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(,,,,,,/-,,/ . yJ,/'/'" .CV,.,."""';,,,4 BIG SPRING SCHOOL DISTRICT COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30, 1996 Governmental Fund Tvaes Capital Capital General Athletic Reserve Pro1ects Assets Cash $ 666,429 $ 5,BIB $ 5,403 $ 56,131 Investments, at cost 4,053,438 919,392 Accounts receivable 945,933 Delinquent taxes receivable (net of $ 301,894 allowance for uncol1ectibles) 380,000 Inventories of supplies 50,000 Food service equipment (net of $ 183,437 accumulated depreciation) Land, buildings and equipment Amount to be provided for general long-term debt Total $ 6.095.800 $ 5.818 $ 924.795 $ 56.131 Liabilities Payroll and benefits payable $ 964,887 $ $ $ Accounts payeb1e 807,147 Deferred revenue 377,840 Due to student orgsnizations General obligation bonds payable Compensated sbsences Total liabilities 2.149.874 .0, -0- -0. Fund equity Invested in inventories 50,000 Invested in geners1 fixed assets Fund balances/ retainsd esrnings Reserved 56,131 Unreserved 3.895.926 5.813 924.795 Total fund equity 3.945.926 5.818 924.795 56.131 Total $ 6.095.800 $ 5.818 $ 924.795 $ 56.131 The accompanying notes are sn integral part of thes.. financial statements. - 2 . ., Proprietary Fund Tyoes Food Service Fiduciary Fund Tynes Activity Account GrOUOB General General Long- Fixed A..et~ Term Debt $ $ 125,627 $ $ 107.968 21,827 31,190 169,347 18,700.000 _5.985.100 $ 330.332 $ 125.627 $ 18.700.000 $ 5.985.100 $ $ $ $ 7,927 15.265 125,627 5,135.000 72.892 850.100 96.084 125.627 -0- 5.985.100 18,700,000 96,455 137.793 234.248 -0- 18.700.000 -0- $ 330.332 $ 125.627 $ 18.700.000 $ 5.985.100 "\ BIG SPRING SCHOOL DISTRICT COMBINED STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 1996 ... Capital Capital General Athletic Reserve Proiects Revenue Local SQurces $ 9.322,547 $ 49,051 $ 52,313 $ 1.020 State sources 9.534,986 '" Federal sources 298.724 Other financing sources 781 288.649 Total revenue 19.157.038 337.700 52.313 1. 020 I.') Expenditures Instruction 11.809,882 Support services 5.604.678 497,376 4,919 Operation of noninstructional services 311.371 335,169 <') Other financing uses 652.989 Total expenditures 18.378.920 335.169 497.376 4.919 Excess of revenue over (under) expenditures 778,118 2,531 (445.063) (3,899) Fund balances, July 1, 1995 3.117.808 3.287 1. 369.858 60.030 Fund balances, June 30, 1996 $ 3.895.926 $ 5.818 $ 924.795 $ 56.131 The accompanying notes are an integral part of these financial statements, . 3 - .J BIG SPRING SCHOOL DISTRICT STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES - ACTUAL AND BUDGET GENERAL AND ATHLETIC FUNDS YEAR ENDED JUNE 30, 1996 General Variance Favorable Actual Budllst CUnfllvorab le) Revenue Local sources $ 9,37.2,547 $ 9,010,549 $ 311,998 State sources 9,534,986 9,277,959 257,027 Federal sources 298,724 263,273 35,451 Other financing sources 781 -0- 781 Total revenue 19.157.038 18.551.781 605.257 Expenditures Instruction Regular programs 9,036,502 9,036,514 12 Special programs 2,100,167 2,101,407 1,240 Vocational education programs 382,762 413,718 30,956 Other instructional programs 290,451 294,886 4,435 Adult education programs -0- 500 500 Total instruction 11.809.882 11.847.025 37.143 Support services Pupil personnel 491,081 508,028 16,947 Instructional staff 600,249 600,250 1 Administration 1,136,579 1,139,705 3,126 Pupil health 161,802 181,984 20,182 Business 313,736 313,945 209 Operation and maintenance of p1snt services 1,637,060 1,637,087 27 Student transportation services 1,215,899 1,215,900 1 Other support services 48.272 48.273 1 Total support services 5.6U4.678 5.645.172 40.494 (Continued) - 4 - Athletic Variance Favorable Actual Budllet (Unfavoreblel $ 49,051 $ 45,380 $ 3,671 288.649 301. 081 (12.432) 337.700 346.461 (8.761) -0- -0- -0- -0- -0- -0- BIG SPRING SCHOOL DISTRICT STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES - ACTUAL AND BUDGET GENERAL AND ATHLETIC FUNDS (Cont'd.) YEAR ENDED JUNE 30, 1996 General Variance Favorable Actual ll.w1&o..t (Unfavorable I Expendi tures (Cont'd.) Operation of noninstructional services Student activities $ 296,690 $ 345,213 $ 48,523 Community services 14.681 14.682 1 Total operation of non- instructional services 311. 371 359.895 48.524 Other financing uses Debt servica 573,989 573,989 -0- Fund trsnafers 79,000 79,000 -0- Budgetary reserve -0- 89.843 89.843 Total other financing uses 652.989 742.832 89.843 Total expenditures 18.378.920 18.594.924- 216.004 Excess of revenue over (under) expenditures 778,118 (43,143) 821,261 Fund balances, July 1, 1995 3.117.808 2.917.000 200.808 Fund balances, June 30, 1996 $ 3.895.926 $ 2.873.857 $ 1.022.069 The accompanying notes are an integral part of these financial statements. - 5 - Athletic Actual Budllet Variance Favorable CUnfavorablel $ 335,169 $ -0- 346,461 $ -0- 11,292 -0- 335.169 346.461 11 .292 ..0... -0- -0- 335.169 346.461 11.292 2,531 -0- 2,531 3.287 -0- 3.287 $ 5.818 $ -0- $ 5.818 BIG SPRING SCHOOL DISTRICT STATEMENT OF REVENUE, EXPENSES AND CHANGES IN FUND BALANCE/RETAINED EARNINGS FOOD SERVICE FUND YEAR ENDEll JUNE 30, 1996 Operating revenue Sales $ 514.667 Operating expenses Salaries and wages Employee benefits Food and milk General supplies Repairs and maintenance Utilities and fuel Depreciation Total operating expanses 286,047 122,479 321,611 13,873 11,875 35,000 21. 514 812.399 (297.732) Operating loss Nonoperating revenue State sources Meal subsidies Social security and retirement subsidies Federal sources Meal subsidies Donated commodities Interest earned Total nonoperating revenue 16,013 22,744 135,150 47,590 5.785 227.282 (70,450) 36.500 (33,950) 268.198 $ 234.248 Loss before transfers Fund transfers General Fund contributed services Net loss Fund balance/retained earnings, July 1, 1995 Fund balance/retained earnings, June 30, 1996 The accompanying notes are an integral part of these financial statements. . 6 - BIG SPRING SCHOOL DISTRICT STATEMENT OF CASH FLOWS FOOD SERVICE FUND YEAR ENDED JUNE 30, 1996 Operating activities Operating loss Adjustments to reconcile operating loss to net cash used in operating activities Depreciation Decrease (increase) in assets Accounts receivable Inventories Increase (decrease) in liabilities Accounts payable Deferred revenue Due to other funds Compensated absences $ (297,732) 21,514 (3,750) (1,425) 7,500 1,042 (28,447) 12.110 Net cash used in operating activities (289.188) Non capital financing activities Grants and subsidies State sources Federal sources Fund transfers (General Fund contributed services) Net cash used in investing activities 38,757 182,740 36.500 257.997 (10,028) (5,785) 5.785 nO.028) (41,219) 41. 219 $ -0- Net cash provided by non capital financing activities Investing activities Purchase of equipment Increase in investments Interest earned Net decrease in cash Cash, July 1, 1995 Cash, June 30, 1996 The accompanying notes are an integral part of these financial statements. - 7 - BIG SPRING SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996 1. Reporting entity Big Spring School District is the level of government which has oversight reoponsibility and control over activities related to public school education. The repo.:t includes services provided by the District to residents within its boundaries: the Cumberland County Townships of Cooke, Lower Frankford, Upper Frankford, Lower Mifflin, Upper Mifflin, North Newton, South Newton, Penn and West Pennsboro, and the Borough of Newville. Services provided include a comprehensive curriculum for primary and secondary education as well as special education and vocational education programs. The District receives revenue from local, state and federal sources and must comply with the requirements of these funding sources. Criteria established in Govornmental Accounting Standards Board Statement Number 14 were used in determining the entities to be included in the reporting entity. These criteria include basic items such as financial interdependency, selection of governing authority, designation of management, ability to significantly influence operations, accountability for fiscal matters, scope of public service and special financing relationships. All operations of the District are included in the reporting entity. There are no component units that meet the above criteria for inclusion in this reporting entity. However, the District is a participant in two jointly-governed operations, each of which is a separate legal entity that offers educational services to the District and its residents. Each entity serves several school districts, so the following entities are not included in this reporting entity. Capital Area Intermediate Unit provides special education services and programs. Cumberland-Perry Area Vocational-Technical School provides vocational and technical education services and programs. 2. Summary of significant accounting policies The accounting records of Big Spring School District are maintained on the basis of accounting practices prescribed or permitted by the Manual of Accounting and Related Financial Procedures for Pennsylvania School Systems, issued by the Pennsylvania Department of Education in accordance with the provisions of the School Laws of Pennsylvania. These practices are in conformity with generally accepted accounting principles as applicable to governmental units. A summary of the more significant accounting policies is as follows: Fund accounting The accounting records of the District are organized on the basis of fund types and account groups. Each fund type may consist of several different funds. Each fund is a separate entity with self-balancing account~ which comprise its assets. liabilities, fund balance/retained earnings, revenues and exp~nditures/expenses as appropriate. The fund types and account groups utilized by Big Spring School District are as follows: - 8 - "' BIG SPRING SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENT (Cont'd.) JUNE 30, 1996 ~ 2. Summary of significant sccounting policies (Cont'd.) Basis of presentation (Cont'd.) Fiduciarv Fund TVDes (Trust llnd Aeencv Fundsl - These funds use a modified accrulll method. They are custodial in nature (assets equal liabilities), and are not involved with the measurement of results of op~rations (revenues and expenditures). Account GrouDs - Land, buildings and equipment are presented at cost. Depreciation is not computed on these assets. Additions and disposals have been estimated since the most recent outside valuation report, which was performed in July 1992. Long-term debt is offset by an amount to be provided by future taxation or other revenue sources. General obligation bonds payable in future years are recorded as District debt. Interest on these bonds is recognized when such interest is due. " Compensated absences (those for which employees receive pay) are presented using the termination payment method. A liability is computed through the use of estimates which apply historical data to current factors. The District maintains records of unused leave and applies the contracted rate for employees eligible for termination payments. The District allows only restricted sabbatical leave and therefore does not present any liability in advance of the sabbaticaL Budgets The District adopts, prior to the beginning of each fiscal year, an annual budget for the General Fund and Athletic Fund. A part of this budget process is the adoption of local tax rates, subject to various legal restrictions. The District approves subsequent budget revisions (primarily transfers between expenditure categories) as necessary. Unused appropriations expire at the end of each year. Revenue . Local sources J Real estate, occupation, residence and per capita taxes are levied as of July 1 with a legal. enforceable claim against the taxpayer and/or property. These taxes are recognized as revenue when received during the fiscal year and also estimated to be received within sixty days after the end of the fiscal year. Amounts estimated to be received between sixty days and one year after the end of the fiscal year are recorded as deferred revenue. An allowance for uncollectibles is recorded for taxes estimated not to be collectible within one yea= after the end of the fiscal year. J Other tax revenues, including taxpayer-assessed revenues such as earned income taxes, are recognized as revenue when received during the fiscal year or soon enough thereafter to be susceptible to accrual. - 11 - J BIG SPRING SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 1996 6. Land, buildings and equipment Changes in land, buildings and equipment were as follows: Julv 1. 1995 Additions Dlsnosals June 30. 1996 Land and buildlngs $ 12,300,000 $ 120,000 $ 20,000 $ 12,400,000 Equipment 6.200.000 180.000 80.000 6.300.000 General fixed asse ts $ 18.500.000 $ 300 . 000 $ 100.000 $ 18.700.000 Food service equipment $ 342.756 $ 10.028 $ -0- $ 352.784 7. General obligation bonds payable Changes in general obligation bonds payable, Series of 1992, were as follows: Bonds payable, July 1. 1995 Redemptions during the year $ 5,410,000 275.000 Bonds payable, June 30, 1996 $ 5.135.000 The bonds, with interest rates of 4.35' to 6.15', are callable in whole or in pBrt, on or after September 1, 1997. Scheduled debt service requirements are as follows: Year Ending June 30 princioal Interest I2al 1997 $ 290,000 $ 286,342 $ 576,342 1998 300,000 273,728 573,728 1999 315,000 259,778 574,778 2000 330,000 244,500 574,500 2001 345,000 228.000 573,000 2002 2006 2,025,000 R34.112 2,859,112 2007 - 2009 1. 530.000 190.890 1.720.890 $ 5 . 13 5 . 000 $ 2.317.350 $ 7.452.350 - 14 - BIG SPRING SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 1996 8. Compensated absences Changes in compensated absences were as follows: Julv 1. 1995 Net Chanee General Long-Term Debt Teachers $ 616,192 $ 16,509 Custodians 76,754 2,100 Secretaries 65,882 942 Aides 15,609 780 Administrators 54.363 969 $ 828.800 $ 21.300 Food Service Fund $ 60.782 $ 12.110 June 30. 1996 $ 632,701 78,854 66,824 16,389 55.332 $ 850.100 $ 72.892 Payments for compensated absences recorded in General Long-Term Debt are made through General Fund expenditures in the year the absence is taken or the employee retires. At retirement or death, while in School District service, employees (with at least 10 years service in the School District) or their beneficiaries shall choose one of the following options (subject to a maximum of $ 8,000 for administrators and $ 6,500 for all other employees): 1. Accumulated unused sick leave days times $ 50 per day 2. Number of full years of service in the District times $ 150 per year 9. Pension plan All full time District employees and part time employees with at least 80 days or 500 hours of service yearly, are eligible to participate in The Public School Employes' Retirement System of Pennsylvania ("System"), a cost-sharing, mu1tip1e- employer defined benefit pension plan. Employees who retire at age 62, or age 60 with 30 years of service, or with 35 years of service regardless of age. are entitled to a retirement benefit, payable monthly for life, equal to 2' of their final average salary times years of service. Benefits vest on reaching 10 years of service. The System also provides for early retirement at age 55 and for death and disability benefits. Also, health insurance premium assistance of $ 55 per month is provided for qualified retirees. The District's total payroll for the year ended June 30, 1996 was $ 1r,710,647; of which $ 10,251,015 was covered by the plan. Covered employees aro required by State statute to contribute a percentage of their salary to the plan. This percentage is 5.25' for employees hired before July 1983, and 6.25' for employees hired after that date. The District's contribution as a percentage of salaries was 11.72' for the year ended June 30. 1996, and will be 10.60' effective July 1996. The District's contribution for the year ended June 30. 1996 was $ 1,196,647: employees' contributions were $ 582,538. - 15 . BIG SPRING SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 1996 9. Pension plan (Cont'd.) The pension benefit obligation, which is the actuarial present value of credited projected benefits, is a standardized measure of the present value of pe~sion benefits, adjusted for the effects of projected salary increases and any step- rate benefits, estimated to be payable in the future as a result of employee service to date. The measure is intended to help users assess the retirement system's funding status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among public employee retirement systems. As of June 30, 1994, the most recent actuarial valuation date, the System's pension benefit obligation, as calculated in accordanca with GASB Statement No.5, totalled $ 26.26 billion. Net sssets available for benefits as of the same date totalled $ 23.45 billion. The unfunded pension obligation under GASB Statement No.5 totalled $ 2.81 billion. Total contributions to the System from all participating employers for the years ended June 30, 1995 and 1994 were $ 0.93 billion and $ 0.97 billion, respectively. Ten-year historical trend information showing the System's progress in accumulating sufficient assets to pay benefits when due is presented in the System's Comprehensive Annual Financial Report. 10. Postemp1oyment benefits other than pension benefits Under the negotiations agreement with Big Spring Education Association, the District shall provide for continuance of health care insurance after retirement until age 65. This health care insurance shall be at the retiree's expense, except that employees who retire after thirty or more years with the District, shall have up to five years of health care insurance benefits provided on the basis of the District paying 50% of the cost and the retiree paying 50% of the cost. The District finances this benefit on a pay-as-you-go basis. For the year ended June 30, 1996 the District incurred a total cost of $ 23,113 to provide this benefit to 15 participants. 11. Inter-fund transactions General Fund expenditures includes contributed services and fund transfers as follows: Student activities Athletic Fund Activity Fund Fund transfers Food Service Fund Athletic Fund $ 246,149 50,541 36.500 42,500 - 16 - '1 BIG SPRING SCMooL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 1996 12. Overpayment received from state sources During June 1996, the District received a much larger than anticipated payment from the Pennsylvania Department of Education. In July, the State Department of the Auditor General determined most of the payment was due to a Department of Education interpretation error of a previous audit by ths Department of the Auditor General. Based upon preliminary information from these two state agencies, accounts payable at June 30, 1996 includes $ 659,421 for the amount to be returned to the Pennsylvania Department of Education. The amount of this adjustment is much larger than normal because it covers the five year period from July 1991 to June 1996. 13. Risk management The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The District maintains commercial insurance coverage covering each of those risks of loss. Management believes such coverage is sufficient to preclude any significant uninsured losses to the District. Settled claims have not exceeded this commercial coverage in any of the past three fiscal years. For State unemployment compensation laws, the District is self-insured, which is a common practice for local governmental units. Any unemp10ymeut claims are paid by the District on a quarterly basis as incurred. For workers' compensation insurance, over 70 Districts participate in a public entity risk sharing pool (School Districts Insurance Consortium) for processing claims and obtaining reinsurance through commercial insurance carriers. Under this plan, the District's annual cost should not exceed standard commercial insurance rates. For dental insurance coverage, the District pays claims plus an administration fee of 11.40\ of claims. Claims coverage is limited to a maximum ol $ 1,000 per person per contract year. 14. Commitments and contingencies The District's contract with its teaching staff is scheduled to expire in June 1997. In the normal course of business, the District is subject to legal disputes and claims. The District does not anticipate any material losses from any pending or threatened litigation. In the normal course of preparing for the subsequent school year, the District has awarded bids for various supplies, fuel contracts, etc. No major commitments in excess of routl.ne requirements have been made by the District. The District is also audited by the Sta~e's Department of the Auditor General. Findings, if any, from these audits could result in the repayment of funds, or the receipt of additional funds. - 17 - ~ (t- 1\ \Xl ~ "6 fV) "" ~ ~ r.: "I '- ... \ .' c-; ,... " to;: ~~. i:\ : ~~ ~:; ~ ..- \ ~ ft;i ;;'" .) ~~ 9" u:,::& @t. "I ...... c.. - .. ~.: ~ et~'. ::- :c: ~'~:J ~':. c.:j ;.c: .' r:.. u.. ,,' " 0 ..., 0' f.)