Lampeter Strasburg School District. Year Ended June 30, 2016

Transcription

1 Year Ended June 30, 2016

2 Lampeter, Pennsylvania ANNUAL REPORT For the Fiscal Year Ended June 30, 2016 SCHOOL BOARD OFFICERS and MEMBERS as of June 30, 2016 Jeffery A. Mills, President Jeanne Hoffard, Secretary Scott M. Arnst James Byrnes Dr. Doreen L. Packer Melissa S. Herr, Vice President Terry L. Sweigart, Treasurer David Beiler Scott J. Kimmel Patricia M. Pontz Audra Spahn Dr. Kevin S. Peart Superintendent Dr. Andrew M. Godfrey Assistant Superintendent Terry L. Sweigart Business Manager Barley Snyder Solicitor

3 Financial Statements with Supplementary Information Year Ended June 30, 2016 TABLE of CONTENTS Page Independent Auditors Report 1 & 2 Required Supplementary Information Management s Discussion and Analysis 3 11 Financial Statements Statement of Net Position 12 & 13 Statement of Activities 14 & 15 Balance Sheet Governmental Funds 16 & 17 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 18 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds 19 & 20 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 21 & 22 Statement of Net Position Proprietary Funds 23 Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds 24 Statement of Cash Flows Proprietary Funds 25 & 26 Statement of Net Position Fiduciary Funds 27 Statement of Changes in Net Position Fiduciary Funds 28 Notes to Financial Statements 29 59

4 Financial Statements with Supplementary Information Year Ended June 30, 2016 TABLE of CONTENTS Page Required Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual General Fund 60 & 61 Notes to Required Supplementary Information 62 Schedule of Funding Progress Other Postemployment Benefits (OPEB) Postretirement Health Care Benefits Plan 63 Schedule of Employer Contributions Other Postemployment Benefits (OPEB) Postretirement Health Care Benefits Plan 64 Notes to Required Supplementary Information 65 Schedules of Employer Contributions Public School Employees Retirement System Last 10 Fiscal Years 66 Schedule of School District s Proportionate Share of the Net Pension Liability Public School Employees Retirement System Last 10 Fiscal Years 67 Notes to Required Supplementary Information 68 Supplementary Information Schedule of Expenditures of Federal Awards Independent Auditors Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 72 & 73 Independent Auditors Report on Compliance for each Major Program and on Internal Control over Compliance Required by Uniform Guidance 74 & 75 Schedule of Findings and Questioned Costs 76 Summary Schedule of Prior Audit Findings 77

5 INDEPENDENT AUDITORS REPORT To the Board Officers and Members Lampeter, Pennsylvania 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 School District), as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the School District 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 misstatements, whether due to fraud or error. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider 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.

6 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, as of June 30, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that management s discussion and analysis on pages 3 through 11, the budgetary comparison information on pages 60 and 62, the schedules of OPEB plan funding progress and employer contributions on pages 63 through 65, and pension liability and contributions schedules on pages 66 through 68 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 s 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 for Federal Awards, and is not a required part of the basic financial statements. The schedule of expenditures of federal awards is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 8, 2016, on our consideration of s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on 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 s internal control over financial reporting and compliance. November 8, 2016 Lancaster, Pennsylvania TROUT, EBERSOLE & GROFF, LLP Certified Public Accountants 2

7 MANAGEMENT S DISCUSSION and ANALYSIS Year Ended June 30, 2016 The discussion and analysis of s financial performance provides an overall review of the School District s financial activities for the year ended June 30, The intent of this discussion and analysis is to look at the School District s financial performance as a whole. It should be read in conjunction with the notes to the basic financial statements and the financial statements to enhance the understanding of the School District s financial performance. Financial Highlights Key financial highlights for 2016 are as follows: The School District implemented GASB 68, Accounting and Financial Reporting for Pensions, during the year ending June 30, 2015, which required recognition of a nearly $62.78 million net pension liability, and significant new disclosures. For the current year, this liability increased to $70.47 million. Governmental activities recognized $67.79 million of the liability, while business type activities recognized $2.68 million. Revenues totaled $50.31 million. General revenues accounted for $40.84 million in revenue or 81.18% of total revenues. Program specific revenues in the form of charges for services and sales, grants, and contributions accounted for $9.47 million or 18.82% of total revenues. Total assets of governmental activities decreased by $2.32 million. This decrease is attributed to the use and normal depreciation of assets. The School District had $46.55 million in expenses related to governmental activities; $7.52 million of these expenses were offset by program specific charges for services, grants, or contributions. General revenues (primarily taxes) of $40.84 million were adequate to provide for these programs. Among major funds, the general fund had $47.89 million in revenues and $47.80 million in expenditures and other financing uses. The general fund s fund balance increased from $5.60 million to $5.69 million. The School District assigned $1.30 million of its fund balance to offset future increases in the employer share of retirement. A transfer of excess funds in the amount of $0.38 million was made to the capital reserve fund for future capital improvements. The School District increased its property tax by equivalent mills for the fiscal year. This is partly due to expected increases in retirement and medical expenses for next year. The tax increase is expected to fund the additional expenditure demands and keep the School District s fund balance near its June 30, 2016 level. The school age child care fund had an increase in net position of $0.02 million, while the food service fund saw a reduction of $0.06 million in its net position. This resulted in a decrease of $0.04 million for the net position of the enterprise funds in Using this Annual Report This annual report consists of a series of financial statements and notes to those statements. These statements are organized so the reader can understand as a financial whole. The statement of net position and statement of activities provide information about the activities of the entire School District, presenting both an aggregate view of the School District s finances and a longer term view of those finances. Fund financial statements provide the next level of detail. For governmental funds, these statements tell how the services were financed in the short term as well as what remains for future spending. The fund financial statements also look at the School District s most significant funds with all other nonmajor funds presented in total in one column. In the case of, the general fund is the most significant fund. 3

8 MANAGEMENT S DISCUSSION and ANALYSIS Year Ended June 30, 2016 Reporting the School District as a Whole Our analysis for the School District as a whole begins on page 12. One of the most important questions asked about the School District s finances is, Is the School District as a whole better off or worse off as a result of the year s activities? The statement of net position and the statement of activities report information about the School District as a whole and about the activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting. All of the current year s revenues and expenses are taken into account regardless of when cash is received or paid. These two statements report the School District s net position and changes in net position. The change in net position is important because it tells the reader, for the School District as a whole, whether the financial position of the School District has improved or diminished. The causes of this change may be the result of many factors. In the statement of net position and the statement of activities, the School District s financial information is divided into two distinct kinds of activities: Governmental Activities Most of the School District s programs and services are reported here including instruction, support services, operation and maintenance of plant, pupil transportation, and extracurricular activities. Business Type Activities These services are provided on a charge for goods or services basis to recover all of the expenses of the goods or services provided. The School District s school age child care program and food services are reported as business activities. Reporting the School District s Most Significant Funds Fund Financial Statements The analysis of the School District s major funds begins on page 16. The fund financial statements provide detailed information about the most significant funds not the School District as a whole. The School District s two types of funds governmental and proprietary use different accounting approaches. Governmental Funds Most of the School District s activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year end available for spending in future periods. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental funds statements provide a detailed short term view of the School District s general government operations and the basic services it provides. Governmental funds information helps you determine whether there are more or less financial resources that can be spent in the near future to finance educational programs. The relationship (or differences) between governmental activities (reported in the statement of net position and the statement of activities) and governmental funds is reconciled in the financial statements. Proprietary Funds Proprietary funds use the same basis of accounting as business type activities; therefore, these statements will essentially match. 4

9 MANAGEMENT S DISCUSSION and ANALYSIS Year Ended June 30, 2016 The School District as a Whole Recall that the statement of net position provides the perspective of the School District as a whole. Table 1 provides a summary of the School District s net position for 2016 compared to 2015: Table 1 Net Position (In Millions) Governmental Business Type xxactivitiesxx Activities Total Assets Current and Other Assets Capital Assets Total Assets Deferred Outflows of Resources Loss on Bond Refunding, net of Accumulated Amortization Deferred Pension Total Deferred Outflows of Resources Total Assets and Deferred Outflows Liabilities Long Term Liabilities Other Liabilities Total Liabilities Deferred Inflows of Resources Deferred Pension Total Deferred Inflows of Resources

10 MANAGEMENT S DISCUSSION and ANALYSIS Year Ended June 30, 2016 The School District as a Whole Table 1 Net Position (In Millions) Governmental Business Type xxactivitiesxx Activities Total Net Position Net Investment in Capital Assets Unrestricted (Deficit) (53.23) (51.85) (2.23) (2.18) (55.46) (54.03) Total Net Position (35.14) (36.91) (2.12) (2.07) (37.26) (38.98) Total Liabilities, Deferred Inflows, and Net Position Comparative Analysis of Table 1 Net Position Total assets (including total deferred outflows of resources) increased by $0.20 million. The increase in total assets is related to an increase in the deferred outflow of resources for pension offset by depreciation of School District buildings and building improvements. Total liabilities (including total deferred inflows of resources) decreased by $1.52 million which is primarily due to the reduction in the School District s deferred inflows related to the pension plan. Total net position increased by $1.72 million. Table 2 Changes in Net Position (In Millions) Governmental Business Type xxactivitiesxx xxactivitiesxx Total Revenues Program Revenues: Charges for Services Operating Grants Capital Grants General Revenue: Property and Other Taxes Grants and Entitlements Other Total Revenues

11 MANAGEMENT S DISCUSSION and ANALYSIS Year Ended June 30, 2016 The School District as a Whole Table 2 Changes in Net Position (In Millions) Governmental Business Type xxactivitiesxx xxactivitiesxx Total Expenses Program Expenses: Instruction Support Services: Instructional Student Support Administrative and Financial Support Services Operation and Maintenance of Plant Services Pupil Transportation Student Activities Interest on Long Term Debt School Age Child Care Food Service Total Expenses Increase (Decrease) In Net Position (0.04) (0.01) The School District passed a real estate millage increase for the fiscal year ending June 30, 2017, to keep pace with rising costs associated with salaries and benefits. As the School District builds its annual budget, it attempts to maintain its fund balance at prior year levels which would sustain the School District s fund balance and continue to allow the School District the ability to deal with unforeseen financial demands. The statement of activities shows the cost of program services and the charges for services and grants offsetting those services. Table 3 shows, for governmental activities, the total cost of services and the net cost of services. It identifies the cost of these services supported by tax revenue and unrestricted state entitlements. The dependence upon tax revenues for governmental activities is apparent. During 2016, about 88% of governmental activities expenditures are supported through taxes and other general revenues. The community, as a whole, is by far the primary financial support for students. 7

12 MANAGEMENT S DISCUSSION and ANALYSIS Year Ended June 30, 2016 The School District as a Whole Table 3 Governmental Activities (In Millions) Total Cost of Services Net Cost of Services Instruction Support Services: Instructional Student Support Administrative and Financial Support Services Operation and Maintenance of Plant Services Pupil Transportation Student Activities Community Services (0.06) (0.02) Interest on Long Term Debt _ Total Expenses Business Type Activities Business type activities include school age child care programs and food service operations. These programs had revenues of $1.99 million and expenses of $2.03 million for fiscal year In , the School District kept all lunch prices at their level. Lunch prices will be increased in Attention will continue to be given to cost reduction and improving lunch sales by promoting the food service program. Child care tuition rates will remain unchanged for as they have for the past several years. The School District s Funds Information about the School District s major funds starts on page 16. These funds are accounted for using the modified accrual basis of accounting. All governmental funds had total revenues of $47.92 million, expenditures of $48.72 million, and net other financing sources (uses) of $(0.03) million. The net decrease in fund balance of $0.83 million can be attributed to the use of capital reserve funds for capital projects. General Fund Budgeting Highlights The School District s budget is prepared according to Pennsylvania law and is based on the modified accrual basis of accounting. The most significant budgeted fund is the general fund. During the course of fiscal year ended June 30, 2016, the School District had no significant general fund budget amendments. The School District used site based budgeting and the budgeting systems are designed to tightly control total site budgets but provide flexibility for site management. For the general fund, budget basis revenue was $47.89 million; $0.07 million below original budget estimates of $47.96 million. The decrease is primarily due to deferred state revenue for the funding of prior construction projects. 8

13 MANAGEMENT S DISCUSSION and ANALYSIS Year Ended June 30, 2016 The School District as a Whole General Fund Budgeting Highlights General fund expenditures (including net other financing sources (uses)) were $47.80 million; $0.86 million below original budget estimates of $48.66 million. This budget surplus is the result of unused budgetary reserve and savings in salaries and benefits. Capital Assets and Debt Administration Capital Assets As of the fiscal year ended June 30, 2016, the School District had $50.62 million invested in land, buildings, and equipment. Governmental activities provided $50.51 million of that total. Table 4 shows the fiscal 2016 balance compared to 2015: Table 4 Capital Assets at June 30 (Net of Depreciation, in Millions) Governmental Business Type xxactivitiesxx xxactivitiesxx Total Land and Site Improvements Building and Building Improvements Furniture, Fixtures, and Equipment Construction in Progress The decrease to net capital assets occurred as a result of the normal depreciation of buildings and building improvements. Debt At June 30, 2016, the School District had $31.90 million in bonds and notes outstanding; $4.80 million due within one year. Table 5 summarizes bonds, notes, and lease obligations outstanding: Table 5 Outstanding Debt at Year End (In Millions) General Obligation Bonds: Series of 2011 GOB (Refunding of Series of 2007 GOB Lampeter Elementary Project)

14 MANAGEMENT S DISCUSSION and ANALYSIS Year Ended June 30, 2016 Capital Assets and Debt Administration Debt General Obligation Notes: Table 5 Outstanding Debt at Year End (In Millions) Series of 2002 GON High School Project Series of 2012 GON (Refunding of Series A of 2004 GOB High School Project) Series of 2014 GON (Partial Refunding of Series of 2009 GON Strasburg and Lampeter Elementary Projects) Series of 2015 GON (Partial Refunding of Series of 2009 GON Strasburg and Lampeter Elementary Projects) Due to the School District s growth in student enrollment over the past 20 years, the School District has systematically renovated and enlarged each of its three major school buildings on its centrally located campus and constructed a new elementary school on campus. The general obligation bonds and notes listed above reflect the outstanding principal due for each project. At June 30, 2016, the School District s overall legal debt margin was $108,692,021. The School District has an AA bond rating. For the Future is strong financially. As the preceding information shows, the School District depends heavily on its property taxpayers. The School District s budget represents a collective effort by all School District stakeholders to continue delivery of quality educational programs with minimal changes to revenue sources used to fund these programs. The budget required an increase in the real estate millage of 1.9% or mills which was below the School District s Act 1 index of 2.8%. In response to the 2008 economic recession, the School District significantly reduced its expenditure budgets, an action which became necessary in order to remain at or below the Act 1 tax increase limit set by the Commonwealth. Since the fiscal year, the School District has remained at or below the Act 1 index in 8 out of 9 fiscal years. This has been particularly challenging given the demand for the increase in the use of instructional technology and escalating cost associated with healthcare and pensions. The School District has been able to remain within the Act 1 index throughout these years by carefully managing staff attrition and scrutiny of how programs are being delivered. The majority of the School District s revenue is derived from real estate taxes which places the burden of funding the School District s growth squarely upon School District property owners. The School District is committed to continually monitoring its expenditures in order to insure that the communities resources are

15 MANAGEMENT S DISCUSSION and ANALYSIS Year Ended June 30, 2016 For the Future prudently managed. With the passage of Act 1, the Property Tax Relief Act, the School District must face the challenge of providing valuable programs while maintaining its budget within the limitations set forth by the Act. The parameters placed upon public education finance underscore the need for ongoing and thorough analysis of the School District s financial data. The constraints of Act 1, sluggish economic conditions, an underfunded pension system, and the state s ability to sustain current funding levels all have created an uncertain economic climate for public education. In conclusion, has committed itself to financial excellence for many years. In addition, the School District s system of budgeting and internal controls is well regarded. All of the School District s financial abilities will be needed to meet the challenges of the future. Contacting the School District s Financial Management This financial report is designed to provide our citizens, taxpayers, investors, and creditors with a general overview of the School District s finances and to show the School District s accountability for the funds that it manages. If you have questions about this report or need additional financial information, please contact Mr. Terry L. Sweigart, Business Manager, at, 1600 Book Road, P.O. Box 428, Lampeter, PA

16 STATEMENT of NET POSITION June 30, 2016 Governmental Activities Business Type Activities Total ASSETS Current Assets Cash and Cash Equivalents $ 3,932,826 $ 110,546 $ 4,043,372 Investments 11,836, ,362 12,085,276 Taxes Receivable, net 1,048, ,048,713 Internal Balances 88,174 (88,174) 0 Due from Other Governments 1,931,529 65,148 1,996,677 Other Receivables, net 126,286 6, ,059 Inventories 70,531 57, ,000 Total Current Assets 19,034, ,124 19,435,097 Noncurrent Assets Land and Improvements 6,365, ,365,459 Building and Building Improvements, net of Accumulated Depreciation 43,152, ,152,553 Furniture and Equipment, net of Accumulated Depreciation 946, ,560 1,059,940 Construction in Progress 40, ,425 Total Noncurrent Assets 50,504, ,560 50,618,377 TOTAL ASSETS 69,539, ,684 70,053,474 DEFERRED OUTFLOWS OF RESOURCES Loss on Bond Refunding, net of Accumulated Amortization 134, ,558 Pension 6,676, ,000 6,940,000 TOTAL DEFERRED OUTFLOWS OF RESOURCES $ 6,810,558 $ 264,000 $ 7,074,558 See notes to financial statements. 12

17 STATEMENT of NET POSITION June 30, 2016 Governmental Activities Business Type Activities Total LIABILITIES Current Liabilities Accounts Payable $ 817,144 $ 263 $ 817,407 Current Portion of Long Term Debt 4,799, ,799,000 Accrued Salaries and Benefits, Deductions and Withholdings 4,731,152 8,666 4,739,818 Accrued Retirement Bonuses Due Within One Year 3, ,701 Compensated Absences Due Within One Year 3, ,000 Accrued Interest on Long Term Debt 190, ,486 Unearned Revenues 0 53,569 53,569 Due to Other Governmental Agencies 319, ,087 Total Current Liabilities 10,863,570 62,498 10,926,068 Noncurrent Liabilities Bonds Payable, net of Unamortized Premium 27,615, ,615,281 Net Pension Liability 67,796,000 2,678,000 70,474,000 Long Term Portion of Accrued Retirement Bonuses 1,706,800 45,378 1,752,178 Long Term Portion of Compensated Absences 1,046,592 26,939 1,073,531 Accrued Postemployment Benefits 793,325 15, ,687 Total Noncurrent Liabilities 98,957,998 2,765, ,723,677 TOTAL LIABILITIES 109,821,568 2,828, ,649,745 DEFERRED INFLOWS OF RESOURCES PENSION 1,669,000 66,000 1,735,000 NET POSITION Net Investment in Capital Assets 18,090, ,560 18,204,096 Unrestricted (Deficit) (53,230,756) (2,230,053) (55,460,809) TOTAL NET POSITION $ (35,140,220) $ (2,116,493) $ (37,256,713) See notes to financial statements. 13

18 STATEMENT of ACTIVITIES Year Ended June 30, 2016 Program Revenue Net Revenue (Expense) and Changes in Net Position Functions/Programs Expenses Charges for Services Operating Grants and Contributions Capital Grants and Contributions Governmental Activities Business Type Activities Total Governmental Activities: Instruction $ 31,592,271 $ 77,252 $ 5,172,755 $ 0 $ (26,342,264) $ 0 $ (26,342,264) Instructional Student Support 3,000, ,412 0 (2,659,226) 0 (2,659,226) Administrative and Financial Support Services 4,888, ,061 0 (4,523,524) 0 (4,523,524) Operation and Maintenance of Plant Services 3,622, ,690 0 (3,414,268) 0 (3,414,268) Pupil Transportation 1,574,250 9, ,339 0 (927,713) 0 (927,713) Student Activities 1,065,719 89,752 74,126 0 (901,841) 0 (901,841) Community Services 3,000 61, , ,167 Interest on Long Term Debt 800, ,817 (314,591) 0 (314,591) Total Governmental Activities 46,547, ,369 6,799, ,817 (39,025,260) 0 (39,025,260) Business Type Activities: Food Services 1,600, , , (100,019) (100,019) Child Care 433, ,926 42, ,112 21,112 Total Business Type Activities 2,033,859 1,293, , (78,907) (78,907) Total Primary Government $ 48,581,688 $ 1,530,652 $ 7,461,052 $ 485,817 $ (39,025,260) $ (78,907) $ (39,104,167) See notes to financial statements. 14

19 STATEMENT of ACTIVITIES Year Ended June 30, 2016 Program Revenue Net Revenue (Expense) and Changes in Net Position Operating Grants and Contributions Capital Grants and Contributions Business Type Activities Functions/Programs Expenses Charges for Services Governmental Activities Total General Revenues and Transfers: Taxes: Property Taxes, Levied for General Purposes, net $ 33,343,418 $ 0 $ 33,343,418 Public Utility Realty, Earned Income, Per Capita Taxes, Levied for General Purposes, net 3,487, ,487,234 Unrestricted Grants and Subsidies 3,877, ,877,094 Unrestricted Investment Earnings 70, ,426 Miscellaneous Income 87, ,163 Loss on Fixed Asset Dispositions (37,492) 0 (37,492) Transfers (34,859) 34,859 0 Total General Revenues and Transfers 40,793,545 35,298 40,828,843 CHANGES in NET POSITION 1,768,285 (43,609) 1,724,676 NET POSITION Beginning (36,908,505) (2,072,884) (38,981,389) Ending $ (35,140,220) $ (2,116,493) $ (37,256,713) See notes to financial statements. 15

20 BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2016 General Fund Major Funds Debt Service Capital Projects Public Purpose Trust Total Governmental Funds ASSETS Cash and Cash Equivalents $ 1,956,043 $ 0 $ 1,279,400 $ 10,218 $ 3,245,661 Investments 6,959, ,745, ,705,115 Taxes Receivable, net 1,048, ,048,713 Due from Other Funds 190, , ,356 Due from Other Governments 1,931, ,931,529 Other Receivables 114, ,817 Inventories 70, ,531 TOTAL ASSETS 12,271, ,304,580 10,218 17,586,722 LIABILITIES and DEFERRED INFLOWS of RESOURCES and FUND BALANCES LIABILITIES Accounts Payable 220, , ,667 Due to Other Funds 370, ,713 Accrued Salaries and Benefits, Deductions and Withholdings 4,731, ,731,152 Payable to Other Governments 319, ,087 Unearned Revenue 67, ,585 TOTAL LIABILITIES 5,708, , ,784,204 DEFERRED INFLOWS of RESOURCES Delinquent Taxes 389, ,533 Subsidies 485, ,817 TOTAL DEFERRED INFLOWS OF RESOURCES $ 875,350 $ 0 $ 0 $ 0 $ 875,350 See notes to financial statements. 16

21 BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2016 General Fund Major Funds Debt Service Capital Projects Public Purpose Trust Total Governmental Funds FUND BALANCES Nonspendable Inventories $ 70,531 $ 0 $ 0 $ 0 $ 70,531 Restricted ,218 10,218 Assigned 1,300, ,229, ,529,354 Unassigned 4,317, ,317,065 TOTAL FUND BALANCES 5,687, ,229,354 10,218 10,927,168 TOTAL LIABILITIES and DEFERRED INFLOWS of RESOURCES and FUND BALANCES $ 12,271,924 $ 0 $ 5,304,580 $ 10,218 $ 17,586,722 See notes to financial statements. 17

22 RECONCILIATION of the GOVERNMENTAL FUNDS BALANCE SHEET to the STATEMENT of NET POSITION June 30, 2016 Total Fund Balances Governmental Funds $ 10,927,168 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not current financial resources and, therefore, are not reported as assets in governmental funds. The cost of assets is $92,189,532 and the accumulated depreciation is $41,684, ,504,817 Internal service funds are used by management to charge the costs of insurance to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net position. 1,297,487 Property taxes, per capita taxes, and certain other receivables are available for collection this year, but are not available soon enough to pay for the current period s expenditures and, therefore, are deferred in the funds. 457,118 Subsidies receivables are available for collection this year, but are not available soon enough to pay for the current period s expenditures and, therefore, are deferred in the funds. 485,817 Long term liabilities, including bonds payable, and deferred inflows of resources are not due and payable in the current period and, therefore, are not reported as liabilities in the funds. Long term liabilities and deferred inflows of resources at year end consist of: Bonds Payable (31,896,000) Net Pension Liability (67,796,000) Accrued Interest on Long Term Debt (190,486) Deferred Outflows of Resources Loss on Bond Refunding, net of Amortization 134,558 Bond Premium, net of Amortization (518,281) Accrued Retirement Bonuses (1,710,501) Compensated Absences (1,049,592) Accrued Postemployment Benefits (793,325) Deferred Inflows of Resources Pension (1,669,000) Deferred Outflows of Resources Pension 6,676,000 TOTAL NET POSITION GOVERNMENTAL ACTIVITIES $ (35,140,220) See notes to financial statements. 18

23 STATEMENT of REVENUES, EXPENDITURES, and CHANGES in FUND BALANCES GOVERNMENTAL FUNDS Year Ended June 30, 2016 General Fund Major Funds Debt Service Capital Projects Public Purpose Trust Total Governmental Funds REVENUES Local Sources: Real Estate Taxes $ 32,755,022 $ 0 $ 0 $ 0 $ 32,755,022 Other Taxes 3,460, ,460,217 Investment Income 60, , ,928 Other Revenue 818, ,896 14, ,174 Total Local Sources 37,094, ,007 14,154 37,131,341 State Sources 10,339, ,339,340 Federal Sources 452, ,904 Total Revenues 47,886, ,007 14,154 47,923,585 EXPENDITURES Instructional Services 28,462, ,462,111 Support Services 12,426, ,426,219 Noninstructional Services 944, , ,663 Capital Outlay 0 0 1,280, ,280,699 Debt Service 1,305,924 4,282, ,588,224 Total Expenditures 43,138,361 4,282,300 1,280,699 16,556 48,717,916 EXCESS (DEFICIENCY) of REVENUES over EXPENDITURES $ 4,748,063 $ (4,282,300) $ (1,257,692) $ (2,402) $ (794,331) See notes to financial statements. 19

24 STATEMENT of REVENUES, EXPENDITURES, and CHANGES in FUND BALANCES GOVERNMENTAL FUNDS Year Ended June 30, 2016 General Fund Major Funds Debt Service Capital Projects Public Purpose Trust Total Governmental Funds OTHER FINANCING SOURCES (USES) Transfers In (Out) $ (4,662,297) $ 4,282,297 $ 345,141 $ 0 $ (34,859) NET CHANGES in FUND BALANCES 85,766 (3) (912,551) (2,402) (829,190) FUND BALANCES Beginning 5,619, ,141,905 12,620 11,773,874 Change in Reserve for Inventories (17,516) (17,516) Ending $ 5,687,596 $ 0 $ 5,229,354 $ 10,218 $ 10,927,168 See notes to financial statements. 20

25 RECONCILIATION of the GOVERNMENTAL FUNDS STATEMENT of REVENUES, EXPENDITURES, and CHANGES in FUND BALANCES to the STATEMENT of ACTIVITIES Year Ended June 30, 2016 Net Changes in Fund Balances Total Governmental Funds $ (829,190) Amounts reported for governmental activities in the statement of activities are different because: Capital outlays are reported in governmental funds as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. The amount by which depreciation exceeds capital outlays in the period is as follows: Depreciation Expense (2,761,518) Capital Outlays 1,132,200 (1,629,318) Because some property taxes and subsidies receivable will not be collected for several months after the School District s fiscal year ends, they are not considered available revenues in the governmental funds. The net of these unearned revenues increased by this amount this year. 498,156 An intergovernmental receivable will not be collected for several months after the School District's fiscal year ends, and is not considered available revenue in the governmental funds. (35,914) The governmental funds follow the purchase method of inventories, therefore the amount of inventories on the balance sheet is offset by a reserved fund balance. However, the statement of net position uses the consumption method of inventories and so the change in inventories from the prior year is reflected as an increase in expense. (17,516) The issuance of long term obligations (e.g., bonds, leases, loans) provides current financial resources to governmental funds, while the repayment of the principal of long term obligations consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of insurance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are capitalized and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long term obligations and related items. $ 237,839 See notes to financial statements. 21

26 RECONCILIATION of the GOVERNMENTAL FUNDS STATEMENT of REVENUES, EXPENDITURES, and CHANGES in FUND BALANCES to the STATEMENT of ACTIVITIES Year Ended June 30, 2016 Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long term liabilities in the statement of net position. In the statement of activities, interest is accrued on outstanding bonds, whereas in the governmental funds, an interest expenditure is reported when due. In the statement of activities, certain operating expenses (e.g., compensated absences) are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used. This amount represents the difference between the amount earned versus the amount used. In the statement of activities, certain operating expenses (e.g., supplemental pension obligations) are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used. This amount represents the difference between the amount earned versus the amount used. $ 4,537,000 12,977 9,394 (173,504) The accrued postemployment benefit is recorded as a liability in the governmentwide financial statements but not in the fund financial statements. This amount represents the change in the accrued postemployment benefit for the year. (54,526) The internal service fund, which is used by management to charge the costs of services to individual funds, is not reported in the statement of activities. Governmental fund expenditures and related internal service fund revenues are eliminated. The net revenue of the internal service fund is allocated among the governmental activities. (150,732) In the statement of activities, deferred inflows of resources pension, deferred outflows of resources pension, and pension expense are recognized in conjunction with net pension liability. Whereas in the governmental funds, pension expense is recorded when required contributions are payable. This amount represents the current pension obligation expense. (636,381) CHANGES in NET POSITION of GOVERNMENTAL ACTIVITIES $ 1,768,285 See notes to financial statements. 22

27 STATEMENT of NET POSITION PROPRIETARY FUNDS June 30, 2016 Food Service Enterprise Funds Major Funds School Age Child Care ASSETS Current Assets Cash and Cash Equivalents $ 7,134 $ 103,412 $ 110,546 $ 687,165 Investments 0 248, ,362 1,131,799 Accounts Receivable, net 0 6,773 6,773 0 Due from Other Funds 44,442 45,635 90,077 0 Receivables from Other Governments 65, ,148 0 Inventories 57, ,469 0 Total Current Assets 174, , ,375 1,818,964 Noncurrent Assets Machinery and Equipment, net of Accumulated Depreciation 113, ,560 0 TOTAL ASSETS 287, , ,935 1,818,964 DEFERRED OUTFLOWS OF RESOURCES PENSION 183,000 81, ,000 0 LIABILITIES Current Liabilities Accounts Payable ,477 Salaries Payable 6,611 2,055 8,666 0 Due to Other Funds 167,293 10, ,251 0 Unearned Revenues 53, ,569 0 Total Current Liabilities 227,473 13, , ,477 Noncurrent Liabilities Net Pension Liability 1,861, ,000 2,678,000 0 Accrued Retirement Bonus 31,066 14,312 45,378 0 Compensated Absences 14,409 12,530 26,939 0 Accrued Postemployment Benefits 11,484 3,878 15,362 0 Total Noncurrent Liabilities 1,917, ,720 2,765,679 0 TOTAL LIABILITIES 2,145, ,996 3,006, ,477 DEFERRED INFLOWS OF RESOURCES PENSION 46,000 20,000 66,000 0 NET POSITION Net Investment in Capital Assets 113, ,560 0 Unrestricted (1,834,239) (395,814) (2,230,053) 1,297,487 TOTAL NET POSITION $ (1,720,679) $ (395,814) $ (2,116,493) $ 1,297,487 Total Internal Service Fund See notes to financial statements. 23

28 STATEMENT of REVENUES, EXPENSES, and CHANGES in NET POSITION PROPRIETARY FUNDS Year Ended June 30, 2016 Enterprise Funds Major Funds Food Service School Age Child Care Total Internal Service Fund OPERATING REVENUES Food Service Revenue $ 881,357 $ 0 $ 881,357 $ 0 Charges for Services 0 411, ,926 5,526,827 Total Operating Revenues 881, ,926 1,293,283 5,526,827 OPERATING EXPENSES Salaries 554, , ,352 0 Employee Benefits 300, , ,452 5,678,619 Purchased Professional and Technical Services 34,184 1,526 35,710 0 Other Purchased Services Supplies 684,214 24, ,401 0 Depreciation 26, ,846 0 Total Operating Expenses 1,600, ,630 2,033,859 5,678,619 OPERATING LOSS (718,872) (21,704) (740,576) (151,792) NONOPERATING REVENUES Investment Earnings ,060 State Sources 127,511 42, ,327 0 Federal Sources 491, ,342 0 Total Nonoperating Revenues 619,037 43, ,108 1,060 CHANGES IN NET POSITION BEFORE TRANSFERS IN (99,835) 21,367 (78,468) (150,732) TRANSFERS IN 34, ,859 0 CHANGES in NET POSITION (64,976) 21,367 (43,609) (150,732) NET POSITION Beginning (1,655,703) (417,181) (2,072,884) 1,448,219 Ending $ (1,720,679) $ (395,814) $ (2,116,493) $ 1,297,487 See notes to financial statements. 24

29 STATEMENT of CASH FLOWS PROPRIETARY FUNDS Year Ended June 30, 2016 Enterprise Funds Major Funds Internal Food School Age Service Service Child Care Total Fund CASH FLOWS from OPERATING ACTIVITIES Cash Received from Users $ 881,361 $ 408,534 $ 1,289,895 $ 5,532,555 Cash Payments to Employees for Services (558,629) (273,799) (832,428) 0 Cash Payments to Suppliers for Goods and Services (859,426) (163,689) (1,023,115) (5,613,520) Net Cash Used by Operating Activities (536,694) (28,954) (565,648) (80,965) CASH FLOWS from NONCAPITAL FINANCING ACTIVITIES State Sources 124,066 42, ,882 0 Federal Sources 394, ,947 0 Net Cash Provided by Noncapital Financing Activities 519,013 42, ,829 0 CASH FLOWS from INVESTING ACTIVITIES Investment Earnings ,060 Purchases of Investments 0 (154,758) (154,758) (349,673) Net Cash Provided (Used) by Investing Activities 184 (154,503) (154,319) (348,613) DECREASE in CASH and CASH EQUIVALENTS (17,497) (140,641) (158,138) (429,578) CASH and CASH EQUIVALENTS Beginning of Year 24, , ,684 1,116,743 End of Year $ 7,134 $ 103,412 $ 110,546 $ 687,165 See notes to financial statements. 25

30 STATEMENT of CASH FLOWS PROPRIETARY FUNDS Year Ended June 30, 2016 Enterprise Funds Major Funds Internal Food School Age Service Service Child Care Total Fund RECONCILIATION of OPERATING LOSS to NET CASH USED by OPERATING ACTIVITIES Operating Loss $ (718,872) $ (21,704) $ (740,576) $ (151,792) ADJUSTMENTS to RECONCILE OPERATING LOSS to NET CASH USED by OPERATING ACTIVITIES Depreciation 26, ,846 0 Donated Commodities Used 71, ,045 0 (Increase) Decrease in Accounts and Interfund Receivables 3,411 (12,108) (8,697) 5,728 Increase in Inventory (15,589) 0 (15,589) 0 Increase (Decrease) in Accounts and Interfund Payables 81,454 (646) 80,808 65,099 Decrease in Accrued Salaries and Benefits (4,314) (1,046) (5,360) 0 Increase in Unearned Revenue Pension Related Changes Other than Periodic Pension Costs 18,356 6,550 24,906 0 Total Adjustments 182,178 (7,250) 174,928 70,827 Net Cash Used by Operating Activities $ (536,694) $ (28,954) $ (565,648) $ (80,965) SUPPLEMENTAL DISCLOSURE of CASH FLOW INFORMATION NONCASH FLOWS from NONCAPITAL and RELATED FINANCING ACTIVITIES Receipt of USDA Donated Commodities 86, ,353 0 See notes to financial statements. 26

31 STATEMENT of NET POSITION FIDUCIARY FUNDS June 30, 2016 Private Purpose Trust Agency Funds ASSETS Cash and Cash Equivalents $ 201,122 $ 133,454 Due from Other Funds 1,080 0 TOTAL ASSETS 202, ,454 LIABILITIES Accounts Payable 6,150 4,546 Due to Other Funds 0 12,549 Other Current Liabilities 0 116,359 TOTAL LIABILITIES 6, ,454 NET POSITION Restricted for Scholarships $ 196,052 $ 0 See notes to financial statements. 27

32 STATEMENT of CHANGES in NET POSITION FIDUCIARY FUNDS Year Ended June 30, 2016 Private Purpose Trust ADDITIONS Gifts and Contributions $ 8,328 Investment Earnings 381 Total Additions 8,709 DEDUCTIONS Scholarships Awarded 12,658 CHANGE in NET POSITION (3,949) NET POSITION Beginning 200,001 Ending $ 196,052 See notes to financial statements. 28