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Ckeo- ?,rmawalt /c Compaq, PC 0 0 • • 0 MECHANICSBURG AREA SCHOOL DISTRICT MECHANICSBURG, PENNSYLVANIA JUNE 30, 1999 0 0 0 0 G 0 0 • • • INDEX Page Number Independent auditors' report 1 - 2 e Combined balance sheet - all fund types and account groups - June 30, 1999 3 Combined statement of revenue, expenditures and changes in fund balances - All Governmental Fund Types - year ended June 30, 1999 q Statement of revenue, expenditures and changes in fund balances - actual and budget - All Governmental Fund Types - year ended June 30, 1999 5 O Statement of revenue, expenses and changes in fund balance /retained earnings - Food Service Fund - year ended June 30, 1999 6 Statement of cash flows - Food Service Fund - year ended June 30, 1999 7 Notes to financial statements - June 30, 1999 8 - 19 Supplementary information O Required supplemental information 20 Not required supplemental information 21 - 27 G w° GPEENAWALT & COMPANY, P.C. CERTIFIED PUBLIC ACCOUNTANTS JAME E LYONS HOWARD L CMIMAWALT F.O. Box 6 400 WEST MAIN STREET 67 WEST POMFRET $TRPLT CRRmON L HDRMAN MECHMIICSBURG. PENNSYLVANIA 17055 CARLISLE. PA 17013 JOHN H. RIDCCAI R OITI Haden DODRAH J. KIILY 1717) 788.4763 FAX (7M 2SS 9377 • L A. GREENAWALT 119761913) FAX 17171766.2731 A. A. 1®041111RRnRRD) C. EDWARD ROOM IL INDEPENDENT AUDITORS' REPORT 0 4 O • O O O Board of School Directors Mechanicsburg Area School District Mechanicsburg, Pennsylvania We have audited the accompanying general-purpose financial statements of Mechanicsburg Area School District as of June 30, 1999, and for the year then ended. These general-purpose financial statements are the responsibility of the District's management. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards 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 general-purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general-purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general-purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the accompanying general-purpose financial statements present fairly, in all material respects, the financial position of Mechanicsburg Area School District at June 30, 1999, the results of its operations and the cash flows of its Food Service Fund for the year then ended in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the general-purpose financial statements taken as a whole. The supplementary information listed on pages 21 - 27 is presented for purposes of additional analysis and is not a required part of the general-purpose financial statements of Mechanicsburg Area School District. Such information has been subjected to the auditing procedures applied in the audit of the general-purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the general-purpose financial statements taken as a whole. - 1 - O MEMBERS - AMERICAN VISTRBTE OF CE"FIED PUBLIC ACCOUNTANTS - PENNSYLVAMA NST nrrE OF CERTIFIED PUBLIC ACCOUNTANTS H Board of School Directors Mechanicsburg Area School District Mechanicsburg, Pennsylvania The supplementary information listed on page 20 is not a required part of the general-purpose financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain © limited procedures, which consisted principally of inquiries of management regarding the procedures used and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. In accordance with Government Auditing Standards, we have also issued reports dated August 13, 1999, on our consideration of Mechanicsburg Area School O District's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. O n O O C7 O August 2, 1999 Mechanicsburg, Pennsylvania 2- GREENAWALT & COMPANY, P.C. J 0 MECHANICSBURG AREA SCHOOL DISTRICT COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30, 1999 Assets and other debits Cash and cash equivalents Investments Due from other funds Accounts receivable Delinquent taxes receivable (net of allowance for uncollectibles, $ 158,719) Inventory Land, buildings and equipment (net of $ 88,172 accumulates depreciation) Amount to be provided for general long-term debt Total assets and other debits Governmental Fund Types Athletic Capital General Association Construction Reserve $ 2,072,221 $ 3,868 $ - $ _ Q 3,704,833 - 9,865,559 558,097 76,495 - - 814,904 - - 1,166 331,112 0 $ 6,999,565 $ 3,868 $ _9,865,559 $_ 559,263 Liabilities Payroll and benefits payable $ 1,828,646 Accounts payable 519,529 Deferred revenue 229,504 Due to other funds _ Due to student organizations - Bonds payable _ Compensated absences 217,160 Total liabilities 2,794,839 Fund equity and other credits Invested in general fixed assets Fund balances/ retained earnings Reserved Unreserved (deficit) 4,204,726 Total fund equity and other credits 4,204,726 Total liabilities, fund equity and other credits $ 61999,565 $ s $ a 2,466 18,307 -0- 2,466 18,307 - 9,500,000 _ 3,868 363,093 540,956 3,868 9,863,093 540,956 $ 3, 868 $ _ 9, 865 , 559 $ S59,263 The accompanying notes are an integral part of these financial statements. - 3 - 0 0 H Proprietary Fund Tunes Fiduciary Fund Types Account Grouns Debt Food Trust and General General Long- Service Service Agency Activities Fixed Assets Term Debt Q $ 12 ,305 $ 45,478 $ - $ 266,681 $ - $ _ - - - 60,607 - 32,781 - 153,003 - - 21,176,798 - © - - 27 326 020 , , $ _ 12, 305 $ _ 231,262 $ -0- $ 327,288 $ 21 176 798 $ 27 326 020 _ , , , , © $ - $ - $ _ $ - $ - $ - - 130 - 27,991 - 76,140 - 355 - - - 326,933 - - - - - 18,947 ,544 - 19,553 8 378 476 , , -0- 123,814 -0- 327,288 -0- 27,326 ,020 - - - - 21,176,798 - - 133,450 - - - _ 12, 305 (26,002) 12, 305 107,448 -0- -0- 21,176,798 -0- $ 12, 305 $ 231,262 $ -0- $ _ 327,288 $ 21,176,798 $ 27,326, 020 w o 0 MECHANICSBURG AREA SCHOOL DISTRICT COMBINED STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 1999 Revenue and other financing sources Local sources State sources Federal sources Bond proceeds Sale of fixed assets Refund of prior years, expenditures Incoming transfers Total revenue and other financing sources Expenditures and other financing uses Instruction Support services Operation of noninstructional services Facilities acquisition, construction and improvement services Other financing uses Transfers to other funds Total expenditures and other financing uses Excess of revenue and other financing sources over (under) expenditures and other financing uses Fund balances, July 1, 1998 Fund balances, June 30, 1999 0 Athletic 1993 General Association Construction $ 19,533,525 $ 87,571 $ 20,714 7,000,164 - - p 177,470 - - 361 - 4,262 - - 19,081 31,000 26,734,863 118,571 20,714 16,234,082 - - 6,855,880 - - 0 639,307 118,430 - - 407,944 43,981 - - 1,812,388 - - 25,585,638 118,430 407,944 1,149,225 141 (387,230) 3,055,501 3,727 610,203. .. $ 4.204,726 $ 3,868 $ 222,973 1 The accompanying notes are an integral part of these financial statements. 4 _ N G • O 1998 Capital Debt Construction Reserve Service $ 417,365 $ 49,244 $ 419 m - _ 9,500,000 _ - - 1,656,440 O 9,917,365 _ 49,244 1,656,859 O - _ 142,505 765,276 _ 122,854 - 1,644,554 11,886 _ 14,973 -277.245 780,249 1,644,554 9,640,120 (731,005) 12,305 -0- 1,271,961 7-0-- $ 9,640,120 $ 540,956 $ 12,305 w o we as MECHANICSBURG AREA SCHOOL DISTRICT STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES - ACTUAL AND BUDGET ALL GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 1999 Revenue and other financing sources Local sources State sources Federal sources Sale of fixed assets Refund of prior years' expenditures Incoming transfers Total revenue and other financing sources Expenditures and other financing uses Instruction Support services Operation of noninstructional services Other financing uses Transfers to other funds Total expenditures and other financing uses Excess of revenue and other financing sources over (under) expenditures and other financing uses Fund balances, July 1, 1998 Fund balances, June 30, 1999 The accompanying notes are an integral part of these financial statements. General Fund Variance Favorable Actual Budget -(Unfavorable) $ 19,533,525 $ 19,003,586 $ 529,939 7,000,164 6,926,544 73,620 177,470 133,824 43,646 361 - 361 4,262 - 4,262 19.081 - 19.081 26.734.863 26,063,954 670 909 . 16,234,082 16,486,451 252,369 6,855,880 7,067,339 211,459 0 639,307 689,193 49,886 43,981 149,659 105,678 1.812.388 1.826.388 14 000 . 25,585,638 26.219.030 633.392 1,149,225 (155,076) 1,304,301 0 31055.501 2,470,412 585,089 $ 4,204,726 $ 2,315,336 $ 1,09,390 - 5 - m 0 r 0 Athletic Association Variance Favorable Actual Budget (Unfavorable) O $ 87,571 $ 71,700 $ 15,871 0 31,000 45,000 (14.000) 118,571 116,700 1,871 118,430 116,700 (1,730) 0 118.430 116,700 (1,730) Q 141 -0- 141 3, 727 -0- 3,727 $ 3. 868 $ -0- $ _ 3,868 =o m o I• I] MECHANICSBURG AREA SCHOOL DISTRICT STATEMENT OF REVENUE, EXPENSES AND CHANGES IN FUND BALANCE/ RETAINED EARNINGS FOOD SERVICE FUND YEAR ENDED JUNE 30, 1999 Operating revenue Sales $ 621,142 Operating expenses Food and milk 398,959 Labor 334,397 Custodian wages 12,283 Supplies and services 24,782 Repairs and maintenance 4,877 Employee benefits 107,925 Utilities and fuel 45,731 Administrative salaries 68,407 Depreciation 18,512 Total operating expenses 1,015,873 Operating loss (394,731) Nonoperating revenue p State sources Meal subsidies 25,430 Social security and retirement subsidies 26,241 Federal sources Meal subsidies 134,918 Donated commodities 55,566 0 Interest earned 7,315 Total nonoperating revenue 249,470 Loss before transfers (145,261) C Services contributed by General Fund 136,834 Equipment purchases by Capital Reserve Fund 14,973 Net income 6,546 © Fund balance/ retained earnings, July 1, 1998 100,902 Fund balance/ retained earnings, June 30, 1999 $ 107,448 The accompanying notes are an integral part of these financial statements. - 6 - 0 • 0 NICSSURG AREA SCHOOL DISTRICT STATEMENT OF CASH FLOWS FOOD SERVICE FUND YEAR ENDED JUNE 30, 1999 . Operating activities operating loss $ (394,731) Adjustments to reconcile operating loss to net cash used in operating activities Depreciation 18,512 Donated commodities earned 55,566 Services contributed by General Fund 136,834 A Decrease (increase) in assets Accounts receivable 2,604 Inventories 5,828 Increase (decrease) in liabilities Accounts payable 130 Due to other funds (3,338) 0 Deferred revenue (4,353) Compensated absences (2,466) Net cash used in operating activities (185,414) Noncapital financing activities 0 Subsidies 186,589 Investing activities Earnings on investments 7,315 Net increase in cash and cash equivalents 8,490 Cash and cash equivalents, July 1, 1998 36,988 Cash and cash equivalents, June 30, 1999 $ 45,478 Supplemental disclosure of noncash financing activities Donated commodities received $ 51,213 Services contributed by General Fund $ 136,834 The accompanying notes are an integral part of these financial statements. - 7 - 0 0 MECHANICSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 1. Reporting entity • Mechanicsburg Area School District is the level of government which has oversight responsibility and control over activities related to public school education. The report includes services provided by the District to residents within its boundaries: the Cumberland County communities of Upper Allen Township, Shiremanstown and Mechanicsburg Borough. 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 Governmental Accounting Standards Board Statement Number O 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. p There are no component units that meet the above criteria for inclusion in this reporting entity. However, the District is a participant in three 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 O and technical education services and programs. Harrisburg Area Community College provides community college education services and programs. 2. Summary of significant accounting policies C9 The accounts of Mechanicsburg Area 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 accounts of the District are organized on the basis of fund types and account V groups. Each fund type may consist of several different funds. Each fund is a separate entity with self-balancing accounts which comprise its assets, liabilities, fund balance/ retained earnings, revenues and expenditures/expenses, as appropriate. to - 8 - MECHANICSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Conti d.) JUNE 30, 1999 2. Summary of significant accounting policies (Cont'd.) • Fund accounting (Cont'd.) The fund types and account groups utilized by Mechanicsburg Area School District are as follows: Governmental Fund Types - These are the funds through which most governmental functions are provided. The acquisition, use and balances of the District's expendable financial resources and related liabilities (except those accounted for in proprietary funds) are accounted for through governmental funds. General Fund - The General Fund is used to account for all C financial resources except those required to be accounted for in another fund. The majority of District activities, including instruction, administration and other services are accounted for in this fund. Construction Funds - The Construction Funds are used to account O for the proceeds of bond issues and their corresponding expenditures. The fund balances at June 30, 1999 will be used for capital improvements. Capital Reserve Fund - The Capital Reserve Fund is used to account for special capital projects. Special Revenue Fund - Special Revenue Funds are used to account for the proceeds of specific revenues that are restricted to expenditures for specified purposes. The Athletic Association Fund is a Special Revenue Fund. Debt Service Fund - The Debt Service Fund is used to account for the receipt and disbursement of funds for payments on the General Obligation Bond issues. Proprietary Fund Types - These funds account for operations using accounting pronouncements for private business enterprises, unless those pronouncements conflict with or contradict governmental accounting pronouncements. Food Service Fund - The Food Service Fund is used to account for the financial transactions associated with the operations of the cafeterias. - 9 - V MECHANICSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (COnt'd.) JUNE 30, 1999 2. Summary of significant accounting policies (Cont'd.) O Fund accounting (COnt'd.) Fiduciary Fund Types (Trust and Agency Funds) - These funds account for assets held in a trustee capacity or as an agent for other funds or entities: O Activity Fund - Accounts for programs operated and sponsored by various clubs and organizations within the schools. Payroll Fund - The Payroll Fund accounts for salaries earned by District employees. It processes payments to the employees and to taxing and other agencies on their behalf. p Account Groups - These account groups are not funds. They are only concerned with the measurement of financial position and are not involved with the measurement of results of operations. General Fixed Assets account for the District's investment in 0 fixed assets. General Long-Term Debt accounts for general obligation bonds payable and accumulated compensated absences payable in future years. O Basis of presentation The accounting and financial presentation methods applied by the different fund types are based on their measurement focus, which determines when revenues and expenditures are recognized. Governmental Fund Types - These funds use the "current financial resources" measurement focus, which is a modified accrual method. Revenues are recorded when susceptible to accrual (both measurable and available). Available means collected within the current period or soon enough thereafter to pay current liabilities. Expenditures are generally recognized when the related fund liability is incurred. Exceptions to this general rule include principal and interest on general long-term debt which is recognized when due. Disbursements for inventory type items and prepaid expenses are considered expenditures at the time of purchase. 0 10 0 MECHANICSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) ® NNE 30, 1999 2. Summary of significant accounting policies (Cont'd.) Basis of presentation (Cont'd.) Proprietary Fund Types - The Food Service Fund uses the "flow of economic resources" measurement focus, which is a full accrual method. Donated commodities are inventoried at an estimated cost value when received. Inventories (valued on the first-in, first-out method) are recorded as an asset, and the portion represented by donated commodities is recorded as deferred revenue. Food service equipment is capitalized, with depreciation (computed on the straight-line method using an estimated useful life of 12 years) O recorded as an operating expense. The equipment (net of accumulated depreciation) is offset by a reserved portion of retained earnings. Compensated absences are recognized as operating expenses and the cumulative amount is recorded as a liability within the Fund. The liability is offset by a reduction in the reserved portion of retained 0 earnings. Fiduciary Fund Types (Trust and Agency Funds) - These funds use a modified accrual method. They are custodial in nature (assets equal liabilities), and are not involved with the measurement of results of operations (revenues and expenditures). Account Groups - Land, buildings and equipment are presented at cost. Depreciation is not computed on these assets. Long-term debt is offset by an amount to be provided by future taxation or other revenue sources. Bonds payable in future years are recorded as District debt. Interest on bonds is recognized when such interest is due. Interest on Capital Appreciation Bonds is accreted annually and added to the amount of bonds outstanding. Compensated absences are presented using the vesting method. Unused vacation leave is minimal. Sick leave is granted as appropriate, and ® medical evidence may be required. Provision is made annually in the budget for the cost of substitute personnel. There is limited payment for accumulated sick leave at the time of retirement. The gross amount of unused compensated absences is recorded in the General Long- Term Debt group of accounts, General Fund and Food Service Fund. 6 - 11 - 0 MECHANICSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 1999 2. Summary of significant accounting policies (Cont'd.) S 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 the year. Revenue - Local sources Real estate, residence and occupation 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 by the District during the fiscal year and also estimated to be received by the District within sixty days after the end of the fiscal year. Those currently levied taxes which are not estimated to be received by the District within sixty days after the close of the current fiscal year are recorded as deferred revenue. • An allowance for uncollectibles is recorded for taxes levied for the current fiscal year and estimated to be of doubtful collection in the current and subsequent fiscal years. 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. Revenue - State sources State subsidies due the District as current fiscal year entitlements are recognized as revenue in the current fiscal year. Revenue - Federal sources Federal program funds applicable to expenditures in the current fiscal year but expected to be received in the next fiscal year are recognized as revenue in the O current fiscal year. a - 12 - VP • • • O O MECHANICSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 1999 2. Summary of significant accounting policies (Cont'd.) Inter-fund transactions Expenditures by the General Fund for the benefit of other funds are reflected in the respective statements of revenue and expenditures/expenses, based on management's estimates. The District does not attempt to allocate all costs which benefit the other funds due to the difficulties associated with the measurement of such benefits. Utilities, salaries, etc. paid by the General Fund for the benefit of the Food Service Fund amounting to $ 136,834 have been reflected on the respective statements of revenue and expenditures for the year ended June 30, 1999, based on management's estimates. Materials and supplies General Fund materials and supplies are expensed as paid. Food Service Fund materials and supplies are expensed as used. Food Service Fund inventories are reflected on the balance sheet at cost, first-in, first-out method. O O O O O Pension plan Substantially all full-time and part-time employees of the District participate in a cost-sharing multiple employer defined benefit pension plan. The District recognizes expenditures or expenses equal to its contractually-required contributions, subject to the modified accrual basis of accounting in governmental funds. 3. Cash and investments Cash (other than $ 757 cash on hand) consists of checking and savings accounts in financial institutions and treasury management accounts with financial institutions, and is categorized as follows: Carrying Value Insured (FDIC) $ 100,000 Collateral held in District's name -0- Collateral not held in District's name 1,219,313 1,319,313 Pooled investment 1,080,483 $ 2,399,796 - 13 - Bank Balance $ 100,000 -0- 1,372.442 1,472,442 1,080,483 $ 2552, 925 W • 0 C: Investments of the District at June 30, 1999 include the following: PA Treasurer's Investment Program for Local Governments $ 1,356,496 U.S. government obligation 59,058 Pennsylvania School District Liquid Asset Fund 1,989,021 Pennsylvania Local Government Investment Trust 10,784,521 O O O O MECHANICSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE ?.0, 1999 3. cash and investments (Cont'd.) For purposes of the Food Service Fund statement of cash flows, cash consists of a checking and savings account, as the Fund does not have any cash equivalents. $ 14,189,096 The investments, whose market value approximates cost due to the short-term nature of the investments, are categorized as follows: Carrying Investment Value Balance insured or federal guaranty $ 59,058 $ 59,058 Collateral held in District's name -0- -0- Collateral not held in District's name -0- -0- 59,058 59,058 Pooled investments 14,130.038 14,130,038 $ 14.189,096 $ 14,189, 096 The types of authorized investments are limited by state regulations. Investment policies followed during the year did not significantly alter the categorization of investments shown above. 4. Accounts receivable General Fund accounts receivable at June 30, 1999 consist of the following: 0 Subsidies Due from other governmental units other $ 239,922 566,172 8.810 m - 14 - $ 814.904 40 MECHANICSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd,) JUNE 30, 1999 5. Delinquent taxes receivable • Delinquent taxes receivable at June 30, 1999 include real estate taxes of $ 254,439 and per capita, residence and occupation taxes of $ 235,392, An allowance for uncollectible taxes of $ 158,719 has been establis hed at June 30, 1999. In addition, $ 224,914 in tax revenue has been deferred in accordance with school tax accounting policies. O 6. Land, buildings and equipment The schedule below presents estimated historical cost of land, buildings and equipment. These amounts were obtained, in the most part, from a valuation report prepared as of June 30, 1994 and updated by management to June 30, 1999, It includes equipment held in the Food Service Fund. July 1, 1998 Additions Disposals June 30. 1999 Land $ 416,983 $ $ - $ 416,983 Land improvements 1,084,479 22,077 - 1,106,556 © Buildings 12,710,247 - - 12,710,247 Equipment 6,365,476 _ 594,667 17,131 6,943,012 General fixed assets $ 20,577,185 $ _ 616,744 $ 17,131 $ 21,176,798 Food service equipment $ 231,682 $ _ 14,973 $ 5,480 $ _ 241,175 Q 7. Bonds payable A summary of changes in bonds payable for the year ended June 30, 1999 is as follows: Beginning Additions Reductions Endin d General Obligation Bonds Series of 1992 $ 6,416,983 $ 380,561(a)$ 1,025,000 $ 5,772,544 Series of 1993 3,825,000 - 3,825,000 -0- Series of 1998 -0- 9,500,000 - 9 500 000 G , , Series A of 1998 -0- 3,675,000 3,675,000 $ 10 241,983 $ 13,555,561 $ 4,850,000 $ 18,947,544 (a) Represents accreted interest on Capital Appreciation Bonds. The Series of 1992 General Obligation Bonds consist of Capital Appreciation Bonds. Interest accreted through the March 1 payment date of each year on the capital Appreciation Bonds is added to the carrying value. The bonds are due semi- annually through September 1, 2005 and have an average coupon rate of 6.23%. The Series of 1998 General Obligation Bonds are due semi-annually through February 15, 2013, and have an average coupon rate of 4.5745. The Mechanicsburg Area School District has contracted with an architect to design a new middle school and has plans to renovate the current middle school and high school. In 1998-99 the District issued $ 9.5 million in general obligation bonds for this purpose. It is anticipated that construction of the new middle school will begin in 2000. ? - 15 - • MECHANICSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 1999 7. Bonds payable (Cont'd.) The Series A of 1998 General obligation Bonds are due semi-annually through September 1 , 2009, and have an average coupon rate of 4.275%. The proceeds of these bonds were used to refund the Series of 1993 General obligation Bonds, which resulted in a savings to the District of $ 85,930. Future maturities and debt service requirements are as follows: 4 Series of Series of 1998 and 1998A 1992 Capital Appreciation Year Total Principal Interest Bonds (1) 1999-2000 $ 1,804,260 $ 205,000 $ 574,260 $ 1,025,000 2000-2001 1,914,755 325,000 564,755 1,025,000 2001-2002 1,886,598 310,000 551,598 1,025,000 2002-2003 1,878,988 315,000 538,988 1,025,000 2003-2004 1,881,083 330,000 526,083 1,025,000 2004-2013 16,567,057 11,690,000 2,877.057 2.000.000 Totals $ 25,932,741 $ 13.175,000 $ 5,632,741 $ 7,125,000 (1) Reflects final maturity value of Capital Appreciation Bonds. 8. Contribution to Food Service Fund "Contribution to Food Service Fund" for the year ended June 30, 1999 includes the following estimated expenses charged to the Food Service Fund and paid through the General Fund: G Custodian wages $ 12,283 Supplies 5,374 Employee benefits 9,554 Utilities and fuel 45,731 Administrative salaries 68,407 Social security subsidy (3,087) $ Retirement subsidy (1,426) $ 136.834 In addition, equipment purchases totaling $ 14,973 were paid by the capital reserve fund. 0 - 16 - 0 e MECHANICSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (COnt'd.) e JUNE 30, 1999 9. Inter-fund transfers The combined statement of revenue and expenditures for the year ended June 30, 0 1999 includes the following inter-fund transfers and contributions from the General Fund to the following funds which are recorded in the General Fund as budgetary expenditures: Food Service Fund $ 136,834 Student activities (Athletic Association) 31,000 Q Debt Service Fund 1,644,554 $ 1,812,388 10. Compensated absences O The General Long-Term Debt group of accounts includes a liability of $ 8,378,476 which represents the estimated gross amount of compensated absences, primarily sick leave, which would be payable to all District employees if they were to use this accumulated leave prior to retirement. It was calculated by multiplying each employee's accumulated leave time by their per diem rate. If an employee retires with unused compensated absences, the payout policy is as follows: Emergency and personal No payout. Vacation (Administrative personnel) Paid at per diem rate. Sickness Paid at the per diem rate paid to a substitute teacher at time of retirement, based on a formula involving a percentage of accumulated sick days and years of service. The maximum is 508 of accumulated sick days after 20 years of service for the year O ended June 30, 1999. Changes in long-term compensated absences were as follows: July 1. 1998 Net Change June 30. 1999 Administrators and support staff $ 1,307,932 $ 110,694 $ 1,418,626 Teachers 7,007,028 (47,178) 6,959,850 $ 8,314,960 $ 63,516 $ 8,378,476 Food Service Fund $ 22,019 $ (2,466) $ 19,553 - 17 - 0 • 0 MECHANICSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) JUNE 30, 1999 11. Pension plan The District contributes to The Public School Employees' Retirement System (the System), a governmental cost sharing multiple-employer defined benefit pension plan. The plan is under the provisions of the PSERS Code (the Code), as amended. The plan provides retirement and disability, legislative mandated ad hoc cost- of-living adjustments, and healthcare insurance premium assistance to qualifying annuitants. The System issues a comprehensive annual financial report that includes financial statements and required supplementary information for the plan. • A copy of the report may be obtained by writing to PSERS, P.O. Box 125, Harrisburg, PA 17108-0125. The contribution policy is established by the Code and requires contributions by active members and employers. Active members are required to contribute 5.25 percent of their qualifying compensation if they joined the plan before July 22, 1983, and 6.25 percent if they joined on or after that date. Contributions required of employers are based upon an actuarial valuation. For the fiscal year ended June 30, 1999 the employer contribution rate was 6.04 percent of covered payroll, composed of 5.89 percent for pension benefits and .15 percent for health insurance premium assistance. The District's contributions to o PSERS for the years ending June 30, 1999, 1998 and 1997 were $ 904,239, $ 1,252,455 and $ 1,501,951, respectively. Those amounts are equal to the required contribution for each year. 12. Post-employment benefits other than pension benefits The District does not offer any post-employment benefits to retired employees other than pension benefits as discussed in Note 11. The District will, however, allow retired employees to remain in its group medical insurance plan upon payment by the retired employee of the cost of such coverage. 13. Risk Management O 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. V For State unemployment compensation laws, the District is self-insured, which is a common practice for local governmental units. Any unemployment claims are paid by the District on a quarterly basis as incurred. - 18 - V e MECHANICSBURG AREA SCHOOL DISTRICT NOTES TO FINANCIAL STATEMENTS (Cont'd.) • JUNE 30, 1999 14. Commitments and contingencies O At June 30, 1999, the District was committed to construction contracts totaling approximately $ 179,517. These amounts will be paid from the Construction and Capital Reserve Funds. The District's contract with its teaching staff is scheduled to expire June 30, 2001. 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 routine requirements have been made by the District. The District is also audited by the State's Department of the Auditor General. Findings, if any, from these audits could result in the repayment of funds, or the 0 receipt of additional funds. The District is contingently liable for outstanding lease rental debt of the Harrisburg Area Community College. C C] C 0 - 19 - 0 0 0 0 11 0 0 0 0 d E 0 SUPPLEMENTARY INFORMATION A f 4 MECHANICSBURG AREA SCHOOL DISTRICT YEAR 2000 DISCLOSURE (UNAUDITED) ® JUNE 30, 1999 The Year 2000 issue is the result of shortcomings in many electronic date processing systems and other electronic equipment that may adversely affect the ® school district's operations in fiscal year 1999-2000. The Mechanicsburg Area school District has completed an inventory of computer systems and other electronic equipment that may be affected by the Year 2000 issue and that are necessary to conducting District operations and has identified such systems as being financial reporting, payroll, student accounting and O scheduling, tax billing, energy management system and personal computers for student use. The District contracts with the Capital Area Intermediate Unit for financial reporting and payroll services. The Capital Area Intermediate Unit is responsible for remediating these systems. Documentation received O indicates that these systems have been remediated. The District contracts with the Capital Area Intermediate Unit for student accounting and scheduling services. The Capital Area Intermediate Unit is responsible for remediating these systems. Documentation received indicates that these systems have been remediated. The District contracts with EUR Datacenter Inc. for tax billing services. EUR Datacenter Inc. is responsible for remediating this system. Documentation received indicates that this system will be remediated. The District contracts with ACT Inc. for energy management services. ACT Inc. is responsible for remediating this system. Documentation received indicates that this system has been remediated. The District maintains personal computers for student use and is responsible for remediating these systems. District personnel have tested and remediated these systems and plans are in place to resolve problems d that may occur with these systems in 2000. To date the District has spent $ 7,395 on resolving Year 2000 issues. There are no outstanding commitments as of June 30, 1999. Because of the unprecedented nature of the Year 2000 issue, its effects and the success of related remediation efforts will not be fully determinable until the Year 2000 and thereafter. Management cannot assure that the District is or will be year 2000 ready, that the District's remediation efforts will be successful in whole or in part, or that the parties with whom the District does business will be year 2000 ready. 0 - 20 - W • MECHANICSBURG AREA SCHOOL DISTRICT GENERAL FUND STATEMENT OF REVENUE YEAR ENDED JUNE 30, 1999 Variance Favorable Revenue Budget (Unfavorable) Local sources Current real estate taxes $ 12,718,913 $ 12,599,385 $ 119,528 Public utility realty tax 217,514 220,746 (3,232) Current per capita taxes 76,872 77,480 (608) w Current Act 511 per capita taxes 76,872 77,480 (608) Occupation privilege taxes 67,975 64,838 3,137 Current occupation taxes 2,669,093 2,669,355 (262) Real estate transfer taxes 419,057 267,432 151,625 Earned income taxes 2,262,707 2,181,470 81,237 Delinquent taxes, all levies 434.505 350.000 84.505 Taxes 18.943.508 18.508.186 435.322 Tuition and other payments from patrons 9,492 - 9,492 Earnings from temporary deposits and investments 456,330 365,000 91,330 0 Student activities 13,584 16,300 (2,716) Rent from School and other facilities 17,757 11,900 5,857 Community services activities 89,761 101,000 (11,239) Miscellaneous revenue 3,093 1,200 1.893 590.017 495.400 94.617 State sources Basic instructional subsidy 4,217,792 4,221,537 (3,745) Homebound instruction 447 - 447 Vocational education 13,690 11,598 2,092 Migratory children 190 - 190 Special education 1,122,524 1,120,850 1,674 a Transportation 261,442 235,000 26,442 Rentals and Sinking Fund payments 176,999 148,390 28,609 Driver education 6,190 7,000 (810) Health services 86,852 85,000 1,852 Social security 588,822 593,012 (4,190) Retirement 441,643 467,157 (25,514) + School performance incentive 26,904 - 26,904 Tuition - court placed students 34,669 15,000 19,669 Link to learn 22.000 22.000 7,000,164 6,926.544 73.620 • (Continued) - 21 - 0 me me ? O 0 =0 E J O CHANICSBURG AREA SCHOOL DISTRICT GENERAL FUND STATEMENT OF REVENUE (Cont'd.) YEAR ENDED JUNE 30, 1999 Federal sources impacted areas IDEA Part B Title I Title VI Title II Drug free schools other Sale of fixed assets Refund of prior years' expenditures Transfers from other local education agencies in Pennsylvania Total revenue variance Favorable Revenue Budget (Unfavorable) 9 8,808 $ $ 8,808 46,629 - 46,629 91,932 94,052 (2,120) 10,652 11,894 (1,242) 6,210 10,007 (3,797) 13,239 17,871 (4,632) 177,470 133.824 43.646 361 - 361 4,262 - 4,262 19.081 - 19,081 23,704 -0- 23,704 $ 26,734,863 $ 26,063,954 $ 670,909 See accompanying report on supplementary information. - 22 - 0 • MECHANICSBURG AREA SCHOOL DISTRICT GENERAL FUND STATEMENT O F EXPENDITURES . YEAR ENDED JUNE 30, 1999 Variance Favorable Expenditures Budget (Unfavorable) Regular programs Personnel services - salaries $ 9,764,616 $ 9,813,704 $ 49,088 Personnel services - employee benefits 2,284,301 2,307,632 23,331 Purchased professional and technical services 99,056 99,062 6 Other purchased services 55,233 83,185 27,952 Supplies 407,866 423,632 15,766 Property 33,152 33,153 1 Other objects 55,064 55,104 40 12,699,288 12,815,472 116,184 Special programs Personnel services - salaries 1,599,142 1,599,636 494 Personnel services - employee benefits 431,740 432,154 414 Purchased professional and technical services 532,308 651,310 119,002 Other purchased services 116,186 116,200 14 ® Supplies 17,397 26,383 8,986 Other objects 10,285 10,285 2,707,058 _2_,835,968 128,910 Vocational education programs Other purchased services 239,893 239,893 -0- Other instructional programs Personnel services - salaries 134,847 134,941 94 Personnel services - employee benefits 33,924 33,967 43 Purchased professional and technical services 49,555 49,630 75 Other purchased services 933 1,000 67: Supplies 14,495 20,170 5,675 233,754 239,708 5,954 Adult education programs Personnel services - salaries - 1,000 1,000 Personnel services - employee benefits - 144 44 1 . -0- 1,144 1,144 Community College education programs Other purchased services 354,089 354,266 177 (Continued) - 23 - 0 • MECHANICSBURG AREA SCHOOL DISTRICT GENERAL FUND STATEMENT OF EXPENDITURES (Cont'd.) YEAR ENDED NNE 30, 1999 0 Variance Favorable Exp enditures Budget .(Unfavorable) Support services - Pupil personnel Personnel services- salaries $ 587,501 $ 591,018 $ 3,517 Personnel services - employee benefits 129,997 141,577 11,580 Purchased professional and technical services 48,863 61,934 13,071 Other purchased services 2,301 2,320 19 Supplies 13,697 13,810 113 Other objects 296 500 204 782.655 811.159 28.504 0 O O d O 0 Support services - instructional staff Personnel services- salaries Personnel services - employee benefits Purchased professional and technical services Other purchased services Supplies Property Other objects support services - administration Personnel services - salaries Personnel services - employee benefits Purchased professional and technical services Purchased property services other purchased services Supplies other objects Support services - pupil health Personnel services - salaries Personnel services - employee benefits Purchased professional and technical services Other purchased services supplies Other objects 690,972 180,526 16,623 3,028 89,970 40,862 47,611 1,069,592 1,109,827 253,975 139,303 22,439 40,345 38,965 35.442 1.640.296 259,473 69,902 980 666 5,715 276 337.012 (Continued) - 24 - 696,072 180,658 26,940 3,050 90,021 40,900 47.633 1,085,274 1,118,072 260,236 143,944 22,450 40,353 39,050 35.451 1.659.556 262,586 69,990 1,200 875 5,723 300 340.674 5,100 132 10,317 22 51 38 22 15.682 8,245 6,261 4,641 11 8 85 9 19.260 3,113 88 220 209 8 24 3.662 to • MECHANICSBURG AREA SCHOOL DISTRICT GENERAL FUND STATEMENT OF EXPENDITURES (Cont'd.) YEAR ENDED JUNE 30, 1999 Variance ® Favorable Exp enditures Budget (Unfavorable) Support services - business Personnel services - salaries $ 166,312 $ 167,571 $ 1,259 Personnel services - employee benefits 44,541 44,569 28 Purchased professional and © technical services 22,312 22,386 74 Other purchased services 4,743 5,366 623 Supplies 24,027 27,188 3,161 Other objects 4,533 6,470 1,937 266,468 273,550 7,082 Operation and maintenance of plant services Personnel services - salaries 674,307 711,070 36,763 Personnel services - employee benefits 208,911 208,942 31 Purchased property services 475,002 521,723 46,721 O Other purchased services 45,704 64,683 18,979 Supplies 420,120 433,769 13,649 Property 17,564 17,600 36 Other objects 16,375 16,375 - 1,857,983 1,974,162 116,179 O Student transportation services Personnel services - salaries 17,822 17,834 12 Personnel services - employee benefits 3,582 3,683 101 Other purchased services 767,209 780,741 13,532 Supplies 33,302 36,000 2,698 Property 2,745 2,750 5 824,660 841,008 16,348 Central services Supplies 5,157 7,000 1,843 Other support services Q Other purchased services 72,057 74.956 2,899 (Continued) - 25 - 0 0 MECHANICSBURG AREA SCHOOL DISTRICT GENERAL FUND STATEMENT OF EXPENDITURES (Cont'd.) YEAR ENDED JUNE 30, 1999 0 s 0 0 0 0 Student activities Personnel services - salaries $ Personnel services - employee benefits Purchased professional and technical services other purchased services Supplies Property other objects Community services Personnel services - salaries Personnel services - employee benefits Purchased professional and technical services Other purchased services Supplies Other objects Debt service Refund of prior year's receipts Other financing uses Transfers to other funds Total expenditures Expenditures 310,303 $ 50,970 9,700 19,211 32,567 28.174 450,925 99,497 21,243 41,471 6,639 874 18.658 188.382 9,998 33,983 43,981 1,812,388 $ 25,585,638 See accompanying report on supplementary information. 26 - variance Favorable Budget (Unfavorable) 310,311 $ 8 59,560 8,590 9,700 19,248 36,204 2,000 28.2C0 465,223 105,031 23,539 37 3,637 2,000 26 14,298 5,534 2,296 64,000 10,300 2,400 18.700 223,970 11,980 137.679 149,659 1,826,388 $ 26,219,030 22,529 3,661 1,526 42 35,588 1,982 103.696 105,678 14,000 $ 633,392 0 • 0 0 O U C 0 0 n u 0 MECHANICSBURG AREA SCHOOL DISTRICT SPECIAL REVENUE FUND - ATHLETIC ASSOCIATION STATEMENT OF REVENUE AND EXPENDITURES YEAR ENDED JUNE 30, 1999 Revenue Season tickets Football gate Jr. High gate Basketball gate Soccer gate Volleyball gate Wrestling gate Program sales Lost equipment Golf tournament Program ads Concession stand District playoff General Fund Miscellaneous Total revenue Expenditures Football Jr. High football Girls, sports Basketball Wrestling Swimming Baseball Soccer Track Golf Cross country State tournament allowance Training supplies Dues, subscriptions and meetings Purchased services Miscellaneous Utilities Golf tournament Jr. High other sports Concession stand Travel and gas Boys volleyball Tennis Total expenditures Excess of revenue over expenditures See accompanying report on supplementary information. - 27 - $ 11,235 34,972 1,887 8,526 2,742 3,034 8,902 1,320 667 4,670 4,730 3,841 410 31,000 635 118.571 21,136 5,343 18,148 4,813 5,102 2,970 8,646 4,995 3,780 3,219 3,379 1,508 5,228 4,962 680 1,069 331 3,068 14,923 47 273 2,872 1.938 118.430 $ 141 F= u: o co cli t lC 6C Q 'L i.: ti nc_ U ? U r ,w. a d N 9 O T fb i ip r