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MECHANICSBURG AREA SCHOOL DISTRICT
FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2008
TABLE OF CONTENTS
Page
Number
INDEPENDENT AUDITORS' REPORT IAR - 1 to IAR - 2
MANAGEMENT'S DISCUSSION AND ANALYSIS MDA -1 to MDA - 11
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
Statement of changes in net assets -fiduciary funds FS - 11
NOTES TO FINANCIAL STATEMENTS FS - 12 to FS - 29
BUDGETARY COMPARISON INFORMATION -GENERAL FUND ~ BCI - 1
SUPPLEMENTARY INFORMATION SI - 1 to SI - 4
~7`~Ca.
Greenawalt & Company, P.C.
CERTIFIED PUBLIC ACCOUNTANTS lames E. ~yoris
Howard R. Greenawalt
Since 1955 Creedon R. Hoffman
Deborah J. Kelly
Scott J. Christ
INDEPENDENT AUDITORS' REPORT
Board of School Directors
Mechanicsburg Area School District
Mechanicsburg, Pennsylvania
We have audited the accompanying financial statements of the governmental activities, the business-type activities,
the aggregate discretely presented component unit, each major fund, and the fiduciary funds of Mechanicsburg Area
School District as of and for the year ended June 30, 2008, 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.
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, the aggregate discretely presented
component unit, each major fund, and the fiduciary funds of Mechanicsburg Area School District, as of June 30, 2008,
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 November 18, 2008 on our
consideration of Mechanicsburg Area School District's internal control over financial reporting and on 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 . Cazlisle, PA 17013.717.243.4822 .Fax 717.258.9372
www.greenawalt.cc
Board of School Directors
Mechanicsburg Area School District
Mechanicsburg, Pennsylvania
Management's discussion and analysis on pages MDA - 1 through MDA - 11 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.
Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The
combining schedules on pages SI - 1 through SI - 4 are for purposes of additional analysis and are not a required part
of the financial statements of Mechanicsburg Area School District. Such information has been subjected to the
auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly presented in all
material respects in relation to the financial statements taken as a whole.
GREENAWALT & COMPA Y, P.C.
November 18, 2008
Mechanicsburg, Pennsylvania
IAR - 2
MECHANICSBURG AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
The management of the Mechanicsburg Area School District is pleased to present the following discussion
and analysis of the District's financial position at June 30, 2008, 2007, and 2006. It provides an overview of
our financial performance between fiscal yeazs ended June 30, 2008 and 2007, in accordance with
governmental reporting requirements. The purpose of this discussion is to provide a narrative summary of
the financial position and activities of the District in order to enhance the reader's understanding of the
District's basic financial statements.
The District is required to present comparative financial information between the current year and the. prior
year in its Management's Discussion and Analysis (MD&A) as mandated by the Governmental Accounting
Standards Board (GASB) Statement No. 34 Basic Financial Statements -and Management's Discussion and
Analysis -for State and Local Governments. This report contains such comparative financial information.
The District has elected not to include the financial information of its discretely presented component unit,
The Wildcat Foundation, in its Management Discussion and Analysis. The sepazate audited financial
statements for the Foundation are available by contracting the District office.
FINANCIAL HIGHLIGHTS
For the 2007-2008 fiscal year, the School Board adopted the general fund budget with a planned deficit of
$2,272,662, mainly due to a budgeted transfer to the Capital Reserve Fund to pay for several capital
projects. The actual 2007-2008 fiscal year results decreased fund balance by $2,423,218, because the
transfer to the Capital Reserve Fund was authorized above the budgeted amount. Expenditures were under
budget by $1,631,447 or 4% which is within the normal variance. Revenue exceeded budget by $1,697,996
or 3.7% due to above average collections in real estate, realty transfer and earned income taxes. The ending
fund balance at June 30, 2008 is $8,199,249 which is comprised of $1,785,378 designated for future medical
insurance claims and $6,413,871 which is undesignated. This undesignated fund balance represents 12.9%
of expenditures and transfers out to other funds.
OVERVIEW OF THE FINANCIAL STATEMENTS
These financial statements consist of three sections -Management's Discussion and Analysis (this section),
the basic financial statements, and other required supplementary information.
The first two statements of the basic financial statements are government-wide financial statements. These
statements on pages FS-1 and FS-2 consist of the Statement of Net Assets and the Statement of Activities.
The government-wide financial statements provide both short-term and long-term information about the
District's overall financial status.
MDA - 1
MECHANICSBURG AREA SCHOOL DISTRICT
MANAGEMENT'S .DISCUSSION AND ANALYSIS
JUNE 30, 2008
The remaining basic financial statements consist of fund financial statements. These statements focus on
individual funds of the District and provide a more detailed presentation of the District's operations. The
governmental funds statements on pages FS-3 and FS-5 present how general District services are financed
in the short-term as well as what remains for future spending. The proprietary fund statements on pages
FS-7 through FS-9 present both short-term and long-term information about the activities that the District
operates similar to a business.
The basic financial statements also include notes on pages FS-12 through FS-29 that provide a more detailed
explanation of some of the information in the financial statements. Following the basic financial statements
is other required supplementary information on page BCI-1 that consists of the District's budgetary
comparison and other supplementary information on pages . SI-1 through SI-4 presenting combining
schedules for additional analysis.
Government-wide Statements Report the District as a Whole
The government-wide statements report financial information about the District as a whole using accounting
methods similar to the accounting used by private-sector companies. The Statement of Net Assets includes
all of the District's assets and liabilities utilizing the full accrual basis of accounting. The Statement of
Activities accounts for all of the District's revenues and expenses, regardless of when cash is received or
paid.
These two government-wide statements report the District's net assets and changes in them. The District's
net assets represent the difference between the District's assets and liabilities. The District's net assets are
one way to measure the District's financial position, or financial health, over time. Increases or decreases in
the District's net assets are one indicator of whether its financial health is improving or deteriorating,
respectively. To assess the overall health of the District, non-financial factors must also be considered, such
as changes in the District's property tax base and the performance of the students.
The government-wide financial statements of the District are divided into two categories:
• Governmental activities -All of the District's basic services are included here, such as
instruction, administration and community services. Real estate and earned income taxes, and
state and federal subsidies and grants finance most of these activities.
• Business-type activities -The District operates a food service operation and charges fees to staff,
students and visitors to help it cover the costs of the food service operation.
MDA-2
MECHANICSBURG AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
Fund Financial Statements
The District's fund financial statements provide detailed information about the most significant funds, or
major funds -not the District as a whole. Some funds are required to be reported as major funds.
• Governmental funds -Most of the District's activities are reported in governmental funds, and
focus on changes in financial resources, rather than upon net income determination. These funds
are reported using the modified accrual basis of accounting, which measures cash and all
financial assets that can readily be converted to cash. The governmental fund statements provide
a detailed short-term view of the District's operations and the services it provides. Governmental
fund information helps the reader determine whether there are more or fewer financial resources
that can be spent in the near future to finance the District's programs. The relationship (or
differences) between governmental activities (reported in the Statements of Net Assets and the
Statement of Activities) and governmental funds is reconciled in the financial statements on
pages FS-4 and FS-6.
• Proprietary funds -These funds are used to account for the District activities that are similar to
business operations in the private sector. When the District charges customers for services it
provides, these services are generally reported in proprietary funds. The Food Service Fund is the
District's proprietary fund and is the same as the business-type activities reported in the
government-wide statements.
• Fiduciary funds -The District is the trustee or agent for individuals, private organizations and/or
governmental units as shown on pages FS-10 and FS-1 L
FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE
Net Assets
The District's total net assets were $21,381,374 at June 30, 2008 which includes $20,477,533 in
Governmental Activities and $903,841 in Business-type Activities. This shows an increase of $2,313,054
from total net assets at June 30, 2007, which included an increase of $2,402,998 in Governmental Activities
and a decrease of $89,944 in Business-type Activities.
MDA - 3
MECHANICSBURG AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
Statement of Net Assets 2007-2008
Current and other assets
Capital assets
Total assets
Current and other liabilities
Long-term liabilities
Total liabilities
Capital assets (net of related debt)
Restricted for capital projects
Unrestricted
Total net assets
Total liabilities and net assets
Governmental
Activities
$ 18,521,940
68,839,547
$ 87,361,487
$ 5,072,083
61,811,871
66,883,954
7,274,553
145,657
13,057,323
20,477,533
$ 87,361,487
Business-type
Activities
$ 405,801
538,878
$ 944,679
$ 27,482
13,356
40,838
538,878
364,963
903,841
$ 944,679
Total
School District
$ 18,927,741
69,378,425
$ 88,306,166
$ 5,099,565
61,825,227
66,924,792
7,813,431
145,657
13,422,286
21,381,374
Statement of Net Assets 2006-2007
Current and other assets
Capital assets
Total assets
Current and other liabilities
Long-term liabilities
Total liabilities
Capital assets (net of related debt)
Restricted for capital projects
Unrestricted
Total net assets
Total liabilities and net assets
Governmental
Activities
$ 16,859,210
71,017,278
$ 87,876,488
$ 5,351,868
64,450,085
69,801,953
3,152,395
2,909,218
12,012,922
18,074,535
$ 87,876,488
Business-type
Activities
$ 422,950
605,688
$ 1,028,638
$ 28,474
6,379
34,853
605,688
388,097
993,785
$ 1,028,638
$ 88,306,166
Total
School District
$ 17,282,160
71,622,966
$ 88,905,126
$ 5,380,342
64,456,464
69,836,806
3,758,083
2,909,218
12,401,019
19,068,320
$ 88,905,126
MDA-4
MECHANICSBURG AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
Statement of Net Assets 2005-2006
Governmental
Activities
Business-type
Activities
Total
School District
Current and other assets $ 12,622,505
Capital assets 71,983,220
Total assets $ 84,605,725
Current and other liabilities $ 4,632,032
Long-term liabilities 66,810,941
Total liabilities 71,442,973
Capital assets (net of related debt) (2,186,507)
Restricted for capital projects 7,184,754
Unrestricted 8,164,505
Total net assets 13,162,752
Total liabilities and net assets $ 84,605,725
Statement of Activities
$ 403,635
664,084
$ 1,067,719
$ 41,903
41.,903
664,084
361,732
1,025,816
$ 1,067,719
$ 13,026,140
72,647,304
$ 85,673,444
$ 4,673,935
66,810,941
71,484,876
(1,522,423)
7,184,754
8,526,237
14,188,568
$ 85,673,444
The results of this year's operations as a whole are reported in the Statement of Activities. Direct expenses
are listed by programs, then offset by program revenues to determine net (expense) revenue and changes in
net assets. General revenues, such as taxes, state general subsidies, and investment earnings are then applied
prior to transfers, and special items, to determine the change in net assets. For the 2007-2008 fiscal year, the
change in net assets for governmental activities was an increase of $2,402,998 and a decrease of $89,944 for
business-type activities, for a net total increase of $2,313,054 as reflected in the following chart. For the
2006-2007 fiscal year, the change in net assets for governmental activities was an increase of $4,911,783
and a decrease of $32,031 for business-type activities for a net total increase of $4,879,752 as reflected in
the chart below:
MDA - 5
MECHANICSBURG AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
Statement of Activities 2007-2008
Governmental
Activities
Business-type
Activities
Program revenues
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues
Taxes
Other local revenue
State general subsidies
Investment earnings
Total revenues
Direct expenses
Excess (deficiency) before transfers
Transfers between activities
Change in net assets
Statement of Activities 2006-2007
Program revenues
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues
Taxes
Other local revenue
State general subsidies
Investment earnings
Total revenues
Direct expenses
Excess (deficiency) before transfers
$ 882,664
5,133,660
675,968
34,557,334
5,158,864
968,329
47,376,819
44,796,503
2,580,316
(177,318)
$ 2,402,998
Governmental
Activities
$ 789,230
4,880,108
719,586
33,941,925
5,060,687
1,284,895
46,676,431
41,591,572
5,084,859
$ 1,029,090
602,172
1,296
18,025
1,650,583
1,917,845
(267,262)
177,318
$ (89,944)
Business-type
Activities
$ 1,022,687
561,099
6,541
23,468
1,613,795
1,818,902
(205,107)
Transfers between activities (173,076) 173,076
Change in net assets $ 4,911,783 $ (32,031)
MDA - 6
Total
School District
$ 1,911,754
5,735,832
675,968
34,557,334
1,296
5,158,864
986,354
49,027,402
46,714,348
2,313,054
$ 2,313,054
Total
.School District
$ 1,811,917
5,441,207
719,586
33,941,925
6,541
5,060,687
1,308,363
48,290,226
43,410,474
4,879,752
$ 4,879,752
MECHANICSBURG AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JiJNE 30, 2008
Local Sources
Direct expenses represent the actual cost of providing the services while the net cost represents the amount
of cost that is not recovered through program revenues, meaning user charges, grants and contributions. The
net cost of services must be recovered through general revenue, primarily taxes and state subsidies.
Amounts not recovered will reduce funds available for future years.
Local Sources 2007-2008
Governmental Activities
Instruction
Instructional student support
Administrative and financial suppo
Operation and maintenance of plant
Pupil transportation
Student activities
Community services
Interest on long-term debt
Total governmental activities
Direct
Expenses
$ 27,720,954
4,214,046
rt 3,353,908
4,089,658
1,483,680
959,082
550,245
2,424,930
$ 44,796,503
Program
Revenues
$ 4,433,965
338,553
138,013
97,872
485,138
140,903
381,880
675,968
$ 6,692,292
Program
Revenues
Net
Cost
$ 23,286,989
3,875,493
3,215,895
3,991,786
998,542
818,179
168,365
1,748,962
3 8,104,211
177,318
(5,158,864)
$ 33,122,665
Net
Cost
$ 286,583
Transfers out and special items
State general subsidies revenues
Total needs from taxes and other local sources
Direct
Expenses
Business-type Activities
Food services $ 1,917,845
Transfers received, special items and investment earnings
Total needs from taxes and other local sources
$ 1,631,262
(196,639)
$ 89,944
MDA - 7
MECHANICSBURG AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
Local Sources 2006-2007
Governmental Activities
Instruction
Instructional student support
Administrative and financial suppo
Operation and maintenance of plant
Pupil transportation
Student activities
Community services
Interest on long-term debt
Total governmental activities
Direct
Expenses
Program
Revenues
$ 4,145,821
324,470
128,372
96,973
483,172
116,197
374,333
719,586
$ 6,388,924
Program
Revenues
Net
Cost
$ 21,585,422
3,386,091
2,886,633
3,741,587
882,077
790,603
94,724
1,835,511
35,202,648
$ 25,731,243
3,710,561
rt 3,015,005
3,838,560
1,365,249
906,800
469,057
2,555,097
$ 41,591,572
173,076
(5,060,687)
$ 30,315,037
Net
Cost
$ 235,116
Transfers out and special items
State general subsidies revenues
Total needs from taxes and other local sources
Direct
Expenses
Business-type Activities
Food services $ 1,818,902
Transfers received, special items and investment earnings
Total needs from taxes and other local sources
The District Funds
$ 1,583,786
(203,085)
$ 32,031
At June 30, 2008, the District governmental funds reported a combined fund balance of $14,152,949, which
is a decrease of $1,578,674 from June 30, 2007. The information below compares the governmental funds
fund balances for June 30, 2008, 2007 and 2006.
MDA - 8
MECHANICSBURG AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
2006-2007 2006-2007 2007-2008 2007-2008
2006 2007 2008 Chance %Chance Chance %Chance
General Fund -unrestricted
General Fund -designated
Capital Reserve Fund -unrestricted
Athletic Fund -unrestricted
Construction Fund -restricted
Debt Service Fund -designated
Total governmental funds
$ 5,097,458 $ 8,899,731 $ 6,413,871 $ 3,802,273
1,105,526 1,722,736 1,785,378 617,210
1,692,580 1,518,126 5,038,654 (174,454)
451 175 4,289 (276)
7,184,754 2,909,218 145,657 (4,275,536)
622,473 681,637 765,100 59,164
$ 15,703,242 $ 15,731,623 $ 14,152,949 $ 28,381
74.6% $ (2,485,860) -27.9%
55.8% 62,642 3.6%
-10.3% 3,520,528 231.9%
-61.2% 4,114 2350.9%
-59.5% (2,763,561) -95.0%
9.5% 83,463 12.2%
0.2% $ (1,578,674) -10.0%
Total unrestricted $ 6,790,489 $ 10,418,032 $ 11,456,814 $ 3,627,543 53.4% $ 1,038,782 10.0%
Total restricted/designated 8,912,753 5,313,591 2,696,135 (3,599,162) -40.4% (2,617,456) -49.3%
Total governmental funds $ 15,703,242 $ 15,731,623 $ 14,152,949 $ 28,381 0.2% $ (1,578,674) -10.0%
Governmental Funds -Reconciliation
The General Fund Balance decrease of $2,423,218 was due to transfers to the Capital Reserve Fun to fund
several current and future capital projects.
The Capital Reserve Fund increase of $3,520,528 was due to transfers from the General Fund.
The Construction Fund decrease of $2,763,561 was due to the completion of construction projects.
'The Debt Service Fund increase of $83,463 was due to favorable interest rates on a variable rate bond issue.
General Fund Budget
A General Fund budget is adopted each year in accordance with the Pennsylvania School Code. The revised
budget reflects budget transfers as approved by the Board.
The District applies for State and Federal grants each year. Certain grants may not be anticipated during the
budgeting process and must be added to the budget during the fiscal year. In addition, the grants that are
anticipated during the budgeting process are based on estimates. The budget must then be modified based on
the actual grant award.
MDA-9
MECHANICSBURG AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JL7NE 30, 2008
June 30, 2008 Budget Actual Variance
Total revenues $ 45,431,798 $ 47,129,794 $ 1,697
996
Total expenditures 40,389,383 38,757,936 ,
1,631,447
Excess revenues (expenditures) 5,042,415 8,371,858 3,329,443
Other financing sources (uses) (7,315,077) (10,795,076) (3,479 999)
Net change in fund balance $ (2,272,662) $ (2,423,218) $ (150,556)
June 30, 2007 Budget Actual Variance
Total revenues $ 42,866,296 $ 46,400,543 $ 3,534,247
Total expenditures 37,765,194 36,436,980 1,328,214
Excess revenues (expenditures) 5,101,102 9,963,563 4,862,461
Other financing sources (uses) (5,588,886) (5,544,080) 44,806
Net change in fund balance $ (487,784) $ 4,419,483 $ 4,907,267
CAPITAL ASSETS
At June 30, 2008, the District had $67,611,880 in Governmental activities capital assets, which represents
an increase of $1,560,443. The District has made substantial capital improvements over the past three years,
including renovations to five elementary schools.
Capital assets (net of depreciation)
Governmental activities
Land
Construction in progress
Land improvements
Buildings and improvements
Furniture and equipment
Library Books
Total governmental capital assets
Business-type activities
Furniture and equipment
2006-2007 2007-2008
2006 2007 2008 Chance Chance
$ 605,983 $ 605,983 $ 605,983 $ - $ _
15,794,500 1,198,342 957,103 (14,596,158) (241,239)
3,045,577 2,059,7]7 1,923,848 (985,860) (135,869)
42,666,303 60,592,308 62,469,056 17,926,005 1,876,748
1,208,145 1,522,513 1,553,014 314,368 30,501
54,918 72,574 102,876 17,656 30,302
$ 63,375,426 $ 66,051,437 $ 67,611,880 $ 2,676,011 $ 1,560,443
$ 664,084 $ 605,688 $ 538,878 $ (58,396) $ (66,810)
MDA - 10
MECHANICSBURG AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
LONG-TERM LIABILITIES
Bonds payable at June 30, 2006, 2007 and 2008 were $66,460,000, $63,990,000 and $61,305,000
respectively. Scheduled payments of principal made during the year to the bondholders were $2,685,000.
The amount of bond principal due within one year is $3,060,000.
Compensated absences increased during the year from anentity-wide perspective from $553,811 to
$599,567 at June 30, 2008. Compensated absences increased from June 30, 2006 to June 30, 2007 from an
entity-wide perspective from $466,597 to $553,811.
NEXT YEAR'S BUDGET AND ECONOMIC FACTORS
Total revenue
Total expenditures
Excess revenues (expenditures)
before transfers
Transfers
Net change in fund balance
Budget Budget
2008-2009 2007-2008 Chance
$ 48,583,259 $ 45,431,798 $ 3,151,461
43,496,973 40,434,383 (3,062,590)
5,086,286 4,997,415 88,871
(5,724,567) (7,270,077) 1,545,510
$ (638,281) $ (2,272,662) $ 1,634,381
The new budget for 2008-2009 represents an increase in total expenditures of 7.57%. This increase is due to
implementation of a full-day kindergarten program, contracted salary increases, contracted education
services, and fuel and operational costs. The 2008-2009 budget increased the real estate tax rate to 13.76
mills. The District plans to reduce its fund balance by $638,281 to offset the planned budget deficit.
There are no changes to economic factors that are expected to have a significant impact on our 2009-2010
budget.
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 funds it receives. If you have questions about this
report or wish to request additional financial information, please contact the district office of Mechanicsburg
Area School District, 100 East Elmwood Avenue, Mechanicsburg, PA 17055, (717) 691-4500.
MDA - 11
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MECHANICSBURG AREA SCHOOL DISTRICT
STATEMENT OF NET ASSETS -PROPRIETARY FUNDS
JUNE 30, 2008
Assets
Cash and cash equivalents
Due from other governments
Inventories
Total current assets
Furniture and equipment (net of accumulated depreciation)
Total assets
Liabilities
Current liabilities
Due to other funds
Deferred revenues
Accounts payable
Compensated absences
Total current liabilities
Total liabilities
Net assets
Invested in capital assets (net of related debt)
Unrestricted
Total net assets
Total liabilities and net assets
Food
Service
$ 413,407
5, 596
23,257
442,260
538,878
$ 981,138
$ 36,460
24,417
3,064
13, 356
77,297
77,297
538,878
364, 963
903,841
$ 981,138
The accompanying notes are an integral part of these financial statements.
FS-7
MECHANICSBURG AREA SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET ASSETS -PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2008
Operating revenues
Food service revenue
Charges for services
Other operating revenues
Total operating revenues
Operating expenses
Salaries
Employee benefits
Purchased property service
Other purchased service
Food and milk
Other supplies
Depreciation
Total operating expenses
Operating income (loss)
Nonoperating revenues (expenses)
Earnings on investments
State sources -commodities
State sources -social security and retirement subsidies
State sources -meal subsidies
Federal sources -meal and other subsidies
Total nonoperating revenues
Loss before transfers
Transfers from other funds
Change in net assets
Net assets -beginning
Net assets -ending
Food
Service
$ 1,011,267
17, 823
1,296
1,030,386
527, 056
224, 968
143,942
2, 881
875, 941
76,247
66,810
1, 917, 845
(887,459)
18, 025
80,282
38,155
69,465
414,270
620,197
(267,262)
177, 318
(89,944)
993,785
$ 903, 841
The accompanying notes are an integral part of these financial statements.
FS-8
MECHANICSBURG AREA SCHOOL DISTRICT
STATEMENT OF CASH FLOWS -PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2008
Operating activities
Cash received from users
Cash payments to employees for services
Cash payments to suppliers for goods and services
Cash payments for other operating expenses
Net cash provided by (used for) operating activities
Non-capital financing activities
State sources
Federal sources
Grant revenue
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 cash provided by (used for) investing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents -beginning
Cash and cash equivalents -ending
Reconciliation of operating income (loss) to net cash used in operating activities
Operating income (loss)
Adjustments to reconcile operating income (loss) to net cash
provided by (used for) operating activities
Depreciation
Donated commodities
Contribution of General Fund
Net change in other assets and other liabilities
Accounts receivable
Inventories
Due to/from other funds
Deferred revenue
Accounts payable
Compensated absences
Total adjustments
Net cash provided by (used for) operating activities
Food
Service
$ 1,032,445
(813,414)
(909,984)
(2, 881)
(693,834)
108,168
418, 069
526,237
18,025
18,025
(149,572)
562, 979
$ 413,407
$ (887,459)
66,810
80,282
177,318
(146)
(5,601)
(131,024)
2,204
(3,195)
6,977
193,625
$ (693,834)
The accompanying notes are an integral part of these financial statements.
FS-9
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MECHANICSBURG AREA SCHOOL DISTRICT
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS -FIDUCIARY FUNDS
JUNE 30, 2008
Additions
Investment earnings
Gifts and contributions
Total additions
Deductions
Scholarships awarded
Change in net assets
Net assets, beginning
Net assets, ending
Private Purpose
Trust
$ 4,307
58,551
62,858
33,631
29,227
105,177
$ 134,404
The accompanying notes are an integral part of these financial statements.
FS - 11
MECHANICSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Mechanicsburg Area School District is the level of government which has oversight responsibility and control over
activities related to public school education. The report includes services provided by the District to residents
within the boundaries of the Cumberland County municipalities of Upper Allen Township, Shiremanstown and
Mechanicsburg Boroughs. 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 Mechanicsburg Area School District have been prepared in accordance with generally
accepted accounting principles as applied to governmental units. The Governmental Accounting Standards Board
(GASB) 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
Department of Education. The more significant of these accounting policies are as follows:
Reporting entity
Governmental Accounting Standards Board Statement No. 39 "Determining Whether Certain Organizations are
Component Units" (an amendment of Statement No. 14), 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 District 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:
• 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 an individual organization that the District is entitled to (or
has the ability to) access is significant to the District.
The District has included The Wildcat Foundation (the Foundation) as a discretely presented component unit. The
financial data of the Foundation is reported in the component unit column in the basic financial statements. This
separate column is used to emphasize that the Foundation is legally separate from the District. The Foundation
was formed for the purpose of supporting projects related to educational programs and to create opportunities for
development for the students, staff and community within the Mechanicsburg Area School District. The separate
financial statements for the Foundation are available by contacting the District office.
FS-12
MECHANICSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Jointly-governed organizations
The District is a participant in four jointly-governed organizations, each of which is a separate legal entity that
offers educational services to the District and its residents. Each of these entities serves several school districts
and/or municipalities and therefore are not included in this reporting entity. These entities do not have taxing
power, but are 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 the respective 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.
West Shore Tax Bureau provides earned income tax collection services.
Harrisburg Area Community College provides community college education services and programs.
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. Accumulated
depreciation and unamortized costs are reported 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 reported as general
revenues.
FS-13
MECHANICSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
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.
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 90 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 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.
FS - 14
MECHANICSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Basis of presentation -Fund financial statements (Cont'd.)
Fund accounting (Cont'd.)
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.
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.
FS-15
MECHANICSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Basis of presentation -Fund financial statements (Cont'd.)
Fund accounting (Contd.)
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.
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 athletic revenues and expenditures of those funds for athletic purposes.
The Construction Funds accounts for bond proceeds and the expenditure of those funds.
The Debt Service Fund accounts for bond refinancing and related costs.
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:
Expendable and Non-expendable Trusts account for contributions to and interest earnings on scholarship
funds donated to the District, and for payments of scholarship funds to selected students.
The District Agency Fund accounts for programs operated and sponsored by non-school organizations.
These funds are separated from student activity 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.
FS-16
MECHANICSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
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 presented in the district-wide financial statements as "internal balances".
Balances between funds are considered to be short term items pending periodic repayments.
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), 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 $ 5,000 and an estimated useful life in excess of one year. Management has elected to include certain
homogeneous groups with individual costs of less than $ 5,000 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.
FS-17
MECHANICSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Capital assets (Cont'd.)
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
Computer equipment
Vehicles
Long-term liabilities
50 -
25 -
20 -
20 20
10 to 15 15
5 -
5 5
8 -
In the district-wide financial statement, and proprietary fund types in the fund financial statements, long term debt
and other long term obligations are presented as liabilities in the applicable governmental activities or proprietary
fund statement of net assets. Refunding costs and bond premiums and 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.
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.
FS - 18
MECHANCISBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
New accounting policies
The Governmental Accounting Standards Board (GASB) has issued several statements which will become
effective in future reporting years. The statement which will have the greatest impact on the District is GASB 45
'Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions". The
statement sets new accounting standards for state and local government employers that offer retiree health
benefits and other non-pension postemployment benefits. This GASB statement will impact future district-wide
financial statements, but will have no impact on the fund financial statements which use the modified accrual
basis of accounting. The effective date of GASB 45 for the District is the June 2009 fiscal year.
The District obtained an actuarial valuation as of July 1, 2008 to determine its accrued liability, which is the
present value of all benefits attributed to past service of current plan participants. The accrued liability was
determined to be $ 1,288,868, composed of $ 739,404 attributable to active participants and $ 549,464
attributable to retired participants.
Beginning July 2008 this unfunded actuarial accrued liability will be amortized over a blended period. The portion
for active participants will be amortized over the expected future service period, and the portion for retired
participants will be amortized over the expected future period of payment. The amortization expense in the
district-wide financial statements is estimated to be $ 218,723 for the June 2009 fiscal year.
DEPOSITS AND INVESTMENTS
Pennsylvania statutes provide for investment of governmental funds into certain 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 governmental funds for investment purposes.
Custodial credit risk is the risk that in the event of a bank failure, the government's deposits may not be returned
to it. The District's policy requires that all deposits in excess of FDIC insurance coverage be collateralized with
approved collateral as provided by law. At June 30, 2008, the District's deposits totaled $ 2,045,593 and the bank
balances totaled $ 2,471,998. Of the bank balances, $ 100,000 was covered by federal depository insurance and
$ 2,371,998 was collateralized under Act No. 72 of the 1971 Session of the Pennsylvania General Assembly, in
which financial institutions were granted the authority to secure deposits of public bodies by pledging a pool of
assets, as defined in the Act, to cover all public funds deposited in excess of Federal Depository Insurance limits.
The pledged collateral is held by the Federal Reserve Bank, but is not titled in the District's name.
FS-19
MECHANICSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
DEPOSITS AND INVESTMENTS (Cont'd.)
The District also has cash equivalents with three organizations that operate as common law trusts established
pursuant to the Intergovernmental Cooperation Act and related statutes for the purpose of pooling investments.
Each organization's fundamental policy is 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. They may only purchase securities which are
permitted under PA law. As of June 30, 2008, the District's deposits in these organizations are as follows:
Pennsylvania Local Government Investment Trust (PLGIT) $ 9,047,663
Pennsylvania Treasurer's INVEST Program (PA INVEST) 2,462,010
Pennsylvania School District Liquid Asset Fund (PSDLAF) 3.273.419
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 each of the organization's is generally less than 90 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 each of the organization's were
rated "AAAm" by Standard & Poor's.
Cash and cash equivalents at June 30, 2008 are as follows:
Governmental activities $ 15,819,925
Business-type activities 413.,407
Fiduciary funds 595.353
Total cash and cash equivalents $ 16.828.685
TAXES RECEIVABLE
Taxes receivable are as follows:
Taxes Taxes
Receivable Allowance for Receivable Deferred
(Gross) Uncollectibles _ (Net) Tax Revenue
Real estate taxes $ 505,974 $ 30,360 $ 475,614 $ 311,887
Earned income taxes 1,383,373 - 1,383,373 135,969
Personal taxes 4.520 785 _ 3.735 2,875
General Fund 1,893,867 31,145 1,862,722 450,731
Full accrual adjustment - - - (450.731)
Governmental activities 1.893.867 $ 31.145 1.862. $
FS - 20
MECHANICSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
DUE FROM/TO OTHER FUNDS AND INTERFUND TRANSFERS
Interfund balances are as follows:
Assets Liabilities
General Fund $ 71,214 $ 71,214 Debt Service Fund
General Fund 36,460 36,460 Food Service Fund
Interfund transfers were as follows:
Other financing sources Other financing uses
Debt Service Fund $ 5,113,188 $ 5,113,188 General Fund
Food Service Fund 177,318 177,318 General Fund
Athletic/Special Revenue Fund 90,000 90,000 General Fund
Capital Reserve Fund 5,414,570 5,414,570 General Fund
Construction Fund 288,583 288,583 Capital Reserve Fund
DUE FROM OTHER GOVERNMENTS
Due from other governments are as follows:
Local sources -other taxes
Local sources -other items
State sources
Federal sources
Governmental Business-type
Activities _ Activities
$ 58,939 $ -
326, 747 199
404, 580 773
255, 621 4.624
1.045.887
FS-21
MECHANICSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
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
Land improvements
Buildings and improvements
Furniture and equipment
Library books
Accumulated depreciation
Land improvements
Buildings and improvements
Furniture and equipment
Library books
Capital assets being depreciated, net
Governmental activities capital assets, net
Business-type activities
Capital assets being depreciated
Equipment
Accumulated depreciation
Equipment
Capital assets being depreciated, net
Business-type activities capital assets, net
Beginning Current Year Activity Ending
Balance Increases Decreases Balance
$ 605,983 $ - $ - $ 605,983
1,198, 342 957.103 (1.198.342) 957,103
1.804,325 957,103 (1,198,342) 1.563
086
,
3,824,765 13,005 - 3,837,770
75,174,272 4,167,904 - 79,342,176
3,750,910 527,801 (2,000) 4,276,711
1,632,634 63.186 (45.716) 1,650,104
84.382,581 4,771.896 (47,716) 89
106
761
,
,
(1,765,048) (148,874) - (1,913,922)
(14,581,964) (2,291,156) - (16,873,120)
(2,228,397) (495,700) 400 (2,723,697)
(1,560.060) (32.884) 45.716 (1,547,228)
(20.135,469) (2,968.614) 46.116 (23,057,967)
64,247.112 1.803,282 (1.600) 66.048,794
66.051.437 2.760.385 (1.199.942) 67.611.880
$ 1,083,848 $ - $ - $ 1,083,848
(478.160) (66,810) - (544,970)
605.688 (66,810) - 538.878
FS - 22
MECHANICSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
CHANGES IN CAPITAL ASSETS (Cont'd.)
Depreciation expense was charged to functions/programs as follows:
Govemmental activities
Instruction $ 2,584,860
Instructional student support 348,083
Administrative and financial support 9,073
Operation and maintenance of plant 20 061
Student activities 6.537
2.968.614
Business-type activities -Food service $ 66.810
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
$ 592,952 consists of $ 450,731 of taxes receivable not received within 90 days of the end of the fiscal period,
and $ 142,221 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.
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 payable $ 63,990,000 $ - $ (2,685,000) $ 61,305,000 $ 3,060,000
Compensated absences 547.432 273.779 (235.000) 586.211 250.000
64.537.432 $ 273.779 (2.920.00) 61.891.211 3.310.000
Business-type activities
Compensated absences $ 6.379 $ 6.977 $ - $ 13.356 $
FS - 23
MECHANICSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
LONG-TERM LIABILITIES (Cont'd.)
Bonds payable
Changes in bonds payable were as follows:
2000 Series C
2001 Series
2002 Series A
2003 Series
2004 Series
2005 Series
2006 Series
2006 Series A
2007 Series
Beginning New Scheduled Ending
Balance Issue Refunding Redemations Balance
$ 4,970,000 $ - $ - $ (5,000) $ 4,965,000
280,000 - - (40,000) 240,000
8,940,000 - - (750,000) 8,190,000
8,510,000 - - (1,305,000) 7,205,000
9,980,000 - - (10,000) 9,970,000
8,225,000 - - (285,000) 7,940,000
4,100,000 - - (140,000) 3,960,000
9,995,000 - - (5,000) 9,990,000
8,990.000 - - (145.000) 8.845.000
Amounts Due
Interest Rates Maturity Date Callable Date Within One Year
2000 Series C
2001 Series
2002 Series A
2003 Series
2004 Series
2005 Series
2006 Series
2006 Series A
2007 Series
Variable rate stabilized
at 4.50%
3.95% to 5.00%
1.40% to 4.80%
1.60% to 3.60%
3.20% to 4.60%
3.00% to 4.50%
3.40% to 4.20%
3.625% to 4.125%
3.70% to 4.00%
October 2016
August 2019
August 2022
February 2013
August 2021
August 2026
August 2026
August 2019
August 2022
Currently
August 2008
February 2010
August 2008
February 2009
February 2010
February 2011
February 2011
August 2012
$ 5,000
40, 000
780,000
1,335,000
10,000
295, 000
145, 000
5,000
445.000
FS - 24
MECHANICSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
LONG-TERM LIABILITIES (Cont'd.)
Bonds payable (Cont'd.)
Year Ending June 30
2009
2010
2011
2012
2013
2014-2018
2019-2023
2024 and later
$ 2,413,479
2,315,664
2,209,699
2,097,181
1,931,361
7,206, 307
2,630,736
549.997
$ 5,473,479
5,490,664
5,539,699
5,552,181
5,546,361
28,046,307
23,155,736
3.854, 997
Principal Interest Total
$ 3,060,000
3,175, 000
3,330,000
3,455,000
3,615,000
20,840,000
20,525,000
3.305.000
61.305.000
Compensated absences
21.354.424
$ 82.659.424
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. When an employee retires, the payout is as follows:
Unused sick leave will be paid at the following rates:
Number of Years
Less than ten
10 through 14
15 or more
Percentage of
Accumulated Davs
20
35
50
For teachers and administrators, any unused sick leave shall be paid at the daily substitute rate.
For support staff and Food Service Fund employees, unused sick leave will be paid at the lowest hourly rate for
support employees.
Under the District's negotiated agreement with Mechanicsburg Education Association, professional employees of
the District who become eligible for retirement after 20 years service to the District, and elect to retire in that year,
will receive a retirement payment of $ 10,000.
FS-25
MECHANICSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
OPERATING LEASES
The District is obligated under various equipment, vehicle, and modular classroom lease agreements at June 30,
2008. Total Operating lease payments included in General Fund expenditures for the year ended June 30, 2008
amounted to approximately $ 174,900. The following is a schedule of future minimum rental payments required
under the operating lease agreements.
Year Ending
June 30
2009 $ 203, 708
2010 149, 069
2011 127,659
2012 123, 898
2013 45.834
Total minimum payments required $ 650.168
PENSION PLAN
Substantially all full-time and part-time employees of the District participate in the pension plan. The District
recognizes expenditures or expenses equal to its contractually-required contributions, subject to the modified
accrual basis of accounting in governmental funds.
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.osers.state.oa.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 - 26
MECHANICSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
PENSION PLAN (Cont'd.)
Contributions required of employers are based upon an actuarial valuation. For the fiscal year ended June 30,
2008 the employer contribution rate was 7.13 percent of covered payroll, composed of 6.44 percent for pension
benefits and 0.69 percent for healthcare insurance premium assistance. The District's contributions to PSERS for
the years ending June 30, 2008, 2007 and 2006 were $ 1,504,768, $ 1,283,442, $ 942,270, respectively. Those
amounts are equal to the required contributions for each year.
POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Under the Collective Bargaining Agreement (expires June 30, 2009) with Mechanicsburg Education Association,
the District provides health insurance up to a maximum of $ 15,000 in premiums for any individual who retired
with 20 years of service to the District. This coverage commences when the retiree reaches age 62 and continues
until age 65. All other retired employees are required to pay the entire premiums. During the year ended June
2008, there were a total of 53 retirees covered for health insurance.
The District finances this benefit on apay-as-you-go basis. For the year ended June 2008, the estimated net cost
to the District was approximately $ 410,000 ($ 700,000 plan costs paid for the retirees less $ 290,000 premiums
paid by the retirees). Please refer to the new accounting policies note on page FS-19 for additional information of
Post-employment Benefits Other Than Pension Benefits.
RISK MANAGEMENT
Health insurance
The District is a member of South Central Trust for processing claims and obtaining reinsurance through
commercial insurance carriers. The pool has reinsurance for claims in excess of $ 125,000 specific (per person).
The District has a maximum lifetime benefit of $ 5,000,000 per person. District transactions with the trust were as
follows:
Amount available in the trust, beginning
Payments to the trust
Claims paid by the trust
Stop loss premiums
Administrative and other fees, net of interest earned
Amount available in the trust, ending
$ (3,836,773)
(124,759)
(21,292)
$ 363, 796
4,106,509
(3,982, 824)
$ 487.481
FS - 27
MECHANICSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
RISK MANAGEMENT (Cont'd.)
Health insurance (Cont'd.)
The amount available in the trust was as follows:
Accrual for actual claims incurred - 60 day run out
Accrual for unknown and potential claims -year ended June 30, 2008
Accrual for administrative and other fees
Amount available in the trust, ending
$ 211,327
256,154
20, 000
There are various methodologies for estimating a reasonable level for 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
Other commitments and contingencies
The District's collective bargaining agreement with its teaching staff expires June 30, 2009.
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.
FS - 28
MECHANICSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
COMMITMENTS AND CONTINGENCIES (Cont'd.)
Other commitments and contingencies (Cont'd.)
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.
As part of its ongoing Capital Projects, the District has entered into contract commitments totaling approximately
$ 1,890,000 for various construction and improvement projects at June 30, 2008.
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 - 29
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SUPPLEMENTARY INFORMATION
MECHANICSBURG AREA SCHOOL DISTRICT
COMBINING BALANCE SHEET -CONSTRUCTION FUNDS
JUNE 30, 2008
ASSETS
Cash and
cash equivalents
Total assets
LIABILITIES
Accounts payable
Total liabilities
FUND BALANCES
Reserve for
capital projects
Total fund balances
Total liabilities and
fund balances
2005 2006
Construction Construction
Total
$ - $ 339,334 $ 339,334
$ - $ 339,334 $ 339,334
$ - $ 193,677. $ 193,677
_ 193,677 193,677
_ 145,657 145,657
145,657 145,657
$ - $ 339,334 $ 339,334
SI-1
MECHANICSBURG AREA SCHOOL DISTRICT
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -CONSTRUCTION FUNDS
FOR THE YEAR ENDED JUNE 30, 2008
Revenues
Local sources -other
Total revenues
Expenditures
Support services
Capital outlay
Total expenditures
Excess (deficiency) of revenues of expenditures
Other financing
sources (uses)
Bond proceeds
Refunding bond proceeds
Debt service (refunded bond issues)
Transfers from (to) other funds
Net change in fund balances
Fund balances, beginning
Fund balances, ending
2005
Construction
2006
Construction Total
$ 3,250 $ 97,195 $ 100,445
3,250 97,195 100,445
- 23,948 23,948
64,268 3,064,373 3,128,641
64,268 3,088,321 3,152,589
(61,018) (2,991,126) (3,052,144)
47,431 241,152 288,583
(13,587) (2,749,974) (2,763,561)
13,587 2,895,631 2,909,218
$ - $ 145,657 $ 145,657
SI - 2
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MECHANICSBURG AREA SCHOOL DISTRICT
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE -ALL TRUST FUNDS
FOR THE YEAR ENDED JUNE 30, 2008
Revenue and other financing sources
Investment income
Contributions
Total operating revenues
Operating expenses
Scholarship awards
Total operating expenses
Operating income (loss)
Transfers to (from) trust accounts
Net income (loss)
Reserved fund balance, July 1, 2007
Reserved fund balance, June 30, 2008
Expendable
Trust
Non-expendable
Trust
Totals
$ 1,916 $ 2,391 $ 4,307
58,051 500 58,551
59,967 2,891 62,858
18,294 15,337 33,631
18,294 15,337 33,631
41,673 (12,446) 29,227
41,673 (12,446) 29,227
31,785 73,392 105,177
$ 73,458 $ 60,946 $ 134,404
SI - 4
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