HomeMy WebLinkAbout09-887069 - 806
BIG SPRING SCHOOL DISTRICT
FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2009
0
M
TABLE OF CONTENTS
Page
Number
INDEPENDENT AUDITORS' REPORT IAR - 1 to IAR - 2
MANAGEMENT'S DISCUSSION AND ANALYSIS MDA - 1 to MDA -13
BASIC FINANCIAL STATEMENTS
District-wide financial statements
Statement of net assets FS -1
Statement of activities FS -2
Fund financial statements
Balance sheet - governmental funds FS - 3
Reconciliation of the governmental funds balance sheet
to the statement of net assets FS - 4
Statement of revenues, expenditures, and changes
in fund balances - governmental funds FS - 5
Reconciliation of the governmental funds statement of revenues, expenditures,
and changes in fund balances to the statement of activities FS - 6
Statement of net assets - proprietary funds FS - 7
Statement of revenues, expenses, and changes in net assets - proprietary funds FS - 8
Statement of cash flows - proprietary funds FS - 9
Statement of net assets - fiduciary funds FS -10
NOTES TO FINANCIAL STATEMENTS FS -11 to FS - 30
OTHER REQUIRED INFORMATION
Budgetary comparison information - general fund ORI - 1
Other post employment benefit plans ORI - 2
r
Greenawalt & Company, P.C.
James
CERTIFIED PUBLIC ACCOUNTANTS E. Lyons
Howard R. . Greenawalt
'/7 Since 1955 Deborah J. Kelly
Scott J. Christ
Creedon R. Hoffman
INDEPENDENT AUDITORS' REPORT
Board of School Directors
Big Spring School District
Newville, Pennsylvania
We have audited the accompanying financial statements of the governmental activities, the business-type activities,
each major fund, and the fiduciary funds of Big Spring School District as of and for the year ended June 30, 2009,
which collectively comprise the District's basic financial statements as listed in the table of contents. These financial
statements are the responsibility of the District's management. Our responsibility is to express opinions on these
financial statements based on our audit. The prior year summarized comparative information has been derived from
the District's June 30, 2008 financial statements and, in our report dated November 12, 2008 we expressed
unqualified opinions on the respective financial statements of the governmental activities, the business-type activities,
each major fund, and the fiduciary funds.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the
v
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 assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our
opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, the business-type activities, each major fund, and the fiduciary funds
of Big Spring School District, as of June 30, 2009, and the respective changes in financial position and, where
applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in
the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated November 10, 2009, on
our consideration of Big Spring School District's internal control over financial reporting and our tests of its compliance
with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that
report is to describe the scope of our testing of internal control over financial reporting and compliance and the results
of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing Standards and should be
considered in assessing the results of our audit.
IAR - 1
400 West Main Street • Mechanicsburg, PA 17055 a 717.766.4763 • Fax 717.766.2731
62 West Pomfret Street • Carlisle, PA 17013. 717.243.4822 • Fax 717.258.9372
www.greenawalt.cc
Board of Directors
Big Spring School District
Management's discussion and analysis on pages MDA - 1 through MDA - 13 and other required information on pages
ORI - 1 and ORI - 2 are not a required part of the basic financial statements but are supplementary information
required by accounting principles generally accepted in the United States of America. We have applied certain limited
procedures, which consisted principally of inquiries of management regarding the methods of measurement and
presentation of the required supplementary information. However, we did not audit the information and express no
opinion on it.
GREENAWALT & COMPANY, P.C.
November 10, 2009
Mechanicsburg, Pennsylvania
IAR - 2
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2009
This discussion and analysis provides an overview of the District's financial performance for the year ended
June 2009. The report format is in accordance with GASB Statement No. 34, Basic Financial Statements -
and Management's Discussion and Analysis -for State and Local Governments. Management's Discussion
and Analysis (MD&A) includes comparisons of financial position at June 2009, 2008 and 2007. The
MD&A also includes comparisons of current year financial activities to the previous year. The 2008 and
2007 amounts have come from our prior year MD&A, and are otherwise not a part of the June 2009
financial statements. Please read our discussion and analysis in conjunction with the District's financial
statements, which begin on page FS-1. To preserve readability, dollar amounts in comparative charts
derived from the financial statements are presented in millions.
FINANCIAL HIGHLIGHTS
2008-09 Expenditures $38,338,219 by Program
Student Activities, Community Svc,
$467,478,1% Debt Service,
$20,670, 0% $4,663,951,12%
Other Supt Svc,1
$25,098,0% \ A 'ag?W
Central Services
$6,291,0%
Student Trans, -4
$2,315,425,6%
Opn & Maint.,
$4,314,712,11%
Business Activities,
$501,960,1%
Pupil Health,
$424,537,1%
Administration,
$2,002,042,5%
Instruct'I Staff Supt,
$1,305,916,3%
Pupil Personel,
$944,234,2%
$243,096,1%
MDA - 1
Fund Transfers,
$126,540,0%
Budgetary Reserve,
$0,0%
Ilk,
Regular Prgm,
$15,372,418,40%
Im,
13%
Vocational Prgm,
$545,187,1%
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2009
2008-09 Revenue $38,450,349
General Fund revenues and transfers-in for
2008-09 increased to $38,450,349 or .6% from
2007-08; expenditures and transfers-out
increased to $38,338,219 or 2.5% from the prior
year. The District added $112,130 to the fund
balance for a total of $2,135,024 as of June 30.
The current unreserved-undesignated fund
balance is approximately 5.3% of the 2008-09
General Fund budget, well within the 8%
maximum required under state law for Districts
of this size.
State
43%
Federal
2%
Loc)
Other
3%
F
Local-
Taxes
52%
The District reached agreement with the bargaining unit on a four-year contract in August 2008 resulting in
a 4.35% increase each year through June 30, 2011. While the District allocated a $1,200,000 transfer to
Capital Reserve; $606,648 went to back pay of salary and benefits for the new agreement.
The district has also experienced an upward trend in healthcare requiring a 5% increase for the 2008-09 -
year.
In the 2007-2008 fiscal year, the Big Spring School District completed a multi-year process that included
opening a new High School, renovating the old High School into a Middle School and renovating the old
Middle School into Mount Rock Elementary School. The District made its last payment on the 1997 Series
bonds in March 2009; however, that millage will be continued in the 2009-10 budget to fund wrap-around
debt structure in support of the possible expansion at Newville and replacement of the Plainfield building.
The District completed its second year under Act 1 of the Special Session of 2006. Act 1 places a limit on
future increases in the district's real estate tax estate. The District determined that pursuing real estate taxes
above the "index" through exceptions related to special education and retirement payments to the employees
retirement system was possible but not necessary to balance the upcoming budget. The district increased
real estate taxes by 3.7% compared to an "index" limit of 5.80%. As part of Act 1, the District received
$770,266 in gaming monies that were distributed in an equal amount to each qualified taxpayer of
approximately $130 per homestead/farmstead.
The table below shows the original budget by Program and the actual spent (or received) at year end.
MDA - 2
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2009
Revenues
Local - Taxes
Local - Other
State
Federal
Total
Expenditures
Regular Prgm
Special Prgm
Vocational Prgm
Other Instruction
Pupil Pers
Instruct'I Staff Supt
Administration
Pupil Health
Business
Opn & Maint.
Student Trans
Central Svc
Other Supt Svc
Student Activities
Community Svc
Debt Service
Fund Transfers
Budget Reserve
Total
X008-09
Budget Receipt
Balance
$20,028,626 $20,263,650 $235,024
1,190, 000 1,157, 672 -32,328
16, 325, 044 16, 239, 081 -85,963
657,229 789,946 132,717
$38,200,899 $38,450,349 $249,450
Budget Spent Balance
$14,319,095 $15,372,418 -$1,053,323
4,834,420 5,058,664 -224,244
619,348 545,187 74,161
129,035 243,096 -114,061
724,882 944,234 -219,352
1,295,177 1,305,916 -10,739
1,727,573 2,002,042 -274,469
515,755 424,537 91,218
531,367 501,960 29,407
4,978,610 4,314,712 663,898
1,869,896 2,315,425 -445,529
0 6,291 -6,291
36,000 25,098 10,902
445,168 467,478 -22,310
15,000 20,670 -5,670
4,758,970 4,663,951 95,019
1,292,124 126,540 1,165, 584
108,479 0 108,479
$38,200,899 $38,338,219 -$137,320
USING THESE FINANCIAL STATEMENTS
This report contains a series of financial statements. The Statement of Net Assets and the Statement of
Activities are on pages FS-1 and FS-2. These statements provide information about the District as a whole,
and present a longer-term view of District finances than fund financial statements. Fund financial statements
are on pages FS-3, FS-5 and FS-7 through FS-10. For governmental funds, the statements show how District
services have been financed in the short term, as well as the amount remaining for future spending.
Proprietary funds statements provide information about non-governmental operations, in this case food
service. The fiduciary funds statement reports amounts held in trust by the District for student activities.
Page FS-4 reconciles total governmental fund balances to total net assets of governmental activities. Page
FS-6 reconciles the total net change in governmental fund balances to the change in net assets of
governmental activities.
MDA-3
. BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2009
District wide Financial Statements
District-wide statements present financial activities and the results of those activities in two categories,
governmental and business-type. Capital assets (land, buildings, improvements, furniture and equipment)
are included with all other assets. Long-term debt is included with all other liabilities. This is distinctly
different from the fund statements in which assets and liabilities are separated into various funds such as
General and Capital Reserve.
In the district-wide statements, the approach to measurement of revenues and expenses is similar to that
used in the private sector and is referred to as the accrual basis of accounting. This is disclosed further in the
notes to financial statements.
Fund Financial Statements
Fund statements provide financial information about the District's funds rather than the District as a whole.
There are three types of funds, Governmental, Proprietary and Fiduciary. The use of each type of fund is
disclosed in the notes to financial statements. Unlike district-wide statements that report revenues on the
accrual basis, the fund statements report revenues only to the extent cash has been received, or is expected "
to be received in the near future.
THE DISTRICT AS A WHOLE
Statement of Net Assets
Total net assets were $20,285,811 at June 2009, which is an increase of $1,404,750 from June 2008 and
$4,562,384 from June 2007. The following summarizes the Statement of Net Assets (page FS-1).
MDA - 4
' BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2009
Governmental Business-type
Activities Activities Totals
2009 2008 2007 2009 2008 2007 2009 2008 2007
Current and other assets $ 7.9 $ 8.8 $12.9 $ 0.1 $ 0.2 $ 0.2 $ 8.0 $ 9.0 $13.1
Capital assets 52.6 53.7 53.1 0.7 0.7 0.8 53.3 54.4 53.9
Total assets $60.5 $62.5 $66.0 $ 0.8 $ 0.9 $ 1.0 $61.3 $63.4 $67.0
Current and other liabilities $ 3.3 $ 3.6 $ 7.2 $ - $ - $ - $ 3.3 $ 3.6 $ 7.2
Long-term liabilities 37.7 40.8 44.0 - 0.1 0.1 37.7 40.9 44.1
Total liabilities 41.0 44.4 51.2 - 0.1 0.1 41.0 44.5 51.3
Capital assets (net of related debt) 15.9 14.0 10.3 0.7 0.7 0.8 16.6 14.7 11.1
Restricted for capital projects - - 1.8 - - - - - 1.8
Unrestricted 3.6 4.1 2.7 0.1 0.1 0.1 3.7 4.2 2.8
Total net assets 19.5 18.1 14.8 0.8 0.8 0.9 20.3 18.9 15.7
Total liabilities and net assets $60.5 $62.5 $66.0 $ 0.8 $ 0.9 $ 1.0 $61.3 $63.4 $67.0
Net assets are the difference between assets and liabilities, and represent resources that can be used to pay
for future operations and capital improvements. The majority of our 2009 net assets, $16,560,068 out of
$20,285,811 total, are invested in capital assets (net of related debt).
Statement of Activities
The following summarizes the Statement of Activities (page FS-2). It shows that total net assets increased
by $1,404,750 during 2009. Total net assets also increased by $3,157,634 during 2008.
MDA - 5
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2009
Program revenues
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues
Taxes
Earnings on investments
State general subsidies
Total revenues
Direct expenses
Excess revenues (expenses)
before transfers
Transfers between activities
Change in net assets
Governmental Business-type
Activities Activities Totals
2009 2208 2009 2008 2009 2008
$ 0.4 $ 0.4 $ 0.9 $ 0.8 $ 1.3 $ 1.2
7.0 6.6 0.5 0.4 7.5 7.0
1.1 1.8 - - 1.1 1.8
20.5 20.8 - - 20.5 20.8
0.2 0.3 - - 0.2 0.3
9.5 8.4 - - 9.5 8.4
38.7 38.3 1.4 1.2 40.1 39.5
37.2 34.9 1.5 1.4 38.7 36.3
1.5 3.4 (0.1) (0.2) 1.4 3.2
(0.1) (0.1) 0.1 0.1 - -
$ 1.4 $ 3.3 $ - $ (0.1) $ 1.4 $ 3.2
The change in net assets is the difference between revenues and expenses using the accrual basis of
accounting.
The following summarizes expense information from the Statement of Activities (page FS-2). Direct
expenses represents the actual cost of providing the services while the net expense represents the amount of
cost that is not recovered through program revenues, meaning user charges, grants and contributions. The
net expense must be recovered through general revenues, primarily taxes and state general subsidies.
Amounts not recovered reduce funds available for future years.
MDA - 6
• BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2009
Governmental Activities
Direct
Expenses
2009 2008
Program Net
Revenues Expense
2009 2008 2009 2008
Instruction $ 22.7 $ 20.8 $ 5.2 $ 5.2 $ 17.5 $ 15.6
Instructional student support 2.8 2.7 0.2 0.2 2.6 2.5
Administrative and financial support 2.7 2.5 0.1 0.1 2.6 2.4
Operation and maintenance of plant 4.4 4.3 0.1 0.1 4.2 4.2
Pupil transportation 2.3 2.2 1.7 1.7 0.6 0.5
Student activities 0.6 0.6 0.1 0.1 0.6 0.5
Community services - - - - - -
Interest on long-term debt 1.6 1.8 1.1 1.4 0.5 0.4
$ 37.2 $ 34.9 $ 8.5 $ 8.8 28.7 26.1
Transfers to business-type activities 0.1 0.1
Net expenses - governmental activities 28.8 26.2
State general subsidies revenues 9.5 8.4
Total needs from taxes and other local sources $ 19.3 $ 17.8
ti
Business-type Activities
Direct Program Net
Exp enses Revenues Expense
2009 2008 2009 2008 2009 2008
Food service $ 1.5 $ 1.4 $ 1.4 $ 1.2 $ 0.1 $ 0.2
Transfers from governmental activities
Net expenses - business-type activities
(0.1) (0.1)
$ - $ 0.1
MDA-7
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2009
THE DISTRICT'S FUNDS
Governmental Funds - fund balances
Governmental Fund Balances
2008-2009 2007-2008
2009 2008 2007 Change Change
General Fund - reserved $ 0.1 $ 0.5 $ - $ (0.4) $ 0.5
General Fund - unreserved 2.0 1.5 1.2 0.5 0.3
Capital Reserve Fund - unreserved - 0.8 0.6 (0.8) 0.2
Athletic Fund - unreserved - - - - -
Capital Projects Fund - reserved - - 1.8 - (1.8)
$ 2.1 $ 2.8 $ 3.6 $ (0.7)- $ (0.8)
Total reserved $ 0.1 $ 0.5 $ 1.8 $ (0.4) $ (1.3)
Total unreserved 2.0 2.3 1.8 (0.3) 0.5
$ 2.1 $ 2.8 $ 3.6 $ (0.7) $ (0.8)
Changes from 2008 to 2009
For 2008-09 the General Fund projected no change in unreserved fund balance; at June 2009 the fund
balance was $2,135,024. This was an $112,130 increase from June 2008 and was mostly due to $249,450 in
extra revenues from real estate taxes and federal grants.
The Capital Reserve Fund decrease of $799,280 was mostly due to expenditures related to a boiler
replacement project in the DAO and Middle School.
The District self funds its health insurance plans through the South Central Trust and ended the year with
$1,214,169 in the trust prior to audit. In addition to providing summer insurance coverage for the
professional staff, this amount funds 2 months of estimated costs and $100,000 for prepaid expenses.
MDA - 8
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2009
Changes from 2007 to 2008 (Previous Year)
The General Fund budget had no scheduled change in fund balance. The actual increase was $795,411,
primarily because actual revenue exceeded budgeted revenue. The 2008 fund balance includes $500,000
reserved for prepaid health insurance expenditures.
In 2008, the Capital Projects Fund was closed due to the completion of the conversion of the former middle
school into Mount Rock Elementary School, and the Guaranteed Energy Savings project.
General Fund Budget
The following summarizes the budgetary comparison information presented on page ORI-1, along with
comparisons to the previous year.
Total revenues
Total expenditures
Excess revenues (expenditures)
Final Budget
2009 2008
$ 38.2 $ 36.1
37.9 35.6
0.3 0.5
Actual Amount Variance
2009 2008
$ 38.4 $ 37.9
38.2 36.5
0.2 1.4
2009 2008
$ 0.2 $ 1.8
(0.3) (0.9)
(0.1) 0.9
Other financing sources (uses) (0.3) (0.5) (0.1) (0.6) 0.2 (0.1)
Net change in fund balance $ - $ - $ 0.1 $ 0.8 $ 0.1 $ 0.8
In 2009, actual revenues exceeded the budgeted amount by $218,795. Actual expenditures were $272,019
over the budgeted amount.
CAPITAL ASSETS
When construction projects are completed, the construction in progress balances are moved into the
respective categories, and depreciated over their estimated useful lives. In 2008, two construction projects
were completed, the conversion of the former middle school into Mount Rock Elementary School, and the
Guaranteed Energy Savings project. In February-2009, the Board awarded bids to Herre Bros, Inc., in the
amount of $709,218 for the replacement of the heating & air conditioning in the DAO and the boilers in the
Middle School. This project remains in progress and is expected to close in December 2009.
MDA - 9
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2009
Governmental activities
Land
Construction in progress
Buildings and improvements
Furniture and equipment
Library books
Computer equipment
Business-type activities
Furniture and equipment
Capital assets (net of depreciation)
2008-2009 2007-2008
2009 2008 2007 Change Change
$ 0.5 $ 0.5 $ 0.5 $ - $ -
0.5 - 6.7 0.5 (6.7)
49.8 51.3 44.0 (1.5) 7.3
1.2 1.3 0.6 (0.1) 0.7
0.2 0.2 0.2 - -
0.4 0.4 1.1 - (0.7)
$ 52.6 $ 53.7 $ 53.1 $ (1.1) $ 0.6
$ 0.7 $ 0.7 $ 0.8 $ - $ (0.1)
Capital assets in the governmental activities were $52,607,816 at June 2009, $53,741,240 at June 2008, and
$53,078,097 at June 2007. During 2009 there was $810,288 in capital assets purchased and $1,943,712 of
depreciation expense. During 2008, there was $2,599,477 of capital assets purchased and $1,936,334 of
depreciation expense.
LONG-TERM LIABILITIES
The following summarizes the long-term liabilities note to financial statements (starting at page FS-22).
Most of the debt is general obligation bonds issued to pay for capital improvements. The District's ability to
raise future funds through the issuance of debt depends on how existing bonds are rated by the investment
community. Moody's Investors Service, Inc. assigned its municipal bond rating of "Aaa" to the District's
most recent series of general obligation bonds, the 2006 Series issued in March 2006.
2008-2009 2007-2008
2009 2008 2007 Change Change
Governmental activities
General obligation bonds and notes
Compensated absences
Other post employment benefits
Unamortized bond costs
$ 37.3 $ 40.5 $ 43.7 $ (3.2) $ (3.2)
0.4 0.4 0.6 - (0.2)
0.1 - - 0.1 -
(0.1) (0.1) (0.3) - 0.2
$ 37.7 $ 40.8 $ 44.0 $ (3.1) $ (3.2)
MDA - 10
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2009
Each year, the District pays interest on the debt and a portion of the outstanding bonds and notes, referred to
as redemption. The District made regularly scheduled redemptions of $3,261,326 during 2009, $3,141,783
during 2008 and $2,550,000 during 2007.
New this year is the inclusion of other post employment benefits (OPEB) in our reporting process. This
primarily has to do with purchasing discounted health insurance after retirement through the District. The
District's actuarial accrued liability of $3,995,512 is being amortized over a period of 30 years. Additional
detail is available starting at page FS-25 of the notes.
NEXT YEAR'S BUDGET AND ECONOMIC FACTORS
Original Budget
2009-2010 2008-2009 Change
Total revenue $ 39.9 $ 38.2 $ 1.7
Total expenditures and other uses 39.9 38.2 1.7
Excess revenues (expenditures) $ - $ - $ -
The revenue budget for 2009-10 represents a 4.5% increase from the 2008-09 actual. The real estate millage
rate increases by 0.735 mills, from 14.720 to 15.455. The earned income tax rate remains at 1.65%.
The expenditure budget for 2009-10 represents a 4.5% increase over actual 2008-09. Although the contract
increase is 4.35%, other areas in the budget were cut. This increase includes $355,000 intended to fund
future PSERS expense and anticipated increases in fuel oil, electricity and maintenance of debt service for
an anticipated, but not yet authorized, elementary project.
The economic downturn caused unexpected loss of revenues in 2008-09 and those reductions will continue
into 2009-10. Some of the more noticeable reductions were in earned income tax, real estate transfer tax and
investment income.
MDA - 11
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2009
Revenue
Earned Income Tax
RE Tranfer Tax
Earnings on Invest
Expenditures
Special Education
SE Tuition
Cyber Charter
2007.08 2008.09 Change
$4,604,288 $4,123,818 -100/0
$309,285 $210,377 -32%
$271,861 $152,555 -44%
$662,162 $908,272 37%
$247,076 $740,932 200%
Notably, the District's tuition expenditures are rising quickly -- especially for special education and cyber-
charter school.
Currently PSERS is a manageable 4.76% and officially it increases to 5.06% in 2010-11; however there are
alternate figures on the website described as unofficial that show significant increases. These represent per
cent of payroll:
2010-2011 8.40%
2011-2012 10.70%
2012-2013 29.55%
2013-2014 32.45%
2014-2015 33.95%
The final rates will be voted on by PSERS' Board of Trustees on December 11, 2009. If voted in, these
rates will significantly change our budget; see chart below, Revenues vs. Expenditures.
Revenues vs. Expenditures
55,000,000
50,000,000
45,000,000
40,000,000
35,000,000
30,000,000
25,000,000
20,000,000
?ti oo? ooa ?b o0, ?A ?s ,?, oyo otiti oyti oti3 oyo otih
-Total Revenues -Total Expenditures
MDA - 12
BIG SPRING SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2009
The other expected, but unknown issue is electric deregulation. In January 2010 the District expects a 30-
50% increase in the generation portion of our electric utility bills. Because the District has such high
exposure because of electrically operated ground source heat pumps and air conditioning included in all
existing, or planned, buildings, this is a significant liability challenge. The District contracted with the
Central Pennsylvania Energy Consortium to procure electricity generation for 2010. The effects are
unknown at this point but are expected to reduce our increase from 50% down to 20-25%.
The District is currently considering a project to add a 2-story addition to Newville to relieve the dangerous
overcrowding and replace the Plainfield elementary school. At one point the District intended to initiate
these projects in 2009 for a total of approximately $17,000,000. As the economy deteriorated, the project
timeline slipped and Plainfield went from a 3 classrooms per grade to 2 per grade and a total of less than
$14,000,000. The current plan is to release bids sometime in March 2010 without final decision on the
projects. Once the bids are back in April, the board would make a final decision on each project and issue
the bonds necessary.
This District has also undertaken a review of capital projects needed to support the repair and upkeep of
existing facilities and infrastructure. As part of that process we identified $950,000 dollars to maintain or
repair existing buildings. It also includes $250,000 to replace the core network and associated switch gear to
provide a faster, more reliable environment the supports a high density wireless overlay and our ever
increasing reliance on connectivity to the web and other centers of learning.
CONTACTING THE DISTRICT FINANCIAL MANAGEMENT
The District's financial report is intended to provide the readers with a general overview of the District's
finances and to show the Board's accountability for the money it receives. If you have questions about this
report or wish to request additional financial information, please contact the district office of Big Spring
School District, 45 Mount Rock Road, Newville, PA 17241, (717) 776-2000.
MDA - 13
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_ BIG SPRING SCHOOL DISTRICT
STATEMENT OF NET ASSETS - PROPRIETARY FUNDS
JUNE 30, 2009
(With Summarized Financial Information for June 30, 2008)
Food Service
2009 2008
Assets
Cash and cash equivalents $ 177,807 $ 103,799
Due from other funds - 14,628
Due from other governments 4,668 5,932
Other receivables 6,827 694
Inventories 27,946 30,736
Total current assets 217,248 155,789
Furniture and equipment (net of accumulated depreciation) 652,213 720,873
Total assets $ 869,461 $ 876,662
Liabilities
Accounts payable $ 290 $ 3,738
Payroll and benefits payable 1,829 1,775
Due to other funds 223 -
Deferred revenues 15,374 13,213
Current portion of compensated absences 7,000 7,000
Total current liabilities 24,716 25,726
Long-term portion of compensated absences 34,812. 35,075
Total liabilities 59,528 60,801
Net assets
Invested in capital assets (net of related debt) 652,213 720,873
Unrestricted 157,720 94,988
Total net assets 809,933 815,861
Total liabilities and net assets $ 869,461 $ 876,662
The accompanying notes are an integral part of these financial statements.
FS-7
BIG SPRING SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASS ETS - PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2009
(With Summarized Financial Information for the Year Ended June 30, 2008)
Food Service
2009 2008
Operating revenues - Food service revenue $ 881,775 $ 848,772
Operating expenses
Salaries 465,428 457,565
Employee benefits 223,267 231,324
Purchased property service 63,000 60,000
Food and milk 576,008 561,670
Other expenses 30,384 15,709
Depreciation 87,302 102,827
Total operating expenses 1,445,389 1,429,095
Operating income (loss) (563,614) (580,323)
Nonoperating revenues
Earnings on investments 735 921
State sources - social security and retirement subsidies 28,710 35,750
_ State sources - meal subsidies 45,626 40,241
Federal sources - meal subsidies 336,135 257,193
Federal sources - donated commodities 82,298 65,990
• Total nonoperating revenues 493,504 400,095
Income (loss) before transfers (70,110) (180,228)
Transfers from other funds 64,182 101,260
Change in net assets
(5,928)
(78,968)
Net assets - beginning 815,861 894,829
Net assets - ending $ 809,933 $ 815,861
The accompanying notes are an integral part of these financial statements.
FS-8
BIG SPRING SCHOOL DISTRICT
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2009
(With Summarized Financial Information for the Year Ended June 30, 2008)
Operating activities
Cash received from users
Cash payments to employees for services
Cash payments to suppliers for goods and services
Net cash provided by (used for) operating activities
Non-capital financing activities
Food Service
2009 2008
$ 877,804
(688, 904)
(587,752)
(398,852)
$ 854,881
(705,095)
(569,914)
(420,128)
State sources 74,669 79,207
Federal sources 337,065 283,274
General fund advances (Due to other funds) 14,851 (16,155)
General fund contributed services 64,182 101,260
Net cash provided by (used for) non-capital financing activities 490,767 447,586
Capital and related financing activities
Cash payments for equipment (18,642) (8,610)
Net cash provided by (used for) capital and related financing activities (18,642) (8,610)
Investing activities
Earnings on investments
Net cash provided by (used for) investing activities
Net change in cash and cash equivalents
Cash and cash equivalents - beginning
Cash and cash equivalents - ending
Reconciliation of operating income (loss) to net cash used for operating activities
Operating income (loss)
Adjustments to reconcile operating income (loss) to
net cash provided by (used for) operating activities
Depreciation
Donated commodities
Net change in other assets and other liabilities
Other receivables
Inventories
Accounts payable
Payroll and benefits payable
Deferred revenues
Compensated absences
Total adjustments
Net cash provided by (used for) operating activities
735 921
735 921
74,008 19,769
103,799 84,030
$ 177,807 $ 103,799
$ (563,614) $ (580,323)
87,302
82,298
102,827
65,990
(6,132)
2,790
(3,448)
54
2,161
(263)
164,762
$ (398,852)
1,401
200
1,275
1,775
4,708
(17,981)
160,195
$ (420,128)
The accompanying notes are an integral part of these financial statements.
FS-9
BIG SPRING SCHOOL DISTRICT
STATEMENT OF NET ASSETS - FIDUCIARY FUNDS
JUNE 30, 2009
(With Summarized Financial Information for June 30, 2008)
Assets
Cash and cash equivalents
Total assets
Liabilities
Due to student groups
Total liabilities
Net assets
Total liabilities and net assets
Student Activities
2009 2008
$ 143,971 $ 163,880
$ 143,971 $ 163,880
$ 143,971 $ 163,880
143,971 163,880
$ 143,971 $ 163,880
The accompanying notes are an integral part of these financial statements.
FS-10
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Big Spring School District is the level of government which has oversight responsibility and control over activities
related to public school education. The report includes services provided by the District to residents within its
boundaries: the Cumberland County Townships of Cooke, Lower Frankford, Upper Frankford, Lower Mifflin,
Upper Mifflin, North Newton, South Newton, Penn and West Pennsboro and the Borough of Newville. Services
provided include a comprehensive curriculum for primary and secondary education as well as special education
and vocational education programs. The District receives revenue from local, state and federal sources and must
comply with the requirements of these funding sources.
The financial statements of Big Spring School District have been prepared in accordance with generally accepted
accounting principles as applied to governmental units. The Governmental Accounting Standards Board is the
authoritative standard-setting body for the establishment of governmental accounting and financial reporting
principles. Accounting guidance is also provided through the Comptroller's office for Pennsylvania's Department
of Education. The more significant of these accounting policies are as follows:
Reporting entity
The Governmental Accounting Standards Board establishes criteria for determining the activities, organizations
and functions of government to be included in the financial statements of the reporting entity. In evaluating the
District as a reporting entity, management has addressed all potential component units which may or may not fall
within the established criteria. The criteria used to evaluate component units for possible inclusion as part of the
District's reporting entity are:
The economic resources received or held by the separate organization are entirely for the direct benefit of
the District or its constituents.
The District is entitled to (or has the ability to) access a majority of the economic resources received or held
by the separate organization.
The economic resources received or held by the separate organization that the District is entitled to (or has
the ability to) access is significant to the District.
There are no component units that meet all of the above criteria for inclusion in this reporting entity.
FS-11
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Contd.)
Jointly-governed organizations
The District is a participant in three jointly-governed organizations, each of which is a separate legal entity that
offers services to the District and its residents. Each entity serves several school districts, and therefore are not
included in this reporting entity. The entities do not have taxing power, but each is required to adopt an annual
budget, which is funded primarily by its member Districts or others that use its services. Complete financial
statements for these entities can be obtained from their administrative offices.
Capital Area Intermediate Unit provides special education services and programs.
Cumberland Perry Area Vocational Technical School provides vocational and technical education services
and programs.
Capital Tax Collection Bureau provides earned income tax collection services.
Basis of presentation - District-wide financial statements
District-wide financial statements (i.e., the statement of net assets and the statement of activities) present
information on all of the nonfiduciary activities of the District. As a general rule the effect of interfund activity has
been eliminated from these statements. Governmental activities, which normally are supported by taxes and
intergovernmental revenues, are presented separately from business-type activities which rely to a significant
extent, on fees and charges for support.
The district-wide financial statements are presented using the economic resources measurement focus and the
accrual basis of accounting as are the proprietary fund and the fiduciary fund financial statements. Revenues are
recognized when earned and expenses are recognized when a liability is incurred, regardless of the timing of
related cash flows. Real estate and personal taxes are recognized as revenues in the year for which they are
levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the
provider have been met. Net assets (total assets less total liabilities) are used as a practical measure of economic
resources and the operating statement includes all transactions and events that increased or decreased net
assets. Depreciation and amortization are charged as an expense against current operations. Capital assets (net
of accumulated depreciation) and bonds payable (net of unamortized costs) are presented in the statement of net
assets.
The statement of activities demonstrates the degree to which the direct expenses of given functions or programs
are offset by program revenues. Direct expenses are those that are clearly identifiable within a specific function or
program. Program revenues include charges to customers who purchase, use, or directly benefit from goods,
services, or privileges provided by a given function or program. In addition, program revenues include grants and
contributions that are restricted to meeting the operational or capital requirements of a particular function or
program. Taxes and other items not properly included among program revenues are presented as general
revenues.
FS-12
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Basis of presentation - Fund financial statements
Fund financial statements are also provided for all governmental funds, proprietary funds, and fiduciary funds of
the District. Major individual governmental funds and major individual proprietary funds are reported as separate
columns in the fund financial statements. Nonmajor funds, if any, are aggregated and presented in a single
column. Fiduciary funds are reported by fund.
The governmental funds are presented using the current financial resources measurement focus and the modified
accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are received within the current period or soon enough
thereafter to pay liabilities of the current period. For this purpose, the District considers tax revenue to be
available if received within 2 months of the end of the fiscal period. Revenue from federal, state and other grants
designated for payment of specific expenditures is recognized when the related expenditures are incurred;
accordingly, when such funds are received, they are recognized as deferred revenues until earned. Expenditures
generally are recognized when a liability is incurred, as under accrual accounting. However, debt service
expenditures, as well as expenditures related to compensated absences and claims and judgments, are
recognized only when payment is due.
Proprietary funds generally follow standards for accounting and financial presentation for private business
enterprises to the extent that those standards do not conflict with or contradict guidance of the Governmental
Accounting Standards Board.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with the
fund's principal ongoing operations. Operating expenses for the District's proprietary fund include food production
costs, supplies, administrative costs, and depreciation on capital assets. All revenues or expenses not meeting
this definition are reported as nonoperating revenues and expenses.
Fund accounting
The accounts of the District are organized on the basis of funds, each of which is considered a separate
accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing
accounts which comprise its assets, liabilities, fund equity, revenues, and expenditures, or expenses, as
appropriate. Resources are allocated to and accounted for in individual funds based upon the purposes for which
they are to be spent.
When both restricted and unrestricted resources are available for use, it is the District's general policy to use the
restricted (primarily operating grants) resources first, then unrestricted resources as they are needed.
FS-13
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Basis of presentation - Fund financial statements (Cont'd.)
Fund accounting (Contd.)
The District has the following major types of funds:
Governmental Funds - These funds account for the activities through which most of the District's operations
are provided.
Proprietary Funds - These funds account for the operations of the District that are financed and operated in a
manner similar to private business enterprises.
Fiduciary Funds - These funds account for the assets held by the District as a trustee or agent for individuals,
private organizations and/or governmental units and are therefore not available to support the District's own
programs.
The District presents the following major governmental funds:
The General Fund is the primary operating fund. It accounts for all financial resources except those required
to be accounted for in another fund.
An operating budget is adopted prior to the beginning of each year on a modified accrual basis of
accounting. The General Fund is the only fund for which a budget is legally required.
The Pennsylvania School Code dictates specific procedures relative to budget adoption and financial
statement presentation. The District, before levying annual school taxes, is required to prepare an
operating budget for the succeeding fiscal year. This process includes the publishing of notices by
advertisement, that the proposed budget has been prepared and is available for public inspection at the
administrative office of the District, and that public hearings are held on the proposed operating budget
which are required to be scheduled at least ten days prior to when final action on adoption is taken by the
Board.
Legal budgetary control is maintained at the sub-function/major object level. The Board may approve
transfers of funds appropriated to any particular item of expenditure in accordance with the Pennsylvania
School Code. Management may amend the budget at the sub-function/sub-object level without Board
approval, provided it is not at a higher level than the Board adopted budget.
In order to preserve a portion of an appropriation for which an expenditure has been committed by a
purchase order, contract or other form of commitment, an encumbrance is recognized. Unused
encumbrances expire at the end of each year.
FS-14
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Basis of presentation - Fund financial statements (Cont'd.)
Fund accounting (Contd.)
Included in the budget are program budgets as prescribed by the federal and state agencies funding the
program. These budgets are approved on a program by program basis by the federal and state funding
agencies. During the year these programs increased both revenues and expenditures of the original
budget by $ 30,655.
The Capital Reserve Fund accounts for transfers from the General Fund and expenditures of those funds for
capital outlays.
The Athletic Fund accounts for athletic revenues and transfers from the General Fund and expenditures of
those funds for athletics.
The District presents the following proprietary fund:
The Food Service Fund accounts for the operations of the cafeterias.
The District presents the following fiduciary fund:
The Student Activities Fund accounts for programs operated and sponsored by various clubs and
organizations within the schools.
Cash and cash equivalents and investments
The District's cash and cash equivalents are considered to be cash on hand, demand deposits (including pooled
investments), and short-term investments with original maturities of three months or less from the date of
acquisition.
The types of authorized investments are limited by State regulations. Pooled investment funds are required to be
operated in accordance with State regulations.
Investments, including pooled investments, are reported at fair value.
Taxes and taxes receivable
Real estate and personal taxes are levied as of July 1 with a legal, enforceable claim against the property and/or
taxpayer. Amounts not collected within six months (December 31) are considered delinquent and submitted to
outside agencies/entities for collection actions.
FS - 15
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Receivables and payables between funds
Activity between funds that represent lending/borrowing arrangements outstanding at the end of the fiscal year
are referred to as "due to/from other funds". Any residual balances outstanding between the governmental
activities and business-type activities are reported in the district-wide financial statements as "internal balances".
Any balances between funds are short term items pending periodic repayments.
Inventories and prepaid items
Inventories are presented at the lower of cost or market on a first-in, first-out basis, and are expensed when
consumed. Donated commodities are recognized as revenue and are inventoried at an estimated cost value.
Certain payments, if any, to vendors reflect expenses applicable to future periods and are presented as prepaid
items in both district-wide and fund financial statements.
Capital assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, sidewalks, and
similar items), are presented in the applicable governmental or business-type activities columns in the district-
wide financial statements. Capital assets are defined by the District as assets with an initial, individual cost of
more than $ 1,500 and an estimated useful life in excess of one year. Management has elected to include certain
homogeneous groups with individual costs of less than $ 1,500 as capital assets for financial presentation
purposes. In addition, capital assets purchased with long-term debt may be capitalized regardless of the
thresholds established. Such assets are presented at historical cost or estimated historical cost if purchased or
constructed.
Major outlays for capital assets and improvements are capitalized as projects are constructed. The costs of
normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not
capitalized.
Capital assets are depreciated using the straight-line method, allowing for reasonable salvage values on
equipment, over the following estimated useful lives:
Assets
Buildings
Site improvements
Furniture
Machinery and equipment
Library books
Audio visual equipment
Computer equipment
Governmental Business-type
Activities Activities
40 -
20 -
15 15
10 to 15 15
7 -
6 -
5 5
FS-16
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Long-term liabilities
In the district-wide financial statements, and proprietary fund types in the fund financial statements, bonds and
notes payable and other long-term obligations are presented as liabilities in the applicable governmental activities
or proprietary fund statement of net assets. Refunding costs and bond discounts are amortized over the life of the
bonds using the effective interest method. Bond issuance costs are presented as deferred charges and amortized
over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as
bond issuance and refunding costs, as current period expenditures. The face amount of debt issued is presented
as other financing sources while discounts and refunding costs on debt issuances are presented as debt service
expenditures. Issuance costs, whether or not withheld from the actual debt proceeds received, are presented as
support service expenditures.
Net assets
Net assets represent the difference between assets and liabilities. In the district-wide financial statements and
proprietary fund financial statements, net assets are classified in the following categories:
Invested in capital assets (net of related debt) - This category groups all capital assets into one
component of net assets. Accumulated depreciation and outstanding debt that are attributable to the
acquisition, construction or improvement of these assets reduce this category.
Restricted - This category presents external restrictions imposed by creditors, grantors, contributors or
laws or regulations of other governments and restrictions imposed by law through constitutional
provisions or enabling legislation.
Unrestricted - This category presents the net assets of the District, which are not restricted for any
project or other purpose. However, these funds may be internally designated for specific projects or
purposes in the fund financial statements.
Fund balance reserves and designations
In the governmental fund financial statements, reserves and designations segregate portions of the fund balance
that are either not available or have been earmarked for specific purposes. Fund balance reserves are as follows:
Reserved for prepaid expenses - This category reflects resources already utilized so they are not
considered as current available funds.
FS-17
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect certain presented amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Comparative information
Comparative totals for the prior year have been presented in the accompanying financial statements in order to
provide an understanding of changes in the District's financial position and operations. Certain amounts
presented in the prior year have been reclassified in order to be consistent with current year's presentation.
However, presentations of prior year totals by fund and activity type have not been presented in each of the
statements since their inclusion would make the statements unduly complex and difficult to read. Summarized
comparative information should be read in conjunction with the District's financial statements for the year ended
June 30, 2008, from which the summarized information was derived.
CASH AND CASH EQUIVALENTS AND INVESTMENTS
Pennsylvania statutes provide for investment of District funds into authorized investment types including U.S.
Treasury bills, other short-term U.S. and Pennsylvania government obligations, and insured or collateralized time
deposits and certificates of deposit. The statutes do not prescribe regulations related to demand deposits;
however, they do allow the pooling of funds for investment purposes.
Custodial credit risk is the risk that in the event of a depository institution failure, the District's deposits may not be
returned to it. The District does not have a formal policy for custodial credit risk. However, the District requires all
deposits in excess of FDIC insurance coverage to be collateralized by the depository institution with approved
collateral as provided by law.
As of June 30, 2009, the District's deposits totaled $ 1,199,596 and the depository institution balances totaled
$ 1,626,224. Of the depository institution balances, $ 450,971 was covered by federal depository insurance
and $ 1,175,253 was collateralized. The pledged collateral is held by the Federal Reserve Bank, but is not
titled in the District's name.
The District also has cash equivalents with the Pennsylvania School District Liquid Asset Fund (PSDLAF) and
Pennsylvania Local Government Investment Trust (PLGIT). PSDLAF and PLGIT operate as common law
trusts established pursuant to the Intergovernmental Cooperation Act and related statues for the purpose of
pooling investments. The fundamental policy of PSDLAF and PLGIT are to maintain a net asset value of $ 1
per share, but there can be no assurance that the net asset value will not vary from $ 1 per share. PSDLAF
and PLGIT may only purchase securities which are permitted under PA law. As of June 30, 2009, the
District's deposits in PSDLAF and PLGIT totaled $ 1,106,974 and $ 76,057, respectively.
FS-18
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
CASH AND CASH EQUIVALENTS AND INVESTMENTS (Cont'd.)
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The
District does not have a formal investment policy for interest rate risk. The weighted average maturity of the
securities held by PSDLAF and PLGIT is generally less than 90 days.
Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The District
does not have a formal investment policy for credit risk. The District's deposits in PSDLAF and PLGIT were rated
"AAAm" by Standard & Poor's.
Cash and cash equivalents are as follows:
Governmental activities $ 2,060,849
Business-type activities 177,807
Fiduciary funds 143,971
TAXES RECEIVABLE
Taxes receivable are as follows:
Taxes Taxes
Receivable Allowance for Receivable Deferred
(Gross) Uncollectibles (Net) Tax Revenue
Real estate taxes $ 830,284 $ (284) $ 830,000 $ 530,000
Earned income taxes 1,850,000 - 1,850,000 1,850,000
Personal taxes 22.055 (17.055) 5.000 51000
General Fund 2,702,339 (17,339) 2,685,000 2,385,000
Full accrual adjustment - - - (2.385,000)
Governmental activities $ 2.702.339 $ (17.339) $ 2.685.000 $ -
FS-19
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
DUE FROM/TO OTHER FUNDS AND INTERFUND TRANSFERS
Interfund balances are as follows:
Assets Liabilities
General Fund $ 223 $ 223 Food Service Fund
Interfund transfers were as follows:
Other financing sources Other financing uses
Athletic Fund $ 81,000 $ 81,000 General Fund
Food Service Fund 45,540 45,540 General Fund
Food Service Fund 18,642 18,642 Capital Reserve Fund
DUE FROM OTHER GOVERNMENTS
Due from other governments are as follows:
Local sources - earned income taxes
Local sources - IDEA - B grant
Local sources - other districts
Local sources - other items
State sources
Federal sources
Governmental Business-type
Activities Activities
$ 535,876 $ -
626,884 -
322,983 -
26,096 -
584,473 453
411.190 4,215
$ 2.507.502 $ 4.668
FS - 20
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
CAPITAL ASSETS
Changes in capital assets were as follows:
Governmental activities
Capital assets not being depreciated
Land
Construction in progress
Capital assets being depreciated
Buildings and improvements
Furniture and equipment
Library books
Computer equipment
Accumulated depreciation
Buildings and improvements
Furniture and equipment
Library books
Computer equipment
Capital assets being depreciated, net
Governmental activities capital assets, net
Business-type activities
Capital assets being depreciated
Furniture and equipment
Accumulated depreciation
Furniture and equipment
Capital assets being depreciated, net
Beginning Ending
Balance Increases Decreases Balance
$ 501,824 $ - $ - $ 501,824
- 484,161 - 484,161
501,824 484.161 - 985
985
,
68,404,599 59,075 - 68,463,674
3,305,021 154,613 (27,301) 3,432,333
2,308,721 - - 2,308,721
3,862,548 112,439 - 3,974,987
77,880,889 326,127 (27,301) 78,179,715
(17,056,606) (1,624,395) - (18,681,001)
(2,013,615) (198,553) 27,301 (2,184,867)
(2,077,848) - - (2,077,848)
(3,493.404) (120,764) - (3,614,168)
(24,641.473) (1,943,712) 27,301 (26,557,884)
53.239.416 (1,617.585) - 51.621.831
53.741.240 (1.133.424) $ - 52.607.81
$ 1,549,844 $ 18,642 $ - $ 1,568,486
(828.971) (87,302) - (916.273)
720.873 (68,660) 652.213
Business-type activities capital assets, net $ 720.873 $ (685260) $ - $ 652.213
FS-21
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
CAPITAL ASSETS (Cont'd.)
Depreciation expense was charged to functions/programs as follows:
Governmental activities
Instruction
Instructional student support
Administrative and financial support
Operation and maintenance of plant
Student activities
Business-type activities - Food service
$ 1,559,531
171,168
76,075
95,093
41,845
The construction in progress at June 2009 was the boiler replacement project at the Middle School. The General
Fund has budgeted for a $ 400,000 transfer to the Capital Reserve Fund during 2009/2010 to complete this
project.
DEFERRED REVENUES
Governmental funds present deferred revenue in connection with receivables for revenues that are not
considered to be available to pay liabilities of the current period. Governmental funds also defer revenue
recognition with resources that have been received, but not yet earned. Deferred revenues in the General Fund of
$ 2,385,000 consist entirely of taxes receivable not received within 2 months of the end of the fiscal period.
Deferred revenues in the proprietary funds and the district-wide financial statements represents resources that
have been received but not yet earned.
LONG-TERM LIABILITIES
Changes in all long-term liabilities were as follows:
Beginning Ending Due Within
Balance Increases Decreases Balance One Year
Governmental activities
Bonds and notes payable $ 40,538,801 $ - $ (3,261,326) $ 37,277,475 $ 2,658,846
Compensated absences 418,800 22,200 (48,300) 392,700 200,000
Other post employment benefits - 478.754 (320.106) 158.648 100.000
$ 40.957.601 $ 500.954 (3.629.73) $ 37.828.823 2.958.84
Business-type activities
Compensated absences $ 42.075 $ 5.000 S (5.263) $ 41.812 $ 7.000
FS - 22
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
LONG-TERM LIABILITIES (Cont'd.)
Bonds and notes payable
Changes in bonds and notes payable were as follows:
Beginning Scheduled Ending
Balance New Issue Redemptions Balance
1997 Series $ 545,000 $ - $ (545,000) $ -
1999 Series 3,230,000 - (265,000) 2,965,000
2001 Series 2,770,000 - (685,000) 2,085,000
2003 Series 15,515,000 - (980,000) 14,535,000
2005 Series 3,725,000 - (405,000) 3,320,000
2006 Series 9,895,000 - (75,000) 9,820,000
2006 Notes (energy savings project) 4.858.801 - (306,326) 4,552.475
40.538.801 $ - S(3,261,326) 37.277.475
Interest Rates Maturity Date Callable Date
1999 Series (1) December 2017 45 days notice
2001 Series 4.30% to 5.00% February 2021 August 2011
2003 Series 3.05% to 5.00% April 2023 April 2013
2005 Series 3.10% to 3.80% June 2016 December 2010
2006 Series 3.40% to 4.05% March 2021 August 2011
2006 Notes 3.95% December 2021 Annually, with fees
Due Within
One Year
$ 275,000
715,000
1,025,000
420,000
80,000
141,846
(1) The 1999 Series pays interest at a variable rate of .85% above the "weekly rate", not to exceed 25.00%.
At June 2009 the "weekly rate" was 0.48%.
During the year ended June 2009, $ 178,097 of debt service was paid from the Capital Reserve Fund. Scheduled
debt service requirements, payable by the General Fund, are as follows:
FS - 23
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
LONG-TERM LIABILITIES (Cont'd.)
Year Ending June Principal Interest Total
2010 $ 2,656,846 $ 1,404,290 $ 4,061,136
2011 2,772,720 1,317,283 4,090,003
2012 2,900,640 1,214,664 4,115,304
2013 3,060,736 1,093,305 4,154,041
2014 3,218,151 973,622 4,191,773
2015-2019 15,583,951 3,113,990 18,697,941
2020-2023 7,084,431 617.341 7.701, 772
37.277.475 9134,495 $ 47.011.970
In the year ended June 2006, the District defeased a portion of the 2001 Series of bonds by creating an irrevocable
trust fund. New debt was issued (2006 Series) and the proceeds were used by the trust fund to purchase U.S.
government securities. The investments and fixed earnings are sufficient to fully service the defeased debt until it is
called or matures. For financial reporting purposes, the defeased debt was removed as a liability from the District-
wide financial statements. As of June 30, 2009 $ 9,135,000 of defeased bonds remain outstanding and are
scheduled to be called in August 2011.
Compensated absences
Compensated absences (those for which employees receive pay) are presented using the termination payment
method. A liability is computed using estimates which apply historical data to current factors. The District
maintains records of unused leave and applies the contracted rate for employees eligible for termination
payments. The District allows only restricted sabbatical leave and therefore does not present any liability in
advance of the sabbatical. Payments for compensated absences are made in the year the absence is taken or the
employee retires. At retirement or death, while in District service, employees or their beneficiaries shall choose
one of the following options (subject to a maximum of $ 12,000 for administrators and $ 11,500 for all other
employees):
1. Number of full years of service in the District multiplied by $ 180 (the employee must have a minimum
of 20 years of service in the District)
2. Accumulated unused sick leave days multiplied by 80% of the substitute per diem rate
FS - 24
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
LONG-TERM LIABILITIES (Cont'd.)
Other post employment benefits (OPEBs)
Beginning with the year ended June 2009, the District became subject to reporting OPEBs in accordance with
Governmental Accounting Standard Board Statement No. 45 (GASB 45). GASB 45 requires recognition of
OPEBs as part of the compensation package of active employees for services rendered. The cost and obligation
for OPEBs are required to be measured by an actuarial valuation. The District chose to implement GASB 45
prospectively, so there is no OPEB obligation reported at the beginning of the year.
Plan description
Under the negotiations agreement with Big Spring Education Association, the District shall provide for
continuance of health care insurance after retirement until the retiree attains the Medicare eligible age. The
retiree will pay the monthly premiums, except that teachers who retire after 30 or more years with the District,
shall have up to five years of health care insurance benefits provided on the basis of the retiree paying 50% of
the monthly premiums.
Retired administrators, and classified employees hired prior to July 2007, receive the same benefit as
described above. Classified employees hired after June 2007 must pay the entire premium.
Retiree's premiums are less than the District's actual cost to provide health care coverage to retirees. The
premium amount retirees pay is a blended rate for covering both active and retired Plan members. The fact
that the blended rate that retirees pay is less than the cost of covering retired members and their beneficiaries
results in what is known as an "implicit rate subsidy," which creates an additional cost to the District.
Participant information
Active participants 354
Vested former members g
Retired participants 73
436
Funding Policy
The District funds Plan liabilities on a "pay-as-you-go" basis, and has not established an OPEB trust fund to
accumulate assets to fund Plan obligations. The District has no statutory or contractual obligation to fund the
Plan and would only do so at the District's discretion.
FS - 25
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
LONG-TERM LIABILITIES (Cont'd.)
Other post employment benefits (OPEBs) (Contd.)
Annual OPEB cost and net OPEB obligation
The District's annual OPEB cost (expense) is calculated based on the actuarially determined annual required
contribution (ARC) of the employer. The ARC represents the amount needed to fund the cost of benefits
attributed to the current year, plus an amortized portion of the unfunded actuarial accrued liability (UAAL). The
District has selected to have the UAAL amortized over a period of 30 years.
Components of the District's annual OPEB cost, the amount actually contributed to the Plan, and changes in
the net OPEB obligation are as follows:
Employer normal cost
Amortization of unfunded actuarial accrued liability
Annual required contribution
Interest on the net OPEB obligation
Adjustment to the ARC
Annual OPEB cost
Contributed to the plan
Increase in net OPEB obligation
Net OPEB obligation - beginning
Net OPEB obligation - end
The percentage of annual OPEB cost contributed was as follows:
Funding status and funding progress
Annual
Year ended OPEB Cost
June 2009 $ 478,754
$ 233,464
245.290
478,754
478,754
(320.106)
158,648
Percentage of
Annual OPEB
Cost Contributed
66.86%
Net OPEB
Obligation
$ 158,648
The District's actuarial accrued liability (AAL) for OPEBs as of July 2008 was $ 3,995,512. There are no Plan
assets, thus, the entire amount is unfunded. The District does not have any current plans to fund the AAL.
FS - 26
Actuarial
Actuarial Actuarial Accrued
Valuation Value of Liability
Date Assets (AAL)
July 2008 $ - $ 3,995,512 $ 3,995,512
UAAL as
a%of
Unfunded Funded Covered Covered
AAL Ratio Payroll Payroll
0.00 $15,104,065 26.45%
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
LONG-TERM LIABILITIES (Cont'd.)
Other post employment benefits (OPEBs) (Cont'd.)
Actuarial assumptions and methods
Actuarial assumptions and methods used in the January 2008 actuarial valuation include the following:
Interest rate 4.50%
General inflation rate 3.00%
Health care cost trend rate 8.50% in 2008 trending to 5.00% in 2015 and later
Actuarial cost method Benefits are allocated on a level basis over the earnings of
an individual from date of hire to assumed retirement date
Amortization period 30 years
Actuarial evaluations on an ongoing basis involve estimates of the reported amounts and assumptions about
the probability of events far into the future. Examples include assumptions about future employment,
mortality, and the healthcare cost trend. Actuarially determined amounts are subject to continual revision as
actual results are compared to past expectations and new estimates are made about the future.
Projections of benefits are based on the types of benefits provided under the plan at the time of each
valuation and on the pattern of sharing of benefit costs between the employer and plan members to that point
in time.
Actuarial calculations reflect a long-term perspective, and consistent with that perspective, actuarial methods
and assumptions used include techniques that are designed to reduce short-term volatility in accrued
liabilities.
The required schedule of funding progress in the other required information (ORI) immediately following the
notes to financial statements, is to present multi-year trend information about whether the actuarial value of
Plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits.
However, because the District maintains no Plan assets, information relative to Plan asset disclosures is not
applicable. Additionally, because this is the year of implementation of GASB 45, the OPEB disclosure
standards are implemented prospectively; therefore, the ORI does not reflect similar information for the two
preceding years.
FS - 27
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
PENSION PLAN
Substantially all full-time and part-time employees of the District participate in the plan. The District recognizes
expenditures or expenses equal to its contractually-required contributions, subject to the modified accrual basis of
accounting in governmental funds.
The District contributes to The Public School Employees' Retirement System (the System), a governmental cost
sharing multiple-employer defined benefit plan. The plan is under the authority of the Public School Employees'
Retirement Code (the Code), as amended. The plan provides retirement and disability, legislatively mandated ad
hoc cost-of-living adjustments, and healthcare insurance premium assistance to qualifying annuitants. The
System issues a comprehensive annual financial report that includes financial statements and required
supplementary information for the plan. A copy of the report may be obtained by writing to the System at PO Box
125, Harrisburg, PA 17108-0125, or by accessing the System's website at www.osers.state.Pa.us.
The contribution policy is established in the Code and requires contributions by active members and employers.
Contribution rates for active members are set by law and are dependent upon members' class. In most cases, the
contribution rates based on qualified member compensation are as follows:
Membership Class T-C Active members hired before July 22, 1983 5.25%
Membership Class T-C Active members hired on or after July 22, 1983 6.25%
` Membership Class T-D Active members hired before July 22, 1983 6.50%
Membership Class T-D Active members hired on or after July 22, 1983 7.50%
Active members newly hired after July 1, 2001 are automatically Class T-D. The contribution rates for all
members in Membership Class T-D were effective January 1, 2002.
Contributions required of employers are based upon an actuarial valuation. For the fiscal year ended June 2009
the employer contribution rate was 4.76 percent of covered payroll, composed of 4.00 percent for pension
benefits and 0.76 percent for healthcare insurance premium assistance. The District's contributions to the system
for the years ended June 2009, 2008 and 2007 were $ 821,696, $ 1,204,162, and $ 1,055,160, respectively.
Those amounts are equal to the required contributions for each year.
FS - 28
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
RISK MANAGEMENT
Health insurance
The District's health insurance plan allows each participant to choose one of the three coverage options available
through South Central Trust. South Central Trust is not a risk sharing pool. The Trust was established for
processing claims and obtaining reinsurance through commercial insurance carriers. The Trust has reinsurance
for claims in excess of $ 100,000 specific (per person) and 125% aggregate (estimated District annual cost).
Financial statements of the trust are provided to the member districts. District transactions within the Trust were
as follows:
Amount available in the trust, beginning
Payments from the District
Claims paid by the trust
Administrative and other fees, net of interest earned
Stop loss premiums and commissions
$ 1,494, 787
3,358,700
$ (3,280,210)
(259,500)
(99,608)
(3.639,318)
Amount available in the trust, ending
The amount available in the trust was as follows:
Accrual for claims incurred
Accrual for administrative and other fees
Accrual for health insurance coverage on payroll payable
Amount available for accrued costs, ending
Prepaid health insurance
Amount available in the trust, ending
$ 571,569
45,100
497.500
1,114,169
100.000
There are various methodologies for estimating claims that have been incurred but not reported (IBNR). District
management has selected the methodology of '60 days of paid claims'. District management believes this
methodology provides an adequate amount for accrued costs.
FS - 29
a
BIG SPRING SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2009
RISK MANAGEMENT (Cont'd.)
Other insurance
The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets;
errors and omissions; injuries to employees; and natural disasters. The District maintains commercial insurance
coverage covering each of those risks of loss. Management believes such coverage is sufficient to preclude any
significant uninsured losses to the District. Settled claims have not exceeded this commercial coverage in any of
the past three fiscal years.
For State unemployment compensation laws, the District is self-insured, which is a common practice for local
governmental units. Any unemployment claims are paid by the District on a quarterly basis as incurred.
For workers' compensation insurance, approximately 80 Districts participate in a public entity risk sharing pool
(School Districts Insurance Consortium) for processing claims and obtaining reinsurance through commercial
insurance carriers. Under this plan, the District's annual cost should not exceed standard commercial insurance
rates.
COMMITMENTS AND CONTINGENCIES
The District's contract with its teaching staff expires in June 2011.
In the normal course of business, the District is subject to legal disputes and claims. The District does not
anticipate any material losses from any pending or threatened litigation.
In the normal course of preparing for the subsequent school year, the District has awarded bids for various
supplies, fuel contracts, etc. No major commitments in excess of routine requirements have been made by the
District.
The District participates in state and federal grant programs which are governed by various rules and regulations.
Expenditures charged to these grant programs are subject to program compliance audits and reviews by the
grantor agencies. The District is potentially liable for any expenditures which may be disallowed by the rules of
these grant programs. The District does not anticipate any material disallowance of program expenditures.
The District is in the process of reviewing two proposed construction projects. Alterations and additions to
Newville Elementary School could cost approximately $ 3,000,000. A new Plainfield Elementary School could cost
approximately $ 11,000,000. These projects are still in the preliminary stages, with bids expected to go out during
February or March 2010. No decisions on construction or financing have been made as of the date of this report.
FS-30
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BIG SPRING SCHOOL DISTRICT
OTHER POST EMPLOYMENT BENEFIT PLANS
JUNE 30, 2009
HEALTH CARE BENEFITS
SCHEDULE OF FUNDING PROGRESS
Actuarial
Actuarial Actuarial Accrued
Valuation Value of Liability Unfunded Funded Covered
Date Assets (AAL) AAL Ratio Payroll
July 2008 $ - $ 3,995,512 $ 3,995,512 0.00 $15,104,065
UAAL as
a % of
Covered
Payroll
26.45%
Because the June 2009 year was the implementation year for GASB 45, and the District chose to implement
prospectively, the above illustration does not reflect similar information for the two preceding years.
ORI - 2
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