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BIG SPRING 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 - 9
BASIC FINANCIAL STATEMENTS
District-wide financial statements
Statement of net assets FS - 1
Statement of activities FS - 2
Fund financial statements
Balance sheet -governmental funds FS - 3
Reconciliation of the governmental funds balance sheet
to the statement of net assets FS - 4
Statement of revenues, expenditures, and changes
in fund balances -governmental funds FS - 5
Reconciliation of the governmental funds statement of revenues, expenditures,
and changes in fund balance to the statement of activities FS - 6
Statement of net assets -proprietary funds FS - 7
Statement of revenues, expenses, and changes in net assets -proprietary funds FS - 8
Statement of cash flows -proprietary funds FS - 9
Statement of net assets -fiduciary funds FS - 10
NOTES TO FINANCIAL STATEMENTS FS - 11 to FS - 27
BUDGETARY COMPARISON INFORMATION -GENERAL FUND BCI - 1
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Greenawalt & Company, P•C.
CERTIFIED PUBLIC ACCOUNTANTS lames E. Lyons
Howard R. Greenawalt
Since 1955 Creedon R. Hoffman
Deborah ). Kelly
Scott J. Christ
INDEPENDENT AUDITORS' REPORT
Board of School Directors
Big Spring School District
Newville, Pennsylvania
We have audited the accompanying financial statements of the governmental activities, the business-type activities,
each major fund, and the fiduciary funds of Big Spring 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. The prior year summarized comparative information has been derived from
the District's June 30, 2007 financial statements and, in our report dated January 22, 2008 we expressed unqualified
opinions on the respective financial statements. of the governmental activities, the business-type activities, each major
fund, and the fiduciary funds.
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 Govemment Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and pertorm the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our
opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, the business-type activities, each major fund, and the fiduciary funds
of Big Spring 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 Govemment Auditing Standards, we have also issued our report dated November 12, 2008, on
our consideration of Big Spring School District's internal control over financial reporting and our tests of its compliance
with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that
report is to describe the scope of our testing of internal control over financial reporting and compliance and the results
of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing Standards and should be
considered in assessing the results of our audit.
IAR - 1
400 West Main Street .Mechanicsburg, PA 17055.717.766.4763 • Fax 717.766.2731
62 West Pomfret Street • Cazlisle, PA 17013.717.243.4822 • Fax 717.258.9372
www.greenawalt.cc
Board of Directors
Big Spring School District
Management's discussion and analysis on pages MDA - 1 through MDA - 9 and budgetary comparison information on
page BCI - 1 are not a required part of the basic financial statements but are supplementary information required by
accounting principles generally accepted in the United States of America. We have applied certain limited procedures,
which consisted principally of inquiries of management regarding the methods of measurement and presentation of
the required supplementary information. However, we did not audit the information and express no opinion on it.
~~ ~~ ~~
GREENAWALT & COMPANY, P.C.
November 12, 2008
Mechanicsburg, Pennsylvania
IAR - 2
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
This discussion and analysis provides an overview of the District's financial performance for the year ended
June 2008. The report format is in accordance with GASB Statement No. 34, Basic Financial Statements -
and Management's Discussion and Analysis -for State and Local Governments. Management's Discussion
and Analysis (MD&A) includes comparisons of financial position at June 2008, 2007 and 2006. The
MD&A also includes comparisons of current year financial activities to the previous year. The 2007 and
2006 amounts have come from our prior year MD&A, and are otherwise not a part of the June 2008
financial statements. Please read our discussion and analysis in conjunction with the District's financial
statements, which begin on page FS-1. In this discussion and analysis, dollar amounts are presented in
millions, to make it easier to read.
FINANCIAL HIGHLIGHTS
General Fund revenues for 2007-2008 increased by 6.1 % ftom 2006-2007 and expenditures increased by
5.7% during the same period as the fund balance increased from $1.2 million to $2.0 million. The current
unrestricted-undesignated fund balance is approximately 4.0% of the 2008-2009 General Fund budget,
within the 8.0% maximum required under state law for Districts of this size.
The District completed one school year of uninterrupted schooling without a successor collective bargaining
agreement following the prior agreement's expiry in June 2007. Negotiations continued through the end of
the reporting period, and the parties reached agreement on a four-year successor contract in August 2008.
The district has experienced a downward trend in health care costs as annual double-digit percentage
increases declined to single-digit increases and most recently to a single-digit decrease. The most recent
plan renewal has been a 4.29% decrease compared to the prior year, representing a welcome change in the
budgeting process.
In the 2007-2008 fiscal year, the Big Spring School District opened Mount Rock Elementary School,
representing completion of a multi-year process that included opening a new High School, renovating the
old High School into a Middle School and renovating the old Middle School into the aforementioned Mount
Rock Elementary School. The District has now successfully phased in all of the debt service related to these
projects.
The District completed its $5.6 million Guaranteed Energy Savings project for the purpose of making
further capital improvements in exchange for operating savings through increased energy efficiency and
reduced maintenance costs. The scope of the Guaranteed Energy Savings project includes 1) geothermal
well fields systems to provide heating and air conditioning support to the Middle School, Mount Rock
Elementary School and Newville Elementary School, 2) lighting and control systems in the same buildings,
and 3) active humidity control at Oak Flat Elementary School. These upgrades were operational by August
2008 including all of the critical upgrades necessary to start the new school year. The District immediately
experienced a substantial reduction in fuel oil consumption in buildings with geothermal well fields.
MDA - 1
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
In the 2007-2008 fiscal year, the District's remained at its anticipated peak debt service of approximately
$4.7 million per year. The district expects to remain at this level for one more fiscal year before reaching
the first maturity in its debt service structure.
District personnel implemented provisions of the new Local Tax Reform Act, commonly known as Act 1 of
the Special Session of 2006. Act 1 places a limit on future increases in the district's real estate tax estate.
Real estate tax increases above the limit or "index", require consent through a formula of exceptions
certified by the Pennsylvania Department of Education, the Commonwealth Court system and/or through
voter referendum. The District determined that pursuing real estate taxes above the "index" through
exceptions related to special education and retirement payments to the employees" retirement system was
possible but not necessary to balance the upcoming budget. The district increased real estate taxes by 3.7%
compared to an "index" limit of 5.40%.
USING THESE FINANCIAL STATEMENTS
This report contains a series of financial statements. The Statement of Net Assets and the Statement of
Activities are on pages FS-1 and FS-2. These statements provide information about the District as a whole,
and present alonger-term view of District finances than fund financial statements. Fund financial statements
are on pages FS-3, FS-5 and FS-7 through FS-10. For governmental funds, the statements show how District
services have been financed in the short term, as well as the amount remaining for future spending.
Proprietary funds statements provide information about non-governmental operations, in this case food
service. The fiduciary funds statement reports amounts held in trust by the District for student activities.
Page FS-4 reconciles total governmental fund balances to total net assets of governmental activities. Page
FS-6 reconciles the total net change in governmental fund balances to the change in net assets of
governmental activities.
District-wide Financial Statements
District-wide statements present financial activities and the results of those activities in two categories,
governmental and business-type. Capital assets (land, buildings, improvements, furniture and equipment)
are included with all other assets. Long-term debt is included with all other liabilities. This is distinctly
different from the fund statements in which assets and liabilities are separated into various funds such as
General and Capital Projects.
In the district-wide statements, the approach to measurement of revenues and expenses is similar to that
used in the private sector and is referred to as the accrual basis of accounting. This is disclosed further in the
notes to financial statements.
MDA-2
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 3 0, 2008
Fund Financial Statements
Fund statements provide financial information about the District's funds rather than the District as a whole.
There are three types of funds, Governmental, Proprietary and Fiduciary. The use of each type of fund is
disclosed in the notes to financial statements. Unlike district-wide statements that report revenues on the
accrual basis, the fund statements report revenues only to the extent cash has been received, or is expected
to be received in the near future.
THE DISTRICT AS A WHOLE
Statement of Net Assets
Total net assets were $18.9 million at June 2008, which is an increase of $3.2 million from June 2007 and a
net increase of $1.9 million from June 2006. The following summarizes the Statement of Net Assets (page
FS-1).
Governmental Business-type
Activities Activities Totals
2008 2007 2006 2008 2007 2006 2008 2006 2005
Current and other assets $ 8.8 $12.9 $ 8.9 $ 0.2 $ 0.2 $ 0.2 $ 9.0 $13.1 $ 9.1
Capital assets 53.7 53.1 48.0 0.7 0.8 0.9 54.4 53.9 48.9
Total assets $62.5 $66.0 $56.9 $ 0.9 $ 1.0 $ 1.1 $63.4 $67.0 $58.0
Current and other liabilities $ 3.6 $ 7.2 $ 2.7 $ - $ - $ - $ 3.6 $ 7.2 $ 2.7
Long-term liabilities 40.8 44.0 41.4 0.1 0.1 0.1 40.9 44.1 41.5
Total liabilities 44.4 51.2 44.1 0.1 0.1 0.1 44.5 51.3 44.2
Capital assets (net of related debt) 14.0 10.3 7.9 0.7 0.8 0.9 ] 4.7 l 1.1 8.8
Restricted for capital projects - 1.8 3.3 - - - - 1.8 3.3
Unrestricted 4.1 2.7 1.6 0.1 0.1 0.1 4.2 2.8 1.7
Total net assets 18.1 14.8 12.8 0.8 0.9 1.0 18.9 15.7 13.8
Total liabilities and net assets $62.5 $66.0 $56.9 $ 0.9 $ 1.0 $ 1.1 $63.4 $67.0 $58.0
Net assets are the difference between assets and liabilities, and represent resources that can be used to pay
for future operations and capital improvements. The majority of our 2008 net assets, $14.7 million out of
$18.9 million total, are invested in capital assets (net of related debt).
MDA - 3
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
Statement of Activities
The following summarizes the Statement of Activities (page FS-2). It shows that total net assets increased
by $3.2 million during 2008. Total net assets also increased by $1.9 million during 2007.
Program revenues
Charges for services
Operating grants and contributions
Capital grants anal contributions
General revenues
Taxes
Earnings on investments
State general subsidies
Total revenues
Direct expenses
Excess revenues (expenses)
before transfers
Transfers between activities
Change in net assets
Governmental Business-type
Activities Activities Totals
2008 2007 .2008 2007 2007 2006
$ 0.4 $ 0.3 $ 0.8 $ 0.8 $ 1.2 $ 1.1
6.6 6.7 0.4 0.3 7.0 7.0
1.8 1.2 - - 1.8 1.2
20.8 19.1 - - 20.8 19.1
0.3 0.6 - - 0.3 0.6
8.4 8.3 - - 8.4 8.3
38.3 36.2 1.2 1.1 39.5 37.3
34.9 34.1 1.4
1.3 36.3 35.4
3.4 2.1 (0.2) (0.2) 3.2 1.9
(0.1) (0.1) 0.1 0.1 -
$ 3.3 $ 2.0 $ (0.1) $ (0.1) $ 3.2 $ 1.9
The change in net assets is the difference between revenues and expenses using the accrual basis of
accounting.
The following summarizes expense information from the Statement of Activities (page FS-2). Direct
expenses represents the actual cost of providing the services while the net expense represents the amount of
cost that is not recovered through program revenues, meaning user charges, grants and contributions. The
net expense must be recovered through general revenues, primarily taxes and state general subsidies.
Amounts not recovered reduce funds available for future years.
MDA-4
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
Governmental Activities
Direct Program Net
Expenses Revenues Expense
2008 2007 2008 2007 2008 2007
Instruction $ 20.8 $ 20.6 $ 5.2 $ 5.3 $ 15.6 $ 15.3
Instructional student support 2.7 2.6 0.2 0.2 2.5 2.4
Administrative and financial support 2.5 2.6 0.1 0.1 2.4 2.5
Operation and maintenance of plant 4.3 3.8 0.1 0.1 4.2 3.7
Pupil transportation 2.2 2.1 1.7 ] .6 0.5 0.5
Student activities 0.6 0.6 0. ] 0.1 0.5 0.5
Community services _ _ _ _
Interest on long-term debt 1.8 1.8 1.4 0.8 0.4 1.0
$ 34.9 $ 34.1 $ 8.8 $ 8.2 26.1 25.9
Transfers to business-type activities 0.1 0.1
Net expenses -governmental activities 26.2 26.0
State general subsidies revenues 8.4 8.3
Total needs from taxes and other local sources $ 17.8 $ 17.7
Business-type Activities
Direct Program Net
Expenses Revenues Expense
2008 2007 2008 2007 2008 2007
Food service $ ] .4 $ 1.3 $ 1.2 $ 1.1 $ 0.2 $ 0.2
Transfers from governmental activities (0.1) (0.1)
Net expenses -business-type activities $ 0.1 $ 0.1
MDA - 5
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
THE DISTRICT'S FUNDS
Governmental Funds -fund balances
Governmental Fund Balances
2007-2008 2006-2007
2008 2007 2006 Chance Chance
General Fund -unrestricted $ 2.0 $ 1.2 $ 0.7 $ 0.8 $ 0.5
Capital Reserve Fund -unrestricted 0.8 0.6 0.1 0.2 0.5
Athletic Fund -unrestricted _ _ _
Capital Projects Fund -restricted - 1.8 3,3 (1.8) (1.5)
$ 2.8 $ 3.6 $ 4.1 $ (0.8) $ (0.5)
Total unrestricted $ 2.8 $ 1.8 $ 0.8 $ 1.0 $ 1.0
Total restricted - 1.8 3.3 (1.8) (1.5)
$ 2.8 $ 3.6 $ 4.1 $ (0.8) $ (0.5)
Changes from 2007 to 2008
The General Fund budgeted no change in fund balance. The actual increase was $0.8 million, primarily
because actual revenue exceeded budgeted revenue. This is summarized on page BCI - 1 (budgetary
comparison information). The 2008 fund balance includes $0.5 million reserved for prepaid health insurance
expenditures.
The Capital Reserve Fund increase of $0.2 million was due to $0.8 million transferred from the General
Fund during the year less $0.6 million of expenditures to complete our construction projects. This increase
is to fund anticipated but not yet authorized construction projects. "
In 2008, the Capital Projects Fund was closed due to the completion of the conversion of the former middle
school into Mount Rock Elementary School, and the Guaranteed Energy Savings project
Changes from 2006 to 2007
The General Fund budgeted no change in fund balance. The actual increase was $0.5 million, primarily
because actual revenue exceeded budgeted revenue. The 2007 fund balance included $0.3 million reserved
for prepaid health insurance expenditures.
MDA - 6
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
The Capital Reserve Fund increase of $0.5 million was due to $0.5 million transferred from the General
Fund during the year less very minimal expenditures. A portion of the 2007 fund balance was committed to
completing the construction projects when the Capital Projects Fund had been fully expended.
The Capital Projects Fund decrease of $1.5 million was primarily due to two types of projects.
Expenditures of approximately $3.1 million had substantially completed our building renovation projects.
In addition, the district borrowed $5.2 million to fund the Guaranteed Energy Savings project, of which $3.6
million had been expended by June 2007.
General Fund Budget
The following summarizes the budgetary comparison information presented on page BCI-l, along with
comparisons to the previous year.
Total revenues
Total expenditures
Excess revenues (expenditures)
Final Budget
2008 2007
$ 36.1 $ 34.8
35.6 34.6
0.5 0.2
Actual Amount Variance
2008 2007 2008 2007
$ 37.9 $ 35.7 $ 1.8 $ 0.9
36.5 34.5 (0.9) 0.1
l.4 1.2 0.9 1.0
Other financing sources (uses) (0.5) (0.2) (0.6) (0.7) (0.1) (0.5)
Net change in fund balance $ - $ - $ 0.8 $ 0.5 $ 0.8 $ 0.5
In 2008, actual revenues exceeded the budgeted amount by $1.8 million. Actual expenditures were $0.9
million over the budgeted amount. The District authorized an additional transfer of $0.5 million to the
Capital Reserve Fund to fund the anticipated but not yet authorized construction projects. This unbudgeted
transfer was made possible from the additional revenues for the year. Additional details are on page BCI-1
(budgetary comparison information).
The 2007 positive revenue variance of $0.9 million also allowed a transfer of $0.5 million to the Capital
Reserve Fund.
CAPITAL ASSETS
When construction projects are completed, the construction in progress balances are moved into the
respective categories, and depreciated over their estimated useful lives. In 2008, two construction projects
were completed, the conversion of the former middle school into Mount Rock Elementary School, and the
Guaranteed Energy Savings project.
MDA - 7
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
Governmental activities
Land
Construction in progress
Buildings and improvements
Furniture and equipment
Library books
Computer equipment
Business-type activities
Furniture and equipment
Capital assets (net of depreciation)
2007-2008 2006-2007
2008 2007 2006 Change Change
$ 0.5 $ 0.5 $ 0.5 $ - $ _
- 6.7 ~ 0.1 (6.7) 6.6
51.3 44.0 45.4 7.3 (1.4)
l.3 0.6 0.7 0.7 (O.l)
0.2 0.2 0.2 - _
$ 53.7 $ 53.1 $ 48.0 $ 0.6 $ 5.1
$ 0.7 $ 0.8 $ 0.9 $ (0.1) $ ~ (0.1)
Capital assets in the governmental activities were $53.7 million at June 2008, $53.1 million at June 2007,
and $48.0 million at June 2006. During 2008, there was $2.5 million of capital assets purchased and $1.9
million of depreciation expense. During 2007, the District purchased $7.3 million of capital assets and had
depreciation expense of $2.2 million.
LONG-TERM LIABILITIES
The following summarizes the long-term liabilities note to financial statements (pages FS-23 and FS-24).
Most of the debt is general obligation bonds issued to pay for capital improvements. The District's ability to
raise future funds through the issuance of debt depends on how existing bonds are rated by the investment
community. Moody's Investors Service, Inc. assigned its municipal bond rating of "Aaa" to the District's
most recent series of general obligation bonds, the 2006 Series issued in March 2006.
Governmental activities
General obligation bonds and notes
Compensated absences
Unamortized bond costs
2008 2007 2006
$ 40.5 $ 43.7 $ 41.1
0.4 0.6 0.6
(0.1) (0.3) (0.3)
$ 40.8 $ 44.0 $ 41.4
2007-2008 2006-2007
Chance Change
$ (3.2) $ 2.6
(0.2) -
0.2 -
$ (3.2) $ 2.6
MDA-8
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2008
Each year, the District pays interest on the bonds and a portion of the outstanding bonds, referred to as
redemption. The District made regularly scheduled redemptions of $3.2 million during 2008 and $2.6
million during 2007.
During 2007, the District issued notes payable of $5.2 million to finance the Guaranteed Energy Savings
project.
NEXT YEAR'S BUDGET AND ECONOMIC FACTORS
Original Budget
2008-2009 2007-2008 Change
Total revenue
Total expenditures
Excess revenues (expenditures)
$ 38.2 $ 35.4 $ 2.8
38.1 34.8 3.3
0.1 0.6 (0.5)
Other financing sources (uses)
Net change in fund balance
(0.1) (0.6) 0.5
$ - $ - $ -
The revenue budget for 2008-2009 represents a 7.9% increase. The real estate millage rate increases by
0.5261 mills, from 14.1943 to 14.7204. The earned income tax rate remains at 1.65%.
The expenditure budget for 2008-2009 represents a 9.5% increase. This increase represents an anticipated
increase in fuel oil prices, additional funding for two new full time kindergarten positions and one math
position, and additional debt service for an anticipated, but not yet authorized, elementary project.
CONTACTING THE DISTRICT FINANCIAL MANAGEMENT
The District's financial report is intended to provide the readers with a general overview of the District's
finances and to show the Board's accountability for the money it receives. If you have questions about this
report or wish to request additional financial information, please contact the district office of Big Spring
School District, 45 Mount Rock Road, Newville, PA 17241, (717) 776-2000.
MDA - 9
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BIG SPRING SCHOOL DISTRICT
STATEMENT OF NET ASSETS -PROPRIETARY FUNDS
JUNE 30, 2008
(With Summarized Financial Information for June 30, 2007)
Food Service
Assets 2008 2007
Cash and cash equivalents $ 103,799 $ 84
030
Due from other funds 14
628 ,
Due from other governments ,
5,932 35
229
Other receivables 694 ,
2
095
Inventories 30,736 ,
30,936
Total current assets 155,789 152,290
Furniture and equipment (net of accumulated depreciation) 720 873 815,090
Total assets $ 876,662 $ 967,380
Liabilities
Accounts payable $ 3,738 $ 2
463
Payroll and benefits payable 1,775 ,
Due to other funds
Deferred revenues -
13,213 1;527
8
505
Current portion of compensated absences 7,000 ,
7,000
Total current liabilities 25,726 19,495
Long-term portion of compensated absences 35,075 53,056
Total liabilities 60,801 72,551
Net assets
Invested in capital assets (net of related debt) 720,873 815
090
Unrestricted 94,988 ,
79,739
Total net assets 815,861 gg4,829
Total liabilities and net assets $ 876,662 $ 967,380
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, 2008
(Wth Summarized Financial Information for the Year Ended June 30, 2007)
Operating revenues -Food service revenue
Operating expenses
Salaries
Employee benefits
Purchased property service
Food and milk
Other expenses
Depreciation
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
2008 2007
$ 848,772 $ 778,636
457, 565 415, 033
231, 324 197,423
60,000 65,598
561,670 516,429
15,709 24,353
102,827 102,253
1,429,095 1,321,089
(580,323) (542,453)
921 2,293
35, 750 28,180
40,241 29,200
257,193 212,563
65,990 63,446
400,095 335,682
(180,228) (206,771)
101,260 117, 000
(78,968) (89,771)
894,829 984,600
$ 815,861 $ 894,829
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, 2008
(With Summarized Financial Information for the Year Ended June 30, 2007)
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
General fund advances (Due to other funds)
General fund contributed services
Net cash provided by (used for) non-capital financing activities
Food Service
2008 2007
$ 854,881
(705,095)
(569,914)
(420,128)
$ 781,003
(607,345)
__ (544,361)
(370,703)
79,207
283,274
(16,155)
101,260
447,586
57,173
208,673
(20, 724)
117,000
362,122
Capital and related financing activities
Cash payments for equipment (8,610) _
Net cash provided by (used for) capital and related financing activities _ (8,610) _
Investing activities
Earnings on investments 921 2,293
Net cash provided by (used for) investing activities 921 2,293
Net change in cash and cash equivalents 19 769 (6 288)
Cash and cash equivalents -beginning 84,030 90,318
Cash and cash equivalents -ending $ 103,799 $ 84 030
Reconciliation of operating income (loss) to net cash used for operating activities
Operating income (loss)
Adjustments to reconcile operating income (loss) to _ $ (580,323) $ (542 453)
'
net cash provided by (used for) operating activities
Depreciation
Donated commodities 102,827 102,253
Net change in other assets and other liabilities 65,990 63,446
Other receivable 1,401 (2
095)
Inventories
Accounts payable 200 ,
4,182
Payroll and benefits payable 1,275
1,775 (1,427)
_
Deferred revenues 4,708 4
462
Compensated absences (17,981) ,
92g
Total adjustments 160,195 171,750
Net cash provided by (used for) operating activities $ (420,128) $ (370 703)
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, 2008
(With Summarized Financial Information for June 30, 2007)
Assets
Cash and cash equivalents
Total assets
Liabilities
Due to student groups
Total liabilities
Net assets
Total liabilities and net assets
Student Activities
2008 2007
$ 163, 880
$ 163, 880
$ 163, 880
163, 880
$ 163,880
$ 145,100
$ 145,100
$ 145,100
145,100
$ 145,100
The accompanying notes are an integral part of these financial statements.
FS - 10
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2008
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Big Spring School District is the level of government which has oversight responsibility and control over activities
related to public school education. The report includes services provided by the District to residents within its
boundaries: the Cumberland County Townships of Cooke, Lower Frankford, Upper Frankford, Lower Mifflin,
Upper Mifflin, North Newton, South Newton, Penn and West Pennsboro and the Borough of Newville. Services
provided include a comprehensive curriculum for primary and secondary education as well as special education
and vocational education programs. The District receives revenue from local, state and federal sources and must
comply with the requirements of these funding sources.
The financial statements of Big Spring School District have been prepared in accordance with generally accepted
accounting principles as applied to governmental units. The Governmental Accounting Standards Board is the
authoritative standard-setting body for the establishment of governmental accounting and financial reporting
principles. Accounting guidance is also provided through the Comptroller's office for Pennsylvania's Department
of Education. The more significant of these accounting policies are as follows:
Reporting entity
The Governmental Accounting Standards Board establishes criteria for determining the activities, organizations
and functions of government to be included in the financial statements of the reporting entity. In evaluating the
District as a reporting entity, management has addressed all potential component units which may or may not fall
within the established criteria. The criteria used to evaluate component units for possible inclusion as part of the
District's reporting entity are:
The economic .resources received or held by the separate organization are entirely for the direct benefit of
the District or its constituents.
The District is entitled to (or has the ability to) access a majority of the economic resources received or held
by the separate organization.
The economic resources received or held by the separate organization that the District is entitled to (or has
the ability to) access is significant to the District.
There are no component units that meet all of the above criteria for inclusion in this reporting entity.
FS-11
BIG SPRING 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 three jointly-governed organizations, each of which is a separate legal entity that
offers services to the District and its residents. Each entity serves several school districts, and therefore are not
included in this reporting entity. The entities do not have taxing power, but each is required to adopt an annual
budget, which is funded primarily by its member Districts or others that use its services. Complete financial
statements for these entities can be obtained from their administrative offices.
Capital Area Intermediate Unit provides special education services and programs.
Cumberland Perry Area Vocational Technical School provides vocational and technical education services
and programs.
Capital Tax Collection Bureau provides earned income tax collection services.
Basis of presentation -District-wide financial statements
District-wide financial statements (i.e., the statement of net assets and the statement of activities) report
information on all of the nonfiduciary activities of the District. As a general rule the effect of interfund activity has
been eliminated from these statements. Governmental activities, which normally are supported by taxes and
intergovernmental revenues, are presented separately from business-type activities which rely to a significant
extent, on fees and charges for support.
The district-wide financial statements are presented using the economic resources measurement focus and the
accrual basis of accounting as are the proprietary fund and the fiduciary fund financial statements. Revenues are
recognized when earned and expenses are recognized when a liability is incurred, regardless of the timing of
related cash flows. Real estate and personal taxes are recognized as revenues in the year for which they are
levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the
provider have been met. Net assets (total assets less total liabilities) are used as a practical measure of economic
resources and the operating statement includes all transactions and events that increased or decreased net
assets. Depreciation and amortization are charged as an expense against current operations. Capital assets (net
of accumulated depreciation) and bonds payable (net of unamortized costs) are presented in the statement of net
assets.
The statement of activities demonstrates the degree to which the direct expenses of given functions or programs
are offset by program revenues. Direct expenses are those that are clearly identifiable within a specific function or
program. Program revenues include charges to customers who purchase, use, or directly benefit from goods,
services, or privileges provided by a given function or program. In addition, program revenues include grants and
contributions that are restricted to meeting the operational or capital requirements of a particular function or
program. Taxes and other items not properly included among program revenues are presented as general
revenues.
FS-12
BIG SPRING 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 2 months of the end of the fiscal period. Revenue from federal, state and other grants
designated for payment of specific expenditures is recognized when the related expenditures are incurred;
accordingly, when such funds are received, they are recognized as deferred revenues until earned. Expenditures
generally are recognized when a liability is incurred, as under accrual accounting. However, debt service
expenditures, as well as expenditures related to compensated absences and claims and judgments, are
recognized only when payment is due.
Proprietary funds generally follow standards for accounting and financial presentation for private business
enterprises to the extent that those standards do not conflict with or contradict guidance of the Governmental
Accounting Standards Board.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with the
fund's principal ongoing operations. Operating expenses for the District's proprietary fund include food production
costs, supplies, administrative costs, and depreciation on capital assets. All revenues or expenses not meeting
this definition are reported as nonoperating revenues and expenses.
Fund accounting
The accounts of the District are organized on the basis of funds, each of which is considered a separate
accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing
accounts which comprise its assets, liabilities, fund equity, revenues, and expenditures, or expenses, as
appropriate. Resources are allocated to and accounted for in individual funds based upon the purposes for which
they are to be spent.
When both restricted and unrestricted resources are available for use, it is the District's general policy to use the
restricted (primarily operating grants) resources first, then unrestricted resources as they are needed.
FS-13
BIG SPRING 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-14
BIG SPRING 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. During the year these programs increased both revenues and expenditures of the original
budget by $ 721,240.
The Capital Reserve Fund accounts for transfers from the General Fund and expenditures of those funds for
capital outlays.
The Athletic Fund accounts for athletic revenues and transfers from the General Fund and expenditures of
those funds for athletics.
The Capital Projects Fund accounts for bond proceeds and expenditures of those funds for capital outlays.
The District presents the following proprietary fund:
The Food Service Fund accounts for the operations of the cafeterias.
The District presents the following fiduciary funds:
The Student Activities Fund accounts for programs operated and sponsored by various clubs and
organizations within the schools.
Cash and cash equivalents and investments
The District's cash and cash equivalents are considered to be cash on hand, demand deposits (including pooled
investments), and short-term investments with original maturities of three months or less from the date of
acquisition.
The types of authorized investments are limited by State regulations. Pooled investment funds are required to be
operated in accordance with State regulations.
Investments, including pooled investments, are reported at fair value.
FS-15
BIG SPRING 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 reported in the district-wide financial statements as "internal balances".
Any balances between funds are 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 expensed when used.
Donated commodities are recognized as revenue and are inventoried at an estimated cost value.
Capital assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, sidewalks, and
similar items), are presented in the applicable governmental or business-type activities columns in the district-
wide financial statements. Capital assets are defined by the District as assets with an initial, individual cost of
more than $ 1,500 and an estimated useful life in excess of one year. Management has elected to include certain
homogeneous groups with individual costs of less than $ 1,500 as capital assets for financial presentation
purposes. In .addition, capital assets .purchased with long-term debt may be capitalized regardless of the
thresholds established. Such assets are presented at historical cost or estimated historical cost if purchased or
constructed.
Major outlays for capital assets and improvements are capitalized as projects are constructed. The costs of
normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not
capitalized.
FS-16
BIG SPRING 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, allowing for reasonable salvage values on
equipment, over the following estimated useful lives:
Governmental
Assets Activities
Buildings 40
Site improvements 20
Furniture 15
Machinery and equipment 10 to 15
Library books 7
Audio visual equipment 6
Computer equipment 5
Long-term liabilities
Business-type
Activities
15
15
5
In the district-wide financial statement, and proprietary fund types in the fund financial statements, bonds and
notes payable and compensated absences are presented as liabilities in the applicable governmental activities or
proprietary fund statement of net assets. Refunding costs and bond discounts are amortized over the life of the
bonds using the effective interest method. Bond issuance costs are presented as deferred charges and amortized
over the term of the related debt.
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 - 17
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Comparative information
Comparative totals for the prior year have been presented in the accompanying financial statements in order to
provide an understanding of changes in the District's financial position and operations. Certain amounts
presented in the prior year have been reclassified in order to be consistent with current year's presentation.
However, presentations of prior year totals by fund and activity type have not been presented in each of the
statements since their inclusion would make the statements unduly complex and difficult to read. Summarized
comparative information should be read in conjunction with the District's financial statements for the year ended
June 30, 2007, from which the summarized information was derived.
New accounting policies
The Governmental Accounting Standards Board (GASB) has issued several statements which will become
effective in future reporting years. The 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. It will require the accrual of liabilities and expenses of
other postemployment benefits (OPEB) over the. working career of plan members. 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 requirements of this statement are under review by the District and management is evaluating the
impact this pronouncement wilt have on the District's financial statements.
CASH AND CASH EQUIVALENTS AND INVESTMENTS
Pennsylvania statutes provide for investment of District funds into authorized investment types including U.S.
Treasury bills, other short-term U.S. and Pennsylvania government obligations, and insured or collateralized time
deposits and certificates of deposit. The statutes do not prescribe regulations related to demand deposits;
however, they do allow the pooling of funds for investment purposes.
Custodial credit risk is the risk that in the event of a depository institution failure, the District's deposits may not be
returned to it. The District does not have a formal policy for custodial credit risk. However, the District requires all
deposits in excess of FDIC insurance coverage to be collateralized by the depository institution with approved
collateral as provided by law.
As of June 30, 2008, the District's deposits totaled $ 381,272 and the depository institution balances totaled
$ 1,025,837. Of the depository institution balances, $ 200,000 was covered by federal depository insurance
and $ 825,837 was collateralized. The pledged collateral is held by the Federal Reserve Bank, but is not titled
in the District's name.
FS-18
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
CASH AND CASH EQUIVALENTS AND INVESTMENTS (Cont'd.)
The District also has cash equivalents with the UMB Corporate Trust Services {UMB), Pennsylvania School
District Liquid Asset Fund (PSDLAF) and Pennsylvania Locaf Government Investment Trust (PLGIT). UMB
uses an investment pool of short-term U.S. government obligations. PSDLAF and PLGIT operate as common
law trusts established pursuant to the Intergovernmental Cooperation Act and related statues for the purpose
of pooling investments. The fundamental policy of PSDLAF and PLGIT are to maintain a net asset value of
$ 1 per share, but there can be no assurance that the net asset value will not vary from $ 1 per share.
PSDLAF and PLGIT may only purchase securities which are permitted under PA law. As of June 30, 2008,
the District's .deposits in UMB, PSDLAF and PLGIT totaled $ 177,288, $ 1,850,500 and $ 44,311,
respectively.
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The
District does not have a formal investment policy for interest rate risk. The weighted average maturity of the
securities held by PSDLAF and PLGIT 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 PSDLAF and PLGIT were rated
"AAAm" by Standard & Poor's.
Cash and cash equivalents are as follows:
Governmental activities $ 2,205,691
Business-type activities 103,799
Fiduciary funds 163.880
TAXES RECEIVABLE
Taxes receivable are as follows:
Taxes Taxes
Receivable Allowance for Receivable Deferred
fGross) Uncollectibles (Net) Tax Revenue
Real estate taxes $ 787,443 $ (2,443) $ 785,000 $ 485
000
Earned income taxes 1,700,000 - 1,700,000 ,
1
700
000
Personal taxes _ 22.638 (17,638) 5.000 ,
,
5
000
General Fund 2,510,081 (20,081) 2,490,000 .
2,190
000
Full accrual adjustment - ,
- - (2.190.000)
Governmental activities ~ 2.510.081 (20 n81) 2.49n. $
FS-19
BIG SPRING 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 $ 4,460 $ 4,460 Athletic Fund
Capital Reserve Fund 582,543 582,543 General Fund
Food Service Fund 14,628 14,628 General Fund
Interfund transfers were as follows:
Other financing sources Other financing uses
General Fund $ 259,830 $ 259,830 Capital Projects Fund
Capital Reserve Fund 759,830 759,830 General Fund
Athletic Fund 65,000 65,000 General Fund
Food Service Fund 92,650 92,650 General Fund
Food Service Fund 8,610 8,610 Capital Reserve Fund
DUE FROM OTHER GOVERNMENTS
Due from other governments are as follows:
Local sources -earned income taxes
Local sources -IDEA - B grant
Local sources -other districts
Local sources -other items
State sources
Federal sources
Governmental Business-type
Activities Activities
$ 818,278 $ _
435,482
435, 032 _
85, 786 _
894, 810 785
306,789 5.147
$ 2.976.177
FS - 20
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
CAPITAL ASSETS
Changes in capital assets were as follows:
Governmental activities
Capital assets not being depreciated
Land
Construction in progress
Capital assets being depreciated
Buildings and improvements
Furniture and equipment
Library books
Computer equipment
Accumulated depreciation
Buildings and improvements
Furniture and equipment
Library books
Computer equipment
Capital assets being depreciated, net
Governmental activities capital assets, net
Business-type activities
Capital assets being depreciated
Furniture and equipment
Accumulated depreciation
Furniture and equipment
Capital assets being depreciated, net
Business-type activities capital assets, net
Beginning Ending
Balance Increases Decreases Balance
$ -501, 824 $ - $ - $ 501, 824
6.715.327 2,139.660 (8,854.987) _
7,217.151 2
139
660 (8
854
987
__
.
. .
.
) 501.824
59,549,612 8,854,987 - 68,404,599
3,260,256 44,765 - 3,305,021
2,308,721 - - 2,308,721
3,447.496 415.052 - 3.862.548
68,566.085 9;314
804 77
_
, -
.880.889
(15,410,180) (1,646,426) - (17,056,606)
(1,852,974) (160,641) - (2,013,615)
(2,077,848) - - (2,077,848)
(3,364,137) (129.267) - (3,493,404)
(22,705.139) (1,936.334) - (24.641,473)
45.860.946 7,378,470 - 53.239.416
X53.078.097 $ 9.518.130 (8,85a gR7) 53.741.240
$ 1,541,234 $ 8,610 $ - $ 1,549,844
(726,144) (102,827) - !828.971)
815.090 (94.217) - 720,873
$ 815 an $ (94.217) $ - 720 87~
FS-21
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
CAPITAL ASSETS (Cont'd.)
Depreciation expense was charged to functions/programs as follows:
Governmental activities
Instruction
$ 1,553,483
Instructional student support 170,504
Administrative and financial support 75,780
Operation and maintenance of plant 94,725
Student activities
41, 842
1 q:~F ~. 4
Business-type activities -Food service $ 102 R~7
As of June 2007 there were two construction projects in progress, the conversion of the former middle school to
an elementary school and an energy savings project. Both projects were completed during the year ended June
2008.
DEFERRED REVENUES
Governmental funds present deferred revenue in connection with receivables for revenues that are not
considered to be available to pay liabilities of the current period. Governmental funds also defer revenue
recognition with, resources that have been received, but not yet earned. Deferred revenues in the General Fund of
$ 2,329,477 consists of $ 2,190,000 of taxes receivable not received within 2 months of the end of the fiscal
period, $ 132,608 of deferred federal grants, and $ 6,869 of resources that have been received but not yet
earned.
Deferred revenue in the proprietary funds and the district-wide financial statements represents deferred federal
grants and resources that have been received but not yet earned.
FS - 22
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
LONG-TERM LIABILITIES
Changes in all long-term liabilities were as follows:
Beginning Ending Due Within
Balance Increases Decreases Balance One Year
Governmental activities
Bonds and notes payable $ 43,680,584 $ - $ (3,141,783) $ 40,538,801 $ 3,083,229
Compensated absences 595.800 _ 235.000 (412,000) - 418.800 200.000
$ 44.276.384 $ 235.000 13.55 ~R.) $ 40.957.601 $ 3.283
Business-type activities
Compensated absences 60.056 10. $ (27.981) $ 42 n75 $ 7 000
Bonds and notes payable
Changes in bonds and notes payable were as follows:
Beginning Scheduled Ending
Balance New Issue Redemptions Balance
1997 Series $ 1,060,000 $ - $ (515,000) $ 545
000
1999 Series 3,480,000 - (250,000) ,
3
230
000
2001 Series 3,430,000 - (660,000) ,
,
2
770
000
2003 Series 16,460,000 - (945,000) ,
,
15
515
000
2005 Series 4,120,000 - (395,000) ,
,
3
725
000
2006 Series 9,970,000 - (75,000) ,
,
9
895
000
2006 Notes 5,160,584 - _ (301.783) _ ,
,
4,858,801
$ 43.680.584 $ - (3.141.78) 40.538,801
1997 Series
1999 Series
2001 Series
2003 Series
2005 Series
2006 Series
2006 Notes
Interest Rates Maturity Date Callable Date
5.075%
(1)
4.20% to 5.00%
3.05% to 5.00%
3.10% to 4.50%
3.35% to 4.05%
3.95%
March 2009 Not callable
December 2017 45 days notice
February 2021 August 2011
Apri12023 Apri12013
June 2016 December 2010
March 2021 August 2011
December 2021 Annually, with fees
Due Within
One Year
$ 545,000
265, 000
685, 000
980, 000
405, 000
75,000
128,229
FS - 23
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
LONG-TERM LIABILITIES (Cont'd.)
(1) The 1999 Series pays interest at a variable rate of .55% above the "weekly rate", not to exceed 25.00%.
At June 2008 the "weekly rate" was 1.47%.
During the year ended June 2008, $ 100,122 of debt service was paid from the Capital Projects Fund. Scheduled
debt service requirements, payable by the General Fund are as follows:
Year Ending June Principal Interest Total
2009 $ 3,083,229 $ 1,558,569 $ 4,641,798
2010 2,667,592 1,431,782 4,099,374
2011 2,783,890 1,342,454 4,126,344
2012 2,912,251 1,237;393 4,149,644
2013 3,072,805 1,113,506 4,186,311
2014-2018 16,609,502 3,762,925 20,372,427
2019-2023 9.409.532 1.007.532 10.417.064
40.538.801 11.454.1 $ 51.992.962
In the year ended June 2006, the District defeased a portion of the 2001 Series of bonds by creating an irrevocable
trust fund. New debt was issued (2006 Series) and the proceeds were used by the trust fund to purchase U.S.
government securities. The investments and fixed earnings are sufficient to fully service the defeased debt until it is
called or matures. For financial reporting purposes, the defeased debt was removed as a liability from the District-
wide financial statements. As of June 30, 2008 $ 9,135,000 of defeased bonds remain outstanding and are
scheduled to be called in August 2011.
Compensated absences
Compensated absences (those for which employees receive pay) are presented using the termination payment
method. A liability is computed using estimates which apply historical data to current factors. The District
maintains records of unused leave and applies the contracted rate for employees eligible for termination
payments. The District allows only restricted sabbatical leave and therefore does not present any liability in
advance of the sabbatical. Payments for compensated absences are made in the year the absence is taken or the
employee retires. At retirement or death, while in District service, employees or their beneficiaries shall choose
one of the following options (subject to a maximum of $ 12,000 for administrators and $ 11,500 for all other
employees):
1. Number of full years of service in the District multiplied by $ 180 (the employee must have a minimum
of 20 years of service in the District)
2. Accumulated unused sick leave days multiplied by 80% of the substitute per diem rate
FS - 24
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
PENSION PLAN
Substantially all full-time and part-time employees of the District participate in the plan. The District recognizes
expenditures or expenses equal to its contractually-required contributions, subject to the modified accrual basis of
accounting in governmental funds.
The District contributes to The Public School Employees' Retirement System (the System), a governmental cost
sharing multiple-employer defined benefit plan. The plan is under the authority of the Public School Employees'
Retirement Code (the Code), as amended. The plan provides retirement and disability, legislatively mandated ad
hoc cost-of-living adjustments, and healthcare insurance premium assistance to qualifying annuitants. The
System issues a comprehensive annual financial report that includes financial statements and required
supplementary information for the plan. A copy of the report may be obtained by writing to the System at PO Box
125, Harrisburg, PA 17108-0125, or by accessing the System's website at www.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.
Contributions required of employers are based upon an actuarial valuation. For the fiscal year ended June 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 the system
for the years ended June 2008, 2007 and 2006 were $ 1,204,162, $ 1,055,160, $ 735,469, respectively. Those
amounts are equal to the required contributions for each year.
POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS
Under the negotiations agreement with Big Spring Education Association, the District shall provide for
continuance of health care insurance after retirement until age 65. The retiree will pay the monthly premiums,
except that employees who retire after thirty or more years with the District, shall have up to five years of health
care insurance benefits provided on the basis of the retiree paying 50% of the monthly premiums. During the year
ended June 2008, there were a total of 77 retirees covered for health insurance.
The District finances this benefit on spay-as-you-go basis. For the year ended June 2008, the estimated net cost
to the District was $ 235,000 ($ 641,000 estimated claims paid plus plan costs for the retirees less $ 406,000
estimated premiums paid by the retirees). Please refer to the new accounting policies note on page FS-18 for
additional information on Postemployment Benefits Other Than Pension Benefits.
FS - 25
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
RISK MANAGEMENT
Health insurance
The District's health insurance plan allows each participant to choose one of the three coverage options available
through South Central Trust. South Central Trust is not a risk sharing pool. The Trust was established for
processing claims and obtaining reinsurance through commercial insurance carriers. The Trust has reinsurance
for claims in excess of $ 100,000 specific (per person) and 125% aggregate (estimated District annual cost).
District transactions with the Trust were as follows:
Amount available. in the trust, beginning
Payments to the trust
Claims paid by the trust
Administrative and other fees, net of interest earned
Stop loss premiums and commissions
$ 1,261,748
3,608,925
$ (3,011,399)
(246,895)
- 117 592)
(3.375.886)
Amount available in the trust, ending
The amount available in the trust was as follows:
Accrual for claims incurred
Accrual for administrative and other fees
Accrual for health insurance coverage on payroll payable
Amount available for accrued costs, ending
Prepaid health insurance
Amount available in the trust, ending
$ 1.494.787
$ 525,787
46, 500
422, 500
994, 787
500.000
$ 1.494.787
There are various methodologies for estimating claims that have been incurred but not reported (IBNR). District
management has selected the methodology of '60 days of paid claims'. District management believes this
methodology provides an adequate amount for accrued costs.
Other insurance
The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets;
errors and omissions; injuries to employees; and natural disasters. The District maintains commercial insurance
coverage covering each of those risks of loss. Management believes such coverage is sufficient to preclude any
significant uninsured losses to the District. Settled claims have not exceeded this commercial coverage in any of
the past three fiscal years.
FS - 26
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2008
RISK MANAGEMENT (Cont'd.)
Other insurance (Cont'd.)
For State unemployment compensation laws, the District is self-insured, which is a common practice for local
governmental units. Any unemployment claims are paid by the District on a quarterly basis as incurred.
For workers' compensation insurance, approximately 80 Districts participate in a public entity risk sharing pool
(School Districts Insurance Consortium) for processing claims and obtaining reinsurance through commercial
insurance carriers. Under this plan, the District's annual cost should not exceed standard commercial insurance
rates.
COMMITMENTS AND CONTINGENCIES
The District's contract with its teaching staff expires in June 2011.
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 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.
The District is in the process of reviewing and prioritizing possible future construction projects. The largest project
under consideration is a new elementary building with a preliminary cost estimate of approximately $ 14,000,000.
No decisions on construction or financing have been made as of the date of this report.
FS - 27
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