RIVERSIDE COUNTY MORENO VALLEY, CALIFORNIA ANNUAL FINANCIAL STATEMENTS WITH REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT JUNE 30, 2014
TABLE OF CONTENTS JUNE 30, 2014 PAGE INTRODUCTORY SECTION TABLE OF CONTENTS i FINANCIAL SECTION INDEPENDENT AUDITOR'S REPORT 1 MANAGEMENT S DISCUSSION AND ANALYSIS 3 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements: Statement of Net Position Exhibit A 11 Statement of Activities Exhibit B 12 Fund Financial Statements: Balance Sheet - Governmental Funds Exhibit C 13 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position Exhibit D 14 Statement of Revenues, Expenditures, and Changes In Fund Balances - Governmental Funds Exhibit E 15 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities Exhibit F 16 Statement of Net Position - Proprietary Fund Exhibit G 17 Statement of Revenues, Expenditures, and Changes in Fund Net Position - Proprietary Fund Exhibit H 18 Statement of Cash Flows - Proprietary Fund Exhibit I 19 Statement of Assets and Liabilities - Fiduciary Funds Exhibit J 20 Statement of Changes in Fund Net Position - Fiduciary Funds Exhibit K 21 NOTES TO FINANCIAL STATEMENTS 22 REQUIRED SUPPLEMENTARY INFORMATION SECTION Budgetary Comparison Schedule - General Fund 54 Other Postemployment Benefits (OPEB) Schedule of Funding Progress 55 i
TABLE OF CONTENTS JUNE 30, 2014 PAGE SUPPLEMENTARY INFORMATION SECTION COMBINING FINANCIAL STATEMENTS - NONMAJOR Special Revenue Funds - Nonmajor Combining Balance Sheet Statement 1 56 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Statement 2 57 Debt Service Fund - Nonmajor Balance Sheet Statement 3 58 Statement of Revenues, Expenditures, and Changes in Fund Balance Statement 4 59 Capital Projects Fund - Nonmajor Balance Sheet Statement 5 60 Statement of Revenues, Expenditures, and Changes in Fund Balance Statement 6 61 Agency Funds Combining Statement of Assets and Liabilities - Student Body Funds Statement 7 62 Combining Statement of Changes in Assets and Liabilities - Student Body Funds Statement 8 63 Combining Statement of Changes in Assets and Liabilities - High Schools Statement 9 64 Combining Statement of Changes in Assets and Liabilities - Middle Schools Statement 10 66 Combining Statement of Changes in Assets and Liabilities - Elementary Schools Statement 11 69 SUPPLEMENTARY SCHEDULES Board of Education and Organization Schedule 1 70 Schedule of Average Daily Attendance Schedule 2 71 Schedule of Instructional Time Schedule 3 72 Schedule of Financial Trends and Analysis Schedule 4 73 Schedule of Expenditures of Federal Awards Schedule 5 74 Reconciliation of Annual Financial and Budget Report Form with Audited Financial Statements Schedule 6 76 Schedule of Charter Schools Schedule 7 77 NOTES TO SUPPLEMENTARY INFORMATION 78 ii
TABLE OF CONTENTS JUNE 30, 2014 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 79 REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE 81 INDEPENDENT AUDITOR'S REPORT ON STATE COMPLIANCE 83 FINDINGS AND RECOMMENDATIONS SECTION SCHEDULE OF AUDIT FINDINGS AND QUESTIONED COSTS 86 STATUS OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS 92 MANAGEMENT LETTER 93 PAGE iii
Financial Section
JLG Jeanette L. Garcia & Associates 1980 Orange Tree Lane, Suite 280 Redlands, CA 92374 Phone: (909) 335-6100 Fax: (909) 335-6122 www.jlgcpa.net INDEPENDENT AUDITOR S REPORT Jeanette L. Garcia, CPA To the Board of Education Moreno Valley Unified School District Moreno Valley, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Moreno Valley Unified School District, as of and for the year ended June 30, 2014, 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. 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 entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Member: American Institute of Certified Public Accountants California Society of Certified Public Accountants 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 the Moreno Valley Unified School District, as of June 30, 2014, 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. 1
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 3 through 10, General Fund Budgetary Comparison Schedule on page 54 and Other Postemployment Benefits Schedule of Funding Progress on page 55 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Moreno Valley Unified School District s basic financial statements. The combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying other supplemental information is presented for purposes of additional analysis as required by the State s audit guide, Standards and Procedures for Audits of California K-12 Local Education Agencies 2013-14, published by the Education Audit Appeals Panel, and is also not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements, other supplementary information and the schedule of expenditures of federal awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations 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 combining and individual nonmajor fund financial statements, other supplementary information and the schedule of expenditures of federal awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations 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 December 15, 2014, on our consideration of the Moreno 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 Moreno Valley Unified School District s internal control over financial reporting and compliance. Redlands, California December 15, 2014 2
MANAGEMENT S DISCUSSION & ANALYSIS For the Fiscal Year Ended June 30, 2014 INTRODUCTION The Management s Discussion and Analysis of Moreno Valley Unified School District s financial performance provides an overall review of the District s financial activities for the fiscal year ended June 30, 2014. The intent of the analysis is to look at the District s financial performance as a whole; readers should also review the auditor s letter, notes to the basic financial statements and the basic government-wide financial statements to enhance their understanding of the District s financial performance. Moreno Valley Unified School District serves approximately 34,000 students. There are forty-three school facilities, including twenty-three elementary schools, six middle schools, five high schools, one adult education, one continuation high school, a K-12 alternative school, a community day school, an online academy, a graduation opportunity program, an independent study program, an early intervention program and a charter school. The 1,763 full time certificated and the 1,290 full time classified employees provide for the needs of the District s students. Moreno Valley Unified School District is located in Moreno Valley, California. USING THE COMPREHENSIVE ANNUAL FINANCIAL REPORT This comprehensive annual financial report consists of a series of financial statements and notes to those statements. The statements are organized so the reader can understand the Moreno Valley Unified School District as a whole, and then proceed to provide an increasingly detailed look at specific financial activities. The Statement of Net Position and Statement of Activities provide information about the activities of the whole District, presenting both an aggregate view of the District 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 major funds with all special revenue funds and other nonmajor funds presented in total. The major funds for Moreno Valley Unified School District are the General Fund, Capital Facilities Fund, Blended Component Unit Capital Projects Fund and Blended Component Unit Debt Service Fund. The Management s Discussion and Analysis is provided to assist our citizens, taxpayers and investors in reviewing the District s finances. FINANCIAL HIGHLIGHTS The Moreno Valley Unified School District s Government-Wide Statement of Net Position shows Total Net Position of $282,120,734, the result of assets of $470,194,785 less liabilities of $188,074,051. General Revenues accounted for $252,111,630 in revenue or 78% of all revenues. Program specific revenues in the form of charges for services, grants and contributions accounted for $73,071,192 or 22% of total revenues of $325,182,822. The District had $313,491,858 in expenses related to governmental activities; only $73,071,192 of these expenses was offset by program specific charges for services, grants or contributions. General revenues (primarily state revenue limit sources and property taxes) of $252,111,630 provided the remaining $240,420,666 required for these programs. This resulted in a change in Total Net Position of $11,690,964. The General Fund reported a positive fund balance of $54,588,538. 3
MANAGEMENT S DISCUSSION & ANALYSIS For the Fiscal Year Ended June 30, 2014 REPORTING THE DISTRICT AS A WHOLE THE STATEMENT OF NET POSITION AND STATEMENT OF ACTIVITIES One of the most important questions asked about the District s finances is, Is the District better off or worse off as a result of the year s activities? The Statement of Net Position and The Statement of Activities report information about the District as a whole and about its activities in a manner that helps to answer this question. These statements include all assets and liabilities using the accrual basis of accounting similar to the accounting used by private sector corporations. All of the current year s revenues and expenses are taken into consideration regardless of when cash is received or paid. These two statements report the District s net position and changes in it. The change in net position provides the reader a tool to assist in determining whether the District s financial health is improving or deteriorating. However, the Moreno Valley Unified School District s goal is to provide services to our students, not to generate profits as commercial entities do. The reader will need to consider other non-financial factors as well as factors such as property tax base, current property tax laws, student enrollment growth, and facility conditions in arriving at their conclusion regarding the overall health of the District. In the Statement of Net Position and the Statement of Activities, the District is divided into two distinct kinds of activities: Governmental Activities Most of the District s programs and services are reported here, including instruction, pupil services including transportation and food services, administration, plant services, facilities acquisition and construction, interest on the long-term debt and other services. Business-Type Activities These services are provided on a charge for goods or services basis to recover all of the expenses of the goods or services provided. Moreno Valley Unified School District does not have any of these types of activities at this time. FUND FINANCIAL STATEMENTS The fund financial statements provide detailed information about the most significant funds, not the District as a whole. Some funds are required to be established by State statute, while many other funds are established by the District to help manage money for particular purposes and compliance with various grant provisions. 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 future periods. These funds are reported using an accounting method called modified accrual accounting. 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 you determine whether there are more or less financial resources available to spend in the near future to finance the District s programs. The relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds is reconciled in the financial statements. Governmental funds include most of the primary funds of the District. 4
MANAGEMENT S DISCUSSION & ANALYSIS For the Fiscal Year Ended June 30, 2014 NOTES TO THE FINANCIAL STATEMENTS The notes provide additional information that is essential for a full understanding of the data provided in the government-wide and fund financial statements. THE SCHOOL DISTRICT AS A WHOLE The Statement of Net Position provides the perspective of the District as a whole. Table 1 provides a summary of the District s net position for fiscal year 2013-14, as well as indicating the change in net position between 2013-14 and 2012-13. Table 1 - Net Position Governmental Activities % 2014 2013* Change Current and Other Assets $ 236,282,353 $ 219,286,962 7.8 Capital Assets 233,912,432 239,811,048 (2.4) Total Assets 470,194,785 459,098,010 2.4 Current Liabilities 43,541,331 32,364,335 34.5 Long-Term Debt 144,532,720 156,303,905 (7.5) Total Liabilities 188,074,051 188,668,240 (0.3) Net Position Net Investment in Capital Assets 92,263,911 85,682,527 7.7 Restricted 141,098,744 184,747,243 (23.6) Unrestricted 48,758,079-100.0 Total Net Position $ 282,120,734 $ 270,429,770 4.3 *Restated 5
MANAGEMENT S DISCUSSION & ANALYSIS For the Fiscal Year Ended June 30, 2014 Table 2 shows the changes in net position for fiscal year 2013-14 as well as changes in net position from 2013-14 to 2012-13. Table 2 - Changes in Net Position Governmental Activities % 2014 2013 Change Revenues Program Revenues: Charges for Services $ 1,284,682 $ 1,391,975 (7.7) Operating Grants and Contributions 71,771,619 70,098,975 2.4 Capital Grants and Contributions 14,891 18,050 (17.5) General Revenues: Unrestricted Federal & State 204,745,099 185,160,222 10.6 Property Taxes 35,975,354 39,112,287 (8.0) Other General Revenues 11,391,177 4,236,180 168.9 Total Revenues 325,182,822 300,017,689 8.4 Expenses Instruction 207,469,371 197,703,120 4.9 Pupil Services 36,307,421 33,334,552 8.9 Administration 7,359,772 8,121,074 (9.4) Maintenance and Operations 33,625,433 31,798,099 5.7 Other 28,729,861 13,393,481 114.5 Total Expenses 313,491,858 284,350,326 10.2 Change in Net Position $ 11,690,964 $ 15,667,363 (25.4) 6
MANAGEMENT S DISCUSSION & ANALYSIS For the Fiscal Year Ended June 30, 2014 GOVERNMENTAL ACTIVITIES Charges for services, operating grants and contributions made up 22% of revenues for governmental activities. General Revenues not restricted to specific programs made up 78% of the total revenues available. Instruction related activities made up 66% of expenses. Pupil services including home-to-school transportation and food services made up 12%. Administration including data processing made up 2%. Maintenance and operations including facility acquisition and construction made up 11%. The Statement of Activities (Exhibit B) shows the cost of program services and the charges for services and grants offsetting those services. Table 3 compares the total cost of services and the net cost of services between 2014 and 2013. The net cost of these services is the cost supported by tax revenue and unrestricted state entitlements. Table 3 - Total and Net Cost of Governmental Activity Total Cost 2014 % 2013 % Instruction $ 207,469,371 66 $ 197,703,120 69 Pupil Services 36,307,421 12 33,334,552 12 Administration 7,359,772 2 8,121,074 3 Maintenance and Operations 33,625,433 11 31,798,099 11 Other 28,729,861 9 13,393,481 5 Total $ 313,491,858 100 $ 284,350,326 100 Net Cost 2014 % 2013 % Instruction $ 158,900,288 66 $ 150,768,820 71 Pupil Services 16,502,075 7 11,727,071 6 Administration 4,223,191 2 6,391,786 3 Maintenance and Operations 32,801,840 14 30,704,029 14 Other 27,993,272 11 13,249,620 6 Total $ 240,420,666 100 $ 212,841,326 100 7
MANAGEMENT S DISCUSSION & ANALYSIS For the Fiscal Year Ended June 30, 2014 GENERAL FUND BUDGET INFORMATION The District s budget is prepared in accordance with California law and is based on accounting for certain transactions on a basis of cash receipts, disbursements and encumbrances. The most significant budgeted fund is the General Fund. In May of each year, a Preliminary Budget is presented to the Board which reflects the latest known financial information, including the Governor s May Revise of the state budget. Time is allocated during the Board meeting for public input and Board direction. The Final Budget is presented for adoption in mid-june. During the course of the fiscal year, the School District revises its budget as it deals with changes in revenues and expenditures. These reports include revisions based on state budget adoption that is normally presented in August if the state has an ontime budget. Adjustments to Actuals are presented in September, First Interim is normally presented in December, and Second Interim is normally presented in March. GENERAL FUND BUDGET VARIATIONS For the General Fund, actual revenues and other sources were $286,677,976 with original budget estimated at $261,231,253. The difference of $25,446,723 is primarily due to the new Local Control Funding Formula, which was not available at the time of the original budget adoption. There are several reasons for expenditure budget revisions. Most notable is rebudgeting of budgeted but unspent dollars from previous years. The original budget does not presume negotiated salary increases. Also, any changes in the number of staff and/or staff utilization of health and welfare benefits that vary from the original projections would also require budget revisions. The implementation of new instructional programs can also affect budget projections. New academically focused programs will impact expenditures in personnel, instructional materials, outside services and supplies. 8
MANAGEMENT S DISCUSSION & ANALYSIS For the Fiscal Year Ended June 30, 2014 CAPITAL ASSETS AND DEBT ADMINISTRATION CAPITAL ASSETS At the end of the fiscal year 2013-14, the District had $233,912,432 invested in land, buildings, furniture and equipment. Table 4 shows fiscal year 2013-14 and 2012-13 balances. Table 4 - Capital Assets at Year-end (net of depreciation) Governmental Activities % 2014 2013 Change Land $ 55,442,463 $ 55,442,463 - Site Improvements 7,753,300 8,635,747 (10.2) Buildings 166,596,504 172,827,667 (3.6) Furniture and Equipment 1,446,811 1,962,994 (26.3) Work in Progress 2,673,354 942,177 183.7 Total $ 233,912,432 $ 239,811,048 (2.5) DEBT At June 30, 2014, the Moreno Valley Unified School District had $144,532,720 in debt outstanding. Table 5 summarized these debts. Table 5 - Outstanding Debt at Year-end Governmental Activities 2014 2013 * Change % General Obligation Bonds $ 36,708,521 $ 39,508,521 (7.1) Other Postemployment Benefits 1,006,654 407,881 146.8 Compensated Absences 1,877,545 1,767,503 6.2 Certificates of Participation 13,280,000 18,585,000 (28.5) Community Facilities Districts 91,660,000 96,035,000 (4.6) Total $ 144,532,720 $ 156,303,905 (7.5) * Restated 9
MANAGEMENT S DISCUSSION & ANALYSIS For the Fiscal Year Ended June 30, 2014 FOR THE FUTURE Moreno Valley Unified School District continues to experience a fairly small decline in enrollment over the past couple of years. As new housing construction is initiated, the District enrollment is expected to stablalize. The State of California s fiscal status has significant impact on the Moreno Valley Unified School District s general fund revenues. Although the District is largely dependent upon state funding, Moreno Valley Unified School District works collaboratively with local agencies to generate supplemental revenues to augment the District revenue stream. CONTACTING THE SCHOOL DISTRICT S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, investors and creditors with a general overview of the School District s finances and to show the District s accountability for the money it receives. If you have questions about this report, or need additional financial information, contact the Business Office, Moreno Valley Unified School District, 25634 Alessandro Blvd., Moreno Valley, CA 92553. 10
STATEMENT OF NET POSITION JUNE 30, 2014 EXHIBIT A GOVERNMENTAL ACTIVITIES ASSETS Cash (Note 2) $ 155,179,384 Accounts Receivable (Note 3) 80,814,316 Inventory 287,826 Other Current Assets 827 Total Current Assets 236,282,353 Capital Assets: (Note 6) Land 55,442,463 Site Improvements 26,769,516 Buildings 295,769,856 Furniture and Equipment 15,401,199 Work in Progress 2,673,354 Less Accumulated Depreciation (162,143,956) Total Capital Assets 233,912,432 TOTAL ASSETS 470,194,785 LIABILITIES Accounts Payable and Other Current Liabilities 42,820,478 Unearned Revenue 720,853 Total Current Liabilities 43,541,331 Long-Term Liabilities: (Note 7) Portion due or payable within one year 13,031,385 Portion due or payable after one year 131,501,335 Total Long-Term Liabilities 144,532,720 TOTAL LIABILITIES 188,074,051 NET POSITION Net Investment in Capital Assets 92,263,911 Restricted for: Capital Projects 82,996,975 Debt Service 26,846,834 Educational Programs 10,006,083 Other Purposes (Expendable) 20,909,280 Other Purposes (Nonexpendable) 339,572 Unrestricted 48,758,079 TOTAL NET POSITION $ 282,120,734 The Notes to Financial Statements are an integral part of this statement. 11
STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2014 EXHIBIT B Operating Capital Total Charges for Grants and Grants and Governmental Activities Expenses Services Contributions Contributions Activities Governmental: Instruction $ 182,146,978 $ 6,742 $ 43,710,776 $ 14,891 $ (138,414,569) Instruction-Related Services: Supervision of Instruction 7,480,387 12 4,526,288 - (2,954,087) Instructional Library, Media and Technology 1,899,232-6,370 - (1,892,862) School Site Administration 15,942,774-304,004 - (15,638,770) Pupil Services: Home-to-School Transportation 7,240,709-134,924 - (7,105,785) Food Services 14,821,082 1,093,621 15,228,823-1,501,362 All Other Pupil Services 14,245,630-3,347,978 - (10,897,652) General Administration: Centralized Data Processing 2,755,650-607,888 - (2,147,762) All Other General Administration 4,604,122 70,874 2,457,819 - (2,075,429) Plant Services 33,625,433 50,487 773,106 - (32,801,840) Ancillary Services 39,266-39,266 - - Community Services 85,832 - - - (85,832) Enterprise Activities 4,769,647 - - - (4,769,647) Interest on Long-Term Debt 8,465,307 - - - (8,465,307) Other Outgo 7,577,702 62,946 634,377 - (6,880,379) Depreciation (Unallocated) 7,792,107 - - - (7,792,107) Total Governmental Activities $ 313,491,858 $ 1,284,682 $ 71,771,619 $ 14,891 (240,420,666) General Revenues: Taxes: Property Taxes, levied for general purposes Property Taxes, levied for debt service Property Taxes, levied for other specific purposes Federal and State Aid not restricted to specific purposes Interest and Investment Earnings Interagency Revenues Miscellaneous Total General Revenues 21,167,821 4,858,745 9,948,788 204,745,099 499,304 6,327,930 4,563,943 252,111,630 Change in Net Position 11,690,964 Net Position - July 1, 2013, as Previously Reported 250,676,906 Adjustment for Restatement (Note 21) 19,752,864 Net Position - July 1, 2013, as Restated 270,429,770 Net Position - June 30, 2014 $ 282,120,734 The Notes to Financial Statements are an integral part of this statement. 12
BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2014 EXHIBIT C BLENDED BLENDED CAPITAL COMPONENT COMPONENT ALL OTHER TOTAL GENERAL FACILITIES UNIT - CAPITAL UNIT - DEBT GOVERNMENTAL GOVERNMENTAL FUND FUND PROJECTS FUND SERVICE FUND FUNDS FUNDS ASSETS Cash (Note 2) Cash in County Treasury $ 12,185,684 $ 26,222,672 $ - $ - $ 18,828,290 $ 57,236,646 Cash on Hand and in Banks 55,897 - - - 5,019,031 5,074,928 Cash in Revolving Fund 50,000 - - - 1,746 51,746 Cash with Fiscal Agent - - 53,187,931 21,891,433-75,079,364 Accounts Receivable (Note 3) 76,022,078 8,807 - - 4,776,121 80,807,006 Due from Other Funds (Note 4A) 25,470 - - - - 25,470 Inventory - - - - 287,826 287,826 Other Current Assets 827 - - - - 827 TOTAL ASSETS $ 88,339,956 $ 26,231,479 $ 53,187,931 $ 21,891,433 $ 28,913,014 $ 218,563,813 LIABILITIES AND FUND BALANCES Liabilities Accounts Payable $ 33,081,120 $ 128,609 $ - $ - $ 402,983 $ 33,612,712 Due to Other Funds - - - - 476,594 476,594 Unearned Revenue 670,298 - - - 50,555 720,853 Total Liabilities 33,751,418 128,609 - - 930,132 34,810,159 Fund Balances (Note 5) Nonspendable 50,000 - - - 289,572 339,572 Restricted 10,006,083 1,785,470 472,864-27,617,325 39,881,742 Assigned 1,877,545 24,317,400 52,715,067 21,891,433 75,985 100,877,430 Unassigned 42,654,910 - - - - 42,654,910 Total Fund Balances 54,588,538 26,102,870 53,187,931 21,891,433 27,982,882 183,753,654 TOTAL LIABILITIES AND FUND BALANCES $ 88,339,956 $ 26,231,479 $ 53,187,931 $ 21,891,433 $ 28,913,014 $ 218,563,813 The Notes to Financial Statements are an integral part of this statement. 13
EXHIBIT D MORENO VALLEY UNIFIED SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2014 Total Fund Balances - Governmental Funds $ 183,753,654 Amounts reported for governmental activities in the statement of net position are different because: In governmental funds, only current assets are reported. In the statement of net position, all assets are reported, including capital assets and accumulated depreciation. The cost of the assets is $396,056,388 and accumulated deprecation is $162,143,956. In governmental funds, interest on long-term debt is not recognized until the period in which it matures and is paid. In the government-wide statement of activities, it is recognized in the period it is incurred. The additional liability for unmatured interest owing at the end of the period was: 233,912,432 (3,260,526) In governmental funds, only current liabilities are reported. In the statement of net position, all liabilities, including long-term liabilities, are reported. Long-term liabilities at year-end consist of: General Obligation Bonds $ 36,708,521 Certificates of Participation 13,280,000 Other Postemployment Benefits 1,006,654 Compensated Absences 1,877,545 Community Facilities Districts 91,660,000 (144,532,720) Internal service funds are used to conduct certain activities for which costs are charged to other funds. Because internal service funds are presumed to operate for the benefit of governmental activities, assets and liabilities of internal service funds are reported with governmental activities. Adjustment for Rounding 12,247,891 3 Total Net Position - Governmental Activities $ 282,120,734 The Notes to Financial Statements are an integral part of this statement. 14
EXHIBIT E MORENO VALLEY UNIFIED SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 BLENDED BLENDED CAPITAL COMPONENT COMPONENT ALL OTHER TOTAL GENERAL FACILITIES UNIT - CAPITAL UNIT - DEBT GOVERNMENTAL GOVERNMENTAL FUND FUND PROJECTS FUND SERVICE FUND FUNDS FUNDS REVENUES Local Control Funding Formula Sources: State Apportionments $ 198,681,586 $ - $ - $ - $ 257,356 $ 198,938,942 Local Sources 21,167,821 - - - - 21,167,821 LCFF Transfers (121,158) - - - 102,518 (18,640) Total LCFF Sources 219,728,249 - - - 359,874 220,088,123 Federal Revenues 20,510,749 - - - 15,346,146 35,856,895 Other State Revenues 39,601,685 - - - 1,442,939 41,044,624 Other Local Revenues 3,377,975 2,910,221 1,915,004 13,921,145 6,068,832 28,193,177 Total Revenues 283,218,658 2,910,221 1,915,004 13,921,145 23,217,791 325,182,819 EXPENDITURES Instruction 180,694,565 - - - 890,347 181,584,912 Instruction-Related Services: Supervision of Instruction 7,446,435 - - - 33,952 7,480,387 Instructional Library, Media and Technology 1,899,232 - - - - 1,899,232 School Site Administration 15,784,234 - - - 158,540 15,942,774 Pupil Services: Home-to-School Transportation 7,240,709 - - - - 7,240,709 Food Services 61,364 - - - 14,759,718 14,821,082 All Other Pupil Services 14,153,058 - - - 133,992 14,287,050 General Administration: Data Processing 2,760,817 - - - - 2,760,817 All Other General Administration 6,055,816 114,553 - - 536,305 6,706,674 Plant Services 33,534,772 526 - - 161,812 33,697,110 Facilities Acquisition and Construction 342,540 1,029,465 1,315-353,910 1,727,230 Ancillary Services 39,266 - - - - 39,266 Community Services 85,832 - - - - 85,832 Enterprise 3,991,562 - - - - 3,991,562 Other Outgo 2,846,058-827,711 3,903,933-7,577,702 Debt Service: Principal - - - 42,030,000 2,800,000 44,830,000 Interest - - - 6,778,936 1,595,248 8,374,184 Total Expenditures 276,936,260 1,144,544 829,026 52,712,869 21,423,824 353,046,523 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 6,282,398 1,765,677 1,085,978 (38,791,724) 1,793,967 (27,863,704) OTHER FINANCING SOURCES (USES) Interfund Transfers In (Note 4B) 3,459,318 1,785,470 - - 203,172 5,447,960 Interfund Transfers Out (Note 4B) (203,172) - - - (1,785,470) (1,988,642) Proceeds from Certificates of Participation - - - 13,280,000-13,280,000 All Other Financing Sources - - - 19,070,000-19,070,000 Total Other Financing Sources (Uses) 3,256,146 1,785,470-32,350,000 (1,582,298) 35,809,318 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES AND OTHER FINANCING SOURCES (USES) 9,538,544 3,551,147 1,085,978 (6,441,724) 211,669 7,945,614 FUND BALANCES - JULY 1, 2013 45,049,994 22,551,723 52,101,953 28,333,157 27,771,213 175,808,040 FUND BALANCES - JUNE 30, 2014 $ 54,588,538 $ 26,102,870 $ 53,187,931 $ 21,891,433 $ 27,982,882 $ 183,753,654 The Notes to Financial Statements are an integral part of this statement. 15
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2014 EXHIBIT F Total Net Change in Fund Balances - Governmental Funds $ 7,945,614 Amounts reported for governmental activities in the statement of activities are different because: Capital outlays are reported in the 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. This is the amount by which depreciation expense of $7,792,107 exceeds capital outlay of $1,893,491 in the period. (5,898,616) In governmental funds, interest on long-term debt is recognized in the period it becomes due. In the government-wide statement of activities, it is recognized in the period that it is incurred. (91,123) Repayment of long-term debt is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. 44,830,000 In governmental funds, proceeds from debt are recognized as other financing sources. In the government-wide statements, proceeds from debt are reported as increases to liabilities. Amounts recognized in the governmental funds as proceeds from debt were: (32,350,000) In the statement of activities, compensated absences (vacation) and postemployment benefits are measured by the amount earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid) (708,815) The activities of the Internal Service Fund were incorporated into the government-wide statements, but the Internal Service Fund is not included as a governmental fund. (2,036,100) Adjustment for Rounding 4 Change in Net Position for Governmental Activities $ 11,690,964 The Notes to Financial Statements are an integral part of this statement. 16
STATEMENT OF NET POSITION PROPRIETARY FUND JUNE 30, 2014 EXHIBIT G Governmental Activities Internal Service Fund ASSETS Cash (Note 2) Cash in County Treasury $ 17,415,200 Cash on Hand and in Banks 321,500 Accounts Receivable (Note 3) 7,310 Due from Other Funds (Note 4A) 451,124 TOTAL ASSETS 18,195,134 LIABILITIES Liabilities Accounts Payable 8,186 Reserve for Open Claims (Note 13) 5,939,057 TOTAL LIABILITIES 5,947,243 NET POSITION Unassigned (Note 5) $ 12,247,891 The Notes to Financial Statements are an integral part of this statement. 17
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2014 EXHIBIT H Governmental Activities Internal Service Fund Operating Revenues In-District Premiums $ 5,377,555 All Other Local Revenues 155,528 Total Operating Revenues 5,533,083 Operating Expenses Certificated Salaries 3,300 Employee Benefits 346 Books and Supplies 45,935 Services and Other Operating Expenses 4,109,568 Total Operating Expenses 4,159,149 Operating Income 1,373,934 Non-Operating Revenues (Expenses) Interfund Transfers Out (Note 4B) (3,459,318) Interest 49,284 Total Non-Operating Revenues (Expenses) (3,410,034) Change in Net Position (2,036,100) Net Position - July 1, 2013, as Previously Reported 19,123,463 Adjustment for Restatement (Note 21) (4,839,472) Net Position - July 1, 2013, as Restated 14,283,991 Net Position - June 30, 2014 $ 12,247,891 The Notes to Financial Statements are an integral part of this statement. 18
STATEMENT OF CASH FLOWS PROPRIETARY FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2014 EXHIBIT I Governmental Activities Internal Service Fund Cash Flows from Operating Activities Cash Received from Contributions $ 5,377,557 Cash Received from Other Revenues 155,478 Cash Paid for Salaries and Benefits (3,646) Cash Paid for Supplies (45,936) Cash Paid for Other Operating Expenses (1,122,701) Cash Paid for Retiree Benefits (2,226,482) Net Cash Provided by Operating Activities 2,134,270 Cash Flows from Financing Activities Temporary Interfund Borrowing (3,459,318) Cash Flows from Investing Activities Interest Income 53,055 Net Increase in Cash (1,271,993) Cash - July 1, 2013 19,008,693 Cash - June 30, 2014 $ 17,736,700 Reconciliation of Operating Income to Net Cash Provided by Operating Activities Operating Income $ 1,373,934 Adjustments to Reconcile Operating Income To Net Cash Provided by Operating Activities Increase in Accounts Receivable (49) Decrease in Accounts Payable (17,700) Increase in Reserve for Open Claims 778,085 Total Adjustments 760,336 Net Cash Provided by Operating Activities $ 2,134,270 The Notes to Financial Statements are an integral part of this statement. 19
STATEMENT OF ASSETS AND LIABILITIES FIDUCIARY FUNDS JUNE 30, 2014 EXHIBIT J PRIVATE PURPOSE AGENCY TRUST FUND FUNDS TOTAL ASSETS Cash (Note 2) Cash on Hand and in Banks $ 2,032,215 $ 564,288 $ 2,596,503 TOTAL ASSETS 2,032,215 $ 564,288 2,596,503 LIABILITIES Accounts Payable - $ 61,217 61,217 Due to Student Groups/Other Agencies - 503,071 503,071 TOTAL LIABILITIES - $ 564,288 564,288 NET POSITION Held in Trust 2,032,215 2,032,215 TOTAL NET POSITION $ 2,032,215 $ 2,032,215 The Notes to Financial Statements are an integral part of this statement. 20
STATEMENT OF CHANGES IN FUND NET POSITION FIDUCIARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2014 EXHIBIT K PRIVATE PURPOSE TRUST FUND Additions Investment Income $ 260,685 Deductions Investment Fees 14,283 Change in Net Position 246,402 Net Position - July 1, 2013 1,785,813 Net Position - June 30, 2014 $ 2,032,215 The Notes to Financial Statements are an integral part of this statement. 21
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2014 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the Moreno Valley Unified School District conform to accounting principles generally accepted in the United States of America as applicable to governments and to general practices within California school districts. 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 accounting policies of the District conform to accounting principles generally accepted in the United States of America as prescribed by the Governmental Accounting Standards Board and by the American Institute of Certified Public Accountants. The following is a summary of the significant accounting policies: Fund Accounting The accounts of the District are organized on the basis of funds or account groups, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of selfbalancing accounts that comprise its assets, liabilities, fund balance or retained earnings, revenues and expenditures or expenses, as appropriate. District resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. The District accounts are organized into major, nonmajor, proprietary and fiduciary funds. Major Governmental Funds: 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. Capital Facilities Fund is used to account for resources received from developer fees. Blended Component Unit - Capital Projects Fund is used to account for the transactions of the Community Facilities Districts (CFDs) and the School Facilities Corporation. Blended Component Unit - Debt Service Fund is used to account for the transactions of the Community Facilities Districts (CFDs) and the School Facilities Corporation. Non-major Governmental Funds: Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specific purposes. The District maintains four nonmajor special revenue funds. Charter School Fund is used to account for resources dedicated to charter school programs maintained by the District. Adult Fund is used to account for resources dedicated to adult education programs maintained by the District. Child Development Fund is used to account for resources dedicated to child development programs maintained by the District. Cafeteria Fund is used to account for revenues received and expenditures made to operate the District's food service operations. 22
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2014 Debt Service Funds are used to account for the accumulation of resources for, and the payment of general longterm debt principal, interest and related costs. The District maintains one nonmajor debt service fund. Bond Interest and Redemption Fund is used to account for the accumulation of resources for, and the repayment of District bonds, interest and related costs. Capital Projects Funds are used to account for the acquisition and/or construction of all major governmental general fixed assets. The District maintains one nonmajor capital projects funds. County School Facilities Fund is used to account for revenues and expenditures for County School Facilities Program (SB50) approved projects. Proprietary Funds: Internal Service Funds are used to account for services rendered on a cost reimbursement basis within the District. The District maintains one internal service fund, the Self Insurance Fund, which is used to account for the costs associated with workers compensation claims. Fiduciary Funds: Agency Funds are used to account for assets held by the District as trustee. The District maintains an agency fund for each school that operates an associated student body. The District also maintains a Private Purpose Trust Fund which is used to account for District retiree health transactions. 23
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2014 Reporting Entity The Moreno Valley Unified School District (the District) and the Moreno Valley Unified School District Public Facilities Corporation (the Corporation) and Community Facilities District s (CFDs) have a financial and operational relationship which meets the reporting entity definition criteria of GASB Statement No. 14, The Financial Reporting Entity, for inclusion of the Corporation as a component unit of the District. The Corporation is a nonprofit, public benefit corporation incorporated under the laws of the State of California for the specific and primary purpose of providing financing assistance to the District for construction and acquisition of major capital facilities. The following are those aspects of the relationship between the District, the Corporation and the CFD which satisfy GASB Statement No. 14 criteria: Oversight Responsibility: 1. The Corporation's Board of Directors were appointed by the District's Board of Education. 2. The District is able to impose its will upon the Corporation and CFD, based on the following: The Corporation and CFD have no employees. The District s Chief Business Official functions as an agent of the corporation. The Chief Business Official does not receive additional compensation for work performed in this capacity. The District exercises significant influence over operations of the Corporation and CFD as it is anticipated that the District will be the sole lessee of the Corporation and CFD for a leasehold interest in an existing school site. Likewise, it is anticipated that the District s lease payments will be the sole revenue source of the Corporation and CFD, with the exception of interest. All major financing arrangements, contracts, and other transactions of the Corporation and CFD must have the consent of the District. 3. The Corporation and CFD provide specific financial benefits or impose specific financial burdens on the District based on the following: Any deficits incurred by the Corporation will be reflected in the lease payments of the District. Any surpluses of the Corporation revert to the District at the end of the lease period. The District has assumed a moral obligation, and potentially a legal obligation, for any debt incurred by the Corporation and CFD. Financial Presentation The financial activities of the Corporation and CFD are presented in Facilities Corporation Fund, Blended Component Unit - Capital Project Fund and Blended Component Unit - Debt Service Fund. 24
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2014 Basis of Presentation Government-wide Financial Statements: The government-wide financial statements (i.e., the statement of net position and the statement of changes in net position) report information on all of the nonfiduciary activities of the District and its component units. 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 are prepared. Governmental fund financial statements, therefore, include a 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 which 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. The Internal Service Fund is presented on the proprietary fund statements. 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 and current liabilities 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 uses) in net current assets. All proprietary fund types are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities associated with the operation of these funds are included on the proprietary fund s Statement of Net Position. The Statement of Revenues, Expenses, and Changes in Fund Net Position for proprietary funds presents increases (i.e., revenues) and decreases (i.e., expenditures) in net total assets. The statement of cash flows provides information about how the District finances and meets the cash flow needs of its proprietary activities. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund s principal ongoing operations. The principal operating revenues of the internal service fund are charges to other funds for self-insurance costs. Operating expenses for internal service funds include the costs of insurance premiums and claims related to self-insurance. Fiduciary funds are reported using the economic resources measurement focus. 25