SONOMA VALLEY UNIFIED SCHOOL DISTRICT COUNTY OF SONOMA SONOMA, CALIFORNIA AUDIT REPORT June 30, 2016 CHAVAN & ASSOCIATES, LLP CERTIFIED PUBLIC ACCOUNTANTS 1475 SARATOGA AVE., SUITE 180 SAN JOSE, CA 95129
SONOMA COUNTY TABLE OF CONTENTS TITLE PAGE FINANCIAL SECTION: Independent Auditor s Report... 1 Management s Discussion and Analysis... 5 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position... 14 Statement of Activities... 15 Fund Financial Statements: Balance Sheet Governmental Funds... 16 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position... 17 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds... 18 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities... 19 Proprietary Funds Statement of Net Position... 20 Proprietary Funds Statement of Activities... 21 Proprietary Funds Statement of Cash Flows... 22 Statement of Fiduciary Net Position Fiduciary Funds... 23 Notes to the Basic Financial Statements... 25-57 REQUIRED SUPPLEMENTARY INFORMATION: Schedule of Revenue, Expenditures and Changes in Fund Balances Budget and Actual (GAAP) General Fund... 59 Schedule of Pension Plan Contributions... 60 Schedule of Proportionate Share of Net Pension Liability... 61 SUPPLEMENTARY INFORMATION: Combining Statements Nonmajor Funds: Combining Balance Sheet Nonmajor Governmental Funds... 64 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds... 65 State and Federal Award Compliance Section: Organization... 67 Schedule of Average Daily Attendance... 68 Schedule of Instructional Time Offered... 69 Schedule of Charter Schools... 70 Schedule of Financial Trends and Analysis... 71 Schedule of Expenditures of Federal Awards... 72 Reconciliation of Annual Financial Budget Report to the Audited Financial Statements... 73 Notes to State and Federal Award Compliance Section... 74
SONOMA COUNTY TABLE OF CONTENTS OTHER INDEPENDENT AUDITOR S REPORTS: Independent Auditor s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards... 77 Independent Auditor s Report on Compliance for Each Major Program and on Internal Control over Compliance Required by Title 2 CFR Part 200 (Uniform Guidance)... 79 Independent Auditors' Report on Compliance with Requirements that Could Have a Direct and Material Effect on State Programs... 81 FINDINGS AND RECOMMENDATIONS: Schedule of Findings and Questioned Costs... 84 Status of Prior Year Findings and Recommendations... 86
FINANCIAL SECTION
The Honorable Board of Trustees Sonoma Valley Unified School District Sonoma, California Report on the Financial Statements INDEPENDENT AUDITOR S REPORT We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Sonoma Valley Unified School District (the District), as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise Sonoma Valley Unified School District s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Sonoma Valley Unified School District s 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. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the 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 opinions. 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 E-Fax: 408-872-4159 info@cnallp.com www.cnallp.com
Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of Sonoma Valley Unified School District, as of June 30, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters New Accounting Pronouncements As discussed in Note 1 to the financial statements, the District adopted the provisions GASB Statement No. 72, Fair Value Measurement and Application, GASB Statement No. 79, Certain External Investment Pools and Pool Participants, and GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, effective June 30, 2016. Our opinion is not modified with respect to these matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis, budgetary comparison information, schedule of pension contributions, schedule of proportionate share of net pension liability and schedule of funding progress for the retiree healthcare plan, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District s basic financial statements. The combining and individual nonmajor fund financial statements, schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Regulations, Cost Principles, and Audit Requirements for Federal Awards, and the other information listed in the supplementary section of the table of contents, as required by the 2015-16 Guide for Annual Audits of K-12 Local Education Agencies and State Compliance Reporting, are presented for purposes of additional analysis and are not a required part of the basic financial statements. 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 E-Fax: 408-872-4159 info@cnallp.com www.cnallp.com
The combining and individual nonmajor fund financial statements, schedule of expenditures of federal awards, and the other information listed in the supplementary section of the table of contents are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements, schedule of expenditures of federal awards, and the other information listed in the supplementary section of the table of contents are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 26, 2016 on our consideration of Sonoma Valley Unified School District s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Sonoma Valley Unified School District s internal control over financial reporting and compliance. November 26, 2016 San Jose, California 1475 Saratoga Ave, Suite 180, San Jose, CA 95129 Tel: 408-217-8749 E-Fax: 408-872-4159 info@cnallp.com www.cnallp.com
Management s Discussion and Analysis
MANAGEMENT S DISCUSSION AND ANALYSIS The discussion and analysis of the financial performance of the Sonoma Valley Unified School District provides an overall review of the organization s financial activities for the fiscal year ended June 30, 2016. The intent of this discussion and analysis is to look at the district s financial performance as a whole. Readers should also review the notes to the basic financial statements and financial statements to enhance their understanding of the district s financial performance. Financial Highlights Key financial highlights for the fiscal year 2016 are as follows: The District had $54,805,357 in governmental expenses. Program revenues in the form of operating grants and contributions, capital grants and contributions, and charges for services accounted for $11,637,249, or 20%, of the total revenues of $56,982,614. 21% of total governmental expenses were offset by program revenues. General revenues (primarily taxes) of $45,345,365 were sufficient to provide for these programs in the current year. The District s net position increased by $2,177,257, or 167%, from June 30, 2015 because of increased property taxes and program revenues. The total governmental fund balances decreased by $4,763,578, or 9.6%, because the District spent proceeds from general obligation bonds on capital projects during the year. Total governmental fund revenues and expenditures totaled $56,444,504 and $61,215,457, respectively. Using the Annual Report This annual report consists of a series of basic financial statements and notes to those statements. These statements are organized to assist the reader in understanding the Sonoma Valley Unified School District as a financial whole, an entire operating entity. The statements then proceed to provide an increasingly detailed look at specific financial activities. The Statement of Net Position and Statement of Activities comprise the district-wide financial statements and provide information about the activities of the whole district, presenting both an aggregate view of the organization s finances and a longer-term view of those finances. Fund financial statements provide the next level of detail. For governmental funds, these statements tell how services were financed in the short-term as well as what remains for future spending. The fund financial statements also look at the district s most significant fund, the General Fund, with all other (non-major) funds presented in total in one column. The basic financial statements also include notes that explain some of the information in the financial statements and provide more detailed data.
MANAGEMENT S DISCUSSION AND ANALYSIS Overview of the Financial Statements Government-wide Financial Statements - Statement of Net Position and the Statement of Activities While this document contains the ten funds used by the Sonoma Valley Unified School District to provide programs and activities, it provides a view of the district as a whole, looks at all financial transactions and asks the question, How did we do financially during 2016? The Statement of Net Position and the Statement of Activities answer this question. These statements include all assets and liabilities using the accrual basis of accounting similar to the accounting used by most private-sector companies. This basis of accounting takes into account all of the current year s revenues and expenditures regardless of when cash is received or paid. These two statements report the district s net position and changes in net position. This change in net position is important because it tells the reader that, for the Sonoma Valley Unified School District as a whole, the financial position of the organization has improved or diminished. The causes of the change may be the result of many factors, some financial, and some not. Nonfinancial factors include the district s property tax base, current property tax laws in California restricting revenue growth, facility condition, required educational programs and other factors. In the Statement of Net Position and the Statement of Activities, the district reports governmental activities. Governmental activities are the activities in which most of the district s programs and services are reported including, but not limited to, instruction, support services, operation and maintenance of plant, pupil transportation, and extracurricular activities. Reporting the Sonoma Valley Unified School District s Most Significant Funds Fund Financial Statements Fund financial reports provide detailed information about the district s major funds. The district uses many funds to account for a multitude of financial transactions. However, these fund financial statements focus on the district s most significant funds and not the organization as a whole. Governmental Funds Most of the district s activities are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end available for spending in the future periods. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the district s general government operations and the basic services it provides. Governmental fund information helps to determine whether there are more or fewer financial resources that can be spent in the near future to finance educational programs. The relationship (or differences)
MANAGEMENT S DISCUSSION AND ANALYSIS between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is reconciled in the financial statements. The Sonoma Valley Unified School District s most significant governmental fund is the General Fund. The Sonoma Valley Unified School District as a Whole Recall that the Statement of Net Position provides the perspective of the District as a whole. Table 1 provides a summary that compares the district s net position in 2015 and 2016: Table 1 - Summary of Statement of Net Position Percentage 2016 2015 Change Change Assets Current & Other Assets $ 50,460,077 $ 53,799,572 $ (3,339,495) -6.2% Capital Assets 61,608,066 58,897,533 2,710,533 4.6% Total Assets $ 112,068,143 $ 112,697,105 $ (628,962) -0.6% Deferred Outflows of Resources $ 7,402,182 $ 4,680,025 $ 2,722,157 58.2% Liabilities Current and Other Liabilities $ 6,701,316 $ 4,669,233 $ 2,032,083 43.5% Long-term Liabilities 104,710,499 103,764,286 946,213 0.9% Total Liabilities $ 111,411,815 $ 108,433,519 $ 2,978,296 2.7% Deferred Inflows of Resources $ 4,578,170 $ 7,640,528 $ (3,062,358) -40.1% Net Position Net Investment in Capital Assets $ 12,098,845 $ 9,984,738 $ 2,114,107 21.2% Restricted 12,475,118 13,760,212 (1,285,094) -9.3% Unrestricted (21,093,623) (22,441,867) 1,348,244-6.0% Total Net Position $ 3,480,340 $ 1,303,083 $ 2,177,257 167.1%
MANAGEMENT S DISCUSSION AND ANALYSIS Table 2 shows the changes in net position for fiscal year 2015 and 2016. Table 2 - Summary of Changes in Statement of Activities Percentage 2016 2015 Change Change Revenues Program Revenues $ 11,637,249 $ 8,839,172 $ 2,798,077 31.66% General Revenues: Property Taxes 39,422,622 37,497,588 1,925,034 5.13% Grants and Entitlements - Unrestricted 2,133,253 1,751,245 382,008 21.81% Other 3,789,490 2,867,634 921,856 32.15% Total Revenues 56,982,614 50,955,639 6,026,975 11.83% Program Expenses Instruction 33,959,629 31,574,102 2,385,527 7.56% Instruction-related services 5,469,723 4,583,007 886,716 19.35% Pupil services 5,774,570 5,316,840 457,730 8.61% General administration 2,560,081 2,148,731 411,350 19.14% Plant services 3,073,021 3,351,618 (278,597) -8.31% Other educational programs 249,363 207,706 41,657 20.06% Other outgo 3,718,970 2,924,689 794,281 27.16% Total Expenses 54,805,357 50,106,693 4,698,664 9.38% Increase in Net Position 2,177,257 848,946 1,328,311 156.47% Prior Period Adjustment - GASB 68 - (34,400,653) 34,400,653-100.00% Beginning Net Position 1,303,083 34,854,790 (33,551,707) -96.26% Ending Net Position $ 3,480,340 $ 1,303,083 $ 2,177,257 167.09%
MANAGEMENT S DISCUSSION AND ANALYSIS Governmental Activities The Statement of Activities shows the cost of program services and the grants and charges to school districts offsetting those services. Table 3 shows the total cost of services and the net cost of services. That is, it identifies the cost of these services supported by unrestricted State entitlements, tax revenue, and other unrestricted local revenue. Table 3 shows a summary of the net cost of services for fiscal year 2015 and 2016. Table 3 - Net Cost of Services Percentage 2016 2015 Change Change Instruction $ 26,133,983 $ 25,767,223 $ 366,760 1.42% Instruction-related services 4,511,946 3,986,149 525,797 13.19% Pupil services 3,312,011 3,057,156 254,855 8.34% General administration 2,445,337 2,057,668 387,669 18.84% Plant services 2,847,745 3,326,275 (478,530) -14.39% Other educational programs 198,116 148,361 49,755 33.54% Other outgo 3,718,970 2,924,689 794,281 27.16% Total Net Cost of Services $ 43,168,108 $ 41,267,521 $ 1,900,587 4.61% Instruction expenditures include activities directly dealing with the teaching of pupils and the interaction between teacher and pupil. Instruction-related services include the activities involved with assisting staff with the content and process of teaching to pupils. Pupil transportation includes activities involved with the conveyance of students to and from school, as well as to and from school activities, as provided by State law. Other non-instructional pupil services include the preparation, delivery, and servicing of lunches, snacks and other incidental meals to students and school staff in connection with school activities. Board of Trustees, administration, fiscal and business include expenditures associated with administrative and financial supervision of the Sonoma Valley Unified School District. Operation and maintenance of plant activities involve keeping the school grounds, buildings, and equipment in effective working condition.
MANAGEMENT S DISCUSSION AND ANALYSIS The Sonoma Valley Unified School District s Funds Table 4 provides an analysis of the fund balances and internal service fund net position. Table 4 - Summary of Fund Balances/Net Position Percentage 2016 2015 Change Change General $ 10,494,107 $ 10,959,030 $ (464,923) -4.24% Building Fund 21,506,567 25,067,669 (3,561,102) -14.21% County School Facilities Fund 2,289,096 2,692,305 (403,209) -14.98% Bond Interest and Redemption Fund 7,234,411 7,923,259 (688,848) -8.69% Nonmajor Funds 2,917,853 2,570,724 347,129 13.50% Internal Service Self Insurance Fund (OPEB) 496,727 489,352 7,375 1.48% Total Fund Balances $ 44,938,761 $ 49,702,339 $ (4,763,578) -9.58% General Fund Budgeting Highlights The District s budget is prepared according to California law and is based on the modified accrual basis of accounting. Over the course of the year, the District revises its budget based on updated financial information. The original budget, approved at the end of June for July 1, is based on May revised figures and updated 45 days after the State approves its final budget. In addition, the District revises its budget at First and Second Interim and at Year-End to reflect the most current financial information available at that point in time. During the course of the 2016 fiscal year, the District revised its General Fund budget three times at 1st Interim, 2nd interim, and at Year-End, which resulted in a total increase in expenditures of $3,761,981 over the 2016 Adopted Budget. Expenditure increases are typically higher from the Adopted Budget to Year-End. For the General Fund, the final year-end budget basis revenue and other financing sources estimate was $46,301,978. The original budgeted estimate was $43,690,648.
MANAGEMENT S DISCUSSION AND ANALYSIS Capital Assets Table 5 shows fiscal year 2016 balances compared to 2015. Table 5 - Summary of Capital Assets Net of Depreciation Percentage 2016 2015 Change Change Land $ 2,982,147 $ 2,982,147 $ - 0.00% Buildings and Improvements 52,434,288 52,193,296 240,992 0.46% Equipment 707,478 678,499 28,979 4.27% Work-in-Progress 5,484,153 3,043,591 2,440,562 80.19% Total Capital Assets - Net $ 61,608,066 $ 58,897,533 $ 2,710,533 4.40% Long Term Debt Table 6 summarizes the District s outstanding debt for the last two fiscal years. Table 6 - Summary of Long-term Liabilities Percentage 2016 2015 Change Change General Obligation Bonds $ 65,903,533 $ 68,468,591 $ (2,565,058) -3.75% Unamortized Bond Premium - Net 6,372,942 6,903,677 (530,735) -7.69% Net Pension Obligations 31,718,567 27,814,636 3,903,931 14.04% Annual Net OPEB Obligation 671,197 533,122 138,075 25.90% Compensated Absences 44,260 44,260-0.00% Total Long-term Liabilities $ 104,710,499 $ 103,764,286 $ 946,213 0.91% Factors Bearing on the District s Future School Districts face increasing pressure to improve outcomes for students, which necessitates a reallocation of resources if existing programs are not producing the desired results. Every District faces its own particular set of financial risk factors based on current reserve levels, enrollment trends, bargaining agreements, degree of revenue volatility and various other local and statewide factors. In such a dynamic and uncertain operating environment there are a few key aspects to maintaining fiscal solvency and protecting the integrity of educational programs that apply to all districts: 1. Maintaining adequate reserves to allow for unanticipated circumstances. 2. Maintaining fiscal flexibility by limiting commitments to future increased expenditures based on projections of future revenue growth, and/or establishing contingencies that allow expenditure plans to be changed if needed.
MANAGEMENT S DISCUSSION AND ANALYSIS Contacting the District s Financial Management This financial report is designed to provide our citizens, taxpayers, parents, investors, and creditors with a general overview of the Sonoma Valley Unified School District s finances and to show the district s accountability for the money it receives. If you have questions regarding this report or need additional financial information, please contact John Bartolome, Chief Business Official, Sonoma Valley Unified School District, 17850 Railroad Avenue, Sonoma, California, 95476, (707) 935-4249.
Basic Financial Statements
STATEMENT OF NET POSITION JUNE 30, 2016 Governmental Activities Assets Current assets: Cash and investments $ 47,831,341 Accounts receivable 2,613,848 Stores inventories 14,888 Total current assets 50,460,077 Noncurrent assets: Non-depreciable capital assets 6,025,738 Depreciable capital assets - net 55,582,328 Total noncurrent assets 61,608,066 Total Assets $ 112,068,143 Deferred Outflows of Resources Pension contributions and deferrals $ 6,141,495 Deferred loss on early retirement of long-term debt 1,260,687 Total Deferred Outflows of Resources $ 7,402,182 Liabilities Current liabilities: Accounts payable $ 5,341,898 Unearned revenue 179,418 Accrued interest 1,180,000 Total current liabilities 6,701,316 Long-term liabilities: Due within one year 2,670,000 Due after one year 102,040,499 Total long-term liabilities 104,710,499 Total Liabilities $ 111,411,815 Deferred Outflows of Resources Differences in pension earnings and projections $ 4,578,170 Net Position Net investment in capital assets $ 12,098,845 Restricted for: Capital projects 2,289,096 Debt service 7,234,411 Educational programs 2,951,611 Total restricted net position 12,475,118 Unrestricted (21,093,623) Total Net Position $ 3,480,340 The notes to basic financial statements are an integral part of this statement
Governmental activities: Program Revenues Net (Expense) Operating Capital Revenue and Charges for Grants and Grants and Changes in Expenses Services Contributions Contributions Net Position Instruction $ 33,959,629 $ 112,896 $ 7,693,706 $ 19,044 $ (26,133,983) Instruction-related services: Supervision of instruction 1,313,405 3,200 528,331 - (781,874) Instruction library, media and technology 310,214-11,241 - (298,973) School site administration 3,846,104 2,584 412,421 - (3,431,099) Pupil services: Home-to-school transportation 1,350,827 5,204 73,379 - (1,272,244) Food services 1,877,620 184,845 1,748,081-55,306 All other pupil services 2,546,123 14,181 436,869 - (2,095,073) General administration: STATEMENT OF ACTIVITIES Data processing 889,562 - - - (889,562) All other general administration 1,670,519 6,180 108,564 - (1,555,775) Plant services 3,073,021 13 225,263 - (2,847,745) Other educational programs 249,363-51,247 - (198,116) Interest on long-term debt 3,718,970 - - - (3,718,970) Total governmental activities $ 54,805,357 $ 329,103 $ 11,289,102 $ 19,044 (43,168,108) General revenues: Taxes and subventions: Taxes levied for general purposes 34,553,500 Taxes levied for debt service 4,422,467 Taxes levied for other specific purposes 446,655 Federal and state aid non restricted to specific purposes 2,133,253 Interest and investment earnings 866,625 Interagency revenues 870,470 Miscellaneous 2,052,395 Total general revenues 45,345,365 Change in net position 2,177,257 Net position beginning 1,303,083 Net position ending $ 3,480,340 The notes to basic financial statements are an integral part of this statement
BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2016 Bond Interest Other County and Nonmajor Total General Building School Facilities Redemption Governmental Governmental Fund Fund Fund Fund Funds Funds Assets Cash and investments $ 11,577,740 $ 23,243,516 $ 2,411,134 $ 7,234,411 $ 2,367,074 $ 46,833,875 Accounts receivable 2,264,009 - - - 349,839 2,613,848 Due from other funds 136,879 - - - 583,603 720,482 Stores inventories - - - - 14,888 14,888 Total Assets $ 13,978,628 $ 23,243,516 $ 2,411,134 $ 7,234,411 $ 3,315,404 $ 50,183,093 Liabilities and Fund Balances Liabilities: Accounts payable $ 2,840,739 $ 1,736,949 $ 99,583 $ - $ 163,888 $ 4,841,159 Due to other funds 464,364-22,455-233,663 720,482 Unearned revenue 179,418 - - - - 179,418 Total Liabilities 3,484,521 1,736,949 122,038-397,551 5,741,059 Fund balances: Nonspendable: Revolving fund 10,000 - - - - 10,000 Stores inventory - - - - 14,888 14,888 Restricted for: Cafeteria programs - - - - 471,595 471,595 Capital projects - 21,506,567 2,289,096 - - 23,795,663 Educational programs 2,480,016 - - - - 2,480,016 Debt service - - - 7,234,411-7,234,411 Assigned for: Capital projects - - - - 2,357,143 2,357,143 Site repairs - - - - 74,227 74,227 Unassigned: Economic uncertainties 5,133,101 - - - - 5,133,101 Unappropriated 2,870,990 - - - - 2,870,990 Total Fund Balances 10,494,107 21,506,567 2,289,096 7,234,411 2,917,853 44,442,034 Total Liabilities and Fund Balances $ 13,978,628 $ 23,243,516 $ 2,411,134 $ 7,234,411 $ 3,315,404 $ 50,183,093 The notes to basic financial statements are an integral part of this statement
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2016 Total fund balances - governmental funds $ 44,442,034 Amounts reported in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. Capital assets at cost $ 118,474,599 Accumulated depreciation (56,866,533) 61,608,066 The difference between projected and actual earnings from pension plan assets is not included in the plan's actuarial study until the next fiscal year and are reported as deferred inflows of resources in the statement of net position, while contrbutions made in the current were reported as deferred outflows of resources because they were not paid as of the plans' valuation dates. 1,563,325 Interest payable on long-term debt does not require the use of current financial resources and, therefore, are not reported in the governmental funds. (1,180,000) An internal service fund is used by management to charge the costs of other postemployment benefits to individual funds. The assets and liabilities of the internal service fund are included with governmental activities. 496,727 Long-term liabilities are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-term liabilities at year-end consists of: General obligation bonds $ 65,903,533 Unamortized bond premium - net 6,372,942 Loss on early retirement of long-term debt (1,260,687) Net pension obligations 31,718,567 Annual net OPEB obligation 671,197 Compensated absences (vacation) 44,260 (103,449,812) Total net position - governmental activities $ 3,480,340 The notes to basic financial statements are an integral part of this statement
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Bond Interest Other County and Nonmajor Total General Building Schools Facilities Redemption Governmental Governmental Fund Fund Fund Fund Funds Funds Revenues: LCFF sources $ 33,788,467 $ - $ - $ - $ - $ 33,788,467 Federal revenue 2,058,717 - - 369,569 1,457,915 3,886,201 Other state 5,941,171 - - 22,991 300,314 6,264,476 Other local 6,124,670 185,194 225,122 4,463,502 1,506,872 12,505,360 Total revenues 47,913,025 185,194 225,122 4,856,062 3,265,101 56,444,504 Expenditures: Current Instruction 33,111,774 - - - 124,003 33,235,777 Instruction-related services: Supervision of instruction 1,270,283 - - - 43,122 1,313,405 Instruction library, media and technology 310,214 - - - - 310,214 School site administration 3,781,638 - - - 7,903 3,789,541 Pupil services: Home-to-school transportation 1,350,827 - - - - 1,350,827 Food services - - - - 1,846,119 1,846,119 All other pupil services 2,514,230 - - - - 2,514,230 General administration: Data processing 882,686 - - - - 882,686 All other general administration 1,587,893 - - - 55,000 1,642,893 Plant services 3,294,550 - - - 83,938 3,378,488 Facilities acquisition and construction 39,790 3,746,296 628,331-742,587 5,157,004 Ancillary services 249,363 - - - - 249,363 Debt service: Principal - - - 3,115,000-3,115,000 Interest and fees - - - 2,429,910-2,429,910 Total expenditures 48,393,248 3,746,296 628,331 5,544,910 2,902,672 61,215,457 Excess (deficiency) of revenues over (under) expenditures (480,223) (3,561,102) (403,209) (688,848) 362,429 (4,770,953) Other financing sources (uses): Transfers in 15,300 - - - 119,239 134,539 Transfers out - - - - (134,539) (134,539) Total other financing sources (uses) 15,300 - - - (15,300) - Net changes in fund balances (464,923) (3,561,102) (403,209) (688,848) 347,129 (4,770,953) Fund balances beginning 10,959,030 25,067,669 2,692,305 7,923,259 2,570,724 49,212,987 Fund balances ending $ 10,494,107 $ 21,506,567 $ 2,289,096 $ 7,234,411 $ 2,917,853 $ 44,442,034 The notes to basic financial statements are an integral part of this statement
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Total net change in fund balances - governmental funds $ (4,770,953) Capital outlays are reported in governmental funds as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. Capital assets additions, net disposals and adjustments $ 5,536,394 Depreciation expense (2,666,622) 2,869,772 Accreted interest on capital appreciation bonds is not recorded in the governmental funds but is required to be recorded under the accrual basis of accounting in the government wide financial statements. (549,942) In governmental funds, actual contributions to pension plans are reported as expenditures in the year incurred. However, in the government-wide statement of activities, only the current year pension expense as noted in the plans' valuation reports is reported as an expense, as adjusted for deferred inflows and outflows of resources. 1,852,462 The governmental funds report debt proceeds as an other financing source, while repayment of debt principal is reported as an expenditure. The net effect of these differences in the treatment of long-term debt and related items is as follows: Repayment of bond principal 3,115,000 Amortization of loss on early retirement of long-term debt (131,117) Discounts and premiums related to bond issues are recorded as other financing sources and uses in the fund financial statements, but are recorded as assets or liabilities and amortized over the life of the bond in the statement of net position: 530,735 In the statement of activities, the net postemployment benefit obligation is the amount by which the contributions toward the OPEB plan were less than the annual required contribution as actuarially determined. The net postemployment benefit obligation is not recorded in the governmental fund statements. The change in the net OPEB obligation was recorded in the statement of activities in the amount of: (138,075) An internal service fund is used by management to charge the costs of other postemployment benefits to individual funds. The net revenue of the internal service fund is reported with governmental activities 7,375 Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due and thus requires the use of current financial resources. In the statement of activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. (608,000) Changes in net position of governmental activities $ 2,177,257 The notes to basic financial statements are an integral part of this statement
STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2016 Internal Service Self Insurance Fund (OPEB) Assets Cash and investments $ 997,466 Total Assets $ 997,466 Liabilities Long-Term Liabilities: Net OPEB obligation $ 500,739 Total Liabilities $ 500,739 Net Position Unrestricted $ 496,727 Total Net Position $ 496,727 The notes to basic financial statements are an integral part of this statement
STATEMENT OF ACTIVITIES PROPRIETARY FUNDS Internal Service Self Insurance Fund (OPEB) Operating Revenues $ - Operating Expenses - Operating Income (Loss) - Nonoperating Revenues (Expenses): Interest income 7,375 Change in Net Position 7,375 Beginning Net Position 489,352 Ending Net Position $ 496,727 The notes to basic financial statements are an integral part of this statement
STATEMENT OF CASH FLOWS PROPRIETARY FUNDS JUNE 30, 2016 Internal Service Self Insurance Fund (OPEB) Cash Flows from Noncapital Financing Activities Transfers from other funds $ 116,456 Cash Flows from Investing Activities Interest income 7,375 Increase in Cash and Cash Equivalents 123,831 Cash and Cash Equivalents - Beginning 873,635 Cash and Cash Equivalents - Ending $ 997,466 The notes to basic financial statements are an integral part of this statement
STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2016 Student Body Agency Fund Total Assets Cash on hand and in banks $ 313,228 Total Assets $ 313,228 Liabilities Due to student groups $ 313,228 Total Liabilities $ 313,228 The notes to basic financial statements are an integral part of this statement
Notes to the Basic Financial Statements
NOTES TO THE BASIC FINANCIAL STATEMENTS NOTE 1 SIGNIFICANT ACCOUNTING POLICIES A. Accounting Principles Sonoma Valley Unified School District (the "District") accounts for its financial transactions in accordance with the policies and procedures of the Department of Education s California School Accounting Manual. The account policies of the District conform to accounting principles generally accepted in the United States of America as prescribed by the U. S. Governmental Accounting Standards Board ("GASB") and the American Institute of Certified Public Accountants ("AICPA"). B. Reporting Entity The District is the level of government primarily accountable for activities related to public education. The governing authority consists of five elected officials who, together, constitute the Board of Trustees. The District s combined financial statements include the accounts of all its operations. The District evaluated whether any other entity should be included in these financial statements using the criteria established by GASB. The basic, but not the only, criterion for including a governmental department, agency, institution, commission, public authority, or other governmental organization in a governmental unit s reporting entity for general purpose financial reports is the ability of the governmental unit s elected officials to exercise oversight responsibility over such agencies. Oversight responsibility implies that one governmental unit is dependent on another and that the dependent unit should be reported as part of the other. Oversight responsibility is derived from the governmental unit s power and includes, but is not limited to: Financial interdependency Selection of governing authority Designation of management Ability to significantly influence operations Accountability for fiscal matters The District does not have any component units and is not a component unit of any reporting entity for the fiscal year ended June 30, 2016. C. Basis of Presentation Government-wide Financial Statements: The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the non-fiduciary activities of the District. The Statement of Net Position reports all assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position. The government-wide statements are prepared using the economic resources measurement focus. This is the same approach used in the preparation of the proprietary fund and fiduciary fund financial statements but differs from the manner in which governmental fund financial statements
NOTES TO THE BASIC FINANCIAL STATEMENTS are prepared. Governmental fund financial statements, therefore, include the reconciliation with brief explanations to better identify the relationship between the government wide statements and the statements for the governmental funds. The government-wide statement of activities presents a comparison between direct expenses and program revenues for each function or program of the District s governmental activities. Direct expenses are those that are specifically associated with a service, program, or department and are therefore clearly identifiable to a particular function. The District does not allocate indirect expenses to functions in the statement of activities. Program revenues include charges paid by the recipients of goods or services offered by a program, as well as grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues of the District, with certain exceptions. The comparison of direct expenses with program revenues identifies the extent to which each governmental function is self-financing or draws from the general revenues of the District. Fund Financial Statements: Fund financial statements report detailed information about the District. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major governmental fund is presented in a separate column, and all nonmajor funds are aggregated into one column. Fiduciary funds are reported by fund type. The accounting and financial treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets, deferred outflows of resources, current liabilities and deferred inflows of resources are generally included on the balance sheet. The Statement of Revenues, Expenditures, and Changes in Fund Balances for these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Proprietary fund operating revenues result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues result from non-exchange transactions or ancillary activities. Fiduciary funds are reported using the economic resources measurement focus except for agency fund, which have no measurement focus. D. Basis of Accounting Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Government-wide financial statements are prepared using the accrual basis of accounting. Governmental funds use the modified accrual basis of accounting. Fiduciary funds use the accrual basis of accounting.
NOTES TO THE BASIC FINANCIAL STATEMENTS Revenues - Exchange and Non-exchange Transactions: Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded under the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the District, available means collectible within the current period or within 60 days after year-end. Non-exchange transactions, in which the District receives value without directly giving equal value in return, include property taxes, grants, and entitlements. Under the accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants and entitlements is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are to be used or the fiscal year when use is first permitted; matching requirements, in which the District must provide local resources to be used for a specific purpose; and expenditure requirements, in which the resources are provided to the District on a reimbursement basis. Under the modified accrual basis, revenue from non-exchange transactions must also be available before it can be recognized. Deferred Outflows/Deferred Inflows: Deferred outflows of resources are consumptions of net assets by the government that are applicable to a future reporting period. For example, prepaid items and deferred charges. Deferred inflows of resources are acquisitions of net assets by the government that are applicable to a future reporting period. For example, unearned revenue and advance collections. Unearned Revenue: Unearned revenue arises when assets are received before revenue recognition criteria have been satisfied. Grants and entitlements received before eligibility requirements are met are recorded as deferred inflows of resources from unearned revenue. In the governmental fund financial statements, receivables associated with non-exchange transactions that will not be collected within the availability period have been recorded as deferred inflows of resources from unearned revenue. Expenses/Expenditures: On the accrual basis of accounting, expenses are recognized at the time a liability is incurred. On the modified accrual basis of accounting, expenditures are generally recognized in the accounting period in which the related fund liability is incurred, as under the accrual basis of accounting. However, under the modified accrual basis of accounting, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Allocations of cost, such as depreciation and amortization, are not recognized in the governmental funds. When both restricted and unrestricted resources are available for use, it
NOTES TO THE BASIC FINANCIAL STATEMENTS is the District s policy to use restricted resources first, then unrestricted resources as they are needed. E. Fund Accounting The accounts of the District are organized on the basis of funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity or retained earnings, revenues, and expenditures or expenses, as appropriate. The District resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. The District s accounts are organized into major, non-major, and fiduciary funds as follows: Major Governmental Funds: The General Fund is the general operating fund of the District. It is used to account for all financial resources except those required to be accounted for in another fund and includes transactions accounted for in the Special Reserve Fund for Other Than Capital Outlay Projects. The Building Fund is used to account for the acquisition of major governmental capital facilities and buildings from the sale of bond proceeds. The County School Facilities Fund is used to account for apportionments from the State Schools Facilities Fund authorized by the State Allocation Board for new school facility construction, modernization projects and facility hardship grants. The Bond Interest and Redemption Fund is used to account for the interest and redemption of principal of general obligation bonds. Non-major Governmental Funds: Special Revenue Funds are used to account for the proceeds of specific revenue sources that are restricted or committed for purposes other than debt service or capital projects. The restricted or committed resources need to comprise a substantial portion of the inflows reported in the special revenue fund. The District maintains three nonmajor special revenue funds: The Child Development Fund is used to account for all income, expenditures and reserve for Pre-Kindergarten and Family Literacy Program. The Cafeteria Fund is used to account for revenues received and expenditures made to operate the District s food service programs. The Deferred Maintenance Fund is used for the purpose of major repair or replacement of District property.
NOTES TO THE BASIC FINANCIAL STATEMENTS Capital Projects Funds are used to account for resources restricted, committed or assigned for capital outlays. The District maintains two nonmajor capital projects funds: The Special Reserve Fund for Capital Outlay Projects exists primarily to account for resources from rentals and proceeds from the sale of real property accumulated for capital outlay. The Capital Facilities Fund is used to account for resources received from developer impact fees assessed under provisions of the California Environmental Quality Act ("CEQA"). Internal Service Fund Self Insurance Fund (OPEB) accounts for other post employment benefit premiums, such as retirement health, dental and vision, and the annual required contributions toward the net OPEB obligation. Fiduciary Funds: Agency Funds are used to account for assets of others for which the District acts as an agent. The District maintains an agency fund for the student body accounts. The student body funds are used to account for the raising and expending of money to promote the general welfare, morale, and educational experience of the student body. F. Budgets and Budgetary Accounting Annual budgets are adopted on a basis consistent with generally accepted accounting principles for all governmental funds. By state law, the District s governing board must adopt a final budget no later than July 1. A public hearing must be conducted to receive comments prior to adoption. The District s governing board satisfied these requirements. These budgets are revised by the District s governing board during the year to give consideration to unanticipated income and expenditures. The original and final revised budgets for the General Fund are presented as Required Supplementary Information. Formal budgetary integration was employed as a management control device during the year for all budgeted funds. The District employs budget control by minor object and by individual appropriation accounts. Expenditures cannot legally exceed appropriations by major object account. G. Encumbrances Encumbrance accounting is used in all budgeted funds to reserve portions of applicable appropriations for which commitments have been made. Encumbrances are recorded for purchase orders, contracts, and other commitments when they are written. Encumbrances are liquidated when the commitments are paid. All encumbrances are liquidated on June 30.