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BIG SPRING SCHOOL DISTRICT
FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2007
TABLE OF CONTENTS
Page
Number
INDEPENDENT AUDITORS' REPORT IAR - 1 to IAR - 2
MANAGEMENT'S DISCUSSION AND ANALYSIS MDA - 1 to MDA - 9
BASIC FINANCIAL STATEMENTS
District-wide financial statements
Statement of net assets FS - 1
Statement of activities FS - 2
Fund financial statements
Balance sheet -governmental funds FS - 3
Reconciliation of the governmental funds balance sheet
to the statement of net assets FS - 4
Statement of revenues, expenditures, and changes
in fund balances -governmental funds FS - 5
Reconciliation of the governmental funds statement of revenues, expenditures,
and changes in fund balance to the statement of activities FS - 6
Statement of net assets -proprietary funds FS - 7
Statement of revenues, expenses, and changes in net assets -proprietary funds FS - 8
Statement of cash flows -proprietary funds FS - 9
Statement of net assets -fiduciary funds FS - 10
NOTES TO FINANCIAL STATEMENTS FS -11 to FS - 27
BUDGETARY COMPARISON INFORMATION -GENERAL FUND BCI - 1
~7`~Co.
Greenawalt & Company, P.C.
James E. Lyons
CERTIFIED PUBLIC ACCOUNTANTS Howard R. Greenawalt
Since 1955 Creedon R. Hoffman
Deborah J. Kelly
Scott J. Christ
INDEPENDENT AUDITORS' REPORT
Board of School Directors
Big Spring School District
Newville, Pennsylvania
We have audited the accompanying financial statements of the governmental activities, the business-type activities,
each major fund, and the aggregate remaining fund information of Big Spring School District as of and for the year
ended June 30, 2007, which collectively comprise the District's basic financial statements as listed in the table of
contents. These financial statements are the responsibility of the District's management. Our responsibility is to
express opinions on these financial statements based on our audit. The prior year summarized comparative
information has been derived from the District's June 30, 2006 financial statements and, in our report dated October
31, 2006 we expressed unqualified opinions on the respective financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and pertorm the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our
opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, the business-type activities, each major fund, and the aggregate
remaining fund information of Big Spring School District, as of June 30, 2007, and the respective changes in financial
position and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated January 22, 2008, on our
consideration of Big Spring School District's internal control over financial reporting and our tests of its compliance
with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that
report is to describe the scope of our testing of internal control over financial reporting and compliance and the results
of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing Standards and should be
considered in assessing the results of our audit.
IAR - 1
400 West Main Street • Mechanicsburg, PA 17055.717.766.4763 • Fax 717.766.2731
62 West Pomfret Street • Carlisle, PA 17013.717.243.4822 • Fax 717.258.9372
www.greenawalt.cc
Board of Directors
Big Spring School District
Management's discussion and analysis on pages MDA - 1 through MDA - 9 and budgetary comparison information on
page BCI - 1 are not a required part of the basic financial statements but are supplementary information required by
accounting principles generally accepted in the United States of America. We have applied certain limited procedures,
which consisted principally of inquiries of management regarding the methods of measurement and presentation of
the required supplementary information. However, we did not audit the information and express no opinion on it.
,~Ly
GREENAWALT & COM AN , P.C.
January 22, 2008
Mechanicsburg, Pennsylvania
IAR - 2
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2007
This discussion and analysis provides an overview of the District's financial performance for the year ended
June 2007. The report format is in accordance with GASB Statement No. 34, Basic Financial Statements -
and Management's Discussion and Analysis -for State and Local Governments. Management's Discussion
and Analysis (MD&A) includes comparisons of financial position at June 2007, 2006 and 2005. The
MD&A also includes comparisons of current year financial activities to the previous year. The 2006 and
2005 amounts have come from our prior year MD&A, and are otherwise not a part of the June 2007
financial statements. Please read our discussion and analysis in conjunction with the District's financial
statements, which begin on page FS-1. In this discussion and analysis, dollar amounts are presented in
millions, to make it easier to read.
FINANCIAL HIGHLIGHTS
General Fund revenues for 2006-2007 increased by 10.5% from 2005-2006 and expenditures increased by
8.2% during the same period as the fund balance increased from $0.7 million to $1.2 million. The current
fund balance is approximately 3.4% of the General Fund budget, within the 8.0% maximum required under
state law for Districts of this size.
The District completed the final year of a three-year collective bargaining agreement with the professional
staff association and has entered into negotiations for a renewal of that contract. The District has
experienced continued moderation of health care costs as annual double-digit percentage increases have
declined into the single-digit percentage range. The most recent plan renewal has been a 5.0% increase over
the prior year, representing a welcome change in the budgeting process.
In the 2006-2007 fiscal year, the Big Spring School district completed its multi-year process of phasing in
debt service related to three construction projects; new high School construction, renovation of the old High
School into a Middle School, and renovation of the old Middle School into Mount Rock Elementary School.
By June 2007, the District had substantially completed the Mount Rock Elementary School renovation work
in anticipation of opening that building for the start of the next school year. Opening this school building
represents the end of the District's current school construction and renovation program.
The District completed a majority of its $5.6 million Guaranteed Energy Savings project for the purpose of
making further capital improvements in exchange for operating savings through increased energy efficiency
and reduced maintenance costs. The scope of the Guaranteed Energy Savings project includes 1) geothermal
well fields systems to provide heating and air conditioning support to the Middle School, Mount Rock
Elementary School and Newville Elementary School, 2) lighting and control systems in the same buildings,
and 3) active humidity control at Oak Flat Elementary School. Most of these upgrades were operational by
June 2007 including all of the critical upgrades necessary to start the new school year.
MDA - 1
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSIONAND ANALYSIS
JUNE 30, 2007
In the 2006-2007 fiscal year, the District's debt service was approximately $4.3 million. The District will
have two more fiscal years at approximately $4.7 million before reaching the first maturity in its debt
service structure. The increase in the next two fiscal years should be offset by savings from the Guaranteed
Energy Savings project.
District personnel implemented provisions of the new Local Tax Reform Act, commonly known as Act 1 of
the Special Session of 2006. This law provides, subject to voter referendum, for homestead and farmstead
exclusions which reduce the real estate taxes for eligible properties in exchange for an increase in the local
Earned Income Tax (EIT). During the primary election in May 2007, voters rejected an increase in the EIT.
Act 1 places a limit on future increases in the District's real estate tax rate. Real estate tax increases above
the limit or "index", require consent through a formula of exceptions certified by the Pennsylvania
Department of Education, the Commonwealth Court system and/or through voter referendum. The District
has pursued real estate taxes above the "index" through exceptions related to debt service and retirements to
the employees' retirement system, but has not pursued a public referendum for the purpose of increasing
real estate taxes.
USING THESE FINANCIAL STATEMENTS
This report contains a series of financial statements. The Statement of Net Assets and the Statement of
Activities are on pages FS-1 and FS-2. These statements provide information about the District as a whole,
and present alonger-term view of District finances than fund financial statements. Fund financial statements
are on pages FS-3, FS-5 and FS-7 through FS-10. For governmental funds, the statements show how District
services have been financed in the short term, as well as the amount remaining for future spending.
Proprietary funds statements provide information about non-governmental operations, in this case food
service. The fiduciary funds statement reports amounts held in trust by the District for student activities.
Page FS-4 reconciles total governmental fund balances to total net assets of governmental activities. Page
FS-6 reconciles the total net change in governmental fund balances to the change in net assets of
governmental activities.
District-wide Financial Statements
District-wide statements present financial activities and the results of those activities in two categories,
governmental and business-type. Capital assets (land, buildings, improvements, furniture and equipment)
are included with all other assets. Long-term debt is included with all other liabilities. This is distinctly
different from the fund statements in which assets and liabilities are separated into various funds such as
General and Capital Projects.
MDA-2
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2007
In the district-wide statements, the approach to measurement of revenues and expenses is similar to that
used in the private sector and is referred to as the accrual basis of accounting. This is disclosed further in the
notes to financial statements.
Fund Financial Statements
Fund statements provide financial information about the District's funds rather than the District as a whole.
There are three types of funds, Governmental, Proprietary and Fiduciary. The use of each type of fund is
disclosed in the notes to financial statements. Unlike district-wide statements that report, revenues on the
accrual basis, the fund statements report revenues only to the extent cash has been received, or is expected
to be received in the near future.
THE DISTRICT AS A WHOLE
Statement of Net Assets
Total net assets were $15.7 million at June 2007, which is a increase of $1.9 million from June 2006 and a
net increase of $1.6 million from June 2005. The following summarizes the Statement of Net Assets (page
FS-1).
Governmental Business-type
Activities Activities Totals
2007 2006 2005 2007 2006 2005 2007 2006 2005
Current and other assets $12.9 $ 8.9 $10.8 $ 0.2 $ 0.2 $ 0.1 $13.1 $ 9.1 $10.9
Capital assets 53.1 48.0 45.5 0.8 0.9 0.7 53.9 48.9 46.2
Total assets $66.0 $56.9 $56.3 $ 1.0 $ 1.1 $ 0.8 $67.0 $58.0 $57.1
Current and other liabilities $ 7.2 $ 2.7 $ 4.0 $ - $ - $ - $ 7.2 $ 2.7 $ 4.0
Long-term liabilities 44.0 41.4 38.9 0.1 0.1 0.1 44.1 41.5 39.0
Total liabilities 51.2 44.1 42.9 0.1 0.1 0.1 51.3 44.2 43.0
Capital assets (net of related debt) 10.3 7.9 7.7 0.8 0.9 0.7 11.1 8.8 8.4
Restricted for capital projects 1.8 3.3 4.6 - - - 1.8 3.3 4.6
Unrestricted 2.7 1.6 1.1 0.1 0.1 - 2.8 1.7 1.1
Total net assets 14.8 12.8 13.4 0.9 1.0 0.7 15.7 13.8 14.1
Total liabilities and net assets $66.0 $56.9 $56.3 $ 1.0 $ 1.1 $ 0.8 $67.0 $58.0 $57.1
MDA-3
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2007
Net assets are the difference between assets and liabilities, and represent resources that can be used to pay
for future operations and capital improvements. The majority of our 2007 net assets, $12.9 million out of
$15.7 million total, are invested in capital assets (net of related debt) or restricted for capital projects.
Statement of Activities
The following summarizes the Statement of Activities (page FS-2). It shows that total net assets increased
by $1.9 million during 2007. Total net assets also decreased by $0.3 million during 2005, prior to the impact
of the special item related to changes in the recorded value of capital assets.
Governmental
Activities
Program revenues
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues
Taxes
Earnings on investments
State general subsidies
Total revenues
Direct expenses
Excess revenues (expenses)
before transfers
Transfers between activities
Change in net assets
2007 2006
Business-type
Activities
2007 2006
Totals
2007 2006
$ 0.3 $ 0.2 $ 0.8 $ 0.7 $ 1.1 $ 0.9
6.7 5.9 0.3 0.3 7.0 6.2
1.2 1.0 - - 1.2 1.0
19.1 17.4 - - 19.1 17.4
0.6 0.4 - - 0.6 0.4
8.3 7.9 - - 8.3 7.9
36.2 32.8 1.1 1.0 37.3 33.8
34.1 32.9 1.3 1.2 35.4 34.1
2.1 (0.1) (0.2) (0.2) 1.9 (0.3)
(0.1) (0.4) 0.1 0.4 - -
$ 2.0 $ (0.5) $ (0.1) $ 0.2 $ 1.9 $ (0.3)
The change in net assets is the difference between revenues and expenses using the accrual basis of
accounting.
The following summarizes expense information from the Statement of Activities (page FS-2). Direct
expenses represents the actual cost of providing the services while the net expense represents the amount of
cost that is not recovered through program revenues, meaning user charges, grants and contributions. The
net expense must be recovered through general revenues, primarily taxes and state general subsidies.
Amounts not recovered reduce funds available for future years.
MDA - 4
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2007
Governmental Activities
Direct Program Net
Expenses Revenues Expense
2007 2006 2007 2006 2007 2006
Instruction $ 20.6 $ 20.0 $ 5.3 $ 4.3 $ 15.3 $ 15.7
Instructional student support 2.6 2.4 0.2 0.1 2.4 2.3
Administrative and financial support 2.6 2.5 0.1 0.1 2.5 2.4
Operation and maintenance of plant 3.8 3.6 0.1 0.1 3.7 3.5
Pupil transportation 2.1 2.1 1.6 1.4 0.5 0.7
Student activities 0.6 0.6 0.1 0.1 0.5 0.5
Community services - - _ _ _ _
Interest on long-term debt 1.8 1.7 0.8 1.0 1.0 0.7
$ 34.1 $ 32.9 $ 8.2 $ 7.1 25.9 25.8
Transfers to business-type activities 0.1 0.4
Net expenses -governmental activities 26.0 26.2
State general subsidies revenues 8.3 7.9
Total needs from taxes and other local sources $ 17.7 $ 18.3
Business-type Activities
Direct Program Net
Expenses Revenues Expense
2007 2006 2007 2006 2007 2006
Food service $ 1.3 $ 1.2 $ 1.1 $ 1.0 $ 0.2 $ 0.2
Transfers from governmental activities (0.1) (0.4)
Net expense (revenue) $ 0.1 $ (0.2)
MDA - 5
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2007
THE DISTRICT'S FUNDS
Governmental Funds -fund balances
Governmental Fund Balances
2006-2007 2005-2006
General Fund -unrestricted
Capital Reserve Fund -unrestricted
Athletic Fund -unrestricted
Capital Projects Fund -restricted
2007 2006 2005
$ 1.2 $ 0.7 $
0.6 0.1
0.6 $
Chance Chance
0.5 $ 0.1
0.5 0.1
1.8 3.3 4.6 (1.5) (1.3)
$ 3.6 $ 4.1 $ 5.2 $ (0.5) $ (1.1)
Total unrestricted $ 1.8 $ 0.8 $ 0.6 $ 1.0 $ 0.2
Total restricted 1.8 3.3 4.6 (1.5) (1.3 )
$ 3.6 $ 4.1 $ 5.2 $ (0.5) $ (1.1)
Changes from 2006 to 2007
The General Fund budgeted no change in fund balance. The actual increase was $0.5 million, primarily
because actual revenue exceeded budgeted revenue. This is summarized on page BCI - 1 (budgetary
comparison information). The 2007 fund balance includes $0.3 million reserved for prepaid health insurance
expenditures.
The Capital Reserve Fund increase of $0.5 million was due to the funds transferred from the General Fund
during the year. A portion of the 2007 fund balance is committed to completing the construction projects
when the Capital Projects Fund has been fully expended.
The Capital Projects Fund decrease of $1.5 million was primarily due to two types of projects. Expenditures
of approximately $3.1 million have substantially completed our building renovation projects. In addition,
the District borrowed $5.2 million to fund the Guaranteed Energy Savings project, of which $3.6 million
had been expended by June 2007.
Changes from 2005 to 2006
The General Fund had budgeted a $0.7 million decrease in fund balance. The actual increase was $0.1
million. The $0.8 million variance was primarily because actual revenue exceeded budgeted revenue.
MDA - 6
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2007
The Capital Reserve Fund increase of $0.1 million was due to the funds transferred from the General Fund
during the year.
The Capital Projects Fund decrease of $1.3 million was primarily due to completing two major renovation
projects, the former high school conversion to a middle school and the former. annex conversion to
administrative offices and a fitness facility. General obligation bonds of $4.5 million were issued primarily
to fund the planned conversion of the former middle school to an elementary school.
General Fund Budget
The following summarizes the. budgetary comparison information presented on page BCI-1, along with
comparisons to the previous year.
Final Budget
2007 2006
Total revenues
Total expenditures
Excess revenues (expenditures)
Other financing sources (uses)
Net change in fund balance
$ 34.8 $ 31.8
34.6 32.2
0.2 (0.4)
Actual Amount
2007 2006
$ 35.7 $ 32.3
34.s 31.9
1.2 0.4
Variance
2007 2006
$ 0.9 $ O.s
0.1 0.3
1.0 0.8
(0.2) (0.3) (0.7) (0.3) (0.5) -
$ (o.o) $ (0.7) $ o.s $ o.l $ o.s $ o.s
In 2007, actual revenues exceeded the budgeted amount by $0.9 million. Actual expenditures were within
$0.1 million of the budgeted amount. The District authorized a transfer of $0.5 million to the Capital
Reserve Fund to fund the completion of the construction projects, in progress. This unbudgeted transfer was
made possible from the additional revenues for the year. Additional details are on page BCI-1 (budgetary
comparison information).
The 2006 positive revenue variance of $O.s million was primarily due to additional state revenues.
CAPITAL ASSETS
When construction projects are completed, the construction in progress balances are moved into the
respective categories, and depreciated over their estimated useful lives. In 2007, there were two construction
projects in progress, the conversion of the former middle school into Mount Rock Elementary- School, and
the Guaranteed Energy Savings project.
MDA - 7
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2007
Governmental activities
Land
Construction in progress
Buildings and improvements
Furniture and equipment
Library books
Computer equipment
Business-type activities
Furniture and equipment
Capital assets (net of depreciation)
2006-2007 2005-2006
2007 2006 2005 Change Change
$ 0.5 $ 0.5 $ 0.5 $ - $ -
6.7 0.1 7.4 6.6 (7.3)
44.0 45.4 35.1 (1.4) 10.3
0.6 0.7 1.1 (0.1) (0.4)
0.2 0.2 0.2 - -
l.l 1.1 1.2 - (0.1)
$ 53.1 $ 48.0 $ 45.5 $ 5.1 $ 2.5
$ 0.8 $ 0.9 $ 0.7 $ (0.1) $ 0.2
Capital assets in the governmental activities were $53.1 million at June 2007, $48.0 million at June 2006
and $45.5 million at June 2005. During 2007, there was $7.3 million of capital assets purchased and $2.2
million of depreciation expense. During 2006, the District purchased $5.1 million of capital assets and had
depreciation expense of $2.6 million.
LONG-TERM LIABILITIES
The following summarizes the long-term liabilities note to financial statements (pages FS-22, FS-23 and
FS-24). Most of the debt is general obligation bonds issued to pay for capital improvements. The District's
ability to raise future funds through the issuance of debt depends on haw existing bonds are rated by the
investment community. Moody's Investors Service, Inc. assigned its municipal bond rating of "Aaa" to the
District's most recent series of general obligation bonds, the 2006 Series issued in March 2006.
2007 2006 2005
Governmental activities
General obligation bonds and notes
Compensated absences
Unamortized bond costs
$ 43.7 $ 41.1 $ 38.1
0.6 0.6 0.6
(0.3) (0.3) 0.2
$ 44.0 $ 41.4 $ 38.9
2006-2007 2005-2006
Change Chance
$ 2.6 $ 3.0
- (0.5)
$ 2.6 $ 2.5
MDA - 8
BIG SPRING SCHOOL.DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2007
Each year, the District pays interest on the bonds and a portion of the outstanding bonds, referred to as
redemption. The District made regularly scheduled redemptions of $2.6 million during 2007 and $2.2
million during 2006.
During 2007, the District issued notes payable of $5.2 million to finance the Guaranteed Energy Savings
project. During 2006, the District issued bonds of $4.5 million and also advance refunded a portion of
previous bonds which resulted in a net increase of $0.7 million.
NEXT YEAR'S BUDGET AND ECONOMIC FACTORS.
Total revenue
Total expenditures
Excess revenues (expenditures)
Other financing sources (uses)
Net change in fund balance
Original Budget
2007-2008 2006-2007 Change
34.0 $ 1.4
33.4 1.4
$ 35.4 $
34.8
0.6
0.6
(0.6) (0.6) -
The revenue budget for 2007-2008 represents a 4.1% increase. The real estate millage rate increases by
0.829 mills, from 13.365 to 14.194. The earned income tax rate remains at 1.65%.
The expenditure budget for 2007-2008 represents a 4.2% increase. Rate increases for health insurance and
retirement are contributing factors to the increase, while selected one-time grants in the prior budget year
limited the size of the overall increase.
CONTACTING THE DISTRICT FINANCIAL MANAGEMENT
The District's financial report is intended to provide the readers with a general overview of the District's
finances and to show the Board's accountability for the money it receives. If you have questions about this
report or wish to request additional financial information, please contact the district office of Big Spring
School District, 45 Mount Rock Road, Newville, PA 17241, (717) 776-2000.
MDA - 9
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BIG SPRING SCHOOL DISTRICT
STATEMENT OF NET ASSETS -PROPRIETARY FUNDS
JUNE 30, 2007
(With Summarized Financial Information for June 30, 2006)
Assets
Cash and cash equivalents
Due from other governments
Other receivables
Inventories
Total current assets
Furniture and equipment (net of accumulated depreciation)
Total assets
Liabilities
Accounts payable
Due to other funds
Deferred revenues
Current portion of compensated absences
Total current liabilities
Long-term portion of compensated absences
Total liabilities
Net assets
Invested in capital assets (net of related debt)
Unrestricted
Total net assets
Total liabilities and net assets
Food Service
2007 2006
$ 84,030 $ 90,318
35,229 31,132
2,095 -
30,936 35,118
152,290 156,568
815,090 917,343
$ 967,380 $ 1,073,911
$ 2,463 $ 3,890
1, 527 22,251
8,505 4,043
7,000 7,000
19,495 37,184
53,056 52,127
72,551 89,311
815, 090 917, 343
79,739 67,257
894,829 984,600
$ 967,380 $ 1,073,911
The accompanying notes are an integral part of these financial statements.
FS-7
BIG SPRING SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS -PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2007
(With Summarized Financial Information for the Year Ended June 30, 2006)
Food Service
2007 2006
Operating revenues -Food service revenue $ 778,636 $ 753,817
Operating expenses
Salaries 415,033 425,340
Employee benefits 197,423 163,165
Purchased property service 65,598 64,365
Food and milk 516,429 460,283
Other expenses. 24,353 10,598
Depreciation 102,253 92,519
Total operating expenses 1,321,089 1,216,270
Operating income (loss) (542,453) (462,453)
Nonoperating revenues
Earnings on investments 2,293 2,712
State sources -social security and retirement subsidies 28,180 26,000
State sources -meal subsidies 29,200 24,372
Federal sources -meal subsidies 212,563 180,364
Federal sources -donated commodities 63,446 46,546
Total nonoperating revenues 335,682 279,994
Income (loss) before transfers (206,771) (182,459)
Transfers from other funds 117,000 412,000
Change in net assets (89,771) 229,541
Net assets -beginning 984,600 755,059
Net assets -ending $ 894,829 $ 984,600
The accompanying notes are an integral part of these financial statements.
FS-8
BIG SPRING SCHOOL DISTRICT
STATEMENT OF CASH FLOWS -PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2007
(With Summarized Financial Information for the Year Ended June 30, 2006)
Food Service
2007 2006
Operating activities
Cash received from users $ 781,003 $ 757,959
Cash payments to employees for services (607,345) (574,488)
Cash payments to suppliers for goods and services (544,361) (508,675)
Net cash provided by (used for) operating activities (370,703} (325,204}
Non-capital financing activities
State sources 57,173 47,406
Federal sources 208,673 158,597
General fund advances (Due to other funds) (20,724) 22,251
General fund contributed services 117,000 120,000
Net cash provided by (used for) non-capital financing activities 362,122 348,254
Capital and related financing activities
Cash payments for equipment - -
Net cash provided by (used for) capital and related financing activities - -
Investing activities
Earnings on investments 2,293 2,712
Net cash provided by (used for) investing activities 2,293 2,712
Net change in cash and cash equivalents (6,288) 25,762
Cash and cash equivalents -beginning 90,318 64,556
Cash and cash equivalents -ending $ 84,030 $ 90,318
Reconciliation of operating income (loss) to net cash used for operating activities
Operating income (loss) $ (542,453) ~ $ (462,453)
Adjustments to reconcile operating income (loss) to
net cash provided by (used for) operating activities
Depreciation 102,253 92,519
Donated commodities 63,446 46,546
Net change in other assets and other liabilities
Other receivable (2,095) 3,564
Inventories 4,182 4,423
Accounts payable (1,427) (2,147)
Payroll and benefits payable - (4,655)
Deferred revenues 4,462 578
Compensated absences 929 (3,579)
Total adjustments 171,750 137,249
Net cash provided by (used for) operating activities $ (370,703) $ (325,204)
The accompanying notes are an integral part of these financial statements.
FS-9
BIG SPRING SCHOOL DISTRICT
STATEMENT OF NET ASSETS -FIDUCIARY FUNDS
JUNE 30, 2007
(With Summarized Financial Information for June 30, 2006)
Student Activities
2007 2006
Assets
Cash and cash equivalents
Total assets
Liabilities
Due to student groups
Total liabilities
Net assets
Total liabilities and net assets
$ 145,100 $ 155,066
$ 145,100 $ 155,066
$ 145,100 $ 155,066
145,100 155,066
$ 145,100 $ 155,066
The accompanying notes are an integral part of these financial statements.
FS-10
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Big Spring 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 Townships of Cooke, Lower Frankford, Upper Frankford, Lower Mifflin,
Upper Mifflin, North Newton, South Newton, Penn and West Pennsboro and the Borough of Newville. Services
provided include a comprehensive curriculum for primary and secondary education as well as special education
and vocational education programs. The District receives revenue from local, state and federal sources and must
comply with the requirements of these funding sources.
The financial statements of Big Spring School District have been prepared in accordance with generally accepted
accounting principles as applied to governmental units. The Governmental Accounting Standards Board is the
authoritative standard-setting body for the establishment of governmental accounting and financial reporting
principles. Accounting guidance is also provided through the Comptroller's office for Pennsylvania's Department
of Education. The more significant of these accounting policies are as follows:
Reporting entity
The Governmental Accounting Standards Board establishes criteria for determining the activities, organizations
and functions of government to be included in the financial statements of the reporting entity. In evaluating the
District as a reporting entity, management has addressed all potential component units which may or may not fall
within the established criteria. The criteria used to evaluate component units for possible inclusion as part of the
District's reporting entity are:
The economic resources received or held by the separate organization are entirely for the direct benefit of
the District or its constituents.
The District is entitled to (or has the ability to) access a majority of the economic resources received or held
by the separate organization.
The economic resources received or held by the separate organization that the District is entitled to (or has
the ability to) access is significant to the District.
There are no component units that meet all of the above criteria for inclusion in this reporting entity.
Jointly-governed organizations
The District is a participant in three jointly-governed organizations, each of which is a separate legal entity that
offers services to the District and its residents. Each entity serves several school districts, and therefore are not
included in this reporting entity. The entities do not have taxing power, but each is required to adopt an annual
budget, which is funded primarily by its member Districts or others that use its services. Complete financial
statements for these entities can be obtained from their administrative offices.
FS-11
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2007
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Jointly-governed organizations (Cont'd.)
Capital Area Intermediate Unit provides special education services and programs.
Cumberland Perry Area Vocational Technical School provides vocational and technical education services
and programs.
Capital Tax Collection Bureau provides earned income tax collection services.
Basis of presentation -District-wide financial statements
District-wide financial statements (i.e., the statement of net assets and the statement of activities) .report
information on all of the nonfiduciary activities of the District. As a general rule the effect of interfund activity has
been eliminated from these statements. Governmental activities, which normally are supported by taxes and
intergovernmental revenues, are presented separately from business-type activities which rely to a significant
extent, on fees and charges for support.
The district-wide financial statements are presented using the economic resources measurement focus and the
accrual basis of accounting as are the proprietary fund and the fiduciary fund financial statements. Revenues are
recognized when earned and expenses are recognized when a liability is incurred, regardless of the timing of
related cash flows. Real estate and personal taxes are recognized as revenues in the year for which they are
levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the
provider have been met. Net assets (total assets less total liabilities) are used as a practical measure of economic
resources and the operating statement includes all transactions and events that increased or decreased net
assets. Depreciation and amortization are charged as an expense against current operations. Capital assets (net
of accumulated depreciation) and bonds payable (net of unamortized costs) are presented in the statement of net
assets.
The statement of activities demonstrates the degree to which the direct expenses of given functions or programs
are offset by program revenues. Direct expenses are those that are clearly identifiable within a specific function or
program. Program revenues include charges to customers who purchase, use, or directly benefit from goods,
services, or privileges provided by a given function or program. In addition, program revenues include grants and
contributions that are restricted to meeting the operational or capital requirements of a particular function or
program. Taxes and other items not properly included among program revenues are presented as general
revenues.
Basis of presentation -Fund financial statements
Fund financial statements are also provided for all governmental funds, proprietary funds, and fiduciary funds of
the District. Major individual governmental funds and major individual proprietary funds are reported as separate
columns in the fund financial statements. Nonmajor funds, if any, are aggregated and presented in a single
column. Fiduciary funds are reported by fund.
FS-12
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2007
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Basis of presentation -Fund financial statements (Cont'd.)
The governmental funds are presented using the current financial resources measurement focus and the modified
accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are received within the current period or soon enough
thereafter to pay liabilities of the current period. For this purpose, the District considers tax revenue to be
available if received within 2 months of the end of the fiscal period. Revenue from federal, state and other grants
designated for payment of specific expenditures is recognized when the related expenditures are incurred;
accordingly, when such funds are received, they are recognized as deferred revenues until earned. Expenditures
generally are recognized when a liability is incurred, as under accrual accounting. However, debt service
expenditures, as well as expenditures related to compensated absences and claims and judgments, are
recognized only when payment is due.
Proprietary funds generally follow standards for accounting and financial presentation for private business
enterprises to the extent that those standards do not conflict with or contradict guidance of the Governmental
Accounting Standards Board.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with the
fund's principal ongoing operations. Operating expenses for the District's proprietary fund include food production
costs, supplies, administrative costs, and depreciation on capital assets. All revenues or expenses not meeting
this definition are reported as nonoperating revenues and expenses.
Fund accounting
The accounts of the District are organized on the basis of funds, each of which is considered a separate
accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing
accounts which comprise its assets, liabilities, fund equity, revenues, and expenditures, or expenses, as
appropriate. Resources are allocated to and accounted for in individual funds based upon the purposes for which
they are to be spent.
When both restricted and unrestricted resources are available for use, it is the District's general policy to use the
restricted (primarily operating grants) resources first, then unrestricted resources as they are needed.
The District has the following major types of funds:
Governmental Funds -These funds account for the activities through which most of the District's operations
are provided.
Proprietary Funds -These funds account for the operations of the District that are financed and operated in a
manner similar to private business enterprises.
FS-13
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2007
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Basis of presentation -Fund financial statements (Cont'd.)
Fund accounting (Cont'd.)
Fiduciary Funds -These funds account for the assets held by the District as a trustee or agent for individuals,
private organizations and/or governmental units and are therefore not available to support the District's own
programs.
The District presents the following major governmental funds:
The General Fund is the primary operating fund. It accounts for all financial resources except those required
to be accounted for in another fund.
An operating budget is adopted prior to the beginning of each year on a modified accrual basis of
accounting. The General Fund is the only fund for which a budget is legally required.
The Pennsylvania School Code dictates specific procedures relative to budget adoption and financial
statement presentation. The District, before levying annual school taxes, is required to prepare an
operating budget for the succeeding fiscal year. This process includes the publishing of notices by
advertisement, that the proposed budget has been prepared and is available for public inspection at the
administrative office of the District, and that public hearings are held on the proposed operating budget
which are required to be scheduled at least ten days prior to when final action on adoption is taken by the
Board.
Legal budgetary control is maintained at the sub-function/major object level. The Board may approve
transfers of funds appropriated to any particular item of expenditure in accordance with the Pennsylvania
School Code. Management may amend the budget at the sub-function/sub-object level without Board
approval, provided it is not at a higher level than the Board adopted budget.
In order to preserve a portion of an appropriation for which an expenditure has been committed by a
purchase order, contract or other form of commitment, an encumbrance is recognized. Unused
encumbrances expire at the end of each year.
Included in the budget are program budgets as prescribed by the federal and state agencies funding the
program. These budgets are approved on a program by program basis by the federal and state funding
agencies. During the year these programs increased both revenues and expenditures of the original
budget by $ 813,001.
The Capital Reserve Fund accounts for transfers from the General Fund and expenditures of those funds for
capital outlays.
FS-14
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2007
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Basis of presentation -Fund financial statements (Cont'd.)
Fund accounting (Cont'd.)
The Athletic Fund accounts for athletic revenues and transfers from the General Fund and expenditures of
those funds for athletics.
The Capital Projects Fund accounts for bond proceeds and expenditures of those funds for capital outlays.
The District presents the following proprietary fund:
The Food Service Fund accounts for the operations of the cafeterias.
The District presents the following fiduciary funds:
The Student Activities Fund accounts for programs operated and sponsored by various clubs and
organizations within the schools.
Cash and cash equivalents and investments
The District's cash and cash equivalents are considered to be cash on hand, demand deposits (including pooled
investments), and short-term investments with original maturities of three months or less from the date of
acquisition.
The types of authorized investments are limited by State regulations. Pooled investment funds are required to be
operated in accordance with State regulations.
Investments, including pooled investments, are reported at fair value.
Taxes and taxes receivable
Real estate and personal taxes are levied as of July 1 with a legal, enforceable claim against the property and/or
taxpayer. Amounts not collected within six months (December 31) are considered delinquent and submitted to
outside agencies/entities for collection actions.
Receivables and payables between funds
Activity between funds that represent lending/borrowing arrangements outstanding at the end of the fiscal year
are referred to as "due to/from other funds". Any residual balances outstanding between the governmental
activities and business-type activities are reported in the district-wide financial statements as "internal balances".
Any balances between funds are short term items pending periodic repayments.
FS-15
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2007
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Inventories
Inventories are presented at the lower of cost or market on afirst-in, first-out basis, and are expensed when used.
Donated commodities are recognized as revenue and are inventoried at an estimated cost value.
Capital assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, sidewalks, and
similar items), are presented in the applicable governmental or business-type activities columns in the district-
wide financial statements. Capital assets are defined by the District as assets with an initial, individual cost of
more than $ 1,500 and an estimated useful life in excess of one year. Management has elected to include certain
homogeneous groups with individual costs of less than $ 1,500 as capital assets for financial presentation
purposes. In addition, capital assets purchased with long-term debt may be capitalized regardless of the
thresholds established. Such assets are presented at historical cost or estimated historical cost if purchased or
constructed.
Major outlays for capital assets and improvements are capitalized as projects are constructed. The costs of
normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not
capitalized.
Capital assets are depreciated using the straight-line method over the following estimated useful lives:
Assets
Governmental Business-type
Activities Activities
Buildings
Interior renovations
Site improvements
Furniture
Machinery and equipment
Library books
Audio visual equipment
Computer equipment
Long-term liabilities
50 -
25 -
15to20 -
15 15
10 to 15 15
7 -
6 -
5 5
In the district-wide financial statement, and proprietary fund types in the fund financial statements, bonds payable
and compensated absences are presented as liabilities in the applicable governmental activities or proprietary
fund statement of net assets. Refunding costs and bond discounts are amortized over the life of the bonds using
the effective interest method. Bond issuance costs are presented as deferred charges and amortized over the
term of the related debt.
FS-16
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2007
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Long-term liabilities (Cont'd.)
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as
bond issuance and refunding costs, as current period expenditures. The face amount of debt issued is presented
as other financing sources while discounts and refunding costs on debt issuances are presented as debt service
expenditures. Issuance costs, whether or not withheld from the actual debt proceeds received, are presented as
support service expenditures.
Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect certain presented amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Comparative information
Comparative totals for the prior year have been presented in the accompanying financial statements in order to
provide an understanding of changes in the District's financial position and operations. Certain amounts
presented in the prior year have been reclassified in order to be consistent with current year's presentation.
However, presentations of prior year totals by fund and activity type have not been presented in each of the
statements since their inclusion would make the statements unduly complex and difficult to read.. Summarized
comparative information should be read in conjunction with the District's financial statements for the year ended
June 30, 2006, from which the summarized information was derived.
New accounting policies
The Governmental Accounting Standards Board (GASB) has issued several statements which will become
effective in future reporting years. The statements which will have the greatest impact on the District are GASB 43
"Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans" and GASB 45 "Accounting
and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions". The purpose of these
two statements is to set new accounting standards for state and local government employers that offer retiree
health benefits and other non-pension postemployment benefits. In particular, these statements require the
accrual of liabilities and expenses of other postemployment benefits (OPEB) over the working career of plan
members. The effective date of GASB 43 for the District is the June 2008 fiscal year. GASB 45 comes into effect
one year after GASB 43. The requirements of these statements are under review by the District and management
is evaluating the impact these pronouncements will have on the District's financial statements.
FS-17
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2007
CASH AND CASH EQUIVALENTS AND INVESTMENTS
Pennsylvania statutes provide for investment of District funds into authorized investment types including U.S.
Treasury bills, other short-term U.S. and Pennsylvania government obligations, and insured or collateralized time
deposits and certificates of deposit. The statutes do not prescribe regulations related to demand deposits;
however, they do allow the pooling of funds for investment purposes.
Custodial credit risk is the risk that in the event of a depository institution failure, the District's deposits may not be
returned to it. The District does not have a formal policy for custodial credit risk. However, the District requires all
deposits in excess of FDIC insurance coverage to be collateralized by the depository institution with approved
collateral as provided by law.
As of June 30, 2007, the District's deposits totaled $ 254,517 and the depository institution balances totaled
$ 1,060,087. Of the depository institution balances, $ 200,000 was covered by federal depository insurance
and $ 860,087 was collateralized. The pledged collateral is held by the Federal Reserve Bank, but is not titled
in the District's name.
The District also has cash equivalents with the UMB Corporate Trust Services (UMB) and Pennsylvania
School District Liquid Asset Fund (PSDLAF). UMB uses an investment pool of short-term U.S. government
obligations. PSDLAF is a common law trust established pursuant to the Intergovernmental Cooperation Act
and the Pennsylvania Public School Code for the purpose of pooling investments. It is a fundamental policy of
PSDLAF to maintain a net asset value of $ 1 per share, but there can be no assurance that the net asset
value will not vary from $ 1 per share. PSDLAF may only purchase securities which are permitted under PA
law. As of June 30, 2007, the District's deposits in UMB and PSDLAF totaled $ 5,163,484 and $ 2,055,333,
respectively.
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The
District does not have a formal investment policy for interest rate risk. The weighted average maturity of the
securities held by PSDLAF is generally less than 60 days.
Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The District
does not have a formal investment policy for credit risk. The District's deposits in PSDLAF were rated "AAAm" by
Standard & Poor's.
Cash and cash equivalents are as follows:
Governmental activities (includes restricted) $ 7,244,204
Business-type activities 84,030
Fiduciary funds 145,100
FS - 18
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2007
TAXES RECEIVABLE
Taxes receivable are as follows:
Real estate taxes
Earned income taxes
Personal taxes
General Fund
Full accrual adjustment
Governmental activities
DUE FROM OTHER GOVERNMENTS
Due from other governments are as follows:
Local sources
Local sources
Local sources
Local sources
State sources
Federal source
-earned income taxes
-IDEA - B grant
-other districts
- other items
's
Taxes Taxes
Receivable Allowance for Receivable Deferred
(Gross) Uncollectibles (Net) Tax Revenue
$ 642,034 $ (2,034) $ 640,000 $ 390,000
1,560,000 - 1,560,000 1,560,000
12.078 (2,078) 10,000 10.000
2,214,112 (4,112) 2,210,000 1,960,000
- (1,960,000)
$ 2.214;112 (4.112) $ 2.210.000 $ -
Governmental Business-type
Activities Activities
$ 849,589 $ -
395,208 -
246,403 -
137, 399 -
671,030 4,001
109.388 31,228
$ 2.409.017
FS-19
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2007
CAPITAL ASSETS
Changes in capital assets were as follows:
Governmental activities
Capital assets not being depreciated
Land
Construction in progress
Capital assets being depreciated
Buildings and improvements
Furniture and equipment
Library books
Computer equipment
Accumulated depreciation
Buildings and improvements
Furniture and equipment
Library books
Computer equipment
Capital assets being depreciated, net
Governmental activities capital assets, net
Business-type activities
Capital assets being depreciated
Furniture and equipment
Accumulated depreciation
Furniture and equipment
Capital assets being depreciated, net
Business-type activities capital assets, net
Beginning Ending
Balance Increases Decreases Balance
$ 501,824 $ - $ - $ 501,824
70,922 6,644,405 - 6,715,327
572,746 6,644,405 - 7,217,151
57,124,612 - - 57,124,612
3,328,556 65,333 - 3,393,889
2,207,008 - - 2,207,008
4,732,982 611,907 - 5,344,889
67,393,158 677,240 - 68,070,398
(11,728,414) (1,370,314) - (13,098,728)
(2,605,879) (175,490) - (2,781,369)
(2,045,956) (23,712) - (2,069,668)
(3,629,940) (629,747) - (4,259,687)
(20,010,189) (2,199,263) - (22,209,452)
47,382,969 (1,522,023) - 45,860,946
47.955.715 $ x,122,382 $ - $ 53.078.097
$ 1,541,234 $ - $ - $ 1,541,234
(623,891) (102,253) - (726,144)
917,343 (102,253) - 815,090
$ 917 343 $ (102.253) $ - $ 815,.Q90
FS - 20
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2007
CAPITAL ASSETS (Cont'd.)
Depreciation expense was charged to functions/programs as follows:
Governmental activities
Instruction
Instructional student support
Administrative and financial support
Operation and maintenance of plant
Student activities
Business-type activities -Food service
$ 1,770,452
194, 318
86, 363
107,954
40,176
2.199.263
As of June 30, 2007 there were two construction projects in progress. The conversion of the former middle school
to an elementary school was essentially completed in August 2007. The energy savings project is scheduled for
completion in late 2007. The June 30, 2007 Capital Projects Fund is fully committed to funding these projects. To
complete these construction projects, the District anticipates paying approximately $ 250,000 to $ 300,000 from
the Capital Reserve Fund.
DEFERRED REVENUES
Governmental funds present deferred revenue in connection with receivables for revenues that are not
considered to be available to pay liabilities of the current period. Governmental funds also defer revenue
recognition with resources that have been received, but not yet earned. Deferred revenues in the General Fund of
$ 2,019,914 consists of $ 1,960,000 of taxes receivable not received within 2 months of the end of the fiscal
period, $ 39,398 of deferred federal grants, and $ 20,516 of resources that have been received but not yet
earned.
Deferred revenue in the proprietary funds and the district-wide financial statements represents resources that
have been received but not yet earned.
FS-21
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2007
LONG-TERM LIABILITIES
Changes in all long-term liabilities were as follows:
Beginning Ending Due Within
Balance Increases Decreases Balance One Year
Governmental activities
Bonds and notes payable $ 41,070,000 $ 5,160,584 $ (2,550,000) $ 43,680,584 $ 3,141,783
Compensated absences 591.760 252.980 (248,940) 595,800 250,000
$ 41;661.760 $ 5.413.564 $ (2798; 940) $ 44:276; 384 3.391.783
Business-type activities
Compensated absences $ 59.127 $ 10 551 $ (9.622) $ 60 056 $ 7 000
Bonds and notes payable
Changes in bonds and notes payable were as follows:
Beginning Scheduled Ending
Balance New Issue Redemptions Balance
1997 Series $ 1,550,000 $ - $ (490,000) $ 1,060,000
1999 Series 3,720,000 - (240,000) 3,480,000
2001 Series 3,915,000 - (485,000) 3,430,000
2003 Series 17,390,000 - (930,000) 16,460,000
2005 Series 4,500,000 - (380,000} 4,120,000
2006 Series 9,995,000 - (25,000) 9,970,000
2006 Notes - 5.160.584 - 5.160.584
$ 41.070.000 $ 5.160.584 $ (2.550.00.0) $ 43.680.584
Due Within
Interest Rates Maturity Date Callable Date One Year
1997 Series 5.075% March 2009 Not callable $ 515,000
1999 Series (1) December 2017 45 days notice 250,000
2001 Series 4.10% to 5.10% February 2021 August 2011 660,000
2003 Series 3.05% to 4.40% April 2023 April 2013 945,000
2005 Series 3.10% to 4.50% June 2016 December 2010 395,000
2006 Series 3.30% to 4.05% March 2021 August 2011 75,000
2006 Notes 3.95% December 2021 Annually, with fees 301,783
FS-22
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2007
LONG-TERM LIABILITIES (Cont'd.)
(1) The 1999 Series pays interest at a variable rate of .55% above the "weekly rate", not to exceed 25.00%.
At June 2007 the "weekly rate" was 3.74%.
During the year ended June 2007, $ 102,197 of debt service was paid from the Capital Projects Fund. Scheduled
debt service requirements, .payable by the General Fund, except for six monthly interest payments on the 2006
Notes totaling $ 100,122 payable by the Capital Projects Fund, are as follows:
Year Endin4 June Principal Interest Total
2008 $ 3,141,783 $ 1,665,473 $ 4,807,256
2009 3,083,229 1,639,642 4,722,871
2010 2,667,592 1,506,204 4,173,796
2011 2,783,890 1,409,973 4,193,863
2012 2,912,251 1,297,633 4,209,884
2013-2017 16,378,578 4,547,454 20,926,032
2018-2022 11, 913,261 1,492,196 13,405,457
2023 800.000 35.200 835,200
$ 43;680;584 13.593.775 $ 57 274T359
In December 2006 the District borrowed $ 5,160,584 (2006 Notes) to finance an energy savings project for
selected District facilities. There are future annual savings guarantees related to the project costs. If the
guaranteed energy savings are not achieved, the District will be reimbursed for any short fall in energy savings.
In the year ended June 2006, the District defeased a portion of the 2001 Series of bonds by creating an irrevocable
trust fund. New debt was issued (2006 Series) and the proceeds were used by the trust fund to purchase U.S.
government securities. The investments and fixed earnings are sufficient to fully service the defeased debt until it is
called or matures. For financial reporting purposes, the defeased debt was removed as a liability from the District-
wide financial statements. As of June 30, 2007 $ 9,135,000 of defeased bonds remain outstanding and are
scheduled to be called in August 2011.
FS - 23
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2007
LONG-TERM LIABILITIES {Cont'd.)
Compensated absences
Compensated absences (those for which employees receive pay) are presented using the termination payment
method. A liability is computed using estimates which apply historical data to current factors. The District
maintains records of unused leave and applies the contracted rate for employees eligible for termination
payments. The District allows only restricted sabbatical leave and therefore does not present any liability in
advance of the sabbatical. Payments for compensated absences are made in the year the absence is taken or the
employee retires. At retirement or death, while in District service, employees (with at least 10 years service in the
District) or their beneficiaries shall choose one of the following options (subject to a maximum of $ 12,000 for
administrators and $ 9,500 for all other employees):
1. Accumulated unused sick leave days times $ 50 per day
2. Number of full years of service in the District times $ 160 per year
PENSION PLAN
Substantially all full-time and part-time employees of the District participate in the plan. The District recognizes
expenditures or expenses equal to its contractually-required contributions, subject to the modified accrual basis of
accounting in governmental funds.
The District contributes to The Public School Employees' Retirement System (the System), a governmental cost
sharing multiple-employer defined benefit plan. The plan is under the authority of the Public School Employees'
Retirement Code (the Code), as amended. The plan provides retirement and disability, legislatively 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 the System at PO Box
125, Harrisburg, PA 17108-0125, or by accessing the System's website at www.psers.state.pa.us.
The contribution policy is established in the Code and requires contributions by active members and employers.
Contribution rates for active members are set by law and are dependent upon members' class. In most cases, the
contribution rates based on qualified member compensation are as follows:
Membership Class T-C Active members hired before July 22, 1983 5.25%
Membership Class T-C Active members hired on or after July 22, 1983 6.25%
Membership Class T-D Active members hired before July 22, 1983 6.50%
Membership Class T-D Active members hired on or after July 22, 1983 7.50%
Active members newly hired after July 1, 2001 are automatically Class T-D. The contribution rates for all
members in Membership Class T-D were effective January 1, 2002.
FS-24
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2007
PENSION PLAN (Cont'd.)
Contributions required of employers are based upon an actuarial valuation. For the fiscal year ended June 2007
the employer contribution rate was 6.46 percent of covered payroll, composed of 5.72 percent for pension
benefits and .74 percent for healthcare insurance premium assistance. The District's contributions to the system
for the years ended June 2007, 2006 and 2005 were $ 1,055,160, $ 735,469, $ 648,394, respectively. Those
amounts are equal to the required contributions for each year.
POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Under the negotiations agreement with Big Spring Education Association, the District shall provide for
continuance of health care insurance after retirement until age 65. The retiree will pay the monthly premiums,
except that employees who retire after thirty or more years with the District,-shall have up to five years of health
care insurance benefits provided on the basis of the retiree paying 50% of the monthly premiums. During the year
ended June 2007, there were a total of 58 retirees covered for health insurance.
The District finances this benefit on spay-as-you-go basis. For the year ended June 2007, the estimated net cost
to the District was $ 200,550 ($ 587,702 estimated plan costs paid for the retirees less $ 387,152 estimated
premiums paid by the retirees).
RISK MANAGEMENT
Health insurance
The District's health insurance plan allows each participant to choose one of the three coverage options available
through South Central Trust. South Central Trust is not a risk sharing pool. The Trust was established for
processing claims and obtaining reinsurance through commercial insurance carriers. The Trust has reinsurance
for claims in excess of $ 100,000 specific (per person) and 125% aggregate (estimated District annual cost).
District transactions with the Trust were as follows:
Amount available for accrued costs, beginning
Payments to the trust
Change in prepaid/accrued to the trust
$ 941,052
$ 3,679,958
(425,000)
3,254,958
Claims paid by the trust
Administrative and other fees, net of interest earned
Stop loss premiums and commissions
(2,921,252)
(183,454)
(104,556)
(3,209,262)
Amount available for accrued costs, ending
$ 986 748
FS - 25
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2007
RISK MANAGEMENT (Cont'd.)
The amount available in the trust was as follows:
Accrual for claims incurred $ 523,248
Accrual for administrative and other fees 34,000
Accrual for health insurance coverage on payroll payable 429,500
Amount available for accrued costs, ending 986,748
Prepaid health insurance 275L000
Amount available in the trust, ending $ 1.261.748
There are various methodologies for estimating claims that have been incurred but not reported (IBNR). District
management has selected the methodology of '60 days of paid claims'. District management believes this
methodology provides an adequate amount for accrued costs.
Other insurance
The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets;
errors and omissions; injuries to employees; and natural disasters. The District maintains commercial insurance
coverage covering each of those risks of loss. Management believes such coverage is sufficient to preclude any
significant uninsured losses to the District. Settled claims have not exceeded this commercial coverage in any of
the past three fiscal years.
For State unemployment compensation laws, the District is self-insured, which is a common practice for local
governmental units. Any unemployment claims are paid by the District on a quarterly basis as incurred.
For workers' compensation insurance, approximately 80 Districts participate in a public entity risk sharing pool
(School Districts Insurance Consortium) for processing claims and obtaining reinsurance through commercial
insurance carriers. Under this plan, the District's annual cost should not exceed standard commercial insurance
rates.
COMMITMENTS AND CONTINGENCIES
The District's contract with its teaching staff expired in June 2007. As of the date of this report, a contract is still
being negotiated.
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.
FS-26
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2007
COMMITMENTS AND CONTINGENCIES (Cont'd.)
The District participates in state and federal grant programs which are governed by various rules and regulations.
Expenditures charged to these grant programs are subject to program compliance audits and reviews by the
grantor agencies. The District is potentially liable for any expenditures which may be disallowed by the rules of
these grant programs. The District does not anticipate any material disallowance of program expenditures.
FS-27
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