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EAST PENNSBORO AREA SCHOOL DISTRICT
ENOLA, PENNSYLVANIA
JUNE 30, 1999
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INDEX
Page
Number
independent auditors' report 1
Combined balance sheet - all fund types and
account groups - June 30, 1999 2
Combined statement of revenue, expenditures
and changes in fund balances - All Governmental
Fund Types - year ended June 30, 1999 3
Combined statement of revenue, expenditures and
changes in fund balances - budget and actual -
General and Special Revenue Funds -
year ended June 30, 1999 4 - S
Combined statement of revenue, expenses and changes in
retained earnings - All Proprietary Fund Types -
year ended June 30, 1999 6
rj Combined statement of cash flows - All Proprietary
Fund Types - year ended June 30, 1999 7
Notes to financial statements - June 30, 1999 8 - 21
Required supplementary information - year 2000 disclosure 22 - 23
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GREENAWALT & COMPANY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
P.O. Box 6 400 WEST MAN STREET
MECHANICSBURG. PENNSYLVANIA 17055
171717664763
FAX 17171 7662731
JAMES E. LYONS
HOWARD R. GREENAWALT
CRPIDON R. HOAMAN
JOHN H. KUNGLER
DEBORAH 1. KELLY
R. A. GREENAWALT (14)6170))
A. A. REIDNCER (REFIRED)
C. EDWARD ROGERS. JR.
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INDEPENDENT AUDITORS' REPORT
Board of School Directors
East Pennsboro Area School District
Enola, Pennsylvania
67 WEST POMFRET STREET
CARLISLE, PA 17011
(717) 711022
FAX (717) nR 9)72
We have audited the accompanying general-purpose financial statements of
East Pennsboro 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 East
Pennsboro Area School District as of 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.
In accordance with Government Auditing Standards, we have also issued a
report dated October 15, 1999 on our consideration of East Pennsboro Area School
District's internal control over financial reporting and our tests of its
compliance with certain provisions of laws, regulations, contracts and grants.
October 15, 1999
Mechanicsburg, Pennsylvania
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R=E P.
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GREEN 4JAL & COMP P.C.
MEMBERS - AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS - PLWSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
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EAST PENNSBORO AREA SCHOOL DISTRICT
COMBINED BALANCE SHEET -
ALL FUND TYPES AND ACCOUNT GROUPS
JUNE 30, 1999
Assets and other debits
cash and cash equivalents
Investments
Delinquent taxes receivable, net
Due from other funds
State subsidies receivable
Federal subsidies receivable
Due from other governments
other accounts receivable
inventories
Land
Buildings
Equipment and furnishings
Food service equipment (net of
accumulated depreciation of $ 187,064)
Amount to be provided for the
retirement of general long-term debt
Governmental Fund TYPes
Special Capital
General Revenue Project
, ®'•
$ 966,920 $ 1,580 $ -
586
1,217,533 - 24,39 3 1, 296
408,059 -
330,517 _ -
448,670 -
69,145 _
27,010
409,508
Total assets'and other debits
is
$ 3,877,362 $ 1,580 $ 24,394,882 01
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Liabilities $ 101,792 $
1 - $
Accrued payroll and benefits ,
476,658 - 311,800
Accounts payable 344,339 -
Deferred revenue 299 - 317,671
Due to other funds _ _ -
Due to student organizations _ _
General obligation bonds and notes payable
Accumulated compensated absences
1
923,088 -0- 629.471
Total liabilities
,
Fund equity and other credits _ -
Invested in general fixed assets _ _
Retained earnings _ - 23,765,411
Specific fund balance reserves 1,954,274 1.580 -
Unreserved fund balances
Total fund equity and other credits 1,954,274 1,580 23,76S,411
Total liability, fund equity 362 $
77 1,580 $ 24,394,862
$
and other credits ,
3,8
The accompanying notes are an integral part of these financial statements.
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Proprietary
Fund Types Fiduciary Fund Ty pes Account Groups
Food Trust and General General
Activities Fixed Assets Long-Term Debt
Service Agency
$ 65,399 $ 16,072 $ 40,046 $ - $ -
299
1,365 -
24,729 -
_ 325,856 -
22,099,370 -
_ 5,290,586 -
41,516 -
39,348, 741
371
16 $ 046
40 $ 27,715,812 $ 39,348, 741
$ 133,009 ,
$ ,
24,553 3,525 - -
19,879 -
- 12,846 -
_ - 40,046 - _
_ - 38,795, 000
553, 741
16
371 046
40 -0- 39,348 ,741
44,432 , ,
_ _ - 27,715,812 -
88,577 -
-0- -0- 27,715,812 -0-
88,577
133,009 $ 16,371 $ 40,046 $ 27,715,812 $ 39,348 ,741
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EAST PENNSBORO AREA SCHOOL DISTRICT
COMBINED STATEMENT OF REVENUE, EXPENDITURES
AND CHANGES IN FUND BALANCES -
ALL GOVERNMENTAL FUND TYPES
YEAR ENDED JUNE 30, 1999
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Revenue
Local sources
State sources
Federal sources
Total revenue
Expenditures
Instruction
Support services
operation of noninstructional services
Facilities acquisition,
construction and improvements
Debt service
Total expenditures
Excess of revenues over (under)
expenditures
Other financing sources (uses)
Receipts from other LEA's
Refunds of prior years' expenditures
Interfund transfers in (out)
Net proceeds from the issuance of
long-term debt
Debt service - refunded bond issue
Total other financing
sources (uses)
Excess of revenues and other
financing sources over (under)
expenditures and other financing uses
Fund balances, July 1, 1998
Fund balances, June 30, 1999
Special Capital
General Revenue Projects
$ 14,693,669 $ 39,894 $ 954,609
5,819,541 - -
123,337
20,636,767 39,894 954.609
13,002,509 - 648,181
5,436,382 - -
318,082 93,371 -
117,257 - 1,058,581
1,301.708 - 10.450.469
20,175,938 93,371 12,157,231
460,829 (53,477) (11,202,622)
72,763 - -
74,985 -
(74,125) 52,800 -
- - 29,835,028
.(5,180,872)
73,623 52,800 24,654,156
534,452 (677) 13,451,534
1,419,822 2,257 10,313,877
$ 1,954,274 $ 1,580 $ 23,765,411
The accompanying notes are an integral part of these financial statements.
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EAST PENNSBORO AREA SCHOOL DISTRICT
COMBINED STATEMENT OF REVENUE, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL -
GENERAL AND SPECIAL REVENUE FUNDS
YEAR ENDED NNE 30, 1999
General Fund
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Variance
Favorable
Budget Actual (Unfavorable',
Revenue and other financing sources
Local sources $ 14,459,865 $ 14,693,889 $ 234,024 o
State sources 5,774,997 5,819,541 44,54=
Federal sources 111,962 123,337 11,375
Total revenue and other
financing sources 20,346,824 20,636,767 289.94 3
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Expenditures and other financing uses
Instruction
Regular programs 10,470,421 10,449,254 21,167,
Special programs 1,908,978 1,905,062 3,93-6
Vocational education programs 245,145 245,145 -
Other instructional programs 113,828 92,152 21,676
Adult education programs 9,187 8,155 1,032
Community College education
programs 302,820 302,741 79
Total instruction 13,050,379 13,002,509 47,870
Support services
Pupil personnel 482,596 476,584 6,012
Instructional staff 666,807 655,513 11,29
Administration 1,505,406 1,449,552 55,854
Pupil health 245,401 238,856 6,S4 S
Business 204,801 204,488 313
Operation and maintenance of
plant services 1,696,494 1,678,439 18,055
Student transportation services 666,727 664,742 1,985
Central 27,393 18,811 8,582
Other support services 49,509 49,397 112
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Total support services 5,545,134 5,436,382 108,752
(Continued)
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S ecial Revenue Fund
® Variance
Favorable
Actual (unfavorable)
Budget
$ 30,200 $ 39,894 $ 9,694
30.200 39.894 9.694
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EAST PENNSBORO AREA SCHOOL DISTRICT
COMBINED STATEMENT OF REVENUE, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - ^
GENERAL AND SPECIAL REVENUE FUNDS (Cont'd.)
YEAR ENDED JUNE 30, 1999
General Fund i
Variance i
Favorable ® i
Budget Actual (Unfavorable)
Expenditures and other financing
uses (COnt'd.)
Operation of noninstructional
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services
Student activities $ 309,884 $ 295,199 $ 14,685
Community services 25,722 22,883 2,839
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Total operation of non- i
instructional services 335,606 318,082 17,524 n?
Facilities acquisition, construction
and improvement services 212,726 117,257 95,469
Debt service 1,435,521 1,301.708 133,813
Total expenditures 20,579,366 20,175,938 403,428
Excess of revenue over
(under) expenditures (232,542) 460,829 693,371
other financing sources (uses)
Receipts from other LEA's - 72,763 72,763
Refunds of prior year expenditures 90,000 74,985 (15,015)
Interfund transfers in (out) (77,200) (74,125) 3,075
Budgetary reserve (735,471) - 735,471 i
Total other financing Gi
sources (uses) (722,671) 73,623 796,294
Excess of revenues and other
financing sources over (under)
expenditures and other financing uses (955,213) 534,452 1,489,665
Fund balance, July 1, 1998 1,442,800 1,419,822 (22,978) "
Fund balance, June 30, 1999 $ 487,587 $ 1,954,274 $ 1,466,687
The accompanying notes are an integral part of these financial statements.
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Special Revenue Fund
Variance
0 Favorable
Budget Actual (Unfavorable)
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$ 83,000 $ 93,371 $ (10,371)
83,000 93,371 (10,371)
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-0- -0- -0-
-0- -0- -0-
83,000 93,371 (10,371)
(52,800) (53,477) (677)
52,800 52,800 -
'0 52,800 52,800 -0-
-0- (677) (677)
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-o- 2,257 2,2s7
$ -0- $ 1,580 $ 1,580
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EAST PENNSBORO AREA SCHOOL DISTRICT
COMBINED STATEMENT OF REVENUE, EXPENSES AND
CHANGES IN RETAINED EARNINGS -
A ALL PROPRIETARY FUND TYPES
YEAR ENDED JUNE 30, 1999
Food
Service
Operating revenue
Local sources - food service revenue $ 410,384
Total operating revenue 410,384
Operating expenses
Payments to food service contractor 540,672
Donated commodities consumed 36,947
4 Supplies 6,438
Depreciation 9,017
Total operating expenses 593,074
Operating income (loss) (182,690)
Nonoperating revenue (expenses)
Earnings on investments 2,493
State sources 12,769
Federal sources 123,416
Federal donated commodities 36,947
b Total nonoperating revenue (expenses) 175,625
Income (loss) before transfers (7,065)
Operating transfers
Noncash contributions from General Fund 18,383
Net income (loss) 11,318
Retained earnings, July 1, 1998 77,259
O Retained earnings, June 30, 1999 $ 88,577
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The accompanying notes are an integral part of these financial statements.
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Im EAST PENNSBORO AREA SCHOOL DISTRICT
COMBINED STATEMENT OF CASH FLOWS -
ALL PROPRIETARY FUND TYPES
YEAR ENDED JUNE 30, 1999
Food
Service
Cash flows from operating activities
Operating income (loss) $ (182,690)
Adjustments to reconcile operating income (loss)
to net cash provided by operating activities
Depreciation 9,017
n Donated commodities consumed 36,947
Noncash contribution of supplies 3,008
Decrease (increase) in
Inventory (1,425)
Receivables 21152
Increase (decrease) in
?y Accounts payable (43,806)
Deferred income 685
Net cash used in operating activities (176,112)
Cash flows from noncapital financing activities
Subsidies received
State 12,769
Federal 123,416
Net cash provided by noncapital
financing activities 136,185
d
Cash flows from investing activities
Earnings on investments 2,493
Net cash provided by investing activities 2,493
Net increase (decrease) in cash (37,434)
Cash and equivalents, July 1, 1998 102,833
Cash and equivalents, June 30, 1999 $ 65,399
Supplemental disclosure of noncash financial activities
Donated commodities received $ 37,632
Noncash contributions from General Fund 18,383
Total $ 56,015
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The accompanying notes are an integral part of these financial statements.
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EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
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1. Reporting entity
East Pennsboro 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 the
Cumberland County community of East Pennsboro Township. 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
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
O 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.
Based on the foregoing criteria, the District has not included any component
units in the reporting entity since no component units fully meet the criteria for
0 inclusion.
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 of these entities serves many school districts and are
therefore not included as part of East Pennsboro Area School District's reporting
0 entity. These other entities are as follows:
Capital Area Intermediate Unit - provides special education services
and programs.
Cumberland-Perry Area Vocational-Technical School - provides vocational
and technical education services and programs.
Harrisburg Area Community College - provides community college education
services and programs.
2. Summary of significant accounting policies
The accounting records of East Pennsboro Area School District are maintained on
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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.
'J A summary of the more significant accounting policies follows.
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EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 1999
2. Summary of significant accounting policies (Cont'd.)
.? 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 accounts which comprise its assets,
liabilities, fund balance/ retained earnings, revenues and expenditures/expenses
as appropriate. The fund types and the account groups utilized by East Pennsboro
Area School District are as follows:
Governmental Fund Types
Governmental Funds are those through which most governmental functions of
the School District are financed. The acquisition, use and balances of the
District's expendable financial resources and the related liabilities
(except those accounted for in proprietary funds) are accounted for through
governmental funds. The measurement focus is upon determination of changes
in financial resources, rather than upon net income determination. The
funds of the District included in this category are:
General Fund - The General Fund is used to account for all financial
transactions not accounted for in another fund. Revenues are primarily
derived from local property, per capita, occupation, earned income taxes
and State and Federal distributions. Many of the more important
activities of the School District, including instruction, administration
p of the School District and certain noninstructional services are
accounted for in this fund.
Special Revenue Fund - Special Revenue Funds are used to account for the
proceeds of specific revenues that are restricted to expenditures for
specified purposes.
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Capital Projects Fund - Capital Projects Funds are used to account for
financial resources to be used for the acquisition or construction of
capital facilities.
Proorietarv Fund Types
Proprietary Funds account for operations that are financed and operated in
a manner similar to private business enterprises:
Food Service Fund - The Food Service Fund is used to account for the
financial transactions associated with the operations of the cafeterias.
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EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (COnt'd.)
JUNE 30, 1999
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2. Summary of significant accounting policies (Cont'd.)
Fund accounting (Cont'd.)
Fiduciary Fund Types
Fiduciary Funds (Trust and Agency Funds) are used to account for assets held
by a governmental unit in a trustee capacity or as an agent for other funds
or entities. Agency Funds are custodial in nature and do not involve
measurement of the results of operations:
Trust and Agency Account - Accounts for proceeds from activities open to
the entire student body and faculty. Agency funds also include a central
payroll fund. The payroll fund accounts for salaries earned by District
employees. It handles the disbursing of such amounts to the employees
and to taxing and other agencies on their behalf.
Activity Fund - Accounts for programs operated and sponsored by various
clubs and organizations within the schools. Activity funds are Agency
Funds which are separately accounted for because of legal requirements.
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Account Groups
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 - accounts for the District's investment in land,
buildings, equipment and furnishings.
General Long-Term Debt - accounts for notes, bonds, capital leases and
compensated absences payable in future years.
Basis of accounting
The accounting and financial reporting treatment applied by the different funds
is based on their measurement focus, which determines when revenues and
expenditures are recognized.
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Governmental Fund Types
These funds are accounted for using a "current financial resources"
measurement focus (a modified accrual basis of accounting).
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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.
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EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 1999
2. Summary of significant accounting policies (Cont'd.)
Basis of accounting (Cont'd.)
Governmental Fund Types (Cont'd.)
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.
Proprietary Fund Types
The Food Service Fund uses the "flow of economic resources"
measurement focus, which is a full accrual method of accounting.
This fund accounts for operations using accounting pronouncements
required for private business enterprises, unless those pronouncements
conflict with or contradict governmental accounting pronouncements.
1®
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)
recorded as an operating expense.
Fiduciarv Fund Types
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Trust and Agency Funds are custodial in nature (assets equal
liabilities), and do not involve measurement of results of operations.
These funds are accounted for in essentially the same manner as
Governmental Funds.
Account Groups
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Land, buildings, equipment and furnishings are recorded at historical
cost or at estimated historical cost if actual historical cost is not
available. Depreciation is not provided on these assets.
Long-term debt is offset by an amount to be provided by future
taxation or other revenue sources. General obligation bonds and notes
to payable in future years are recorded as District debt. Interest on
bonds and notes is recognized when such interest is due.
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EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 1999
2. Summary of significant accounting policies (Cont'd.)
Basis of accounting (Cont'd.)
Account Groups (Cont'd.)
Compensated absences (those for which employees receive pay) are
recorded using the termination payment method. A liability is
recorded 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
!g therefore does not present any liability in advance of the sabbatical.
Cash and cash equivalents
The District pools cash resources of certain funds in order to facilitate the
management of cash. As part of this cash management program sponsored by the
District's depositary institution, overnight repurchase agreements are bought and
sold on a regular basis to increase interest earnings. Cash and cash equivalents
applicable to a particular fund are readily identifiable. The balances in the
pooled cash management accounts are available to meet current operation
requirements.
For purposes of the Food Service Fund statement of cash flows, the District
considers all deposits purchased with an original maturity of three months or less
to be cash or cash equivalents.
Budgets
b 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
Real estate, occupation and residence 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
Co 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 year after the end of the fiscal
year.
Other tax revenues, including taxpayer-assessed revenues such as earned income
V taxes, are recognized as revenue when received during the fiscal year or soon
enough thereafter to be susceptible to accrual.
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EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 1999
2. Summary of significant accounting policies (Cont'd.)
Revenue - State sources
h
State subsidies due the District as current fiscal year entitlements are
recognized as revenue in the current fiscal year.
Revenue - Federal sources
r' 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
current fiscal year.
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.
I#? 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
NO of such benefits.
3. Cash and investments
The District's cash and cash equivalents consist of cash balances deposited in
financial institutions and repurchase agreements purchased by the District from
W the financial institutions as part of a cash management account.
Cash and cash equivalents at June 30, 1999 are categorized as follows:
Cash and cash ewivalents Carrying Bank
Value Balance
Change funds
Insured (FDIC) $ Soo
$ -
Collateral held in the District's 164,326 200,000
Collateral not held in name
the District's
name
928,487
1,166.813
0 Total
$ _1_093,313 $ 1,366.813
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EAST PENNSBORO AREA SCHOOL DISTRICT
MOTES TO FINANCIAL STATEMENTS (Cont'd)
JUNE 30, 1999
el
3. Cash and investments (Cont'd.)
Investments are categorized into these three categories of credit risk:
1. Insured or registered or securities held by the District or its agent in
the District's name.
2. Uninsured and unregistered, with securities held by the counterparty's
® trust department or agent in the District's name.
3. Uninsured and unregistered, with securities held by the counterparty or by
its trust department or agent but not in the District's name. This includes
public funds which are secured by pooled collateral as permitted by Act 72.
t"j The investments, whose market value approximates cost due to the short term nature
of the investments, are categorized as follows:
Insured $
Collateral held in the District's name -
Collateral not held in the District's name -
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Pooled investments:
PA Local Government Investment Trust 1,217,533
PA Local Government Investment Trust
Arbitrage Rebate Management Program 19,432,951
PA Treasurer's Invest Program for
Local Governments 37,704
Chase Manhattan Money Reserve Fund 4,920,931
Total $ 25,609,119
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.
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EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 1999
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4. Delinquent taxes receivable
Delinquent taxes receivable at June 30, 1999 consist of the following:
Real
Total Estate Personal
Current year in process of collection $ 533,861 $ 180,398 $ 353,463
Held by delinquent collectors 1,000,557 116,195 884.362
Delinquent taxes receivable 1,534,418 296,593 1,237,825
Less: allowance for uncollectibles (1,126,359) (124,154) (1,002.205)
Net delinquent taxes receivable $ 4086059 $ 172,439 $ 235,620
5. Land, buildings, equipment and furnishings
As explained in Note 2, buildings and equipment are reflected on the balance sheet
under the General Fixed Assets Group of Accounts stated at historical cost or
estimated historical cost if actual historical costs are not available. A summary
of changes in fixed assets for the year ended June 30, 1999 is as follows:
Beginning End
of Year Increases Decreases of Year
General fixed assets
Land and
improvements
Buildings and
improvements
Furniture and
equipment
Food Service Fund
fixed assets
Furniture and
equipment
Accumulated
depreciation
$ 325,856
21,248,255
3,853,242
$ 25,427,353
$ 213,205
(178,047)
$ 35,158
851,115
1,437.344
$ 2,288,459 $ -0-
$ 15,375
(9,017)
$ 6,358
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$ 325,856
22,099,370
5,290.586
$ 27,715,812
$ 228,580
(187,064)
$ 41.516
0
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 1999
A
6. General obligation bonds and notes payable
A summary of changes in general obl igation bonds and notes payable for the year
ended June 30, 1999 i s as follows:
Payments
Beginning and other End
of Year Additions Decreases of Year
General Obligation Bonds
Series of 1989,
6.40 to 7.45%,
maturing 9/1/2006 $ 4,880,228 $ - $ 4,880,228 $ -
d Series A of 1997,
3.80% to 5.05%,
maturing 9/1/2011 8,220,000 - 195,000 8,025,000
Series AA of 1997,
4.009d to 4.20%,
maturing 9/1/2001 1,115,000 - - 1,115,000
® Series of 1998,
3.60% to 4.30%,
maturing 9/1/2006 - 5,270,000 395,000 4,875,000
Series A of 1998,
4.10% to 4.70%,
maturing 2/15/2015 - 9,780,000 - 9,780,000
14,215,228 15,050,000 5,470,228 23,795,000
General Obligation Notes,
Series A of 1997,
Variable rate,
maturing 1/3/2000 10,000,000 - 10,000,000 -
Series A of 1998,
Variable rate,
maturing 1/2/2001 - 10,000,000 - 10,000,000
Series of 1999,
Variable rate,
maturing 2/1/2018 - 5 000,000 - 51000,000
10,000,000 15,000,000 10,000,000 15,000,000
$ 24,215,228 $ 30,050,000 $ 15,470,228 $ 38,795,000
1 %?r
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EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 1999
A
6. General obligation bonds and notes payable (COnt'd.)
Total scheduled debt service payments for all general obligation debt as of June
30, 1999 are as follows:
A
Year Total Princinal Interest
1999-2000 $ 3,007,224 $ 1,385,000 $ 1,622,224
2000-2001 12,800,703 11,435,000 1,365,703
2001-2002 2,595,988 1,490,000 1,105,988
2002-2003 2,656,893 1,605,000 1,051,893
2003-2004 2,655,134 1,670,000 985,134
2004 and there after 26,825,323 21,210,000 5,615,323
Totals $ 50.541,265 $ 38,795,000 $ 11,746,265
Q In August 1998, the District borrowed $ 5,270,000 through the issuance of General
Obligation Bonds, Series of 1998. Interest on these bonds range from 3.60% to
4.30 and mature from 1999 through 2006. The net proceeds of the bonds were used
to currently refund the District's outstanding General Obligation Bonds, Series
of 1989 (Capital Appreciation Bonds) with a compounded accreted value of
$ 5,053,576 as of September 1, 1998 and pay a call premium of $ 127,307.
In September 1998, the District borrowed $ 9,780,000 through the issuance of
General Obligation Bonds, Series A of 1998. Interest on these bonds range from
4.10% to 4.70% and matures from 2000 through 2015. Net proceeds from these bonds
will be used for alterations, additions and/or renovations to existing eleientary
and middle schools and capital improvements to other facilities owned by the
District.
On October 1, 1998, the District borrowed $ 10,000,000 through the issuance of
the General Obligation Note, Series A of 1998 to the Emmaus General Authority of
Emmaus, Pennsylvania. Interest on this note is payable monthly at a variable rate
O of .556 above the "weekly rate", up to a maximum of 15.55%. At June 30, 1999, the
effective rate was 4.00%. The note is due and payable in full on January 2,
2001. Proceeds from the note are to be used to finance the cost of planning,
designing, constructing and equipping of high school projects or alteration and
renovations to existing facilities. During the year ended June 30, 1999,
$ 279,507 of interest was paid within the Capital Projects Fund.
V As part of the Series A of 1997 Note, the District was required to enter into a
Credit Agreement with Bayerische Landesbank Girozentrale, New York Branch in which
the Bank agrees to issue a letter of credit in the amount of $ 10,247,727 to
provide funds for the repayment of the note through January 2001, if other
financing has not been arranged.
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EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 1999
6. General obligation bonds and notes payable (Cont'd.)
On January 4, 1999, the District borrowed $ 5,000,000 through the issuance of
the General Obligation Note, Series of 1999 to the Emmaus General Authority of
Emmaus, Pennsylvania. Interest on this note is payable monthly at a variable rate
of .55% above the "weekly rate", up to a maximum of 25.00%. At June 30, 1999, the
effective rate was 4.00%. Principal is due on this note from 2000 through 2018.
Proceeds from the note are to be used to finance the cost of planning, designing,
constructing and equipping of high school projects or alteration and renovations
410 to existing facilities. During the year ended June 30, 1999, $ 89,082 of interest
was paid within the Capital Projects Fund.
Total interest paid on all General Obligation Debt for the year ended June 30,
1999 approximated $ 1,327,800 of which $ -0- was capitalized as part of
construction projects.
® 7. Compensated absences
At June 30, 1999, the General Long-Term Debt Group of Accounts includes a
liability for compensated absences of $ 553,741. Payments for compensated
absences are made through General Fund expenditures in the year the absence is
used or the employee retires. When an employee retires with unused compensated
absences, the District's payout policy is as follows:
Emergency and personal - no payout required
Vacation (administrative personnel only) - unused vacation days
(not to exceed 5 days) are paid at the time of separation
Sickness - no payout required
Personal days - unused personal days (not to exceed 5 days) are
paid at a rate equal to the average rate paid to substitute
teachers
Retirement with at least seven years of service - retiring
professional employees with at least seven consecutive years of
District employment immediately prior to retirement are eligible
to receive a severance payment equal to $ 150 times the number
V of continuous years of service to the District up to a maximum
amount of $ 3,000 (20 years)
Retirement with 30 or more years of service - retiring full time
professional employees with at least 30 years of experience,
including at least 15 years with the District, may be entitled
to a retirement incentive bonus of between $ 1,000 and $ 10,000
depending on age and total years of experience
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EAST PENNSHORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 1999
7. Compensated absences (Cont'd.)
Changes in compensated absences were as follows:
Balance Net Increase Balance
Julv 1, 1998 (Decrease) June 30, 1999
A
Vacation pay $ 11,627 $ (1,734) $ 9,893
Severance payments 391,900 (3,068) 388,832
Retirement incentives 169.011 (13,995) 155,016
Totals $ 5721538 $ (18,797) $ 553,741
8. Lease commitments
At June 30, 1999, the District was leasing four photocopying machines pursuant to
various lease agreements which are being accounted for as operating leases. Total
lease rental payments during the year ended June 30, 1999 were $ 51,057. Minimum
Q net lease rental payments for future periods are expected to be as follows:
1999-2000 $ 27,182
2000-2001 7,464
2001-2002 7,464
2002-2003 7,464
C9 2003-2004 3,732
9. Pension plan
The District contributes to The Public School Employees' Retirement System (the
System), a governmental cost sharing multiple-employer defined benefit pension
d 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,
G 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
Q 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
PSERS for the years ending June 30, 1999, 1998 and 1997 were $ 656,559, $ 938,331
and $ 1,075,186, respectively. Those amounts are equal to the required
contribution for each year.
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A
A
10. Management services
EAST PENNSHORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Copt' d. )
JUNE 30, 1999
The cafeteria facilities of the District were operated by a third party vendor.
Under the terms of the contract, the vendor provides for the operation and
maintenance of food services as required by law, with the policies subject to the
approval of the District. Operating costs, management fees and administrative
costs are billed monthly to the District.
9
11. Other post-employment retirement benefits
The District offers one post-employment benefit to retired professional employees
other than pension benefits as discussed in Note 9. For employees with twenty
or more years of service to the District, the District will pay the basic medical
insurance premiums for five years (excluding family coverage) following
retirement. This benefit amounted to approximately $ 49,000 during the year ended
June 30, 1999 and covered 26 eligible retired employees. The District does allow
other employees not eligible for this benefit to remain in its group medical
insurance plan upon payment by the retired employee of the cost of such coverage.
110 12. 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 purposes of State unemployment compensation laws, the District has elected not
to be covered by the Pennsylvania Unemployment Compensation Fund. Any
Q unemployment claims are paid by the District on a quarterly basis as incurred.
The District is a member of a group of School Districts who have joined together
to self-insure their workers' compensation exposure. The District pays annual
contributions to the group based on a formula utilizing the District's own claim
experience and annual payroll. Claims in excess of the District's retention
V experience are paid by a Central Fund within the group and, if necessary, by an
insurance company carrying excess liability coverage.
V.0
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®m
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 1999
13. Commitments and contingencies
^ The collective bargaining agreement between the District and the teaching staff
expires on August 31, 2000.
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 participates in numerous state and federal grant programs which are
governed by various rules and regulations of the grantor agencies. Costs charged
to the respective grant programs are subject to audit and review by the grantor
agencies; therefore, any findings or adjustments by the grantor agencies could
have an effect on the recorded grants receivable and/or deferred grant revenues,
G1 and on the related grant revenues and expenditures.
As part of its ongoing capital projects, the District has entered into contract
commitments totaling approximately $ 5,781,000 for various construction and
improvement projects at June 30, 1999. In addition, the District's School Board
10 has approved new construction projects at the high school, middle school and
athletic fields not to exceed total costs of $ 23.5 million.
The District is contingently liable for repayment of East Pennsboro School
District Authority Revenue Bonds, Series of 1965, 1968 and 1973. Those issues
were refunded by the deposit of funds into an irrevocable escrow account in
amounts sufficient to retire the bonds and interest when due. Because of the
refunding, these bonds are not included as general obligation debt on the
District's balance sheet. At June 30, 1999, the amount of Authority Bonds still
outstanding totaled $ 1,645,000.
The District, during the normal course of business, is subject to numerous
disputes and claims. At June 30, 1999, the District is named as a party in
actions for which the potential liability cannot presently be determined.
District management feels that the actions are generally without merit and they
intend to vigorously contest the claims. It is management's opinion that the
ultimate outcome of the actions will not have a material affect on the District's
financial position.
?., 14. Subsequent events
On October 7, 1999, the District approved issuance of $ 4,995,000 of General
Obligation Bonds, Series of 1999. The. proceeds of these bonds will be used for
the planned renovation projects at the high school, middle school and athletic
fields.
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10
REQUIRED SUPPLEMENTARY INFORMATION
O
O
O
V
IA
GUENAWALT & COMPANY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
JAMES E. LYONS P.O. Box 6 400 WEST MAN STREET
HOWARD R. GREENAWALT MECHANICSBURG. PENNsYLYANIA 17055
CII®ON R. NORMAN
JOHN 11. KLPIGLtF 17171 766d783
DEEMAH J. XMLY
FAX 97171766-2731
AR.. A. REDIN ER (R
C. GREENAWALT 0916199)1
EDWARD Ra ARD RO 1 (RS. JR.
DISa.
62 WEST POMFRET STREET
CARLISLE, PA 17011
QM 2414322
FAX (7171 2199172
INDEPENDENT AUDITORS' REPORT ON REQUIRED
SUPPLEMENTARY INFORMATION - YEAR 2000 DISCLOSURE
In
Board of Directors
East Pennsboro Area School District
Enola, Pennsylvania
0
11 0
III O
111 0
The year 2000 supplementary information on pages 22 to 23 is not a required
part of the basic 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
methods of measurement and presentation of the supplementary information.
However, we did not audit the information and do not express an opinion on it.
lW?I/,,.?'?,-',,,,,/%/n-'1 , Rc.
GREENAWALT & COMP7IN 1P. C.
October 15, 1999
Mechanicsburg, Pennsylvania
v
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v
MEMBERS - AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOLYTA.NTS - PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
i?
EAST PENNSBORO AREA SCHOOL DISTRICT
REQUIRED SUPPLEMENTARY INFORMATION
YEAR 2000 DISCLOSURE
A UNAUDITED
JUNE 30, 1999
East Pennsboro Area School District is currently addressing year 2000 issues
relating to its computer systems and other electronic equipment. The year 2000
A issue refers to the fact that many computer programs use only the last two digits
to refer to a year. Therefore, both 1900 and 2000 would be referred to as "00".
Computer programs have to be adjusted to recognize the difference between those
two years or the programs will fail or create errors. Also, some programs may
not be able to recognize that 2000 is a leap year. Further, the year 2000 issue
could affect electronic equipment such as environmental systems and elevators
Q containing computer chips that have date recognition features.
0
10
10
10
10
CV
In 1998, East Pennsboro Area School District started to address the year 2000
issue (Y2K) by developing a process. The process is:
A. Problem Identification - identify all areas that might be affected by Y2K
B. Verification - check internal systems; seek compliance verification from
outside services
C. Prioritize Plan of Action - identify failed systems; prioritize solutions
D. Implement Solution - repair or replace non compliant systems
E. Contingency Plan Development - determine District response to any
verification failures
As part of the Problem Identification Process, an outside consultant was hired
to assess the District's network and computers and bring forth recommendation.
The Director of Educational and Administrative Technology has been appointed the
Y2K coordinator that monitors the Y2K process and gives periodic updates to the
Board of Directors.
The District's internal network and computer systems are at the "Implement
Solutions" stage of this process. verification of external vendors/ suppliers
is at various stages that are dependent on their progress in dealing with Y2K
issues.
Even though the District has taken numerous precautions because of the
unprecedented nature of the year 2000 issues, 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.
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