MID-STATE TECHNICAL COLLEGE DISTRICT ANNUAL FINANCIAL REPORT JUNE 30, 2017

Transcription

1 ANNUAL FINANCIAL REPORT JUNE 30, 2017

2 June 30, 2017 Table of Contents Page No. INTRODUCTORY SECTION Table of Contents 1-2 FINANCIAL SECTION Independent Auditors' Report 3-5 MANAGEMENT'S DISCUSSION AND ANALYSIS 6-12 BASIC FINANCIAL STATEMENTS Statement of Net Position 13 Statement of Revenues, Expenses and Changes in Net Position 14 Statement of Cash Flows Statement of Net Position - Fiduciary Fund 17 Statement of Changes in Net Position - Fiduciary Fund 18 Notes to Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Schedule of Changes in Net OPEB Liability and Related Ratios 4 7 Schedule of Employer Contributions - OPEB Plan 48 Schedule of Proportionate Share of Net Pension Liability (Asset) - Wisconsin Retirement System 49 Schedule of Contributions - Wisconsin Retirement System 49 Notes to Required Supplementary Information 50 SUPPLEMENTARY INFORMATION General Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget (Non-GMP Budgetary Basis) and Actual 51 Special Revenue Funds Special Revenue Aidable Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget (Non-GMP Budgetary Basis) and Actual 52 Special Revenue Non-Aidable Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget (Non-GAAP Budgetary Basis) and Actual 53 Capital Projects Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget (Non-GMP Budgetary Basis) and Actual 54 1

3 June 30, 2017 Table of Contents Page No. SUPPLEMENTARY INFORMATION (CONTINUED) Debt Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget (Non-GAAP Budgetary Basis) and Actual 55 Enterprise Funds Schedule of Revenues, Expenditures and Changes in Fund Balance Budget (Non-GAAP Budgetary Basis) and Actual 56 Internal Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget (Non-GAAP Budgetary Basis) and Actual 57 Schedule to Reconcile Budget (Non-GAAP Budgetary) Basis Financial Statements to Basic Financial Statements ADDITIONAL INDEPENDENT AUDITORS' REPORT FOR BASIC FINANCIAL STATEMENTS Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards SINGLE AUDIT SECTION Independent Auditors' Report on Compliance for each Major Federal and State Program and on Internal Control Over Compliance Required by the Federal Uniform Grant Guidance and the State Single Audit Guidelines Schedule of Expenditures of Federal Awards Schedule of Expenditures of State Awards Notes to the Schedule of Expenditures of Federal Awards and the Schedule of State Financial Assistance Schedule of Findings and Questioned Costs Schedule of Prior Year Audit Findings 75 2

4 Schenck ADVISORY TAX ASSURANCE INDEPENDENT AUDITORS' REPORT To the District Board Mid-State Technical College District Wisconsin Rapids, Wisconsin Report on th e Financial Statements We have audited the accompanying financial statements of the Mid-State Technical College District, (the "District") as of and for the year ended June 30, 2017, 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 accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to an express opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 Mid-State Technical College Foundation, Inc., a discretely presented component unit of the District, were not audited in accordance with Governmental Auditing Standards. T hose standards requ ire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the District'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 District'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 opinion. schencksc.com S<h n<k SC 3

5 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the District as of June 30, 2017, and the changes in financial position and cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. Change in Accounting Principle As discussed in Note F.1, the District adopted new accounting guidance, GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans and No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 6 through 12 and the schedules relating to pensions and other postemployment benefits on pages 47 through 49 be presented to supplement the basic financial statements. Such information, although not part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the District's basic financial statements. The financial information listed in the table of contents as supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. The schedule of expenditures of federal awards and schedule of state financial assistance are presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and the State Single Audit Guidelines issued by the Wisconsin Department of Administration and are also not a required part of the basic financial statements. The supplementary information and schedules of expenditures of federal awards and state financial assistance are the responsibility of management and were derived from and relate 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 supplementary information, the schedules of expenditures of federal awards and the schedule of state financial assistance are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Report on Summarized Financial Information We have previously audited the District's 2016 financial statements, and our report dated January 12, 2017, expressed an unmodified opinion on those financial statements. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2016, is consistent, in all material respects, with the audited financial statements from which it has been derived. 4

6 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2017 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 the 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. Certified Public Accountants Green Bay, Wisconsin November 17,

7 MANAGEMENT'S DISCUSSION AND ANALYSIS

8 l.ej.r.njng FOR U FE msh:.~du f MSTC MID-STATE TECHNICAL COLLEGE DISTRICT Management's Discussion and Analysis June 30, 2017 The purpose of Management's Discussion and Analysis (MD&A) is to provide users of the basic financial statements with a narrative introduction, overview, and analysis of those statements. The MD&A provides summary level financial information; therefore, it should be read in conjunction with the accompanying financial statements. Bas ic Financial Statements This discussion and analysis is intended to serve as an introduction to the Mid State Technical College District's basic financial statements. The statements are comprised of two components: government-wide financial statements and notes to financial statements. Government-wide financial statements - The government-wide financial statements are designed to provide readers with a broad overview of the District's fi nances, in a manner similar to a private-sector business. The statement of net position presents information on all of the District's assets, deferred outflows/inflows of resources, and liabilities, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The statement of revenues, expenses and changes in net position presents the revenues earned and expenses incurred during the year. Activities are reported as either operating or non-operating. In general, a public college such as the District will report an operating deficit or loss, as the financial reporting model classifies state appropriations and property taxes as non-operating revenues. The utilization of capital assets is reflected in the financial statements as depreciation, which amortizes the cost of an asset over its expected useful life. The statement of cash flows presents information related to cash inflows and outflows summarized by operating, financing, capital, and investing activities. This statement is important in evaluating the District's ability to meet financial obligations as they mature. Notes to financial statements - The notes provide additional information that is essential to a full understanding of the data provided in the government-wide financial statements. The notes to financial statements are located after the government-wide financial statements in the financial section of the basic financial statements. Condensed Comparative Data and Overall Analysis The Statement of Revenues, Expenses and Changes in Net Position presents the revenues earned and expenses incurred during the year. Activities are reported as either operating or non-operating. A public college such as MSTC will report an operating deficit or loss, as the financial reporting model classifies state appropriations and property taxes as non-operating revenues. The utilization of capital assets is reflected in the financial statements as depreciation, which amortizes the cost of an asset over its expected useful life. "':!2ms County Ce:iter 401 No rth Main Street Adams, WI P , F: illlar,hlel'l ~mpus 2600 West Fifth Stree, Marshfield, WI P: I F: Stevs n Point Camp.;, 1001 Ce.nterpoint Ori-Je Ste'lens Point. Wl P I ~, Wtsc.onsin Rapid:, Camp-us nd St il!i'! No:-u WISCO'\Sin Rapids, WI 5449.a.559=1 P: ?-M / i:;. 71r: A7? ;:;;1,.1

9 The following is a condensed version of the Statement of Revenues, Expenses and Changes in Net Position for the year ended June 30, 2017 with comparison totals for the prior year Operating revenue $ 14,705,619 $ 14,875,824 Operating expenses (39,966,464) (37,673,483) Nonoperating Revenues (Expenses) 24,067,439 23,400,852 Change in Net Position $ (1,193,406) $ 603,193 Some of the most noteworthy results of operations for the current year are reflected below: Operating revenue are the charges for services offered by the District. During 2017, the District generated approximately $14.7 million of operating revenue compared to $14.9 million for the prior year. Significant items and revenue sources are as follows: Total revenue from program, material and other student fees was approximately $5.4 million for 2017 and $5.5 million for Approximately $7.1 million in operating revenue came from state and federal grants compared to $7.0 million for the prior year. The District continues to seek new sources of revenue. Contract revenues were approximately $494 thousand for the year and represents revenue from instructional and technical assistance contracts with business and industry, as well as local school districts. Auxiliary enterprise revenues include revenues generated by the bookstore and copy center and other similar activities of the College. Revenues of over $1,263,000 were generated by these activities this year. The table below shows the District's distribution of operating revenues br source. I Tuition and fees Federal and state grants Contracts Auxiliary Other 36.79% 48.20% 3.36% 8.59% 3.06% 36.59% 47.32% 4.72% 8.22% 3.15% Total operating rewnues by source % % Operating expenses are costs related to offering the programs of the District. During 2017, operating expenses totaled $40.0 million compared to $37.7 million for the prior year. The majority of the District's expenses, approximately 62%, are for personnel related costs. Other major types of expenses include supplies, contracted services, depreciation, travel, rentals, insurance, utilities and other expenses make up the remaining 38%. 7

10 The table below shows the District's distribution of operating expenses by function Instruction 46.18% 47.12% Instructional resources 3.83% 2.66% Student services 11.76% 10.16% General institutional 14.55% 15.64% Physical plant 7.26% 6.62% Auxiliary enterprise services 3.30% 3.00% Depreciation 5.92% 5.66% Student aid 7.20% 9.14% Total operating expenses by function % % Non-operating revenues and expenses are items not directly related to providing instruction. Net nonoperating revenues for the year ending June 30, 2017 were $24.1 million. The most significant components of net non-operating revenues include the following: State operating appropriations accounted for over $13.8 million in revenue for the current year compared to $13.6 million for the prior year. Property taxes levied by the District for the year were approximately $10.8 million compared to $10.4 million for the prior year. Interest expense of $742 thousand was recorded by the District this year. Net position of the District decreased $1,193,406 for the year and totaled $23,154,175 as of June 30, The net position reflects a cumulative effect of a change in accounting principle of ($1,220,474). Statement of Cash Flows The Statement of Cash Flows presents information related to cash inflows and outflows, summarized by operating, capital, financing and investing activities. This statement is important in evaluating the District's ability to meet financial obligations as they mature. The table below shows the District's major categories of cash flows: Cash used in operating activities $ (26,076,786) $ (19,240,318) Cash provided by non-capital financing activities 24,530,130 23,919,722 Cash used in capital and related financing activities (4,567,267) (3,165,371) Cash provided by inwsting activities (981,197) 727,661 Change in cash and cash equivalents $ (7,095,120) $ 2,241,694 Specific items of interest related to the Statement of Cash Flows include the following: The largest component of cash used in operating activities was payments to employees for salaries/wages and benefits, which continue to increase on a yearly basis. Approximately $23. 7 million was paid compared to $22.4 million for the prior year. The District also contributed 4.6 million to a trust for post-employment benefits. Another component of operating cash flows was payments to suppliers of over $12.5 million compared to $11.9 million for the prior year, which represents the costs of doing business. 8

11 The largest cash inflows from operating activities included $5.5 million in tuition and fees and $7.1 million in state and federal grants. Categorized as cash flows from non-capital financing activities were $10.7 million in property taxes received. State appropriations are the other major item in this category and this accounted for $13.8 million of positive cash flow. The cash used in capital and related financing activities is made up of two categories of cash flows: purchases of capital assets of $5.6 million and capital-related debt activity (principal and interest payments) of nearly $4.8 million. The issuance of capital related debt and the debt premium received of over $5.9 million and federal and state grants received of nearly $82 thousand are two categories of positive cash flow in the capital and related financing activities. Investment income is interest received on the District's investments. Statement of Net Position The Statement of Net Position includes all assets (items that the District owns and amounts owed to the District by others) and liabilities (amounts owed to others by the District and what has been collected from others for which a service has not yet been performed). This statement is prepared using the economic resources measurement focus, which details the items to be reported and the accrual basis of accounting. Below are highlights of the components of the Statement of Net Position ASSETS Cash and cash equivalents $ 13,348,269 $ 20,443,389 Long-term investments 2,282,862 1,194,038 Net capital assets 35,513,730 32,241,379 Other assets 5,306,393 7,838,155 Total assets 56,451,254 61,716,961 DEFERRED OUTFLOWS OF RESOURCES Loss on advance refunding 257, ,747 Pension plan 6,239,820 9,299,472 Total deferred outflows of resources 6,497,231 9,584,219 LIABILITIES Current liabilities 8,235,399 10,094,865 Long-term obligations, net of current portion 27,537,574 25,818,144 Net pension liability 847,958 1,792,137 Other post employment benefits 421,711 4,313,320 Total liabilities 37,042,642 42,018,466 DEFERRED OUTFLOWS OF RESOURCES Pension plan 2,751,668 3,714,659 NET POSITION Net investment in capital assets 13,377,535 13,109,410 Restricted for debt service 328, ,992 Unrestricted 9,448,377 11,802,653 Total net position $ 23,154,175 $ 25,568,055 9

12 A more detailed analysis would reveal the following facts: As shown above, the largest component is the District's capital assets. Total cost of capital assets net of accumulated depreciation as of June 30, 2017 was approximately $35.5 million compared to $32.2 million for the prior year. The largest item within the other assets category is the property taxes receivable of approximately $3.1 million. Current liabilities include accounts payable, various types of accruals and the portion of long-term debt due within the next fiscal year. At year-end, the current portion of the District's long-term debt was $4.1 million. Long-term liabilities of $27.5 million represent the portion of long-term obligations related to general obligation bonds and notes, premium and compensated absences due after fiscal year The District is a member of the Wisconsin Retirement System (System) and is required to report their proportionate share of the System's activities in their financial statements. The System's actuarial study performed with a measurement date of December 31, 2016, determined a net pension liability existed, of which the District's share was $0.9 million. In the actuarially study with a measurement date of December 31, 2015, the District's share was a net pension liability of $1.8 million. Changes in these balances are reported through deferred outflows and inflows of resources and amortized to net position over time. Additional information is in Note E. Capital Assets and Debt Administration The District's investment in capital assets as of June 30, 2017 amounts to $35,513,730 (net of accumulated depreciation). This includes land and land improvements, building and improvements and moveable equipment. The most significant building projects capitalized in fiscal year 2017 include planned and budgeted campus construction and remodeling projects, including the Learning Commons remodeling, SSIC furniture, roofing replacement and equipment purchases. Additional information on the District's capital assets can be found in Note Con page 27. At the end of the 2017 fiscal year, the District had total general obligation debt outstanding of $28,940,000. The District notes it continues to maintain a Moody's Investors Services Aa1 rating, and the District has continued to meet all of its debt service requirements. All general obligation debt for equipment, building and remodeling is repaid over 5 to 10 years. The debt is secured by the District's irrepealable tax pledge. The current debt adequately replaces and expands the equipment and facility needs of the District. Additional information on the District's long-term debt can be found in Note D on pages 28 to 31. Financial Position MSTC maintained its strong financial position with despite a decrease in net position of $1,193,406, and a decrease in net cash of $7,095,120. These changes are primarily attributed to the following: The effect of strategies to lower the escalating cost of health insurance through plan redesign and best suited options, higher co-pays, higher employee deductibles and contributions. Fiscal constraint exercised by budget managers through efficiency and cost containment measures and prudent discretionary spending creating continued favorable expenditure budget variances. These positive spending variances offset the effect of unanticipated revenue shortfalls, planned use of fund balance, and have enabled continued growth in fund balance. Planned use of $700,000 of general fund balance for one-time expenses. 10

13 Vacancies due to turnovers in employees during the year positively affected the general fund net position. The net decrease in net cash is due to the difference between cash inflows and outflows for the year. A significant item was the $4.6 million used to establish an employee benefit trust. Details can be found on the Statement of Cash Flows in pages In , $5,700,000 in general obligation promissory notes were issued to finance budgeted site improvements, capital facilities, equipment expenditures and debt retirement. Anticipated capital debt for includes $5,350,000 of general obligation promissory notes to finance building construction and remodeling, moveable major equipment and site improvements. An additional $3,600,000 of debt will be vendor financed for the Connected Experience equipment. General fund revenue has increased 2.2%. MSTC's revenue increase is primarily attributed to the amount that the increase in outcomes based aid, state grants and property tax levy revenue exceeded the institutional and federal revenue decreases of 46% and 13% respectively. MSTC's overall mill rate is three cents per $1,000 of equalized valuation lower than average in the state technical college system. Tuition and material fees are mandated by the Wisconsin Technical College Board. Federal and State grants are subject to change with new legislation. At June 30, 2017 reserves and fund balances total $15.4 million reflecting a decrease of $5.3 million. Reserves and fund balance for the General Fund total $11.2 million reflecting a decrease of $5,249,772. Economic Factors MSTC, one of 16 colleges in the Wisconsin Technical College System, is a leading provider of higher education offering more than 100 associate degrees, technical diplomas, and certificates. Student-focused and community-based, MSTC serves a resident population of approximately 165,000 in central Wisconsin with campuses in Marshfield, Stevens Point and Wisconsin Rapids, and a learning center in Adams. According to the most recent Graduate Employment Survey, 93% of alumni are employed within six months after graduation; 65% of graduates work in the MSTC District com prising all or portions of Adams, Clark, Jackson, Juneau, Marathon, Portage, Waushara, and Wood Counties. Although the paper industry has cut a significant portion of its workforce, it still remains a key employer in central Wisconsin. Verso and Domtar have plants in Wisconsin Rapids, Nekoosa, and Stevens Point. Major regional employers are also found in the healthcare, insurance, educational software, alternative energy, food processing, and agriculture industries. While the region still maintains a strong dairy industry, the majority of the agricultural operations involve the growing of fruits and vegetables as cash crops, such as McCain Foods, Ocean Spray Cranberries, and Del Monte Foods. Now, more than ever, it is very important for business and educational leaders from throughout central Wisconsin to collaborate to increase the economic prosperity of the region. Recent economic conditions have made it very apparent that the strong regions of Wisconsin will be those which work together to develop their workforce, businesses, and community organizations and build upon their unique strengths and resources. Historically and consistently, MSTC has served as a key player in the economy of central Wisconsin, and again the College is stepping forward to create value as the underlying nature of the region's economy transforms. 11

14 The MSTC District Board has remained committed to maintaining College programs and services. Therefore, to remain financially viable, the College has had to tighten its belt, reallocate resources, and pursue only those opportunities that represent the greatest community need and provide the greatest economic return. The following are some of the strategies deployed that have contributed to positive financial results: a. Implementing new academic programs that meet employers' current and future needs. b. Eliminating programs that experience consistently low enrollment and job placement. c. Reassessing positions and changing responsibilities as vacancies arise, resulting in intermittent savings. d. Eliminating staff positions through attrition, whenever possible. e. Continuously exploring means of slowing the growth in health insurance costs. f. Continued management of faculty workloads, adjunct budgets, optimal class sizes, and student retention. g. Exercising greater scrutiny over perceived needs and spending. h. Stressing tighter budgetary management and control with managers. i. Enhanced energy saving mechanisms throughout facilities, resulting in reduced heating and cooling costs, e.g., implemented a four-day work week during the summer session. Despite continued demand for skilled workers, MSTC enrollments and student fee revenue have moved into a down cycle; which further reduces an already restricted revenue flow of property tax revenue and state aid. MSTC has expanded its efforts to reverse this cycle and to again generate enrollment growth. In addition to improving promotion and marketing effectiveness, the college is implementing changes to advising services to increase student success and retention. Many of the past funding and budgeting pressures will continue to have an impact on the College. These include: Tighter tax levy constraints. Maintaining affordable tuition and student fees. Proposed legislation to shift or eliminate federal and state grants. Need to maintain strong enrollments and demand for programs. Rising health insurance costs. Adequate funding for post-employment benefits. Need to keep salary and benefits competitive to maintain and attract professional staff. Need to keep up with technology. Need to maintain and improve aging facilities. Despite these budgetary challenges, MSTC deploys effective financial strategies that enable the College to meet its mission of transforming lives through the power of teaching and learning. 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 college's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Vice President of Finance, nd Street North, Wisconsin Rapids, WI

15 BASIC FINANCIAL STATEMENTS

16 ASSETS Current Assets Cash and investments Receivables Accounts Property taxes Student fees, net of reserve of $441,979 Beneficial interest in assets held by community foundation Inventories Prepaid items Total Current Assets Noncurrent Assets Restricted cash and investments Capital assets Non-depreciable Land Construction in progress Depreciable Land improvements Buildings and improvements Equipment Intangible assets Less: Accumulated depreciation Total Noncurrent Assets TOT AL ASSETS DEFERRED OUTFLOWS OF RESOURCES Loss on advance refunding Pension plan TOTAL DEFERRED OUTFLOWS OF RESOURCES LIABILITIES Current Liabilities Accounts payable Accrued payroll, payroll taxes and retirement Accrued health and dental claims Accrued interest Unearned student fees Unearned other revenues Current portion of long-term liabilities Total Current Liabilities Long-term Liabilities General obligation debt Debt premium Compensated absences Net pension liability Other post employment benefits Total Long-term Liabilities TOTAL LIABILITIES MID-STATE TECHNICAL COLLEGE DISTRICT Statement of Net Position June 30, 2017 With Comparative Amounts as of June 30, District Foundation District Foundation $ 12,331,032 $ 3,115,260 $ 17,139,945 $ 2,765,783 1,149,752 3,050, ,919 1,861 62,374 1,248,653 2,966,329 3,258,711 1,976 56, , ,011 92, ,179,495 24, ,824,748 3,300,099 4,497, , , , ,820 3,599,184 3,201,332 44,434,268 41,850,617 20,336,213 17,767,981 11,915 11,915 { } {31,416,598} ,738, ,179,495 61,716,961 2,824, , , , ,219 1,338, ,312 1,566,888 1,521, , , , , ,546 2,792,459 21, , ,865 24,980,000 23,240, , ,070 1,855,499 1,935, ,958 1,792, , ,923, DEFERRED INFLOWS OF RESOURCES Pension plan NET POSITION Net investment in capital assets Restricted for debt service Restricted for scholarships and Foundation activities Unrestricted 13,377, , ,179,495 13,109, , ,824,748 TOTAL NET POSITION $ 2J,154,17g $ 3,179,495 $ 25,g ~.Qgg $ 2,824,748 The notes to the basic financial statements are an integral part of this statement. 13

17 Statement of Revenues, Expenses and Changes in Net Position For the Year Ended June 30, 2017 With Comparative Amounts for the Year Ended June 30, District Foundation District Foundation Operating Revenues Student program fees, net of scholarship allowances of $1,813,298 and $1,640,833 for 2017 and 2016 $ 4,682,712 $ $ 4,677,978 $ Student material fees, net of scholarship allowances of $92,656 and $81,698 for 2017 and , ,882 Other student fees, net of scholarship allowances of $189,469 and $187,003 for 2017 and , ,689 Federal grants 5,779,134 6,284,168 State grants 1,308, ,022 Contract revenue 494, ,594 Auxiliary enterprise revenues 1,263,405 1,222,386 Miscellaneous 450, , , ,862 Total Operating Revenues 14,705, ,805 14,875, ,862 Operating Expenses Instruction 18,455,708 17,753,583 Instructional resources 1,529,223 1,000,231 Student services 4,699,982 3,826,181 General institutional 5,813, ,989 5,892, ,379 Physical plant 2,900,523 2,492,594 Auxiliary enterprise services 1,318,600 1,130,889 Depreciation 2,364,959 2,132,380 Student aid 2,883,756 3,445,389 Total Operating Expenses 39,966, ,989 37,673, ,379 Operating Income {Loss) (25,260,845) (11,184) (22,797,659) 29,483 Nonoperating Revenues (Expenses) Property taxes State operating appropriations Federal grants Capital grants Investment income (loss) Gain (loss) on disposition of capital assets Interest expense Total Nonoperating Revenues (Expenses) Change in Net Position Net Position - July 1, as originally reported Cumulative Effect of Change in Accounting Principle Net Position - July 1 10,815,523 13,798,914 55,057 26, , ,931 5,482 (741,764) 10,358,681 13,602,399 29,657 36, ,968 10,026 (739,493) (68,053) 24,067, ,931 23,400,852 (68,053) (1,193,406) 354, ,193 (38,570) 25,568,055 2,824,748 24,964,862 2,863,318 (1,220,474) 24,347,581 2,824,748 24,964,862 2,863,318 Net Position - June 30 $ 23, $ 3,179,495 $ 25,568,055 $ 2,824,748 The notes to the basic financial statements are an integral part of this statement. 14

18 Statement of Cash Flows For the Year Ended June 30, 2017 With Comparative Amounts for the Year Ended June 30, District Foundation District Foundation Cash Flows from Operating Activities Tuition and fees received $ 5,491,656 $ $ 5,574,877 $ Federal and state grants received 7,087,631 7,039,190 Contract revenue received 473, ,293 Auxiliary enterprise revenues received 1,263,405 1,222,386 Other receipts 450, , , ,028 Payments to employees (23,719,854) (22,423,087) Payment to employee benefit trust fund (4,608,728) Payment for scholarships (301,524) (317,126) Payments to suppliers {12,515,412) (17,465) (11,927,082} (27,253} Net Cash Provided (Used) for Operating Activities (26,076,786} {11,069} (19,240,318} 27,649 Cash Flows from Noncapital Financing Activities Local property taxes received 10,731,216 10,317,323 State appropriations received 13,798,914 13,602,399 Net Cash Provided by Noncapital Financing Activities 24,530,130 23,919,722 Cash Flows from Capital and Related Financing Activities Purchases of capital assets (5,637,310) (4,803, 172) Proceeds from sale of capital assets 5,482 10,026 Proceeds from issuance of capital debt 5,700,000 5,500,000 Premium received on debt issuance 217, ,436 Issuance costs on long term debt (100,650) (96,600) Federal grant received 55,057 29,657 Capital grant received 26,600 36,614 Principal paid on capital debt (4,090,000) (3,310,000) Interest paid on capital debt (743,812} {707,332} Net Cash Used for Capital and Related Financing Activities (4,567,267} {3. 165,371} Cash Flows from Investing Activities Change in long-term investments (1,088,824) 624,693 Investment income received 107,627 71, ,968 42,758 Net Cash Provided (Used) by Investing Activities (981,197} 71, ,661 42,758 Change in Cash and Cash Equivalents (7,095,120) 60,258 2,241,694 70,407 Cash and Cash Equivalents - July 1 20,443, ,649 18,201, ,242 Cash and Cash Equivalents - June ,348, ,907 ~ 20,443, ,649 Reconciliation of Cash and Cash Equivalents to the Statement of Net Position Cash and investments in current assets $ 12,331,032 $ 3,115,260 $ 17,139,945 $ 2,765,783 Cash and investments in restricted assets 3,300,099 4,497,482 Less: Long-term investments {2,282,862} (2,878,353} {1,194,038} (2,589,134} Cash and Cash Equivalents - June 30 ~ 13,348, ,907 ~ 20,443, ,649 (Continued) 15

19 MID-STATES TECHNICAL COLLEGE DISTRICT Statements of Cash Flows (Continued) For the Year Ended June 30, 2017 With Comparative Amounts for the Year Ended June 30, 2016 Reconciliation of Operating Income (Loss) to Net Cash Used for Operating Activities Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) for operating activities Depreciation Pension plan amortization Changes in assets and liabilities Receivables Accounts Student fees Inventories Prepaid items Pension plan contributions Accounts payable Accrued payroll, payroll taxes, retirement and vacation Accrued claims Unearned student fees Other unearned revenue Compensated absences Other post employment benefits Net Cash Provided (Used) for Operating Activities District Foundation District Foundation $ (25,260,845) $ (11,184) 2,364,959 1,206,014 98, ,605,792 (48,034) (40,590) (53,552) 755,975 45,383 83,974 (2,523,913) (119,191) (79,576) {5,112,083} $ (22,797,659) $ 29,483 2,132,380 1,217, ,665 (1,834) 274,574 41,943 92,315 94,631 95, ,058 (143,246) (7,966) (254,494) {197,547} i (26,076,786} i c11,oe9} i (19,240,318} I 27,649 The notes to the basic financial statements are an integral part of this statement. 16

20 Statement of Net Position Fiduciary Fund June 30, 2017 Employee Benefit Trust Fund ASSETS Cash and cash equivalents $ 4,889,720 NET POSITION Restricted $ 4,889,720 The notes to the basic financial statements are an integral part of this statement. 17

21 Statement of Changes in Net Position Fiduciary Fund For the Year Ended June 30, 2017 Employee Benefit Trust Fund ADDITIONS Other $ 4,608,728 Investment income 280,992 Total Additions 4,889,720 DEDUCTIONS Trust fund disbursements Change in Net Position 4,889,720 Net Position - July 1 Net Position - June 30 $ 4,889,720 The notes to the basic financial statements are an integral part of this statement. 18

22 Notes to Basic Financial Statements June 30, 2017 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Mid-State Technical College District (the "District 11 ) is organized under state legislation enacted in 1911 establishing vocational, technical and adult education. The goals of the District are to train people for employment, in a system flexible enough to meet the needs of the community, with programs offered on a part-time, full-time, day and evening basis. The District includes full-service campuses in Stevens Point, Marshfield and Wisconsin Rapids, a center in Adams and several outreach sites. The District offers training in over forty careers by granting one and two year technical diplomas and two year associate degrees in business, service and health, and technical and industrial. In addition, the District also awards certificates for the successful completion of a single course or a combination of courses. Special interest and leisure-time activities are also available through user-supported adult and continuing education programs designed to enhance overall quality of life throughout the District. The basic financial statements of the District have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to government units as well as those prescribed by the Wisconsin Technical College System Board (WTCSB). The significant accounting principles and policies utilized by the District are described below: 1. Reporting Entity The District Board oversees the operations of what is generally referred to as the Mid-State Technical College (MSTC) under the provisions of Chapter 38 of the Wisconsin Statutes. The District is comprised of three counties - Wood, Portage and Adams, plus parts of five other contiguous counties. The Board consists of nine members appointed by the Chairpersons of various county boards in the service area and therefore is considered a "stand-alone" government entity. As the District's governing authority, the Board's powers include: Authority to borrow money and levy taxes; Budgetary authority; and Authority over other fiscal and general management of the District which includes, but is not limited to, the authority to execute contracts, to exercise control over facilities and properties, to determine the outcome or disposition of matters affecting the recipients of the services being provided and to approve the hiring or retention of key management personnel who implement Board policies and directives. GASB Statement No. 61, The Financial Reporting Entity: Omnibus, requires reporting, as a component unit, an organization that raises and holds economic resources for the direct benefit of a governmental unit. The District is affiliated with Mid-State Technical College Foundation, Inc. (Foundation), a not-for-profit corporation whose purpose is to solicit, hold, manage, invest and expend endowment funds and other gifts, grants, and bequests exclusively for the maintenance and benefit of the District and its students. The Foundation is managed by an independent board of directors, and is not financially accountable to the District. The Foundation has been reported as a discretely presented component unit in the District's financial statements. The Foundation's financial statements can be obtained through Mid-State Technical College Foundation, Inc., nd Street North, Wisconsin Rapids, WI

23 Notes to Basic Financial Statements June 30, 2017 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2. Measurement Focus, Basis of Accounting, and Financial Statement Presentation For financial reporting purposes, the District is considered a special purpose government engaged only in business-type activities. The District's basic financial statements are reported using the economic resources measurement focus and the accrual basis ofaccounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met. As a general rule the effect of interfund activity has been eliminated from the district-wide financial statements. 3. Accounting Estimates The preparation of basic financial statements in conformity with generally accepted accounting principles requires District management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. 4. Cash and Investments Cash deposits consist of demand and time deposits with financial institutions and are carried at cost. Investments are stated at fair value. Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. For purposes of the statement of cash flows, all cash deposits and highly liquid investments (including restricted assets) with an original maturity of three months or less from date of acquisition are considered to be cash equivalents. 5. Property Taxes and Taxes Receivable The District disseminates its property tax levy to city, village and town treasurers or clerks in October of the fiscal year for which the taxes are levied. The following dates are pertinent to the District's tax calendar. Levy date October 31 Assessment date January 1 Lien date August 31 Due dates: Taxes paid in one installment January 31 Taxes paid in two installments January 31 and July 31 Taxes paid in three installments January 31, April 30, and July 31 Settlement with County Treasurers August20 Generally, property taxes are collected in two installments; however, certain municipalities within the District have allowed their citizens to pay in three installments. The District recognizes its total levy as revenue in the fiscal year for which taxes are levied. 20

24 Notes to Basic Financial Statements June 30, 2017 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Under Section of the Wisconsin Statutes, the District Board may levy a tax not to exceed a rate of $1.50 per $1,000 of the full equalized value of taxable property within the area served by the District for the purposes of making capital improvements, acquiring equipment, and operating and maintaining schools. The mill rate limitation is not applicable to taxes levied for the purposes of paying principal and interest on general obligation debt issued by the District for capital improvements and equipment acquisitions. For the year ended June 30, 2017, the District levied taxes at the following mill rate: I Mill Rate I Amount Levied I Operating Mil Rate $ $ 6,420,405 Debt Service ,396,027 $ $ 10,816,432 Property tax revenue recognized in the financial statements for the year ended June 30, 2017 totaled $10,815,523 which includes the District's property tax levy and other miscellaneous tax collection related adjustments. 6. Student Receivables, Fees and Tuition Tuition and fees are recognized as revenue in the period in which the related activity or instruction takes place. Tuition and fees attributable to the District's summer school program are prorated on the basis of student class days occurring before and after June 30. The District's student fees receivable is stated at amounts due from students, net of an allowance for doubtful accounts of $441,979 as of June 30, Amounts outstanding longer than the agreed upon payment terms are considered past due. The District determines its allowance for doubtful accounts by considering a number of factors including length of time amounts are past due, the District's previous loss history, and the student's ability to pay his or her obligation. The District writes off receivables when they become uncollectible. 7. Inventories Inventories are recorded at cost, which approximates market, using primarily the first-in, first-out method. Inventories consist of supplies and other expendable supplies held for resale or consumption. The cost is recorded as an expense at the time individual inventory items are consumed rather than when purchased. Instructional and administrative inventories are accounted for as expenses when purchased. 8. Prepaid Items Payments made to vendors that will benefit periods beyond the end of the current fiscal year are recorded as prepaid items, and are accounted for on the consumption method. 9. Capital Assets Capital assets include land, land improvements, buildings and building improvements, intangible assets, and equipment. Capital assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. 21

25 Notes to Basic Financial Statements June 30, 2017 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Depreciation on land improvements, buildings, intangible assets, and equipment is provided in amounts sufficient to charge the cost of the depreciable assets to operations on the straight-line method over the following estimated useful lives: Capitalization Threshold Years Assets Land improwments $ 15, Buildings and improwments 15, Intangible assets 5,000 5 Equipment 5, Compensated Absences, Retirement Plan and Other Employee Benefits Vacation The District's policy allows employees to earn varying amounts of vacation pay for each year employed in accordance with District policy. Upon termination of employment from the District, the employee is entitled to 100% of accumulated vacation days. Accumulated vacation days are recorded as an expense and a liability when incurred. Sick Leave Exempt and faculty employees who, at June 30th, are age 55 may retire early subject to fulfilling a years of service requirement. District employees hired before July 1, 2016, whether at early retirement or normal retirement age as applicable, may opt to utilize their unused accumulated sick leave, subject to certain limits, for payment of their group health and dental insurance premiums. The District accounts for the sick pay expense as it is earned. Retirement Plan The District has a retirement plan covering substantially all of its employees which is funded through contributions to the Wisconsin Retirement System. All contributions made by the District on behalf of its employees are reported as expenses when paid. Additional information on the retirement plan can be found in Note E. Other Post-employment Benefits Health Insurance District employees hired before July 1, 2016 who have at least 1 Oto 15 years of service in the District and have applied for a Wisconsin Retirement System annuity are eligible to receive group health insurance benefits funded by the District in an amount based on the number of full years of service to the District. Coverage does not extend beyond a retiree's eligibility date for Medicare. Additional information on the other post-employment benefits can be found in Note F. 11. Unearned Revenues Unearned revenues include amounts received for tuition, fees or other activities prior to the end of the fiscal year but relate to the subsequent fiscal year. Unearned revenues also include amounts received from grant and contract sponsors that have not yet been earned. 12. State and Federal Revenues The District receives funding from various federal and state contracts and grants. Some of these revenues are earned over fiscal periods different than that of the District and are subject to federal and state single audit requirements. 22

26 Notes to Basic Financial Statements June 30, 2017 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 13. Scholarship Allowances and Student Aid Financial aid to students is reported in the basic financial statements under the alternative method, as prescribed by the National Association of College and University Business Officers (NACUBO). Certain aid (loans, funds provided to students as awarded by third parties and Federal Direct Lending) is accounted for as third party payments (credited to the student's account as if the student made the payment). All other aid is reflected in the basic financial statements as operating expenses or scholarship allowances, which reduce revenues. The amount reported as operating expenses represents the portion of aid that was provided to the student in the form of cash. Scholarship allowances represent the portion of aid provided to the student in the form of reduced tuition. Under the alternative method, these amounts are computed on a total District basis by allocating the cash payments to students, excluding payments for services, on the ratio of all aid to the aid not considered to be third party aid. 14. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position will sometimes 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(s) and so will not be recognized as an outflow of resources (expense) until then. The District has two items that qualify for this category. The first is the loss on advance refunding reported in the statement of net position. A loss on advance 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. The second is related to the District's proportionate share of the Wisconsin Retirement System pension plan and is deferred and amortized over the expected remaining service lives of the pension plan participants. In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The District currently has one item that qualifies for reporting in this category. The item is related to the District's proportionate share of the Wisconsin Retirement System pension plan and is deferred and amortized over the expected remaining service lives of the pension plan participants. 15. Pension For purposes of measuring the net pension liability (asset), deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Wisconsin Retirement System (WRS) and additions to/deductions from WRS' fiduciary net position have been determined on the same basis as they are reported by WRS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 16. Net Position Net position is classified according to restrictions or availability of assets for satisfaction of District obligations as follows: a. Net investment in capital assets - Amount of capital assets, net of accumulated depreciation, and capital related deferred outflows of resources, less outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets and any capital related deferred inflows of resources. b. Restricted net position - Amount of net position that is subject to restrictions that are imposed by 1) external groups, such as creditors, granters, contributors or laws or regulations of other governments or 2) law through constitutional provisions or enabling legislation. c. Unrestricted net position - Net position that is neither classified as restricted nor as net investment in capital assets. When both restricted and unrestricted resources are available for use, it is the District's policy to use restricted resources first, then unrestricted resources, as they are needed. 23

27 Notes to Basic Financial Statements June 30, 2017 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 17. Classification of Revenues and Expenses The District classifies its revenues and expenses as either operating or non-operating according to the following criteria: Operating revenues and expenses: Operating revenues and expenses include activities that have the characteristics of exchange transactions to provide goods and services related to the District's principal ongoing operations. The principal operating revenues of the District are student tuition and fees, net of scholarship allowances, sales and services of auxiliary enterprises and most federal, state and local grants and contracts. Operating expenses include the cost of providing educational services, student aid, administrative expenses and depreciation on capital assets. Non-operating revenues and expenses: Non-operating revenues and expenses include activities that have the characteristics of non-exchange transactions. The primary non-operating revenues of the District are general property taxes, state appropriations, investment income and grants restricted by the grantor to be used exclusively for capital programs. Non-operating expenses include interest on longterm obligations and losses on disposal of capital assets. 18. Comparative Data Comparative total data for the prior year has been presented in the accompanying financial statements in order to provide an understanding of changes in the Districts financial position and operations. 19. Reclassifications Certain amounts in the prior year financial statements have been reclassified to conform with the presentation in the current year financial statements with no change in previously reported net position or changes in net position. NOTE B - CASH AND INVESTMENTS Cash and investments of the District consist of bank deposits and investments that are restricted by the Wisconsin Statutes to the following: Time deposits; repurchase agreements; securities issued by federal, state and local governmental entities; statutorily authorized commercial paper and corporate securities; and the Wisconsin local government investment pool. The carrying amount of the District's cash and investments totaled $20,520,851 summarized below: Petty cash funds Deposits with financial institutions Investments Wisconsin local government investment pool Wisconsin lmestment Series Cooperati\,e Fixed income mutual funds Equity mutual funds on June 30, 2017 as $ 3, ,541 14,972, ,282,862 2,601,002 $ 20,520,851 24

28 Notes to Basic Financial Statements June 30, 2017 NOTE B CASH AND INVESTMENTS (Continued) A portion of cash and cash equivalents is restricted for compliance with legal requirements and cannot be used for general purposes of the District. The cash and cash equivalents are classified as follows at June 30, 2017: Statement of Net Position Unrestricted $ 12,331,032 Restricted for Capital projects Debt ser'.1ce Total Restricted Cash and lm.estments 2,944, ,133 3,300,099 Fiduciary fund statements of net position Post-employment benefits trust 4,889,720 Total $ 20,520,851 Deposits and investments of the District are subject to various risks. Presented below is a discussion of the specific risks and the District's policy related to the risk. Fair Value Measurements The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant observable inputs; Level 3 inputs are significant unobservable inputs. The District had the following fair value measurements as of June 30, 2017: Fair Value Measurements Using: Le\.el 1 Le1.el 2 Lei.el 3 lni.estments Fixed income mutual funds $ 2,282,862 $ $ Equity mutual funds 2,601,002 Total investments by fair value le1.el $ 4,883,864 $ $ Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. Wisconsin statutes require repurchase agreements to be fully collateralized by bonds or securities issued or guaranteed by the federal government or its instrumentalities. The District does not have an additional custodial credit risk policy. 25

29 Notes to Basic Financial Statements June 30, 2017 NOTE B - CASH AND INVESTMENTS (Continued) Deposits with financial institutions within the State of Wisconsin are insured by the Federal Deposit Insurance Corporation (FDIC) in the amount of $250,000 for the combined amount of all time and savings accounts and $250,000 for the combined amount of all interest-bearing and noninterest-bearing demand deposit accounts per official custodian per insured depository institution. Deposits with financial institutions located outside the State of Wisconsin are insured by the FDIC in the amount of $250,000 for the combined amount of deposit accounts per official custodian per depository institution. Also, the State of Wisconsin has a State Guarantee Fund which provides a maximum of $400,000 per public depository above the amount provided by an agency of the U.S. Government. However, due to the relatively small size of the State Guarantee Fund in relation to the Fund's total coverage, total recovery of insured losses may not be available. As of June 30, 2017, $462,730 of the District's deposits with financial institutions were in excess of federal and state depository insurance limits and uncollateralized (or collateralized with securities held by the pledging financial institution or its trust department or agent but not in the District's name). Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization..wisconsin statutes limit investments in securities to the top two ratings assigned by nationally recognized statistical rating organizations. The District does not have an additional policy. Presented below is the actual rating as of year-end for each investment type. Exempt From Disclosure BBB B Not Rated Investment Type Amount Wisconsin local government investment pool $ 14,972,658 $ $ $ $ 14,972,658 Wis cons in Investment Series Cooperative Fixed income mutual funds 2,282,862 2,069, ,334 Totals $ 17,255,962 $ $ 2,069,528 $ 213,334 $ 14,973,100 Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The District's investment policy limits the maturity of any security to not extend beyond any recognized unfunded cash needs of the District. Information about the sensitivity of the fair values of the District's investments to market interest rate fluctuations is provided by the following table that shows the distribution of the District's investments by maturity: Remaining Maturity(in Months) 12 Months 13 to 24 25to 60 More Than Investment Type Amount orless I Months I Months I 60 Months Wisconsin local government investment pool $ 14,972,658 $ 14,972,658 $ $ $ Wis cons in Investment Series Cooperative Fixed income mutual funds 2,282,862 2,282,862 Totals $ 17,255,962 $ 14,973,100 $ $ $ 2,282,862 26

30 Notes to Basic Financial Statements June 30, 2017 NOTE B - CASH AND INVESTMENTS (Continued) Investment in Wisconsin Local Government Investment Pool The District has investments in the Wisconsin local government investment pool of $14,972,658 at year-end. The Wisconsin local government investment pool (LGIP} is part of the State Investment Fund (SIF), and is managed by the State of Wisconsin Investment Board. The SIF is not registered with the Securities and Exchange Commission, but operates under the statutory authority of Wisconsin Chapter 25. The SIF reports the fair value of its underlying assets annually. Participants in the LGIP have the right to withdraw their funds in total on one day's notice. At June 30, 2017, the fair value of the District's share of the LGIP's assets was substantially equal to the carrying value. NOTE C - CAPITAL ASSETS Capital asset activity for the year ended June 30, 2017 was as follows: July 1, June 30, 2016 Additions Deductions 2017 Capital assets, not being depreciated: Land $ 291,312 $ $ $ 291,312 Construction in progress 534, , , ,346 Total capital assets, not being depreciated 826, , , ,658 Capital assets, being depreciated: Land improwments 3,201, ,852 3,599,184 Buildings and improvements 41,850,617 2,583,651 44,434,268 Equipment 17,767,981 2,694, ,049 20,336,213 Intangible assets 11,915 11,915 Subtotal 62,831,845 5,675, ,049 68,381,580 Less accumulated depreciation for. Land improwments 743,125 71, ,599 Buildings and improwments 16,297,615 1,148,803 17,446,418 Equipment 14,368,113 1,142, ,049 15,384,363 Intangible assets 7,745 2,383 10,128 Subtotal 31,416,598 2,364, ,049 33,655,508 Total capital assets, being depreciated, net 31,415,247 3,310,825 34,726,072 Net capital assets $ 32,241,379 $ 3,807,171 $ 534,820 35,513,730 Less: Capital related debt (22,136,195) Net inwstment in capital assets $ 13,377,535 27

31 Notes to Basic Financial Statements June 30, 2017 NOTE D - LONG-TERM OBLIGATIONS The following is a summary of changes in long-term obligations of the District for the year ended June 30, 2017: July 1, June 30, Due Within 2016 Issued Retired 2017 One Year General Obligation Debt Bonds $ 1,880,000 $ $ 175,000 $ 1,705,000 $ 175,000 Notes 25,450,000 5,700,000 3,915,000 27,235,000 3,785,000 Subtotal 27,330,000 5,700,000 4,090,000 28,940,000 3,960,000 Debt premium 765, , , , ,975 Compensated absences 1,935, , ,374 1,855,499 $ 30,031,005 $ 6,259,165 $ 4,649,621 $31,640,549 $ 4,102,975 Total interest paid during the year on long-term debt totaled $738,870. Detail of the above outstanding general obligation debt follows. General Obligation Debt General obligation debt service requirements are direct obligations and pledge the full faith and credit of the District. General obligation debt outstanding on June 30, 2017 totaled $28,940,000 and was comprised of the following issues: Bonds $2,090,000 taxable general obligation refunding bonds payable to Associated Bank of Green Bay, issued December 5, 2012, interest at 1.29% to 2.95%, payable on March 1 and September 1, principal payments of$175,000 to $210,000 due annually until maturity on March 1, Proceeds used to retire a portion of the $2,575,000 Taxable General Obligation Refunding Bonds, Series 2006 dated July 3, $ 1,705,000 Notes $4,000,000 general obligation promissory notes payable to Associated Bank of Green Bay, issued September 11, 2008, interest at 4.00%, payable on March 1 and September 1, principal payment of $510,000 due on March 1, Proceeds used to pay the cost of remodeling and impro\ang District facilities, miscellaneous site improwments, and to acquire mowable equipment. 510,000 $3,000,000 general obligation promissory notes payable to Associated Bank of Green Bay, issued September 1, 2009, interest at 3.30% to 3.50%, payable on March 1 and September 1, principal payments of $425,000 to $440,000 due annually until maturity on March 1, Proceeds used to pay the cost of remodeling and impro\ang District facilities, miscellaneous site improwments, and to acquire mowable equipment. 865,000 $5,000,000 general obligation promissory notes payable to Associated Bank of Green Bay, issued August 2, 2010, interest at 3.00%, payable on March 1 and September 1, principal payments of$650,000 to $710,000 due annually until maturity on March 1, Proceeds used to pay the cost of remodeling and impro\ang District facilities, miscellaneous site improvements, and to acquire moveable equipment. 2,070,000 28

32 Notes to Basic Financial Statements June 30, 2017 NOTED - LONG-TERM OBLIGATIONS (Continued) Notes (continued) $3,600,000 general obligation promissory notes payable to Associated Bank of Green Bay, issued September 7, 2011, interest at 3.00%, payable on March 1 and September 1, principal payments of $455,000 to $495,000 due annually until maturity on March 1, Proceeds used to pay the cost of remodeling and impro'ang District facilities, miscellaneous site improvements, and to acquire moveable equipment. $2,900,000 general obligation promissory notes payable to Associated Bank of Green Bay, issued September 6, 2012, interest at 2.00%, payable on March 1 and September 1, principal payments of $345,000 to $375,000 due annually from March 2014 until maturity on March 1, Proceeds used to pay the cost of remodeling and impro'ang District facilities, miscellaneous site improvements, and to acquire moveable equipment. $2,200,000 general obligation promissory notes payable to Associated Bank of Green Bay, issued December 5, 2012, interest at 2.00%, payable on March 1 and September 1, principal payments of $230,000 to $245,000 due annually until maturity on March 1, Proceeds used to pay the cost of remodeling and impro'ang District facilities, miscellaneous site improvements, and to acquire moveable equipment. $2,800,000 general obligation promissory notes payable to Associated Bank of Green Bay, issued September 10, 2013, interest at 2.00% to 3.00%, payable on March 1 and September 1, principal payments of $340,000 to $385,000 due annually until maturity on March 1, Proceeds used to pay the cost of remodeling and impro'ang District facilities, miscellaneous site improvements, and to acquire moveable equipment. $2,495,000 general obligation promissory notes payable to Associated Bank of Green Bay, issued December 9, 2013, interest at 2.00% to 3.00%, payable on March 1 and September 1, principal payments of $270,000 to $390,000 due annually until maturity on March 1, Proceeds were used to retire $1,005,000 (years ) of the $3,400,000 general obligation promissory notes issued September 1, The remaining proceeds were used to pay the cost of remodeling and impro'ang District facilities, miscellaneous site improvements, and to acquire moveable equipment. $3,555,000 general obligation promissory notes payable to Associated Bank of Green Bay, issued September 4, 2014, interest at 2.00% to 3.00%, payable on March 1 and September 1, principal payments of $155,000 to $570,000 due annually until maturity on March 1, Proceeds were used to pay the cost of remodeling and impro'ang District facilities, miscellaneous site improvements, and to acquire moveable equipment. $1,545,000 general obligation promissory notes payable to Associated Bank of Green Bay, issued May 5, 2015, interest at 2.00% to 3.00%, payable on March 1 and September 1, principal payments of $135,000 to $160,000 due annually until maturity on March 1, Proceeds were used to pay the cost of remodeling and impro'ang District facilities, miscellaneous site improvements, and to acquire moveable equipment. 1,895,000 1,795,000 1,195,000 2,170,000 1,810,000 3,345,000 1,170,000 29

33 Notes to Basic Financial Statements June 30, 2017 NOTED LONG-TERM OBLIGATIONS (Continued) Notes (continued) $4,000,000 general obligation promissory notes payable to Associated Bank of Green Bay, issued September 1, 2015, interest at 2.00% to 3.00%, payable March 1 and September 1, principal payments of$150,000 to $750,000 due annually beginning March 1, 2019 until maturity on March 1, Proceeds were used to pay the cost and remodeling and impro\ling District facilities, miscellaneous site improwments, and to acquire mowable equipment. $1,500,000 general obligation promissory notes payable to Associated Bank of Green Bay, issued April 11, 2016, interest at 2.00% to 3.00%, payable March 1 and September 1, principal payments of $225,000 to $245,000 due annually until maturity on March 1, Proceeds were used to pay the cost and remodeling and impro\ling District facilities, miscellaneous site improwments, and to acquire mowable equipment. $4,200,000 general obligation promissory notes payable to Associated Bank of Green Bay, issued September 1, 2016, interest at 2.00%, payable March 1 and September 1, principal payments of $430,000 to $695,000 due annually until maturity on March 1, Proceeds used to pay the cost and remodeling and impro\ling District facilities, miscellaneous site improwments, and to acquire mowable equipment. $1,500,000 general obligation promissory notes payable to Associated Bank of Green Bay, issued March 6, 2017, interest at 2.00% to 3.00%, payable March 1 and September 1, principal payments of $130,000 due September 1, 2017 and $160,000 to $220,000 from March 1, 2021 until maturity on March 1, Proceeds were used to pay the cost and remodeling and impro\ling District facilities, miscellaneous site improwments, and to acquire mowable equipment. Total Notes Total General Obligation Debt 4,000, ,000 4,200,000 1,500,000 27,235,000 $ 28,940,000 Principal and interest maturities on general obligation debt are as follows: Year Ended June 30 Principal Interest Total 2018 $ 3,960,000 $ 712,009 $ 4,672, ,995, ,223 4,603, ,245, ,719 4,763, ,245, ,565 4,664, ,620, ,565 3,935, ,875, ,923 9,382,923 $ 28,940,000 $ 3,082,004 $ 32,022,004 30

34 Notes to Basic Financial Statements June 30, 2017 NOTE D - LONG-TERM OBLIGATIONS (Continued) Legal Margin for New Indebtedness The District's legal margin for creation of additional indebtedness on June 30, 2017 was as follows: I Aggregate I Bonded I Equalized \!aluation of the District $ 12,892,401,374 $ 12,892,401,374 Statutory limitation percentage (x) 5% (x} 2% General obligation debt limitation, per Section of the Wisconsin Statutes $ 644,620,069 $ 257,848,027 General obligation debt $ 28,940,000 $ 1,705,000 Less: Amounts a\!ailable for financing general obligation debt Debt sence fund ( 1 ) 216, ,557 Net outstanding general obligation debt applicable to debt limitation $ 28,723,443 $ 1,488,443 (1l Interest payments of $351,288 are included in fund balance and payable through December 31, 2017 and not available for retirement of general obligation debt. This amount is composed of interest accrued through June 30, 2017 of $239,581 and interest of $111,706 which will accrue from July 1, 2017 through the next interest payment. The $328,263 Restricted for Debt Service on the Statement of Net Position is the aggregate of the $216,557 available for debt service (above) and the $111,706 which will accrue from July 1, 2017 through the next interest payment. NOTE E - RETIREMENT COMMITMENTS 1. Wisconsin Retirement System CWRS) Pension Plan a. Plan Description The WRS is a cost-sharing, multiple-employer, defined benefit pension plan. WRS benefits and other plan provisions are established by Chapter 40 of the Wisconsin Statutes. Benefit terms may only be modified by the legislature. The retirement system is administered by the Wisconsin Department of Employee Trust Funds (ETF). The system provides coverage to all eligible State of Wisconsin, local government and other public employees. All employees, initially employed by a participating WRS employer on or after July 1, 2011, and expected to work at least 1200 hours a year (880 hours for teachers and school district educational support employees) and expected to be employed for at least one year from employee's date of hire are eligible to participate in the WRS. ETF issues a standalone Comprehensive Annual Financial Report (CAFR), which can be found at For employees beginning participation on or after January 1, 1990, and no longer actively employed on or after April 24, 1998, creditable service in each of five years is required for eligibility for a retirement annuity. Participants employed prior to 1990 and on or after April 24, 1998, and prior to July 1, 2011, are immediately vested. Participants who initially became WRS eligible on or after July 1, 2011, must have five years of creditable service to be vested. Employees who retire at or after age 65 (54 for protective occupation employees, 62 for elected officials and State executive participants} are entitled to receive an unreduced retirement benefit. The factors influencing the benefit are: (1) final average earnings, (2) years of creditable service, and (3) a formula factor. Final average earnings is the average of the participant's three highest years' earnings. Creditable service is the creditable current and prior service expressed in years or decimal equivalents of partial years for which a participant receives earnings and makes contributions as required. The formula factor is a standard percentage based on employment category. 31

35 Notes to Basic Financial Statements June 30, 2017 NOTE E - RETIREMENT COMMITMENTS (Continued) Employees may retire at age 55 (50 for protective occupation employees} and receive reduced benefits. Employees terminating covered employment before becoming eligible for a retirement benefit may withdraw their contributions and forfeit all rights to any subsequent benefits. The WRS also provides death and disability benefits for employees. b. Post-Retirement Adjustments The Employee Trust Funds Board may periodically adjust annuity payments from the retirement system based on annual investment performance in accordance withs , Wis. Stat. An increase (or decrease) in annuity payments may result when investment gains (losses}, together with other actuarial experience factors, create a surplus (shortfall} in the reserves, as determined by the system's consulting actuary. Annuity increases are not based on cost of living or other similar factors. For Core annuities, decreases may be applied only to previously granted increases. By law, Core annuities cannot be reduced to an amount below the original, guaranteed amount (the "floor"} set at retirement. The Core and Variable annuity adjustments granted during recent years are as follows: C. Contributions Year Core Fund Ad"ustment Variable Fund Ad ustment % 10% % 0% 2009 (2.1 }% (42)% 2010 (1.3)% 22% 2011 (1.2)% 11% 2012 (7.0)% (7)% 2013 (9.6)% 9% % 25% % 2% % (5.0)% Required contributions are determined by an annual actuarial valuation in accordance with Chapter 40 of the Wisconsin Statutes. The employee required contribution is one-half of the actuarially determined contribution rate for general category employees, including teachers, and Executives and Elected Officials. Starting on January 1, 2016, the Executives and Elected Officials category was merged into the General Employee category. Required contributions for protective employees are the same rate as general employees. Employers are required to contribute the remainder of the actuarially determined contribution rate. The employer may not pay the employee required contribution unless provided for by an existing collective bargaining agreement. During the reporting period, the WRS recognized $992,070 in contributions from the District. Contribution rates as of June 30, 2017 are: I Employee Category I Employee I Employer General (including teachers) 6.6% 6.6% Protective with Social Security 6.6% 9.4% Protective without Social Security 6.6% 13.2% 32

36 Notes to Basic Financial Statements June 30, 2017 NOTE E - RETIREMENT COMMITMENTS (Continued) d. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2017, the District reported a liability of $874,958 for its proportionate share of the net pension liability. The net pension liability was measured as of December 31, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of December 31, 2015 rolled forward to December 31, No material changes in assumptions or benefit terms occurred between the actuarial valuation date and the measurement date. The District's proportion of the net pension liability was based on the District's share of contributions to the pension plan relative to the contributions of all participating employers. At December 31, 2016, the District's proportion was %, which was a decrease of % from its proportion measured as of December 31, For the year ended June 30, 2017, the District recognized pension expense of $2,293,739. At June 30, 2017, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience $ 333,622 $ 2,751,668 Changes in assumptions 914,803 Net differences between projected and actual earnings on pension plan inwstments 4,355,265 Changes in proportion and differences between employer contributions and proportionate share of contributions 130,125 Employer contributions subsequent to the measurement date 506,005 Total $ 6,239,820 $ 2,751,668 $506,005 reported as deferred outflows related to pension resulting from the District's contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows: Year Ended Deferred Outflows Deferred Inflows June 30 of Resources of Resources 2017 $ 2,081,117 $ 878, ,081, , ,702, , (132,772) 116, ,033 Total $ 5,733,815 $ 2,751,668 33

37 Notes to Basic Financial Statements June 30, 2017 NOTE E RETIREMENT COMMITMENTS (Continued) e. Actuarial Assumptiori The total pension liability in the December 31, 2016, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Actuarial Valuation Date: December 31, 2015 Measurement Date of Net Pension Liability {Asset) December 31, 2016 Actuarial Cost Method: Entry Age Asset Valuation Method: Fair Value Long-Term Expected Rate of Return: 7.2% Discount Rate: 7.2% Salary Increases: Inflation 3.2% Seniority/Merit 0.2%- 5.6% Mortality: Wisconsin 2012 Mortality Table Post-retirement Adjustments* 2.1% * No post-retirement adjustment is guaranteed. Actual adjustments are based on recognized investment return, actuarial experience and other factors. 2. 1% is the assumed annual adjustment based on the investment return assumption and the post-retirement discount rate. Actuarial assumptions are based upon an experience study conducted in 2015 using experience from The total pension liability for December 31, 2016 is based upon a roll-forward of the liability calculated from the December 31, 2015 actuarial valuation. Long-term expected Return on Plan Assets. The long-term expected rate of return on pension plan investments was determined using a building-block 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 longterm 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 are summarized in the following table: 34

38 Notes to Basic Financial Statements June 30, 2017 NOTE E - RETIREMENT COMMITMENTS (Continued) Core Fund Asset Class Destination Long-Term Long-Term Current Asset Target Asset Expected Nominal Expected Real Allocation % Allocation % Rate of Return % Rate of Return % Global Equities 50% 45% 8.3% 5.4% Fixed Income 24.5% 37% 4.2% 1.4% Inflation Sensitive Assets 15.5% 20% 4.3% 1.5% Real Estate 8% 7% 6.5% 3.6% Private Equity/Debt 8% 7% 9.4% 6.5% Multi-Asset 4% 4% 6.6% 3.7% Total Core Fund 110% 120% 7.4% 4.5% Variable Fund Asset Class U.S. Equities 70% 70% 7.6% 4.7% International Equities 30% 30% 8.5% 5.6% Total Variable Fund 100% 100% 7.9% 5% New England Pension Consultants Long Term US CPI (Inflation) Forecast: 2.75% Asset Allocations are managed within established ranges, target percentages may differ from actual monthly allocations Single Discount rate. A single discount rate of 7.20% was used to measure the total pension liability. This single discount rate was based on the expected rate of return on pension plan investments of 7.20% and a long term bond rate of 3.78%. Because of the unique structure of WRS, the 7.20% expected rate of return implies that a dividend of approximately 2.1 % will always be paid. For purposes of the single discount rate, it was assumed that the dividend would always be paid. The projection of cash flows used to determine this single discount rate assumed that plan member 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. Based on these assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments (including expected dividends) of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 35

39 Notes to Basic Financial Statements June 30, 2017 NOTE E - RETIREMENT COMMITMENTS (Continued) Sensitivity of the District's proportionate share of the net pension liability (asset) to changes in the discount rate. The following presents the District's proportionate share of the net pension liability (asset) calculated using the discount rate of 7.20 percent, as well as what the District's proportionate share of the net pension liability (asset} would be if it were calculated using a discount rate that is 1-percentage-point lower (6.20 percent} or 1-percentage-point higher (8.20 percent) than the current rate: District's proportionate share of 1% Decrease to Current 1 % Increase to Discount Rate Discount Rate Discount Rate (6.20%} (7.20%) (8.20%) the net pension liability (asset) $ 11,510,638 $ 874,958 $ (7,314,997) ====================== Pension plan fiduciary net position. Detailed information about the pension plan's fiduciary net position is available in separately issued financial statements available at f. Payable to the WRS At June 30, 2017 the District reported a payable of $80,673 for the outstanding amount of contributions to the pension plan for the year ended June 30, Supplemental Pension Plan The District maintains a supplemental pension plan for faculty, professional, management, and technical employees hired prior to July 1, 2012 who also meet certain age and service requirements. As of June 30, 2017, there are forty-six employees potentially eligible for the plan, which is closed. The plan, a single-employee pension plan, is a defined benefit pension plan established to provide benefits after early retirement. The plan is administered by the District. Funding Policy - The entire cost of these benefits is paid by the District. Benefits are currently funded on a pay-as-you-go basis and recorded in the District's general fund. No assets exist to prefund retiree benefits. No payments were made for the year ended June 30, Because the supplemental pension plan is closed to new employees, the District determined the pension liability to be immaterial, and an actuarial study was not performed for the year ended June 30,

40 Notes to Basic Financial Statements June 30, 2017 NOTE F - OTHER POST EMPLOYMENT BENEFITS 1. Other Postemployment Benefits Other Than Pension Benefits (OPEB) The District has adopted GASS Statements No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans and No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions for the year ended June 30, These statements revised and established new financial reporting requirements for governments that provide their employees with postemployment benefits. Financial statements for the year ended June 30, 2016 have not been restated. The cumulative effect of this change was to decrease the June 30, 2016 net position by $1,220,474 as follows: Other postemployment liability Balance previously reported $ 4,313,320 Actuarially determined balance 5,533,794 Change in other postemployment liability $ (1,220,474) a) Plan Description - In addition to providing pension benefits, the District as authorized by the Board of Trustees provides medical, dental and insurance benefits for eligible retirees (and spouses) in accordance with employee contracts. Eligible retired employees have access to group coverage through the District's group plans. District paid medical, dental and life insurance benefits last until the retiree reaches age 65 while coverage for the spouse lasts until the retiree would have reached 65. All employees of the District are eligible for the Plan if they meet the following age and service requirements: Administrati..e Support Staff Faculty Professional, Technical, Management Employees Custodians Age 55 and 10 years of service Age 55 and 10 years of service Age 55 and 10 years of ser\oice Age 56 and 10 years of ser\oice Certain retired plan members and beneficiaries currently receiving benefits are required to contribute specified amounts monthly toward the cost of insurance premiums based on the employee group and their retirement date. b) At June 30, 2017, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently recei'1ing benefit payments lnacti..e employees entitled to but not yet recei\ling benefit payments Actiw employees

41 Notes to Basic Financial Statements June 30, 2017 NOTE F- OTHER POST EMPLOYMENT BENEFITS (Continued) a. Contributions Eligible to Hire Eligibility as of (Date) Amount of Contribution Length of Contribution Administrators lier 1: At least age 55 with a minimum of 10 years of sen.ice. lier 2: At least age 55 with a minimum of 1 O years of senice. Prior to 7/1 /13 Prior to 7/1 / times the monthly health insurance premium in effect at retirement (either single or family) times the completed years of senice. $800 single/month or $1,700 family/month for the plan the retiree is in at retirement times the completed years of senice. Medicare-eligibility, retiree wai"ves cowrage or exhaustion of funds. Exhaustion of funds or death Custodial lier 1 : At least age 55 with a minimum of 10 years of sen.ice. lier 2: At least age 55 with a minimum of 10 years of senice. Prior to 7/1/12 Prior to 7/1/ times the monthly health insurance premium in effect at retirement (either single or family) times the completed years of senice. $800 single/month or $1,700 family/month for the plan the retiree is in at retirement times the completed years of senice. Medicare-eligibility, retiree waiws cowrage or exhaustion of funds. Exhaustion of funds or death Faculty lier 1: At least age 55 with a minimum of 1 O years of senice. lier 2: At least age 55 with a minimum of 10 years of senice. Prior to 7/1/12 Prior to 7/1/12.3 times the annual health insurance premium in effect at retirement (either single or family) times the completed years of senice. $800 single/month or $1,700 family/month for the plan the retiree is in at retirement times the completed years of senice. Medicare-eligibility, retiree wai"ves coi.erage or exhaustion of funds. Exhaustion of funds or death Professional, Technical, Management Employees lier 1 : At least age 55 with a minimum of 10 years of sen.ice. lier 2: At least age 55 with a minimum of 10 years of sen.ice. Prior to 7/1/12 Prior to 7/1/12 Retirees who haw exhausted sick leaw funds and haw not reached Medicare eligibility shall receiw additional benefits. $800 single/month or $1,700 family/month for the plan the retiree is in at retirement times the completed years of sen.ice. 60 months or Medicare eligibility, whichewr occurs first Exhaustion of funds or death 38

42 Notes to Basic Financial Statements June 30, 2017 NOTE F - OTHER POST EMPLOYMENT BENEFITS (Continued) a. Contributions (Continued) Eligible to Hire Eligibility as of (Date) Amount of Contribution Length of Contribution Administratiw Support Employees lier 1: At least age 55 with After July 1, 2013 Retirees who haw exhausted a minimum of 10 years of sick leaw funds and haw not sence. reached Medicare eligibility shall receil. additional benefits. Retirees are responsible for the same contributions towards medical premiums as actil. employees 36 months or Medicare eligibility, whichewr occurs first Custodial, Faculty, Professional, Technical, and Management lier 1: At least age 55 with After July 1, 2012 Retirees who ha-.e exhausted a minimum of 10 years of sick leaw funds and ha\ not sence. reached Medicare eligibility shall recei-.e additional benefits. Retirees are responsible for the same contributions towards medical premiums as acti-.e employees 36 months or Medicare eligibility, whiche-.er occurs first Administratiw Support Employees Custodial, Faculty, Professional, Technical, and Management lier 1: At least age 55 with AfterJuly 1, 2013 Life insurance equal to 100% a minimum of 10 years of of salary at retirement, rounded sel'\1ce. to the next $1,000; not to exceed $500,000. lier 1: At least age 55 with After July 1, 2012 Life insurance equal to 100% a minimum of 10 years of of salary at retirement, rounded sence. to the next $1,000; not to exceed $500,000. Retiree pays 100% of premium until age 65, District pays premium at age 65 and older. Life insurance amounts reduce to 75% at age 65, 50% at age 66 and 25% at age 67 and beyond. Retiree pays 100% of premium until age 65, District pays premium at age 65 and older. Life insurance amounts reduce to 75% at age 65, 50% at age 66 and 25% at age 67 and beyond. 39

43 Notes to Basic Financial Statements June 30, 2017 NOTE F - OTHER POST EMPLOYMENT BENEFITS (Continued) b. Net OPEB Liability The District's net OPEB liability was measured as of June 30, 2017, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of that date. Actuarial Assumptions. The total OPEB liability in the June 30, 2017 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Inflation: 2.5 percent Salary Increases: Ranges from 0.2 percent to 5.8 percent Investment Rate of Return: 3.50 percent 8.70 percent in the first year, then 7.00% decreasing by 0.50 percent Healthcare cost trend rates: per year down to 6.50 percent, then by 0.10 percent per year down to 5.0 percent, and level thereafter Mortality rates are the same as those used in the December 31, 2014 Wisconsin Retirement System's annual report. The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, June The long-term expected rate of return on OPEB plan investments was valued at 3.50%. The 20 year taxexempt AA Municipal bond rate as of the measurement date was used for all years of benefit payments. Discount rate. The discount rate used to measure the total OPEB liability was 3.50 percent. The projection of cash flows used to determine the discount rate assumed that District contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan's fiduciary net position was projected to be available to make all projected OPEB payments for current active and inactive employees. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability. c. Changes in the Net OPEB Liability Increase (Decrease) Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability (a) (b) (a) - (b) Balance at July 1, 2016 $ 5,533,794 $ $ 5,533,794 Changes for the year: Service cost 226, ,033 Interest 186, ,527 Contributions - employer 5,229,262 (5,229,262) Net im.estment income 317,731 (317,731) Benefit payments (634,923) (634,923) Administratiw expense (22,350) 22,350 Net changes (222,363) 4,889,720 (5,112,083) Balance at June 30, 2017 $ 5,311,431 $ 4,889,720 $ 421,711 40

44 Notes to Basic Financial Statements June 30, 2017 NOTE F - OTHER POST EMPLOYMENT BENEFITS (Continued) Sensitivity of the net OPEB liability to changes in the discount rate and healthcare cost trend rates. The following presents the net OPEB liability of the District, as well as what the District's net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.50 percent) or 1-percentage-point higher (4.50 percent) than the current rate: 1 % Decrease to Current 1 % Increase to Discount Rate Discount Rate Discount Rate (2.50%) (3.50%) (4.50%) Net OPEB Liability $ 835,290 $ 421,711 $ 61,130 Sensitivity of the net OPEB liability to changes in the healthcare cost trend rates. The following presents the net OPEB liability of the District, as well as what the District's net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower (7. 7 percent decreasing to 4.0 percent) or 1-percentage-point higher (9.7 percent decreasing to 6.0 percent} than the current healthcare cost trend rates: Healthcare Cost 1% Decrease Trend Rates 1% Increase (7.7% decreasing (8. 7% decreasing (9. 7% decreasing to 4.0%) to 5.0%) to 6.0%) Net OPEB liability $ 118,388 $ 421,711 $ 762,395 OPEB plan fiduciary net position. Information about the OPEB plan's fiduciary net position is presented in the Employee Benefit Trust Fund in these financial statements. d. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2017, the District recognized OPEB expense of $117,179. e. Payable to the OPEB Plan At June 30, 2017, the District reported a payable of $0 for the outstanding amount of contributions to the Plan required for the year ended June 30,

45 Notes to Basic Financial Statements June 30, 2017 NOTE G - RISK MANAGEMENT The District has purchased commercial insurance policies for various risks of loss related to torts; theft, damage or destruction of assets; errors or omissions; injuries to employees; or acts of God. Payments of premiums for these policies are recorded as an expenditure of the District's general fund. In addition to the above, the District has established a separate internal service funds for the following risk management programs: District employees, retirees and employee dependents are eligible for medical, dental and vision benefits with funding provided by charges to the District, employees and retirees. On June 30, 2017, District established a reserve of $730,348 for future unreported claims. The claims liability of $697,172 reported as of June 30, 2017, is based on the requirements of GASB Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Changes in the District's claims liability amount for 2016 and 2017 follow: Current Year Claims and Liability Changes in Claim Liability January 1 Estimates Payments December $ 512,140 $ 4,122,230 $ 4,021,172 $ 613, ,198 4,772,178 4,688, ,172 The District also participates in the following risk management programs: Districts Mutual Insurance Company In July 2004 all sixteen WTCS technical colleges created Districts Mutual Insurance Company (DMI). DMI is a fully-assessable mutual company authorized under Wisconsin Statute 611 to provide property, casualty, and liability insurance and risk management services to its members. The scope of insurance protection provided by DMI is broad, covering property at $350,000,000 per occurrence; general liability and auto at $5,000,000 per occurrence, and workers' compensation at the statutorily required limits. At this time, settled claims have not approached the coverage limits as identified above. The District's exposure in its layer of insurance is limited to $2,500 to $100,000 per occurrence depending on the type of coverage and DMI purchases reinsurance for losses in excess of its retained layer of coverage. DMI operations are governed by a five-member board of directors. Member colleges do not exercise any control over the activities of DMI beyond election of the board of directors at the annual meeting. The board has the authority to adopt its own budget, set policy matters, and control the financial affairs of the company. 42

46 Notes to Basic Financial Statements June 30, 2017 NOTE G - RISK MANAGEMENT (Continued) Each member college was assessed an annual premium that included a capitalization component, a premium component and an operational expense component. Future premiums will be based on relevant rating exposure bases as well as historical loss experience by members. DMl's ongoing operational expenses, other than loss adjustment expenses, are apportioned pro rata to each participant based on equity interest in the company. For the year ended June 30, 2017, the District paid total insurance premiums of $230,717. Future premiums will be based on relevant rating exposure bases as well as the historical loss experience by members. Audited financial statements for DMI can be obtained from Districts Mutual Insurance Company, 200 W. Grand Avenue Suite B, Port Washington, WI Supplemental Insurance In July 1997, the WTCS technical colleges formed the WTCS Insurance Trust to jointly purchase commercial insurance to provide coverage for losses from theft of, damages to, or destruction of assets. The trust is organized under Wisconsin Statutes and is governed by a board of trustees consisting of one trustee from each member college. Members include all sixteen Wisconsin Technical College System districts. The WTCS Insurance Trust has purchased the following levels of coverage from DMI for its participating members: Foreign liability: $2,000,000 aggregate general; $1,000,000 auto per accident; $1,000,000 employee benefits; includes benefit for accidental death and dismemberment, repatriation, and medical expenses; $1,000 deductible for employee benefits. Crime: $750,000 coverage for employee dishonesty, forgery, computer fraud and funds transfer fraud; $500,000 coverage for theft, robbery, burglary, disappearance and destruction of money and securities; $25,000 coverage for investigation expenses; $2,500 deductible for investigation; $15,000 deductible for employee dishonesty, forgery, and fraud. The WTCS Insurance Trust statements can be obtained through Lakeshore Technical College District, 1290 North Avenue, Cleveland, WI Insurance settlements have not exceeded insurance coverage in any of the past three years nor has there been any significant reduction in coverage compared to the prior year. 43

47 Notes to Basic Financial Statements June 30, 2017 NOTE H - EXPENSES CLASSIFICATION Expenses on the Statement of Revenues, Expenses and Changes in Net Position are classified by function. Alternatively, the expenses could also be shown by type of expense, as follows for the year ended June 30, 2017: I Amount I Salaries and wages $ 16,423,332 Fringe benefits 8,663,036 Tra'l.el, memberships and subscriptions 600,286 Supplies, printing and minor equipment 3,497,333 Contract services 4,106,611 Rentals 11,500 Insurance 234,170 Utilities 603,962 Depreciation 2,364,959 Student aid 2,883,938 Other expenses 577,337 Total Operating Expenses $ 39,966,464 NOTE I CONTINGENT LIABILITIES 1. The District participates in a number of federal and state grant programs which are subject to program compliance audits and possible future adjustments to expenditures reported for federal and state reimbursement. The amount, if any, of expenditures that may be disallowed cannot be determined at this time although the District expects such amounts, if any, to be immaterial. 2. From time to time, the District is party to various pending claims and legal proceedings. Although the outcome of such matters cannot be forecast with certainty, it is the opinion of management and legal counsel that the likelihood is remote that any such claims and proceedings will have a material adverse effect on the District's financial position or result of operations. 44

48 Notes to Basic Financial Statements June 30, 2017 NOTEJ-COMPONENTUNIT This report contains the Mid State Technical College Foundation, Inc., which is included as a component unit. Financial information is presented as a discrete column in the statement of net position, the statement of revenues, expenses and changes in net position, and the statement of cash flows. In addition to the basic financial statements, the following disclosures are considered necessary for a fair presentation. 1. Cash and Investments Investments at June 30, 2017 consist of the following: Unrealized Fair Gain Cost Value (Loss) Money market funds $ 20,969 $ 20,969 $ Fixed income Mutual funds 671, ,339 7,345 Corporate bonds 153, ,235 (2,049) Equities Mutual funds 1,480,989 1,850, ,081 Common stock 93,605 96,434 2,829 Preferred stock 28,291 29,296 1,005 Stock index ETF 38,923 51,010 12,087 Total lm.estments $ 2,488,055 2,878,353 $ 390,298 Bank deposits 236,907 Total Cash and lmestments $ 3,115,260 As of June 30, 2017, none of the Foundation's deposits with financial institutions were in excess of federal depository insurance limits and uncollateralized (or collateralized with securities held by the pledging financial institution or its trust department or agent but not in the District's name). Investment income (loss) reported in the statement of revenues, expenses and changes in net position consisted of the following: Realized and unrealized gain {loss), net $ 289,393 Interest and dhadend income 87,870 lm.estment fees (19,101) Decrease in beneficial interest in assets held by community foundation 7,769 Investment income (loss) $ 365, Beneficial Interest in Investments Held by Community Foundation Beneficial interest in assets held by Community Foundation represents amounts held at the Community Foundation of South Wood County. The Foundation entered into an agreement with the Community Foundation of South Wood County whereby they transfer donor restricted and board designated endowment funds to the Community Foundation of South Wood County. These amounts are the legal assets of the Community Foundation of South Wood County with the restriction that the Community Foundation of South Wood County make annual distributions to the Foundation as requested. The agreement governing the assets includes a variance power allowing the Community Foundation of South Wood County to modify the restrictions on distributions from the funds. 45

49 Notes to Basic Financial Statements June 30, 2017 NOTE K - SUBSEQUENT EVENTS The District issued a general obligation promissory note, Series on September 13, Maturities of $330,000 to $450,000 will be repaid March 1, 2018 through March 1, 2027 at an interest rates of percent. The notes will be used to acquire moveable equipment, site improvements, and building remodeling projects. 46

50 REQUIRED SUPPLEMENTARY INFORMATION

51 Schedule of Changes in Net OPES Liability and Related Ratios Last 1 OFiscal Years * Total OPES Liability Service cost Interest Benefit payments Net change in total OPES liability Total OPES liability- beginning $ , ,527 (634,923) (222,363) 5,533,794 Total OPES liability- ending (a) $ 5,311,431 Plan Fiduciary Net Position Contributions - Employer Net investment income Benefit payments Administrative expense Net change in plan fiduciary net position Plan fiduciary net position - beginning $ 5,229, ,731 (634,923) (22,350) 4,889,720 Plan fiduciary net position - ending (b) $ 4,889,720 District's net OPES liability- ending (b) - (a) $ 421,711 Plan fiduciary net position as a percentage of the total OPES liability 92.06% Covered-employee payroll $ 12,221,249 District's net OPES liability as a percentage of covered-employee payroll 3.45% * The amounts presented for each fiscal year were determined as of the current fiscal year end. Amounts for prior years was not available. See Notes to Required Supplementary Information. 47

52 Schedule of Employer Contributions Other Post-Employment Benefits Plan Last 10 Fiscal Years * Actuarially determined contribution (ADC) Contributions in relation to the ADC Contribution deficiency (excess) Covered-employee payroll Contributions as a percentage of covered-employee payroll I 2017 $ 534,824 5,229,262 $ (4,694,438) $ 12,221, % I Key Methods and Assumption Used to Calculate ADC Actuarial cost method Asset valuation method Amortization method Discount rate Inflation Entry Age Normal Level $ of Salary Market Value 30 year Level Dollar 3.50% 2.50% * The amounts presented for each fiscal year were determined as of the prior fiscal year end. Amounts for prior years were not available. See Notes to Required Supplementary Information. 48

53 Schedule of Proportionate Share of the Net Pension Liability (Asset) Wisconsin Retirement System Last 10 Fiscal Years* Proportionate Share of the Net Plan Fiduciary Proportionate Pension Liability Net Position as a Proportion of Share of the Covered (Asset) as a Percentage of the Fiscal the Net Pension Net Pension Employee Percentage of Total Pension Year Ending Liability (Asset) Liability (Asset) Payroll Covered Payroll Liability (Asset) 6/30/ % $ (2,727,741) $ 15,057,878 6/30/ % 1,765,117 15,180,292 6/30/ % 874,958 15,031, % 11.63% 5.82% % 98.20% 99.12% Schedule of Contributions Wisconsin Retirement System Last 10 Fiscal Years Contributions in Relation to the Contractually Contractually Contribution Fiscal Required Required Deficiency Year Ending Contributions Contributions (Excess) Covered Employee Payroll Contributions as a Percentage of Covered Employee Payroll 06/30/15 06/30/16 06/30/17 $ 1,054,051 1,032, ,070 $ 1,054,051 1,032, ,070 $ $ 15,057,878 15,180,292 15,031, % 6.80% 6.60% See Notes to Required Supplementary Information. 49

54 Wisconsin Rapids, Wisconsin Notes to Required Supplementary Information June 30, 2017 NOTE A - WISCONSIN RETIREMENT SYSTEM There were no changes of benefit terms or assumptions for any participating employer in WRS. NOTE B - GOVERNMENTAL ACCOUNTING STANDARDS BOARD STATEMENT NOS. 74 AND 75 The District implemented GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans and Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions for the fiscal year ended June 30, Information for prior years is not available. 50

55 SUPPLEMENTARY INFORMATION The following supplementary information is provided to document the District's compliance with budgetary requirements. This accountability is an essential requirement to maintain the public trust. The method of accounting used for budgetary compliance monitoring is substantially different from the method of preparing the basic financial statements of the District. At the end of this section is a reconciliation between the two methods.

56 GENERAL FUND The General Fund is the primary operating fund of the District and its accounts reflect all financial activity not to be accounted for in another fund.

57 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget (Non-GAP Budgetary Basis) and Actual For the Year Ended June 30, 2017 Original Budget Amended Budget Adjustment to Budgetary Basis Actual on a Budgetary Basis Variance Positive (Negative) Actual Revenues Local government - tax levy $ 6,384,920 $ 6,384,920 $ 6,419,496 $ $ 6,419,496 $ 34,576 Intergovernmental revenue State 14,835,632 14,893,662 14,746,313 14,746,313 (147,349) Federal 1,392,294 1,442,694 1,019,418 1,019,418 (423,276) Tuition and fees Statutory program fees 6,856,847 6,856,847 6,517,774 6,517,774 (339,073) Material fees 331, , , ,045 1,404 Other student fees 394, , , ,430 (37,942) Institutional 308, , , ,785 (105,210) Total Revenues 30,504,701 30,588,131 29,571,261 29,571,261 (1,016,870) Expenditures Instruction 17,896,362 18,187,287 16,424,658 (29,087) 16,395,571 1,791,716 Instructional resources 1,187,478 1,219,272 1,132,980 (1,258) 1,131,722 87,550 Student services 3,892,227 4,017,092 3,755,082 (4,875) 3,750, ,885 General institutional 6,448,492 11,330,552 10,248, ,926 10,606, ,284 Physical plant 2,101,052 2,097,121 2,001,313 8,907 2,010,220 86,901 Total Expenditures 31,525,611 36,851,324 33,562, ,613 33,893,988 2,957,336 Excess (Deficiency) of Revenues Over Expenditures (1,020,910) (6,263,193) (3,991,114) (331,613) (4,322,727) 1,940,466 Other Financing Sources (Uses) Transfers in Transfers out Total Other Financing Sources (Uses) 120,000 (35,000) 85, ,000 (1,068,100) (948,100) 120,000 (1,047,247) (927,247) 120,000 (1,047,247) (927,247) 20,853 20,853 Net Change in Fund Balance (935,910) (7,211,293) (4,918,361) (331,613) (5,249,974) 1,961,319 Fund Balance - July 1, ,224,936 16,403,549 16,532,866 (129,317) 16,403,549 Fund Balance - June 30, 2017 $ I $ $ { } $ $ Fund Balance Reserved for encumbrances $ 460,930 Reserved for prepaid items 131,412 Unreserved fund balance Designated for state aid fluctuations 383,216 Designated for subsequent year expenditures 1,822,299 Designated for other post employment benefits 482,274 Designated for operations 8,334,374 $

58 SPECIAL REVENUE FUNDS Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than debt service or major capital projects) that are restricted to expenditures for designated purposes because of the legal or regulatory provisions. The District has two special revenue funds: Aidable Fund - The operating fund is used to account for the proceeds from specific revenue sources other than non-aidable funds that are legally restricted as to expenditures for specific purposes. This fund includes technical assistance contracts and contracted instructional services to business and industry. Non-aidable Fund - The non-aidable fund is used to account for assets held by the District in a trustee capacity, primarily for student aids and other student activities.

59 Special Revenue Aidable Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget (Non-GAAP Budgetary Basis) and Actual For the Year Ended June 30, 2017 Original Amended Budget Adjustment to Budgetary Basis Actual on a Budgetary Basis Variance Positive (Negative) Budget Actual Revenues Institutional $ 778,180 $ 778,180 $ 463,612 $ $ 463,612 $ (314,568) Expenditures Instruction 651, , , , ,218 Net Change in Fund Balance 126, ,240 24,890 24,890 (101,350) Fund Balance - July 1, , , , ,956 Fund Balance - June 30, 2017 $ 624,673 $ 662,196 $ 560,846 $ $ 560,846 $ {101,350} Fund Balance Reserved for prepaid items Unreserved Designated for subsequent year expenditures Designated for operations $ $ , , ,846 52

60 Special Revenue Non-Aidable Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget (Non-GAAP Budgetary Basis) and Actual For the Year Ended June 30, 2017 Original Budget Amended Budget Adjustment to Budgetary Basis Actual on a Budgetary Basis Variance Positive (Negative) Actual Revenues Intergovernmental revenue Federal $ 5,666,300 $ 5,666,300 $ 4,763,121 $ $ 4,763,121 $ (903,179) Tuition and fees Other student fees 350, , , ,602 (26,370) Institutional 445, , , ,321 (72,809) Total Revenues 6,462,402 6,462,402 5,460,044 5,460,044 (1,002,358) Expenditures Student services 6,496,836 6,496,836 5,449,870 5,449,870 1,046,966 Excess (Deficiency) of Revenues Over Expenditures (34,434) (34,434) 10,174 10,174 44,608 Other Financing Sources Transfers in 35,000 35,000 14,147 14,147 (20,853) Net Change in Fund Balance ,321 24,321 23,755 Fund Balance - July 1, ,914 71,899 71,899 71,899 Fund Balance- June 30, 2017 $ 130,480 $ 72,465 $ 96,220 $ $ 96,220 $ 23?55 Fund Balance Reserved for student government and organizations $ 96,220 53

61 CAPITAL PROJECTS FUND The capital projects fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities and remodeling (other than those financed by enterprise funds and trust funds).

62 Capital Projects Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget (Non-GAAP Budgetary Basis} and Actual For the Year Ended June 30, 2017 Revenues Original Budget Amended Budget Actual Adjustment to Budgetary Basis Actual on a Budgetary Basis Variance Positive (Negative} Intergovernmental revenue State $ 360,064 $ 360,064 $ 361,098 $ $ 361,098 $ 1,034 Federal 54,832 51,652 51,652 (3,180} Institutional 19,920 19,920 61,728 61,728 41,808 Total Revenues 379, , , ,478 39,662 Expenditures Instruction 1,222,174 1,299,696 1,508,573 (229,388) 1,279,185 20,511 Instructional resources 309, , ,900 (199,272) 292, ,767 Student services 550, , ,172 (15,868) 610,304 9,696 General institutional 897, , , , , ,448 Physical plant 3,250,920 3,021,490 4,450,562 (1,456,587) 2,993,975 27,515 Total Expenditures 6,230,594 6,379,030 7,794,634 (1,772,541) 6,022, ,937 Excess (Deficiency} of Revenues Over Expenditures (5,850,610) (5,944,214} (7,320,156) 1,772,541 (5,547,615) 396,599 Other Financing Sources Transfers in 33,100 33,100 33,100 Long-term debt issued 5,700,000 5,700,000 5,700,000 5,700,000 Total Other Financing Sources 5,700,000 5,733,100 5,733,100 5,733,100 Net Change in Fund Balance (150,610) (211,114) (1,587,056} 1,772, , ,599 Fund Balance - July 1, , ,490 3,742,584 (3,277,094) 465,490 Fund Balance - June 30, 2017 $ 180,120 $ 254,376 $ $ (1,504,553) $ 650,975 $ 396,599 Reserved for encumbrances Reserved for capital projects $ $ 1,504, , ,528 54

63 DEBT SERVICE FUND The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs.

64 Debt Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget (Non-GMP Budgetary Basis) and Actual For the Year Ended June 30, 2017 Original Budget Amended Budget Adjustment to Budgetary Basis Actual on a Budgetary Basis Variance Positive (Negative) Actual Revenues Local government - tax levy $ 4,396,027 $ 4,396,027 $ 4,396,027 $ $ 4,396,027 $ I nstitulional 100, ,500 1,554 1,554 (98,946) Total Revenues 4,496,527 4,496,527 4,397,581 4,397,581 (98,946) Expenditures Physical plant 4,983,455 4,983,455 4,934,463 4,934,463 48,992 Excess (Deficiency) of Revenues Over Expenditures (486,928) (486,928) (536,882) (536,882) (49,954) Other Financing Sources Debt premium 217, , ,366 Net Change in Fund Balance (486,928) (486,928) (319,516) (319,516) 167,412 Fund Balance - July 1, , , , ,360 Fund Balance - June 30, 2017 $ 400,786 i 400,432 $ 567,844 $ $ 567,844 $ 167,412 Fund Balance Reserved for debt service $ 567,844 55

65 ENTERPRISE FUNDS The enterprise funds are used to account for activities where the intent of the district is that the costs of providing goods or services on a continuing basis be financed or recovered primarily through fees charged to the users of the goods or services. The operations of the District's food service and bookstore, as well as various other minor services are accounted for in the enterprise funds.

66 Enterprise Funds Schedule of Revenues, Expenditures and Changes in Fund Balance Budget (Non-GMP Budgetary Basis) and Actual For the Year Ended June 30, 2017 Original Budget Amended Budget Adjustment to Budgetary Basis Actual on a Budgetary Basis Variance Positive (Negative) Actual Revenues Auxiliary revenue $ 1,260,124 $ 1,260,124 $ 1,251,630 $ $ 1,251,630 $ (8,494) Expenditures Auxiliary services 1,225,624 1,355,720 1,355,715 1,355,715 5 Excess {Deficiency) of Revenues Over Expenditures 34,500 (95,596) (104,085) (104,085) (8,489) Other Financing Uses Transfers out (120,000) (120,000) (120,000) (120,000) Net Change in Fund Balance (85,500) (215,596) (224,085) (224,085} (8,489) Fund Balance - July 1, ,692,687 1,717,595 1,717,595 1,717,595 Fund Balance - June 30, 2017 $ 1,607,187 $ 1,501,999 $ 1,493,510 $ $ 1,493,510 $ (8,489} Fund Balance Unrestricted net position $ 1.493,510 56

67 INTERNAL SERVICE FUND The Internal Service Fund is used to account for the financing of goods or services provided by one department to other departments on a cost-reimbursement basis. The District's internal service fund is used to account for all collections and claim payments related to the District's dental, vision, and health self-insurance program along with copy center operations on the Marshfield and Wisconsin Rapids campuses.