2,946,686 Fund equity, end of year $ 4,088,049 See accompanying independent auditor s report and notes to financial statements.

22 STATEMENTS OF NET POSITION - FIDUCIARY FUNDS AS OF JUNE 30, Page Private 2017 Purpose Agency (Memo only) (Memo only) Trusts Fund Totals Totals Assets Cash $ 2,653 $ 157,482 $ 160,135 $ 171,996 Total assets $ 2,653 $ 157,482 $ 160,135 $ 171,996 Liabilities Student extraclassroom activity funds $ - $ 157,482 $ 157,482 $ 169,365 Total liabilities - 157, , ,365 Net position Reserved for scholarships 2,653-2,653 2,631 Total liabilities and net position $ 2,653 $ 157,482 $ 160,135 $ 171,996 See accompanying independent auditor s report and notes to financial statements.

23 STATEMENTS OF CHANGES IN NET POSITION - FIDUCIARY FUNDS FOR THE YEAR ENDED JUNE 30, Page Additions Gifts and contributions $ 17 $ - Interest earnings 5 1 Total additions 22 1 Deductions Scholarships awarded - 63 Change in net position 22 (62) Net position - beginning of year 2,631 2,693 Net position - end of year $ 2,653 $ 2,631 See accompanying independent auditor s report and notes to financial statements.

24 STATEMENTS OF NET POSITION - PROPRIETARY FUND AS OF JUNE 30, Page Assets Cash and cash equivalents $ 324,073 $ 240,747 Intergovernmental receivables 62,617 57,193 Inventories 13,328 12,684 Capital assets, net 251, ,261 Total assets $ 651,696 $ 582,885 Liabilities Accounts payable $ 25,699 $ 26,378 Unearned revenue 13,328 12,684 Due to other funds 1,756 1,756 Total liabilities 40,783 40,818 Net Position Net investment in capital assets 251, ,261 Unrestricted 359, ,806 Total net position 610, ,067 Total liabilities and net position $ 651,696 $ 582,885 See accompanying independent auditor s report and notes to financial statements.