BUILDING FUND 2002 GENERAL OBLIGATION BOND MEASURE B FINANCIAL REPORT
BUILDING FUND 2002 GENERAL OBLIGATION BOND MEASURE B TABLE OF CONTENTS INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS Building Fund 2002 General Obligation Bond Measure B Balance Sheet 2 Statement of Revenues, Expenditures and Changes in Fund Balance 3 Notes to Financial Statements 4
INDEPENDENT AUDITORS' REPORT Governing Board Redwood City School District San Mateo, California We have audited the accompanying financial statements of the Building Fund, 2002 General Obligation Bond Measure B, of the Redwood City School District, as of and for the year ended June 30, 2009, as listed in the table of contents. These financial statements are the responsibility of the District's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As discussed in Note 1, the financial statements present only the Building Fund, 2002 General Obligation Bond Measure B, and do not represent the financial position and results of operations of the Redwood City School District in conformity with accounting principles generally accepted in the United States of America. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Building Fund, 2002 General Obligation Bond Measure B, of the Redwood City School District at June 30, 2009, and the results of its operations for the year then ended in conformity with accounting principles generally accepted in the United States of America. Pleasanton, California February 18, 2010 1 5000 Hopyard Road, Suite 335 Pleasanton, CA 94588 Tel: 925.734.6600 Fax: 925.734.6611 www.vtdcpa.com FRESNO LAGUNA HILLS PLEASANTON RANCHO CUCAMONGA PALO ALTO
BALANCE SHEET ASSETS Cash and investments $ 64,721 Accounts receivable 727 Total Assets $ 65,448 LIABILITIES AND FUND EQUITY LIABILITIES Accounts payable $ 31,315 Due to other funds 45 Total Liabilities 31,360 FUND EQUITY Fund balances Undesignated 34,088 Total Fund Equity 34,088 Total Liabilities and Fund Equity $ 65,448 The accompanying notes are an integral part of these financial statements. 2
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED REVENUES Interest income $ 7,629 Total Revenues 7,629 EXPENDITURES Current Expenditures Classified salaries 8,771 Employee benefits 1,537 Services and operating expenditures 211,202 Capital outlay Site and improvements of sites 53,906 Building and improvements of building 113,749 Equipment 41,540 Total Expenditures 430,705 EXCESS OF REVENUES (UNDER) EXPENDITURES (423,076) CHANGE IN NET ASSETS (423,076) FUND BALANCE, BEGINNING OF YEAR 457,164 FUND BALANCE, END OF PERIOD $ 34,088 The accompanying notes are an integral part of these financial statements. 3
NOTES TO FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the Redwood City School District Building Fund, 2002 General Obligation Bond Measure B, conforms to accounting principles generally accepted in the United States of America as prescribed by the Governmental Accounting Standards Board (GASB). The Redwood City School District Building Fund, 2002 General Obligation Bond Measure B accounts for financial transactions in accordance with the policies and procedures of the California School Accounting Manual. Financial Reporting Entity The financial statements include only the Building Fund, 2002 General Obligation Bond Measure B, of the Redwood City School District. This fund was established to account for the expenditures of general obligation bonds issued under the General Obligation Bonds Election of 2002. The voters authorized the issuance and sale of not more than $22,000,000 of general obligation bonds to finance the renovation and remodeling of existing educational facilities within the District. These financial statements are not intended to present fairly the financial position and results of operations of the Redwood City School District in compliance with accounting principles generally accepted in the United States of America. Fund Accounting The operations of the Building Fund, 2002 General Obligation Bond Measure B, are accounted for in a separate set of self-balancing accounts that comprise its assets, liabilities, fund balance, revenues, and expenditures. Resources are allocated to and accounted for in the fund based upon the purpose for which they are to be spent and the means by which spending activities are controlled. Basis of Accounting Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of measurement made, regardless of the measurement focus applied. The financial statements of the Redwood City School District Building Fund, 2002 General Obligation Measure B are accounted for under the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current fiscal period. Expenditures are recognized in the accounting period in which the liability is incurred (when goods are received or services rendered), except for unmatured interest on general long-term debt, which is recognized when due. Fund Balance Reserves and Designations Reservations of the ending fund balance indicate the portions of fund balance not available for appropriation or amounts legally segregated for a specific future use. Designations of the ending fund balance indicate tentative plans for financial resource utilization in a future period. 4
NOTES TO FINANCIAL STATEMENTS Property Tax Secured property taxes attach as an enforceable lien on property as of January 1. Taxes are payable in two installments on November 1 and February 1 and become delinquent on December 10 and April 10, respectively. Unsecured property taxes are payable in one installment on or before August 31. The County of San Mateo bills and collects the taxes on behalf of the District. Local property tax revenues are recorded when received. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires 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 the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 CASH AND INVESTMENTS Summary of Cash and Investments Investments at June 30, 2009, held on behalf of the Redwood City School District Building Fund, 2002 General Obligation Bond Measure B, consist of the following: Cash in County $ 63,120 Local Agency Investment Fund 1,601 Total $ 64,721 Policies and Practices The District is authorized under California Government Code to make direct investments in local agency bonds, notes, or warrants within the State; U.S. Treasury instruments; registered State warrants or treasury notes; securities of the U.S. Government, or its agencies; bankers acceptances; commercial paper; certificates of deposit placed with commercial banks and/or savings and loan companies; repurchase or reverse repurchase agreements; medium term corporate notes; shares of beneficial interest issued by diversified management companies, certificates of participation, obligations with first priority security; and collateralized mortgage obligations. Investment in County Treasury - The District is considered to be an involuntary participant in an external investment pool as the District is required to deposit all receipts and collections of monies with their County Treasurer (Education Code Section 41001). The fair value of the District's investment in the pool is reported in the accounting financial statements at amounts based upon the District's pro-rata share of the fair value provided by the County Treasurer for the entire portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by the County Treasurer, which is recorded on the amortized cost basis. 5
NOTES TO FINANCIAL STATEMENTS Investment in the State Investment Pool - The District is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California government code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the District's investment in the pool is reported in the accompanying financial statement at amounts based upon the District's pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which is recorded on the amortized cost basis. 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 change in market interest rate. The District manages its exposure to interest rate risk by investing in the county pool, LAIF and having the Pools purchase a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations The District monitors the interest rate risk inherent in its portfolio by measuring the weighted average maturity of its portfolio. Information about the weighted average maturity of the District's portfolio is presented in the following schedule. Weighted Average Fair Maturity Investment Type Value in Years County Pool $ 62,926 0.89 State Investment Pool 1,603 0.64 Total $ 64,529 Credit Risk 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. The District s investment s in the county pool and LAIF are not required to be rated, nor have they been rated as of June 30, 2009. NOTE 3 ACCOUNTS RECEIVABLE Receivables at June 30, 2009 consist of the following: Interest Receivable $ 727 Total $ 727 6
NOTES TO FINANCIAL STATEMENTS NOTE 4 INTERFUND TRANSACTIONS Interfund Receivables (Due from) and Payables (Due to) The amount of interfund payable due from the 2002 General Obligations Bond Measure B to General Fund at June 30, 2009 is $45, which is for employee benefits. Subsequent to June 30, 2009, the 2002 General Obligations Bond Measure B transferred this amount to the District s General fund to reimburse for those items. NOTE 5 ACCOUNTS PAYABLE Accounts payable at June 30, 2009, consists of the following: Vendor payables $ 31,315 Total $ 31,315 NOTE 6 LONG TERM OBLIGATIONS Under the modified accrual basis of accounting, liabilities for long-term obligation are not reported in the individual funds. However, they are reported as liabilities on the Statement of Net Assets in the Entity-wide financial statements of the Redwood City School District. The information presented below is for informational purposes. General obligation bonds have been issued and are outstanding as follows: Bonds Bonds Issue Maturity Interest Original Outstanding Additions/ Outstanding Date Date Rate Issue July 1, 2008 Accretion Redeemed June 30, 2009 7/11/2002 8/1/2027 2.1-5.15% 21,999,968 $ 22,796,016 $ 22,059 $ 169,388 $ 22,648,687 Premiums net of amortization 675,078-35,530 639,548 Total $ 23,471,094 $ 22,059 $ 204,918 $ 23,288,235 The 2002 General Obligation Bond proceeds are used to finance specific facilities projects summarized as the following: repairs and replacement at District campuses, technology and equipment at District campuses, construction of two separate multi use facilities for student use, repair and remodel an existing multi use facility for student use, construct District warehouse, repair and improve maintenance, operations, transportation facility, convert existing multi use room to maintenance warehouse, and repair various facilities to meet requirements of the Americans with Disabilities Act. Principal and interest payments of these issues are payable from ad valorem property taxes collected by County of San Mateo. Theses amounts are deposited into the bond interest and redemption fund of Redwood City School District which then makes the bond interest and principal payments. 7
NOTES TO FINANCIAL STATEMENTS Debt Service Requirements The general obligation bonds of 2002 series mature through fiscal year 2028 as follows: Interest to Fiscal Year Principal Maturity Total 2010 $ 195,713 $ 1,089,287 $ 1,285,000 2011 217,361 1,132,639 1,350,000 2012 237,410 1,182,590 1,420,000 2013 253,440 1,236,560 1,490,000 2014 268,113 1,296,887 1,565,000 2015-2019 2,237,659 6,867,341 9,105,000 2020-2024 7,810,000 3,825,000 11,635,000 2025-2028 10,240,000 1,345,750 11,585,750 Subtotal 21,459,696 $ 17,976,054 $ 39,435,750 Accretions to date 1,188,991 Total $ 22,648,687 8