CAMPBELL UNION HIGH SCHOOL DISTRICT San Jose, California. FINANCIAL STATEMENTS June 30, 2013

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1 San Jose, California FINANCIAL STATEMENTS June 30, 2013

2 FINANCIAL STATEMENTS WITH SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2013 TABLE OF CONTENTS Page Independent Auditor's Report 1 Management's Discussion and Analysis 3 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position 10 Statement of Activities 11 Fund Financial Statements: Balance Sheet - Governmental Funds 12 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 13 Statement of Revenues, Expenditures and Change in Fund Balances - Governmental Funds 14 Reconciliation of the Statement of Revenues, Expenditures and Change in Fund Balances - Governmental Funds - to the Statement of Activities 15 Statement of Net Position - Proprietary Fund - Self-Insurance Fund 16 Statement of Change in Net Position - Proprietary Fund - Self-Insurance Fund 17 Statement of Cash flows - Proprietary Fund - Self-Insurance Fund 18 Statement of Fiduciary Net Position - Trust and Agency Funds 19 Statement of Change in Fiduciary Net Position - Trust Fund 20 Notes to Basic Financial Statements 21 Required Supplementary Information: General Fund Budgetary Comparison Schedule 46 Schedule of Other Postemployment Benefits (OPEB) Funding Progress 47 Notes to Required Supplementary Information 48

3 FINANCIAL STATEMENTS WITH SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2013 TABLE OF CONTENTS (Continued) Page Supplementary Information: Combining Balance Sheet - All Non-Major Funds 49 Combining Statement of Revenues, Expenditures and Change in Fund Balances - All Non-Major Funds 50 Combining Statement of Changes in Assets and Liabilities - All Agency Funds 51 Organization 53 Schedule of Average Daily Attendance 54 Schedule of Instructional Time 55 Schedule of Expenditure of Federal Awards 56 Reconciliation of Unaudited Actual Financial Report with Audited Financial Statements 57 Schedule of Financial Trends and Analysis - Unaudited 58 Schedule of Charter Schools 59 Notes to Supplementary Information 60 Independent Auditor's Report on Compliance with State Laws and Regulations 61 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 63 Independent Auditor's Report on Compliance for Each Major Federal Program and Report on Internal Control over Compliance 65 Findings and Recommendations: Schedule of Audit Findings and Questioned Costs 67 Status of Prior Year Findings and Recommendations 71

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6 MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2013 The Management Discussion and Analysis section of the audit provides Management s overall view of the District s financial condition and serves as a vehicle to convey important fiscal issues to the Board and the public. REPORTING OVERVIEW The Statement of Net Position and the Statement of Activities The Statement of Net Position reports summary financial information as of June 30, The Statement of Activities summarizes changes which have occurred in the past fiscal year. These statements include all assets and liabilities of the District using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. 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 District s Net Position and changes in the Net Position. The Net Position is the difference between assets and liabilities. This is one way to measure the District s financial health, or financial position. Over time, increases or decreases in the District s net position are one indicator of whether its financial health is improving or deteriorating. Other factors to consider are changes in the District s property tax base and the condition of the District s facilities. The relationship between revenues and expenses is the District s operating results. Since the Board s responsibility is to provide services to our students and not to generate profit as commercial entities do, one must consider other factors when evaluating the overall health of the District. The quality of the education and the safety of our schools will likely be an important component in this evaluation. In the Statement of Net Position and the Statement of Activities, activities are separated as follows: Governmental activities - Most of the District s services are reported in this category. This includes the education of grade nine through grade twelve students, and the on-going effort to improve and maintain buildings and sites. Property taxes, state income taxes, user fees, interest income, federal, state and local grants, as well as general obligation bonds, finance these activities. Business-type activities - The District has no business-type activities. FINANCIAL HIGHLIGTS FISCAL YEAR DISTRICT ASSETS Net Position The District s net position was $113,889,047 at the end of Fiscal year which ended June 30, Restricted net position is reported separately to show legal constraints from debt covenants and enabling legislation that limit the School Board s ability to use those assets for day-to-day operations. Our analysis below focuses on the net position (Table 1) and the change in net position (Table 2) of the District s governmental activities. 3

7 MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2013 Table 1 June 30, 2012 June 30, 2013 Current and other assets $ 90,858,409 $ 79,387,948 Capital Assets 208,442, ,120,478 Total Assets 299,301, ,508,426 Deferred outflows from refunding of debt 1,201,495 Current liabilities 13,905,328 11,649,001 Long-term debt 178,295, ,171,873 Total Liabilities 192,200, ,820,874 Net Position Net investment in capital assets 32,066,356 64,276,206 Restricted 64,749,827 53,651,668 Unrestricted 10,284,095 (4,038,827) Net Position $ 107,100,277 $ 113,889,047 4

8 MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2013 Changes in Net Position The results of this year s operations for the District as a whole are reported in the Statement of Activities. Table 2 is representative of this report. Net Position has increased $6,788,770. Table 2 Revenues June 30, 2012 June 30, 2013 Charges for services $ 521,900 $ 469,565 Operating grants & contributions 5,442,588 5,397,251 Capital grants and contributions 184,745 5,934,276 General revenues: State revenue limit sources - - Property taxes 70,311,287 73,755,481 Other general revenues 7,673,943 9,257,540 Total Revenues 84,134,463 94,814,113 Expenses Instructional related 54,230,932 54,820,803 Student support services 6,143,406 6,134,157 Administration 4,779,600 4,981,797 Maintenance and operations 9,796,340 10,235,362 Other 11,963,478 11,853,224 Total Expenses 86,913,756 88,025,343 Change in Net Position $ (2,779,293) $ 6,788,770 Statement of Activities 100,000,000 80,000,000 60,000,000 40,000,000 June 30, 2012 June 30, ,000,000 - (20,000,000) Total Revenues Total Expenses Change in Net Position 5

9 MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2013 The total cost of all our governmental activities this year was $88,025,343. The District s expenses are predominantly related to educating and caring for students (71%). Purely administrative activities of the District accounted for just 5.5% of total costs. District revenues exceeded expenditures, increasing the district s net position by $6,788,770. In Table 3, we have presented the District s eleven largest functions by cost - regular program instruction, guidance and counseling, school administration, student transportation services, school food services, other pupil services, district administration, data processing, maintenance and operations, ancillary services, and others. Providing this information allows our citizens to consider the cost of each function in comparison to the benefits they believe are provided by that function. Table 3 Cost of Services by Function June 30, 12 June 30, 13 Instruction $ 46,939,456 $ 47,577,964 Guidance and Counseling 1,271,744 1,420,498 School Administration 6,019,732 5,822,341 Pupil Transportation 909, ,117 Food Services 1,153,573 1,288,521 All other pupil services 4,080,307 3,906,519 Administration 3,522,784 4,050,644 Data Processing 1,256, ,153 Maintenance and operations 8,250,002 8,663,737 Ancillary services 1,546,338 1,571,625 Other 11,963,478 11,853,224 Totals: $ 86,913,756 $ 88,025,343 $50,000,000 $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- Cost of Services by Function 6

10 MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2013 DISTRICT FUNDS As the District completed this year, our governmental funds reported a combined fund balance of $64,872,607, which is a net decrease of $8,906,005 year over year. General Fund Budgetary Highlights The General Fund accounts are for the primary operations of the District. The District s initial budget is adopted by July 1. Over the course of the year, the District s budget is revised several times to take into account revised and new categorical funding appropriations and related expenditures, and to update budgets for prior year carryover amounts. The following table summarizes the general fund budget to actual information for the year ended June 30, Adopted Budget Year-End Budget Actual Variance Year-End to Actual Total Revenues $65,866,759 $69,978,234 $70,099,202 $120,938 Total Expenditures $68,609,360 $67,188,813 $67,798,570 $609,757 Total Other Uses $408,553 $408,553 $408,553 $0 CAPITAL ASSET & DEBT ADMINISTRATION Capital Assets At June 30, 2013, the District had $220,120,478 in a broad range of capital assets, including land, buildings, furniture, and equipment. This amount represents a net increase (including additions, deductions and depreciation) of $11,677,637 year over year. Table 4 Capital Assets at Year End (Net of Depreciation) Land $ 4,037,160 $ 4,037,160 Improvement of Sites 23,227,002 22,280,327 Buildings 157,158, ,590,533 Work In Progress 20,049,025 29,862,209 Machinery & Equipment 3,971,323 3,350,249 Total $ 208,442,841 $ 220,120,478 $180,000,000 $160,000,000 $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $

11 MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2013 Long-Term Liabilities At the end of this year, the District had $175,171,873 in Long-Term liabilities, which primarily consists of $161,340,413 in General Obligation Bonds and related unamortized premiums General Obligation Bonds $ 163,924,972 $ 161,340,413 Capitalized Lease Obligation 12,451,514 11,325,579 Compensated Absences 278, ,194 Other Post Employment Benefits 1,640,390 2,259,687 Total $ 178,295,645 $ 175,171,873 The District s general obligation bond rating continues to be Aa2 (Moody s) and AA+ (Fitch). The State limits the amount of general obligation debt that District s can issue to 5 percent of the assessed value of all taxable property within the District s boundaries. SIGNIFICANT ACCOMPLISHMENTS OF FISCAL YEAR ARE NOTED BELOW: PROJECT NAME Branham Exterior Sports Improvement Branham Modernization of Cafeteria Branham Modernization of Large & Small Gyms Branham Performing Arts Center Branham Quads & Courtyards Branham ED Classrooms Branham Toilet Room Camden Facility project Del Mar Exterior Sports Improvement Del Mar Modernization of Cafeteria Del Mar Performing Arts Center Del Mar Quads & Courtyards District Ed Center Leigh Art & Science Leigh Exterior Sports Improvement Leigh Modernization of Cafeteria Leigh Modernization of Library Leigh Performing Arts Center Leigh Portable Replacement Leigh Quads & Courtyards Leigh Special Ed Classroom 86 Program Management Prospect Exterior Sports Improvement Total $ 130, $ 1,780, $ 7, $ 13, $ 33, $ 1, $ 334, $ 159, $ 44, $ $ 10, $ 31, $ 23, $ 4,103, $ 13, $ 2,161, $ 2, $ 13, $ 202, $ 35, $ 10, $ 74, $ 145,

12 MANAGEMENT S DISCUSSION AND ANALYSIS JUNE 30, 2013 SIGNIFICANT ACCOMPLISHMENTS OF FISCAL YEAR (Continued): Prospect Exterior Sports Improvement Prospect Performing Arts Center Prospect Quads & Courtyards Westmont Exterior Sports Improvement Westmont Modernization of Library Westmont Performing Arts Center Westmont Quads & Courtyards Project Totals $ 145, $ 15, $ 30, $ 60, $ 4,141, $ 13, $ 37, $ 13,632, ECONOMIC FACTORS AND NEXT YEAR S BUDGETS AND RATES In considering the District Budget for the Fiscal Year, the District Board and management used the following assumptions: 1. The State of California has approved a fundamental change in the funding formula for education called the Local Control Funding Formula. 2. Campbell Union High School District will be held harmless under the LCFF. 3. LCFF/Revenue Limit Sources are expected to increase 5.9%. 4. ADA is expected to remain flat. CONTACTING THE DISTRICT S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, students, and investors and creditors with a general overview of the District s finances and to show the District s accountability for the money it receives. If you have questions about this report or need any additional financial information, contact Ron Wheelehan, Assistant Superintendent, at 3235 Union Avenue, San Jose, California 95124, or rwheelehan@.cuhsd.org. 9

13 BASIC FINANCIAL STATEMENTS

14 STATEMENT OF NET POSITION June 30, 2013 Governmental Activities ASSETS Cash and investments (Note 2) $ 74,165,304 Receivables 4,946,552 Prepaid expenditures 241,752 Stores inventory 34,340 Non-depreciable capital assets (Note 4) 33,899,369 Depreciable capital assets, net of accumulated depreciation (Note 4) 186,221,109 Total assets 299,508,426 DEFERRED OUTFLOWS Deferred loss from refunding of debt (Note 5) 1,201,495 LIABILITIES Accounts payable 9,291,952 Unearned revenue 25,594 Unpaid claims and claim adjustment expenses (Note 5) 2,331,455 Long-term liabilities (Note 6): Due within one year 4,810,688 Due after one year 170,361,185 Total liabilities 186,820,874 NET POSITION Net investment in capital assets 64,276,206 Restricted (Note 7) 53,651,668 Unrestricted (4,038,827) Total net position $ 113,889,047 See accompanying notes to financial statements. 10

15 STATEMENT OF ACTIVITIES For the Year Ended June 30, 2013 Net (Expense) Revenues and Changes in Program Revenues Net Position Charges Operating Capital for Grants and Grants and Governmental Expenses Services Contributions Contributions Activities Governmental activities (Note 4): Instruction $ 47,577,964 $ 13,258 $ 3,737,286 $ 5,934,276 $ (37,893,144) Instruction-related services: Supervision of instruction 1,342, ,768 - (1,299,767) Instructional library, media and technology 77, (77,287) School site administration 5,822, ,843 - (5,817,229) Pupil services: Home-to-school transportation 939, ,949 - (867,152) Food services 1,288, , ,555 - (325,674) All other pupil services 3,906,519 3,067 36,329 - (3,867,123) General administration: Data processing 931, (931,153) All other general administration 4,050, ,955 - (4,003,675) Plant services 8,663, ,373 - (8,662,335) Ancillary services 1,571,625 1,302 69,240 - (1,501,083) Interest on long-term liabilities 7,283, (7,283,004) Other outgo 4,570, , ,388 - (3,695,625) Total governmental activities $ 88,025,343 $ 469,565 $ 5,397,251 $ 5,934,276 (76,224,251) General revenues: Taxes and subventions: Taxes levied for general purposes 57,719,434 Taxes levied for debt service 11,097,507 Taxes levied for other specific purposes 4,938,540 Federal and state aid not restricted to specific purposes 5,092,266 Interest and investment earnings 212,022 Miscellaneous 3,953,252 Total general revenues 83,013,021 Change in net position 6,788,770 Net position, July 1, ,100,277 Net position, June 30, 2013 $ 113,889,047 See accompanying notes to financial statements. 11

16 BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2013 Bond Special Interest and All General Building Reserve Redemption Non-Major Fund Fund Fund Fund Funds Total ASSETS Cash and investments: Cash in County Treasury $ 20,925,578 $ 17,140,801 $ 9,237,719 $ 7,416,122 $ 10,397,512 $ 65,117,732 Cash awaiting deposit 49, ,563 59,097 Cash in revolving fund 4, ,000 5,000 Receivables 3,515,026 16,969 9,181 2,776 1,377,852 4,921,804 Prepaid expenditures 241, ,752 Stores inventory 34, ,340 Total assets $ 24,770,230 $ 17,157,770 $ 9,246,900 $ 7,418,898 $ 11,785,927 $ 70,379,725 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 4,414,267 $ 336,050 $ 125,084 $ - $ 468,953 $ 5,344,354 Unearned revenue 25, ,594 Due to other funds 137, ,170 Total liabilities 4,577, , , ,953 5,507,118 Fund balances: Nonspendable 280, , ,092 Restricted 2,275,418 16,821,720 9,121,816 7,418,898 11,315,974 46,953,826 Assigned 15,519, ,519,615 Unassigned 2,118, ,118,074 Total fund balances 20,193,199 16,821,720 9,121,816 7,418,898 11,316,974 64,872,607 Total liabilities and fund balances $ 24,770,230 $ 17,157,770 $ 9,246,900 $ 7,418,898 $ 11,785,927 $ 70,379,725 See accompanying notes to financial statements. 12

17 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION June 30, 2013 Total fund balances - Governmental Funds $ 64,872,607 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used for governmental activities are not financial resources and, therefore, are not reported as assets in governmental funds. The cost of the assets is $289,054,337 and the accumulated depreciation is $68,933,859 (Note 4). 220,120,478 Long-term liabilities are not due and payable in the current period and, therefore, are not reported as liabilities in the funds. Long-term liabilities at June 30, 2013 consisted of (Note 6): General Obligation Bonds $ (156,055,000) Unamortized Bond Premiums (5,285,413) Capitalized Lease Obligations (11,325,579) Compensated absences (246,194) Other postemployment benefits (Note 9) (2,259,687) (175,171,873) Losses on refundings of debt are categorized as deferred outflows and are amortized over the life of the related debt. 1,201,495 Unmatured interest is not recognized until it is due and, therefore, is not accrued as a payable in governmental funds. (3,830,502) Internal service funds are used to conduct certain activities for which costs are charged to other funds on a full cost-recovery basis. Net position for the Self-Insurance Fund is: 6,696,842 Total net position - governmental activities $ 113,889,047 See accompanying notes to financial statements. 13

18 STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended June 30, 2013 Bond Special Interest and All General Building Reserve Redemption Non-Major Fund Fund Fund Fund Funds Total Revenues: Revenue limit sources: State apportionment $ 826,378 $ - $ - $ - $ 250,966 $ 1,077,344 Local sources 57,364, ,364,550 Total revenue limit 58,190, ,966 58,441,894 Federal sources 2,031, ,204 2,589,692 Other state sources 3,146, ,088 8,867,551 12,098,542 Other local sources 6,729, ,479 2,163,842 11,024,574 1,353,323 21,693,101 Total revenues 70,099, ,479 2,163,842 11,108,662 11,030,044 94,823,229 Expenditures: Certificated salaries 30,205, ,175,593 31,381,005 Classified salaries 8,784,660 41, ,832 9,709,104 Employee benefits 14,679,437 28, ,252 15,571,957 Books and supplies 2,165,940 27, , ,994 3,054,114 Contract services and operating expenditures 8,552,258 46,117 58, ,483 9,016,454 Capital outlay 71,084 8,805,223 6,443,510-3,311,370 18,631,187 Other outgo 3,339, ,339,779 Debt service: Principal retirement - - 1,125,935 3,815,000-4,940,935 Interest ,037 9,075,882-9,501,919 Total expenditures 67,798,570 8,949,216 8,168,262 12,890,882 7,339, ,146,454 Excess (deficiency) of revenues over (under) expenditures 2,300,632 (8,527,737) (6,004,420) (1,782,220) 3,690,520 (10,323,225) Other financing sources (uses): Operating transfers in , ,533 Operating transfers out (408,533) (408,533) Proceeds from issuance of long-term liabilities ,235,000-16,235,000 Refundings of debt (17,560,000) - (17,560,000) Other financing sources ,817,220-2,817,220 Total other financing (uses) sources (408,533) - - 1,492, ,533 1,417,220 Net change in fund balances 1,892,099 (8,527,737) (6,004,420) (290,000) 4,024,053 (8,906,005) Fund balances, July 1, ,301,100 25,349,457 15,126,236 7,708,898 7,292,921 73,778,612 Fund balances, June 30, 2013 $ 20,193,199 $ 16,821,720 $ 9,121,816 $ 7,418,898 $ 11,316,974 $ 64,872,607 See accompanying notes to financial statements. 14

19 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDS - TO THE STATEMENT OF ACTIVITIES For the Year Ended June 30, 2013 Net change in fund balances - Total Governmental Funds $ (8,906,005) Amounts reported for governmental activities in the statement of activities are different because: Acquisition of capital assets is an expenditure in the governmental funds, but increases capital assets in the statement of net position (Note 4). $ 18,631,186 Depreciation of capital assets is an expense that is not recorded in the governmental funds (Note 4). (6,941,820) In governmental funds, proceeds from the disposal of capital assets are reported as revenue. In the statement of activities only the resulting gain or loss is reported (Note 4). (11,729) In governmental funds, the premium on issuance of debt is recognized as other financing sources. In the governmentwide statements, the premium is amortized over the life of the related debt (Note 6). (2,555,441) Proceeds from debt are recognized as other financing sources in the governmental funds, but increases the long-term liabilities in the statement of net position (Note 6). (16,235,000) Repayment of principal on long-term liabilities is an expenditure in the governmental funds, but decreases the long-term liabilities in the statement of net position (Note 6). 22,500,935 Losses on refundings of debt are categorized as deferred outflows and are amortized over the life of the related debt. 1,201,495 In governmental funds, interest on long-term liabilities is recognized in the period that it becomes due. Unmatured interest owing at the end of the period less matured interest paid during the period but owing from the prior period, was: (474,800) Internal service funds are used to conduct certain activities for which costs are charged to other funds on a full cost-recovery basis. Change in net position for the Self-Insurance Fund was: 166,671 In governmental funds, other postemployment benefits are recognized when employers contributions are made. In the government-wide statements, other postemployment benefits are recognized on the accrual basis (Notes 6 and 9). (619,297) In the statement of activities, expenses related to compensated absences are measured by the amounts earned during the year. In the governmental funds, expenditures are measured by the amount of financial resources used (Note 6). 32,575 15,694,775 Change in net position of governmental activities $ 6,788,770 See accompanying notes to financial statements. 15

20 STATEMENT OF NET POSITION - PROPRIETARY FUND SELF-INSURANCE FUND June 30, 2013 ASSETS Cash and investments: Cash in County Treasury $ 8,825,882 Cash on hand and in banks 77,593 Cash with Fiscal Agent 80,000 Receivables 24,748 Due from other funds 137,170 Total assets 9,145,393 LIABILITIES Accounts payable 117,096 Unpaid claims and claim adjustment expenses 2,331,455 Total liabilities 2,448,551 NET POSITION Restricted (Note 7) $ 6,696,842 See accompanying notes to financial statements. 16

21 STATEMENT OF CHANGE IN NET POSITION - PROPRIETARY FUND SELF-INSURANCE FUND For the Year Ended June 30, 2013 Operating revenues: Self-insurance premiums $ 1,466,339 Operating expenses: Books and supplies 23,929 Contract services 1,439,795 Total operating expenses 1,463,724 Operating income 2,615 Non-operating revenues: Interest income 89,056 Operating transfers in 75,000 Total non-operating revenues 164,056 Change in net position 166,671 Net position, July 1, ,530,171 Net position, June 30, 2013 $ 6,696,842 See accompanying notes to financial statements. 17

22 STATEMENT OF CASH FLOWS - PROPRIETARY FUND SELF-INSURANCE FUND For the Year Ended June 30, 2013 Cash flows from operating activities: Cash received from self-insurance premiums $ 1,318,529 Cash paid for employee benefits (1,315,158) Cash paid to suppliers (13,998) Net cash used in operating activities (10,627) Cash flows provided by investing activities: Interest income received 89,056 Cash flows provided by non-capital financing activities: Operating transfers from General Fund 75,000 Increase in cash and investments 153,429 Cash and investments, July 1, ,830,046 Cash and investments, June 30, 2013 $ 8,983,475 Reconciliation of operating income to net cash used in operating activities: Operating income $ 2,615 Adjustments to reconcile operating income to net cash used in operating activities: Increase in: Receivables (11,640) Due from other funds (136,170) Unpaid claims and claim adjustment expenses 124,637 Accounts payable 9,931 Total adjustments (13,242) Net cash used in operating activities $ (10,627) See accompanying notes to financial statements. 18

23 STATEMENT OF FIDUCIARY NET POSITION TRUST AND AGENCY FUNDS June 30, 2013 Agency Trust Fund Funds Student Scholarship Body Total ASSETS Cash on hand and in banks (Note 2) $ 175,208 $ 910,287 $ 1,085,495 LIABILITIES Due to student groups - 910, ,287 NET POSITION Restricted (Note 7) $ 175,208 $ - $ 175,208 See accompanying notes to financial statements. 19

24 STATEMENT OF CHANGE IN FIDUCIARY NET POSITION TRUST FUND For the Year Ended June 30, 2013 Scholarship Donations $ 65,781 Scholarships (60,116) Change in net position 5,665 Net position, July 1, ,543 Net position, June 30, 2013 $ 175,208 See accompanying notes to financial statements. 20

25 NOTES TO BASIC FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Campbell Union High School District (the "District") accounts for its financial transactions in accordance with the policies and procedures of the California Department of Education's California School Accounting Manual. The accounting policies of the District conform to accounting principles generally accepted in the United States of America as prescribed by the Governmental Accounting Standards Board. The following is a summary of the more significant policies: Reporting Entity The Board of Trustees is the level of government which has governance responsibilities over all activities related to public school education in the Campbell Union High School District. The Board is not included in any other governmental "reporting entity" as defined by the Governmental Accounting Standards Board since Board members have decision-making authority, the power to designate management, the responsibility to significantly influence operations and primary accountability for fiscal matters. The District receives funding from local, state and federal governmental sources and must comply with all the requirements of these funding source entities. Basis of Presentation - Financial Statements The basic financial statements include a Management's Discussion and Analysis (MD & A) section providing an analysis of the District's overall financial position and results of operations, financial statements prepared using full accrual accounting for all of the District's activities, including infrastructure, and a focus on the major funds. Basis of Presentation - Government-Wide Financial Statements The Statement of Net Position and the Statement of Activities display information about the reporting government as a whole. Fiduciary funds are not included in the government-wide financial statements. Fiduciary funds are reported only in the Statement of Fiduciary Net Position and the Statement of Change in Fiduciary Net Position at the fund financial statement level. The Statement of Net Position and the Statement of Activities are prepared using the economic resources measurement focus and the accrual basis of accounting. Revenues, expenses, gains, losses, assets and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets and liabilities resulting from nonexchange transactions are recognized in accordance with the requirements of Governmental Accounting Standards Board Codification Section (GASB Cod. Sec.) N Program revenues: Program revenues included in the Statement of Activities derive directly from the program itself or from parties outside the District's taxpayers or citizenry, as a whole; program revenues reduce the cost of the function to be financed from the District's general revenues. 21

26 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Presentation - Government-Wide Financial Statements (Continued) Allocation of indirect expenses: The District reports all direct expenses by function in the Statement of Activities. Direct expenses are those that are clearly identifiable with a function. Depreciation expense is specifically identified by function and is included in the direct expense of the respective function. Interest on general long-term liabilities is considered an indirect expense and is reported separately on the Statement of Activities. Basis of Presentation - Fund Accounting The accounts of the District are organized on the basis of funds or account groups, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. District resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. A - Major Funds 1 - General Fund: The General Fund is the general operating fund of the District and accounts for all revenues and expenditures of the District not encompassed within other funds. All general tax revenues and other receipts that are not allocated by law or contractual agreement to some other fund are accounted for in this fund. General operating expenditures and capital improvement costs that are not paid through other funds are paid from the General Fund. For financial reporting purposes, the Special Reserve for Other than Capital Outlay Fund is included with the General Fund. 2 - Building Fund: The Building Fund is used to account for resources used for the acquisition of capital facilities by the District. 3 - Special Reserve for Capital Outlay Projects Fund: The Special Reserve for Capital Outlay Projects Fund is to provide for the accumulation of general fund moneys to be used for capital outlay purposes. 4 - Bond Interest and Redemption Fund: The Bond Interest and Redemption Fund is used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related costs. 22

27 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Presentation - Fund Accounting (Continued) B - Other Funds 1 - Special Revenue Funds: Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specific purposes. This includes the Adult Education, Cafeteria, and Deferred Maintenance Funds. 2 - Capital Projects Funds: The Capital Projects Funds are used to account for resources used for the acquisition or construction of capital facilities and equipment by the District. This includes the Capital Facilities, County School Facilities, and Special Reserve Funds. 4 - Self-Insurance Fund: The Self-Insurance Fund is an internal service fund which is used to account for the District's self-insured property and liability claims, workers' compensation claims and dental insurance claims. 5 - Trust Fund: The Scholarship Fund is a trust fund which is used to account for scholarship monies, for which the District acts as trustee. 6 - Agency Funds: Basis of Accounting The Agency Funds are used to account for the assets of others for which the District acts as an agent. The District maintains five agency funds, one for each school's student body organization. Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the basic financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. Accrual Governmental activities in the government-wide financial statements, the proprietary and fiduciary fund financial statements are presented on the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred. 23

28 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Modified Accrual The governmental funds financial statements are presented on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; i.e., both measurable and available. "Available" means collectible within the current period or within 60 days after year end. Expenditures are generally recognized under the modified accrual basis of accounting when the related liability is incurred. The exception to this general rule is that principal and interest on general obligation long-term liabilities, if any, is recognized when due. Budgets and Budgetary Accounting By state law, the Board of Trustees must adopt a final budget by July 1. A public hearing is conducted to receive comments prior to adoption. The Board of Trustees complied with these requirements. Receivables Receivables are made up principally of amounts due from the State of California for Revenue Limit funding and Categorical programs. The District has determined that no allowance for doubtful accounts was needed as of June 30, Stores Inventory Inventories in the General and Cafeteria Funds consist mainly of consumable supplies, and are valued at average cost. Inventories are recorded as expenditures at the time individual inventory items are transferred from the warehouse to the schools and offices. Capital Assets Capital assets purchased or acquired, with an original cost of $5,000 or more, are recorded at historical cost or estimated historical cost. Contributed assets are reported at fair market value as of the date received. Additions, improvements and other capital outlay that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Capital assets are depreciated using the straight-line method over 4-30 years depending on asset types. Compensated Absences Compensated absences benefits in the amount of $246,194 are recorded as a liability of the District. The liability is for the earned but unused benefits. Accumulated Sick Leave Sick leave benefits are not recognized as liabilities of the District. The District's policy is to record sick leave as an operating expenditure in the period taken since such benefits do not vest nor is payment probable; however, unused sick leave is added to the creditable service period for calculation of retirement benefits for certain STRS and PERS employees when the employee retires. 24

29 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Unearned Revenue Revenue from federal, state and local special projects and programs is recognized when qualified expenditures have been incurred. Funds received but not earned are recorded as unearned revenue until earned. Restricted Net Position Restrictions of the ending net position indicate the portions of net position not appropriable for expenditure or amounts legally segregated for a specific future use. The restriction for unspent categorical program revenues represents the portion of net position restricted to specific program expenditures. The restriction for special revenues represents the portion of net position restricted for special purposes. The restriction for capital projects represents the portion of net position restricted for capital outlay. The restriction for debt retirement represents the portion of net position available for the retirement of long-term liabilities. The restriction for self-insurance represents the portion of net position restricted for the payment of insurance. The restriction for scholarships represents the portion of net position restricted for the payment of scholarships. It is the District's policy to use restricted net position first, when allowable expenditures are incurred. Fund Balance Classifications Governmental Accounting Standards Board Codification Sections 1300 and 1800, Fund Balance Reporting and Governmental Fund Type Definitions (GASB Cod. Sec and 1800) implements a five-tier fund balance classification hierarchy that depicts the extent to which a government is bound by spending constraints imposed on the use of its resources. The five classifications, discussed in more detail below, are nonspendable, restricted, committed, assigned and unassigned. A - Nonspendable Fund Balance: The nonspendable fund balance classification reflects amounts that are not in spendable form, such as revolving fund cash, prepaid expenditures and stores inventory. B - Restricted Fund Balance: The restricted fund balance classification reflects amounts subject to externally imposed and legally enforceable constraints. Such constraints may be imposed by creditors, grantors, contributors, or laws or regulations of other governments, or may be imposed by law through constitutional provisions or enabling legislation. These are the same restrictions used to determine restricted net position as reported in the government-wide and fiduciary trust fund statements. 25

30 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fund Balance Classifications (Continued) C - Committed Fund Balance: The committed fund balance classification reflects amounts subject to internal constraints self-imposed by formal action of the Board of Trustees. The constraints giving rise to committed fund balance must be imposed no later than the end of the reporting period. The actual amounts may be determined subsequent to that date but prior to the issuance of the financial statements. Formal action by the Board of Trustees is required to remove any commitment from any fund balance. At June 30, 2013, the District had no committed fund balances. D - Assigned Fund Balance: The assigned fund balance classification reflects amounts that the District's Board of Trustees has approved to be used for specific purposes, based on the District's intent related to those specific purposes. The Board of Trustees can designate personnel with the authority to assign fund balances, however, as of June 30, 2013, no such designation has occurred. E - Unassigned Fund Balance: In the General Fund only, the unassigned fund balance classification reflects the residual balance that has not been assigned to other funds and that is not restricted, committed, or assigned to specific purposes. In any fund other than the General Fund, a positive unassigned fund balance is never reported because amounts in any other fund are assumed to have been assigned, at least, to the purpose of that fund. However, deficits in any fund, including the General Fund that cannot be eliminated by reducing or eliminating amounts assigned to other purposes are reported as negative unassigned fund balance. Fund Balance Policy The District has an expenditure policy relating to fund balances. For purposes of fund balance classifications, expenditures are to be spent from restricted fund balances first, followed in order by committed fund balances (if any), assigned fund balances and lastly unassigned fund balances. While GASB Cod. Sec and 1800 do not require districts to establish a minimum fund balance policy or a stabilization arrangement, GASB Cod. Sec and 1800 do require the disclosure of a minimum fund balance policy and stabilization arrangements, if they have been adopted by the Board of Trustees. At June 30, 2013, the District has not established a minimum fund balance policy nor has it established a stabilization arrangement. 26

31 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property Taxes Secured property taxes are attached as an enforceable lien on property as of March 1. Taxes are due in two installments on or before December 10 and April 10. Unsecured property taxes are due in one installment on or before August 31. The County of Santa Clara bills and collects taxes for the District. Tax revenues are recognized by the District when received. Encumbrances Encumbrance accounting is used in all budgeted funds to reserve portions of applicable appropriations for which commitments have been made. Encumbrances are recorded for purchase orders, contracts and other commitments when they are written. All encumbrances are liquidated as of June 30. Estimates The preparation of basic financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Accordingly, actual results may differ from those estimates. Eliminations and Reclassifications In the process of aggregating data for the Statement of Net Position and the Statement of Activities, some amounts reported as interfund activity and balances in the funds were eliminated or reclassified. Interfund receivables and payables were eliminated to minimize the "grossing up" effect on assets and liabilities within the governmental activities column. New Accounting Pronouncements In November 2010, the GASB issued Statement No. 61, The Financial Reporting Entity: Omnibus. The Statement improves financial reporting for a governmental financial reporting entity. The requirements of Statement No. 14, The Financial Reporting Entity, and the related financial reporting requirements of Statement No. 34, Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments, were amended to better meet user needs and to address reporting entity issues. This statement was adopted for the District s fiscal year ended June 30, 2013 with no material impact on the District's financial statements. 27

32 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) New Accounting Pronouncements (Continued) In December 2010, the GASB issued Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. The Statement incorporates into the GASB s authoritative literature certain accounting and financial reporting guidance that is included in the following pronouncements issued on or before November 30, 1989, which does not conflict with or contradict GASB pronouncements: (1) Financial Accounting Standards Board (FASB) Statements and Interpretations; (2) Accounting Principles Board Opinions; and (3) Accounting Research Bulletins of the American Institute of Certified Public Accountants (AICPA) Committee on Accounting Procedure. This statement was adopted for the District s fiscal year ended June 30, 2013 with no material impact on the District's financial statements. In June 2011, the GASB issued Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. This Statement provides a new statement of net position format to report all assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position (which is the net residual amount of the other elements). This Statement requires that deferred outflows of resources and deferred inflows of resources be reported separately from assets and liabilities. This Statement also amends certain provisions of GASB Statement No. 34, Basic Financial Statement and Management s Discussion and Analysis for State and Local Governments, and related pronouncements to reflect the residual measure in the statement of financial position as net position, rather than net assets. This statement was adopted for the District s fiscal year ended June 30, 2013 with no material impact on financial statements of the District. In March 2012, the GASB issued Statement No. 65, Items Previously Reported as Assets and Liabilities. This statement establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. This Statement also provides other financial reporting guidance related to the impact of the financial statement elements deferred outflows of resources and deferred inflows of resources, such as changes in the determination of the major fund calculations and limiting the use of the term deferred in financial statement presentations. The provisions of this Statement are effective for the District s fiscal year ended June 30, 2014, with earlier application being encouraged. This statement was adopted for the District s fiscal year ended June 30, 2013, and the District recorded a deferred outflow due to the loss on refunding debt of $1,201,

33 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) New Accounting Pronouncements (Continued) In March 2012, the GASB issued Statement No. 66, Technical Corrections 2013, an amendment of GASB Statements No. 10 and No. 61. The objective of this Statement is to improve accounting and financial reporting for a governmental financial reporting entity by resolving conflicting guidance that resulted from the issuance of two pronouncements, Statements No. 64, Fund Balance Reporting and Governmental Fund Type Definitions, and No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre- November 30, 1989 FASB and AICPA Pronouncements. This Statement amends Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues, by removing the provision that limits fundbased reporting of an entity s risk financing activities to the general fund and the internal service fund type. As a result, Districts should base their decisions about fund type classification on the nature of the activity to be reported, as required in Statement No. 54 and Statement No. 34, Basic Financial Statements-and Management s Discussion and Analysis-for State and Local Governments. This Statement also amends Statement No. 62 by modifying the specific guidance on accounting for (1) operating lease payments that vary from a straight line basis, (2) the difference between the initial investment (purchase price) and the principal amount of a purchased loan or group of loans, and (3) servicing fees related to mortgage loans that are sold when the stated service fee rate differs significantly from a current (normal) servicing fee rate. These changes clarify how to apply Statement No. 13, Accounting for Operating Leases with Scheduled Rent Increases, and result in guidance that is consistent with the requirements in Statement No. 48, Sales and Pledges of Receivables and Future Revenues and Intra-Entity Transfers of Assets and Future Revenues, respectively. The provisions of this statement are effective for the District s fiscal year ended June 30, 2014, with earlier application encouraged. Management has not determined what impact, if any, this statement will have on the District s financial statements. In June 2012, the GASB issued Statement No. 67, Financial Reporting for Pension Plans. This Statement replaces the requirements of Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans and Statement No. 50 as they relate to pension plans that are administered through trusts or similar arrangements meeting certain criteria. The Statement builds upon the existing framework for financial reports of defined benefit pension plans, which includes a statement of fiduciary net position (the amount held in a trust for paying retirement benefits) and a statement of changes in fiduciary net position. Statement No. 67 enhances note disclosures and RSI for both defined benefit and defined contribution pension plans. Statement No. 67 also requires the presentation of new information about annual money-weighted rates of return in the notes to the financial statements and in 10-year RSI schedules. This Statement is effective for the District s financial period beginning June 30, Management has not determined what impact, if any, this statement might have on the District's financial statements. 29

34 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) New Accounting Pronouncements (Continued) In June 2012, the GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions. This statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers and Statement No. 50, Pension Disclosures, as they relate to governments that provide pensions through pension plans administered as trusts or similar arrangements that meet certain criteria. Statement No. 68 requires governments providing defined benefit pensions to recognize their long-term obligation for pension benefits as a liability for the first time, and to more comprehensively and comparably measure the annual costs of pension benefits. The Statement also enhances accountability and transparency through revised and new note disclosures and required supplementary information (RSI). This Statement is effective for the District s financial period beginning June 30, Management has not determined what impact, if any, this statement might have on the District's financial statements. 2. CASH AND INVESTMENTS Cash and investments at June 30, 2013 consisted of the following: Governmental Activities Governmental Proprietary Fiduciary Funds Fund Total Activities Pooled Funds: Cash in County Treasury $ 65,117,732 $ 8,825,882 $ 73,943,614 $ - Cash awaiting deposit 59,097-59,097 - Deposits: Cash on hand and in banks - 77,593 77,593 1,085,495 Cash in revolving fund 5,000-5,000 - Investments: Cash with Fiscal Agent - 80,000 80,000 - Total $ 65,181,829 $ 8,983,475 $ 74,165,304 $ 1,085,495 30

35 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 2. CASH AND INVESTMENTS (Continued) Pooled Funds In accordance with Education Code Section 41001, the District maintains substantially all of its cash in the Santa Clara County Treasury. The County pools and invests the cash. These pooled funds are carried at cost which approximates fair value. Interest earned is deposited quarterly into participating funds. Any investment losses are proportionately shared by all funds in the pool. Because the District's deposits are maintained in a recognized pooled investment fund under the care of a third party and the District's share of the pool does not consist of specific, identifiable investment securities owned by the District, no disclosure of the individual deposits and investments or related custodial credit risk classifications is required. In accordance with applicable state laws, the Santa Clara County Treasurer may invest in derivative securities. However, at June 30, 2013, the Santa Clara County Treasurer has indicated that the Treasurer's pooled investment fund contained no derivatives or other investments with similar risk profiles. Deposits - Custodial Credit Risk The District limits custodial credit risk by ensuring uninsured balances are collateralized by the respective financial institution. Cash balances held in banks are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) and are collateralized by the respective financial institution. At June 30, 2013, the carrying amount of the District's accounts were $1,168,088, and the bank balances were $1,300,516. The total uninsured bank balances at June 30, 2013 were $930,635. Cash with Fiscal Agent Cash with Fiscal Agent in the Self-Insurance Fund represents a security deposit held by a third party. Interest Rate Risk The District does not have a formal investment policy that limits cash and investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. At June 30, 2013, the District had no significant interest rate risk related to cash and investments held. Credit Risk The District does not have a formal investment policy that limits its investment choices other than the limitations of state law. 31

36 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 2. CASH AND INVESTMENTS (Continued) Concentration of Credit Risk The District does not place limits on the amount it may invest in any one issuer. At June 30, 2013, the District had no concentration of credit risk. 3. INTERFUND TRANSACTIONS Interfund Activity Transactions between funds of the District are recorded as interfund transfers. The unpaid balances at year end, as a result of such transactions, are shown as due to and due from other funds. Interfund Receivables/Payables Individual fund interfund receivable and payable balances at June 30, 2013 were as follows: Interfund Interfund Fund Receivables Payables Major Fund: General $ - $ 137,170 Proprietary Fund: Self-Insurance 137,170 - Interfund Transfers Interfund transfers for the fiscal year were as follows: $ 137,170 $ 137,170 Transfer from the General Fund to the Self-Insurance Fund to meet reserve requirement. $ 75,000 Transfer from the General Fund to the Deferred Maintenance Fund for deferred maintenance projects. 333,533 $ 408,533 32

37 4. CAPITAL ASSETS NOTES TO BASIC FINANCIAL STATEMENTS (Continued) A schedule of changes in capital assets for the year ended June 30, 2013 is shown below: Balance Balance July 1, June 30, 2012 Additions Deductions Transfers 2013 Non-depreciable: Land $ 4,037,160 $ - $ - $ - $ 4,037,160 Work-in-process 20,049,025 18,631,186 - (8,818,002) 29,862,209 Depreciable: Improvement of sites 31,900, ,512 32,442,251 Buildings 204,504, ,785, ,290,301 Equipment 10,007,337-75, ,003 10,422,416 Totals, at cost 270,499,075 18,631,186 75, ,054,337 Less accumulated depreciation: Improvement of sites (8,673,737) (1,488,187) - - (10,161,924) Buildings (47,346,483) (4,353,285) - - (51,699,768) Equipment (6,036,014) (1,100,348) (64,195) - (7,072,167) Total accumulated depreciation (62,056,234) (6,941,820) (64,195) - (68,933,859) Capital assets, net $ 208,442,841 $ 11,689,366 $ 11,729 $ - $ 220,120,478 Depreciation expense was charged to governmental activities as follows: Instruction $ 6,595,652 All other general administration 85,815 Plant services 260, SELF-INSURANCE Total depreciation expense $ 6,941,820 The District is self-insured for property and liability, workers' compensation and dental claims. The District has established a separate Self-Insurance Fund for accounting and reporting purposes. For the year ended June 30, 2013, the District provides coverage up to a maximum of $350,000 for each workers' compensation claim, $60,000 for each property claim and $25,000 for each general liability claim. The District purchases commercial insurance for claims in excess of coverage provided by the Fund and for all other risks of loss. Settled claims have not exceeded this commercial coverage in any of the past three fiscal years. The claims liability of $2,331,455 at June 30, 2013 was actuarially determined based on the requirements of Governmental Accounting Standards Board Cod. Sec C This liability was reported at present value using an expected future investment yield assumption of 2.0% and 5.0% for the workers' compensation and property and liability programs, respectively. 33

38 5. SELF-INSURANCE (Continued) NOTES TO BASIC FINANCIAL STATEMENTS (Continued) Changes in the District's claims liability amount for the year ended June 30, 2013 was as follows: Claims Claims Liability Incurred Claims Liability July 1 Claims Payments June /2012 $ 2,120,818 $ 1,246,520 $ 1,160,520 $ 2,206, /2013 $ 2,206,818 $ 1,398,143 $ 1,273,506 $ 2,331, LONG-TERM LIABILITIES General Obligation Bonds On August 1, 2004 the District issued a Series 2004 General Obligation Bond, Series D totaling $20,000,000. Bond proceeds are being spent on the repairs of existing schools and for alterations or acquisitions of school facilities. Repayment of the bonds is made from special parcel (valorem) tax revenues levied in connection with this bond issue. During the year ended June 30, 2013 a portion of the Series 2004 Bonds were advance refunded, and the refunded bonds were considered defeased. The balance of the refunded bonds was $13,535,000 as of June 30, The Bonds bear interest at rates ranging from 4.25% to 5.00% and are scheduled to mature through August 2029, as follows: Year Ending June 30, Principal Interest Total 2014 $ 475,000 $ 79,688 $ 554, , , , , , , , , , , , , , , , , ,250 1,518, ,880, ,350 2,011,350 $ 3,565,000 $ 2,057,098 $ 5,622,098 34

39 6. LONG-TERM LIABILITIES (Continued) NOTES TO BASIC FINANCIAL STATEMENTS (Continued) General Obligation Bonds (Continued) On April 1, 2005 the District issued a Series 2005 General Obligation Refunding Bond, totaling $20,605,000. Bond proceeds are being spent on the repairs of existing schools and for alterations or acquisitions of school facilities. Repayment of the bonds is made from special parcel (valorem) tax revenues levied in connection with this bond issue. During the year ended June 30, 2013 a portion of the Series 2005 Refunding Bonds were advance refunded, and the refunded bonds were considered defeased. The balance of the refunded bonds was $4,025,000 as of June 30, The bonds bear interest at rates ranging from 4.0% to 4.7% and are scheduled to mature through August 2029, as follows: Year Ending June 30, Principal Interest Total 2014 $ 690,000 $ 547,809 $ 1,237, , ,059 1,232, , ,871 1,240, , ,071 1,240, , ,971 1,242, ,435,000 1,557,846 5,992, ,835, ,679 4,511, ,000 39, ,425 $ 12,855,000 $ 4,702,731 $ 17,557,731 On April 10, 2007 the District issued a Series 2006 General Obligation Bond, Series A totaling $25,000,000. Bond proceeds are being spent on renovating older classrooms, improving access for disabled students and teachers, modernizing libraries and homework centers, enhancing computer learning technology and improving facilities. Repayment of the bonds is made from special parcel (valorem) tax revenues levied in connection with this bond issue. The bonds bear interest at rates ranging from 4.12% to 5.00% and are scheduled to mature through August 2031, as follows: Year Ending June 30, Principal Interest Total 2014 $ 55,000 $ 892,119 $ 947, , ,919 1,399, , ,244 1,563, , ,706 1,678, , ,006 1,688, ,990,000 3,433,076 8,423, ,115,000 2,280,325 8,395, ,910, ,975 6,595,975 $ 20,000,000 $ 10,691,370 $ 30,691,370 35

40 6. LONG-TERM LIABILITIES (Continued) NOTES TO BASIC FINANCIAL STATEMENTS (Continued) General Obligation Bonds (Continued) On March 20, 2008, the District issued a Series 2006 General Obligation Bonds, Series B totaling $30,000,000. Bond proceeds are being spent on renovating older classrooms, improving access for disabled students and teachers, modernizing libraries and homework centers, enhancing computer learning technology and improving facilities. Repayment of the bonds is made from special parcel (valorem) tax revenues levied in connection with this bond issue. The bonds bear interest at rates ranging from 4.13% to 5.25% and are scheduled to mature through August 2038, as follows: Year Ending June 30, Principal Interest Total 2014 $ 580,000 $ 1,314,483 $ 1,894, ,000 1,285,483 1,895, ,000 1,254,984 1,894, ,000 1,229,383 1,904, ,000 1,195,634 1,900, ,025,000 5,479,981 9,504, ,975,000 4,557,289 9,532, ,245,000 3,322,084 9,567, ,900,000 1,673,663 9,573, ,820,000 91,000 1,911,000 $ 28,175,000 $ 21,403,984 $ 49,578,984 On May 20, 2009, the District issued a Series 2009 General Obligation Refunding Bonds, in the aggregate principal amount of $29,240,000, for the purpose of refunding an outstanding issue of General Obligation Bonds Election 1999, Series Repayment of the bonds is made from special parcel (valorem) tax revenues levied in connection with this bond issue. The bonds bear interest at rates ranging from 3.50% to 5.25% and are scheduled to mature through August 2030, as follows: Year Ending June 30, Principal Interest Total 2014 $ 980,000 $ 1,268,988 $ 2,248, ,020,000 1,228,988 2,248, ,060,000 1,182,088 2,242, ,115,000 1,127,713 2,242, ,175,000 1,076,338 2,251, ,630,000 4,616,027 11,246, ,495,000 2,724,720 11,219, ,250, ,500 6,728,500 $ 26,725,000 $ 13,703,362 $ 40,428,362 36

41 6. LONG-TERM LIABILITIES (Continued) NOTES TO BASIC FINANCIAL STATEMENTS (Continued) General Obligation Bonds (Continued) On December 9, 2010, the District issued an Election 2006, Series C General Obligation Bonds, in the aggregate principal amount of $35,000,000, for the purpose of financing the addition and modernization of school facilities. The bonds bear interest at rates ranging from 3.00% to 5.00% and are scheduled to mature through August 2040, as follows: Year Ending June 30, Principal Interest Total 2014 $ 605,000 $ 1,818,513 $ 2,423, ,000 1,797,038 2,417, ,000 1,771,738 2,416, ,000 1,744,600 2,414, ,000 1,712,863 2,412, ,060,000 7,989,313 12,049, ,190,000 6,833,063 12,023, ,680,000 5,295,125 11,900, ,715,000 3,185,931 11,900, ,530, ,300 7,107,300 $ 34,415,000 $ 32,725,484 $ 67,066,290 On January 1, 2012, the District issued 2012 Refunding General Obligation Bonds, in the aggregate principal amount of $14,650,000, for the purpose of refunding the outstanding principal amount of its General Obligation Bonds Election 1999, Series The bonds bear interest at rates ranging from 3.00% to 5.00% and are scheduled to mature through August 2032, as follows: Year Ending June 30, Principal Interest Total 2014 $ - $ 661,250 $ 661, , , , , , , , , ,750 1,254, ,455,000 2,802,550 6,257, ,295,000 1,930,625 6,225, ,490, ,500 6,202,500 $ 14,085,000 $ 8,725,825 $ 22,810,825 37

42 6. LONG-TERM LIABILITIES (Continued) NOTES TO BASIC FINANCIAL STATEMENTS (Continued) General Obligation Bonds (Continued) On May 23, 2013, the District issued 2013 Refunding General Obligation Bonds, in the aggregate principal amount of $16,235,000, for the purpose of refunding portions of the outstanding principal amount of the Election of 2004 General Obligation Bonds, Series D and the 2005 General Obligation Refunding Bonds. The bonds bear interest at rates ranging from 2.00% to 5.00% and are scheduled to mature through August 2034, as follows: Year Ending June 30, Principal Interest Total 2014 $ 260,000 $ 509,313 $ 769, , , , , , , , ,800 1,085, ,260,000 3,325,300 6,585, ,040,000 2,289,600 7,329, ,970,000 1,232,250 6,202, ,350, ,000 2,469,000 $ 16,235,000 $ 10,419,963 $ 26,654,963 Although the 2013 refundings resulted in the recognition of an accounting loss of $1,201,495 for the year ended June 30, 2013, the District in effect decreased its aggregate debt service payments by $1.8 million over the next twenty-one years, and the District obtained an economic gain of $1.7 million. Calculation of the difference in cash flow requirements and economic loss are as follows: Old debt service cash flows $ 28,485,254 New debt service cash flows 26,654,963 Cash flow difference $ 1,830,291 Present value of old debt cash flows $ 21,878,546 Present value of new debt cash flows 20,162,436 Economic gain $ 1,716,110 38

43 6. LONG-TERM LIABILITIES (Continued) Capitalized Lease Obligations NOTES TO BASIC FINANCIAL STATEMENTS (Continued) On August 1, 2011 the District entered into a capitalized lease agreement totaling $13,000,000 to finance a district-wide solar project. As of June 30, 2012, the District had expended approximately $6,441,000 on solar projects, all of which is categorized as work-in-process until the project is completed (Note 4). The capitalized lease agreement requires semi-annual principal and interest payments through August 2021, as follows: Year Ending June 30, Principal Interest Total 2014 $ 1,165,688 $ 386,284 $ 1,551, ,206, ,128 1,551, ,249, ,519 1,551, ,293, ,405 1,551, ,339, ,734 1,551, ,070, ,112 5,431,902 Schedule of Changes in Long-Term Liabilities $ 11,325,579 $ 1,866,182 $ 13,191,761 A schedule of changes in long-term liabilities for the year ended June 30, 2013 is as follows: Balance Balance Amounts July 1, June 30, Due Within 2012 Additions Deductions 2013 One Year General Obligation Bonds $ 161,195,000 $ 16,235,000 $ 21,375,000 $ 156,055,000 $ 3,645,000 Unamortized Bond Premiums 2,729,972 2,817, ,779 5,285,413 - Capitalized Lease Obligations 12,451,514-1,125,935 11,325,579 1,165,688 Compensated absences 278,769-32, ,194 - Other postemployment benefits (Note 9) 1,640, , ,578 2,259,687 - $ 178,295,645 $ 19,881,095 $ 23,004,867 $ 175,171,873 $ 4,810,688 Payments for the General Obligation Bonds are made from the Bond Interest and Redemption Fund. Payments on the capitalized lease obligations are made from the Special Reserve Fund. Payments for the compensated absences and other postemployment benefits are made from the fund that the respective compensation was charged to. 39

44 7. NET POSITION / FUND BALANCES NOTES TO BASIC FINANCIAL STATEMENTS (Continued) The restricted net position as of June 30, 2013 consist of the following: Governmental Activities Fiduciary Activities Restricted for: Unspent categorical program revenues $ 2,275,418 $ - Special revenues 3,712,249 - Capital projects 33,548,261 - Debt retirement 7,418,898 - Self-insurance 6,696,842 - Scholarships - 175,208 $ 53,651,668 $ 175,208 Fund balances, by category, at June 30, 2013 consisted of the following: Bond Special Interest and All General Building Reserve Redemption Non-Major Fund Fund Fund Fund Funds Total Nonspendable: Revolving cash fund $ 4,000 $ - $ - $ - $ 1,000 $ 5,000 Prepaid expenditures 241, ,752 Stores inventory 34, ,340 Subtotal nonspendable 280, , ,092 Restricted: Unspent categorical revenues 2,275, ,275,418 Capital projects - 16,821,720 9,121,816-7,604,725 33,548,261 Special programs ,711,249 3,711,249 Debt service ,418,898-7,418,898 Subtotal restricted 2,275,418 16,821,720 9,121,816 7,418,898 11,315,974 46,953,826 Assigned: Parcel taxes 6,777, ,777,270 Loss of State funding 7,298, ,298,583 Restoration and expansion 1,443, ,443,762 Subtotal assigned 15,519, ,519,615 Unassigned: Designated for economic uncertainty 2,118, ,118,074 Total fund balances $ 20,193,199 $ 16,821,720 $ 9,121,816 $ 7,418,898 $ 11,316,974 $ 64,872,607 40

45 8. EMPLOYEE RETIREMENT SYSTEMS NOTES TO BASIC FINANCIAL STATEMENTS (Continued) Qualified employees are covered under multiple-employer defined benefit pension plans maintained by agencies of the State of California. Certificated employees are members of the State Teachers' Retirement System (STRS), and classified employees are members of the California Public Employees' Retirement System (CalPERS). Plan Description and Provisions California Public Employees' Retirement System (CalPERS) Plan Description The District contributes to the School Employer Pool under the California Public Employees' Retirement System (CalPERS), a cost-sharing multiple-employer public employee retirement system defined benefit pension plan administered by CalPERS. The plan provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefit provisions are established by state statutes, as legislatively amended, within the Public Employees' Retirement Law. CalPERS issues a separate comprehensive annual financial report that includes financial statements and required supplementary information. Copies of the CalPERS annual financial report may be obtained from the CalPERS Executive Office, 400 Q Street, Sacramento, California Funding Policy Active plan members are required to contribute 7.0% of their salary, and the District is required to contribute an actuarially determined rate. The actuarial methods and assumptions used for determining the rate are those adopted by the CalPERS Board of Administration. The required employer contribution rate for fiscal year was % of annual payroll. The contribution requirements of the plan members are established by state statute. The District's contributions to CalPERS for the fiscal years ending June 30, 2011, 2012 and 2013 were $928,026, $936,309 and $977,087, respectively, and equal 100% of the required contributions for each year. State Teachers' Retirement System (STRS) Plan Description The District contributes to the State Teachers' Retirement System (STRS), a costsharing multiple-employer public employee retirement system defined benefit pension plan administered by STRS. The plan provides retirement, disability and survivor benefits to beneficiaries. Benefit provisions are established by state statutes, as legislatively amended, within the State Teachers' Retirement Law. STRS issues a separate comprehensive annual financial report that includes financial statements and required supplementary information. Copies of the STRS annual financial report may be obtained from the STRS Executive Office, 100 Waterfront Place, West Sacramento, California

46 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 8. EMPLOYEE RETIREMENT SYSTEMS (Continued) Plan Description and Provisions (Continued) State Teachers' Retirement System (STRS) (Continued) Funding Policy Active plan members are required to contribute 8.00% of their salary. The required employer contribution rate for fiscal year was 8.25% of annual payroll. The contribution requirements of the plan members are established by state statute. The District's contributions to STRS for the fiscal years ending June 30, 2011, 2012 and 2013 were $2,638,293, $2,650,007 and $2,489,512, respectively, and equal 100% of the required contributions for each year. 9. OTHER POSTEMPLOYMENT BENEFITS The District's annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Cod. Sec. P The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the District's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the District's net OPEB obligation: Annual required contribution $ 858,123 Interest on net OPEB obligation 65,616 Adjustment to annual required contribution (94,864) Annual OPEB cost (expense) 828,875 Contributions made (209,578) Increase in net OPEB obligation 619,297 Net OPEB obligation - beginning of year 1,640,390 Net OPEB obligation - end of year $ 2,259,687 42

47 NOTES TO BASIC FINANCIAL STATEMENTS (Continued) 9. OTHER POSTEMPLOYMENT BENEFITS (Continued) The District's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the year ended June 30, 2013 and preceding two years were as follows: Percentage of Annual Fiscal Year Annual OPEB Cost Net OPEB Ended OPEB Cost Contributed Obligation June 30, 2011 $ 639, % $ 1,171,547 June 30, 2012 $ 661, % $ 1,640,390 June 30, 2013 $ 828, % $ 2,259,687 As of July 1, 2012, the most recent actuarial valuation date, the plan was unfunded. The actuarial accrued liability for benefits was $7,366,467, and the actuarial value of assets was zero, resulting in an unfunded actuarial accrued liability (UAAL) of $7,366,467. The covered payroll (annual payroll of active employees covered by the Plan) was $41,090,109, and the ratio of the UAAL to the covered payroll was 18 percent. The OPEB plan is currently operated as a pay-as-you-go plan. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, shown as Required Supplementary Information, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the July 1, 2012 actuarial valuation, the projected unit cost method was used. The actuarial assumptions included a 4.0 percent investment rate (net of administrative expenses), which is a blended rate of the expected long-term investment returns on plan assets and on the employer's own investments calculated based on the funded level of the plan on the valuation date, and an annual healthcare cost trend rate of 8 percent. The actuarial value of assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a five-year period. The UAAL is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2013, was 29 years. 43

48 10. JOINT POWERS AGREEMENTS Metropolitan Education District NOTES TO BASIC FINANCIAL STATEMENTS (Continued) The District participates in a Joint Powers Authority with the Metropolitan Education District ("MetroEd") which administers and operates the Regional Occupational, Vocational Education and Adult Education programs for member school districts. Each member school district has a representative on the Governing Board which is responsible for adopting an annual budget and overall management of MetroEd's activities. MetroEd receives most of its annual operating funds from each of the participating school district's Adult Education and General Funds. Condensed financial information of MetroEd for the year ended June 30, 2012 (the latest information available) is as follows: Total assets $ 51,758,308 Total liabilities $ 4,399,838 Total net assets $ 47,358,470 Total revenue $ 19,998,259 Total expenses $ 20,543,744 Change in net assets $ (545,485) The District's share of year-end assets, liabilities or fund equity has not been calculated by MetroEd. School Project for Utility Rate Reduction The District is a member with approximately 150 school districts, community college districts and county offices of education in a Joint Power Authority, School Project for Utility Rate Reduction (SPURR). SPURR was established in 1989 to provide for the direct purchase of gas, electricity, and other utility services. SPURR also provides advisory services relative to utilities. The following is a summary of the financial information for SPURR at June 30, 2012 (the latest information available): Total assets $ 12,712,307 Total liabilities $ 6,292,890 Total net assets $ 6,419,417 Total revenues $ 33,252,050 Total expenses $ 33,030,650 Net increase in net assets $ 221,400 The relationship between the District and the Joint Powers Authorities is such that the Joint Powers Authorities are not component units of the District for financial reporting purposes. 44

49 11. CONTINGENT LIABILITIES NOTES TO BASIC FINANCIAL STATEMENTS (Continued) The District is subject to legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, the amount of ultimate liability with respect to these actions will not materially affect the financial position or results of operations of the District. The District has received federal and state funds for specific purposes that are subject to review and audit by the grantor agencies. Although such audits could result in expenditure disallowances under terms of the grants, it is management's opinion that any required reimbursements or future revenue offsets subsequently determined will not have a material effect on the District's financial position. At June 30, 2013, the District had approximately $7.7 million in construction contract commitments outstanding. 45

50 REQUIRED SUPPLEMENTARY INFORMATION

51 GENERAL FUND BUDGETARY COMPARISON SCHEDULE For the Year Ended June 30, 2013 Budget Variance Favorable Original Final Actual (Unfavorable) Revenues: Revenue limit sources: State apportionment $ 622,459 $ 828,393 $ 826,378 $ (2,015) Local sources 54,976,259 57,452,164 57,364,550 (87,614) Total revenue limit 55,598,718 58,280,557 58,190,928 (89,629) Federal sources 1,921,430 1,917,870 2,031, ,618 Other state sources 4,117,957 3,144,911 3,146,903 1,992 Other local sources 5,473,572 6,634,896 6,729,883 94,987 Total revenues 67,111,677 69,978,234 70,099, ,968 Expenditures: Certificated salaries 30,628,840 30,060,643 30,205,412 (144,769) Classified salaries 8,833,021 8,747,753 8,784,660 (36,907) Employee benefits 14,978,268 14,644,766 14,679,437 (34,671) Books and supplies 1,926,723 2,041,538 2,165,940 (124,402) Contract services and operating expenditures 8,719,578 8,426,695 8,552,258 (125,563) Capital outlay - 64,044 71,084 (7,040) Other outgo 1,780,371 3,203,373 3,339,779 (136,406) Total expenditures 66,866,801 67,188,812 67,798,570 (609,758) Excess of revenues over expenditures 244,876 2,789,422 2,300,632 (488,790) Other financing uses: Operating transfers out (2,151,092) (408,533) (408,533) - Net change in fund balance (1,906,216) 2,380,889 1,892,099 (488,790) Fund balance, July 1, ,301,100 18,301,100 18,301,100 - Fund balance, June 30, 2013 $ 16,394,884 $ 20,681,989 $ 20,193,199 $ (488,790) See accompanying notes to required supplementary information. 46

52 SCHEDULE OF OTHER POSTEMPLOYMENT BENEFITS (OPEB) FUNDING PROGRESS For the Year Ended June 30, 2013 Schedule of Funding Progress Unfunded UAAL as a Actuarial Actuarial Percentage Fiscal Actuarial Actuarial Accrued Accrued of Year Valuation Value of Liability Liability Funded Covered Covered Ended Date Assets (AAL) (UAAL) Ratio Payroll Payroll 6/30/2009 February 9, 2008 $ - $ 4,810,284 $ 4,810,284 0% $ 42,309, % 6/30/2010 February 9, 2008 $ - $ 4,810,284 $ 4,810,284 0% $ 40,119, % 6/30/2011 May 11, 2011 $ - $ 5,194,279 $ 5,194,279 0% $ 40,646, % 6/30/2012 May 11, 2011 $ - $ 5,194,279 $ 5,194,279 0% $ 41,772, % 6/30/2013 July 1, 2012 $ - $ 7,366,467 $ 7,366,467 0% $ 41,090, % See accompanying notes to required supplementary information. 47

53 NOTES TO REQUIRED SUPPLEMENTARY INFORMATION 1. PURPOSE OF SCHEDULES A - Budgetary Comparison Schedule The District employs budget control by object codes and by individual appropriation accounts. Budgets are prepared on the modified accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America as prescribed by the Governmental Accounting Standards Board. The budgets are revised during the year by the Board of Trustees to provide for revised priorities. Expenditures cannot legally exceed appropriations by major object code. The originally adopted and final revised budgets for the General Fund are presented as Required Supplementary Information. The basis of budgeting is the same as GAAP. Excess of expenditures over appropriations for the year ended June 30, 2013 were as follows: Fund Excess Expenditures General Fund: Certificated salaries $ 144,769 Classified salaries 36,907 Employee benefits 34,671 Books and supplies 124,402 Contract services and other operating expenditures 125,563 Capital outlay 7,040 These excesses are not in accordance with Education Code Section B - Schedule of Other Postemployment Benefits Funding Progress The Schedule of Funding Progress presents multi-year trend information which compares, over time, the actuarially accrued liability for benefits with the actuarial value of accumulated plan assets. 48

54 SUPPLEMENTARY INFORMATION

55 COMBINING BALANCE SHEET ALL NON-MAJOR FUNDS June 30, 2013 Adult Deferred Capital County School Education Cafeteria Maintenance Facilities Facilities Fund Fund Fund Fund Fund Total ASSETS Cash and investments: Cash in County Treasury $ 65,633 $ 2,858 $ 2,294,480 $ 1,731,819 $ 6,302,722 $ 10,397,512 Cash awaiting deposit 2,409 3,770-3,384-9,563 Cash in revolving fund ,000 Receivables 1,193, ,104-2,010 6,229 1,377,852 Total assets $ 1,261,751 $ 183,532 $ 2,294,480 $ 1,737,213 $ 6,308,951 $ 11,785,927 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 1,120 $ 24,631 $ 1,763 $ 439,737 $ 1,702 $ 468,953 Fund balances: Nonspendable ,000 Restricted 1,260, ,101 2,292,717 1,297,476 6,307,249 11,315,974 Total fund balances 1,260, ,901 2,292,717 1,297,476 6,307,249 11,316,974 Total liabilities and fund balances $ 1,261,751 $ 183,532 $ 2,294,480 $ 1,737,213 $ 6,308,951 $ 11,785,927 49

56 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES ALL NON-MAJOR FUNDS For the Year Ended June 30, 2013 Adult Deferred Capital County School Education Cafeteria Maintenance Facilities Facilities Fund Fund Fund Fund Fund Total Revenues: Revenue limit sources: State apportionment $ - $ 250,966 $ - $ - $ - $ 250,966 Federal sources - 558, ,204 Other state sources 2,606,166 48, ,490-5,908,954 8,867,551 Other local sources 290, , ,122 25,322 1,353,323 Total revenues 2,896,342 1,213, , ,122 5,934,276 11,030,044 Expenditures: Certificated salaries 1,175, ,175,593 Classified salaries 473, , ,832 Employee benefits 648, , ,252 Books and supplies 48, ,417 63, ,994 Contract services and operating expenditures 274,509 28,973 24,617 31, ,483 Capital outlay - - 1,882,842 1,225, ,705 3,311,370 Total expenditures 2,620,081 1,288,523 1,971,008 1,257, ,705 7,339,524 Excess (deficiency) of revenues over (under) expenditures 276,261 (74,709) (1,667,518) (575,085) 5,731,571 3,690,520 Other financing sources: Operating transfers in , ,533 Net change in fund balances 276,261 (74,709) (1,333,985) (575,085) 5,731,571 4,024,053 Fund balances, July 1, , ,610 3,626,702 1,872, ,678 7,292,921 Fund balances, June 30, 2013 $ 1,260,631 $ 158,901 $ 2,292,717 $ 1,297,476 $ 6,307,249 $ 11,316,974 50

57 COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS For the Year Ended June 30, 2013 STUDENT BODY FUNDS Del Mar High School Balance Balance July 1, June 30, 2012 Additions Deductions 2013 Assets: Cash on hand and in banks $ 80,007 $ 66,506 $ 16,371 $ 130,142 Liabilities: Due to student groups $ 80,007 $ 66,506 $ 16,371 $ 130,142 Leigh High School Assets: Cash on hand and in banks $ 195,480 $ 111,752 $ 131,235 $ 175,997 Liabilities: Due to student groups $ 195,480 $ 111,752 $ 131,235 $ 175,997 Westmont High School Assets: Cash on hand and in banks $ 184,749 $ 169,430 $ 135,100 $ 219,079 Liabilities: Due to student groups $ 184,749 $ 169,430 $ 135,100 $ 219,079 Branham High School Assets: Cash on hand and in banks $ 185,408 $ 130,103 $ 146,973 $ 168,538 Liabilities: Due to student groups $ 185,408 $ 130,103 $ 146,973 $ 168,538 (Continued) 51

58 COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS (Continued) For the Year Ended June 30, 2013 STUDENT BODY FUNDS (Continued) Prospect High School Balance Balance July 1, June 30, 2012 Additions Deductions 2013 Assets: Cash on hand and in banks $ 228,349 $ 81,778 $ 93,596 $ 216,531 Liabilities: Due to student groups $ 228,349 $ 81,778 $ 93,596 $ 216,531 Total Agency Funds Assets: Cash on hand and in banks $ 873,993 $ 559,569 $ 523,275 $ 910,287 Liabilities: Due to student groups $ 873,993 $ 559,569 $ 523,275 $ 910,287 52

59 AUDIT ORGANIZATION For the Year Ended June 30, 2013 Campbell Union High School District was established on September 1, 1900 and is comprised of an area of approximately 28 square miles located in Santa Clara County. There were no changes in the boundaries of the District during the current year. At June 30, 2013, the District operated five comprehensive high schools and one alternative education school. The Board of Trustees of Campbell Union High School District is comprised of five members elected at large within the boundaries of the District. The Board and Administration manage and control the affairs of the District. BOARD OF TRUSTEES Name Office Term Expires Mr. Matthew Dean President November 2014 Mr. Kalen Gallagher Clerk November 2016 Ms. Linda Goytia Alt. Clerk November 2016 Mrs. Pam Parker Member November 2014 Mrs. Royce Peterson Member ** ADMINISTRATION Mr. Patrick Gaffney Superintendent Ms. Tanya Krause Deputy Superintendent - Human Resources Mr. Ron Wheelehan Assistant Superintendent - Business Services Ms. Mary Streshly Assistant Superintendent - Curriculum & Instruction **Mrs. Royce Peterson served as a member until October 18, 2013 when she passed away. 53

60 AUDIT SCHEDULE OF AVERAGE DAILY ATTENDANCE For the Year Ended June 30, 2013 Second Period Report Annual Report Secondary: Regular Classes 6,134 6,104 Special Education Compulsory Continuation Education Home and Hospital Community Day School ,031 6,998 See accompanying notes to supplementary information. 54

61 AUDIT SCHEDULE OF INSTRUCTIONAL TIME For the Year Ended June 30, 2013 Statutory Reduced Statutory Reduced Number Minutes Minutes June 30, 2013 of Days Require- Require- Actual Actual Actual Traditional Grade Level ment ment Minutes Minutes Minutes Calendar Status Grade 9 64,800 63,000 63,780 62,008 66, In Compliance Grade 10 64,800 63,000 63,780 62,008 66, In Compliance Grade 11 64,800 63,000 63,780 62,008 66, In Compliance Grade 12 64,800 63,000 63,780 62,008 66, In Compliance See accompanying notes to supplementary information. 55

62 SCHEDULE OF EXPENDITURE OF FEDERAL AWARDS For the Year Ended June 30, 2013 Pass- Through Federal Entity Federal Catalog Federal Grantor/Pass-Through Identifying Expend- Number Grantor/Program or Cluster Title Number itures U.S. Department of Education - Passed through California Department of Education Special Education cluster: Special Ed - IDEA: LCI Growth, Part B, Sec $ 1,322, A Special Ed - IDEA: Mental Health, Part B, Sec ,157 Subtotal Special Education cluster 1,538, Secondary Education and Transition Services for Youth with Disabilities , Innovative Education Strategies NCLB: Title II, Part A, Improving Teacher Quality Local Grants , NCLB: Title III, Limited English Proficiency (LEP) Student Program , Advanced Placement Test Fee Program , Vocational Programs: Voc and Applied Technology Secondary I C, Sec 131 (Carl Perkins Act) , Education Jobs Fund (SB 847) ,209 Total U.S. Department of Education 2,031,488 U.S. Department of Agriculture - Passed through California Department of Education Child Nutrition: School Programs ,204 Total Federal programs $ 2,589,692 See accompanying notes to supplementary information. 56

63 AUDIT RECONCILIATION OF UNAUDITED ACTUAL FINANCIAL REPORT WITH AUDITED FINANCIAL STATEMENTS For the Year Ended June 30, 2013 There were no audit adjustments proposed to any funds of the District. See accompanying notes to supplementary information. 57

64 SCHEDULE OF FINANCIAL TRENDS AND ANALYSIS For the Year Ended June 30, 2013 UNAUDITED General Fund (Budgeted) Revenues and other financing sources $ 74,940,282 $ 70,099,202 $ 65,635,783 $ 68,397,660 Expenditures 70,753,166 67,798,570 67,293,617 66,844,110 Other uses and transfers out 408, , ,532 1,254,728 Total outgo 71,161,698 68,207,103 67,815,149 68,098,838 Change in fund balance $ 3,778,584 $ 1,892,099 $ (2,179,366) $ 298,822 Ending fund balance $ 23,971,783 $ 20,193,199 $ 18,301,100 $ 20,480,466 Available reserves $ 2,118,074 $ 2,118,074 $ 2,068,074 $ 2,066,571 Designated for economic uncertainties $ 2,118,074 $ 2,118,074 $ - $ - Undesignated fund balance $ - $ - $ 2,068,074 $ 2,066,571 Available reserves as percentages of total outgo 3.00% 3.10% 3.05% 3.03% All Funds Total long-term liabilities $170,361,185 $175,171,873 $178,295,645 $168,917,066 Average daily attendance at P-2 7,031 7,031 7,106 7,110 The General Fund fund balance has decreased by $11,555 over the past three fiscal years. The fiscal year budget projects a decrease of $3,778,584. For a district this size, the State of California recommends available reserves of at least 3% of total General Fund expenditures, transfers out, and other uses to be maintained. For the year ended June 30, 2013, the District has met this requirement. The District has incurred operating surpluses in two of the past three years, and anticipates an operating surplus during the fiscal year. Total long-term liabilities have increased by $6,254,807 over the past two years. Average daily attendance has decreased by 79 over the past two years and no change is anticipated during the year ending June 30, See accompanying notes to supplementary information. 58

65 SCHEDULE OF CHARTER SCHOOLS For the Year Ended June 30, 2013 Charter Schools Chartered by District Included in District Financial Statements, or Separate Report There are no charter schools operating under the District. See accompanying notes to supplementary information. 59

66 AUDIT NOTES TO SUPPLEMENTARY INFORMATION 1. PURPOSE OF SCHEDULES A - Schedule of Average Daily Attendance Average daily attendance is a measurement of the number of pupils attending classes of the District. The purpose of attendance accounting from a fiscal standpoint is to provide the basis on which apportionments of state funds are made to school districts. This schedule provides information regarding the attendance of students at various grade levels and in different programs. B - Schedule of Instructional Time The District has received incentive funding for increasing instructional time as provided by the Incentives for Longer Instructional Day. This schedule presents information on the amount of instructional time offered by the District, and whether the District complied with the provisions of Education Code Sections through C - Schedule of Expenditure of Federal Awards OMB Circular A-133 requires a disclosure of the financial activities of all federally funded programs. This schedule was prepared to comply with A-133 requirements, and is presented on the modified accrual basis of accounting. D - Reconciliation of Unaudited Actual Financial Report with Audited Financial Statements This schedule provides the information necessary to reconcile the fund balances of all funds as reported on the Unaudited Actual Financial Report to the audited financial statements. E - Schedule of Financial Trends and Analysis - Unaudited This schedule provides trend information on the District's financial condition over the past three years and its anticipated condition for the fiscal year, as required by the State Controller's Office. The information on this schedule was derived from audited information. F - Schedule of Charter Schools This schedule provides information for the California Department of Education to monitor financial reporting by Charter Schools. 2. EARLY RETIREMENT INCENTIVE PROGRAM Education Code Section requires certain disclosure in the financial statements of districts which adopt Early Retirement Incentive Programs pursuant to Education Code Section and For the fiscal year ended June 30, 2013, the District did not adopt such a program. 60

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