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BIG SPRING SCHOOL DISTRICT
FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
TABLE OF CONTENTS
Independent auditors' report
Management's discussion and analysis
Statement of net assets
Statement of activities
Balance sheet - governmental funds
Reconciliation of the governmental funds balance sheet to the statement of net assets
Statement of revenues, expenditures, and changes in fund balances - governmental funds
Reconciliation of the governmental funds statement of revenues, expenditures,
and changes in fund balance to the statement of activities
Statement of net assets - proprietary funds
Statement of revenues, expenses, and changes in net assets - proprietary funds
Statement of cash flows - proprietary funds
Statement of net assets - fiduciary funds
Notes to financial statements
Statement of revenues, expenditures, and changes in fund balance -
budget and actual - general fund
Page
Number
AR-lteAR-2
MDA - 1 to MDA - 8
FS- 1
FS - 2
FS - 3
FS -4
FS- 5
FS - 6
FS - 7
FS - 8
FS -9
FS - 10
FS - 11 to FS - 26
RSI - 1
GREENAWALT ~; COMPANY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
400 WEST MA~N STREET
MECHAmCSBURG, PENNSYLVANIA 17055
(717) 766-4763
FAX (7t?) 756-273t
INDEPENDENT AUDITORS'REPORT
62 WEST POMFRET STREET
CARLISLE, PA 17013
(717) 2434822
FAX (717) 25g-9372
Board of School Directors
Big Spring School District
Newville, Pennsylvania
We have audited the accompanying financial statements of Big Spring School District as of and for the year ended
June 30, 2003, as listed in the table of contents. These financial statements are the responsibility of the District's
management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are fTee 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
opinion.
In our opinion, the accompanying financial statements 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, 2003, and the respective changes in financial position
and cash flows, where applicable, thereof and for the year then ended in conformity with accounting principles
generally accepted in the United States of Amedca.
As described in the notes to the financial statements, the District has implemented a new financial reporting model, as
required by the provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial
Statements - and Management's Discussion and Analysis - for State and Local Governments, as of and for the year
ended June 30, 2003.
Management's discussion and analysis on pages MDA - 1 through MDA - 8 and budgetary comparison information on
page RSI - 1 are not a required part of the financial statements but are 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 required supplementary
information. However, we did not audit the information and express no opinion on it.
AR- 1
MEMBERS -AME1L1CAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS -PENIqSYLVANIA II~STITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Big Spring School District
Page Two
In accordance with Government Auditing Standards, we have also issued separate reports dated September 10,
2003, 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 grants. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in conjunction with this report in
considering the results of our audit.
GREENAWALT & COMPANY, P,C.
October 23, 2003
Mechanicsburg, Pennsylvania
AR - 2
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2003
This discussion and analysis provides an overview of the District's financial performance for the fiscal year
ended June 30, 2003. This is the first year we have reported District activities in accordance with GASB
Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis -for State and
Local Governments. In future years, our discussion and analysis will compare current year financial
activities to those of the previous year. Please read our discussion and analysis in conjunction with the
District's financial statements, which begin on page FS-1.
FINANCIAL HIGHLIGHTS
As the result of a referendum, we eliminated the 80% Occupation Tax as a source of revenue,
replacing it with a .65% increase in the Earned Income Tax. This is not expected to significantly
change our tax receipts over the long-term. During the initial year, the Earned Income Tax revenue
was less than budgeted, due to the normal time delay until the funds are collected and available to
the District.
As budgeted, General Fund expenditures were greater than revenues. The shortfall was offset by
using available fund balance and through a tax increase. The 2003-2004 budget has been prepared on
a similar basis.
Construction of the new high school approached completion, increasing our construction in progress
to approximately $ 28.5 million. We are paying for this project with funds remaining in our Capital
Projects Fund from previously issued general obligation bonds.
In April, we issued $19.46 million in general obligation bonds, referred to as the 2003 Series. The
amount we received was used to pay offour 1998 Series and provide funds for renovations to the old
high school and existing middle school. As a result of this favorable financing, we realized an
economic gain of approximately $ 230,000.
USING THESE FINANCIAL STATEMENTS
This report consists of a series of financial statements. The Statement of Net Assets and the Statement of
Activities (pages FS-I and FS-2) are presented for the first time this year, to comply with GASB Statement
No. 34. These statements provide information about the District as a whole, and present a longer-term view
of the District's finances than Fund financial statements. Fund financial statements are on pages FS-3, FS-5
and FS-7 through FS-10. For governmental funds, these statements show how District services have been
financed in the short term, as well as the amount remaining for future spending. Proprietary fund statements
provide information about non-governmental operations, in this case food services. Fiduciary funds
statements report funds held in trust by the District for student activities.
MDA- 1
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2003
Page FS-4 reconciles total governmental fund balances to total net assets. Page FS-6 does the same for the
components of the changes in fund balances to the change in net assets.
Government - Wide Statements
The new 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 presented with all other assets. Long-term debt is presented 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.
The approach to measurement of revenue and expense is similar to that used in the private sector and is
referred to as the accrual basis of accounting. This is discussed further in the notes to financial statements.
Fund Financial Statements
The 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 described in the notes to financial statements. Unlike the government-wide statements that measure
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
The District's total net assets were $14,385,445 at June 30, 2003. The following summarizes the Statement
of Net Assets (page FS-1).
Governmental Business-type Total School
Activities Activities District
Current and other assets
Capital assets
$ 20,740,841 $ 90,047 $ 20,830,888
38.986,173 567,199 39,553,372
Total assets $ 59.727,014 $ 657.246 $ 60:384.260
MDA - 2
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2003
Governmental Business-type Total School
Activities Activities District
Current and other liabilities
Long-term liabilities
Total liabilities
$ 3,350,841 $ 831 $ 3,351,672
42,574,856 72,287 42,647,143
45,925,697 73,118 45,998,815
Invested in capital assets, net of related debt
Restricted for capital projects
Unrestricted
Total net assets
(2,688,827) 567,199 (2,121,628)
13,485,297 13,485,297
3,004,847 16,929 3,021,776
13~801,317 584,128 14,385,445
Total liabilities and net assets
$ 59,727,014 $ 657,246 $ 60,384,260
Net assets are the difference between total assets and total liabilities, and represent resources that can be
used to pay for future operations and capital improvements. Most of the District's net assets are invested in
capital assets. The restricted mount represents cash and investments that can only be used for buildings and
improvements. Any excess funds would be used to repay debt.
Statement of Activities
The following summarizes the Statement of Activities (page FS-2). It shows how total net assets decreased
by $ 731,253 during the year.
Program revenues Charges for services
Operating grants and contribution
Capital grants and contributions
General revenues Taxes
Investment earnings
State general subsidies
Total revenues
Governmental Business-type Total School
Activities Activities Dislxict
$ 167,007 $ 649,258 $ 816,265
4,831,826 279,689 5,111,515
470,413 470,413
12,677,313 12,677,313
243,761 1,713 245,474
7,394,557 7,394,557
25,784,877 930,660 26,715,537
MDA - 3
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2003
Direct expenses
Excess (deficiency) before transfers
Transfers between activities
Change in net assets
Governmental Business-type Total School
Activities Activities District
$ 26,389,444 $ 1.057,346 $ 27,446,790
(604,567) (126,686) (731,253)
(48L212) 481,212
$ (1,085,779) $ 354,526 $ (731,253)
The following summarizes expense information from the Statemem of Activities (page FS-2). Direct
expenses represents the actual cost of providing the services while the net cost represents the amount of cost
that is not recovered through program revenues, mean'rog user charges, grants and contributions. The net
cost of services of must be recovered through general revenue, primarily taxes and state subsidies. Amounts
not recovered will reduce funds available for future years.
Governmental Activities
Direct Program Net
Expenses Revenues Cost
Instruction
Instructional student support
Administrative and financial support
Operation and maintenance of plant
Pupil transportation
Student activities
Community services
Interest on long-term debt
$ 16,087,423 $ 3,404,164 $ 12,683,259
1,881,940 142,101 1,739,839
2,212,539 63,297 2,149,242
2,657,080 73,088 2,583,992
1,629,721 1,247,621 382,100
538,779 67,858 470,921
20,522 704 19,818
1,361 ~440 470,413 891 ~027
$ 26,389,444 $ 5,469,246 20,920,198
Transfers to business - type activities
Total governmental activities
State general subsidies revenues
481,212
21,401,410
T394,557
Total needs from taxes and other local sources
$ 14~06,853
MDA - 4
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2003
Business-type Activities
Direct Program
Expenses Revenues
Food services $ 1,057~346
Transfers from governmental activities and investment earnings
Total business-type activities
THE DISTRICT'S FUNDS
$ 928,947 $
Net
Cost
128,399
482,925
(354,526)
Governmental Funds
As of June 30, 2003 the District's govemmental funds have a combined fund balance of $ 15,651,062,
which is a decrease of $ 5,851,226 from June 30, 2002.
Governmental fund balances
2002 2003 Change % Change
General fund - unrestricted $ 4,953,433 $
Capital reserve fund - unrestricted 739,376
Athletic fund - unrestricted (2,139)
Capital projects fund - restricted 15.811.618
2,048,567 $ (2,904,866) (58.64) %
115,849 (623,527) (84.33)
1,349 3,488 NM
13,485,297 (2,326321) (14.71)
Total governmental funds
$ 21.502.288 $ 15,651,062 $ (5,851,226) (27.21)
Total unrestricted
Total restricted
$ 5,690,670 $ 2,165,765 $ (3,524,905) (61.94)
15,811.618 13,485.297 (2,326,321) (14.71)
Total governmental funds
$ 21,502,288 $ 15,651,062 $ (5,851,226) (27.21)
The General Fund had budgeted expenditures in excess of revenues by $ 935,979. The District eliminated
the occupation tax, which was replaced with a higher earned income tax based on Act 24. As a result of this
change, the actual revenue collected fell short of budget by approximately $ 1,130,000 for earned income
taxes. Expenditures included the payoff of a 1,200,000 variable rate note that had not been budgeted.
MDA - 5
BIG SPRING SCHOOL DISTRICT
MANAGEMENT' S DISCUSSION AND ANALYSIS
JUNE 30, 2003
The Capital Reserve Fund decrease of $ 623,527 included expenditures of $ 295,229 for the final payments
to Cumberland Perry Area Vocational Technical School to support their capital improvements.
The Athletic Fund usually has a small fund balance, as the General Fund transfers mounts as needed.
The Capital Projects Fund decrease of $ 2,326,321 is a result of expenditures to build the new high school,
and the borrowing of additional funds for anticipated projects.
General Fund Budget
The following summarizes budget information presented on page RSI-I.
Total revenues
Total expenditures
Revenues over (under) expenditures
Other financing sources (uses)
Net change in fund balance
Budget Actual Variance
$ 26,289,964 $ 24,934,521 $ (1,355,443)
27,112,387 2T744,087 631,700
(822,423) (2,809,566) (1,987,143)
(113,556) (95300) 18.256
$ (935.979) $ (2,904,866) $ (1,968,887)
The revenues variance shows that actual revenues were less than budget. This is mostly due to the increased
earned income tax rate not making funds available soon enough to be recognized as revenue.
The expenditures variance shows that actual expenditures exceeded budget. This is due to repayment of a
$1,200,000 note that had not been budgeted.
CAPITAL ASSETS
At June 30, 2003 the District had $ 38,986,173 in governmental activities capital assets, which represents an
increase of $ 12,250,216. The increase is mostly due to the construction of the new high school. As
construction projects are completed, related construction in progress balances are moved into the buildings
and improvements category, and depreciated over their estimated useful lives.
MDA - 6
BIG SPRING SCHOOL DISTRICT
MANAGEMENT' S DISCUSSION AND ANALYSIS
JUNE 30, 2003
Governmental activities Land
Construction in progress
Buildings, structures and improvements
Furniture and equipment
Computer equipment
Library books
Capital assets (net of depreciation)
2002 2003 Chan~e
610,000 $ 610,000 $
15,657,896 28,564,274 12,906,378
9,623,883 9,077,956 (545,927)
270,279 280,345 10,066
471,644 344,164 (127,480)
102,255 109,434 7,179
Total governmental capital assets
$ 26,735,957 $ 38,986.173 $ 12,250,216
Business - type activities
Furniture and equipment
$ 135~520 $ 567,199 $ 431.679
LONG-TERM LIABILITIES
The following smnmarizes the long-term liabilities note to financial statements (pages FS-21 through
FS~23). Most of the debt is general obligation bonds issued by the District to pay for capital improvements.
Our ability to raise future funds through the issuance of debt depends on how well our existing bonds are
rated by the investment community. Moody's Investors Service Inc. has assigned its municipal bond rating
of "Aaa" to the 2003 Series.
2002 2003 Change
Governmental activities
General obligation bonds
Capital leases
Compensated absences
$ 33,445,000 $ 41,675,000 $ 8,230,000
25,669 (25,669)
725,960 720~690 (5~270)
Total long-term liabilities
$ 34,196,629 $ 42~395~690 $ 8,199,061
Each year, the District pays interest to bond holders and pays down a portion of the outstanding debt,
referred to as redemption. During 2003, in addition to the scheduled redemption, we fully repaid the
outstanding balance of $ 8,470,000 on bonds referred to as the 1998 Series, and replaced it with a portion of
lower interest rate bonds referred to as the 2003 Series. This action is discussed in the notes to financial
statements.
MDA - 7
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2003
NEXT YEAR'S BUDGET AND ECONOMIC FACTORS
Budget Budget
2002-2003 2003-2004 Chan~,e
Total revenues
Total expenditures
$ 26,289,964 $ 27,420,375 $ 1,130,411
27,112,387 28,057A00 944~713
Revenues over (under) expenditures
(822,423) (636,725) 185,698
Other financing sources (uses)
(113,556) 247,100 360,656
Net change in fund balance
$ (935,979) $ (389,625) $ 546.354
The budget for 2003-2004 represents an increase in total expenditures of 3.48%. This increase is largely due
to the increase in the retirement rate from 1.15% to 3.77%, the 9.70% increase in medical insurance and the
increase in debt service requirements. As a result, the 2003-2004 budgeted revenues include an increase in
real estate taxes from 10.0 mills up to 11.3 mills. The earned income tax rate remains at 1.15%.
There are no changes to economic factors that are expected to have a significant impact on our 2003-2004
budget, other than the cash flow difficulties created by the Commonwealth of Pennsylvania not timely
adopting an education budget and therefore not giving funds to school districts in a timely manner.
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 - 8
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BIG SPRING SCHOOL DISTRICT
STATEMENT OF NET ASSETS - PROPRIETARY FUNDS
JUNE 30, 2003
Assets
Cash and cash equivalents
Due from other governments
inventories
Total current assets
Construction in progress
Furniture and equipment (net of accumulated depreciation)
Total assets
Food Service
$ 179,184
4,345
20,168
203,697
448,712
118,487
$ 770,896
Liabilities
Due to other funds
Accounts payable
Current portion of compensated absences
Deferred revenues
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
$ 113,650
318
7,000
513
121,481
65,287
186,768
567,199
16,929
584,128
$ 770,896
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, 2003
Operating revenues ~ Food service revenue
Operating expenses
Salaries
Employee benefits
Purchased property service
Food and milk
Other supplies
Depreciation
Dues and fees
Total operating expenses
Operating income (loss)
Nonoperating revenues Earnings on investments
State sources - social security and retirement subsidies
State sources - meal subsidies
Federal sources - meal subsidies
Federal sources - donated commodities
Total nonoperating revenues
Income (loss) before transfers
Transfers from other funds
Change in net assets
Net assets - beginning
Net assets - ending
Food Service
$ 649,258
382,587
115,131
54,869
473,111
12,612
17,033
2,003
1,057,346
(408,088)
1,713
17,000
32,700
187,997
41,992
281,402
(126,686)
481,212
354,526
229,602
$ 584,128
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, 2003
Operating activities
Cash received from users
Cash payments to employees for services
Cash payments to suppliers for goods and services
Net cash provided by (used for) operating activities
Non-capital financing activities
State sources
Federal sources
Capital projects fund for equipment
General fund contributed services
Net cash provided by (used for) non-capital financing activities
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
Net decrease (increase) in investments
Net cash provided by (used for) investing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents - beginning
Cash and cash equivalents - ending
Food Service
$ 649,929
(489,977)
(525,157)
(365,205)
49,814
188,623
448,712
32,500
719;649
(448,712)
(448,712)
1,713
1,713
(92,555)
271,739
$ 179,184
Reconciliation of operating income (loss) to net cash used in operating activities
Operating income (loss)
Adjustments to reconcile operating income (loss) to net cash used in operating activities
Depreciation
Donated commodities
Net change in other assets and other liabilities
Accounts receivable
Inventories
Due to/from other funds
Accounts payable
Deferred revenue
Compensated absences
Total adjustments
Net cash provided by (used for) oPerating activities
$ (408,088)
17,033
41,992
1,278
10,002
4,781
(35,676)
513
2,960
42,883
$ (365,205)
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~ 2003
Assets
Cash and cash equivalents
Total assets
Student
Activities
$ 144,930
$ 144,930
Liabilities
Due to student groups
Total liabilities
Net assets
Total liabilities and net assets
$ 144,930
144,930
$ 144,930
The accompanying notes are an integral part of these financial statements.
FS- 10
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2003
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 Distdct to residents within its
boundaries: the Cumberland County Townships of Cooke, Lower Frankford, Upper Frenkford, 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. The more significant of these accounting policies are as follows:
Reporting entity
Governmental Accounting Standards Board Statement No. 14 "The Financial Reporting Entity", established the
criteria for determining the activities, organizations and functions of government to be included in the financial
statement of the reporting entity. In evaluating the school as a reporting entity, management has addressed all
potential component units which may or may not fall within the school's financial accountability. The criteria used
to evaluate component units for possible inclusion as part of the District's reporting entity are financial
accountability and the nature and significance of the relationship,
Them are no component units that meet the above criteria for inclusion in this reporting entity. However, the
District is a participant in three jointly-governed operations, each of which is a separate legal entity that offers
services to the District and its residents. Each entity serves several schoot districts, so the following entities 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 the entities can be obtained from the entity's administrative office.
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.
FS - 11
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2003
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
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 resoumes are available for use, it is the District's general policy to use the
restricted (primarily operating grants) resoumes 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.
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.
Basis of presentation
Government-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 reported separately from business-type activities which rely to a significant
extent, on fees and charges for support.
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 reported as general
revenues.
FS- 12
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2003
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Basis of presentation (Cont'd.)
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.
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.
The District reports 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.
The Capital Reserve Fund accounts for transfers from other funds and related investment earnings for capital
outlays not accounted for in another fund.
The Athletic Fund accounts for the revenues and expenditures for athletic purposes.
The Capital Projects Fund accounts for bond proceeds and the expenditure of those funds.
The District reports the following proprietary fund:
The Food Service Fund accounts for the operations of the cafeterias,
The District reports the following fiduciary fund:
The Student Activities Fund accounts for programs operated and sponsored by various clubs and
organizations within the schools.
FS- 13
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2003
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Measurement focus and basis of accounting
The government-wide financial statements are reported using the economic resoumes measurement focus and
the accrual basis of accounting as are the proprietary fund and the fiduciary fund financial statements. Revenues
are recorded when earned and expenses are recorded 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
resoumes 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. Accumulated
depreciation and unamortized costs are reported in the statement of net assets.
The governmental fund financial statements are reported 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 collectible within the current
period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government
considers tax revenue to be available if collected within 60 days 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 recorded as deferred revenues
untir earned. Expenditures generally are recorded 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 recorded only when payment is due.
Budgets and budgetary accounting
An operating budget is adopted pdor to the beginning of each year for the General Fund on s 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 adoption of the District's budget and
reporting of its financial statements. 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. Based
on current operating procedures, management submits all budget transfer requests for Board approval.
FS - 14
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2003
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Budgets and budgeta~j accounting (Cont'd.)
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 recorded. Unused encumbrances expire at the
end of each year.
Included in the General Fund 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 $ 481,234.
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 government-wide financial statements as "internal
balances".
Inventories
Inventories are presented at the lower of cost or market on a first-in, first-out basis, and are expended 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), ara reported in the applicable governmental or business-type activities columns in the government-
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 reporting purposes.
In addition, capital assets purchased with long-term debt may be capitalized regardless of the thresholds
established. Such assets are recorded at historical Cost or estimated historical cost if pumhased or constructed.
FS - 15
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2003
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Capital assets (Cont'd.)
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 tires are not
capitalized.
All reported capital assets are depreciated using the straight-line method over the following estimated useful lives:
Governmental Business-type
Assets Activities Activities
Buildings 50
Other structures 20 to 30
Interior renovations 25
Land improvements 20
Furniture 20
Machinery and equipment 10 to 15
Office machines 8
Audio visual equipment 6
Computer equipment 5
Library books 5
2O
15
Long-term liabilities
In the government-wide financial statement, and proprietary fund types in the fund financial statements, long-term
debt and other long-term obligations are reported 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 reported as deferred charges and amortized
over the term of the related debt.
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 reported
as other financing sources while discounts and refunding costs on debt issuances are reported as debt service.
Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as support service
expenditures.
FS- 16
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2003
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Financial accounting standards for proprietary funds
Standards for accounting and financial reporting for private business enterprises generally ara followed for
proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance
of the Governmental Accounting Standards Board.
CHANGES IN ACCOUNTING PRINCIPLES AND RESTATEMENT OF FUND BALANCE
Changes in accounting principles
For the year ended June 30, 2003 the District has implemented GASB Statement No. 34, Basic Financial
Statements - and Management's Discussion and Analysis - for State and Local Govemments. GASB 34 creates
new basic financial statements for reporting on the District's financial activities. The financial statements now
include government-wide financial statements prepared on an accrual basis of accounting and fund financial
statements which present information for individual major funds rather than by fund type. Nonmajor funds, if any,
are presented in total in one column. The government-wide financial statements split the District's programs
between governmental and business-type activities. The beginning net asset amounts reflect the changes in fund
balance at June 30, 2002, caused by the conversion to the accrual basis of accounting.
Restatement of fund balances
The transition from fund balances of governmental funds to net assets of governmental activities is as follows:
Total fund balances of governmental funds - June 30, 2002
$ 21,502,288
GASB 34 adjustments:
Capital assets, net of accumulated depreciation
Long-term liabilities
Unamortized bond related costs
Accrued interest on bonds payable
Taxes receivable, net of allowance for uncollectibles
26,735,957
(34,196,629)
421,980
(436,500)
860,000
Total net assets of governmental activities - June 30, 2002
$ J4,887,096
FS-17
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2003
CASH AND CASH EQUIVALENTS AND INVESTMENTS
The District's cash and cash equivalents and investments have been categorized to indicate the level of risk
assumed by the District. Category 1 includes cash and cash equivalents and investments that are insured or
registered, or securities held by the District or by its agent in the District's name. Category 2 includes uninsured or
unregistered, with securities held by the counterpart's trust department or agent in the District's name. Category 3
includes uninsured and unregistered, with securities held by the counterparty or by its trust department or agent
but not in the District's name, including public funds collateralized as permitted by Act 72 of the Commonwealth of
Pennsylvania.
Carrying AmountJ Bank Cateclorv
Market Value Balance 1 2 3
Demand deposits $ 863,381 1,812,667 $ ~200,000 $ - $ 1,612,667
Petty cash
Money market funds
U.S. Government agencies
Pooled investments
PLGIT
PSDLAF
8O
2,049,649 2,842,158
7,351,472 7,351,473
5,599,175 5,599,175
1,536,179 1,536,179
$ 17.399,936 $ 19,141.652
Cash and cash equivalents, in the proprietary funds statement of cash flows, consists of a demand deposit
account.
The types of authorized investments are limited by State regulations. Investment policies followed during the year
did not significantly alter the categorizations shown above.
The pooled investments funds are required to be operated in accordance with state laws and regulations.
FS- 18
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2003
TAXES RECEIVABLE
Taxes receivable are as follows:
Taxes Taxes
Receivable Allowance for Receivable Deferred
(Gross) Uncollectibles (Net) Tax Revenue
Real estate taxes
Personal taxes
General Fund
Full accrual adjustment
Earned income taxes
$ 478,611 $ 143,611 $ 335,000 $ 155,000
76,579 61,579 15,000 15,000
555,190 205,190 350,000 170,000
(140,000) 140,000 (170,000)
1,185,000 1,185,000
Governmental activities
$ 1,740.190 $ 65,190
The deferred revenue balance in the General Fund of $ 252,462 consists of deferred taxes of $170,000, deferred
revenue for federal grants of $ 72,232, and deferred revenue for summer school of $10,230.
DUE FROM OTHER GOVERNMENTS
Due from other governments are as follows:
Governmental Business-type
Activities Activities Total
Local sources - taxes $ 618,980 $ $ 618,980
Local sources - other 65,755 65,755
State sou rces 181,352 554 181,906
Federal sources 263,585 3,791 267,376
$ .1.129,672 $ 4,345 $ 1,134,017
FS- 19
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2003
CHANGES IN CAPITAL ASSETS
Capital asset activity for the year was as follows:
Governmental activities
Capital assets not being depreciated
Land
Construction in progress
Capital assets being depreciated
Buildings, structures and
improvements
Furniture and equipment
Computer equipment
Library books
Accumulated depreciation for:
Buildings, structures and
improvements
Furniture and equipment
Computer equipment
Library books
Capital assets being depreciated, net
Governmental activities capital assets, net
Business-type activities
Capital assets not being depreciated
Equipment not operational
Capital assets being depreciated
Furniture and equipment
Accumulated depreciation for:
Furniture and equipment
Capital assets being depreciated, net
Business-type activities capital assets, net
Beginning Ending
Balance Increases Decreases Balance
$ 610,000$ $ - $ 610,000
15,657,896 12,906,378 28,564,274
16,267,896 12,906,378 29,174.274
23,612,317 23,612.317
1,459,575 49,803 1,509,378
1,865,209 49,376 1,914,585
704,530 48,882 753~412
27,641.631 148,061 27,789,692
13,988,434 545.927 14,534,361
1,189,296 39,737 1,229,033
1,393,565 176,856 1,570,421
602,275 41,703 643,978
17.173,570 804,223 17,977,793
10,468,061 (656,162) 9,811,899
$ 26,735,957 $ 12.250,216 $
- $ 38.986,173
448,712 $ - $ 448,712
417,203 417,203
281,683 17,033 298,716
135,520 ~17,033) 118,487
$ 135.520 $ _ 431,679 $ _ - $ 567,199
FS-20
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2003
CHANGES IN 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
$ 657,411
69,104
23,661
18,672
35,375
804,223
Business-type activities - Food service
$ 17.~033
An independent appraisal company is scheduled to begin a fixed asset inventory project designed to enhance the
District's tracking of furnishings and equipment and the accumulated depreciation thereon. This capital asset
system will also provide data for the new reporting requirements under GASB Statement No. 34. Any changes in
the recorded values of estimated historical costs and accumulated depreciation of the District's capital assets
which may result from this inventory will be reflected during the year ending June 30, 2004.
LONG-TERM LIABILITIES
Changes in bonds payable were as follows:
Beginning Scheduled Ending
Balance Refundinq Redemptions Balance
Fixed rates
1997 Series $ 3,285,000 $ - $ (405,000) $ 2,880,000
1998 Series 8,875,000 (8,470,000) (405,000)
2001 Series 15,500,000 (545,000) 14,955,000
2003 Series 19,460,000 19,460,000
Capital lease for computers 25,669 (25,669)
Variable rates
1999 Series 4,585,000 (205,000) 4,380,000
2000 Series 1,200,000 (1,200,000/
$ 33,470.669 $ 10,990,000 $ (2.785,669) $ 41,675.000
FS - 21
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2003
LONG-TERM LIABILITIES (Cont'd,)
Interest Rates
Maturity Date
Callable Date
Amounts Due
With in One Year
1997 Series 5.075% Mamh 2009 Not callable $ 420,000
1999 Series (1) December 2017 45 days notice 210,000
2001 Series 3.40% to 5.10% February 2021 August 2011 565,000
2003 Series 2.00% to 4.40% April 2023 April 2013 290,000
$ 1,485,000
(1) The 1999 series pays interest at a variable rate of .55% above the "weekly rate", not to exceed 25.00%.
At June 30, 2003 the "weekly rate" was 1.00%.
In June 2003, the District issued its 2003 Series general obligation bonds in the amount of $19,460,000, for the
advance refunding of the 1998 Series and to finance various capital projects of the District. After receiving a bond
premium of $ 314,726, paying issuance costs of $ 278,220 and depositing $ 8,623,752 in an irrevocable trust
fund, the remaining $10,872,754 was available to the District. The investments and earnings of the irrevocable
trust fund were sufficient to fully retire the 1998 Series when it was called in October 2003. The refunding of the
1998 Series reduced future debt service by approximately $ 230,000, which will be realized during the year ended
June 30, 2004.
The District has been reviewing preliminary cost estimates to convert the old high school to a middle school, and
other cost estimates related to the middle school annex.
For financial reporting purposes the 1998 Series is considered defeased and therefore not included as a liability in
the statement of net assets. As of June 30, 2003 the $ 8,470,000 of the defeased 1998 Series was outstanding.
Scheduled debt service requirements, payable by the General Fund, are as follows:
Year EndinQ June 30
Principal Interest Total
2004 $ 1,485,000 $ 1,535,561 $ 3,020,561
2005 2,135,000 1,609,902 3,744,902
2006 2,200,000 1,541,346 3,741,346
2007 2,290,000 1,464,152 3,754,152
2008 2,370,000 1,390,370 3,760,370
2009-2013 11,030,000 5,622,640 16,652,640
2014-2018 13,035,000 3,272,479 16,307,479
2019-2023 7,130,000 848,810 7,978,810
$ 41,675,000 $ 17~285,260 $ 58,960,260
FS - 22
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2003
LONG-TERM LIABILITIES (Cont'd.)
Changes in compensated absences were as follows:
Beginning Ending
Balance Net Chanoe Balance
Governmental activities
$ 725.960 $ (5,270) $ 720,690
Business-type activities
$ 69.327 $ 2,960 $ 72,287
The estimated amounts due within one year on these items are $150,000 and $ 7,000 for the governmental and
business-type activities, respectively.
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 $ 8,000 for all other employees):
Accumulated unused sick leave days times $ 50 per day
2. Number of full years of service in the District times $150 per year
PENSION PLAN
Substantially ail full-time and part-time employees of the District participate in a cost-sharing multiple employer
defined benefit pension plan. The Distdct 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.13a.us.
FS - 23
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2003
PENSION PLAN (Cont'd.)
The contribution policy is established by the Code and requires contributions by active members, employers and
the Commonwealth. Active members are required to contribute as follows:
Active members who joined the System prior to July 22, 1983, contribute at 5.25 percent (Class TC) or at
6.50 percent (Class TD) of the member's qualifying compensation.
Members who joined the System on or before July 22, 1983, who were active or inactive as of July 1,
2001, contribute at 6.25 percent (Class TC) or at 7.50 percent (Class TD) of the member's qualifying
compensation.
Members who joined the System after June 30, 2001, contribute at 7.50 percent (automatic Class TD).
For all new hires and for members who elected Class TD membership, the higher contribution rates begin
with service rendered on or after January 1, 2002.
Contributions required of employers are based upon an actuarial valuation. For the fiscal year ended June 30,
2003 the employer contribution rate was 1.15 percent of covered payroll, composed of 0.18 percent for pension
benefits and 0.97 percent for healthcare insurance premium assistance. The District's contributions to PSERS for
the years ending June 30, 2003, 2002 and 2001 were $163,975, $149,368 and $ 241,893, respectively. Those
amounts are equal to the required contributions for each year.
POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Under the negotiations agreement with Big Spdng Education Association, the District shall provide for
continuance of health care insurance after retirement until age 65. This health care insurance shall be at the
retiree's expense, except that employees who retire after thirty or more years with the District, shall have up to
five years of health care insurance benefits provided on the basis of the District paying 50% of the cost and the
retiree paying 50% of the cost. The District finances this benefit on a pay-as-you-go basis. For the year ended
June 30, 2003 the District incurred a total cost of $ 49,664 to provide this benefit to 22 participants.
RISK MANAGEMENT
The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets;
errors and omissions; injuries to employees; and natural disasters. The District maintains commercial insurance
coverage covering each of those risks of loss. Management believes such coverage is sufficient to preclude any
significant uninsured losses to the District. Settled claims have not exceeded this commercial coverage in any of
the past three fiscal years.
For State unemployment compensation laws, the District is self-insured, which is a common practice for local
governmental units. Any unemployment claims are paid by the District on a quarterly basis as incurred.
FS - 24
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2003
RISK MANAGEMENT (Cont'd.)
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.
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 Distdct annual cost). A
summary of District transactions with the Trust is as follows:
District balance, June 30, 2002
(plus $100,000 accrual equals $820,583)
Prior year adjustment to Insurance Company reserves
$ 720,583
508,971
Adjusted Distdct balance, July 1, 2002
1,229,554
District payments to the Trust
Rebates and reimbursements
Interest income
2,082,804
20,598
7,890
Total receipts 2,111,292
Claims paid by the Trust
Stop loss premiums (reinsurance)
Administrative and other fees
2,025,821
153,395
43,550
Total payments
2,222,766
District balance, June 30, 2003
$ 1,118~080
Participants in the trust are required to maintain adequate balances to cover risk and incurred but not reported
claims. District management considers the June 30, 2003 balance of $ 1,118,080 to be adequate. For the
previous year, the District had accrued a liability to the trust of $100,000 and considered the combined balance of
$ 820,583 to be adequate.
FS-25
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2003
COMMITMENTS AND CONTINGENCIES
The District's contract with its teaching staff is scheduled to expire in June 2004.
As of June 30, 2003 the District was in the final stages of construction of a new high school. Approximately
$ 200,000 of construction remained to be completed and approximately $ 400,000 of equipment remained to be
received. The open house for the building was held on August 19, 2003.
In the normal course of business, the District is subject to legal disputes and claims. The District does not
anticipate any material losses from any pending or threatened litigation.
In the normal course of preparing for the subsequent school year, the District has awarded bids for various
supplies, fuel contracts, etc. No major commitments in excess of routine requirements have been made by the
District.
The District participates in state and federal grant programs which are governed by various rules and regulations.
Expenditures charged to these 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, and on the related revenues and expenditures.
FS - 26
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