LINCOLN WAY COMMUNITY HIGH SCHOOL DISTRICT 210 FINANCE AND BUILDING ADVISORY COMMITTEE MEETING AGENDA. December 6, :00 P.M.

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1 LINCOLN WAY COMMUNITY HIGH SCHOOL DISTRICT 210 FINANCE AND BUILDING ADVISORY COMMITTEE MEETING AGENDA December 6, :00 P.M. Lincoln Way Central Knights Round Table Hall A. Routine Matters 1. Call to Order 2. Pledge of Allegiance 3. Roll Call B. Public Comment C. Approval of the September 6, 2016 Meeting Minutes Approval of the November 8, 2016 Meeting Minutes D. Building 1. Director of Buildings and Grounds Report E. Budget and Financial Matters 1. Results of the Fiscal Year 2016 Financial Statement Audit F. Other Business G. Adjournment

2 Finance and Building Advisory Committee Meeting September 6, :45 p.m. Knights Round Table Hall A. Routine Matters 1. Call to Order: Mr. Kosel called the meeting to order at 7:45 p.m. in the Knights Round Table Hall. 2. Pledge of Allegiance 3. Roll Call: Members present Ms. Denise Budney, Mr. Christopher Kosel, Mr. David Larson, Mr. Christopher Lucchetti, Mrs. Kelly Luzzo, Dr. Sharon Michalak, Mr. Mike Murphy, Mr. Rich Pagliaro, Mrs. Catherine Vasilakis Pleasant, Mr. Jack Richards, Mr. Norman Roney, Jr., Dr. Monica Schmitt, Dr. Scott Tingley, and Mr. Richard Wilkey. Members absent Mrs. Annmarie Mampe and Dr. Steve Provis B. Public Comment: The committee heard public comment from Mr. John Perish who spoke about financial matters of the District, student achievement as well as onsite daycare. C. Approval of the August 9, 2016 Meeting Minutes Mr. Murphy moved, seconded by Mrs. Vasilakis Pleasant, that the minutes from the August 9, 2016 meeting be approved. All in favor voted aye. None opposed. Motion carried. D. Building 1. Director of Buildings and Grounds Report Mr. Wilkey presented the committee members with the July 2016 report of operations and maintenance expenditures. The District experienced a $95,956 (22%) decrease in these costs over the same month in All schools had a decrease except for West which had a 2.4% increase over the previous year. 2. Review of Proposal for an Asphalt and Roof Evaluation Dr. Tingley presented the committee with the specifications from DLA Architects, Ltd. for an asphalt and roof evaluation. Discussion ensued among the committee members. A committee member asked whether the life safety study would accomplish the same thing as this survey. Mr. Wilkey responded that the life safety study doesn t cover the roofs. Committee members requested that Mr. Wilkey contact other Districts that have had similar studies done to ensure pricing is consistent. Overall though, the

3 committee members had no objection to proceeding with the survey as the results will assist the Board with the prioritization of capital projects that need to be completed in order to maintain our buildings. E. Budget and Financial Matters 1. Director of Finance Report Mrs. Luzzo updated the committee on several financial matters including Skyward integration, audit status, and the behind the wheel refunds. The auditors were out the week of August 22 and are substantially complete with their audit work. They will return to the District the week of September 12 to wrap up their fieldwork and then we ll move into the reporting stage of the audit. In addition, Mrs. Luzzo updated the committee members on her ongoing project to review the student activity accounts and the District s chart of accounts. F. Other Business None G. Adjournment A motion was made by Dr. Tingley, seconded by Mrs. Budney to adjourn the meeting. The meeting was adjourned at 8:15 p.m.

4 Finance and Building Advisory Committee Meeting Minutes November 8, :00 p.m. Knights Round Table Hall A. Routine Matters 1. Call to Order: Mr. Kosel called the meeting to order at 7:00 p.m. in the Knights Round Table Hall. 2. Pledge of Allegiance 3. Roll Call: Members Present Mrs. Denise Budney, Mr. Christopher Kosel, Mr. David Larson, Mr. Christopher Lucchetti, Mrs. Kelly Luzzo, Dr. Sharon Michalak, Mr. Mike Murphy, Dr. Steve Provis, Dr. Monica Schmitt, Dr. Scott Tingley, Mr. Richard Wilkey. Members Absent: Mrs. Annmarie Mampe, Mrs. Catherine Vasilakis Pleasant, Mr. Jack Richards, Mr. Norman Roney, Jr. B. Public Comment There were no public comments. C. Approval of the September 6, 2016 Meeting Minutes D. Building The minutes will be discussed at the next meeting. The committee members didn t receive the minutes from September 6, 2016 in their packet materials. 1. Director of Buildings and Grounds Report Mr. Wilkey presented the committee members with the October 2016 report of operations and maintenance expenditures. The District experienced a $135,188 (22.7%) decrease in these costs over the same month in Mr. Wilkey also highlighted through the use of bar graphs that when comparing fiscal year 2015 costs to fiscal years 2016 and 17 costs, there were some significant decreases in some months because the District has deferred maintenance on our roofs and pavement for the past two years. Committee members appreciated the additional detail and analysis added to this month s report and requested that the variances be summarized in a cover memo going forward. 2. Results of the DLA Architects Asphalt and Roof Evaluation Mr. Wilkey presented the committee with the results of the DLA survey on East and Central s roofs and pavement. They have estimated that the District should spend approximately $3 million over the next three years for maintenance. The survey did identify an area of wet insulation on the roof. Mr. Wilkey recommends that this should be addressed this summer. A committee member commented that this survey was a good first step for building a capital projects plan for the District.

5 E. Budget and Financial Matters 1. October 2016 Treasurer s Report and Monthly Financial Reports Mrs. Luzzo presented the October monthly report. The District received revenues of $2,374,841 and expended $6,624,311. The total cash fund balance as of October 31, 2016 is $24,931,663 and total fund balance (accounting for warrants and loans outstanding) was $17,931,663. F. Other Business For the fiscal year to date, the District has recognized operating revenues of $34,046,140 which is a 2% decrease from operating revenues recorded in the prior year. The most significant reason for the decrease year over year is due to the fact that we have not received any mandated categorical payments from the State in this fiscal year. Actual operating expenditures fiscal year to date are 10.2% less than the prior fiscal year and total $26,921,313. Audit Status Mr. Lucchetti updated the committee on the status of the fiscal year 2016 external audit. The District filed an extension until December 15 to submit our completed Annual Financial Report (AFR) to the State. The current plan is to have the reports ready for approval at the November 17 board meeting. Additionally, he informed the committee that he, along with board member, Mrs. Christine Glatz, participated in a closing meeting with the District s audit partner, Dave Meyer, along with Dr. Tingley and Mrs. Luzzo. In this meeting, several areas where there is a need for improvement were discussed and will appear as comments in the management comment letter issued by the auditors. Mr. Lucchetti recommended that this be an ongoing agenda item at both the Finance and Building Advisory Committee and the Board of Education Meetings so that administration can update both the committee and the Board on the status of resolution of these comments. Additionally, Mr. Dave Meyer will be in attendance at the December committee meeting to discuss the results of the audit with the committee members. G. Adjournment A motion was made by Dr. Tingley, seconded by Dr. Michalak to adjourn the meeting. The meeting was adjourned at 7:45 p.m.

6 LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT 210 NEW LENOX, ILLINOIS ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2016

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8 Table of Contents June 30, 2016 Independent Auditor s Report 1-3 Other Information: Management's Discussion and Analysis (MD&A) 4-12 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position (Modified Cash Basis) 13 Statement of Activities (Modified Cash Basis) 14 Fund Financial Statements: Governmental Funds: Statement of Assets, Liabilities and Fund Balances (Modified Cash Basis) 15 Reconciliation of the Governmental Funds Statement of Assets, Liabilities and Fund Balances to the Statement of Net Position (Modified Cash Basis) 16 Statement of Revenues Received, Expenditures Disbursed, and Changes in Fund Balances (Modified Cash Basis) 17 Reconciliation of the Governmental Funds Statement of Revenues Received, Expenditures Disbursed, and Changes in Fund Balances to the Statement of Activities (Modified Cash Basis) 18 Fiduciary Funds: Statement of Fiduciary Net Position (Modified Cash Basis) 19 Statement of Changes in Fiduciary Net Position (Modified Cash Basis) 20 Page Notes to Basic Financial Statements Other Information: Budgetary Comparison Information: Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) - General Fund and Major Special Revenue Fund Illinois Municipal Retirement Fund: Schedule of Changes in the Net Pension Liability and Related Ratios 54 Schedule of Employer Contributions 55 Teachers Retirement System of the State of Illinois: Schedule of the District's Proportionate Share of the Net Pension Liability 56 Schedule of Employer Contributions 57 Schedule of Funding Progress - Health Insurance Plan for Retired Employees 58

9 Table of Contents June 30, 2016 Other Supplementary Information: Page Combining and Individual Fund Financial Schedules General Fund Schedule of Assets, Liabilities and Fund Balances by Account (Modified Cash Basis) Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance by Account (Modified Cash Basis) General Fund - Educational Account Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) General Fund - Operations and Maintenance Account Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) General Fund - Working Cash Account Schedule of Revenues Received and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) 71 General Fund - Tort Account Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) 72 Transportation Fund Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) Debt Services Fund Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) 75 Nonmajor Governmental Funds Combining Schedule of Assets and Fund Balances (Modified Cash Basis) 76 Combining Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balances (Modified Cash Basis) 77 Municipal Retirement / Social Security Fund Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) 78-79

10 Table of Contents June 30, 2016 Page Other Supplementary Information: Schedule of Cash Receipts, Cash Disbursements and Ending Balance - Agency Funds - Student Activity Funds (Modified Cash Basis) 80 Other Supplemental Schedules: Schedule of Assessed Valuations, Rates and Extensions Last Ten Tax Levy Years Computation of Legal Debt Margin 83 Schedule of Operating Expenditures Per Student 84

11 11 ll I ll wrnmrn, ROGERS, oonnn & nuzon LLc CERTIFIEDPUBLJCAcaJLJNTAN1S 755 ESSINGTON ROAD, JOLIET, ILLJNOIS / FAX 815/ To the Superintendent and Board of Education Lincoln-Way Community High School District 210 New Lenox, Illinois Independent Auditor's Report Report on the Financial Statements We have audited the accompanying modified cash basis financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Lincoln-Way Community High School District 210 (District) as of and for the year ended June 30, 2016 and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the modified cash basis of accounting described in Note 1; this includes determining that the modified cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective modified cash basis financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the District, as of June 30, 2016, and the respective changes in modified cash basis financial position thereof for the year then ended in accordance with the modified cash basis of accounting described in Note 1. 1 Members of American Institute of Certified Public Accountants/Illinois CPA Society

12 Basis of Accounting We draw attention to Note 1 of the financial statements, which describes the basis of accounting. The financial statements are prepared on the modified cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinions are not modified with respect to this matter. Other Matters Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District s basic financial statements. The Other Information, Other Supplementary Information and Other Supplemental Schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. The Other Supplementary Information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Other Supplementary Information is fairly stated in all material respects in relation to the basic financial statements as a whole. The District s basic financial statements for the year ended June 30, 2015, which are not presented with the accompanying financial statements, were audited by other auditors in accordance with auditing standards generally accepted in the United States of America. The other auditors expressed unmodified opinions on the respective modified cash basis financial statements of the governmental activities, each major fund, and the aggregate remaining fund information. The 2015 individual fund financial schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the 2015 basic financial statements. The information has been subjected to the auditing procedures applied in the audit of those basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare those basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In the opinion of the other auditors, the 2015 individual fund financial schedules were fairly stated in all material respects in relation to the basic financial statements from which they have been derived. The Other Information and Other Supplemental Schedules have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. 2

13 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 15, 2016, on our consideration of the District s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District s internal control over financial reporting and compliance. November 15,

14 OTHER INFORMATION MANAGEMENT S DISCUSSION AND ANALYSIS

15 LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT NO. 210 MANAGEMENT'S DISCUSSION AND ANALYSIS as of and for the fiscal year ended June 30, 2016 As management of Lincoln-Way High School District No. 210 (the District), we offer readers of the District's Annual Financial Report this narrative overview and analysis of the financial activities of the District for the fiscal year ended June 30, Financial Position The assets of the District exceeded its liabilities at the close of the fiscal year by $21,728,425 (net position). The total net position of the District decreased by $8,301,540 during fiscal year 2016 from fiscal year 2015 s net position of $30,029,785. The District s unrestricted net position is ($12,038,068). The District's governmental funds reported combined fund balances of $8,128,257, a decrease of $3,941,315 from $12,069,572 in fiscal year Governmental funds unassigned fund balance is ($6,895,304). Expenditures exceed revenues in the operating funds (General, Transportation, and Nonmajor Funds) for the year by $3,770,803. The General Fund balance is ($6,378,606), a $4,789,984 decrease from the adjusted beginning fund balance of ($1,588,622) from fiscal year There are $20,000,000 in outstanding tax anticipation warrants (short-term debt) that are to be paid from property tax receipts in early fiscal year The District's long-term debt decreased by $7,457,261 to $287,393,042 in accordance with the long-term debt payment schedule. The District did not issue additional long-term debt during the fiscal year. Moody's Investors Service has downgraded the District s general obligation long-term debt rating to Baa3 from A1 Overview of the Financial Statements The discussion and analysis provided here is intended to serve as an introduction to the District's basic financial statements. The basic financial statements consist of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) the notes to basic financial statements. This report also contains combining and individual fund financial statements and schedules and other supplementary information intended to furnish additional detail to support the basic financial statements themselves. Government-wide Financial Statements The government-wide financial statements are designed to provide the reader of the District's Annual Financial Report with a broad overview of the financial activities, in a manner similar to a private-sector business. 4

16 LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT NO. 210 MANAGEMENT'S DISCUSSION AND ANALYSIS as of and for the fiscal year ended June 30, 2016 The statement of net position - modified cash basis presents information on the District s assets, deferred outflows of resources and liabilities as reported using the modified cash basis of accounting. The difference between assets, deferred outflows of resources and liabilities is reported as net position. Over time, changes in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The statement of activities - modified cash basis presents information showing how the net position of the District changed during the current fiscal year. Changes in net position are recorded in the statement of activities using the modified cash basis of accounting. The modified cash basis of accounting is described in the notes to basic financial statements. The government-wide financial statements distinguish functions of the District that are supported from taxes and intergovernmental revenues (governmental activities). Governmental activities include instructional, pupil support, other support, transportation and administration. The government-wide financial statements can be found on pages of this report. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Fund financial statements for the District include governmental and fiduciary funds. Fund financial statements can be found on pages of this report. Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide statements, the governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the year. Such information may be useful in evaluating financing requirements in the near term. Because the focus of the governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet - modified cash basis and the governmental fund statement of revenues, expenditures, and changes in fund balance - modified cash basis provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The financial statements group the District s funds into five major funds: General Fund, Transportation Fund, Debt Services Fund, Capital Projects Fund, and Nonmajor Governmental Funds. They are presented separately in the fund financial statements. Specific General Funds and Nonmajor Funds are presented in the combining and individual fund financial statements and schedules section of this report starting on page 59. 5

17 LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT NO. 210 MANAGEMENT'S DISCUSSION AND ANALYSIS as of and for the fiscal year ended June 30, 2016 The District adopted an annual budget for each of the governmental funds except the Capital Projects Fund and Fire Prevention and Safety Fund. The governmental funds' budgetary comparisons are reported in the combining and individual fund financial statements and schedules section of this report starting on page 63. Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside of the government. Fiduciary funds are not reported in the government-wide financial statements because the resources of those funds are not available to support the District's own programs. The District maintains two different types of fiduciary funds. The Scholarship Fund (a private-purpose trust fund) accounts for assets held by the District as the beneficiary of private donors. The Student Activity Fund (an agency fund) accounts for assets held by the District as an agent for the students. The fund is custodial in nature and does not involve the measurement of results of operations. The fiduciary fund financial statements can be found on pages of this report. Notes to Basic Financial Statements The notes to basic financial statements provide additional information that is essential to a full understanding of the data provided in the basic financial statements. The notes can be found on pages of this report. Government-wide Overall Financial Analysis As noted earlier, net position over time may serve as a useful indicator of a government's financial position. In the case of the District, assets and deferred outflows of resources exceeded liabilities by $21,728,245 at the close of the fiscal year. A statement of the District s net position can be found on the following page. 6

18 LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT NO. 210 MANAGEMENT'S DISCUSSION AND ANALYSIS as of and for the fiscal year ended June 30, 2016 Net Position - Modified Cash Basis as of June 30, 2016 and 2015 Government-wide Assets: Current and other assets $ 28,128,257 $ 12,069,572 Capital assets 252,023, ,446,699 Total assets 280,151, ,516,271 Deferred outflows of resources 48,969,748 54,363,817 Liabilities: Total assets and deferred outflows 329,121, ,880,088 Other liabilities 20,000,000 - Long-term liabilities 287,393, ,850,303 Total liabilities 307,393, ,850,303 Net Position: Net Investment in capital assets 25,251,034 17,960,213 Restricted 8,515,279 7,385,766 Unrestricted (12,038,068) 4,683,806 Total net position 21,728,245 30,029,785 Total liabilities and net position $ 329,121,287 $ 324,880,088 The District's net position is comprised of the net investment in capital assets and restricted and unrestricted funds. The net investment in capital assets account for the amount spent on capital assets on an historical cost basis (e.g., land and improvements, buildings, equipment, and transportation equipment) less any related outstanding debt that was used to acquire those assets. The District uses these capital assets to provide a variety of services to its citizens and these assets are not available for future spending. Although the District's investment in capital assets is reported net of related debt, it should be noted that the resources used to repay this debt will be provided from future tax levies. $7,506,812 out of the $8,515,279 in restricted net position is for debt service payments to be made in fiscal year Whereas the District requires a significant positive net position at the end of the fiscal year to fund the operating expenses of the District for July and August until the District receives additional property taxes in September, the District had ($12,038,068) in unrestricted net position. To manage its cashflow, the District had $20,000,000 in outstanding tax anticipation warrants which are due October 30, The District's overall net position decreased $8,301,540 following a $11,163,367 decrease in fiscal year The following financial statement presents the changes in net position for both fiscal years 2016 and

19 LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT NO. 210 MANAGEMENT'S DISCUSSION AND ANALYSIS as of and for the fiscal year ended June 30, 2016 Changes in Net Position - Modified Cash Basis for the fiscal years ended June 30, 2016 and 2015 Government-wide Revenues: Program revenues: Charges for services $ 8,449,668 $ 11,660,446 Operating and capital grants contributions 31,778,322 20,494,911 General revenues: Property taxes 74,981,799 73,441,759 Personal Property replacement taxes 599, ,482 Unrestricted investment earnings 22,747 6,873 Other revenues 2,054,719 2,979,272 General State Aid 5,186,100 4,930,373 Total revenues 123,073, ,165,116 Expenses: Governmental activities: Instructional 78,066,681 70,907,846 Pupil support 5,513,371 5,116,647 Other support 19,768,540 19,384,187 Transportation 11,179,377 11,506,891 Administration 3,622,471 4,441,807 Interest 13,224,224 13,971,105 Total expenses 131,374, ,328,483 Decrease in net position (revenues less expenses) (8,301,540) (11,163,367) Net position at beginning of year 30,029,785 41,193,152 Net position at end of year 21,728,245 30,029,785 8

20 LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT NO. 210 MANAGEMENT'S DISCUSSION AND ANALYSIS as of and for the fiscal year ended June 30, 2016 Changes in the District's Fund Balances The following statement shows the change in fund balances from fiscal year 2015 s financial report: Changes in Fund Balances - Modified Cash Basis for the fiscal years ended June 30, 2016 and 2015 Government-wide Adjusted Fiscal Year Fund Balance Prior Period Beginning 2016 Fund Balance June 30, 2015 Adjustments Fund Balances Net Change June 30, 2016 General $ 3,119,078 $ (4,707,700) $ (1,588,622) $ (4,789,984) $ (6,378,606) Transportation 135,395 (306,649) (171,254) 517, ,659 Debt Services 8,153,469-8,153, ,853 8,334,322 Capital Projects - 5,088,529 5,088, ,088,547 Nonmajor Governmental 661,630 (74,180) 587, , ,335 Total Governmental Funds $ 12,069,572 $ - $ 12,069,572 $ (3,941,315) $ 8,128,257 The prior period adjustments were the result of the School Board engaging an accounting firm to conduct an Agreed Upon Procedures (AUP) to examine the use and accounting for $235,000,000 in bond proceeds from three bond issuances dated May 8, 2006, February 1, 2007 and December 1, 2009 for the construction of two new high schools. The AUP found accounting errors during fiscal years 2008 through To correct these errors, the School Board voted in April of 2016 to direct the administration to make prior period adjustments to the beginning fund balances as shown above. The ($4,789,984) net change for the fiscal year in the General Fund was result of expenditures exceeding revenues by $4,438,601 and the transfer of $351,383 to other funds. Budget Analysis of the General Fund The financial statement on the following page show a summary budget to actual variance analysis of the General Fund which comprises four funds Educational, Operations and Maintenance, Working Cash and Tort. A detailed variance analysis of the General Funds can be found on pages

21 LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT NO. 210 MANAGEMENT'S DISCUSSION AND ANALYSIS as of and for the fiscal year ended June 30, 2016 Final Budget to Actual Variance Analysis For the Year Ended June 30, 2106 General Fund Variance Final Budget Actual Positive (Negative) Revenues: Local $ 62,065,706 $ 61,636,265 $ (429,441) State 7,589,923 8,109, ,314 Fed 2,005,109 1,653,107 (352,002) On behalf payments from State 15,800,000 23,268,434 7,468,434 87,460,738 94,667,043 7,206,305 Expenditures: Instruction 45,953,992 45,163, ,310 Support and Community Services 26,022,433 25,857, ,651 Payments to other districts and governmental units 4,775,000 4,513, ,164 Debt services 125, ,910 (176,910) On behalf payments from State 15,800,000 23,268,434 (7,468,434) 92,676,425 99,105,644 (6,429,219) Excess of revenues over expenditures surplus/(deficit) (5,215,687) (4,438,601) 777,086 Other financing sources and uses 4,260,000 (351,383) (4,611,383) Net change in fund balance $ (955,687) $ (4,789,984) $ (3,834,297) There is a major variance in On behalf payments from state with both equal positive revenue and negative expenditure variances. Even though the District did not adequately budget for these payments, it did not have any effect on the District s finances. These payments are book entries and there are no actual revenues received or expenditures made by the District. The State requires school districts to book payments the State makes into the Teacher Retirement System on behalf of the certified teachers and administrators that work for public schools. The major variance in Other financing sources and uses is the result of the budgeted sales of assets in the amount of $4,260,000 that did not occur. 10

22 LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT NO. 210 MANAGEMENT'S DISCUSSION AND ANALYSIS as of and for the fiscal year ended June 30, 2016 Capital Assets, Short-Term Debt and Long-Term Debt Capital Assets The District's investment in capital assets stated on a historical cost basis for its governmental activities as of June 30, 2016 amounted to $252,023,282 (net of accumulated depreciation). This investment in capital assets included land and improvements, buildings, equipment and transportation equipment. Capital Assets (net of accumulated depreciation) June 30, 2016 and 2015 Government-wide Land $ 25,018,371 $ 25,018,371 Improvements 2,518,733 2,715,234 Buildings 224,030, ,203,338 Equipment 350, ,627 Transportation equipment 104, ,129 Total $ 252,023,282 $ 258,446,699 Additional information on the District s capital assets can be found in the notes to basic financial statements on page 30. Short-term Debt and Long-Term Debt At June 30, 2016, the District had $20,000,000 short-term debt from issuing $40,000,000 in tax anticipation warrants and repaying $20,000,000 during the fiscal year. The tax anticipation warrants are due for payment by October 30, The District retired/deleted $7,457,261 in long-term debt and ended the year with $287,393,024 outstanding. There is $6,562,517 due for payment in the fiscal year. On April 26, 2016, Moody's Investors Service has downgraded the District s general obligation longterm debt rating to Baa3 from A1. Additional information on the District's short-term and long-term liabilities can be found in the notes to basic financial statements on pages

23 LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT NO. 210 MANAGEMENT'S DISCUSSION AND ANALYSIS as of and for the fiscal year ended June 30, 2016 Financial Factors and the Budget for and Beyond On March 19, 2015, the Illinois State Board of Education (ISBE) released the state-wide financial profile scores based on the fiscal year ending June 30, 2014 and the District was placed on the Financial Watch list along with 37 other school districts. With this designation, the District is required to file a deficit reduction plan with the next fiscal year s budget. On August 13, 2015, the School Board voted close Lincoln-Way North upon the conclusion of the school year to balance the budget for fiscal year Administration estimates that the District will save over $5,000,000 in expenditures by operating one less school in the school year. On September 24, 2015, the School Board adopted an unbalanced budget for the fiscal year. As required, the District filed a deficit reduction plan listing the closing of a school as the means to eliminate the deficit in future budgets. On February 19, 2016, ISBE issued a letter to the District, along with 5 other districts, stating that the District is to be investigated to determine whether they should be certified in financial difficulty. If a district is certified in financial difficulty, the State Board may require the district to submit a financial plan within 45 days after certification. The district s budget is then required to be consistent with the financial plan submitted to and approved by the State Board. If the State Board determines that the district has failed to comply with its approved financial plan, the State Board may rescind the plan and appoint a Financial Oversight Panel for the district. ISBE investigated and at the May 11, 2016 ISBE monthly meeting, the State Superintendent informed the State School Board that the Lincoln-Way Community High School District 210 did not meet the criteria to be certified in financial difficulty. With closing a school, the District estimates that it can annually operate with over a $2,000,000 surplus and it has budgeted accordingly for the fiscal year. For budgets past FY 2017, the District faces many potential issues that could lessen its annual surplus as listed below: 1. State-wide property tax freeze. 2. Gradual Teacher Retirement System pension cost shift from the State to local school districts. 3. Decline in State revenue both General State Aid and mandated categorical aid. 4. Decline in student enrollment 5. Major expenditure increases for maintaining facilities and integrating technology into the curriculum. Requests for Information This financial report is designed to provide a general overview of the District's finances for all those with an interest in the District. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: Dr. R. Scott Tingley, Superintendent Lincoln-Way Community High School District No E. Lincoln Highway, New Lenox, IL Electronic requests can be submitted via to stingley@lw2l0.org. 12

24 BASIC FINANCIAL STATEMENTS

25 Statement of Net Position (Modified Cash Basis) June 30, 2016 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Governmental Activities Assets Cash and Investments $ 27,882,691 Building Trades Inventory - Land 245,566 Capital Assets not Being Depreciated 25,018,371 Capital Assets Being Depreciated, Net of Accumulated Depreciation 227,004,911 Total Assets 280,151,539 Deferred Outflows of Resources Deferred Amount on Refunding of Debt 48,969,748 Total Deferred Outflows of Resources 48,969,748 Total Assets and Deferred Outflows of Resources $ 329,121,287 LIABILITIES AND NET POSITION Liabilities Tax Anticipation Warrants Payable $ 20,000,000 Long-Term Obligations, Due Within One Year General Obligation Bonds Payable 6,545,000 Installment Contracts Payable 17,517 Long-Term Obligations, Due in More Than One Year General Obligation Bonds Payable 280,625,399 Installment Contracts Payable 205,126 Total Liabilities 307,393,042 Net Position Net Investment in Capital Assets 25,251,034 Restricted for: Employee Benefits 737,335 Debt Service 7,506,812 Tort Immunity 271,132 Unrestricted ( 12,038,068) Total Net Position 21,728,245 Total Liabilities and Net Position $ 329,121,287 See Accompanying Notes to Basic Financial Statements. 13

26 Statement of Activities (Modified Cash Basis) For the Year Ended June 30, 2016 Net (Expense) Revenue and Changes in Program Revenues Net Assets Charges Operating Capital Total For Grants and Grants and Governmental Functions / Programs Expenses Services Contributions Contributions Activities Governmental Activities: Instruction $ 78,066,681 $ 2,981,409 $ 28,008,391 $ - ($ 47,076,881) Support Services - Pupils 5,513, ,051 37, ,443 ( 4,871,420) Other Support Services 19,768,540 19,540 1,962,541 - ( 17,786,459) Transportation 11,179,377 5,188,668 1,425,490 - ( 4,565,219) Administration 3,622, ( 3,622,471) Interest on Debt 13,224, ( 13,224,224) Total Governmental Activities $ 131,374,664 $ 8,449,668 $ 31,433,879 $ 344,443 ( 91,146,674) General Revenues: Property Taxes 74,981,799 Personal Property Replacement Taxes 599,769 General State Aid 5,186,100 Earnings on Investments 22,747 Other General Revenues 2,054,719 Total General Revenues 82,845,134 Change in Net Position ( 8,301,540) Net Position, Beginning of Year 30,029,785 Net Position, End of Year $ 21,728,245 See Accompanying Notes to Basic Financial Statements. 14

27 Governmental Funds Statement of Assets, Liabilities and Fund Balances (Modified Cash Basis) June 30, 2016 Major Funds Debt Capital Nonmajor Total General Fund Transportation Fund Services Fund Projects Fund Governmental Funds Governmental Funds ASSETS Cash and Investments $ 13,375,828 $ 346,659 $ 8,334,322 $ 5,088,547 $ 737,335 $ 27,882,691 Building Trades Inventory - Land 245, ,566 Total Assets $ 13,621,394 $ 346,659 $ 8,334,322 $ 5,088,547 $ 737,335 $ 28,128,257 LIABILITIES AND FUND BALANCES Liabilities Tax Anticipation Warrants Payable $ 20,000,000 $ - $ - $ - $ - $ 20,000,000 Total Liabilities 20,000, ,000,000 Fund Balances Nonspendable 245, ,566 Restricted 271,132-7,506,812 5,088, ,335 13,603,808 Assigned - 346, , ,174,187 Unassigned ( 6,895,304) ( 6,895,304) Total Fund Balances ( 6,378,606) 346,659 8,334,322 5,088, ,335 8,128,257 Total Liabilities and Fund Balances $ 13,621,394 $ 346,659 $ 8,334,322 $ 5,088,547 $ 737,335 $ 28,128,257 See Accompanying Notes to Basic Financial Statements. 15

28 Reconciliation of the Governmental Funds Statement of Assets, Liabilities and Fund Balances to the Statement of Net Position (Modified Cash Basis) June 30, 2016 Total Fund Balances - Governmental Funds $ 8,128,257 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds: Capital Assets 340,161,063 Accumulated Depreciation ( 88,137,781) Net Capital Assets 252,023,282 The unamortized deferred amount on refunding reported in the Statement of Net Position does not require the use of current financial resources and therefore is not reported as deferred outflows of resources in governmental funds. 48,969,748 Some liabilities reported in the Statement of Net Position do not require the use of current financial resources and therefore are not reported as liabilities in governmental funds. These liabilities consist of: General Obligation Bonds Payable ( 253,069,161) Unamortized Bond Premium on Bonds ( 34,101,238) Installment Contracts Payable ( 222,643) Total Long-Term Liabilities ( 287,393,042) Net Position of Governmental Activities $ 21,728,245 See Accompanying Notes to Basic Financial Statements. 16

29 Governmental Funds Statement of Revenues Received, Expenditures Disbursed, and Changes in Fund Balances (Modified Cash Basis) For the Year Ended June 30, 2016 Major Funds Debt Capital Nonmajor Total General Transportation Services Projects Governmental Governmental Revenues Received Fund Fund Fund Fund Funds Funds Local Sources Property Taxes $ 53,854,247 $ 4,100,434 $ 14,799,318 $ - $ 2,227,800 $ 74,981,799 Payments in Lieu of Taxes 559, , ,769 Transportation Fees - 5,144, ,144,842 Earnings on Investments 18, , ,747 Food Services 1,962, ,962,273 Pupil Activities 1,248, ,248,715 Textbooks 1,675, ,675,044 Other Revenue 2,317,512 58, ,094 2,981,667 Total Local Sources 61,636,265 9,303,960 14,802, ,874,109 88,616,856 State Sources Unrestricted Grants-in-Aid 5,186, ,186,100 Restricted Grants-in-Aid 2,923,137 1,425, ,348,627 Total State Sources 8,109,237 1,425, ,534,727 Federal Sources 1,653, ,653,107 On-Behalf Payments from State 23,268, ,268,434 Total Revenues Received 94,667,043 10,729,450 14,802, ,874, ,073,124 Expenditures Disbursed Current: Instruction 45,035, ,068 45,893,360 Support Services 25,692,343 9,054, ,865,932 36,612,483 Community Services 3, ,937 Payments to Other Governments 4,513,836 1,144, ,658,917 On-Behalf Payments to State 23,268, ,268,434 Debt Service - Interest and Fees 301,910 1,680 8,599, ,903,218 Debt Service - Principal Retired - 10,792 6,373, ,384,198 Capital Outlay 289, ,892 Total Expenditures Disbursed 99,105,644 10,211,537 14,973,034-2,724, ,014,439 Excess (Deficiency) of Revenues Received Over Expenditures Disbursed ( 4,438,601) 517,913 ( 170,530) ,885 ( 3,941,315) Other Financing Sources (Uses) Transfers In , ,383 Transfers Out ( 351,383) ( 351,383) Total Other Financing Sources (Uses) ( 351,383) - 351, Net Change in Fund Balances ( 4,789,984) 517, , ,885 ( 3,941,315) Fund Balances (Deficits), Beginning of Year as Adjusted ( 1,588,622) ( 171,254) 8,153,469 5,088, ,450 12,069,572 Fund Balances (Deficits), End of Year ($ 6,378,606) $ 346,659 $ 8,334,322 $ 5,088,547 $ 737,335 $ 8,128,257 See Accompanying Notes to Basic Financial Statements. 17

30 Reconciliation of the Governmental Funds Statement of Revenues Received, Expenditures Disbursed, and Changes in Fund Balances to the Statement of Activities (Modified Cash Basis) For the Year Ended June 30, 2016 Net Change in Fund Balances - Governmental Funds ($ 3,941,315) Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets are depreciated over their estimated useful lives as depreciation expense. This is the amount of expenditures capitalized in the current period. 5,044 This is the amount of depreciation recorded in the current period. ( 6,428,461) Repayment of debt principal on bonds and installment contracts is an expenditure in the governmental funds, but the repayment reduced long-term liabilities in the Statement of Net Position. 6,384,198 Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported in the governmental funds. Amortization of deferred amount on refunding ( 5,394,069) Amortization of deferred bond premium 1,073,063 Change in Net Position of Governmental Activities ($ 8,301,540) See Accompanying Notes to Basic Financial Statements. 18

31 Fiduciary Funds Statement of Fiduciary Net Position (Modified Cash Basis) June 30, 2016 ASSETS Private Purpose Trust Scholarship Fund Agency Student Activity Fund Cash and Investments $ 593,740 $ 2,321,414 Total Assets $ 593,740 $ 2,321,414 LIABILITIES AND NET POSITION LIABILITIES Due to Activity Fund Organizations $ - $ 2,321,414 NET POSITION Restricted for Scholarships 593,740 - Total Liabilities and Net Position $ 593,740 $ 2,321,414 See Accompanying Notes to Basic Financial Statements. 19

32 Fiduciary Fund - Scholarship Private - Purpose Trust Fund Statement of Changes in Fiduciary Net Position (Modified Cash Basis) For the Year Ended June 30, 2016 Additions Contributions $ 109,192 Investment Income 2,704 Total Additions 111,896 Deductions Scholarships 143,855 Total Deductions 143,855 Net (Decrease) in Net Position ( 31,959) Net Position Restricted for Scholarships Beginning of Year 625,699 End of Year $ 593,740 See Accompanying Notes to Basic Financial Statements. 20

33 1. Summary of Significant Accounting Policies Notes to Basic Financial Statements For the Year Ended June 30, 2016 Lincoln-Way Community High School District 210 (District) operates as a public school system and is organized under the School Code of the State of Illinois, as amended. The District is governed by an elected seven-member board and through June 30, 2016, operated four high schools providing secondary education, transportation, cafeteria, building maintenance, and general administrative services. Financial Reporting Entity Accounting principles generally accepted in the United States of America require that the financial statements of the reporting entity include: (1) the primary government, (2) organizations for which the primary government is financially accountable, and (3) other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The criteria provided in Government Accounting Standards Board (GASB) Statement Nos. 14, 39, and 61 have been considered and there are no agencies or entities which should be presented with the District. Also, the District is not included as a component unit in any other government reporting entity, as defined by GASB pronouncements. Measurement Focus, Basis of Accounting and Basis of Presentation The accounts of the District are organized and operated on a basis of funds. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements. The District accounts for its funds and prepares its annual budget on the modified cash basis of accounting measurement focus, which varies from accounting principles generally accepted in the United States of America. With this measurement focus, only current assets and current liabilities arising from cash transactions are included on the balance sheet. Accordingly, revenues are recognized when received rather than when earned, and expenditures are recognized when paid rather than when the obligation is incurred. Consequently, property taxes and other revenues due, as well as amounts owed to vendors and suppliers are not included in the financial statements. Only assets representing a right to receive cash from a previous payment of cash are recorded as assets of a fund. In the same manner, only liabilities resulting from previous cash transactions are recorded as liabilities of a particular fund. Government-wide Financial Statements The government-wide Statement of Net Position and the Statement of Activities display information about the governmental activities of the District as a whole. Governmental activities are those that are supported primarily by taxes and intergovernmental sources. The effect of interfund activity has been eliminated from these statements. Fiduciary funds are not included in the government-wide statements. Fiduciary funds are reported only in the Fiduciary Fund Statement of Net Position at the fund financial statement level. The government-wide statements are reported using the modified cash basis of accounting measurement focus as explained above. The Statement of Net Position includes all current assets and liabilities arising from cash transactions and all capital assets, net of accumulated depreciation, and long-term debt and deferred amounts on refundings of debt associated with the operation of the District. 21

34 1. Summary of Significant Accounting Policies Notes to Basic Financial Statements For the Year Ended June 30, 2016 The Statement of Activities reflects both the direct expenses and net cost of each function of the District's governmental activities. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include charges paid by the recipient for the goods or services offered by the program, grants and contributions that are restricted to meeting the operational or capital requirements of a particular program and interest earned on grants that is required to be used to support a particular program. Revenues that are not classified as program revenues, such as property taxes and general state aid, are presented as general revenues of the District. The comparison of direct expenses with program revenues identifies the extent to which each District function is self-financing or draws from the general revenues of the District. Fund Financial Statements The funds of the District are classified into two categories: governmental and fiduciary. In turn, each category is divided into separate fund types. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. All remaining governmental funds are aggregated and presented as nonmajor funds. The fund classifications and a description of each existing fund type follow: Governmental Funds Governmental funds are used to account for the District's general government activities, including the collection and disbursement of specific or legally restricted monies, the acquisition or construction of general capital assets and the servicing of general long-term debt. An emphasis is placed on major funds. A fund is considered major if it is the primary operating fund of the District (General Fund) or if the fund s total assets, liabilities, revenues, or expenditures of that individual fund are at least 10 percent of the total for all funds. In addition to funds that meet the major fund criteria, any other governmental fund that the District s officials believe is particularly important to financial statement users may be reported as a major fund. The District reports the following major governmental funds: General Fund - The General Fund is the general operating fund of the District. It is used to account for and report all financial resources not accounted for and reported in another fund. The District's general fund consists of four accounts: the Educational Account, which records direct costs of instruction and administration, including the District's food service operations, the Operations and Maintenance Account, which reports all costs of maintaining, improving or repairing school buildings and property, the Working Cash Account, which reports financial resources held by the District to be used for temporary interfund loans to other District funds/accounts and the Tort Account, which accounts for the risk financing of the District. Special Revenue Funds - Special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. The District s major special revenue fund is the following: Transportation Fund, which accounts for the transportation of pupils. Revenues of the Transportation Fund include property taxes, state transportation grants, user charges and interest income. 22

35 1. Summary of Significant Accounting Policies Notes to Basic Financial Statements For the Year Ended June 30, 2016 Debt Service Fund - The District s debt service fund (the Debt Services Fund ) is used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal, interest, and related costs. Capital Projects Fund - The Capital Projects Fund is used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. The District also reports the following other funds: The Municipal Retirement/Social Security Fund, (a special revenue fund) accounts for the District's share of retirement benefit and social security costs for employees. The Fire Prevention and Safety Fund (a capital projects fund) is used to account for the altering, reconstructing and repairing of the existing school buildings of the District. Differences occur from the manner in which the fund financial statements and the government-wide statements are prepared due to the inclusion of capital assets and long-term debt activity. The fund financial statements, therefore, include a reconciliation which briefly explains the adjustments necessary to transform the fund based financial statements into the governmental column of the government-wide presentation. Additionally, the District reports the following fiduciary fund types: The Scholarship Fund (a private-purpose trust fund) accounts for assets held by the District as the beneficiary of private donors. The Student Activity Fund (an agency fund) accounts for assets held by the District as an agent for the students. The fund is custodial in nature and does not involve the measurement of results of operations. The amounts due to the activity fund organizations are equal to the assets. Assets, Liabilities, Net Position or Equity, and Other Policies Deposits and Investments State statutes (the Illinois Public Funds Investment Act (30 ILCS 235/2)) and Board policy authorize the District to invest any available funds in: (1) in bonds, notes, certificates of indebtedness, treasury bills or other securities, which are guaranteed by the full faith and credit of the United States of America as to principal and interest; (2) in bonds, notes, debentures, or other similar obligations of the United States of America, its agencies, and its instrumentalities; (3) in interest-bearing savings accounts, interest-bearing certificates of deposit or interest-bearing time deposits or any other investments constituting direct obligations of any bank as defined by the Illinois Banking Act; (4) in short term obligations of corporations organized in the United States with assets exceeding $500,000,000 if (i) such obligations are rated at the time of purchase at one of the 3 highest classifications established by at least 2 standard rating services and which mature not later than 270 days from the date of purchase, (5) in money market mutual funds registered under the Investment Company Act of 1940, (6) interest bearing bonds of any county, township, city, village, incorporated town, municipal corporation, school district, or state. 23

36 1. Summary of Significant Accounting Policies Notes to Basic Financial Statements For the Year Ended June 30, 2016 The District s cash and investments are pooled into common accounts to maximize interest earnings. The investments are stated at cost. The District invests in the Illinois Funds money market mutual fund (Illinois Funds). In accordance with state law, the Illinois Funds operates in conformity with all of the requirements of the Securities and Exchange Commission's (SEC) Rule 2a7 as promulgated under the Investment Company Act of 1940, as amended. Accordingly, the Illinois Funds qualifies as a 2a7-like pool and is reported at the net asset value per share (which approximates fair value) even though it is calculated using the amortized cost method. The Illinois Funds is subject to regulatory oversight by the state Treasurer, although it is not registered with the SEC. Capital Assets The District's modified cash basis of accounting reports capital assets (land, buildings, equipment and transportation equipment) resulting from cash transactions or certain events and reports depreciation, when appropriate. Capital assets reported in the government-wide financial statements are defined by the District as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. As the District constructs or acquires additional capital assets each period, they are capitalized and reported at historical cost. The reported value excludes normal maintenance and repairs which are essentially amounts spent in relation to capital assets that do not increase the capacity or efficiency of the item or increase its estimated useful life. Donated capital assets are recorded at their estimated acquisition value at the date of donation. Depreciation of all exhaustible capital assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Position. Depreciation is provided over the assets' estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows: Assets Years Land improvements Buildings Equipment 5-20 Transportation equipment 8 In the fund financial statements, capital assets acquired for use in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Deferred Outflows of Resources In addition to assets, the Statement of Net Position will report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period and so will not be recognized as an outflow of resources (expense) until then. The District has only one type of item that qualifies for reporting in this category. Accordingly, the item, deferred amount on refunding, is reported in the governmentwide Statement of Net Position - modified cash basis. A deferred amount on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. 24

37 1. Summary of Significant Accounting Policies Long-Term Liabilities Notes to Basic Financial Statements For the Year Ended June 30, 2016 In the government-wide financial statements, long-term debt is reported as liabilities in the Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenses. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures. Net Position Flow Assumption Sometimes the District will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position in the government-wide financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the District's policy to consider restricted net position to have been depleted before unrestricted - net position is applied. Fund Balance Flow Assumptions Sometimes the District will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the District's policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last. Fund Balance Policies Fund balance of governmental funds is reported in various categories based on the nature of any limitations requiring the use of resources for specific purposes. The District may not necessarily utilize each classification in a given fiscal year. The District itself can establish limitations on the use of resources through either a commitment (committed fund balance) or an assignment (assigned fund balance). Nonspendable fund balance includes amounts that cannot be spent because they are either not in spendable form, or, for legal or contractual reasons, must be kept intact. Restricted fund balance results from constraints placed on the use of these resources are either externally imposed by creditors (such as through debt covenants), grantors, contributors or other governments; or are imposed by law (through constitutional provisions or enabling legislation). 25

38 1. Summary of Significant Accounting Policies Notes to Basic Financial Statements For the Year Ended June 30, 2016 The committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the District's highest level of decision-making authority. The Board of Education is the highest level of decision-making authority for the District that can, by adoption of an ordinance prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the ordinance remains in place until a similar action is taken (the adoption of another ordinance) to remove or revise the limitation. Amounts in the assigned fund balance classification are intended to be used by the District for specific purposes but do not meet the criteria to be classified as committed. The Board of Education may, by resolution, authorize an individual to assign fund balance. The Board of Education has not adopted such a resolution. The Board of Education may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year's appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Unassigned fund balance is the residual classification of the General Fund. Only the General Fund can report a positive unassigned fund balance. Other governmental funds might report a negative balance in this classification, as the result of overspending for specific purposes for which amounts had been restricted or committed. Interfund Transactions The District has the following types of interfund transactions: Loans Amounts provided with a requirement for repayment. Interfund loans are reported as interfund receivables (due from other funds) in lender funds and interfund payables (due to other funds) in borrower funds. Reimbursements Repayments from the funds responsible for particular expenditure to the funds that initially paid for them. Reimbursements are reported as expenditure in the reimbursing fund and as a reduction of expenditures in the reimbursed fund. Transfers Flows of assets (typically cash) without equivalent flows of assets in return and without a requirement for repayment. Transfers are reported as other financing uses in the funds making transfers and as other financing sources in the funds receiving transfers. Eliminations Eliminations have been made in the Statement of Net Position to remove the "grossing-up" effect on assets and liabilities within the governmental activities column for amounts reported in the individual funds as interfund receivables and payables, if any. Similarly, transfers between funds have been eliminated in the Statement of Activities. 26

39 1. Summary of Significant Accounting Policies Use of Estimates and Comparative Data Notes to Basic Financial Statements For the Year Ended June 30, 2016 The preparation of financial statements in conformity with the modified cash basis of accounting requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. The financial statements include certain prior year comparative information in order to provide an understanding of changes in the District's financial position and operations. 2. Stewardship, Compliance, and Accountability Budgets and Budgetary Information The budget is prepared on the modified cash basis of accounting for all governmental funds, (a budget was not adopted for the Capital Projects Fund or the Fire Prevention and Safety Fund), which is an acceptable method as prescribed by the Illinois Compiled Statutes and is the same basis that is used for financial reporting. This allows for comparability between budget and actual amounts. The budget appropriations lapse at the end of each fiscal year. The District does not utilize an encumbrance system. The District follows these procedures in establishing the budgetary data reflected in the financial statements. 1. The administration submits to the Board of Education a proposed operating budget for the fiscal year commencing July 1st. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted and the proposed budget is available for inspection to obtain taxpayer comments. 3. Prior to September 30th, the budget is legally adopted through passage of a resolution. 4. The Superintendent is authorized to transfer up to 10 percent of the total budget between departments within any fund; however, any revisions that alter the total expenditures of any fund must be approved by the Board of Education. The level of control (level at which expenditures may not exceed budget/appropriations) is the fund. 5. Formal budgetary integration is employed as a management control device during the year. 6. The Board of Education may amend the budget by the same procedures required of its original adoption. The budget was adopted September 24, Budgets of certain funds were amended by administration to account for funding changes. Excess of Expenditures over Budget The following funds had an excess of actual expenditures over budgeted amounts for the year ended June 30, 2016: State On-Behalf Payments were over budget by $7,468,434, causing total expenditures of the General Fund to exceed budgeted expenditures by $6,429,219 and expenditures of the Educational Account of the General Fund to exceed budgeted expenditures by $6,574,620 during the fiscal year ended June 30,

40 2. Stewardship, Compliance, and Accountability Notes to Basic Financial Statements For the Year Ended June 30, 2016 The General Fund Tort Account incurred expenditures in excess of budgeted expenditures in the amount of $118,178. Additionally, the Debt Services Fund incurred expenditures in excess of budgeted expenditures in the amount of $772,508 during the fiscal year ended June 30, Deficit Fund Balances The General Fund (in total) had a deficit fund balance at year end of $6,378,606. The Educational Account and Operations and Maintenance Account of the General Fund had deficit fund balances at year end of $3,624,733 and $4,827,626, respectively. The District anticipates future revenues will eliminate the deficits. Transfers The following transfers were made between funds: The General Fund - Educational Account and General Fund - Operations and Maintenance Account transferred $344,292 and $7,091, respectively, to the Debt Services Fund to make required payments on installment contracts payable. Within the General Fund, the Operations and Maintenance Account transferred $4,000,000 to the Educational Account. Intrafund Loan Within the General Fund, the Educational Account loaned $6,000,000 to the Operations and Maintenance Account. Pro-rata General State Aid Expenditures The Educational Account of the General Fund paid $11,369 of Special Education salaries expenditures from revenue code General State Aid, during the fiscal year ended June 30, Deposits and Investments Substantially all cash and investments are deposits and investments maintained in pooled accounts held in the name of the District. Deposits As of June 30, 2016, the District had deposits with federally insured financial institutions of $9,655,949, which included $842,841 of certificates of deposit; the book balances of those deposits totaled $9,323,443. Custodial Credit Risk Deposits. In the case of deposits, this is the risk that in the event of a bank failure, the District's deposits may not be recovered. The District's investment policy protects the District from custodial risk by requiring funds on deposit (checking accounts, certificates of deposit, etc.) in excess of FDIC limits to be collateralized. As of June 30, 2016, $6,079,774 of account balances at banks were not collateralized - the remaining $3,576,175 of account balances at banks were either insured by the Federal Deposit Insurance Corporation (FDIC) for $250,000, or collateralized with securities of the U.S. Government. 28

41 3. Deposits and Investments Investments Investment Policies Notes to Basic Financial Statements For the Year Ended June 30, 2016 The District's investments are subject to the following risks: Concentration of credit risk is the risk of loss attributed to the magnitude of the District's investment in a single issuer. The District places no limit on the amount it may invest in any one issuer. The District invests in the Illinois Funds money market mutual fund. The Illinois Funds has been rated AAAm by Standard & Poor s; the weighted average maturity of investments held by the Illinois Funds at June 30, 2016 was 40 days. The District s balance in the Illinois Funds at June 30, 2016 was $21,474,402. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The District's investment options were described previously. Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The District may invest in short-term obligations of corporations that mature no later than 270 days from the date of purchase. Custodial credit risk is the risk that, in the event of a bank failure, the District's deposits might not be recovered. All investments are required to be registered and held by a third-party custodian. The Illinois Funds is collateralized by repurchase agreements at 102%. The above deposits and investments are presented in the basic financial statements as cash and investments as follows: Cash - Carrying Amount of District Deposits Per Note Above $ 9,323,443 Investments - Carrying Amount of District Investments Per Note Above 21,474,402 Total $ 30,797,845 Cash and Investments Per Statement of Net Position $ 27,882,691 Cash and Investments Per Statement of Fiduciary Net Position Private-Purpose Trust Fund 593,740 Agency Fund 2,321,414 Total $ 30,797, Real Estate Taxes The District's property tax is levied each year on all taxable real property located in the District on or before the last day in December. The lien date for the levy is January 1st. The Board of Education approved the 2015 tax levy on December 10, Property taxes are payable in two installments on June 1st and September 1st of the following year. The District receives significant distributions of tax receipts. approximately one month after these due dates. The County Treasurer remits to the District its respective share of taxes collected. The District receives the remittances from the County Treasurer approximately one month after collection. Property taxes are recorded upon receipt. The receipts for fiscal year ended June 30, 2016 represent approximately one half of the 2015 tax extension and one half of the 2014 tax extension. 29

42 5. Capital Assets LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT 210 Notes to Basic Financial Statements For the Year Ended June 30, 2016 Capital asset balances and activity for the year ended June 30, 2016, are as follows: Balance Balance July 1, 2015 Additions Deletions June 30, 2016 Capital Assets not Being Depreciated Land $ 25,018,371 $ - $ - $ 25,018,371 Total Capital Assets not Being Depreciated 25,018, ,018,371 Capital Assets Being Depreciated Improvements Other Than Buildings 7,307, ,307,523 Buildings 300,481, ,481,315 Equipment 4,059,537 5,044-4,064,581 Transportation Equipment 3,289, ,289,273 Capital Assets Being Depreciated, Gross 315,137,648 5, ,142,692 Accumulated Depreciation Improvements Other Than Buildings ( 4,592,289) ( 196,501) - ( 4,788,790) Buildings ( 70,277,977) ( 6,172,637) - ( 76,450,614) Equipment ( 3,664,910) ( 48,973) - ( 3,713,883) Transportation Equipment ( 3,174,144) ( 10,350) - ( 3,184,494) Total Accumulated Depreciation ( 81,709,320) ( 6,428,461) - ( 88,137,781) Total Capital Assets Being Depreciated, Net of Depreciation 233,428,328 ( 6,423,417) - 227,004,911 Total Capital Assets, Net of Depreciation $ 258,446,699 ($ 6,423,417) $ - $ 252,023,282 Depreciation expense was charged to the functions of governmental activities as follows: 6. Short-Term Debt Instruction $ 4,497,573 Pupil Support 320,906 Other Support 960,786 Transporation 327,772 Administration 321,424 Total $ 6,428,461 On July 8, 2015, the District issued $10,000,000 of 1.5 percent 2014D Taxable Educational Purposes Tax Anticipation Warrants. The maturity date of the warrants was October 30, The warrants were repaid on October 30, On December 15, 2015, the District issued $15,000,000 of 1.75 percent 2015A Taxable Educational Purposes Tax Anticipation Warrants. The maturity date of the warrants is October 30,

43 6. Short-Term Debt LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT 210 Notes to Basic Financial Statements For the Year Ended June 30, 2016 On February 25, 2016, the District issued $10,000,000 of 1.75 percent 2015B Taxable Educational Purposes Tax Anticipation Warrants. The maturity date of the warrants was October 30, The warrants were repaid on June 23, On April 15, 2016, the District issued $5,000,000 of 1.75 percent 2015C Taxable Educational Purposes Tax Anticipation Warrants. The maturity date of the warrants is October 30, The following is a summary of activity for the District s short-term debt for the year ended June 30, 2016: Balance Balance July 1, 2015 Additions Repayments June 30, 2016 Tax Anticipation Warrants $ - $ 40,000,000 $ 20,000,000 $ 20,000,000 All outstanding tax anticipation warrants at June 30, 2016 are payable from the General Fund Educational Account. 7. Long-Term Debt The following is a summary of activity for the District s long-term debt for the year ended June 30, 2016: Balance Issuances/ Retirements/ Balance Principal Due July 1, 2015 Additions Deletions June 30, 2016 Within One Year Bonds Payable: General Obligation Bonds $ 259,104,161 $ - $ 6,035,000 $ 253,069,161 $ 6,545,000 Unamortized Premiums 35,174,301-1,073,063 34,101,238 - Total Bonds Payable 294,278,462-7,108, ,170,399 6,545,000 Installment Contracts Payable 571, , ,643 17,517 Total $ 294,850,303 $ - $ 7,457,261 $ 287,393,042 $ 6,562,517 The District received property taxes to retire the general obligation bonds from the District s Debt Services Fund. The Transportation Fund makes the principal and interest payments to retire installment contracts payable for transportation purposes. Non-transportation installment contracts are retired by transferring monies from the General Fund to the Debt Services Fund; the Debt Services Fund reports the principal and interest as expenditures. In addition to the unamortized premiums, the District is also amortizing a deferred amount on refunding of previous debt issues. The District amortized $5,394,069 of the deferred amount on refunding during the current year leaving a remaining unamortized balance of $48,969,748 as of June 30, 2016 which is reported in the Statement of Net Position as a deferred outflow of resources. At June 30, 2016 general long-term debt consisted of the following: 31

44 7. Long-Term Debt LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT 210 General Obligation Bonds Notes to Basic Financial Statements For the Year Ended June 30, 2016 General Obligation School Bonds, Series 1998, dated May 1, 1998, issued in the amount of $20,000,000 in denominations of $5,000. Principal is payable on January 1st, with interest due semiannually on July 1st, and January 1st, at a rate of 5.1 percent. Final payment is due January 1, Remaining principal and interest requirements are as follows: Due in Total Fiscal Year Principal Interest Debt Service 2017 $ 1,300,000 $ 66,300 $ 1,366,300 Total $ 1,300,000 $ 66,300 $ 1,366,300 General Obligation School Bonds, Series 1999, dated February 1, 1999, issued in the amount of $24,000,000 in denominations of $5,000. Principal is payable on January 1st, with interest due semiannually on July 1st, and January 1st, at a rate of 5.7 percent. Final payment is due January 1, Remaining principal and interest requirements are as follows: Due in Total Fiscal Year Principal Interest Debt Service 2017 $ 2,555,000 $ 312,645 $ 2,867, ,930, ,010 3,097,010 Total $ 5,485,000 $ 479,655 $ 5,964,655 General Obligation Capital Appreciation School Bonds, Series 2006, dated May 8, 2006, issued in the amount of $52,378,548. Principal along with accreted interest at 9 percent is payable on January 1, 2021 through Remaining principal and interest requirements are as follows: Due in Total Fiscal Year Principal Interest Debt Service 2021 $ 2,898,795 $ 7,626,205 $ 10,525, , , , ,502,371 14,992,629 19,495, ,393,705 16,381,295 20,775, ,285,917 17,844,083 22,130, ,174,818 19,365,182 23,540,000 Total $ 20,365,318 $ 76,534,682 $ 96,900,000 32

45 7. Long-Term Debt LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT 210 Notes to Basic Financial Statements For the Year Ended June 30, 2016 General Obligation School Building Bonds, Series 2007, dated February 1, 2007, issued in the amount of $123,190,000 in denominations of $5,000. Remaining principal is payable on January 1, 2017 with interest due semiannually on July 1st, and January 1st, at a rate of 5.0 percent. Remaining principal and interest requirements are as follows: Due in Total Fiscal Year Principal Interest Debt Service 2017 $ 645,000 $ 32,250 $ 677,250 Total $ 645,000 $ 32,250 $ 677,250 General Obligation School Bonds, Series 2009, dated December 1, 2009, issued in the amount of $29,015,000 in denominations of $5,000. Principal is payable on January 1st, with interest due semiannually on July 1st, and January 1st, at rates ranging from 3.7 percent to 5.0 percent. Final payment is due January 1, Remaining principal and interest requirements are as follows: Due in Total Fiscal Year Principal Interest Debt Service 2017 $ 2,005,000 $ 1,200,650 $ 3,205, ,380,000 1,120,450 4,500, , , , ,250 1,485, ,615, ,750 6,581, ,150, ,000 17,836,000 Total $ 28,650,000 $ 5,944,350 $ 34,594,350 Refunding School Bonds, Series 2013A, dated February 21, 2013, issued in the amount of $130,840,000 in denominations of $5,000. Principal is payable on January 1st, beginning in 2027 with interest due semiannually on July 1st, and January 1st, at rates ranging from 3.25 percent to 5.00 percent. Final payment is due January 1, Remaining principal and interest requirements are as follows: 33

46 7. Long-Term Debt LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT 210 Notes to Basic Financial Statements For the Year Ended June 30, 2016 Due in Total Fiscal Year Principal Interest Debt Service 2017 $ - $ 6,022,475 $ 6,022, ,022,475 6,022, ,022,475 6,022, ,022,475 6,022, ,022,475 6,022, ,022,475 6,022, ,022,475 6,022, ,022,475 6,022, ,022,475 6,022, ,022,475 6,022, ,300,000 6,022,475 24,322, ,300,000 5,107,475 23,407, ,300,000 4,192,475 22,492, ,500,000 3,277,475 24,777, ,300,000 2,308,725 20,608, ,300,000 1,393,725 19,693, ,840, ,725 18,501,725 Total $ 130,840,000 $ 83,188,825 $ 214,028,825 Capital Appreciation Refunding School Bonds, Series 2013B, dated February 21, 2013, issued in the amount of $47,673,843. Principal along with accreted interest at rates ranging from 4.02 percent to 4.39 percent is payable on January 1, 2027 through Remaining principal and interest requirements are as follows: Due in Total Fiscal Year Principal Interest Debt Service 2027 $ 3,968,433 $ 2,921,567 $ 6,890, ,130,896 4,234,104 9,365, ,213,419 5,706,581 11,920, ,624,699 5,730,301 11,355, ,119,625 9,210,375 17,330, ,963,115 11,181,885 20,145, ,653,656 13,216,344 22,870,000 Total $ 47,673,843 $ 52,201,157 $ 99,875,000 General Obligation Refunding School Bonds, Series 2015, dated April 7, 2015, issued in the amount of $18,380,000 in denominations of $5,000. Principal is payable on January 1st, with interest due semiannually on July 1st, and January 1st, at rates ranging from 2.0 percent of 5.0 percent. Remaining principal and interest requirements are as follows: 34

47 7. Long-Term Debt LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT 210 Notes to Basic Financial Statements For the Year Ended June 30, 2016 Due in Total Fiscal Year Principal Interest Debt Service 2017 $ 40,000 $ 887,700 $ 927, , ,900 1,716, ,250, ,000 9,112, ,990, ,500 9,439,500 Total $ 18,110,000 $ 3,086,100 $ 21,196,100 Total annual principal and interest requirements for all outstanding bonds are as follows: Installment Contracts Due in Total Fiscal Year Principal Interest Debt Service 2017 $ 6,545,000 $ 8,522,020 $ 15,067, ,140,000 8,196,835 15,336, ,250,000 7,869,725 16,119, ,490,000 7,457,225 16,947, ,513,795 14,615,430 23,129, ,259,712 7,033,763 24,293, ,502,371 21,015,104 25,517, ,393,705 22,403,770 26,797, ,285,917 23,866,558 28,152, ,174,818 25,387,657 29,562, ,268,433 8,944,042 31,212, ,430,896 9,341,579 32,772, ,513,419 9,899,056 34,412, ,124,699 9,007,776 36,132, ,419,625 11,519,100 37,938, ,263,115 12,575,610 39,838, ,493,656 13,878,069 41,371,725 Total $ 253,069,161 $ 221,533,319 $ 474,602,480 The District entered into an installment contract for computers on December 10, Payments under the contract, including interest at 1.47 percent, are due as follows: Due in Total Fiscal Year Principal Interest Debt Service 2018 $ 150,716 $ 2,216 $ 152,932 Total $ 150,716 $ 2,216 $ 152,932 35

48 7. Long-Term Debt LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT 210 Notes to Basic Financial Statements For the Year Ended June 30, 2016 The District entered into an installment contract for equipment on January 23, Payments under the contract, including interest at 3.2 percent, are due as follows: Due in Total Fiscal Year Principal Interest Debt Service 2017 $ 8,466 $ 989 $ 9, , , , , , ,667 Total $ 34,763 $ 2,269 $ 37,032 The District entered into an installment contract for equipment on March 3, Payments under the contract, including interest at 3.2 percent, are due as follows: Due in Total Fiscal Year Principal Interest Debt Service 2017 $ 9,051 $ 1,057 $ 10, , , , , , ,266 Total $ 37,164 $ 2,426 $ 39,590 Total annual debt service requirements to maturity for all installment contracts outstanding are as follows: Legal Debt Margin Due in Total Fiscal Year Principal Interest Debt Service 2017 $ 17,517 $ 2,046 $ 19, ,802 3, , , , , ,933 Total $ 222,643 $ 6,911 $ 229,554 As of June 30, 2016, the legal debt limit of the District was $243,218,632, based upon 6.9 percent of its actual 2015 equalized assessed valuation, the most recent available, of $3,524,907,713. The debt limit less outstanding debt applicable to the limit of $157,661,804 results in a legal debt margin of $85,556,828 as of June 30,

49 7. Long-Term Debt LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT 210 Prior Year Defeasance of Debt Notes to Basic Financial Statements For the Year Ended June 30, 2016 In prior years, the District defeased various bond issues by placing proceeds of new bonds in irrevocable trust funds to provide for future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the District's financial statements. At June 30, 2016, $97,598,230 of the defeased bonds remains outstanding. 8. Operating Leases The District leases transportation equipment under lease agreements that expire through fiscal year ending June 30, Future minimum lease payments required under these leases in years ending June 30th are as follows: Fiscal Year Ending June 30, Total 2017 $ 1,013, ,073, , ,570 Total $ 3,128,819 Expenditures under the District's operating leases for the year ended June 30, 2016 were $1,994, Risk Management The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. In order to protect against such losses, the District has purchased insurance from private insurance companies. For employees medical claims, the District is a member of the Lincoln-Way Area Affiliation of Participating School Districts Employee Benefits Plan (the Plan ). The Plan is an insurance cooperative pool comprised of member school districts. Each member district appoints a person to the Plan s Board of Directors. The Plan pays all claims for the member districts. The District is responsible for the claims of its own employees and their beneficiaries. The District pays the Plan monthly premiums based on employee participation; a total of $9,473,677 was paid during the fiscal year ended June 30, The Plan purchases stop-loss insurance of $300,000 per individual member. The District had a reserve balance for future claims of $3,786,861 with the Plan as of June 30,

50 10. Employee Retirement Systems and Plans Illinois Municipal Retirement Fund Plan Description Notes to Basic Financial Statements For the Year Ended June 30, 2016 The District s defined benefit pension plan for regular employees provides retirement and disability benefits, post-retirement increases, and death benefits to plan members and beneficiaries. The District s plan is managed by the Illinois Municipal Retirement Fund (IMRF), the administrator of a multi-employer public pension fund. A summary of IMRF s pension benefits is provided in the Benefits Provided section of this document. Details of all benefits are available from IMRF. Benefit provisions are established by statute and may only be changed by the General Assembly of the State of Illinois. IMRF issues a publicly available Comprehensive Annual Financial Report that includes financial statements, detailed information about the pension plan s fiduciary net position, and required supplementary information. The report is available for download at Benefits Provided IMRF has three benefit plans. The vast majority of IMRF members participate in the Regular Plan (RP). The Sheriff s Law Enforcement Personnel (SLEP) plan is for sheriffs, deputy sheriffs, and selected police chiefs. Counties could adopt the Elected County Official (ECO) plan for officials elected prior to August 8, 2011 (the ECO plan was closed to new participants after that date). All three IMRF benefit plans have two tiers. Employees hired before January 1, 2011, are eligible for Tier 1 benefits. Tier 1 employees are vested for pension benefits when they have at least eight years of qualifying service credit. Tier 1 employees who retire at age 55 (at reduced benefits) or after age 60 (at full benefits) with eight years of service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1-2/3 percent of the final rate of earnings for the first 15 years of service credit, plus 2 percent for each year of service credit after 15 years to a maximum of 75 percent of their final rate of earnings. Final rate of earnings is the highest total earnings during any consecutive 48 months within the last 10 years of service, divided by 48. Under Tier 1, the pension is increased by 3 percent of the original amount on January 1st every year after retirement. Employees hired on or after January 1, 2011, are eligible for Tier 2 benefits. For Tier 2 employees, pension benefits vest after ten years of service. Participating employees who retire at age 62 (at reduced benefits) or after age 67 (at full benefits) with ten years of service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1-2/3 percent of the final rate of earnings for the first 15 years of service credit, plus 2 percent for each year of service credit after 15 years to a maximum of 75 percent of their final rate of earnings. Final rate of earnings is the highest total earnings during any 96 consecutive months within the last 10 years of service, divided by 96. Under Tier 2, the pension is increased on January 1st every year after retirement, upon reaching age 67, by the lesser of: 3 percent of the original pension amount, or 1/2 of the increase in the Consumer Price Index of the original pension amount. Employees Covered by Benefit Terms At December 31, 2015, the following employees were covered by the benefit terms: 38

51 10. Employee Retirement Systems and Plans Contributions Notes to Basic Financial Statements For the Year Ended June 30, 2016 Inactive Plan Members and Beneficiaries Currently Receiving Benefits 224 Inactive Plan Members Entitled to But Not Yet Receiving Benefits 242 Active Plan Members 373 Total 839 As set by statute, the District s Regular Plan Members are required to contribute 4.5 percent of their annual covered salary. The statute requires employers to contribute the amount necessary, in addition to member contributions, to finance the retirement coverage of its own employees. The District s annual contribution rate for calendar year 2015 was percent. For the fiscal year ended June 30, 2016, the District contributed $1,360,418 to the plan. The District also contributes for disability benefits, death benefits, and supplemental retirement benefits, all of which are pooled at the IMRF level. Contribution rates for disability and death benefits are set by IMRF s Board of Trustees, while the supplemental retirement benefits rate is set by statute. Net Pension Liability The District s net pension liability was measured as of December 31, The total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. Actuarial Assumptions The following are the methods and assumptions used to determine total pension liability at December 31, 2015: The Actuarial Cost Method used was Entry Age Normal. The Asset Valuation Method used was Market Value of Assets. The Inflation Rate was assumed to be 2.75 percent. Salary Increases were expected to be 3.75 percent to percent, including inflation. The Investment Rate of Return was assumed to be 7.50 percent. Projected Retirement Age was from the Experience-based Table of Rates, specific to the type of eligibility condition, last updated for the 2014 valuation according to an experience study from years 2011 to The IMRF-specific rates for Mortality (for non-disabled retirees) were developed from the RP-2014 Blue Collar Health Annuitant Mortality Table with adjustments to match current IMRF experience. For Disabled Retirees, an IMRF-specific mortality table was used with fully generational projection scale MP-2014 (base year 2014). The IMRF-specific rates were developed from the RP-2014 Disabled Retirees Mortality Table, applying the same adjustments that were applied for non-disabled lives. For Active Members, an IMRF-specific mortality table was used with fully generational projection scale MP-2014 (base year 2014). The IMRF-specific rates were developed from the RP-2014 Employee Mortality Table with adjustments to match current IMRF experience. 39

52 10. Employee Retirement Systems and Plans Notes to Basic Financial Statements For the Year Ended June 30, 2016 The long-term expected rate of return on pension plan investments was determined using a buildingblock method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense, and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return to the target asset allocation percentage and adding expected inflation. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Discount Rate Long-Term Expected Target Real Rate Asset Class Percentage of Return Domestic Equity 38.00% 7.39% International Equity 17.00% 7.59% Fixed Income 27.00% 3.00% Real Estate 8.00% 6.00% Alternative Investments 9.00% % Cash Equivalents 1.00% 2.25% Total % A Single Discount Rate of 7.47 percent was used to measure the total pension liability. The projection of cash flow used to determine this Single Discount Rate assumed that the plan members contributions will be made at the current contribution rate, and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. The Single Discount Rate reflects: 1. The long-term expected rate of return on pension plan investments (during the period in which the fiduciary net position is projected to be sufficient to pay benefits), and 2. The tax-exempt municipal bond rate based on an index of 20-year general obligation bonds with an average AA credit rating (which is published by the Federal Reserve) as of the measurement date (to the extent that the contributions for use with the long-term expected rate of return are not met). For the purpose of the most recent valuation, the expected rate of return on plan investments is 7.50 percent, the municipal bond rate is 3.57 percent, and the resulting single discount rate is 7.47 percent. 40

53 10. Employee Retirement Systems and Plans Changes in the Net Pension Liability Notes to Basic Financial Statements For the Year Ended June 30, 2016 Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (A) (B) (A)-(B) Balances at December 31, 2014 $ 40,616,805 $ 34,724,294 $ 5,892,511 Changes for the Year: Service Cost 1,273,270-1,273,270 Interest on the Total Pension Liability 3,019,136-3,019,136 Differences Between Expected and Actual Experience of the Total Pension Liability 32,213-32,213 Changes of Assumptions 50,932-50,932 Contributions - Employer - 1,370,364 ( 1,370,364) Contributions - Employees - 485,734 ( 485,734) Net Investment Income - 173,808 ( 173,808) Benefit Payments, Including Refunds of Employee Contributions ( 1,781,330) ( 1,781,330) - Other (Net Transfer) - 98,658 ( 98,658) Net Changes 2,594, ,234 2,246,987 Balances at December 31, 2015 $ 43,211,026 $ 35,071,528 $ 8,139,498 Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the plan s net pension liability, calculated using a Single Discount Rate of 7.47 percent, as well as what the plan s net pension liability would be if it were calculated using a Single Discount Rate that is 1 percent lower or 1 percent higher: 1% Decrease Current Discount Rate 1% Increase (6.47%) (7.47%) (8.47%) District's Net Pension Liability $ 13,653,718 $ 8,139,498 $ 3,562,049 Pension Expense and Deferred Outflows of Resources Related to Pensions For the year ended December 31, 2015, the District recognized pension expense of $2,187,205. At December 31, 2015, the District reported deferred outflows of resources related to pensions from the following sources: 41

54 10. Employee Retirement Systems and Plans Notes to Basic Financial Statements For the Year Ended June 30, 2016 Deferred Deferred Amounts Related to Pensions Outflows of Resources Deferred Amounts to be Recognized in Pension Expense in Future Periods Differences between Expected and Actual Experience $ 146,880 Changes of Assumptions 1,049,351 Net Difference between Projected and Actual Earnings on Pension Plan Investments 2,224,166 Total Deferred Amounts to be Recognized in Pension Expense in Future Periods 3,420,397 Pension Contributions Made Subsequent to the Measurement Date 702,638 Total Deferred Amounts Related to Pensions $ 4,123,035 Amounts of deferred outflows of resources related to pensions will be recognized in pension expense in future periods as follows: Year Ending Net Deferred Outflows December 31, of Resources 2016 $ 1,080, ,080, , ,903 Total $ 3,420,397 Teachers Retirement System of the State of Illinois Plan Description The District participates in the Teachers Retirement System of the State of Illinois (TRS). TRS is a cost-sharing multiple-employer defined benefit pension plan that was created by the Illinois legislature for the benefit of Illinois public school teachers employed outside the city of Chicago. TRS members include all active non-annuitants who are employed by a TRS-covered employer to provide services for which teacher licensure is required. The Illinois Pension Code outlines the benefit provisions of TRS, and amendments to the plan can be made only by legislative action with the Governor s approval. The TRS Board of Trustees is responsible for the System s administration. TRS issues a publicly available financial report that can be obtained at by writing to TRS at 2815 W. Washington, PO Box 19253, Springfield, IL 62794; or by calling (888) , option 2. 42

55 10. Employee Retirement Systems and Plans Benefits Provided Notes to Basic Financial Statements For the Year Ended June 30, 2016 TRS provides retirement, disability, and death benefits. Tier I members have TRS or reciprocal system service prior to January 1, Tier I members qualify for retirement benefits at age 62 with five years of service, at age 60 with 10 years, or age 55 with 20 years. The benefit is determined by the average of the four highest years of creditable earnings within the last 10 years of creditable service and the percentage of average salary to which the member is entitled. Most members retire under a formula that provides 2.2 percent of final average salary up to a maximum of 75 percent with 34 years of service. Disability and death benefits are also provided. Tier II members qualify for retirement benefits at age 67 with 10 years of service, or a discounted annuity can be paid at age 62 with 10 years of service. Creditable earnings for retirement purposes are capped and the final average salary is based on the highest consecutive eight years of creditable service rather than the last four. Disability provisions for Tier II are identical to those of Tier I. Death benefits are payable under a formula that is different from Tier I. Essentially all Tier I retirees receive an annual 3 percent increase in the current retirement benefit beginning January 1st following the attainment of age 61 or on January 1st following the member s first anniversary in retirement, whichever is later. Tier II annual increases will be the lesser of 3 percent of the original benefit or 1/2 percent of the rate of inflation beginning January 1st following attainment of age 67 or on January 1st following the member s first anniversary in retirement, whichever is later. Contributions The state of Illinois maintains the primary responsibility for funding TRS. The Illinois Pension Code, as amended by Public Act and subsequent acts, provides that for years 2010 through 2045, the minimum contribution to the System for each fiscal year shall be an amount determined to be sufficient to bring the total assets of the System up to 90 percent of the total actuarial liabilities of the System by the end of fiscal year Contributions from active members and TRS contributing employers are also required by the Illinois Pension Code. The contribution rates are specified in the pension code. The active member contribution rate for the year ended June 30, 2016, was 9.4 percent of creditable earnings. The member contribution, which may be paid on behalf of employees by the employer, is submitted to TRS by the employer. On Behalf Contributions to TRS The state of Illinois makes employer pension contributions on behalf of the District. For the year ended June 30, 2016, state of Illinois contributions recognized by the District were based on the state s proportionate share of the collective net pension liability associated with the District, and the District recognized revenue and expenditures of $22,809,199 in pension contributions from the state of Illinois. 2.2 Formula Contributions Employers contribute 0.58 percent of total creditable earnings for the 2.2 formula change. The contribution rate is specified by statute. Contributions for the year ended June 30, 2016, were $248,931 and are deferred because they were paid after the June 30, 2015 measurement date. 43

56 10. Employee Retirement Systems and Plans Federal and Special Trust Fund Contributions Notes to Basic Financial Statements For the Year Ended June 30, 2016 When TRS members are paid from federal and special trust funds administered by the employer, there is a statutory requirement for the employer to pay an employer pension contribution from those funds. Under a policy adopted by the TRS Board of Trustees that has been in effect since the fiscal year ended June 30, 2006, employer contributions for employees paid from federal and special trust funds will be the same as the state contribution rate to TRS. Public Act now requires the two rates to be the same. For the year ended June 30, 2016, the employer pension contribution was percent of salaries paid from federal and special trust funds. For the year ended June 30, 2016, salaries totaling $204,018 were paid from federal and special trust funds that required District contributions of $73,569. These contributions are deferred because they were paid after the June 30, 2015 measurement date. Employer Retirement Cost Contributions Under GASB Statement No. 68, contributions that an employer is required to pay because of a TRS member retiring are categorized as specific liability payments. The employer is required to make a one-time contribution to TRS for members retiring under the Early Retirement Option (ERO). The payments vary depending on the member s age and salary. The maximum employer ERO contribution under the current program is percent and applies when the member is age 55 at retirement. For the year ended June 30, 2016, the District made no payments to TRS for employer ERO contributions. The employer is also required to make a one-time contribution to TRS for members granted salary increases over 6 percent if those salaries are used to calculate a retiree s final average salary. A onetime contribution is also required for members granted sick leave days in excess of the normal annual allotment if those days are used as TRS service credit. For the year ended June 30, 2016, the District paid $220 to TRS for employer contributions due on salary increases in excess of 6 percent and made no payments for sick leave days granted in excess of the normal annual allotment. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2016, the District reported a liability for its proportionate share of the net pension liability (first amount shown below) that reflected a reduction for state pension support provided to the District. The state s support and total are for disclosure purposes only. The amount recognized by the District as its proportionate share of the net pension liability, the related state support, and the total portion of the net pension liability that was associated with the District were as follows: District s Proportionate Share of the Net Pension Liability $ 5,663,871 State s Proportionate Share of the Net Pension Liability Associated with the District 278,403,939 Total $ 284,067,810 The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2014 and rolled forward to June 30, The District s proportion of the net pension liability was based on the District s share of contributions to TRS for the measurement year ended June 30, 2015, relative to the projected contributions of all participating TRS employers and the state during that period. At June 30, 2015, the employer s proportion was percent, which was a decrease of percent from its proportion measured as of June 30,

57 10. Employee Retirement Systems and Plans Notes to Basic Financial Statements For the Year Ended June 30, 2016 For the year ended June 30, 2016, the District recognized pension expense of $22,809,199 and revenue of $22,809,199 for support provided by the state. At June 30, 2016, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Deferred Amounts Related to Pensions Outflows of Inflows of Resources Resources Deferred Amounts to be Recognized in Pension Expense in Future Periods Differences between Expected and Actual Experience $ 2,105 $ 6,208 Net Difference between Projected and Actual Earnings on Pension Plan Investments 112, ,330 Changes of Assumptions 78,325 - Changes in Proportion and Differences between District Contributions and Proportionate Share of Contributions - 795,509 Total Deferred Amounts to be Recognized in Pension Expense in Future Periods 192,599 1,000,047 Pension Contributions Made Subsequent to the Measurement Date 322,500 - Total Deferred Amounts Related to Pensions $ 515,099 $ 1,000,047 $322,500 reported as deferred outflows of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the reporting year ended June 30, Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ending Net Deferred Inflows June 30, of Resources 2016 ($ 244,299) 2017 ( 244,299) 2018 ( 244,299) 2019 ( 74,551) Total ($ 807,448) 45

58 10. Employee Retirement Systems and Plans Actuarial Assumptions Notes to Basic Financial Statements For the Year Ended June 30, 2016 The total pension liability in the June 30, 2015 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 3.00 percent Salary Increases Varies by amount of service credit Investment Rate of Return 7.50 percent, net of pension plan investment expense, including inflation Mortality rates were based on the RP-2014 White Collar Table with adjustments as appropriate for TRS experience. The rates are used on a fully-generational basis using projection table MP The actuarial assumptions for the years ended June 30, 2015 and 2014 were different. The actuarial assumptions used in the June 30, 2015 valuation were based on the 2015 actuarial experience analysis. The investment return assumption remained at 7.5 percent, salary increase assumptions were lowered, retirement rates were increased, mortality updates were made and other assumptions were revised. The actuarial assumptions used in the June 30, 2014 valuation were based on updates to economic assumptions adopted in 2014 which lowered the investment return assumption from 8.0 percent to 7.5 percent. The salary increase and inflation assumptions were also lowered from their 2013 levels. The long-term expected rate of return on pension plan investments was determined using a buildingblock method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class that were used by the actuary are summarized in the following table: Long-Term Expected Target Real Rate Asset Class Percentage of Return U.S. Large Cap 18.00% 7.53% Global Equity excluding U.S % 7.88% Aggregate Bonds 16.00% 1.57% U.S. TIPS 2.00% 2.82% NCREIF 11.00% 5.11% Opportunistic Real Estate 4.00% 9.09% ARS 8.00% 2.57% Risk Parity 8.00% 4.87% Diversified Inflation Strategy 1.00% 3.26% Private Equity 14.00% 12.33% Total % 46

59 10. Employee Retirement Systems and Plans Discount Rate Notes to Basic Financial Statements For the Year Ended June 30, 2016 At June 30, 2015, the discount rate used to measure the total pension liability was a blended rate of 7.47 percent, which was a change from the June 30, 2014 rate of 7.50 percent. The projection of cash flows used to determine the discount rate assumed that employee contributions, employer contributions, and state contributions will be made at the current statutorily-required rates. Based on those assumptions, TRS s fiduciary net position at June 30, 2015 was not projected to be available to make all projected future benefit payments of current active and inactive members and all benefit recipients. Tier I s liability is partially funded by Tier II members, as the Tier II member contribution is higher than the cost of Tier II benefits. Due to this subsidy, contributions from future members in excess of the service cost are also included in the determination of the discount rate. Despite the subsidy, all projected future payments were not covered, so a slightly lower long-term expected rate of return on TRS investments was applied to all periods of projected benefit payments to determine the total pension liability. At June 30, 2014, the discount rate used to measure the total pension liability was 7.50 percent. The discount rate was the same as the actuarially-assumed rate of return on investments that year because TRS s fiduciary net position and the subsidy provided by Tier II were sufficient to cover all projected benefit payments. Sensitivity of the District s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the District s proportionate share of the net pension liability calculated using the discount rate of 7.47 percent, as well as what the District s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.47 percent) or 1-percentage-point higher (8.47 percent) than the current rate. 1% Decrease Current Discount Rate 1% Increase (6.47%) (7.47%) (8.47%) District's Proportionate Share of the Net Pension Liability $ 6,999,156 $ 5,663,871 $ 4,568,901 TRS Fiduciary Net Position Detailed information about the TRS s fiduciary net position as of June 30, 2015 is available in the separately issued TRS Comprehensive Annual Financial Report. Social Security Employees not qualifying for coverage under the TRS or the IMRF are considered nonparticipating employees. These employees and those qualifying for coverage under IMRF are covered under Social Security. The District paid $632,582, for Social Security during the year ended June 30, 2016, the total required contribution for the year. 47

60 Notes to Basic Financial Statements For the Year Ended June 30, Postemployment Benefits Other Than Pensions The District administers a single-employer defined benefit healthcare plan, the Health Insurance Plan for Retired Employees (HIPRE) or the Plan. Plan Description - The HIPRE is a single-employer defined benefit healthcare plan administered by the District. The District provides limited health care insurance coverage for its eligible retired employees. Such coverage is provided for retired employees until they reach age 65. The District does not issue a stand-alone report for HIPRE. Funding Policy - The contribution requirements are established by the District, using an actuarial study that is based on projected pay-as-you-go financing. For fiscal year 2016, the District contributed $43,552 to the plan. Plan members receiving benefits contributed $0. Annual OPEB Cost and Net OPEB Obligation - The District's annual other postemployment benefits (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 45. 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 30 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 to HIPRE. Annual Required Contribution $ 121,852 Interest on Net OPEB Obligation 2,286 Adjustment to Annual Required Contribution ( 1,905) Annual OPEB Cost 122,233 Contributions Made ( 43,552) Increase in Net OPEB Obligation (Asset) 78,681 Net OPEB Obligation - Beginning of Year 57,150 Net OPEB Obligation - End of Year $ 135,831 The District s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal years 2016, 2015 and 2014 was as follows: Annual Percentage Net Year OPEB of AOC OPEB Ended Cost (AOC) Contributed Obligation Health Insurance Plan 6/30/2016 $ 122,233 36% $ 135,831 for Retired Employees 6/30/ ,198 43% 57,150 6/30/ ,533 44% 39,861 Since the District reports its financial activity on the modified cash basis, the net OPEB obligation of $135,831 has not been recorded in the Statement of Net Position. Pay-as-you-go contributions have typically been made by the General Fund. 48

61 Notes to Basic Financial Statements For the Year Ended June 30, Postemployment Benefits Other Than Pensions Funded Status and Funding Progress - As of July 1, 2015, the most recent actuarial valuation date, the plan was zero percent funded. The actuarial accrued liability for benefits was $1,066,479, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $1,066,479. The covered payroll (annual payroll of active employees covered by the plan) was $45,185,470 and the ratio of the UAAL to covered payroll was 2.36 percent. 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, included in the other information section, 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. Actuarial Methods and Assumptions - 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 included in the types of benefits provided at the time of each valuation and historical pattern of sharing benefits 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, 2015 actuarial valuation, the entry age method was used. The actuarial assumptions included a 4.0 percent investment rate of return (net of administrative expenses), a 3.0 percent inflation rate and an annual healthcare cost trend rate of 6.0 percent for the PPO plan and 5.5 percent for the HMO plan initially, reduced by decrements to an ultimate rate of 5.0 percent. The UAAL is being amortized as a level percentage of projected pay on an open basis. The remaining amortization period at July 1, 2015 was 30 years. Teacher Health Insurance Security Fund The District participates in the Teacher Health Insurance Security (THIS) Fund, a cost-sharing, multiple-employer defined benefit post-employment healthcare plan that was established by the Illinois legislature for the benefit of retired Illinois public school teachers employed outside the city of Chicago. The THIS Fund provides medical, prescription, and behavioral health benefits, but it does not provide vision, dental, or life insurance benefits to annuitants of the Teachers Retirement System (TRS). Annuitants not enrolled in Medicare may participate in the state-administered participating provider option plan or choose from several managed care options. Annuitants who are enrolled in Medicare Parts A and B may be eligible to enroll in a Medicare Advantage plan. The State Employees Group Insurance Act of 1971 (5 ILCS 375) outlines the benefit provisions of the THIS Fund and amendments to the plan can be made only by legislative action with the Governor s approval. The plan is administered by the Illinois Department of Central Management Services (CMS) with the cooperation of TRS. Section 6.6 of the State Employees Group Insurance Act of 1971 requires all active contributors to TRS who are not employees of the state to make a contribution to the THIS Fund. The percentage of employer required contributions in the future will not exceed 105 percent of the percentage of salary actually required to be paid in the previous fiscal year. 49

62 Notes to Basic Financial Statements For the Year Ended June 30, Postemployment Benefits Other Than Pensions On Behalf Contributions to the THIS Fund The state of Illinois makes employer retiree health insurance contributions on behalf of the District. State contributions are intended to match contributions to the THIS Fund from active members which were 1.07 percent of pay during the year ended June 30, State of Illinois contributions were $459,235, and the District recognized revenue and expenditures of this amount during the year. Employer Contributions to the THIS Fund The District also makes contributions to the THIS Fund. The employer THIS Fund contribution was 0.80 percent during the year ended June 30, For the year ended June 30, 2016, the District paid $343,354 to the THIS Fund, which was 100 percent of the required contribution. Further Information on the THIS Fund The publicly available financial report of the THIS Fund may be found on the website of the Illinois Auditor General: The current reports are listed under Central Management Services. Prior reports are available under Healthcare and Family Services. 12. Jointly Governed Organization The District, in conjunction with five other area school districts, has created the Lincoln-Way Area Special Education Cooperative. The Cooperative's board of directors is composed of one member from each of the six participating school districts. The Cooperative charged the District $3,795,636 for special education, transportation, and related expenditures during the year ended June 30, Fund Balances Beginning Fund Balance Adjustment Beginning of the year fund balance was reduced in the General Fund Educational Account, General Fund Operations and Maintenance Account, Transportation Fund, and Fire Prevention and Safety Fund in the amounts of $366,986, $4,340,714, $306,649, and $74,180, respectively, with a corresponding increase in fund balance in the Capital Projects Fund of $5,088,529 to account for adjustments related to prior year expenditures. 50

63 13. Fund Balances LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT 210 Notes to Basic Financial Statements For the Year Ended June 30, 2016 Details of the District s fund balances by individual major fund and nonmajor funds in the aggregate are as follows: Major Funds Debt Capital Nonmajor Total General Transportation Services Projects Governmental Governmental Fund Fund Fund Fund Funds Funds Fund Balances: Nonspendable for: Inventory $ 245,566 $ - $ - $ - $ - $ 245,566 Restricted for: Debt Service - - 7,506, ,506,812 Employee Benefits , ,335 Capital Projects ,088,529-5,088,529 Tort Immunity 271, ,132 Total Restricted 271,132-7,506,812 5,088, ,335 13,603,808 Assigned to: Debt Service , ,510 Transportation of Students - 346, ,659 Capital Projects Total Assigned - 346, , ,174,187 Unassigned ( 6,895,304) ( 6,895,304) Total Fund Balances ($ 6,378,606) $ 346,659 $ 8,334,322 $ 5,088,547 $ 737,335 $ 8,128, Contingencies Litigation The District is involved in legal and administrative proceedings with respect to employment, civil rights, property tax appeals and other matters wherein varying amounts are claimed. In the opinion of the District's attorneys, these matters should not result in judgments, which in aggregate would have a material adverse effect on the District's financial statements. School Closing On August 13, 2015, the District s Board of Education approved the closing of Lincoln-Way North High School, one of the District's four high schools, effective for the school year. Lincoln-Way North High School was in operation through the fiscal year ended June 30, Formal plans for the future use of the school have not been finalized. The District s Board of Education is exploring opportunities. Once plans are finalized, the District will determine if an adjustment to the carrying value of the school building is warranted through the application of the principles of GASB Statement No. 42. Grants Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government and the Illinois State Board of Education. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time. However, in the opinion of management, any such disallowed claims will not have a material adverse effect on the overall financial position of the District at June 30,

64 OTHER INFORMATION

65 Other Information - Budgetary Comparison Information Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) General Fund and Major Special Revenue Fund For the Year Ended June 30, 2016 General Fund Variance With Final Budget Original Final Positive Revenues Received Budget Budget Actual (Negative) Local Sources Property Taxes $ 53,238,156 $ 53,238,156 $ 53,854,247 $ 616,091 Payments in Lieu of Taxes 645, , ,769 ( 85,231) Transportation Fees Earnings on Investments 6,000 6,000 18,705 12,705 Food Services 2,181,550 2,181,550 1,962,273 ( 219,277) Pupil Activities 1,375,000 1,375,000 1,248,715 ( 126,285) Textbooks 1,850,000 1,850,000 1,675,044 ( 174,956) Other Revenue 2,770,000 2,770,000 2,317,512 ( 452,488) Total Local Sources 62,065,706 62,065,706 61,636,265 ( 429,441) State Sources Unrestricted Grants-in-Aid 4,400,000 4,400,000 5,186, ,100 Restricted Grants-in-Aid 3,189,923 3,189,923 2,923,137 ( 266,786) Total State Sources 7,589,923 7,589,923 8,109, ,314 Federal Sources 2,005,109 2,005,109 1,653,107 ( 352,002) On-Behalf Payments from State 15,800,000 15,800,000 23,268,434 7,468,434 Total Revenues Received 87,460,738 87,460,738 94,667,043 7,206,305 Expenditures Disbursed Current: Instruction 45,070,103 44,945,103 45,035,292 ( 90,189) Support Services 25,841,833 25,966,833 25,692, ,490 Community Services ,937 ( 3,437) Payments to Other Governments 4,775,000 4,775,000 4,513, ,164 On-Behalf Payments to State 15,800,000 15,800,000 23,268,434 ( 7,468,434) Debt Service - Interest and Fees 125, , ,910 ( 176,910) Debt Service - Principal Retired Capital Outlay 1,063,989 1,063, , ,097 Total Expenditures Disbursed 92,676,425 92,676,425 99,105,644 ( 6,429,219) Excess (Deficiency) of Revenues Received Over Expenditures Disbursed ( 5,215,687) ( 5,215,687) ( 4,438,601) 777,086 Other Financing Sources (Uses) Proceeds from the Sale of Assets 4,260,000 4,260,000 - ( 4,260,000) Transfers Out - - ( 351,383) ( 351,383) Total Other Financing Sources (Uses) 4,260,000 4,260,000 ( 351,383) ( 4,611,383) Net Change in Fund Balances ($ 955,687) ($ 955,687) ( 4,789,984) ($ 3,834,297) Fund Balances (Deficits), Beginning of Year ( 1,588,622) Fund Balances (Deficits), End of Year ($ 6,378,606) Notes to Other Information: The District budgets on the modified cash basis. Budget transfers were made between line items as allowable. The General Fund (in total), the General Fund Educational Account and Tort Account incurred expenditures in excess of budgeted expenditures in the amounts of $6,429,219, $6,574,620, and $118,178, respectively, during the fiscal year ended June 30, The General Fund (in total), the General Fund Educational Account and Operations and Maintenance Account had deficit fund balances of $6,378,606, $3,624,733, and $4,827,626, respectively, at June 30,

66 Transportation Fund Original Variance With and Final Budget Final Budget Actual Positive (Negative) $ 4,150,000 $ 4,100,434 ($ 49,566) ,933,000 5,144,842 ( 788,158) ,000 58,061 18,061 10,123,000 9,303,960 ( 819,040) ,319,000 1,425, ,490 1,319,000 1,425, , ,442,000 10,729,450 ( 712,550) ,940,000 9,054, , ,500,000 1,144, , ,680 ( 1,680) - 10,792 ( 10,792) ,440,000 10,211,537 1,228,463 2, , , $ 2, ,913 $ 515,913 ( $ 171,254) 346,659 53

67 Other Information Illinois Municipal Retirement Fund Schedule of Changes in the Net Pension Liability and Related Ratios Last Two Calendar Years Calendar Year Ended December 31, Total Pension Liability Service Cost $ 1,273,270 $ 1,380,600 Interest on the Total Pension Liability 3,019,136 2,693,738 Differences Between Expected and Actual Experience of the Total Pension Liability 32, ,446 Changes of Assumptions 50,932 1,868,771 Benefit Payments, Including Refunds of Employee Contributions ( 1,781,330) ( 1,557,926) Net Change in Total Pension Liability 2,594,221 4,611,629 Total Pension Liability - Beginning 40,616,805 36,005,176 Total Pension Liability - Ending (A) $ 43,211,026 $ 40,616,805 Plan Fiduciary Net Position Contributions - Employer $ 1,370,364 $ 1,420,609 Contributions - Employees 485, ,194 Net Investment Income 173,808 1,981,378 Benefit Payments, Including Refunds of Employee Contributions ( 1,781,330) ( 1,557,926) Other (Net Transfer) 98,658 75,868 Net Change in Plan Fiduciary Net Position 347,234 2,428,123 Plan Fiduciary Net Position - Beginning 34,724,294 32,296,171 Plan Fiduciary Net Position - Ending (B) $ 35,071,528 $ 34,724,294 Net Pension Liability - Ending (A) - (B) $ 8,139,498 $ 5,892,511 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 81.16% 85.49% Covered Valuation Payroll 10,766,926 11,292,600 Net Pension Liability as a Percentage of Covered Valuation Payroll 75.60% 52.18% Notes to Schedule: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, information is presented for those years for which information is available. 54

68 Calendar Actual Contribution Year Actuarially Contribution Covered as a Percentage Ended Determined Actual Deficiency Valuation of Covered December 31, Contribution Contribution (Excess) Payroll Valuation Payroll 2015 $ 1,365,246 $ 1,370,364 ($ 5,118) $ 10,766, % ,490,623 1,490,623-11,292, % Notes to Schedule: Summary of Actuarial Methods and Assumptions Used in the Calculation of the 2015 Contribution Rate* Valuation Date: Notes Other Information Illinois Municipal Retirement Fund Schedule of Employer Contributions Last Two Calendar Years Methods and Assumptions Used to Determine 2015 Contribution Rates: Actuarial Cost Method: Aggregate Entry Age Normal. Actuarially determined contribution rates are calculated as of December 31st each year, which are 12 months prior to the beginning of the fiscal year in which contributions are reported. Amortization Method: Remaining Amortization Period: Asset Valuation Method: Level Percentage of Payroll, Closed. 28-year closed period. 5-year smoothed market; 20% corridor. Wage Growth: 4.00%. Price Inflation: Salary Increases: 3.00% - approximate; No explicit price inflation assumption is used in this valuation. 4.40% to 16.00% including inflation. Investment Rate of Return: 7.50%. Retirement Age: Mortality: Other Information: Notes: Experience-based table of rates that are specific to the type of eligibility condition. Last updated for the 2011 valuation pursuant to an experience study of the period RP-2000 Combined Healthy Mortality Table, adjusted for mortality improvements to 2020 using projection scale AA. For men, 120% of the table rates were used. For women, 92% of the table rates were used. For disabled lives, the mortality rates are the rates applicable to non-disabled lives set forward 10 years. There were no benefit changes during the year. * Based on Valuation Assumptions used in the December 31, 2013 actuarial valuation. This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, information is presented for those years for which information is available. 55

69 Other Information Teachers Retirement System of the State of Illinois Schedule of the District's Proportionate Share of the Net Pension Liability Last Two Fiscal Years 2016* 2015* District s Proportion of the TRS Net Pension Liability % % District s Proportionate Share of the Net Pension Liability $ 5,663,871 $ 5,799,214 State s Proportionate Share of the Net Pension Liability Associated with the District 278,403, ,458,346 Total $ 284,067,810 $ 289,257,560 District s Covered-Employee Payroll 43,004,572 42,520,260 District s Proportionate Share of the Net Pension Liability as a Percentage of Its Covered-Employee Payroll 13.17% 13.64% Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 41.47% 42.95% Notes to Schedule: * The amounts presented were determined as of the prior fiscal-year end. This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, information is presented for those years for which information is available. 56

70 Other Information Teachers Retirement System of the State of Illinois Schedule of Employer Contributions Last Two Fiscal Years Fiscal District's Contribution Year Contractually Contribution Covered as a Percentage Ended Required Actual Deficiency Employee of Covered June 30,* Contribution Contribution (Excess)** Payroll Employee Payroll 2016 $ 297,041 $ 303,159 ($ 6,118) $ 43,004, % , ,125 ( 225) 42,520, % Notes to Schedule: Changes of Assumptions Amounts reported in 2015 reflect an investment rate of return of 7.5 percent, an inflation rate of 3.0 percent and real return of 4.5 percent, and salary increases that vary by service credit. In 2014, assumptions used were an investment rate of return of 7.5 percent, an inflation rate of 3.0 percent and real return of 4.5 percent, and salary increases of 5.75 percent. * The amounts presented were determined as of the prior fiscal-year end. ** Any excesses or deficiencies for each year are reconciled and are paid or refunded in the following fiscal year. This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, information is presented for those years for which information is available. 57

71 Other Information Health Insurance Plan for Retired Employees Schedule of Funding Progress June 30, 2016 Actuarial Actuarial Accrued Unfunded UAAL as a Actuarial Value of Liability (AAL) AAL Funded Covered Percentage of Valuation Assets Entry Age (UAAL) Ratio Payroll Covered Payroll Date (a) (b) (b-a) (a/b) (c) ((b-a)/c) 7/1/2015 $ - $ 1,066,479 $ 1,066, % $ 45,185, % 7/1/ No actuarial valuation performed * --- 7/1/ , , % N/A N/A 7/1/ No actuarial valuation performed * --- 7/1/ , , % N/A N/A 7/1/ No actuarial valuation performed * --- 7/1/ ,361 67, % N/A N/A This Schedule provides information for as many years as is available. The District funds the benefits on a pay-as-you-go basis, therefore, there are no plan assets at year-end. N/A - Covered payroll was not determined in applicable years. * According to GASB 45, an actuarial valuation should be performed at a minimum frequency of every two years for a plan the size of the District s. 58

72 OTHER SUPPLEMENTARY INFORMATION COMBINING AND INDIVIDUAL FUND FINANCIAL SCHEDULES

73 This Page Intentionally Left Blank

74 Major Governmental Funds General Fund To account for resources traditionally associated with government operations that are not accounted for and reported in another fund, the District maintains the General Fund. The General Fund consists of the following accounts: Educational Account to account for most of the instructional and administrative aspects of the District s operations. Operations and Maintenance Account to account for operations, repairs and maintenance of District property. Working Cash Account to account for financial resources held by the District that may be temporarily loaned to other funds/accounts. Tort Account to account for the District s risk financing activities. Transportation Fund Transportation Fund a special revenue fund, accounts for activity relating to student transportation to and from school. Debt Service Fund Debt Services Fund to account for the receipt of property taxes and other monies in order to pay principal and interest on bonded indebtedness. Capital Projects Fund Capital Projects Fund a capital projects fund type, accounts for school construction and site acquisition projects financed through debt issues, government grants and developer contributions. The District did not adopt a budget for the Capital Projects Fund; therefore, an individual fund financial schedule is not presented.

75 General Fund Schedule of Assets, Liabilities and Fund Balance by Account (Modified Cash Basis) June 30, 2016 Operations and Educational Maintenance Working Cash Tort Account Account Account Account ASSETS Cash and Investments $ 10,129,701 $ 1,172,374 $ 1,802,621 $ 271,132 Building Trades Inventory - Land 245, Due from Other Funds 6,000, Total Assets $ 16,375,267 $ 1,172,374 $ 1,802,621 $ 271,132 LIABILITIES AND FUND BALANCES Liabilities Tax Anticipation Warrants Payable $ 20,000,000 $ - $ - $ - Due to Other Funds - 6,000, Total Liabilities 20,000,000 6,000, Fund Balances Nonspendable 245, Restricted ,132 Unassigned ( 3,870,299) ( 4,827,626) 1,802,621 - Total Fund Balances ( 3,624,733) ( 4,827,626) 1,802, ,132 Total Liabilities and Fund Balances $ 16,375,267 $ 1,172,374 $ 1,802,621 $ 271,132 59

76 Eliminations Total $ - $ 13,375, ,566 ( 6,000,000) - ($ 6,000,000) $ 13,621,394 $ - $ 20,000,000 ( 6,000,000) - ( 6,000,000) 20,000, , ,132 - ( 6,895,304) - ( 6,378,606) ($ 6,000,000) $ 13,621,394 60

77 General Fund Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance by Account (Modified Cash Basis) For the Year Ended June 30, 2016 Operations and Educational Maintenance Working Cash Tort Account Account Account Account Revenues Received Local Sources Property Taxes $ 45,473,286 $ 7,268,812 $ 95,502 $ 1,016,647 Payments in Lieu of Taxes 559, Earnings on Investments 9, , Food Services 1,962, Pupil Activities 1,248, Textbooks 1,675, Other Revenue 387,123 1,661, ,376 Total Local Sources 51,315,768 8,930, ,555 1,286,133 State Sources Unrestricted Grants-in-Aid 5,186, Restricted Grants-in-Aid 2,923, Total State Sources 8,109, Federal Sources 1,615,650 37, On-Behalf Payments from State 23,268, Total Revenues Received 84,309,089 8,968, ,555 1,286,133 Expenditures Disbursed Current: Instruction 45,035, Support Services 13,975,857 10,237,308-1,479,178 Community Services 3, Payments to Other Governments 4,308, , On-Behalf Payments to State 23,268, Debt Service - Interest and Fees 301, Capital Outlay 289, Total Expenditures Disbursed 87,183,785 10,442,681-1,479,178 Excess (Deficiency) of Revenues Received Over Expenditures Disbursed ( 2,874,696) ( 1,474,415) 103,555 ( 193,045) Other Financing Sources (Uses) Transfers In 4,000, Transfers Out ( 344,292) ( 4,007,091) - - Total Other Financing Sources (Uses) 3,655,708 ( 4,007,091) - - Net Change in Fund Balances 781,012 ( 5,481,506) 103,555 ( 193,045) Fund Balances (Deficit), Beginning of Year, as Adjusted ( 4,405,745) 653,880 1,699, ,177 Fund Balances (Deficits), End of Year ($ 3,624,733) ($ 4,827,626) $ 1,802,621 $ 271,132 61

78 Eliminations Total $ - $ 53,854, ,769-18,705-1,962,273-1,248,715-1,675,044-2,317,512-61,636,265-5,186,100-2,923,137-8,109,237-1,653,107-23,268,434-94,667,043-45,035,292-25,692,343-3,937-4,513,836-23,268, , ,892-99,105,644 - ( 4,438,601) ( 4,000,000) - 4,000,000 ( 351,383) - ( 351,383) - ( 4,789,984) - ( 1,588,622) $ - ($ 6,378,606) 62

79 General Fund - Educational Account Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) For the Year Ended June 30, 2016 (With Comparative Actual Amounts for the Year Ended June 30, 2015) Variance With Final Budget Final Positive Budget Actual (Negative) Actual Revenues Received Local Sources Property Taxes $ 45,328,428 $ 45,473,286 $ 144,858 $ 44,576,331 Payments in Lieu of Taxes 645, ,769 ( 85,231) 612,393 Tuition ,817 Earnings on Investments 1,000 9,558 8, Food Services 2,181,550 1,962,273 ( 219,277) 1,898,975 Pupil Activities 1,375,000 1,248,715 ( 126,285) 977,958 Textbooks 1,850,000 1,675,044 ( 174,956) 1,682,431 Other Revenue 955, ,123 ( 567,877) 1,093,921 Total Local Sources 52,335,978 51,315,768 ( 1,020,210) 51,309,159 State Sources Unrestricted Grants-in-Aid 4,400,000 5,186, ,100 4,930,373 Restricted Grants-in-Aid 3,189,923 2,923,137 ( 266,786) 2,475,115 Total State Sources 7,589,923 8,109, ,314 7,405,488 Federal Sources - Restricted Grants-in-Aid 1,945,109 1,615,650 ( 329,459) 2,002,146 On Behalf of Payments from State 15,800,000 23,268,434 7,468,434 14,633,395 Total Revenues Received 77,671,010 84,309,089 6,638,079 75,350,188 Expenditures Disbursed Instruction Regular Programs Salaries 27,818,900 27,563, ,057 29,190,862 Employee Benefits 3,800,931 3,996,785 ( 195,854) 3,934,405 Purchased Services 274, ,891 ( 575,851) 221,651 Supplies and Materials 298, ,283 ( 1,373) 240,459 Capital Outlay 933, , ,270 Other Objects 10,050 8,789 1,261 6,529 Noncapitalized Equipment - 123,346 ( 123,346) - Total Regular Programs 33,135,981 32,842, ,044 34,317,176 Special Education Programs Salaries 5,126,500 4,835, ,354 4,955,486 Employee Benefits 816, ,965 51, ,602 Purchased Services 2,150 2,838 ( 688) 2,953 Supplies and Materials 11,350 24,152 ( 12,802) 6,450 Capital Outlay - 5,044 ( 5,044) - Total Special Education Programs 5,956,500 5,632, ,355 5,765,491 (Continued)

80 General Fund - Educational Account Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) For the Year Ended June 30, 2016 (With Comparative Actual Amounts for the Year Ended June 30, 2015) Variance With Final Budget Final Positive Budget Actual (Negative) Actual CTE Programs Salaries $ 2,137,638 $ 2,009,122 $ 128,516 $ 2,126,889 Employee Benefits 212, ,200 13, ,740 Purchased Services 4,500 1,570 2,930 3,344 Supplies and Materials 87,315 36,432 50,883 59,459 Capital Outlay 75,739-75,739 - Total CTE Programs 2,517,941 2,246, ,617 2,402,432 Interscholastic Programs Salaries 3,262,070 3,193,038 69,032 2,481,108 Employee Benefits 20,000 71,302 ( 51,302) - Purchased Services 447, ,989 ( 71,389) 483,404 Supplies and Materials 148, ,515 ( 22,715) 203,196 Other Objects 130, ,963 ( 16,863) 140,795 Total Interscholastic Programs 4,008,570 4,101,807 ( 93,237) 3,308,503 Summer School Programs Salaries 325, ,609 ( 9,609) 302,621 Purchased Services ,254 Total Summer School Programs 325, ,609 ( 9,609) 309,875 Gifted Programs Purchased Services 10,000 5,860 4,140 - Total Instruction 45,953,992 45,163, ,310 46,103,477 Support Services Support Services - Pupil Attendance and Social Work Services Salaries 500, ,660 ( 76,660) 512,588 Employee Benefits 12,000 18,234 ( 6,234) 12,030 Total Attendance and Social Work Services 512, ,894 ( 82,894) 524,618 Guidance Services Salaries 2,866,779 3,059,578 ( 192,799) 2,851,805 Employee Benefits 297, ,265 63, ,272 Purchased Services 17,150 31,649 ( 14,499) 28,507 Supplies and Materials 68,750 34,673 34,077 34,971 Capital Outlay Total Guidance Services 3,249,917 3,359,165 ( 109,248) 3,195,555 Health Services Salaries 190, ,894 ( 14,894) 185,613 Employee Benefits 35,000 25,315 9,685 25,967 Total Health Services 225, ,209 ( 5,209) 211,580 (Continued)

81 General Fund - Educational Account Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) For the Year Ended June 30, 2016 (With Comparative Actual Amounts for the Year Ended June 30, 2015) Variance With Final Budget Final Positive Budget Actual (Negative) Actual Psychological Services Salaries $ 330,000 $ 328,731 $ 1,269 $ 323,671 Employee Benefits 56,000 52,901 3,099 51,029 Total Psychological Services 386, ,632 4, ,700 Speech Pathology and Audiology Services Salaries 275, ,232 ( 112,232) 273,710 Employee Benefits 25,000 25,076 ( 76) 24,543 Total Speech Pathology and Audiology Services 300, ,308 ( 112,308) 298,253 Total Support Services - Pupil 4,672,917 4,978,208 ( 305,291) 4,604,706 Support Services - Instructional Staff Improvement of Instruction Services Salaries 53,937 76,620 ( 22,683) 22,047 Employee Benefits 8,000 22,509 ( 14,509) 13,031 Purchased Services 21,720 19,776 1,944 22,902 Supplies and Materials 9, ,236 ( 95,884) 6,743 Capital Outlay 55,000-55,000 - Noncapitalized Equipment - 161,502 ( 161,502) - Total Improvement of Instruction Services 148, ,643 ( 237,634) 64,723 Educational Media Services Salaries 750, , , ,117 Employee Benefits 114,000 98,423 15,577 93,429 Purchased Services Supplies and Materials 107,900 99,331 8,569 98,390 Total Educational Media Services 972, , , ,986 Assessment and Testing Salaries 1,200 2,550 ( 1,350) 233 Total Support Services - Instructional Staff 1,121,209 1,160,781 ( 39,572) 901,942 Support Services - General Administration Board of Education Services Employee Benefits 4,000 44,609 ( 40,609) - Purchased Services 95, ,386 ( 86,386) 97,557 Other Objects - 1,286 ( 1,286) - Total Board of Education Services 99, ,281 ( 128,281) 97,557 Executive Administration Services Salaries 567, ,767 ( 34,192) 553,453 Employee Benefits 97,000 79,920 17,080 83,904 (Continued)

82 General Fund - Educational Account Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) For the Year Ended June 30, 2016 (With Comparative Actual Amounts for the Year Ended June 30, 2015) Variance With Final Budget Final Positive Budget Actual (Negative) Actual Purchased Services $ - $ 15,721 ($ 15,721) $ 144,259 Supplies and Materials 200, ,646 2, ,356 Other Objects - 132,436 ( 132,436) 55,041 Total Executive Administration Services 864,575 1,027,490 ( 162,915) 1,062,013 Special Area Administration Services Salaries 215, ,907 ( 57,417) 215,305 Employee Benefits 80,000 70,436 9,564 66,525 Total Special Area Administration Services 295, ,343 ( 47,853) 281,830 Total Support Services - General Administration 1,259,065 1,598,114 ( 339,049) 1,441,400 Support Services - School Administration Office of the Principal Services Salaries 1,605,000 1,528,679 76,321 1,577,107 Employee Benefits 265, ,166 ( 15,166) 252,748 Supplies and Materials 83,000 28,476 54,524 23,886 Other Objects 145,250 71,627 73,623 70,707 Total Office of the Principal Services 2,098,250 1,908, ,302 1,924,448 Other Support Services - School Administration Salaries 520, ,059 47, ,043 Employee Benefits 7, ,256 62,331 Total Other Support Services - School Administration 527, ,803 54, ,374 Total Support Services - School Administration 2,625,250 2,381, ,499 2,498,822 Support Services - Business Fiscal Services Salaries 520, ,061 ( 9,061) 579,454 Employee Benefits 165, ,534 48, ,091 Purchased Services Supplies and Materials 15,000 16,928 ( 1,928) 13,336 Other Objects 150, ,474 10, ,125 Total Fiscal Services 850, ,997 48, ,006 Operation and Maintenance of Plant Services Purchased Services ,893 Supplies and Materials ,236 Total Operation and Maintenance of Plant Services ,129 (Continued)

83 General Fund - Educational Account Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) For the Year Ended June 30, 2016 (With Comparative Actual Amounts for the Year Ended June 30, 2015) Variance With Final Budget Final Positive Budget Actual (Negative) Actual Food Services Salaries $ 692,500 $ 609,693 $ 82,807 $ 660,031 Employee Benefits 230, ,675 17, ,983 Purchased Services ( 375) - Supplies and Materials 1,600,000 1,295, ,447 1,301,404 Total Food Services 2,522,500 2,118, ,204 2,181,418 Internal Services Salaries 124, ,739 ( 15,739) 121,770 Employee Benefits 22,000 31,487 ( 9,487) 20,699 Supplies and Materials 125, ,909 ( 16,909) 77,441 Total Internal Services 271, ,135 ( 42,135) 219,910 Total Support Services - Business 3,644,000 3,233, ,572 3,496,463 Support Services - Central Planning, Research, Development and Evaluation Services Salaries 94, ,722 ( 20,124) 125,670 Information Services Salaries 343, ,794 37, ,843 Employee Benefits 46,000 19,850 26,150 44,429 Purchased Services 160, ,364 53,636 3,723 Supplies and Materials 19,000 7,738 11,262 14,265 Other Objects 5,500 17,596 ( 12,096) 4,542 Total Information Services 574, , , ,802 Data Processing Services Purchased Services 205, , Total Support Services - Central 873, ,064 96, ,472 Other Support Services Salaries - 1,532 ( 1,532) - Purchased Services 8,000 6,481 1,519 6,852 Supplies and Materials Total Other Support Services 8,500 8, ,852 Total Support Services 14,204,673 14,137,359 67,314 13,500,657 Community Services Salaries - 3,937 ( 3,937) - Supplies and Materials Total Community Services 500 3,937 ( 3,437) 188 (Continued)

84 General Fund - Educational Account Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) For the Year Ended June 30, 2016 (With Comparative Actual Amounts for the Year Ended June 30, 2015) Variance With Final Budget Final Positive Budget Actual (Negative) Actual Payments to Other Districts and Governmental Units Payments to Other Governmental Units (In-State) Payments for Regular Programs Purchased Services $ 25,000 $ 24,495 $ 505 $ 32,874 Payments for Special Education Programs Purchased Services 4,500,000 4,283, ,032 - Other Objects ,677,637 Total Payments to Other Districts and Governmental Units 4,525,000 4,308, ,537 4,710,511 Debt Services Debt Services - Interest on Short-Term Debt Tax Anticipation Warrants 125, ,910 ( 176,910) 132,937 Principal on Long Term Debt ,407 Total Debt Services 125, ,910 ( 176,910) 456,344 On Behalf of Payments to State 15,800,000 23,268,434 ( 7,468,434) 14,633,395 Total Expenditures Disbursed 80,609,165 87,183,785 ( 6,574,620) 79,404,572 Excess (Deficiency) of Revenues Received Over Expenditures Disbursed ( 2,938,155) ( 2,874,696) 63,459 ( 4,054,384) Other Financing Sources (Uses) Transfer Among Funds - 4,000,000 4,000,000 3,450,000 Proceeds from the Sale of Assets 2,940,000 - ( 2,940,000) - Transfer to Debt Service to Pay Principal on Installment Contracts Payable - ( 332,232) ( 332,232) - Transfer to Debt Service to Pay Interest on Installment Contracts Payable - ( 12,060) ( 12,060) - Total Other Financing Sources (Uses) 2,940,000 3,655, ,708 3,450,000 Net Change in Fund Balance $ 1, ,012 $ 779,167 ( 604,384) Fund Balance (Deficit), Beginning of Year ( 4,038,759) ( 3,434,375) Fund Balance Adjustment ( 366,986) - Fund Balance (Deficit), Beginning of Year, as Adjusted ( 4,405,745) ( 3,434,375) Fund Balance (Deficit), End of Year ($ 3,624,733) ($ 4,038,759)

85 General Fund - Operations and Maintenance Account Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) For the Year Ended June 30, 2016 (With Comparative Actual Amounts for the Year Ended June 30, 2015) Variance With Final Budget Final Positive Budget Actual (Negative) Actual Revenues Received Local Sources Property Taxes $ 6,866,227 $ 7,268,812 $ 402,585 $ 6,561,426 Earnings on Investments 1, ( 16) 130 Other Revenue 1,465,000 1,661, ,013 1,529,573 Total Local Sources 8,332,227 8,930, ,582 8,091,129 State Sources Restricted Grants-in-Aid ,826 Federal Sources - Grants-in-aid 60,000 37,457 ( 22,543) 43,732 Total Revenues Received 8,392,227 8,968, ,039 8,213,687 Expenditures Disbursed Support Services Support Services - Business Operation and Maintenance of Plant Services Salaries 2,181,260 2,130,680 50,580 2,127,039 Employee Benefits 357, ,201 ( 18,201) 338,289 Purchased Services 3,523,000 3,568,703 ( 45,703) 3,854,087 Supplies and Materials 4,395,000 4,162, ,776 4,203,479 Capital Outlay ,648 Other Objects ( 500) - Total Support Services 10,456,260 10,237, ,952 10,569,542 Payments to Other Districts and Governmental Units Payments to Other Governmental Units (In-State) Payments for Special Education Programs Purchased Services 250, ,373 44, ,986 Debt Services Other Interest on Long-Term Debt Principal on Long-Term Debt Total Debt Services Total Expenditures Disbursed 10,706,260 10,442, ,579 10,839,370 Excess (Deficiency) of Revenues Received Over Expenditures Disbursed ( 2,314,033) ( 1,474,415) 839,618 ( 2,625,683) (Continued) 69

86 General Fund - Operations and Maintenance Account Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) For the Year Ended June 30, 2016 (With Comparative Actual Amounts for the Year Ended June 30, 2015) Variance With Final Budget Final Positive Budget Actual (Negative) Actual Other Financing Sources (Uses) Sale or Compensation for Fixed Assets $ 1,320,000 $ - ($ 1,320,000) $ - Proceeds on Installment Contract ,648 Transfer Among Funds - ( 4,000,000) ( 4,000,000) ( 3,820,000) Transfer to Debt Service to Pay Principal on Installment Contracts Payable - ( 6,174) ( 6,174) - Transfer to Debt Service to Pay Interest on Installment Contracts Payable - ( 917) ( 917) - Total Other Financing Sources (Uses) 1,320,000 ( 4,007,091) ( 5,327,091) ( 3,773,352) Net Change in Fund Balance ($ 994,033) ( 5,481,506) ($ 4,487,473) ( 6,399,035) Fund Balance, Beginning of Year 4,994,594 11,393,629 Fund Balance Adjustment ( 4,340,714) - Fund Balance, Beginning of Year, as Adjusted 653,880 11,393,629 Fund Balance (Deficit), End of Year ($ 4,827,626) $ 4,994,594 70

87 General Fund - Working Cash Account Schedule of Revenues Received and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) For the Year Ended June 30, 2016 (With Comparative Actual Amounts for the Year Ended June 30, 2015) Variance With Final Budget Final Positive Budget Actual (Negative) Actual Revenues Received Local Sources Property Taxes $ 3,501 $ 95,502 $ 92,001 $ 7,343 Earnings on Investments 4,000 8,053 4,053 5,671 Total Revenues Received 7, ,555 96,054 13,014 Net Change in Fund Balance $ 7, ,555 $ 96,054 13,014 Fund Balance, Beginning of Year 1,699,066 1,686,052 Fund Balance, End of Year $ 1,802,621 $ 1,699,066 71

88 General Fund - Tort Account Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) For the Year Ended June 30, 2016 (With Comparative Actual Amounts for the Year Ended June 30, 2015) Variance With Final Budget Final Positive Budget Actual (Negative) Actual Revenues Received Local Sources Property Taxes $ 1,040,000 $ 1,016,647 ($ 23,353) $ 1,372,822 Earnings on Investments Other Revenue 350, ,376 ( 80,624) 375,000 Total Revenues Received 1,390,000 1,286,133 ( 103,867) 1,747,832 Expenditures Disbursed Support Services Support Services - General Administration Workers' Compensation or Workers' Occupation Disease Acts Payments Purchased Services 700, ,522 5, ,561 Unemployment Insurance Payments Purchased Services 50,000 4,155 45,845 30,504 Insurance Payments (Regular or Self-Insurance) Purchased Services 508, ,256 ( 122,256) 458,496 Risk Management and Claims Services Payments Salaries 40,000 37,663 2,337 35,448 Educational, Inspectional, Supervisory Services Related to Loss Prevention or Reduction Salaries 63,000 62, ,615 Vehicle Insurance Purchased Services - 49,689 ( 49,689) 39,577 Total Expenditures Disbursed 1,361,000 1,479,178 ( 118,178) 1,316,201 Net Change in Fund Balance $ 29,000 ( 193,045) ($ 222,045) 431,631 Fund Balance, Beginning of Year 464,177 32,546 Fund Balance, End of Year $ 271,132 $ 464,

89 Transportation Fund Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) For the Year Ended June 30, 2016 (With Comparative Actual Amounts for the Year Ended June 30, 2015) Variance With Final Budget Final Positive Budget Actual (Negative) Actual Revenues Received Local Sources Property Taxes $ 4,150,000 $ 4,100,434 ($ 49,566) $ 4,079,575 Transportation Fees 5,933,000 5,144,842 ( 788,158) 5,940,785 Earnings on Investments Other Revenue 40,000 58,061 18,061 35,024 Total Local Sources 10,123,000 9,303,960 ( 819,040) 10,055,399 State Sources Restricted Grants-In-Aid 1,319,000 1,425, ,490 1,164,286 Total Revenues Received 11,442,000 10,729,450 ( 712,550) 11,219,685 Expenditures Disbursed Support Services Support Services - Business Pupil Transportation Services Salaries 4,200,000 4,012, ,870 4,190,034 Employee Benefits 1,250,000 1,016, ,540 1,224,572 Purchased Services 2,090,000 2,524,746 ( 434,746) 2,330,688 Supplies and Materials 2,399,000 1,500, ,258 2,020,766 Capital Outlay ,635 Other Objects 1, Total Support Services 9,940,000 9,054, ,792 9,809,760 Payments to Other Districts and Governmental Units Payments for Special Education Programs Purchased Services 1,500,000 1,144, ,143 1,324,796 Debt Services Debt Services - Interest on Long-Term Debt - 1,680 ( 1,680) 116 Debt Service - Payments of Principal on Long-Term Debt - 10,792 ( 10,792) 672 Total Debt Services - 12,472 ( 12,472) 788 Total Expenditures Disbursed 11,440,000 10,211,537 1,228,463 11,135,344 Excess of Revenues Received Over Expenditures Disbursed 2, , ,913 84,341 (Continued) 73

90 Transportation Fund Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) For the Year Ended June 30, 2016 (With Comparative Actual Amounts for the Year Ended June 30, 2015) Variance With Final Budget Final Positive Budget Actual (Negative) Actual Other Financing Sources Transfer Among Funds $ - $ - $ - $ 370,000 Proceeds on Installment Contract ,635 Total Other Financing Sources ,635 Net Change in Fund Balance $ 2, ,913 $ 515, ,976 Fund Balance (Deficit), Beginning of Year 135,395 ( 362,581) Fund Balance Adjustment ( 306,649) - Fund Balance (Deficit), Beginning of Year, as Adjusted ( 171,254) ( 362,581) Fund Balance, End of Year $ 346,659 $ 135,395 74

91 Debt Services Fund Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) For the Year Ended June 30, 2016 (With Comparative Actual Amounts for the Year Ended June 30, 2015) Variance With Final Budget Final Positive Budget Actual (Negative) Actual Revenues Received Local Sources Property Taxes $ 14,626,400 $ 14,799,318 $ 172,918 $ 14,450,526 Earnings on Investments 1,000 3,186 2, Total Revenues Received 14,627,400 14,802, ,104 14,451,213 Expenditures Disbursed Debt Service - Interest on Long-Term Debt 8,773,010 8,598, ,508 9,107,015 Debt Service - Principal on Long-Term Debt 5,427,216 6,373,406 ( 946,190) 5,090,000 Debt Services Other 300 1,126 ( 826) 356,204 Total Expenditures Disbursed 14,200,526 14,973,034 ( 772,508) 14,553,219 Excess (Deficiency) of Revenues Received Over Expenditures Disbursed 426,874 ( 170,530) ( 597,404) ( 102,006) Other Financing Sources (Uses) Principal on Bonds Sold ,380,000 Premium on Bonds Sold ,236,981 Transfer to Pay Principal on Installment Contracts Payable - 338, ,406 - Transfer to Pay Interest on Installment Contracts Payable - 12,977 12,977 - Transfer to Escrow Agent ( 20,257,029) Total Other Financing Sources (Uses) - 351, , ,952 Net Change in Fund Balance $ 426, ,853 ($ 246,021) 257,946 Fund Balance, Beginning of Year 8,153,469 7,895,523 Fund Balance, End of Year $ 8,334,322 $ 8,153,469 75

92 Nonmajor Governmental Funds Special Revenue Fund To account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects. In addition to the Transportation Fund, the District maintains the following Special Revenue Fund: Municipal Retirement / Social Security Fund to account for the District s portion of pension contributions to the Illinois Municipal Retirement Fund as well as Medicare for certified employees and FICA and Medicare for noncertified employees. Capital Projects Fund To account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of school buildings and other capital assets. In addition to the Capital Projects Fund, the District maintains the following nonmajor capital projects fund: Fire Prevention and Safety Fund to account for the altering, reconstructing and repairing of the existing school buildings of the District under an approved life safety plan. The District did not adopt a budget for the Fire Prevention and Safety Fund; therefore, an individual fund financial schedule is not presented.

93 Nonmajor Governmental Funds Combining Schedule of Assets and Fund Balances (Modified Cash Basis) June 30, 2016 Special Capital Revenue Projects Fund Fund Municipal Fire Total Retirement/ Prevention Nonmajor Social Security and Safety Governmental Fund Fund Funds ASSETS Cash and Investments $ 737,335 $ - $ 737,335 Total Assets $ 737,335 $ - $ 737,335 FUND BALANCES Restricted $ 737,335 $ - $ 737,335 Total Fund Balance $ 737,335 $ - $ 737,335 76

94 Nonmajor Governmental Funds Combining Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balances (Modified Cash Basis) For the Year Ended June 30, 2016 Special Capital Revenue Projects Fund Fund Municipal Fire Total Retirement/ Prevention Nonmajor Social Security and Safety Governmental Fund Fund Funds Revenues Received Local Sources Property Taxes $ 2,227,800 $ - $ 2,227,800 Payments in Lieu of Taxes 40,000-40,000 Earnings on Investments Other Revenue 606, ,094 Total Revenues Received 2,874, ,874,109 Expenditures Disbursed Current: Instruction 858, ,068 Support Services 1,865,932-1,865,932 Payments to Other Governments Total Expenditures Disbursed 2,724,224-2,724,224 Net Change in Fund Balances 149, ,885 Fund Balance (Deficit), Beginning of Year 587,532 ( 82) 587,450 Fund Balances, End of Year $ 737,335 $ - $ 737,335 77

95 Municipal Retirement/Social Security Fund Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) For the Year Ended June 30, 2016 (With Comparative Actual Amounts for the Year Ended June 30, 2015) Variance With Final Budget Final Positive Budget Actual (Negative) Actual Revenues Received Local Sources Property Taxes $ 2,320,000 $ 2,227,800 ($ 92,200) $ 2,393,736 Payments in Lieu of Taxes - 40,000 40,000 39,089 Earnings on Investments Other Revenue 707, ,094 ( 100,906) 736,645 Total Revenues Received 3,027,000 2,874,027 ( 152,973) 3,169,483 Expenditures Disbursed Instruction - Employee Benefits Regular Programs 491, ,457 44, ,943 Special Education Programs 270, ,174 38, ,292 CTE Programs 38,000 30,325 7, ,893 Interscholastic Programs 207, ,170 64, ,427 Summer School Programs 7,000 6, ,133 Total Instruction - Employee Benefits 1,013, , , ,688 Support Services - Employee Benefits Support Services - Pupil Attendance and Social Work Services 48,000 48,778 ( 778) 43,116 Guidance Services 96, ,997 ( 7,997) 93,777 Health Services 31,500 29,413 2,087 27,611 Psychological Services 7,000 5,348 1,652 5,097 Speech Pathology and Audiology Services 5,000 26,721 ( 21,721) 3,787 Total Support Services - Pupil 187, ,257 ( 26,757) 173,388 Support Services - Instructional Staff Improvement of Instruction Services 400 1,173 ( 773) 336 Educational Media Services 105,000 81,792 23,208 88,490 Total Support Services - Instructional Staff 105,400 82,965 22,435 88,826 Support Services - General Administration Executive Administration Services 47,100 44,623 2,477 41,662 Special Area Administration Services 21,000 29,021 ( 8,021) 20,027 Total Support Services - General Administration 68,100 73,644 ( 5,544) 61,689 Support Services - School Administration Office of the Principal Services 101,850 89,377 12,473 95,251 Other Support Services - School Administration 7,150 6, ,630 Total Support Services - School Administration 109,000 95,674 13, ,881 (Continued) 78

96 Municipal Retirement/Social Security Fund Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual (Modified Cash Basis) For the Year Ended June 30, 2016 (With Comparative Actual Amounts for the Year Ended June 30, 2015) Variance With Final Budget Final Positive Budget Actual (Negative) Actual Support Services - Business Fiscal Services $ 116,000 $ 105,517 $ 10,483 $ 114,881 Operation and Maintenance of Plant Services 376, ,455 36, ,962 Pupil Transportation Services 758, ,034 13, ,490 Food Services 140, ,872 21, ,232 Internal Services 24,194 27,361 ( 3,167) 23,851 Total Support Services - Business 1,415,422 1,336,239 79,183 1,374,416 Support Services - Central Planning, Research, Development and Evaluation Services 11,000 2,707 8,293 7,483 Information Services 73,000 60,143 12,857 74,172 Total Support Services - Central 84,000 62,850 21,150 81,655 Other Support Services ( 303) - Total Support Services - Employee Benefits 1,969,422 1,865, ,490 1,881,855 Payments to Other Districts and Governmental Units - Employee Benefits Payments for Special Education Programs ( 224) 172 Total Expenditures Disbursed 2,982,922 2,724, ,698 2,848,715 Net Change in Fund Balance $ 44, ,803 $ 105, ,768 Fund Balance, Beginning of Year 587, ,764 Fund Balance, End of Year $ 737,335 $ 587,532 79

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98 AGENCY FUNDS - STUDENT ACTIVITY FUNDS

99 Schedule of Cash Receipts, Cash Disbursements and Ending Balance Agency Funds - Student Activity Funds (Modified Cash Basis) For the Year Ended June 30, 2016 Balance Balance as of as of July 1, 2015 Receipts Disbursements June 30, 2016 ASSETS Cash and Investments $ 1,889,098 $ 6,589,885 $ 6,157,569 $ 2,321,414 Building Trades Inventory - Land 248, ,566 - Total Assets $ 2,137,664 $ 6,589,885 $ 6,406,135 $ 2,321,414 LIABILITIES Due to Activity Fund Organizations: Lincoln-Way Central High School $ 430,611 $ 2,411,162 $ 2,107,369 $ 734,404 Lincoln-Way East High School 543,606 1,751,874 1,652, ,808 Lincoln-Way West High School 421,007 1,008, , ,723 Lincoln-Way North High School 493,874 1,191,658 1,395, ,902 District-Wide 248, , , ,577 Total Liabilities $ 2,137,664 $ 6,589,885 $ 6,406,135 $ 2,321,414 80

100 OTHER SUPPLEMENTAL SCHEDULES

101 Schedule of Assessed Valuations, Rates, and Extensions Last Ten Tax Levy Years (Unaudited) Levy Year Equalized Assessed Valuation $ 3,524,907,713 $ 3,474,225,875 $ 3,501,937,459 $ 3,660,911,726 Tax Rates per $100 of EAV: Education Operations and Maintenance Bond and Interest Transportation Municipal Retirement and Social Security Working Cash Tort Liability Special Education Total Tax Extensions: Education $ 45,093,729 $ 44,240,792 $ 42,800,288 $ 41,426,524 Operations and Maintenance 7,990,892 6,566,287 6,531,054 6,560,298 Bond and Interest 15,068,842 14,626,491 14,200,227 13,922,329 Transportation 4,085,330 4,148,226 3,992,172 3,858,568 Municipal Retirement and Social Security 2,058,528 2,418,061 2,360,284 2,320,998 Working Cash 179,769 3,474 3,502 3,661 Tort Immunity 676,776 1,386,216 1,362,241 1,310,595 Special Education 962, , , ,324 Total $ 76,116,157 $ 74,327,588 $ 72,156,762 $ 70,252,297 Tax Collections as of June 30, 2016 $ 38,909,708 $ 74,144,823 $ 71,958,646 $ 69,841,297 Collections as a Percentage of Total Extensions 51.12% 99.75% 99.73% 99.41% Note: 2015 is the most current information available. Amounts collected change each year due to collections of delinquent taxes, penalties, refunds and interest. Amounts may exceed 100% due to the collection of penalties and interest earned on taxes. 81

102 $ 3,821,253,668 $ 3,991,036,867 $ 4,058,909,058 $ 4,083,639,422 $ 3,803,058,802 $ 3,381,042, $ 39,939,412 $ 38,653,192 $ 37,183,666 $ 37,018,191 $ 34,638,260 $ 32,579,724 6,488,435 6,477,453 6,295,368 5,815,103 5,571,481 5,254,140 15,808,395 15,197,868 14,616,132 13,104,399 11,903,574 10,826,098 3,649,267 3,643,817 3,527,192 3,487,428 3,137,524 2,779,217 2,032,890 2,027,447 1,907,687 1,943,812 1,604,891 1,548,517 3,821 3,991 4,059 4,084 3,803 3,381 1,218,970 1,213,275 1,144,612 1,163,837 1,045,841 1,000, , , , , , ,154 $ 69,951,289 $ 68,027,223 $ 65,214,492 $ 63,059,560 $ 58,357,938 $ 54,428,020 $ 69,776,289 $ 68,013,616 $ 64,727,447 $ 62,675,354 $ 58,195,693 $ 54,293, % 99.98% 99.25% 99.39% 99.72% 99.75% 82

103 Computation of Legal Debt Margin June 30, 2016 (Unaudited) Assessed Valuation Tax Year - (Most Recent Available) $ 3,524,907,713 Statutory Debt Limitation (6.9% of Assessed Valuation) $ 243,218,632 Amount Less Bonded Indebtedness: Balance at Applicable to Year End Debt Limit* General Obligation Bonds Payable: General Obligation School Bonds, Series 1998 $ 1,300,000 $ 1,300,000 General Obligation School Bonds, Series ,485,000 5,485,000 General Obligation Capital Appreciation School Bonds, Series ,365,318 20,365,318 General Obligation School Building Bonds, Series ,000 - General Obligation School Bonds, Series ,650,000 17,550,000 Refunding School Bonds, Series 2013A 130,840,000 65,065,000 Capital Appreciation Refunding School Bonds, Series 2013B 47,673,843 47,673,843 General Obligation Refunding School Bonds, Series ,110,000 - Installment Contracts Payable: Chase 150, ,716 Caterpillar 1 34,763 34,763 Caterpillar 2 37,164 37,164 Total 253,291, ,661, ,661,804 Legal Debt Margin $ 85,556,828 * Pursuant to Section 19-1, subsection p-20, of the Illinois School Code, the Series 2007 Bonds, portions of the Series 2009 Bonds, and other bonds used to refund portions of the Series 2007 Bonds are not considered debt for the calculation of the legal debt margin. 83

104 Schedule of Operating Expenditures Per Student For the Year Ended June 30, 2016 (Unaudited) Expenditures Educational Account* $ 63,915,351 Operations and Maintenance Account 10,442,681 Debt Service Fund 14,973,034 Transportation Fund 10,211,537 Municipal Retirement/Social Security Fund 2,724,224 Tort Account 1,479,178 Total Expenditures $ 103,746,005 Less Expenditures not Applicable to Operating Expenditures of Regular Programs: Educational Account Summer School Programs 334,609 Community Services 3,937 Total Payments to Other District & Governmental Units 4,308,463 Capital Outlay 5,044 Non-Capitalized Equipment 284,848 Operations and Maintenance Account Total Payments to Other District & Governmental Units 205,373 Debt Service Fund Debt Principal Retired 6,373,406 Transportation Fund Regular - Transportation Fees from Other Districts (In State) 4,924,947 Special Ed - Transportation Fees from Other Districts (In State) 219,895 Total Payments to Other District & Governmental Units 1,144,857 Debt Principal Retired 10,792 Municipal Retirement/Social Security Fund Summer School Programs 6,942 Total Payments to Other District & Governmental Units 224 Total Deductions 17,823,337 Net Operating Expenditures $ 85,922,668 Average Daily Attendance 6,447 Operating Expenditures per Student $ 13,329 Source: 2016 Annual Financial Report, State Form * Computation excludes TRS and THIS on-behalf payments made by state of Illinois 84

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106 LINCOLN-WAY COMMUNITY HIGH SCHOOL DISTRICT 210 NEW LENOX, ILLINOIS SINGLE AUDIT FOR THE FISCAL YEAR ENDED JUNE 30, 2016

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108 Single Audit For the Fiscal Year Ended June 30, 2016 Table of Contents Annual Federal Financial Compliance Report (Cover Sheet) 1 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 2-3 Independent Auditor's Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance 4-6 Schedule of Expenditures of Federal Awards 7 Notes to Schedule of Expenditures of Federal Awards 8 Schedule of Findings and Questioned Costs 9-13 Summary Schedule of Prior Year Audit Findings 14 Page Corrective Action Plan for Current Year Audit Findings 15-18

109 ANNUAL FEDERAL FINANCIAL COMPLIANCE REPORT (COVER SHEET) DISTRICT/JOINT AGREEMENT Year Ending June 30, 2016 DISTRICT/JOINT AGREEMENT NAME RCDT NUMBER CPA FIRM 9-DIGIT STATE REGISTRATION NUMBER Lincoln-Way Community High School District ADMINISTRATIVE AGENT IF JOINT AGREEMENT (as applicable) NAME AND ADDRESS OF AUDIT FIRM Wermer, Rogers, Doran & Ruzon, LLC 755 Essington Road ADDRESS OF AUDITED ENTITY Joliet IL (Street and/or P.O. Box, City, State, Zip Code) 1801 E. Lincoln Highway New Lenox IL ADDRESS: NAME OF AUDIT SUPERVISOR David M. Meyer CPA FIRM TELEPHONE NUMBER FAX NUMBER (815) (815) THE FOLLOWING INFORMATION MUST BE INCLUDED IN THE SINGLE AUDIT REPORT: X A copy of the CPA firm's most recent peer review report and acceptance letter has been submitted to ISBE (either with the audit or under separate cover). X Financial Statements including footnotes Title 2 CFR (a) X Schedule of Expenditures of Federal Awards including footnotes Title 2 CFR (b) X Independent Auditor's Report Title 2 CFR (a) X Independent Auditor's Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Title 2 CFR (b) X Independent Auditor's Report on Compliance with Requirements Applicable to each Major Program and Internal Control over Compliance Title 2 CFR (c ) X Schedule of Findings and Questioned Costs Title 2 CFR (d) (1) - (3) X Summary Schedule of Prior Year Audit Findings Title 2 CFR (b) X Corrective Action Plan Title 2 CFR (c) THE FOLLOWING INFORMATION IS HIGHLY RECOMMENDED TO BE INCLUDED: Copy of Federal Data Collection Form Title 2 CFR (b) Copy(ies) of Management Letter(s) 1

110 11 ll I ll wrnmrn, nosrns, oonnn & nuzon LLc CERTIREDF\JBUCACCOJNrANTS 755 ESSINGTON ROAD, JOLIET, ILLINOIS / FAX 815/ To the Superintendent and Board of Education Lincoln-Way Community High School District 210 New Lenox, Illinois 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 We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Lincoln-Way Community High School District 210 (District), as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the District's basic financial statements and have issued our report thereon dated November 15, The District prepared its financial statements on the modified cash basis of accounting, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do not express an opinion on the effectiveness of the District's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying schedule of findings and questioned costs to be a material weakness - see item A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompany schedule of findings and questioned costs to be significant deficiencies - see items and Members of American Institute of Certified Public Accountants/Illinois CPA Society