HomeMy WebLinkAbout04-1812CUMBERLAND VALLEY SCHOOL DISTRICT
FINANCIAL REPORT
JUNE 30, 2003
CONTENTS
INDEPENDENT AUDITOR'S REPORT 1 - 2
Management's Discussion and Analysis 3 - 12
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Assets 13 - 14
Statement of Activities 15
Fund Financial Statements:
Balance Sheet- Governmental Funds 16 - 17
Reconciliation of the Governmental Funds Balance
Sheet to the Statement of Net Assets 18
Statement of Revenues, Expenditures and Changes in
Fund Balances - Governmental Funds 19 - 20
Reconciliation of the Governmental Funds
Statement of Revenues, Expenditures and Changes
in Fund Balances to the Statement of Activities 21
Statement of Revenues, Expenditures and Changes in
Fund Balances (Deficit) - Budget and Actual -
General and Athletic Funds 22 - 23
Statement of Net Assets - Proprietary
Fund - Food Service 24
Statement of Revenues, Expenses and Changes in
Net Assets - Proprietary Fund - Food Service 25
Statement of Cash Flows - Proprietary
Fund - Food Service 26
Statement of Fiduciary Net Assets 27
Statement of Changes in Fiduciary Net Assets 28
Notes to Financial Statements 29 - 48
CONTENTS (Continued)
SUPPLEMENTARY INFORMATION
Balance Sheet - Non-Major Governmental Fund -
Special Revenue - Capital Reserve
Statement of Revenues, Expenditures, and Changes
in Fund Balance - Non-Major Governmental
Fund - Special Revenue - Capital Reserve
Independent Auditor's Report on Compliance and on
Internal Control over Financial Reporting Based on
an Audit of the Basic Financial Statements Performed
in Accordance with Government Auditing Standards
Independent Auditor's Report on Compliance with
Requirements Applicable to each Major Program
And on Internal Control over Compliance in
Accordance with OMB Circular A-133
Schedule of Findings and Questioned Costs
Schedule of Expenditures of Federal Awards
Summary Schedule of Prior Year's Audit Findings
49
5O
51 - 52
53 - 54
55 - 56
57 - 60
61
BOYFR & RITTER
CEF, TIFIED PUBLIC ACCOUNTANTS AND CONSULTA~NTS
INDEPENDENT AUDITOR'S REPORT
Board of School Directors
Cumberland Valley School District
Mechanicsburg, Pennsylvania
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of the Cumberland Valley
School District, as of and for the year ended June 30, 2003, which collectively comprise the Cumberland
Valley School District's basic financial statements as listed in the table of contents. These financial
statements are the responsibility of the Cumberland Valley School 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 perform
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 asse. ssing 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 l~vr our opinions.
As stated in Note 2, the Cumberland Valley School District adopted Governmental Accounting Standards
Board (GASB) Statements No. 34, Basic Financial Statements and Management's Discussion and
Analysis, No. 37, Basic Financial Statements - and Management's Discussion and Analysis - For State
and Local Governments: Omnibus, and No. 38, Certain Financial Statement Note Disclosure, and GASB
Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in
Governmental Fund Financials.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, each major fund,
and the aggregate remaining fund information of the Cumberland Valley School District, as of June 30,
2003, and the respective changes in financial position and cash flows, where applicable, thereof and the
respective budgetary comparison for the General Fund 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, September 12,
2003, on our consideration of Cumberland Valley School District's internal control over financial
reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants.
That report is an integral part of an audit performed in accordance with Government Auditing Standards
and should be read in conjunction with this report in considering the results of our audit.
CAMP HILL
STATE COLLEGE
The management's discussion and analysis on pages 3 through 12 are not a required part of the basic
financial statements but are supplementary information required by the Governmental Accounting
Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the required supplementary
information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the Cumberland Valley School District's basic financial statements. The individual non-major
fund financial statements and other schedules, listed in the Table of Contents as supplementary
information, are presented for purposes of additional analysis and are not a required part of the basic
financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for
purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A-133,
Audits of States, Local Governments, and Non-Profit Organizations, and is not a required pan of the
general purpose financial statements of Cumberland Valley School District. Such information has been
· subjected to the auditing procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a
whole.
Camp Hill, Pennsylvania
September 12, 2003
2
CUMBERLAND VALLEY SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2003
The management of the Cumberland Valley School District is pleased to present the following discussion
and analysis of the District's financial activities for the fiscal year ended June 30, 2003. 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 Fina~tcial Statements - and Management's
Discussion and Analysis - for State and Local Governments. However, GASB Statement No. 34 does not
require comparative data to be presented in the first year of implementation. Due to the extensive
financial resources necessary to prepare this information for the prior year, the District has elected to omit
the prior year information for comparative purposes from this report. Subsequent reports, however, will
include the required comparative information.
FINANCIAL HIGHLIGHTS
For the year 2002-2003, the School Board adopted an unbalanced General Fund Budget in the
amount of $293,000. The District raised real estate taxes to 8.89 mills to offset rising salary and
benefit costs to employees.
On July 1, 2002, the District issued the General Obligation Note, Series of 2002 in the principal
amount of $20,400,000. The proceeds of the Note were used to finance the High School
construction project.
On October 15 2002, the District advance refunded the General Obligation Bonds - Series B of
1997 and the General Obligation Bonds - Series of 1998 by issuing the Series B of 2002 General
Obligation Bonds in the amount of $20,425,000. The refunding reduced future debt service, and
generated about $1,929,260 in savings to the District over the life of the bonds.
On June 1,2003, the District advance refunded the General Obligation Bonds - Series A of 1993
and the General Obligation Bonds - Series of 1997 by issuing the Series of 2003 - General
Obligation Bonds in the amount of $19,335,000. The refunding reduced future debt service, and
generated about $1,428,008 in savings to the District over the life of the bonds.
CUMBERALAND VALLEY SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2003
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 13 - 14 and 15 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.
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 16 - 17 and pages 19 - 20 present how
general District services are financed in the short-term as well as what remains for future spending.
The District's required information on budgetary comparison is presented on pages 22 - 23. The
proprietary fund statements on pages 24 through 26 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 29 through 48 that provide a more detailed
explanation of some of the information in the financial statements.
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 Distrlct"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.
4
CUMBERLAND VALLEY SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2003
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.
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 titan 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
Statement of Net Assets and the Statement of Activities) and governmental funds is
reconciled in the financial statements on pages 18 and 21.
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 tbr individuals, private organizations
and/or governmental units as shown on pages 27 - 28.
CUMBERLAND VALLEY SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ,~uNALYSIS
JUNE 30, 2003
FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE
The District's total net assets were $11,232,594 at June 30, 2003, which includes $9,156,741 in
Governmental Activities and $2,075,853 in Business-Type Activities.
Statement of Net Assets
Total
Governmental Business-Type School
Activities Activities District
Current and other assets
Noncurrent assets
Total assets
Current and other liabilities
Noncurrent liabilities
Total liabilities
Investment in Capital Assets (net of related debt)
Restricted for Athletics
Restricted for retirement of debt
Restricted for capital projects
Restricted for capital reserve
Unrestricted
Total net assets
Total liabilities and net assets
$ 18,757,286 $ 350,116 $ 19,107,402
137,719,680 1,725,904 139,445,584
$ 156,476,966 $ 2,076,020 ~ 1~,>32,U~0
$ 10,169,218 $ 167 $ 10,169,385
137,151,007 137,151,007
147,320,025 167 147,320,392
480,267 1,725,904 2,206,171
(39,516) (39,516)
131,036 131,036
7,585,792 7,585,792
222,328 222,328
776,834 349,949 1,126,783
9,156,741 2,075,853 11,232,594
$ 156,476,766 $ 2,076,020 $ 158,552,986
The results of this year's operations as a whole are reported in the Statement of Activities. Direct
expenses are listed by programs, and then offset by program revenues to determine net (expense)
revenue and changes in net assets. General revenues, such as taxes, state subsidies, and investment
earnings are then applied prior to transfers to determine the change in net assets. For the 2002-2003
fiscal years, the change in net assets for governmental activities was an increase of $2,790,132 and a
decrease of $298,775 for business-type activities, for a coml~ined net increase of $2,491,357 as
reflected in the following chart.
6
CUMBERLAND VALLEY SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ~d~IALYSIS
JUNE 30, 2003
Statement of Activities
Governmental Business-Type School
Activities Activities District
Program Revenues
Charges for services
Operating grants and contributions
General Revenues
Taxes
State general subsidies
Investment earnings
Miscellaneous income
Total revenues
Direct Expenses
Change in net assets
$ 460',270 $ 1,572,006 $ 2,032,276
10,193,171 421,770 10,614,941
49,328,384 49,328,384
8,420,250 8,420,250
697,931 7,404 705,335
126,926 75 127,001
69,226,,932 2,001,255 71,228,187
66,436,,800 2,300,030 68,736,830
$ 2,790,132 $ (298,775) $ 2,491,357
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.
7
CUMBERLAND VALLEY SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2003
Governmental Activities
Governmental Activities
Direct Program Net
Expenses Revenues Cost
Instruction
Instructional student support
Administrative and financial services
Operation and maintenance of plant services
Pupil transportation
Student activities
Community services
Interest on long-term debt
Total governmental activities
State General subsidies revenues
Total needs from taxes and other local sources
Total governmental type activities
$ 41,208,944 $ 5,980,463 $ (35,228,481)
5,716,284 421,918 (5,294,366)
5,060,058 182,991 (4,877,067)
6,276,966 565,307 (5,711,659)
4,004,951 2,585,677 (1,419,274)
1,141,204 127,253 (1,013,951)
254,365 180,243 (74,122)
2,774,028 609,589 (2,164,439)
$ 66,436,800 $ 10,653,441 (55,783,359)
8,420,250
50,153,241
$ 2,790,132
Business-Type Activities
Direct Program Net
Expenses Revenues Cost
Food Service $ 2,300',030 $ 1,993,776 $ 306,254
Miscellaneous income and investment earnings
Total business-type activities
7,479
$ (298,775)
THE DISTRICT FUNDS
At June 30, 2003, the District's governmental funds reported a combined fund balance of
$10,640,175, which is an increase 0£$4,435,405 £rom June 30, 2002.
8
CUMBERLAND VALLEY SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2003
Governmental Fund Balance
2002 2003 Change
General Fund - unrestricted
Athletic Fund - restricted
Capital Projects Fund - restricted
Debt Service Fund - restricted
Non-Major Governmental Funds - restricted
Total governmental funds
Total unrestricted
Total restricted
Total governmental funds
1,857,883 $ 2,740,535 $ 882,652
(342) (39,516) (39,174)
4,099,289 7,585,792 3,486,503
131,036 131,036
247,940 222,328 (25,612)
$ 6,204,770 $ 10,640,175 $ 4,435,405
$ 1,857,883 $ 2,740,535 $ 882,652
4,346,887 7,899,640 3,552,753
$ 6,204,770 $ 10,640,175 $ 4,435,405
Governmental Funds
The General Fund had budgeted expenditures in excess of revenues in 2002-2003 in the amount of
$293,000. Total expenditures were under budget by approximately $1,175,652, resulting in the
increase of fund balance.
The Capital Projects Fund increase of $3,486,503 was a result of a new bond issue proceeds being
greater than the High School construction project costs for the for the year ended June 30, 2003.
The Debt Service Fund increase of $131,036 was due to additional monies being set aside for early
retirement of bonds in the fall of 2003.
The decrease of $25,612 in the Non-Major Governmental fund was primarily the result of using the
Capital Reserve Fund to make planned capital improvements during the 2002-03 fiscal year.
9
CUMBERLAND VALEY SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2003
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. Contracted educational services
and other instructional programs required budget adjustments.
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.
Final
Budget Actual Variance
Total Revenues
Total Expenditures
Revenues over expenditures
Other Financing Sources (Uses)
Net change in fund balance
$ 68,971,738 $ 68,104,566 $ (867,172)
67,760,357 66,422,035 1,338,322
1,211,381 1,682,531 471,150
(1,504,381) (799,879) 704,502
$ (293,000) $ 882,652 $ 1,175,652
CAPITAL ASSETS
At June 30, 2003, the District had $136,536,353 in Governmental activities capital assets net of
accumulated depreciation, which represents an increase of $16,002,170 from June 30, 2002. The
District has made substantial capital improvements over the past few years. A major renovation is
nearing completion at the High School.
10
CUMBERLAND VALLEY SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2003
2002 2003 Change
Governmental Activities
Land $ 1,050,067
Site improvements 3,775,582
Buildings and building improvements 102,514,234
Furniture and equipment 13,073,635
Construction-in-progress 120,665
Total Governmental activities assets $ 120,534,183
$ 1,050,067 $
3,468,534 (307,048)
118,797,856 16,283,622
12,980,349 (93,286)
239,547 118,882
$ 136,536,353 $ 16,002,170
Business-Type Activities
Furniture and equipment
$ 1,908,830 $ 1,725,904 $ (182,926)
LONG- TERM LIABILITIES
As of June 30, 2003 and 2002, General Obligation Debt was $135,445,000 and $118,255,000,
respectively. A scheduled payment of principal made during the year to the bondholders was
$1,530,000. The net change from the refunding of throe bond series was $1,680,000. The amount of
bond principal due within one year is $2,840,000. Standard and Poor's Corporation has assigned its
municipal bond rating of "Aaa" to all of the series of bonds issued during the 2002-2003 year. The
District issued $20,400,000 in General Obligation Notes Series 2002 during the fiscal year ended
June 30, 2003.
Compensated absences increased during the year from an entity-wide perspective by $202,414 to
$3,939,921 at June 30, 2003.
11
CUMBERLAND VALLEY SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2003
NEXT YEAR'S BUDGET AND ECONOMIC FACTORS
Budget Budget
2002-2003 2003-2004
Change
Total Revenues
Total Expenditures
Revenues over/(under) expenditures
Net change in fund balance
$ 69,431,738 $ 71,390,035 $ 1,958,297
69,724,738 71,390,035 1,665,297
$ (2921,000) $ $ 293,000
$ (293,000) $ $ 293,000
The budget for 2003-2004 represents an increase in total expenditures of 2.33%. This increase is
largely due to the increase in the retirement rate from 1.15% to 3.77%, increase in medical insurance
costs, new curriculum initiatives, and new facility operational costs. The 2003-2004 budgeted
revenues include a tax rate increase of.228 mills.
There are no economic factors that are expected to have a significant impact on our 2003-2004
budgets, other than the cash flow difficulties created by the Commonwealth of Pennsylvania by not
adopting an education budget timely and therefore not releasing funds to school districts in a timely
manner.
CONTACTING THE DISTRICT'S 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 Cumberland Valley School District, 6746 Carlisle Pike, Mechanicsburg, PA 17050,
(717) 697-8261.
12
CUMBERLAND VALLEY SCHOOL DISTRICT
STATEMENT OF NET ASSETS
June 30, 2003
ASSETS
Governmental Business-Type
Activities Activities Total
Current Assets
Cash and cash equivalents
Investments
Receivables:
Taxes - net of allowance for
uncollectible taxes of $164,661
Federal subsidies
State subsidies
Other
Due from other governments
Internal balances
Inventories
Total current assets
$ 7,081,313 $ 298,938 $ 7,380,251
8,834,996 8,834,996
1,750,709 1,750,709
132,889 132,889
460,109 460,109
316,902 453 317,355
166,448 166,448
13,920 13,920
50,725 50,725
18,757,286 350,116 19,107,402
Noncurrent Assets
Bond issuance costs - net
Land
Site improvements - net
Building and building improvements - net
Furniture and equipment - net
Construction-in-progress
Total noncurrent assets
1,183,327 1,183,327
1,050,067 1,050,067
3,468,534 3,468,534
118,797,856 118,797,856
12,980,349 1,725,904 14,706,253
239,547 239,547
137,719,680 1,725,904 139,445,584
Total assets
See Notes to Financial Statements.
$ 156,476,966 $ 2,076,020 $ 158,552,986
13
LIABILITIES AND NET ASSETS
Governmental Business-Type
Activities Activities Total
Liabilities
Current Liabilities
Current portion of long-term debt
Current portion of note payable
Accounts payable
Accrued salaries and benefits
Payroll deductions and withholdings
Accrued expenses
Due to other governments
Internal balances
Deferred revenues
Total current liabilities
Noncurrent Liabilities
Long-term debt - net of current portion
Note payable - net of current portion
Sick leave payable
Other liabilities
Total noncurrent liabilities
Total liabilities
2,840,000 $ $ 2,840,000
5,000 5,000
2,724.,011 2,724,011
3,934.,263 167 3,934,430
43,,682 43,682
540,607 540,607
81,655 81,655
10,169,218 167 10,169,385
112,816,086 112,816,086
20,395;,000 20,395,000
3,939,921 3,939,921
137,151,007 137,151,007
147,320,225 167 147,320,392
Net Assets
Investment in capital assets - net of related debt
Restricted for:
Athletic
Capital projects
Debt service
Capital reserve
Unrestricted
Total net assets
Total liabilities and net assets
480,267 1,725,904 2,206,171
(39,516) (39,516)
7,585;,792 7,585,792
131,036 131,036
222,328 222,328
776,834 349,949 1,126,783
9,156,741 2,075,853 11,232,594
$ 156,476,966 $ 2,076,020 $ 158,552,986
14
CUMBERLAND VALLEY SCHOOL DISTRICT
BALANCE SHEET - GOVERNMENTAL FUNDS
June 30, 2003
Capital
General Athletic Projects
Fund Fund Fund
ASSETS
Cash and cash equivalents
Investments
Receivables
Taxes - net of allowance for
uncollectible taxes of $164,661
Federal subsidies
State subsidies
Other
Due from other funds
Due from other governments
Total assets
$ 6,491,862 $ 1,488 $ 251,027
27,332 8,784,379
1,750,709
132,889
460,109
316,090
14,679
166,448
812
345,086
$ 9,360,118 $ 1,488 $ 9,381,304
LIABILITIES AND FUND BALANCES
Due to other funds
Accounts payable
Accrued salaries and benefits
Payroll deductions and withholdings
Deferred revenues
Total liabilities
Fund Balances
Reserved for
Athletic
Capital reserve
Capital projects
Debt service
Unreserved
Total fund balances
Total liabilities and fund balances
$ 368,485 $ $
895,600 3,402 1,795,512
3,896,661 37,602
43,682
1,415,155
6,6t9,583 41,004 1,795,512
(39,516)
7,585,792
2,740,535
2,740,535 (39,516) 7,585,792
$ 9,360,118 $ 1,488 $ 9,381,304
See Notes to Financial Statements.
16
Debt Non-Major Total
Service Governmental Governmental
Fund Fund Funds
85,111 $ 251,825 $ 7,081,313
23,285 8,834,996
22,640
1,750,709
132,889
460,109
316,902
382,405
166,448
$ 131,036 $ 251,825 $ 19,125,771
$ $ $
29,497
368,485
2,724,011
3,934,263
43,682
1,415,155 .
29,497 8,485,596
131,036
222,328
(39,516)
222,328
7,585,792
131,036
2,740,535
131,036 222,328 10,640,175
$ 131,036 $ 251,825 $ 19,125,771
17
CUMBERLAND VALLEY SCHOOL DISTRICT
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
June 30, 2003
Total Fund Balances - Governmental Funds
Capital Assets used in governmental activities are not financial resources
and; therefore, are not reported as assets in governmental funds. The cost
of assets is $183,428,668 and the accumulated depreciation is $46,892,315.
Property taxes receivable will be collected this year, but are not
available soon enough to pay for the current period's expenditures,
and therefore are deferred revenues in the funds.
Governmental funds report bond issuance costs as expenditures.
However, in the Statement of Activities the cost of the issuance is
allocated over the life of the debt issue. This is the amount by
which bond i~suance costs exceeds accumulated amortization.
Long-term liabilities, including bonds payable and compensated absences,
are not due and payable in the current period, and therefore are not reported
as liabilities in the funds. Long-term liabilities at year end consist cf:
Bonds payable
Note payable
Accrued interest
Bond discount
Compensated absences.
Total net assets - governmental activities
(115,045,000)
(20,400,000)
(540,607)
(611,086)
3,939,921)
$ 10,640,175
136,536,353
1,333,500
1,183,327
(140,536,614)
$ 9,156,741
See Notes to Financial Statements.
18
CUMBERLAND VALLEY SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
GOVERNMENTAL FUNDS
Year Ended June 30, 2003
Capital
General Athletic Projects
Fund Fund Fund
Revenues
Local sources $ 49,944,024 $ 93,850 $ 762,373
State appropriations 17,237,788
Federal appropriations 922,754
Total revenues 68,104,566 93,850 762,373
Expenditures
Instructional 36,326,555
Support services 20,844,115 149,577 230,153
Noninstructional services 436,985 830,989
Capital outlay 179,643 16,972,217
Debt service
Principal 3,585,000
Interest 5,049,737
Total expenditures 66,422,035 980,566 17,202,370
Excess (deficiency) of revenues over
expenditures
Other Financing Sources (Uses)
Refund of prior year receipts
Proceeds from general long-term debt
Operating transfers in
Operating transfers out
Sale of fixed assets
Refunds of prior year expenditures
Total other financing sources (uses)
Net change in fund balances
Fund Balances:
July 1, 2002
June 30, 2003
1,682,531 (886,716) (16,439,997)
(18,213)
473,556
(1,304,835)
29,759
19,854
847,542
20,400,000
(473,500)
(799,879) 847,542 19,926,500
882,652 (39,174) 3,486,503
1,857,883 (342) 4,099,289
$ 2,740,535 $ (39,516) $ 7,585,792
See Notes to Financial Statements.
19
Debt Non-Major Totals
Service Governmental Governmental
Fund Fund Funds
$ 28,687 $ 3,886 $ 50,832,820
17,237,788
922,754
28,687 3,886 68,993,362
481,713
29,498
36,326,555
21,705,558
1,267,974
17,181,358
39,385,000 42,970,000
1,261,651 6,311,388
41,128,364 29,498 125,762,833
(41,099,677) (25,612) (56,769,471)
(18,213)
40,795,378 61,195,378
435,391 1,756,489
(56) (I,778,39l)
29,759
19,854
41,230,713 61,204,876
131,036 (25,612) 4,435,405
247,940 6,204,770
$ 131,036 $ 222,328 $ 10,640,175
20
CUMBERLAND VALLEY SCHOOL DISTRICT
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE
STATEMENT OF ACTIVITIES
Year Ended June 30, 2003
Net change in fund balances - governmental funds
Amounts reported for governmental activities in the Statement of
Activities are different because:
Capital outlays are reported in governmental funds as expenditures.
However, in the Statement of Activities, the cost of those assets are
allocated over their useful lives as depreciation expense.
This is the amount by which depreciation exceeds capital outlays
in the period.
Capital outlays
Less depreciation expense
Because some proper~ taxes will not be collected for several
months after the District's fiscal year ends, they are not considered
as "available" revenues in the governmental funds. Deferred tax
revenue increased by this amount this year.
Interest on long-term debt in the Statement of Activities differs from the
amount reported in the governmental funds because interest is
recognized as an expenditure in the funds when it is due, and thus
requires the use of current financial resources. In the Statement of
Activities, interest expense is recognized as the interest accrued,
regardless of when it is due. In addition, bond premiums and discounts
are recognized as interest throughout the life of the loan. The additional
interest accrued is in the Statement of Activities over the amount
due is shown here.
Some expenses reported in the Statement of Activities do not require
the use of current financial resources and, therefore, are not reported
as expenditures in governmental funds.
The issuance of long-term debt provides current financial resources
to governmental funds, while the repayment of the principal of long-
term debt consumes the current financial resources of government funds.
Neither transaction, however, has any effect on net assets. Also,
governmental funds report the effect of issuance costs, premium,
discounts, and similar items when debt is first issued, whereas these
amounts are deferred and amortized in the Statement of Activities. This
amount is the net efcct of these differences in the treatment of long-term
debt and related items.
Issuance of long-term debt
Repayment of long-term debt
Payment of bond issuance costs and other items
Amortization of bond issuance costs
Change in net assets of governmental activities
See Notes to Financial Statements.
$ 4,435,405
21,853,898
(5,851,728) 16,002,170
202,170
241,664
(202,414)
(61,195,378)
42,970,000
587,063
(250,548) (17,888,863)
$ 2,790,132
21
CUMBERLAND VALLEY SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
(DEFICIT) - BUDGET AND ACTUAL - GENERAL AND ATHLETIC FUNDS
Year Ended June 30, 2003
Governmental Fund
Oeneral Fun0
State appropriations
Federal appropriations
Total revenues
Expenditures
Regular instruction
Special instruction
Vocational education
Other instructional
Adult education
Community/Junior College Education
Support services-Pupil Personnel
Support services-Instructional Staff
Support services-Administration
Support services-Pupil Health
Support services-Business
Operation and maintenance of plant services
Student transportation services
Support services-central
Other support services
Noninstructional services
Student activities
Community services
Capital outlay
Debt service
Total expenditures
Excess (deficiency) of revenues over
expenditures
Other Financing Sources (Uses)
Refund of prior receipts
Operating transfers in
Operating transfers out
Sale of fixed assets
Refunds of prior year expenditures
Budgetary reserve
Total other financing sources (uses)
Net change in fund balances
Budeeted Amountg
Original Final A~;l,~l
51,161,856 $ 51,161,856
17,086,797 17,086,797
723.085 723.085
68.971.738 68.971.738
49,944,024
17,237,788
922,754
68.104.566
25,448,998 25,929,587 25,894,487
7,941,481 7,945,831 7,838,896
903,355 906,478 901,739
582,561 728,516 726,421
29,296 90;177 88,865
750,000 878,000 876,147
1,799,003 1,801,436 1,790,266
4,085,263 3,884,218 3,868,867
2,980,414 3,077,711 3,076,301
606,003 613,712 578,224
1,034,804 1,002,428 985,471
6,517,973 5,979,866 5,861,629
3,910,997 3,998,770 3,997,586
591,341 562,607 486,263
110,670 201,852 199,508
198,501 193,354 191,814
352,362 279,700 245,171
180,069 179,643
10.505.533 9.506.0~~ ~,~4,737
68.348.555 67.760.357 66.422.035
623,183 1,211,381 1,682,531
(19,000) (18,213)
425,000 425,000 473,556
(728,012) (1,309,459) (1,304,835)
5,000 5,000 29,759
30,000 30,000 19,854
(648.17D (635,~)
(916,183) (1,504,381) (799,879)
$ (293,000) $ (293,000)
882,652
Fund Balances (Deficit) - July 1, 2002
Fund Balances (Deficit) - June 30, 2003
1,857,883
$ 2,740,535
See Notes to Financial Statements.
22
Types
Athletic Fund
Variance
Favorable
(Unfavorable'~
$ (1,217,832) $
150,991
199.~9
{867,17~)
35,100
106,935
4.739
2.095
1,312
1,853
I 1,170
15,351
1,410
35,488
16,957
118.237
1,184
76,344
2,344
1,540
34,529
426
~71,~0~
1,338,322
471,150
787
48,556
4,624
24,759
(10,146)
635,922
Budget Actual
Variance:
Favorable
{Unfavorai:,le~
90,124 $ 93,850 $ 3,726
90,124 93,8~0 3.726
140,815 149,577 (8:,762)
774,648 830,989 (56,341)
915,463 9~0.566 (65.103~
(825,339) (886,716) (61,377)
825,339 847.542 22,203
704,502 825,339 847,542 22,203
$ 1,175,652 $ (39,174) $ (39,174)
(342)
$ (39,516)
23
CUMBERLAND VALLEY SCHOOL DISTRICT
STATEMENT OF NET ASSETS - PROPRIETARY FUND - FOOD SERVICE
June 30, 2003
ASSETS
Current Assets
Cash and cash equivalents
Receivables - other
Inventory
Total current assets
Noncurrent Assets
Furniture and equipment, net
Total assets
298,938
453
50,725
350,116
1,725,904
$ 2,076,020
$ 167
1,725,904
349,949
2,075,853
$ 2,076,020
LIABILITIES AND NET ASSETS
Liabilities - all current
Accrued salaries and benefits
Net Assets
Invested in capital assets
Unrestricted
Total net assets
Total liabilities and net assets
See Notes to Financial Statements.
24
CUMBERLAND VALLEY SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS -
PROPRIETARY FUND - FOOD SERVICE
Year Ended June 30, 2003
Operating Revenues
Sales
Operating Expenses
Salaries
Employee benefits
Purchased property services
Disposal services
Repairs
Supplies
Food and milk purchases
Donated commodities
Nonfood supplies
Depreciation
Other operating expenses
Total operating expenses
Operating loss
Nonoperating Revenues (Expenses)
Investment income
State subsidies
Federal sources Subsidies
Value of donated commodities
Sale of capital assets
Total nonoperating revenues
Change in net assets
Net Assets - July 1,2002, as previously reported
Prior period adjustment
Net Assets - July 1, 2002, as restated
Net Assets - June 30, 2003
$ 1,572,006
733,500
175,837
21,617
11,647
914,003
124,692
74,173
182,926
61,635
2,300,030
(728,024)
7,404
69,888
227,190
124,692
75
429,249
(298,775)
1,464,652
909,976
2,374,628
$ 2,075,853
See Notes to Financial Statements.
25
CUMBERLAND VALLEY SCHOOL DISTRICT
STATEMENT OF CASH FLOWS - PROPRIETARY FUND - FOOD SERVICE
Year Ended June 30, 2003
Cash Flows From Operating Activities
Cash received from meal sales
Cash payments for goods and services
Cash payments to employees for services
Net cash used in operating activities
Cash Flows From Noncapital Financing Activities
Federal and state subsidies
Cash Flows From Investing Activities
Investment income
Proceeds from sale of fixed assets
Net cash provided by investing activities
Net decrease in cash and cash equivalents
Cash and Cash Equivalents:
July 1, 2002
June 30, 2003
Reconciliation of Operating Loss to Net Cash used
in Operating Activities
Operating loss
Adjustments to reconcile operating loss to net
cash used in operating activities
Depreciation
Value of donated commodities
Changes in assets and liabilities:
(Increase) decrease in:
Receivables
Inventories
(Decrease) increase in: Accounts payable
Accrued salaries and benefits
Deferred revenues
Net cash used in operating activities
$ 1,572,006
(1,107,958)
(910,134)
(446,086)
297,078
7,404
75
7,479
(141,529)
440,467
$ 298,938
$ (728,024)
182,926
124,692
1,010
5,267
(56)
(797)
(31,104)
$ (446,086)
See Notes to Financial Statements.
26
CUMBERLAND VALLEY SCHOOL DISTRICT
STATEMENT OF FIDUCIARY NET ASSETS
June 30, 2003
Student Activities
Elementary Student Section
School Activity Trust 125 Plan
Fund Fund Fund Fund
ASSETS
Cash and cash equivalents
Due from other funds
Other receivables
Total assets
LIABILITIES
Due to other funds
Accounts payable
Due to student groups
Total liabilities
NET ASSETS
Reserved in Trust
Total liabilities
and net assets
$ 106,338 $ 183,060 $ 56,245 $ 25,025
49 560
803
$ 106,387 $ 183,620 $ 56,245 $ 25,828
$ 201 $ 384 $ 8,062 $ 5,882
19,946
106,186 183,.236
106,387 183~.620 8,062 25,828
48,183
$ 106,387 $ 183,,620 $ 56,245 $ 25,828
See Notes to Financial Statements.
27
CUMBERLAND VALLEY SCHOOL DISTRICT
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
Year Ended June 30, 2003
Additions
Contributions
Investment earnings
Interfund transfers
Total additions
Deductions
Scholarships
Change in net assets
Net Assets:
July 1, 2002
June 30, 2003
43,834
795
21,902
66,531
27,197
39,334
8,849
$ 48,183
See Notes to Financial Statements.
28
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
The Cumberland Valley School District operates seven elementary schools, two middle schools, and one
high school in Cumberland County, Pennsylvania. The District operates under current standards
prescribed by the Pennsylvania Department of Education in accordartcc with the provisions of the School
Laws of Pennsylvania. The District operates under a locally elected nine member Board form of
government.
The financial statements of the Cumberland Valley School District (the District) have been prepared in
accordance with accounting principles generally accepted in the United States of America (GAAP) as
applied to governmental units. The Governmental Accounting Standards Board (GASB) is the
authoritative standard setting body for thc establishment of gow:rnmcntal accounting and financial
reporting principles. The more significant of these accounting policies are as follows:
A. Reporting Entity
The Cumberland Valley School District's financial statements inclnde the operations of all entities for
which the School Board exercises oversight responsibility. Oversight responsibility is demonstrated by
financial interdependency, selection of governing authority, designation of management, ability to
significantly influence operations, and accountability for fiscal matters.
The Cumberland Valley School District is the lowest level of government which has oversight
responsibility and control over all activities related to public school education in the Commonwealth of
Pennsylvania. The District receives funding from local, state and Federal government sources and must
comply with the requirements of these source entities. The District is affiliated with the
Cumberland/Perry Area Vocational-Technical School and eleven member school districts. The District is
also affiliated with the Harrisburg Area Community College (HACC). The member school districts
participate in providing oversight responsibility to the Cumberland/Perry Vocational-Technical School
and HACC through the following:
Appointment of Board members who are also Board members of the participating schools
Approval and funding of operating budgets
Long-Term agreement to provide funding for capital expenditures
See additional information regarding payments to the Vo-Tech School in Note 12.
Despite the foregoing, the overriding issue is that the volume of participating school districts does not
permit Cumberland Valley School District to exercise "significant influence" over the operations of the
Cumberland/Perry Area Vocational-Technical School and HACC. Consequently, the
Cumberland/Perry Area Vocational-Technical School and HACC are not considered "component
units" of the Cumberland Valley School District in determining the: "reporting entity" as required by
Government Accounting Standards Board Statement No. 14.
29
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies (Continued)
B. Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the Statement of Net Assets and the Statement of
Activities) report information on all of the non-fiduciary activities of the primary government. For the
most part, the effect of interfund activity has been removed from these statements. Governmental
activities, which normally are supported by taxes and intergovernmental revenues, are reported separately
from business-type activities, which rely to a significant extent on fees and charges for support.
The Statement of Activities demonstrates the degree to which the diirect expenses of a given function or
segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a
specific function or segment. Program revenues includes 1) charges to customers or applicants who
purchase, use, or directly benefit from goods, services or privileges provided by a given function or
segment and 2) grants and contributions that are restricted to meeting the operational or capital
requirements of a particular function or segment. Taxes and other items not properly included among
program revenues are reported instead as general revenues.
Separate fund financial statements are provided in the report for all o[the governmental funds, proprietary
funds, and the fiduciary funds of the School District, even though the latter are excluded from the
government-wide financial statements. Major individual governmental funds and the major enterprise
fund are reported as separate columns in the fund financial statemen:ts. Non-Major funds are aggregated
and presented in a single column. Fiduciary funds are reported by fund type.
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The School District complies with accounting principles generally accepted in the United States of
America (GAAP) and applies all relevant Governmental Accounting Standards Board (GASB)
pronouncements.
The government-wide financial statements are reported using the ecunomic resources measurement focus
and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements.
Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of
the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are
levied. Grants and similar items are recognized as revenues 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 is charged as expense against current operations and
accumulated depreciation is reported on the Statement of Net Assets.
30
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies (Continued)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
Governmental fund financial statements are reported using the current financial resources measurement
focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both
measurable and available. Revenues are considered to be available when they are collectible within the
current period or soon enough thereafter to pay liabilities of the cnrrent period. For this purpose, the
government considers revenues to be available if they are collected within 60 days of the end of the
current fiscal period. Revenues from Federal, state and other grants; designated for payment of specific
school district expenditures is recognized when the related expenditures are incurred; accordingly, when
such funds are received, they are recorded as deferred revenues until earned. Expenditures generally are
recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as
well as expenditures related to compensated absences and claims and judgments, are recorded only when
payment is due.
When both restricted and unrestricted resources are available for use, it is the District's policy to use
restricted resources first, then unrestricted resources as they are needed.
Governmental funds are those through which most governmental functions of the School District are
financed. The acquisition, use, and balances of the School District's expendable financial resources and
the related liabilities (except those accounted for in Proprietary funds) are accounted for through
Governmental funds.
The District reports the following major governmental funds:
The General Fund is the District's primary operating fund. It accounts for all financial resources
except those required to be in another fund. Revenues are primarily derived from local property,
earned income tax, per capita and occupational taxes, and state and Federal distributions. Many
of the more important activities of the School District, including instruction, administration of the
School District and certain non-instructional services are accounted for in this fund.
The Athletic Fund is authorized by Section 511 of the Public: School Code of 1949 to account for
the certain revenues and expenditures of athletic activities. The fund accounts for gate receipts
and other revenues from athletic events and certain budgeted costs of the District's athletic
program.
The Capital Projects Fund is used to account for financial resources to be used for the acquisition
or construction of major capital facilities.
The Debt Service Fund accounts for accumulation of resources for, and the payment of long-term
debt principal, interest and related costs.
The District operates one enterprise fund, the Food Service Fund. This fund accounts for the
activities of the District's food service program.
31
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies (Continued)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
Additionally, the District reports the following non-major governmental fund:
The Capital Reserve Fund (Section 2932 is authorized by P.L. 145, Act of April 30, 1943,
known as Section 2932 School Laws of Pennsylvania) accounts for (1) monies transferred
during any fiscal year from appropriations made for any particular purpose which may not be
needed, and (2) surplus monies in the General Fund of the School District at the end of any
fiscal year. This fund is included in the financial statements as a Special Revenue Fund.
Proprietary funds distinguish operating revenues and expenses fi:om nonoperating items. Operating
revenues and expenses generally result from providing services amt producing and delivering goods in
connection with the proprietary fund's principal ongoing operations. The principal operating revenues of
the school district's enterprise fund is food service charges. Operating expenses for the School District's
enterprise fund include food production costs, supplies, administrative costs, and depreciation on capital
assets. All revenues or expenses not meeting this definition are reported as nonoperating revenues and
expenses.
The School District does not attempt to allocate "building-wide cos~Is" to the Food Service Fund. Thus,
General Fund expenditures which partially benefit the Food Service Fund (utilities, janitorial services,
insurance, etc.) are not proportionately recognized within the Food Service Fund; similarly, the Food
Service Fund does not recognize a cost for the building space it occupies (no rental-of-facilities expense).
The District accounts for assets held by the District in a trustee capacity in a private-purpose trust fund.
This fund accounts for activities in the various scholarship accoun~Is, whose sole purpose is to provide
annual scholarships to particular students as prescribed by donor stipulations.
The Activity Fund accounts for the monies authorized by Section 511 of the Public School Code of 1949
for school publications and organizations. A portion of the Activity Fund is an Agency Fund which is
separate from other Agency Funds because of legal requirements. Agency Funds are custodial in nature
(assets equal liabilities) and do not involve measurement of results of operations. Agency Funds are also
accounted for using the modified accrual basis of accounting.
D. Budget and Budgetary Accounting
An operating budget is adopted prior to the beginning of each year for the General Fund 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 adoption of the School District's
budget and reporting of its financial statements, specifically:
The School District, before levying annual school taxes, is required to prepare an operating
budget for the succeeding fiscal year.
32
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies (Continued)
D. Budget and Budgetary Accounting (Continued)
The School District is required to publish notice by advertisement, at least once in two
newspapers of general circulation in the municipality in which it is located, and within fifteen
days of final action, that the proposed budget has been prepared and is available for public
inspection at the administrative office of the School District.
Notice that public hearings will be held on the proposed operating budget must be included in the
advertisement; such hearings 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 of School
Directors may make transfers of funds appropriated to any particular item of expenditure by legislative
action in accordance with the Pennsylvania School Code. Management may amend the budget at the sub-
function/sub-object level without Board approval. Appropriations lapse at the end of the fiscal period.
Budgetary information reflected in the financial statements is presented at or below the level of budgetary
control and includes the effect of approved budget amendments.
E. Assets, Liabilities, and Net Assets or Equity
Cash and Cash Equivalents: For purposes of the Statement of Cash Flows presented for the proprietary
fund, the School District considers all highly-Liquid debt instruments with original maturities of three
months or less to be cash equivalents.
Investments: Investments are stated at fair value.
Allowances for Estimated Uncollectible Taxes and Deferred Revenues:
The allowance for estimated uncollectible taxes is based upon a historical estimate of delinquent taxes
that will not be received within one year of the fiscal year-end. Deferred revenues are based upon a
historical estimate of delinquent taxes expected to be received within one year of the fiscal year-end.
The portion of taxes receivable which is expected to be received within 60 days of June 30 is recorded as
revenues in the currant year. The remaining amount of taxes receiwible which is expected to be received
within one year from June 30 is recorded as deferred revenues. All other amounts in taxes receivable are
written off as estimated uncollectible taxes.
33
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies (Continued)
E. Assets, Liabilities, and Net Assets or Equity (Continued)
Inventories: On government-wide financial statements, inventories .are presented at the lower of cost or
market on a first-in, first-out basis, and are expensed when used.
A physical inventory of the Cafeteria Fund food and supplies was taken as of June 30, 2003. The
inventory consisted of government donated commodities which were valued at estimated fair market
value, and purchased commodities and supplies, both valued at costs using the first-in, first-out (FIFO)
method. The District has adopted a single inventory record keeping system which does not distinguish
between donated and purchased commodities. Accordingly, no deferred revenues for donated
commodities have been recorded.
Prepaid Expenses: Certain payments to vendors reflect costs applicable to future accounting periods and
are recorded as prepaid items (consumption method) in both the government-wide and fund financial
statements.
Capital Assets and Depreciation: Capital assets, which include property, plant, and equipment, and
infrastructure assets, are reported in the applicable governmental or business-type activities column in the
government-wide financial statements. Capital assets are capitalized at the discretion of management,
unless the assets acquired by debt proceeds, in which case the asset is required to be capitalized.
Management considers various factors in the capitalization of assets, including the asset's estimated
useful life, cost, and the extent to which the asset is part of a larger capital project. The costs of normal
maintenance and repairs that do not add to the value of the assets or materially extend asset lives are not
capitalized.
Depreciation is provided for fixed assets on the straight-line basis over the estimated useful life of the
asset or group of assets as determined by management.
Long-Term Obligations: In the government-wide financial statements, and proprietary fund types in the
fund financial statements, long term debt and other long term obligations are reported as liabilities in the
applicable governmental or business type activity columns in the statement of net assets. Bond premium
and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the
effective interest method. Bonds payable are reported net of applicable bond premium or discount. Bond
issuance costs are reported as deferred charges and amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premium and discounts, as well
as bond issuance costs, during the current period. The face amount of the debt issued is reported as other
financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs,
whether or not withheld from the actual debt proceeds received, are reported as expenditures.
34
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies (Continued)
E. Assets, Liabilities, and Net Assets or Equity (Continued)
Compensated Absences: Under the system of financial accounting and reporting for Pennsylvania School
Systems, the School District accrues for certain accumulated employee benefits, such as unpaid vacation
and sick pay. The calculation of this amount is determined by the appropriate vacation, sick and
retirement lump-sum payments which would be available to employees if they would leave or retire from
the School District and is adjusted for expected turnover rates of employees.
Transfers: Advances between funds that are not expected to be repaid are accounted for as transfers. In
those cases when repayment is expected, the advances are accounted for through the various due from and
due to accounts.
Fund Balance:
The School District classifies fund balances as follows:
Reserved
Reserve fund is used to denote that portion of the fund balance, which is not available for expenditure
appropriation or is legally segregated for a specific purpose.
· Reserve for athletics represents that portion of fund balance legally restricted to athletic
programs.
· Reserve for capital reserve represents that portion of fund balance legally restricted to capital
projects.
· Reserve for capital projects represents that portion of fund balance legally restricted to capital
projects.
· Reserve for debt service represents that portion of fund balance legally restricted to debt
service.
Unreserved
Designation is used to indicate intentions for financial resource utilization
Undesignated is used to denote that portion of fund balance which is available for
appropriations.
Use of Estimates: Management uses estimates and assumptions in preparing financial statements. These
estimates and assumptions affect the reported amounts of assets and liabilities and the reported revenues
and expenditures.
35
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 2. Change in Accounting Principles
During the year ended June 30, 2003, the District adopted Statement ,of Government Accounting Standard
(SGAS) No. 34, Basic Financial Statements and Management's Discussion and Analysis, No. 37, Basic
Financial Statements - and Management's Discussion and Analysis - For State and Local Governments:
Omnibus, and No. 38, Certain Financial Statement Note Disclosures, and GASB Interpretation No. 6,
Recognition and Measurement of Certain Liabilities and Expenditures in Governmental Fund Financials.
Adoption of this pronouncement is predicated upon management's belief's that the prescribed reporting
model, by incorporating new information and restructuring previously reported information, will be more
comprehensive, informative and useful than previously utilized reporting models.
Note 3. Deposits and Investments
Under Section 440.1 of the Public School Code of 1949, as amended, the School District is permitted to
invest funds consistent with sound business practices in the following; types of investments:
· U.S. Treasury Bills.
· Short-term obligations of the U. S. Government or its agencies or instrumentalities.
· Deposits in savings accounts or time deposits or share accounts of institutions insured by:
1. The Federal Deposit Insurance Corporation (FDIC), ,or
2. The Federal Savings and Loan Insurance Corporation, or
3. The National Credit Union Share Insurance Fund
to the extent that such accounts arc so insured, and for any amounts above maximum, provided
that approved collateral as provided by law therefore shall be pledged by the depository.
· Obligations of (a) the United States of America or its agencies or instrumentalities backed by full
faith and credit of the United States of America, (b) the Commonwealth of Pennsylvania or
instrumentalities backed by the full faith and credit of the political subdivision.
· Shares of investment companies whose investments are restriicted to the above categories.
The deposit and investment policy of the School District adheres to state statues and prudent business
practices. There were no deposit or investment transactions during the year that were in violation of either
state statutes or the policy of the School District.
36
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 3. Deposits and Investments (Continued)
Deposits
Deposits of the School District are held at various financial institutions and are carried at cost.
Carrying Bank Financial
Amount Balance Institution
Insured (FDIC) $ 100,000 $ 100,000 Commerce Bank
Insured (FDIC) 41 41 Allfirst Bank
Insured (FDIC) 54 54 PNC Bank
Uninsured, ¢ollateralized 7,542,635 7,858,578 Commerce Bank
Total Deposits $ 7,642,730 $ 7,958,673
The carrying amount of cash and cash equivalents as presented on the balance sheet includes petty cash of
$440.
At June 30, 2003, the cash and cash equivalents of the School District can be categorized to indicate the
level of risk assumed. Category 1 includes bank balances that are insured or collateralized by insured or
registered securities held by the government or its agent in the District's name. Category 2 includes bank
balances collateralized by insured or registered securities held by pledging financial institution's trust
department or agent in the District's name. Category 3 include,,; bank balances collateralized with
securities held by the pledging financial institutions, or its trust department or agent, but not in the
District's name.
Investments
GASB # 3, Deposits with Financial Institutions, Investments, and Reverse Repurchase Agreements,
requires the disclosure of carrying amounts and market values by the following categories:
Category I are insured or registered securities held by the District or its agent in the District's name.
Registered securities are those registered in the District's name.
Category 2 are uninsured and unregistered, with securities held by the counterparty's trust department
or its agent in the District's name.
Category 3 are uninsured and unregistered, with securities held by the counterparty or by its trust
department or agent but not in the District's name.
37
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 3. Deposits and Investments (Continued)
Investments (Continued)
The District invests in the Pennsylvania School District Liquid Asset Fund (PSDLAF) and the
Pennsylvania Local Government Investment Trust (PLGIT) as authorized by the Board. PSDLAF was
established to enable school districts to pool funds for investment in instruments authorized by Section
440.1 of the Pennsylvania School Code of 1949, as amended. PLGIT insures that it will not place
deposits with any single issuing institution if the largest participants share exceeds $100,000, unless such
deposits are collateralized as prescribed by Act 72 of the Commonwealth of Pennsylvania. These funds
have the characteristics of open-end mutual funds and are not subject to credit risk classification.
At June 30, 2003, the investments of the District were as follows:
Fair Value
Carrying Category Category Category Not
Amount I 2 3 Categorized
JP Morgan Chase $ 107,751
Pennsylvania School District
Liquid Asset Fund 24,521
Pennsylvania Local Government
Investment Trust 2,811
Allfirst 46,801
Commerce 8,760,815
Fulton Financial 48
$ $ $
$ 107,751
24,521
2,811
46,801
8,760,815
48
$8,942,747 $ $ $8,760,815 $ 181,932
38
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 4. Taxes Receivable, Deferred Revenues and Estimated Uncollectible Taxes
A summary of the taxes receivable and related accounts at June 30, 2003, are as follows:
Uncollected taxes - real estate
Uncollected taxes - personal
Allowance for uncollectible
Taxes receivable - net
Taxes to be collected within 60 days
Deferred revenue - delinquent taxes
Deferred Revenue
Delinquent taxes
Summer school
Federal and State subsidy
Other
Total Deferred Revenues
Amount
$ 1,574,070
341,300
1,915,370
(164,661)
$ 1,750,709
$ 417,209
1,333,500
$ 1,750,709
1,333,500
61,698
19,813
144
1,415,155
Note 5. Interfund Accounts
Individual fund receivable and payable balances at June 30, 2003, are as follows:
Inter fund
Fund Receivables
lnterfund
Payables
Governmental
General
Payroll
Capital Projects
Building Activities
Debt Service
Total Governmental
Fiduciary
Section 125 Plan
Trust
Activities
Elementary School
Total Fiduciary
$ 14,600 $ 367,342
1,143
345,086
79
22,640
382,405 368,485
5,882
8,062
560 384
49 201
609 14,529
$ 383,014 $ 383,014
39
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 6. Property Taxes
Based upon assessed valuations provided by County, the municipal tax collector bills and collects
property taxes on behalf of the School District. The schedule for property taxes levied for 2002-2003 is as
follows:
July 1, 2002
Through August 31, 2002
Through October 31, 2002
November 1, 2002
4th Monday, 2003
January 1, 2003
tax levy date
2% discount
face payment period
10% penalty period
lien filing date
interim tax levy date
The School District tax rate for all purposes in 2002-2003 was 8.89 mills ($8.89.00 per $1,000 assessed
valuation). Refunds on payments of prior year taxes are classified as; Other Debt Service items under the
Commonwealth of Pennsylvania accounting system.
Note 7. Cafeteria Fund Inventory
The composition of Cafeteria Fund inventory at June 30, 2003, is as tbllows:
Amount
Materials and supplies $ 7,346
Purchased food 43,379
$ 50,725
40
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 8. General Fixed Assets
Capital asset activity for the year ended June 30, 2003, was as £ollows:
July l,
2002 Increases
June 30,
Decreases 2003
Governmental Activities
Land $ 1,050,067
Site Improvements 5,287,917
Buildings and building improvements 126,851,898
Furniture and equipment 28,264,223
Construction-in-progress 120,665
Total Governmental Activities Assets
$ $ $ 1,050,067
5,287,917
19,145,190 145,997,088
2,589,826 30,854,049
118,882 239,547
161,574,770 21,85;3,898 183,428,668
1,512,335 3(}7,048 1,819,383
24,337,664 2,861,568 27,199,232
15,190,588 2,683,112 17,873,700
41,040,587 5,851,728 46,892,315
$120,534,183 $16,002,170 $ $136,536,353
$ 2,851,553 $ $ $ 2,851,553
2,851,553 2,851,553
942,723 182,926 1,125,649
$ 1,908,830 $ (182,926) $ $ 1,725,904
Less accumulated depreciation Site improvements
Buildings and building improvements
Furniture and equipment
Total Accumulated Depreciation
Governmental Activities, Capital
Assets - Net
Business-Type Activities
Furniture and equipment
Total Business-Type Activities
Less accumulated depreciation
Furniture and equipment
Business-Type Activities, Capital
Assets - Net
The net change in general fixed assets is a combination of new assets; purchased, disposed and an increase
in the appraisal of all assets.
41
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 8. General Fixed Assets (Continued)
Depreciation expense was charged to the functions/programs of the District as follows:
Amount
Governmental Activities
Instruction
Instructional student support
Admin. and financial support
Operation and maintenance of plant services
Pupil transportation
Student activities
Community services
Total governmental activities
Business-Type Activities:
Food Service
Total School District
$ 4,716,598
353,026
288,583
380,464
7,365
96,499
9,193
5,851,728
182,926
$ 6,034,654
The School District capitalizes the interest expense on debt incurred to construct capital projects during
the construction phase. Upon completion of the projects, they will be capitalized as General Fixed
Assets, at cost. During the year ended June 30, 2003, the District capitalized $3,393,671 of interest cost.
42
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 9. Long-Term Obligations
A summary of the reporting entity's long-term obligations as of June 30, 2003, and transactions during
the year then ended follows:
Balances Balances
July 1, June 30,
2002 Increases Decreases 2003
General Long-Term Obligations
General Obligation Bonds
Series A of 1993
Series B of 1993
Series of 1997
Series B of 1997
Series of 1998
Series B of 1998
Series C of 1998
Series of 2001
Series of 2003
Series [3 of 2002
General Obligation Note
Series 2002
Bond Premium (Discounts)
Total Long-Term Bonds and Notes payable
$ $ $ 19,015,000 $
1,430,000 335,000
2,845,000
9,585,000
9,995,000
90,000 10,215,000
5,000 54,995,000
5,000 9,740,000
19,335,000 19,335,000
20,425,000 20,425,000
19,015,000
1,765,000
2,845,000
9,585,000
9,995,000
10,305,000
55,000,000
9,745,000
20,400,000 20,400,000
(582,042) 1,193,128 611,086
117,672,958 61,353,128 42,970,000 136,056,086
3,737,507 202,414 3,939,921
$ 121,410,465 $ 61,555,542 $ 42,970,000 $ 139,996,007
Compensated Absences
Total General Long-Term Obligations
General Obligation Bonds - Series A of 1993 - On July 15, 1993,, the School District issued General
Obligation Bonds in the principal amount of $21,075,000. The bonds bear annual interest rates ranging
from 2.25% to 5.45%. Interest is payable semi-annually, and the bonds mature serially in amounts
ranging from $1,705,000 to $2,590,000 through September i, 2010.
General Obligation Bonds - Series B of 1993 - On July 15, 1993, the School District issued General
Obligation Bonds in the principal amount of $3,525,000. The bonds bear annual interest rates ranging
from 2.25% to 4.90%. Interest is payable semi-annually, and the bonds mature serially in amounts
ranging from $335,000 to $1,430,000 through September I, 2003.
General Obligation Bonds - Series of 1997 - On June I, 1997, the School District issued General
Obligation Bonds in the principal amount of $7,175,000. The bonds bear annual interest rates ranging
from 4.0% to 5.10%. Interest is payable semi-annually, and the bonds mature serially in amounts ranging
from $350,000 to $470,000 through September 1, 2008.
General Obligation Bonds - Series B of 1997 - On December 15, 1997, the School District issued General
Obligation Bonds in the principal amount of $9,600,000. The bonds bore annual interest rates ranging
from 4.0% to 5.10%. Interest was payable semi-annually, and the, bonds matured serially in amounts
ranging from $5,000 to $2,105,000 through November 15, 2016. These bonds were refunded in advance
by General Obligation Bonds, Series B of 2002.
43
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 9. Long-Term Obligations (Continued)
General Obligation Bonds - Series of t998 - On January 1, 1998, the School District issued General
Obligation Bonds in the principal amount of $9,995,000. The bonds bore annual interest rates ranging
from 4.85% to 5.10%. Interest was payable semi-annually, and the bonds matured annually in amounts
ranging from $1,335,000 to $1,910,000 beginning in 2011 through 2:016. These bonds were refunded in
advance by General Obligation Bonds, Series B of 2002.
General Obligation Bonds - Series B of 1998 - On November 1, 1998, the School District issued General
Obligation Bonds in the principal amount of $10,510,000. The bonds bear annual interest rates ranging
from 3.85% to 4.50%. Interest is payable semi-annually, and the bonds mature serially in amounts
ranging from $90,000 to $3,095,000 through December 15,2011.
General Obligation Bonds - Series C of 1998 - On December 15, 199'8, the School District issued General
Obligation Bonds in the principal amount of $55,000,000. The bonds bear annual interest rates ranging
from 3.85% to 5.00%. Interest is payable semi-annually, and the bonds mature annually in amounts
ranging from $5,000 to $13,275,000 beginning in 2002 through 2021.
General Obligation Bonds - Series of 2001 - On December 15, 2001, the School District issued General
Obligation Bonds, Series of 2001, in the principal amount of $9,745,000. The proceeds of the Bonds
were used to advance refund the General Obligation Bonds, Series of 1995. The bonds bear annual
interest rates ranging from 2.65% to 3.90%. Interest is payable semi-annually, and the bonds mature
serially in amounts ranging from $5,000 to $2,090,000 through December 15, 2008.
General Obligation Note - Series of 2002 - On July 1, 2002, the School District issued the General
Obligation Note, Series of 2002, in the principal amount of $20,400,000. The proceeds of the Note were
used to finance several construction projects. The note bears interest: on a varying rate not to exceed 12%
annually. Interest is payable monthly, and the note mature serially in amounts ranging from $5,000 to
$8,000,000 through December 1, 2023.
General Obligation Bonds - Series B of 2002 - On October 15,200:2, the School District issued General
Obligation Bonds, Series B of 2002, in the principal amount of $20,.425,000. The proceeds of the Bonds
were used to advance refund the General Obligation Bonds, Series B of 1997 and General Obligation
Bonds, Series of 1998. The economic gain on the refunding of the bonds was $1,929,260. The bonds
bear annual interest rates ranging from 1.50% to 4.00%. Interest is payable semi-annually, and the bonds
mature serially in amounts ranging from $10,000 to $4,035,000 through November 15, 2015.
General Obligation Bonds - Series of 2003 - On June 1, 2003, the School District issued General
Obligation Bonds, Series of 2003, in the principal amount of $19,335,000. The proceeds of the Bonds
were used to advance refund the General Obligation Bonds, Series; A of 1993 and General Obligation
Bonds, Series of 1997. The economic gain on the refunding of the bonds was $1,428,008. The bonds
bear annual interest rates ranging from 2.0% to 5.0%. Interest is payable semi-annually, and the bonds
mature serially in amounts ranging from $1,000,000 to $2,845,000 through September 1,2009.
44
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 9. Long-Term Obligations (Continued)
The District is in compliance with all debt covenants in the outstanding Bond Issues. Those covenants
include the following: the School District shall include the annual debt service in its budget for the fiscal
year; shall appropriate these amounts from its general revenues; and shall punctually cause the payment
of the principal and interest of each of the Bonds.
The maturity of the long-term debt issues are as follows:
General Obligation Debt
Years Principal Interest Total
2003-2004 $ 2,840,000 $ 5,745,934 $ 8,585,934
2004-2005 4,605,000 5,808,233 10,413,233
2005-2006 4,775,000 5,677,404 10,452,404
2006-2007 4,925,000 5,538,509 10,463,509
2007-2008 5,095,000 5,356,801 10,451,801
2009-2013 29,205,000 23,130,280 52,335,280
2014-2018 35,325,000 16,388,936 51,713,936
2019-2023 42,135,000 7,048,283 49,183,283
2024-2028 6,540,000 168,405 6,708,405
$135,445,000 $ 74,862,785 $ 210,307,785
Compensated Absences
Under the terms of the School District's employment policies, employees are reimbursed for accrued
vacation upon retirement or other termination of employment. The reimbursement rate is established by
the employment contract and varies by employee classification. In addition, employees are granted sick
days per school year and any unused sick days are permitted to be carried over to future years. Upon
retirement from the School District, employees are reimbursed for accumulated sick days equal to the
number of unused days multiplied by an amount pm-established per the employment contract. The total
liability for accrued vacation, sick leave and retirement bonuses at June 30, 2003, has been reflected in the
Statement of Net Assets and totals $3,939,921.
45
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 10. Advance Refunding
On October 15, 2002, the School District issued General Obligation Bonds, Series B of 2002, in the
principal amount of $20,425,000. The proceeds the Bonds were used to advance refund the General
Obligation Bonds, Series B of 1997 and General Obligation Bonds, Series of 1998. The economic gain
on the refunding of the bonds was $1,929,260.
On June 1, 2003, the School District issued General Obligation Bonds, Series of 2003, in the principal
amount of $19,335,000. The proceeds the Bonds were used to advance refund the General Obligation
Bonds, Series A of 1993 and General Obligation Bonds, Series of 1997. The economic gain on the
refunding of the bonds was $1,428,008.
Note 11. Prior-Year Defeasance of Debt
In prior years, the District defeased certain general obligations and other bonds by placing the proceeds of
new bonds in irrevocable trusts to provide for all future debt service payments on the old bonds.
Accordingly, the trust account assets and the liability for the defeased bonds am not included in the
District's financial statements. At June 30, 2003, $40,291,228 of bonds outstanding are considered
defeased.
Note 12. Affiliates
As explained in Note 1, the Cumberland Valley School District is affiliated with the Cumberland/Perry
Area Vocational-Technical School (Vo-Tech School).
Total payments of $514,822 were made by the School District to the Vo-Tech School as the former's
sham of operating expenses for the year ended June 30, 2003. Total payments of $292,097 were made by
the School District to the Vo-Tech School as the former's share of construction project billings for the
year ended June 30, 2003.
46
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 13. Defined-Benefit Pension Plan
Plan Description:
The School District contributes to the statewide Public School Employees' Retirement System (the
System), a governmental cost-sharing multiple-employer defined-benefit pension plan administered by
the System. In addition to regular retirement benefits, the System also provides for disability,
legislatively mandated ad hoc cost-of-living adjustments, and healthcare insurance premium assistance to
qualifying annuitants. Membership in the System is mandatory fbr substantially all full-time public
school employees in the Commonwealth of Pennsylvania (Commonwealth). State statutes assign the
authority to establish and amend benefit provisions of the Pennsylvania Public School Employees'
Retirement Code (the Code) to the Pennsylvania General Assembly (Act No. 96 of October 2, 1975, as
amended) (24 Pa. C.S. 8101-8535). The Public School Employees' Retirement System issues a publicly
available comprehensive annual financial report that includes financial statements and required
supplementary information for the defined-benefit pension plan. This report may be obtained by writing
to Barbara D. Flurie, Office of Financial Management, Public School Employees' Retirement System of
Pennsylvania, P.O. Box 125, Harrisburg, PA, 17108-0125. This report is also available in the
publications section of the PSERS website at www.psers.state.pa.us.
Funding Policy:
The contribution policy is established in the Public School Employees' Retirement Code and requires
contributions by the active employees, School District and the Commonwealth.
Contribution Rates:
The current contribution rate for active employees joining the System before July 22, 1983, is set by law
at 5.25% or at 6.50% of the employee's qualifying compensation. For active employees joining the
System on or after July 22, 1983, and who were active or inactive as of July 1, 2001, the rate of
contribution is 6.25% or at 7.50% of the employee's qualifying compensation. Members who joined the
System after June 30, 2001, contribute at 7.50%. For all new hires, the higher contribution rates began
with service rendered on or after January 1,2002.
District Contributions:
The School District's required contributions am based upon an actuarial valuation. For the fiscal year
ended June 30, 2003, the District's rate of contribution was 1.15% of covered payroll. The 1.15% rate is
entirely attributed to actuarial requirements for healthcare insurance premiums. The School District is
required to pay the entire contribution and will be reimbursed by the: Commonwealth in an amount equal
to the Commonwealth's share as determined by the income aid ratio (as defined in Act 29 of 1994), which
is at least one half of the total School District's rate. The School District's contributions to the Plan for the
years ended June 30, 2003, 2002, and 2001 were $353,912, $373,606, and $576,180, respectively, and are
equal to the required contributions for each year.
47
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 14. Risk Management
The School District is exposed to various risks of loss related to torts; theft of, damage to, or destruction
of assets and errors or omissions. Significant losses are covered by commercial insurance for all major
programs. For insured programs, them have been no significant reductions in settlement coverage.
Settlement amounts have not exceeded insurance coverage for the current year or the three prior years.
The School District insures a portion of its workers' compensation insurance through the Pennsylvania
School Board Association (PSBA). Total payments to PSBA in the year ended June 30, 2003, amount to
$130,291. Them were no significant unpaid claims incurred but not reported at June 30, 2003.
Note 15. Significant Commitments
As of June 30, 2003, the District had entered into the following significant contract commitments:
Vendor Project Amount
Lobar, Inc.
Rado Enterprises, Inc.
W.G. Tomko & Son, Inc.
Encompass & Fairfield
Triangle Fire Protection, Inc.
High School Renovations
High School Renovations
High School Renovations
High School Renovations
High School Renovations
$ 4,299,253
620,294
217,441
693,952
79,694
$ 5,910,634
Note 16. Prior Period Adjustment
The District has restated the net assets at July 1, 2002, to include food service equipment that was
purchased through the General Fund in previous years. The adjustment increases net assets at July 1,
2002, by $909,976.
48
SUPPLEMENTARY INFORMATION
CUMBERLAND VALLEY SCHOOL DISTRICT
BALANCE SHEET - NON-MAJOR GOVERNMENTAL FUND -
SPECIAL REVENUE - CAPITAL RESERVE
June 30, 2003
ASSETS
Cash and cash equivalents
Total assets
$ 251,825
$ 251,825
$ 29,497
29,497
222,328
222,328
$ 251,825
LIABILITIES AND FUND BALANCE
Liabilities
Accounts payable
Total liabilities
Fund Balance
Reserved for
Capital reserve
Total fund balance
Total liabilities and fund balance
49
CUMBERLAND VALLEY SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -
NON-MAJOR GOVERNMENTAL FUND - SPECIAL REVENUE - CAPITAL
RESERVE
Year Ended June 30, 2003
Revenues
Local sources
Total revenues
Expenditures
Capital outlay
Total expenditures
Net change in fund balance
Fund Balance - July 1, 2002
Fund Balance - June 30, 2003
$ 3,886
3,886
29,498
29,498
(25,612)
247,940
$ 222,328
50
BOYFR & RITTER
CEI:GIFIED PUBLIC ACCOUNT~rrS A~V CONSULTANTS
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND
ON INTERNAL CONTROL OVER FINANCIAL REPORTING
BASED ON AN AUDIT OF THE BASIC FINANCIIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENTAUD1TING STANDARDS
Board of School Directors
Cumberland Valley School District
Mechanicsburg, Pennsylvania
We have audited the basic financial statements of the Cumberland Valley School District as of and for the
year ended June 30, 2003, and have issued our report thereon dated September 12, 2003. 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.
Compliance
As part of obtaining reasonable assurance about whether the Cumberland Valley School District's basic
financial statements are free of material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit and, accordingly, we do not express
such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be
reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the Cumberland Valley School District's internal
control over financial reporting in order to determine our auditing procedures for the purpose of
expressing our opinion on the basic financial statements and not to provide assurance on internal control
over financial reporting. Our consideration of the internal control over financial reporting would not
necessarily disclose all matters in the internal control over financial reporting that might be material
weaknesses. A material weakness is a condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively Iow level the risk that misstatements in
amounts that would be material in relation to the financial statements being audited may occur and not be
detected within a timely period by employees in the normal course of performing their assigned functions.
We noted no matters involving the internal control over financial reporting and its operation that we
consider to be material weaknesses. However, we noted other matters involving the internal control over
financial reporting that we have reported to management of Cumberland Valley School District in a
separate letter dated September 12, 2003.
CAMP HILL
CARLISLE CHAMBERSBURG LE'~/ISTO'vVN
STATE COLLEGE
This report is intended solely for the information and use of the Board of School Directors, management
and Federal awarding agencies and pass-through entities, and is not intended to be and should not be used
by anyone other than these specified parties.
Camp Hill, Pennsylvania
September 12, 2003
52
BOYFR & RITTER
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH
REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND
ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE
WITH OMB CIRCULAR A-133
Board of School Directors
Cumberland Valley School District
Mechanicsburg, Pennsylvania
Compliance
We have audited the compliance of the Cumberland Valley School District with the types of compliance
requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance
Supplement that are applicable to each of its major Federal programs for the year ended June 30, 2003.
Cumberland Valley School District's major Federal programs are identified in the summary of auditor's
results section in the accompanying Schedule of Findings and Questioned Costs. Compliance with the
requirements of laws, regulations, contracts and grants applicable to each of its major Federal programs is
the responsibility of the Cumberland Valley School District's management. Our responsibility is to express
an opinion on the Cumberland Valley School District's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of
States, Local Governments. and Non-Profit Organizations. Those standards and OMB Circular A-133
require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance
with the types of compliance requirements referred to above that could have a direct and material effect on
a major Federal program occurred. An audit includes examining;, on a test basis, evidence about the
Cumberland Valley School District's compliance with those requirements and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion. Our audit does not provide a legal determination on the Cumberland
Valley School District's compliance with those requirements.
In our opinion, the Cumberland Valley School District complied, in all material respects, with the
requirements referred to above that are applicable to each of its major Federal programs for the year ended
June 30, 2003.
CAMP HILL
CARLISLE CHAMBEI:LSBURG LEWISTOWN
STATE COLLEGE
Internal Control Over Compliance
The management of the Cumberland Valley School District is responsible for establishing and
maintaining effective internal control over compliance with requirenaents of laws, regulations, contracts
and grants applicable to Federal programs. In planning and perfo~rming our audit, we considered the
Cumberland Valley School District's internal control over compliance with requirements that could have a
direct and material effect on a major Federal program in order to determine our auditing procedures for
the purpose of expressing our opinion on compliance and to test and report on internal control over
compliance in accordance with OMB Circular A-133.
Our consideration of the internal control over compliance would not necessarily disclose all matters in the
internal control that might be material weaknesses. A material weakness is a condition in which the
design or operation of one or more of the internal control components does not reduce to a relatively low
level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants
that would be material in relation to a major Federal program being audited may occur and not be
detected within a timely period by employees in the normal course of performing their assigned functions.
We noted no matters involving the internal control over compliance and its operation that we consider to
be material weaknesses.
This report is intended solely for the information and use of the Board of School Directors, management
and Federal awarding agencies and pass-through entities, and is not ilatended to be and should not be used
by anyone other than these specified parties.
Camp Hill, Pennsylvania
September 12, 2003
CUMBERLAND VALLEY SCHOOL DISTRICT
Schedule of Findings and Questioned Costs
Year Ended June 30, 2003
Section I -- Summary of Auditor's Results
Financial Statements
Type of auditor's report issued: Unqualified
Internal control over financial reporting:
· Material weakness identified:
· Reportable condition(s) identified that are
not considered to be material weakness(es)?
Noncompliance material to financial statements
noted?
Federal Awards
Internal control over major programs:
· Material weakness identified?
· Reportable condition(s) identified that is not
Yes X No
__Yes X None Reported
Yes X No
Yes X No
considered to be a material weakness(es)? __ Yes X None Reported
Type of auditor's report issued on compliance for the major programs: Unqualified
· Any audit findings disclosed that are
required to be reported in accordance
with Section .510(a) of Circular A-1337 Yes X No
55
CUMBERLAND VALLEY SCHOOL DISTRICT
Schedule of Findings and Questioned Costs
Year Ended June 30, 2003
Identification of the major programs:
CFDA Number(s)
84.010
84.027
Dollar threshold used to distinguish between
type A and type B programs
Auditee qualified as Iow-risk audi[ce?
Name of Federal Pro~rams/Cluster
Title 1 - Grants to Local Educational Agencies
Special Education - Grants Io States
$300,000
Yes X No
Section II -- Financial Statement Findings
A. Reportable Conditions in Internal Control
There were no findings relating to the financial statement audit required to be reported.
B. Compliance Findings
There were no compliance findings relating to the financiall statement audit required to be
reported.
Section III -- Federal Award Findings and Questioned Costs
A. Reportable Conditions in Internal Control
There were no findings relating to the Federal awards as required to be reported in
accordance with Section .510(a) of OMB Circular A-133.
B. Compliance Findings
There were no findings relating to the Federal awards as required to be reported in
accordance with Section .510(a) of OMB Circular A- 133.
56
CUMBERLAND VALLEY SCHOOL DISTRICT
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Year Ended June 30, 2003
Grantor Program Title
U.S. Department of Agriculture
Code
Federal
C.F.D.A.
Number
Pass Through
Grantor's
Number
Grant
Period
Passed through PA Department of Education
National School Lunch Program
National School Lunch Program
School Breakfast Program
School Breakfast Program
Passed through the PA Department of Agriculture
Food Donation (a)
Total U.S. Department of Agriculture
I (F)
I (S)
I (F)
I (s)
I (F)
10.555
10.553
N/A
10.550
1-15-21160-3
N/A
N/A
N/A
1-15-21160-3
02-03
02-03
02-03
02-03
02-03
U.S. Department of Education
Passed through the PA Dept. of Education
Title I - Graats to Local Educational Agencies
Title I - Grants to Local Educational Agencies
Title 1 - Grants to Local Educational Agencies
Eisenhower Professional Development Grants
Title II - Education Technology
Innovative Education Program Strategies
Innovative Education Program Strategies
Innovative Education Program Strategies
Classroom Size Reduction
Adult Education - State Grant Program
Adult Education - State Grant Program
Safe and Drug-Free Schools and Communities
Safe and Drug-Free Schools and Communities
Passed through Pennsylvania Higher Education
Assistance Agency
Fund for the Improvement of Education
Passed through Capital Area Intermediate Unit
Special Education - Grants to States
Special Education - Grants to States
Total U.S. Department of Education
Total Expenditures of Federal Awards
84.010
84.010
84.010
84.281
84.318
84.298
84.298
84.298
84.340
84.002
84.002
84.186
84.186
84.215
84.027
84.027
13-01-0109
13-02-0109
13-03-0109
020-03-0109
055-03-0109
11-01-0109
11-02-0109
11-03-0109
88-02-0109
41-02-2105
41-03-1105
100-02-0109
100-03-0109
N/A
N/A
N/A
00-01
01-02
02-03
02-03
02-03
00-03
01-03
01-03
01-02
01-02
02-03
01-02
02-03
01-02
01-02
02-03
See Note to Schedule of Expenditures of Federal Awards.
57
Program
or Annual
Award
Total
Received for
the Year
Restated
Accrued or Accrued or
(Deferred) (Deferred)
Revenue at Revenue Expenditures Revenue at
July 1, 2002 Recognized Recognized June 30, 2003
N/A
N/A
N/A
N/A
214,928
66,886
12,262
3,002
$ 214,928 $ 214,928 $
66,886 66,886
12,262 12,262
3,002 3,002
N/A (b)
93,588 (c) (31,104) 124,692 (d) 124,692 (e)
390,666 (31,104) 421,770 421,770
$ 142,586
$ 188,591
$ 221,793
$ 166,586
$ 5,612
$ 26,769
$ 28,864
$ 28,727
$ 104,884
$ 37,706
$ 41,922
$ 31,870
$ 23,243
26,679
158,424
107,091
2,405
1,785
20,519
37,288
6,284
34,935
12,747
7,748
1,000
24,379
1,000
2,300 2,300
221,793 221,793 63,369
151,222 151,222 44,131
5,277 5,277 2,872
(154) 1,939 1,939
(2,186) 2,0?9 2,079 (107)
28,727 28,727 8,208
36,544
6,284
7,157
744 744
41,922 41,922 6,987
5,590 5,590
14,070 14,070 6,322
$ 39,712
(1,438) 1,42,8 1,438
$ 318,480
$ 403,361
(42,292) 42,292 42,292
403,361 403,361 403,361
819,266 29,294 922,754 922,754 132,782
$ 1,209,932 $ (1,810) $ 1,344,524 $ 1,344,524 $ 132,782
CUMBERLAND VALLEY SCHOOL DISTRICT
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
Year Ended June 30, 2003
Test of 50% rule:
Total Expenditures
Less State Expenditures
Total Federal Expenditures
,344,524
(69,888)
,274,636
224,093
445,653
669,746
Program selected for testing major programs
Title 1 - Grants to Local Educational Agencies
Special Education - Grants to States
/ 1,274,636=
52.54%
Source Codes:
D - Direct Funding
I - Indirect Funding
(F) - Federal Share
(S) - State Share
Legends:
(a) Donated commodities value at local market rates
(b) Total amount of commodities received from
Department of Agriculture
(c) Inventories ~:t July 1, 2002
(d) Total amount of commodities used
(e) Inventories ett June 30, 2003
CUMBERLAND VALLEY SCHOOL DISTRICT
NOTE TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Note 1. Significant Accounting Policies
The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the
School District's Federal award programs and presents transactions that would be included in financial
statements of the School District presented on the accrual basis of accounting, as contemplated by
accounting principles generally accepted in the United States of America.
60
CUMBERLAND VALLEY SCHOOL DISTRICT
SUMMARY SCHEDULE OF PRIOR YEAR'S AUDIT FINDINGS
Year Ended June 30, 2003
There were no prior year audit findings.
61