HomeMy WebLinkAbout10-7623V~' ~{~#~ T-I~L3dti~iYV II~iC~IiA
4Y~V ~LV ~ V ~~ V~ VV
CUMBERLAtwti C~UP~~''f
~E~INSYGUAt#!~
.~
~ ~ ~_~ ~ ~ > CgpQL DIgTRICT
IiIppENS~~G AREA. S
S CIAL ~ppRT
FINA,N
3UNE 30, 2010
S~'
o'~~
C~~'k b~'~~a
~~ s~~
~'`~ ~
CONTENTS
INDEPENDENT AUDITOR' S REPORT 1 - 2
Management's Discussion & Analysis 3 - 10
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Assets 11 - 12
Statement of Activities 13
Fund Financial Statements:
Balance Sheet -Governmental Funds 14
Reconciliation of the Governmental Funds Balance
Sheet to the Statement of Net Assets 15
Statement of Revenues, Expenditures and
Changes in Fund Balances -Governmental Funds 16
Reconciliation of the Governmental Funds Statement
of Revenues, Expenditures and Changes in Fund
Balances to the Statement of Activities 17
Statement of Revenues, Expenditures and Changes in
Fund Balance -Budget and Actual -General Fund 18
Statement of Net Assets -Proprietary Fund -
Food Service 19
Statement of Revenues, Expenses and Change in Net
Assets -Proprietary Fund -Food Service 20
Statement of Cash Flows -Proprietary Fund -
Food Service 21 - 22
Statement of Fiduciary Net Assets 23
Notes to Financial Statements 24 - 43
CONTENTS (Continued)
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Funding Progress
44
SUPPLEMENTARY INFORMATION
Schedule of Revenues -General Fund 45 - 46
Schedule of Expenditures -General Fund 47 - 52
Combining Balance Sheet -Non-Major Governmental
Funds 53 - 54
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances -Non-Major
Governmental Funds 55 - 56
Independent Auditor's Report on Internal Control
over Financial Reporting and on Compliance
and Other Matters Based on an Audit of
Financial Statements Performed in Accordance
with Government Auditing Standards 57 - 58
Independent Auditor's Report on Compliance with
Requirements that Could Have a Direct and
Material Effect on Each Major Program
and on Internal Control over Compliance in
Accordance with OMB Circular A-133 59 - 60
Schedule of Findings and Questioned Costs 61 - 62
Schedule of Expenditures of Federal Awards 63 - 66
Notes to Schedule of Expenditures of Federal Awards 67
Summary Schedule of Prior Year's Audit Findings 68
Boyer&Ritter
Certified Public Accountants and Consultants
INDEPENDENT AUDITOR'S REPORT
Board of School Directors
Shippensburg Area School District
Shippensburg, Pennsylvania
Web Site: www.cpabr.com
We have audited the accompanying fmancial statements of the governmental activities, the business-type
activity, each major fund, and the aggregate remaining fund information of Shippensburg Area School
District, as of and for the year ended June 30, 2010, which collectively comprise the District's basic
financial statements as listed in the table of contents. These financial statements are the responsibility of
Shippensburg Area 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 consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the District's internal control over financial reporting. Accordingly, we
express no such opinion. 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, fmancial-statement
presentation. We believe 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 activity, each major fund,
and the aggregate remaining fund information of Shippensburg Area School District, as of June 30, 2010,
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 November 9,
2010, on our consideration of the Shippensburg Area School District's internal control over fmancial
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.
CAMP HILL CARLISLE CHAMBERSBURG LEWISTOWN STATE COLLEGE
I ^ An Independently Owned Member of the RSM McGladrey Network
Management's Discussion & Analysis and the Schedule of Funding Progress on pages 3 through 10 and
page 44, respectively, are not required parts of the basic financial statements but are supplementary
information required by accounting principles generally accepted in the United States of America. We
have applied certain limited procedures, which consisted principally of inquiries of management
regarding the methods of measurement and presentation of the required supplementary information.
However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming an opinion on the fmancial statements that
^ collectively comprise Shippensburg Area School District's basic financial statements. The combining
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 aze 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 U. S. Office of Management and Budget Circulaz A-133,
Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic
^ financial statements. 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.
Chambersburg, Pennsylvania
~ November 9, 2010
i~
2
MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
SHIPPENSBURG AREA SCHOOL DISTRICT
JUNE 30, 2010
The discussion and analysis of Shippensburg Area School District's (District) financial performance
provides an overall review of the District's financial activities for the fiscal year ended June 30, 2010.
The intent of this discussion and analysis is to look at the District's financial performance as a whole;
readers should also review the financial statements and the notes to the basic financial statements to
enhance their understanding of the District's financial performance.
Management's Discussion & Analysis (MD&A) is an element of the reporting model adopted by the
Governmental Accounting Standards Board (GASB) in their Statement No. 34, Basic Financial
Statements and Management's Discussion and Analysis for State and Local Governments, issued in
June 1999. Certain comparative information between the current year and the prior year is required to
be presented in MD&A.
Financial Highlights
Special Education
The trends of prior years indicate that during the fiscal year 2009-2010, the Shippensburg Area School
District would experience another year of significant increases in the costs for Special Education
Instruction.
Alternative Education
Alternative Education costs increased during the 2009-2010 fiscal year. T'he District transferred
increased financial resources to fund Alternative Education Placements for at-risk students during the
fiscal year.
Charter Schools
Expenses for Charter Schools continue to grow.
Building Program
Construction on the High School Security Entrance and renovated offices was completed during the
2009-2010 school year.
i;
Table A-1 summarizes the major features of the District's financial statements, including the portion of
the District they cover and the types of information they contain. The remainder to this overview section
of MD&A explains the structure and contents of the statements.
Table A-1
Major Features of Shippensburg Area School District's
Government-Wide and Fund Financial Statements
i~
Government-Wide Fund Statements
Statements Governmental Funds Pro rie Funds Fiduci Funds
Scope Entire District (except Activities of the District Activities the District Activities in which the
fiduciary funds) that are not operates similar to District is the trustee or
proprietary or private business - agent to someone else's
fiduciary, such as Food Service resowces -
education, Activity Funds
administration and
communi services
Required Financial Statement of Net Assets Balance Sheet Statement of Net Assets Statement of Fiduciary
Information Net Assets
Statement of Revenues, Statement of Revenues,
Statement of Activities Expenditwes and Expenses and Changes Statement of Changes
Changes in Fund in Net Assets in Fiduciary Net Assets
Balances
Statement of Cash
Flows
Accounting Basis and Accrual accounting and Modified-accrual Accrual accounting and Accrual accounting and
Measurement Focus economic-resowces accounting and current economic-resowces economic-resources
focus financial-resowces focus focus
focus
Type ojasset/lialdlity All assets and Only assets expected to All assets and All assets and
injormaAion liabilities, both be used up and liabilities, both liabilities, both short-
financial and capital, liabilities that come due financial and capital, term and long-term
and short-term and during the yeaz or soon and short-term and
long-term thereafter; no capital long-term
assets included
Type ojinJlow/outflow All revenues and Revenues for which All revenues and All revenues and
injormaiion expenses during the cash is received during expenses during the expenses during the
year, regazdless of or soon after the end of year, regardless of year, regazdless of
when cash is received the yeaz; expenditures when cash is received when cash is received
or paid when goods or services or paid or paid
have been received and
payment is due during
the year or soon
thereafter
4
Overview of Financial Statements
^
Government-Wide Statements
^ The government-wide statements report information about the District as a whole using accounting
methods similar to those used by private-sector companies. The Statement of Net Assets includes all of
^ the government's assets and liabilities. All of the current year's revenues and expenses are accounted for
in the Statement of Activities regardless of when cash is received or paid.
The two government-wide statements report the District's net assets and how they have changed. Net
^ assets, the difference between the District's assets and liabilities, are one way to measure the District's
financial health or position.
^ Over time, increases or decreases in the District's net assets are an indication of whether its financial
S health is improving or deteriorating, respectively.
i
^
t
^
^
^
To assess the overall health of the District, additional non-financial factors, such as changes in the
District's property-tax base and the performance of students, must be considered.
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. Property taxes and state and Federal subsidies and grants
finance most of these activities.
• Business-type activities -The District conducts afood-service operation and charges fees to
students, staff and visitors to cover the costs of their operation.
Fund Financial Statements
The District's fund financial statements provide detailed information about the most significant funds -
not the District as a whole. Some funds are required by state law and by bond requirements.
Governmental funds -Most of the District's activities are reported in governmental funds,
which focus on the determination of financial position and changes in financial position, not on
income determination. They are reported using an accounting method called modified-accrual
basis of accounting, which measures cash and all other 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.
Proprietary funds -These funds are used to account for the District's activities that are similar
to business operations in the private sector, or where the reporting focuses on determining net
income, financial position, changes in financial position, and where a significant portion of
funding comes through user charges. When the District charges customers for services it
provides -whether outside customers or other units in the District -these services are generally
reported in proprietary funds. The Food Service Fund is the District's proprietary fund and
corresponds to the business-type activities reported in the government-wide statements, but the
fund financial statements provide more detail and additional information such as cash flows.
Fiduciary funds -The District is the trustee, or fiduciary, for several activity funds. All
fiduciary activities are reported in a separate Statement of Net Assets. We exclude these
activities from the District's other financial statements because the District cannot use these
assets to finance operations.
~ Financial Analysis of the District as a Whole
^ The District's total net assets were $14,852,613, at June 30, 2010.
~ Table A-2
As of June 30, 2010 and 2009
~ Net Assets
^ Governmental Activities Business-Type Activities Total
6/30/10 6/30/09 6/30/10 6/30/09 6/30/10 6/30/09
^ Current and other assets $ 8,480,557 $ 10,736,563 $ 58,737 $ 70,256 $ 8,539,294 $ 10,806,819
Capital assets 45,861,931 45,278,718 87,640 105,471 45,949,571 45,384,189
^ Total assets $ 54,342,488 $ 56,015,281 $ 146,377 $ 175,727 $ 54,488,865 $ 56,191,008
Current and other liabilities $ 5,627,612 $ 5,710,892 $ 54,068 $ 53,328 $ 5,681,680 $ 5,764,220
Long-tear liabilities 33,954,572 36,222,642 - - 33,954,572 36,222,642
. Total liabilities 39,582,184 41,933,534 54,068 53,328 39,636,252 41,986,862
^ Invested in capital assets,
net of related debt 10,976,931 8,253,718 87,640 105,471 11,064,571 8,359,189
^ Restricted 160,189 1,830,351 - - 160,189 1,830,351
Unrestricted, undesignated 3,623,184 3,997,678 4,669 16,928 3,627,853 4,014,606
^ Total net assets 14,760,304 14,081,747 92,309 122,399 14,852,613 14,204,146
Total liabilities
and net assets $ 54,342,488 $ 56,015,281 $ 146,377 $ 175,727 $ 54,488,865 $ 56,191,008
Most of the District's net assets are invested in capital assets (land, site improvements, buildings and
equipment). The remaining net assets consist of restricted and unrestricted amounts. The restricted
^ balances are amounts set aside to fund future purchases or capital projects as planned by the District. The
unrestricted amounts include designated and undesignated amounts.
The results of this year's operations as a whole are reported in the Statement of Activities. All expenses
~ are reported in the first column. Specific charges, grants, revenues and subsidies that directly relate to
specific expense categories are presented to determine the final amount of the District's activities which
are supported by other general revenues. The two largest general revenues are the Basic Education
Subsidy provided by the Commonwealth of Pennsylvania, and the local taxes assessed to community
r taxpayers.
6
Table A-3 presents information from the Statement of Activities in a different format.
Table A-3
Fiscal Years Ended June 30, 2010 and 2009
Changes in Net Assets
Governmental Activities Business-Type Activities
6/30/10 6/30!09 6/30/10 6130/09
Total
6/30110
/30!09
Revenues
Program revenues
Chazges for services $ 104,666 $ 121,277 $ 791,401 $ 792,246 $ 896,067 $ 913,523
Operating grants
and contributions 9,022,329 7,148,789 525,834 462,941 9,548,163 7,611,730
General revenues
Property taxes 17,169,517 16,209,953 - - 17,169,517 16,209,953
Other taxes 4,104,421 4,170,580 - - 4,104,421 4,170,580
Grants, subsidies and
contributions, unrestricted 8,727,854 9,072,753 - - 8,727,854 9,072,753
Other 482,985 586,670 377 693 483,362 587,363
Transfers (6,862) (8,255) 6,862 8,255 - -
Total revenues 39,604,910 37,301,767 1,324,474 1,264,135 40,929,384 38,565,902
Expenses
Instructional 25,534,571 23,781,257 - - 25,534,571 23,781,257
Instructional student support 3,056,703 2,875,086 - - 3,056,703 2,875,086
Administrative and
financial support 3,108,177 2,948,011 - - 3,108,177 2,948,011
Operation and maint.
of plant services 2,517,870 2,361,392 - - 2,517,870 2,361,392
Pupil transportation 2,531,340 1,732,936 - - 2,531,340 1,732,936
Student activities 811,525 754,104 - - 811,525 754,104
Community services 24,338 21,522 - - 24,338 21,522
Interest on long-term debt 1,341,829 1,403,501 - - 1,341,829 1,403,501
Food service - - 1,354,564 1,317,583 1,354,564 1,317,583
Total expenses 38,926,353 35,877,809 1,354,564 1,317,583 40,280,917 37,195,392
Changes in net assets $ 678,557 $ 1,423,958 $ (30,090) $ (53,448) $ 648,467 $ 1,370,510
^ The tables below present the expenses of both the Governmental and Business-Type Activities of the
District.
Table A-4 presents the District's functions -instructional programs, instructional student support,
administration, operation and maintenance of plant services, pupil transportation, student activities and
~ community services and each program's net cost (total cost less revenues generated by the activities).
This table also shows the net costs offset by the other unrestricted grants, subsidies and contributions to
show the remaining financial needs supported by local taxes and other miscellaneous revenues.
Table A-4
Fiscal Years Ended June 30, 2010 and 2009
Governmental Activities
~ Total Cost Net Cost
of Services of Services
^
Functions/Programs 6/30/2010 6/30/2009 6/30/2010 6/30/2009
Instructional $25,534,571 $ 23,781,257 $ 19,575,839 $18,574,692
Instructional student support 3,056,703 2,875,086 2,529,425 2,444,404
~ Administration 3,108,177 2,948,011 2,925,974 2,777,157
Operation and maint. of plant services 2,517,870 2,361,392 1,124,799 1,881,764
~ Pupil transportation 2,531,340 1,732,936 1,560,503 854,693
Student activities 811,525 754,104 717,386 650,624
~ Community services 24,338 21,522 23,603 20,908
Interest on long term debt 1,341,829 1,403,501 1,341,829 1,403,501
^ Total governmental activities $ 38,926,353 $ 35,877,809 29,799,358 28,607,743
Less unrestricted grants, subsidies (8,727,854) (9,072,753)
~
Total needs for grants, fazes
~ and other revenues $ 21,071,504 $19,534,990
Table A-5 reflects the activities of the Food Service Program, the only business-type activity of the
District.
e Table A-5
. Fiscal Years Ended June 30, 2010 and 2009
Business-Type Activities
Total Cost Net Cost
^ of Services of Services
Functions/Pro ams 6/30/2010 6/30/2009 6/30/2010 6/30/2009
Food services 1,354,564 1,317,583 37,329 62,396
Less investment earnings (377) (693)
~ Less transfers (6,862) (8,255)
Total business-type activities 30,090 53,448
The Statement of Revenues, Expenses and Changes in Net Assets for this proprietary fund will further
^ detail the actual results of operations.
8
The District Funds
At June 30, 2010, the District's governmental funds reported a combined fund balance of $3,936,457,
S which reflects a decrease of $2,226,619 from June 30, 2009.
^ General Fund Budget
i During the fiscal year, the Board of School Directors (Board) authorizes revisions to the original budget
~ to accommodate differences from the original budget to the actual expenditures of the District. All
adjustments are again confirmed at the time the annual audit is accepted, which is after the end of the
fiscal year and not prohibited by state law. A schedule showing the District's original and final budget
amounts compared with amounts actually paid and received is provided in the financial statements.
The District applied for Federal, state and local grants. These grants cannot always be anticipated in the
budgeting process. Budgeted revenues increased by $464,206 as a result of additional approved grants.
Budgeted expenditures and other financing uses also increased by the same amount to compensate for the
additional approved grants. Transfers between specific categories of expenditures/financing uses occur
during the year. The most significant transfers are from the budget reserve to specific expenditures.
Capital Asset and Debt Administration
^
Capital Assets
At June 30, 2010, the District's governmental activities had $45,861,931 invested in a broad range of
capital assets, including land, buildings, furniture and equipment.
Table A-6
^ Fiscal Years Ended June 30, 2010 and 2009
Capital Assets -Net of Depreciation
6/30/2010 6/30/2009 Change
Governmental Activities
Land and site improvements $ 756,254 $ 771,826 $ (15,572)
Buildings and improvements 41,645,613 37,007,631 4,637,982
Furniture and equipment 3,460,064 3,496,324 (36,260)
Construction-in-progress - 4,002,937 (4,002,937)
Total Governmental Capital Assets 45,861,931 45,278,718 583,213
Business-Type Activities
Total Capital Assets
87,640 105,471 (17,831)
$ 45,949,571 $ 45,384,189 $ 565,382
9
~ Debt Administration
S As of July 1, 2009, the District had total outstanding bond principal of $37,025,000. During the current
^ year, the District made payments against principal of $2,140,000 resulting in ending outstanding debt as of
June 30, 2010, of $34,885,000.
Table A-7
Fiscal Years Ended June 30, 2010 and 2009
Outstanding Debt
Governmental Activities
6/30/10 6/30/09 Change
General Obligation Bonds
Series of 2004 $ 15,400,000 $ 15,405,000 $ (5,000)
Series of 2007 4,445,000 4,600,000 (1.55,000)
Series of 2008 8,965,000 9,275,000 (310,000)
Series of 2008A 2,115,000 2,185,000 (70,000)
Series of 2008AA 3,960,000 5,560,000 (1,600,000)
$ 34,885,000 $ 37,025,000 $ (2,140,000)
Other obligations include accrued vacation-pay and sick-leave for specific employees of the District. More
detailed information about our long-term liabilities is included in Notes to Financial Statements.
Table A-8 reflects the comparisons of revenue and expenditure categories by percentages.
Table A-8
Revenues and Expenditures
Governmental Activities
2009-2010 2008-2009 2007-2008 2006-2007
Local revenues 56.3% 54.8% 39.7% 53.7%
State revenues 36.9% 37.4% 24.9% 32.6%
Federal revenues 6.3% 2.0% 1.6% 1.8%
Other financing sources 0.5% 5.8% 33.8% 11.9%
^ Instruction 59.5% 55.8% 36.8% 49.9%
Support services 26.6% 23.7% 15.3% 21.9%
^ Non-instructionaUcommunity 1.9% 1.9% 1.1% 1.5%
Facilities acquisition, construction
and improvement services 3.6% 10.4% 15.0% 19.7%
Debt service 8.4% 8.2% 31.8% 7.0%
~ Contacting the District's Financial Management
~ Our financial report is designed to provide our citizens, taxpayers, pazents, students, investors and creditors
with a general overview of the District's finances and to show the Boazd's accountability for the money it
^ receives. If you have questions about this report or wish to request additional financial information, please
contact Deborah Westover, Business AdministratorBoard Secretary, at the Shippensburg Area School
~ District, 317 North Morris Street, Shippensburg, PA 17257, (717) 530-2700.
10
SHIPPENSBURG AREA SCHOOL DISTRICT
STATEMENT OF NET ASSETS
June 30, 2010
Governmental Business-Type
ASSETS Activities Activities Total
Current Assets
Cash $ 2,349,904 $ 5,852 $ 2,355,756
Investments 1,644,952 - 1,644,952
Receivables
Taxes -net of allowance
for uncollectibles 1,869,736 - 1,869,736
Federal subsidies 1,437,285 11,882 1,449,167
State subsidies 281,675 999 282,674
Other 5,938 633 6,571
Internal balances 20,000 - 20,000
Prepaid expenses 332,135 - 332,135
Inventories - 39,371 39,371
Total current assets 7,941,625 58,737 8,000,362
Noncurrent Assets
Bond-issuance costs -net
Land and site improvements -net
Buildings and improvements -net
Furniture and equipment -net
Total noncurrent assets
Total assets
538,932 - 538,932
756,254 - 756,254
41,645,613 - 41,645,613
3,460,064 87,640 3,547,704
46,400,863 87,640 46,488,503
$ 54,342,488 $ 146,377 $ 54,488,865
See Notes to Financial Statements.
11
LIABILITIES AND NET ASSETS Governmental
Activities Business-Type
Activities
Total
Current Liabilities
Accounts payable $ 932,788 $ 2,760 $ 935,548
Current portion of long-term debt
General obligation debt 2,190,000 - 2,190,000
Accrued expenses
Salaries and benefits 2,154,122 - 2,154,122
Payroll withholdings 166,368 - 166,368
Interest payable 178,483 - 178,483
Internal balances - 20,000 20,000
Deferred revenues - 31,308 31,308
Unearned revenues 5,851 - 5,851
Total current liabilities
Noncurrent Liabilities
Long-term debt -net of current portion
General obligation debt
Compensated absences
Other post-employment benefits
Total noncurrent liabilities
5,627,612 54,068 5,681,680
32,695,000 - 32,695,000
1,055,487 - 1,055,487
204,085 - 204,085
33,954,572 - 33,954,572
Total liabilities
Net Assets
Invested in capital assets -net of
related debt
Restricted for
Capital projects
Capital reserve
Athletic
Unrestricted
Undesignated
Total net assets
Total liabilities and net assets
39,582,184 54,068 39,636,252
10,976,931 87,640 11,064, 5 71
49,236 - 49,236
73,804 - 73,804
37,149 - 37,149
3,623,184 4,669 3,627,853
14,760,304 92,309 14,852,613
$ 54,342,488 $ 146,377 $ 54,488,865
12
W
E"
O
[-~ o
V N
d M
~1
O ~i
z
.fl
~~
W O
W
H ~
~~
b
Y
~ ~
>
N y
~z
.~
~~
~~
W U
N
z
QN
Q
~.
~~
'~ Q
V
N 4
•G
oa
C7
V
.^
N w ~ ~
~ p, rrr~~i x
N O ~./
~Cr
G i.
~ t~ u
~ a
O y .~
Q. ~ ~
~ U
U
O~ vl 'cf' O~ M ~O M 01 00 Q~
M N l~ O~ O 00 O N h N
00 ~ 01 l ~ V1 M ~O 00 M M
V7 Q~ V1 ~ O I~ M ~-+ O\ (~
I~NNN~O~N~O~ M
O~ N N ~--~ ~--~ v •-+ O~
,~ ~~~.~ N
b9
~ ~~~ ~ ~ i i
t~ .~ v ~ v~ v r ~o
,--~ N Vl d' ~ Vl ~O d
V ^ ~ 00 00 N ~--~ ~
D\ d' [~ ~ ~ l!') 00 ~
~O O N ~O ~--~ 00 ~ O
~--~ .--~ [~ '~ ~ ~D N
l~ ~ 00 O ~
~--~ M .-+
' , ' M ' 00 N O M
O~ h ~ C1 M ~O M 01 00
MNl~O~OO0ONh
00~G~[~~M~00M
viQ~h~OrM~--~Oi
[~NNN~O~--~N~O~
V1 V1 O\ ~ Vl ~ ~ M ~
V7 00 M O~ I~ N vl
~NN~oMONr ~
~t l~ N o0 0 00
M N oo ~D l~ M
V1 ~--~
69
t~~d'OVl N ~n t~ [~
~ ~ 00 <T Yl 00 01 V1 l~
O~ et l~ ~O ~C ~O l~ 00 rr
~ ~ 00 O ~
M
00
N
~ ~ ~~ ~ p i ~ ~p O
v1 O~ ~O ~
~ ~ ~ ~ ~--~
N N V') O ~
rr M [~ O O ~ 00 ~ M et
l~Ol~I~~NMN~ ~O
Vl (~ ~--~ 00 M ~ M 00 M V7
M~O~M~N~'IN ~
V'1 O ~--~ ~ ~!1 00 M O~ M
V1 M M N N ~ 00 ~--~
N M
69
N
U
.~
U
~ ~
' ~.
GL ~
vii 4-.
~ O
~ N rn
r
i ~ ~ G
LL ~ ~ ...
y ~
~ ~ ~ ~ b
~ 4. ~
> ,~ ~ ~ O y , V
• ~ R > ..Va
Q ~+ ~ "~
~i .~ ~
y L"r ~ Q
~ ~ '~ ~ a>~
~~'~
~~ a a.~
o
o~~
~ ~o
.U .U •
~ ,
~~
~ ~
~
~~
~ ~
'
b ~ ti C ~
~~
~
o ~ a
i
a ,
~~QOa.~U a
i
c o =
~~' w~
C7 E~ ~ F
•+
G
vi
U
O
Cs.
~
»
a~
N
dq
~,
w
~'
c
U
s..
N
Ll.
'Cf ~
N
U
N
~ ~ ~
rUi. O
O U ~
•~
~
¢
, y vi
~
.
~ O
~
C
~ ~ ~~
U
~"' ~
^ts b ~ °~ y
'j ~' ~ bA O ~ O
~ '-'• U N '~ ~
• O
> y •O G
G U ~ '~ N
~ L 6~ •G~ C
~ ~
y
~ C .
.O 6a
.
L~ ~'+ ~ ~
~ a> C ~ ry+
U .U» ~
O
` ~
h V ~ y
b0 bD ii y
~'
y
~ ~~„
a
"i j ~' ~ ;R O e
e e
0
~ H~ zz
Q
c~
.~
Lt.
0
z
M
~--~
SHIPPENSBURG AREA SCHOOL DISTRICT
BALANCE SHEET -GOVERNMENTAL FUNDS
June 30, 2010
Non-Major Total
Governmental Governmental
General Funds Funds
ASSETS
Cash
Investments
Receivables
Taxes -net of allowance
for uncollectibles
Federal subsidies
State subsidies
Other
Due from other funds
Prepaid expenses
Total assets
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable
Accrued expenses
Salaries and benefits
Payroll withholdings
Deferred revenues
Unearned revenues
Total liabilities
Fund Balances
Reserved for
Capital projects
Capital reserve
Athletic
Unreserved
Undesignated
Total fund balances
Total liabilities and fund balances
$ 2,181,966 $ 167,938 $ 2,349,904
1,644,952 - 1,644,952
1,869,736 - 1,869,736
1,437,285 - 1,437,285
281,675 - 281,675
5,938 - 5,938
20,000 - 20,000
332,135 - 332,135
$ 7,773,687 $ 167,938 $ 7,941,625
$ 925,039 $ 7,749 $ 932,788
2,154,122 - 2,154,122
166,368 - 166,368
746,039 - 746,039
5,851 - 5,851
3,997,419 7,749 4,005,168
- 49,236 49,236
- 73,804 73,804
- 37,149 37,149
3,776,268 - 3,776,268
3,776,268 160,189 3,936,457
$ 7,773,687 $ 167,938 $ 7,941,625
14
SHIPPENSBURG AREA SCHOOL DISTRICT
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
June 30, 2010
Total fund balances -governmental funds $ 3,936,457
Amounts reported for governmental activities in the Statement
of Net Assets are different because:
^ Capital assets used in governmental activities are not financial resources,
and therefore, they are not reported as assets in governmental funds. The
cost of assets is $65,842,448, and the accumulated depreciation
is $19,980,517. 45,861,931
^ Property taxes receivable will be collected this year, but are not
available soon enough to pay for the current period's expenditures,
and therefore, they are deferred revenues in the funds. 746,039
Governmental funds report bond-issuance costs as expenditures.
However, in the Statement of Activities, the costs of issuance are
allocated over the lives of the debt issues. This is the amount by
which bond-issuance costs exceed accumulated amortization. 538,932
Long-term liabilities, including bonds payable and compensated
absences, are not due and payable in the current period,
and therefore, they are not reported as liabilities in the funds.
Long-term liabilities at year-end consist o£
Bonds payable (34,885,000)
Accrued interest (178,483)
Compensated absences (1,055,487)
Other post-employment benefits (204,085)
(36,323,055)
Total net assets -governmental activities $ 14,760,304
See Notes to Financial Statements.
15
I^
^
• SHIPPENSBURG AREA SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN
^ FUND BALANCES -GOVERNMENTAL FUNDS
Year Ended June 30, 2010
Non-Major
Governmental
General Funds
Total
Governmental
Funds
Revenues
Local sources
State sources
Federal sources
Total revenues
Expenditures
Instruction
Support services
Operation of non-instructional services
Facilities acquisition, construction
and improvement
Debt service
Total expenditures
Deficiency of revenues
over expenditures
Other Financing Sources (Uses)
$ 22,250,358 $ 65,303 $ 22,315,661
14,619,845 - 14,619,845
2,498,976 - 2,498,976
39,369,179 65,303 39,434,482
24,716,884 55,707 24,772,591
10,978,231 119,03 7 11,097,268
525,033 279,689 804,722
- 1,489,331 1,489,331
3,490,307 - 3,490,307
39,710,455 1,943,764 41,654,219
(341,276) (1,878,461) (2,219,737)
Interfund transfers in - 208,299 208,299
Refund of prior years' receipts (20) - (20)
Interfund transfers out (215,161) - (215,161)
Total other financing sources (uses) (215,181) 208,299 (6,882)
Net changes in fund balances (556,457) (1,670,162) (2,226,619)
Fund Balances -July 1, 2009 4,332,725 1,830,351 6,163,076
Fund Balances -June 30, 2010 $ 3,776,268 $ 160,189 $ 3,936,457
See Notes to Financial Statements.
16
i^
^
^ SHIPPENSBURG AREA 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, 2010
Net change in fund balances -total governmental funds
Amounts reported for governmental activities in the Statement of
Activities are different because:
$ (2,226,619)
Capital outlays are reported in governmental funds as expenditures.
However, in the Statement of Activities, the costs of those assets are
allocated over their useful lives as depreciation expense. This
is the amount by which capital outlays exceed depreciation
in the period.
Capital outlays
Less depreciation expense
1,758,081
(1,135,730)
622,351
The net effect of various miscellaneous transactions involving capital
assets (ie. sales, trade-ins, and donations) is to decrease net assets.
Because some property 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
revenues 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 accrues,
regardless of when it is due. The increase in interest accrued reflected
in the Statement of Activities is shown here.
Some expenses reported in the Statement of Activities do not require
the use of current financial resources, and therefore, they 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 govemmental funds.
Neither transaction, however, has any effect on net assets. Also,
governmental funds report the effect of issuance costs, premiums,
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 effect of these differences in the treatment of long-term
debt and related items.
Repayment of long-term debt
Amortization ofbond-issuance costs
Change in net assets of governmental activities
See Notes to Financial Statements.
(39,138)
177,292
8,477
78,070
2,140,000
(81,876) 2,058,124
$ 678,557
17
SHIPPENSBURG AREA SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -
BUDGET AND ACTUAL -GENERAL FUND
Year Ended June 30, 2010
Vaziance with Final
Budgeted Amounts Budget Favorable
Original Final Actual (Unfavorable)
Revenues
Local sources $ 22,187,900 $ 22,485,296 $ 22,250,358 $ (234,938)
State sources 14,668,141 14,308,141 14,619,845 311,704
Federal sources 1,908,654 2,435,464 2,498,976 63,512
Total revenues 38,764,695 39,228,901 39,369,179 140,278
Expenditures
Instruction
Support services
Operation ofnon-instructional services
Debt service
Total expenditures
Deficiency of revenues
over expenditures
Other Financing Uses
Refund of prior years' rec eipts
Interfund transfers out
Budgetary reserve
Total other financing uses
Net changes in fund balance
Fund Balance -July 1, 2009
Fund Balance -June 30, 2010
See Notes to Financial Statements.
24,469,834 24,716,884 24,716,884 -
11,578,747 10,978,231 10,978,231 -
545,507 525,033 525,033 -
3,515,305 3,490,327 3,490,307 20
40,109,393 39,710,475 39,710,455 20
(1,344,698) (481,574) (341,276) 140,298
- - (20) (2 0)
(253,000) (215,161) (215,161) -
(109,450) (847,216) - 847,216
(362,450) (1,062,377) (215,181) 847,196
$ (1,707,148) $ (1,543,951) (556,457) $ 987,494
4,332,725
$ 3,776,268
18
SHIPPENSBURG AREA SCHOOL DISTRICT
STATEMENT OF NET ASSETS -
PROPRIETARY FUND -FOOD SERVICE
June 30, 2010
ASSETS
Current Assets
Cash $ 5,852
Receivables
Federal subsidies 11,882
State subsidies 999
Other 633
Inventories 39,371
Total current assets 58,737
Noncurrent Assets
Furniture and equipment -net 87,640
Total assets $ 146,377
LIABILITIES AND NET ASSETS
Liabilities
Accounts payable $ 2,760
Due to other funds 20,000
Deferred revenues 31,308
Total liabilities -all current 54,068
Net Assets
Invested in capital assets 87,640
Unrestricted 4,669
Total net assets 92,309
Total liabilities and net assets $ 146,377
See Notes to Financial Statements.
19
SHIPPENSBURG AREA SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENSES AND CHANGE IN NET ASSETS -
PROPRIETARY FUND -FOOD SERVICE
Year Ended June 30, 2010
Operating Revenues
Food service revenue $ 791,401
Operating Expenses
Labor, taxes and benefits 649,299
Professional and technical services 5,933
Disposal services 2,306
Electricity 20,000
Equipment repairs and maintenance 17,783
Extermination services 1,687
Advertising 326
Printing and binding 1,075
Travel 1,345
Supplies 30,869
Food and milk 523,969
Donated commodities used 74,198
Depreciation 24,693
Dues and fees 1,081
Total operating ezpenses 1,354,564
Operating loss (563,163)
Nonoperating Revenues (Expense)
Investment earnings 377
Federal subsidies 391,357
State subsidies 60,279
Value of donated commodities 74,198
Operating transfers in 6,862
Total nonoperating revenues 533,073
Change in net assets (30,090)
Net Assets -July 1, 2009 122,399
Net Assets -June 30, 2010 $ 92,309
See Notes to Financial Statements.
20
SHIPPENSBURG AREA SCHOOL DISTRICT
STATEMENT OF CASH FLOWS -
PROPRIETARY FUND -FOOD SERVICE
Year Ended June 30, 2010
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 Non-Capital Financing Activities
Federal subsidies
State subsidies
Interfund transfers
Net cash provided by non-capital
financing activities
Cash Flows From Capital and Related Financing Activities
Acquisition of equipment
Cash Flows From Investing Activities
Investment earnings
Net decrease in cash
Cash:
July 1, 2009
June 30, 2010
(Continued)
$ 793,253
(606,598)
(649,299)
(462,644)
391,357
60,279
6,862
458,498
(6,862)
377
(10,631)
16,483
$ 5,852
21
SHIPPENSBURG AREA SCHOOL DISTRICT
STATEMENT OF CASH FLOWS -
PROPRIETARY FUND -FOOD SERVICE (Continued)
Year Ended June 30, 2010
Reconciliation of Operating Loss to Net Cash Used
in Operating Activities
Operating loss
Adjustmerns 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
Deferred revenues
Net cash used in operating activities
See Notes to Financial Statements.
$ (563,163)
24,693
74,198
1,576
(688)
(1,112)
1,852
$ (462,644)
22
SHIPPENSBURG AREA SCHOOL DISTRICT
STATEMENT OF FIDUCIARY NET ASSETS
June 30, 2010
James Burd Nancy Grayson Intermediate
Elementary Elementary School Middle School Senior High
Activity Fund Activity Fund Activity Fund Activity Fund Activity Fund
ASSETS
Cash $ 3,351 $ 4,253 $ 5,249 $ 27,853 $ 82,475
LIABILITIES
Due to student groups $ 3,351 $ 4,253 $ 5,249 $ 27,853 $ 82,475
See Notes to Financial Statements.
23
SHIPPENSBURG AREA SCHOOL DISTRICT
~ NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
~ Shippensburg Area School District operates three elementary schools, one middle school and one high
school in Shippensburg, Pennsylvania. The District operates under current standards prescribed by the
Pennsylvania Department of Education in accordance with the provisions of the School Laws of
Pennsylvania. The District operates under alocally-elected, nine-member, Board-form of government.
The financial statements of Shippensburg Area 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 Standazds Board (GASB) is the
authoritative, standazd-setting body for the establishment of governmental-accounting and financial-
reporting principles. The more significant of these accounting policies are as follows:
. A. Reporting Entity
Shippensburg Area School District's financial statements include 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.
~ Shippensburg Area 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 funding-source entities. However, the District is not included in any other
governmental "reporting entity" since the School Board members are elected by the public and have
decision-making authority, the power to designate management, the ability to significantly influence
operations and primary accountability for fiscal matters. The District is affiliated with the Capital Area
Intermediate Unit (CAIU) along with 23 other member school districts. The District is also affiliated with
the Franklin County Career and Technology Center (FCCTC) along with four other member school
districts. The member school districts participate in providing oversight responsibility to the CAN and
FCCTC through the following:
Approval of Board members who aze also Board members of the participating school districts
Approval of funding of operating budgets
The District is also affiliated with Shippensburg University through the Grace B. Luhrs University
Elementary School (GBLUES).
^ Despite the foregoing, the overriding issue is that the volume of participating school districts does not
permit Shippensburg Area School District to exercise "significant influence" over the operations of the
CAIU and FCCTC; therefore, the CAN and FCCTC are not considered "component units" of
Shippensburg Area School District in determining the "reporting entity" as required by GASB Statement
No. 39.
^
^
^
^
24
^ SHIPPENSBURG AREA SCHOOL DISTRICT
i NOTES TO FINANCL~I, STATEMENTS
~~
Note 1. Summary of Significant Accounting Policies (Continued)
~ B. Government-wide and Fund Financial Statements
S 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 chazges for support.
~ The Statement of Activities demonstrates the degree to which the direct expenses of a given function or
. segments aze offset by program revenues. Direct expenses are those that are cleazly identifiable with a
specific function or segment. Program revenues include 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 aze restricted to meeting the operational or capital
i requirements of a particulaz function or segment. Taxes and other items not included among program
revenues aze reported as general revenues.
Separate-fund financial statements are provided in the report for all of the governmental, proprietary, and
^ fiduciary funds of the District, even though the latter are excluded from the government-wide fmancial
statements. Major, individual goven~unental funds and major, individual enterprise funds are reported as
sepazate columns in the fund financial statements. Non-major funds are aggregated and presented in a
single column. Fiduciary funds aze reported by fund type.
s
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The District complies with accounting principles generally accepted in the United States of America
(GAAP) and applies all relevant Governmental Accounting Standazds Boazd (GASB) Pronouncements.
The government-wide financial statements aze reported using the economic-resources measurement focus
and the accrual basis of accounting, as are the proprietary and fiduciary-fund financial statements.
Revenues aze 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.
i~
~~
25
SHIPPENSBURG AREA 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 current 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
District expenditures are 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 District are financed.
The acquisition, use and balances of the District's expendable financial resources and related liabilities
~ (except those accounted for in proprietary funds) are accounted for through governmental funds.
~ The District reports the following major governmental fund:
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 and per capita taxes, and state and Federal distributions. Many of the more important
activities of the District, including instruction, administration of the District and certain non-
instructional services are accounted for in this fund.
The District operates one enterprise fund, the Food Service Fund. This fund accounts for the activities of
. the District's food-service program.
^ Additionally, the District reports the following non-major governmental funds:
. The Capital Projects Fund is used to account for financial resources available for the acquisition or
construction of major capital facilities (other than those financed by proprietary funds).
The Athletic Funds are authorized by Section 511 of the Public School Code of 1949 to account for
S the revenues and expenditures of athletic activities. The funds account for gate receipts and other
revenues from athletic events and certain budgeted costs of the District's athletic programs.
The Capital Reserve Fund (Section 2932 is authorized by P.L. 145, Act of April 30, 1943, and is
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 District at the end of any fiscal year. This fund is
. included in the financial statements as a Special Revenue Fund.
26
SHIPPENSBURG AREA 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)
Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods in
connection with the proprietary fund's principal on-going operations. The principal operating revenues of
the District's enterprise fund are food-service charges. Operating expenses for the 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 asnon-operating revenues and expenses.
The District does not attempt to allocate "building-wide costs" 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 Activity Funds account for the monies authorized by Section 511 of the Public School Code of 1949
^ for school publications and organizations. A portion of the Activity Funds 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. Budgets 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 District's budget
and reporting of its financial statements.
The District, before levying annual school taxes, is required to prepare an operating budget for
the succeeding fiscal year.
^ The 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 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 effects of approved budget amendments.
27
. SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies (Continued)
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 District considers all highly-liquid investments with maturities of three months or less when
purchased to be cash equivalents.
~ Investments: Investments are stated at fair value.
Allowance for Estimated Uncollectible Taxes and Deferred Revenues: The allowance for estimated
^ uncollectible taxes is based upon an historical estimate of delinquent taxes that will not be received within
one year of the fiscal year-end. Deferred revenues are based upon an 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 sixty days of June 30 is recorded
as revenue in the current year. The remaining amount of taxes receivable 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.
~ Inventories: 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 Food Service Fund's food and supplies was taken as of June 30, 2010. The
inventory consisted of government-donated commodities which were valued at estimated fair market
value, and purchased commodities and supplies, valued at cost using the first-in, first-out (FIFO) method.
The District has adopted aninventory-recordkeeping system which distinguishes between donated and
purchased commodities. Accordingly, deferred revenue for donated commodities has been recorded.
Capital Assets and Depreciation: Capital assets; consisting of property, plant and equipment;, are
reported in the applicable governmental or business-type activities column in the government-wide
financial statements. Capital assets are defined by the District as assets with an initial, individual cost of
more than $5,000 or a grouping of assets exceeding $10,000 and having useful lives of longer than one
year, unless the assets are acquired by debt proceeds, in which case the assets must be capitalized.
Management considers various factors in the capitalization of assets, including the assets' estimated
useful lives, costs, and the extent to which the assets are parts of larger capital projects. The District's
capital assets include library books, classroom texts, computer equipment, classroom furniture, and other
instructional equipment, subject to the on-going discretion of management. The costs of normal
maintenance and repairs that do not add to the values of the assets or materially extend assets' useful lives
are not capitalized.
Depreciation is provided for capital assets on the straight-line basis over the estimated useful lives of the
assets or groups of assets as determined by management.
28
SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies (Continued)
~~
^ E. Assets, Liabilities and Net Assets or Equity (Continued)
Long-Term Obli atg ions: In the government-wide financial statements, long-term debt and other long-
term obligations are reported as liabilities in the applicable governmental or business-type activities
columns in the Statement of Net Assets. Bond premiums and discounts, as well as issuance costs, are
deferred and amortized over the lives of the issues using the effective-interest method. Bonds payable are
reported net of applicable bond premiums or discounts. Bond-issuance costs are reported as deferred
charges and amortized over the terms of the related debt.
^ In the fund financial statements, governmental-fund types recognize bond premiums 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 debt-service
^ expenditures.
^ Compensated Absences: Under the system of fmancial accounting and reporting for Pennsylvania School
Systems, the District accrues certain accumulated employee benefits, such as unpaid vacation and sick
^ pay. 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 District and is
adjusted for expected turnover rates of employees. Accrued benefit days, multiplied by appropriate salary
amounts, are reflected as a long-term liability unless retirements are likely within the upcoming fiscal
year. Those costs, determined to be current-year costs, are reflected as a liability of the General Fund.
Post-Employment Benefits: In the government-wide financial statements, the District recognized the
costs and liabilities associated with post-employment benefits other than pension compensation, which is
funded through the District's contribution to the statewide Public School Employees' Retirement System,
a governmental, cost-sharing, multiple-employer, defined-benefit pension plan. The District provides
retiree health, vision, dental, and prescription-drug coverage to eligible, retired employees and qualified
^ spouses beneficiaries. The District has estimated the cost of providing these benefits through an actuarial
valuation.
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.
~ 29
^ SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies (Continued)
E. Assets, Liabilities and Net Assets or Equity (Continued)
Fund Balance: The District classifies fund balances as follows:
Reserved
~ Reserved 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.
• Reserved for capital reserve represents that portion of fund balance legally restricted to capital
^ projects.
• Reserved for athletic represents that portion of fund balance legally restricted to athletic
^ programs.
r Unreserved
^ • Designated indicates intentions for financial-resource utilization.
• Undesignated denotes 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.
^ Subsequent Events: In preparing these financial statements, the District has evaluated events and
transactions for potential recognition or disclosures through November 9, 2010, the date the financial
statements were available to be issued.
^ Note 2. Deposits and Investments
^ Under Section 440.1 of the Public School Code of 1949, as amended, the 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 its instrumentalities
• Deposits in savings accounts or time deposits or share accounts of institutions insured by either:
1. The Federal Deposit Insurance Corporation (FDIC), or
2. The Federal Savings and Loan Insurance Corporation (FSLIC), or
3. The National Credit Union Share Insurance Fund (NCUSIF)
to the extent that such accounts are so insured, and for any amounts above maximum insurable
limits, provided that approved collateral as provided by law shall be pledged by the depository
• Obligations of (a) the United States of America or its agencies or instrumentalities backed by the
full-faith and credit of the United States of America, and (b) the Commonwealth of Pennsylvania
^ or instrumentalities thereof backed by the full-faith and credit of these political subdivisions
• Shares of investment companies whose investments are restricted to the above categories
30
. SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 2. Deposits and Investments (Continued)
. The deposit and investment policies of the District adhere to state statutes and prudent business practices.
There were no deposit or investment transactions during the year that violated either state statutes or
District policies.
Deposits: Custodial-Credit Risk
Custodial-credit risk is the risk that in the event of a bank failure, the District's investments may not be
returned to it. As of June 30, 2010, $2,425,090 of the District's total bank balances of $2,675,090, were
exposed to custodial-credit risk as follows:
Amount
^ Uninsured and collateralized by assets maintained in conformity with Act 72 $ 2,425,090
Act 72 is an act standardizing the procedures for pledges of assets to secure deposits of public funds with
banking institutions pursuant to other laws; establishing a standard rule for the types, amounts and
valuations of assets eligible to be used as collateral for deposits of public funds; permitting assets to be
pledged against deposits on a pooled basis and authorizing the appointment of custodians to act as
pledgors of the assets.
Investments:
As of June 30, 2010, the District had the following investments:
Weighted-
Average
Investment Type Maturity Rating Fair Value
Pennsylvania Local Government
Investment Trust (PLGIT)
PLGIT Class 58 days AAAm $ 599
PLGIT/ARM 58 days AAAm 89,782
Pennsylvania School District Liquid
Asset Fund (PSDLAF) 52 days AAAm 1,938
Orrstown Financial Advisors Not Rated 1,644,952
$ 1,737,271
31
SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
~~
Note 2. Deposits and Investments (Continued)
Portfolio Assets
PLGIT -This fund invests primarily in U.S. Treasury and Federal-agency securities and repurchase
agreements, secured by such obligations. This fund also invests in certain municipal obligations and
collateralized or insured certificates of deposit. Weighted-average maturity for the fund is expected to be
kept at or below 60 days.
PSDLAF -This fund invests in U.S. Treasury securities, U.S. government securities, its agencies and
instrumentalities, and over-collateralized repurchase agreements with highly-rated counterparties.
_ Weighted-average maturity for the fund is expected to be kept at or below 60 days.
The District also maintains, at Orrstown Financial Advisors, investments which are invested in U.S.
Treasury obligations.
Weighted-Averag~Maturity
The weighted-average maturity (WAM) method expresses investment time horizons, the time when
investments become due and payable, in years or months, weighted to reflect the dollar-size of individual
investments within an investment type. WAMs are computed for each investment type. The portfolio's
WAM is derived by dollar-weighting the WAM for each investment type.
Interest-Rate Risk
The District does not have a formal investment policy that limits investment maturities as a means of
managing its exposure to fair-value losses arising from increasing interest rates.
Credit Risk
As indicated above, Section 440.1 of the Public School Code of 1949, as amended, limits the composition
of the District's investments, and the District has no investment policy that would further limit its
investment choices.
Concentrations-of-Credit Risk
The District places no limit on the amounts invested in any one issuer. The percentages of the
concentrations of the District's investments at June 30, 2010, are as follows:
Percent of
Investment Portfolio
Pennsylvania Local Government Investment Trust (PLGIT) 5.20%
Pennsylvania School District Liquid Asset Fund (PSDLAF} 0.11
Orrstown Financial Advisors 94.69%
100.00%
32
SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 3. Taxes Receivable, Deferred Revenues and Estimated Uncollectible Taxes
A summary of the taxes receivable and related accounts at June 30, 2010, are as follows:
Amount
Uncollected taxes -real estate $ 1,]37,765
Uncollected taxes -personal 20,145
Interest and commissions -net 22,433
Earned income taxes 575,597
Realty transfer taxes 113,796
Taxes Receivable -Net $ 1,869,736
Taxes to be collected within 60 days $ 1,130,711
Deferred revenues -delinquent taxes 746,039
Allowance for uncollectible taxes (7,014)
Taxes Receivable -Net $ 1,869,736
Deferred Revenue -General Fund
Delinquent taxes $ 746,039
Deferred Revenue -Food Service Fund
Student deposits $ 22,020
Donated food 9,288
$ 31,308
33
^ SHIPPENSBURG AREA SCHOOL DISTRICT
NOTE5 TO FINANCIAL STATEMENTS
. Note 4. Property Taxes
Based upon assessed valuations, the municipal tax collector bills and collects property taxes on behalf of
the District. Property taxes are levied on July 1st. Taxes are collected at a 2.00% discount until August
31st, at face amount from September 1st until October 31st, and include a 10.00% penalty thereafter. The
County Tax Bureaus collect delinquent real estate taxes for the District.
The District's tax rates for all purposes in 2009-2010 were 13.21 mills ($13.21 per $1,000 assessed
valuation) for Cumberland County and 93.60 mills ($93.60 per $1,000 assessed valuation) for Franklin
County. Refunds on payments of prior-year taxes are classified as other debt-service items under the
Commonwealth of Pennsylvania accounting system. Current tax collections for the District were
approximately 92.20% of the total tax levies.
Note 5. Interfund Accounts
^ Individual fund receivable and payable balances at June 30, 2010, are as follows:
Interfund Interfund
Receivables Payables
~ General $ 20,000 $ -
^ Food Service - 20,000
$ 20,000 $ 20,000
All interfund receivable/payable balances resulted from time lags between the dates that (1) interfund
goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the
accounting system, and (3) payments between funds are made. All balances are expected to be repaid
within the following year.
34
SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 5. Interfund Accounts (Continued)
Operating transfers between funds at June 30, 2010, are as follows:
Transfers In Transfers Out
General
Capital Reserve
Senior High Athletic
Middle School Athletic
Cafeteria
$ - $ 215,161
75,000 -
97,299 -
36,000 -
6,862 -
$ 215,161 $ 215,161
Transfers and payments within the District are substantially for purposes of subsidizing operations,
funding capital projects and asset acquisitions, or maintaining debt service on a routine basis. Resources
are accumulated in a fund to support and simplify the administration of various projects or programs.
Note 6. Food Service Fund Inventories
The composition of Food Service Fund inventories at June 30, 2010, is as follows:
Amourrt
Materials and supplies
Purchased food
Donated food
$ 10,330
19,753
9,288
$ 39,371
35
^ SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 7. General Fized Assets
Capital-asset activity for the year ended June 30, 2010, was as follows:
July 1, 2009 Increases Decreases June 30, 2010
overnmenta ctrvihes
Capital assets, not being depreciated
Land $ 272,820 $ - $ - $ 272,820
Construction-in-progress 4,002,937 (4,002,937) - -
Total capital assets, not
being depreciated 4,275,757 (4,002,937) - 272,820
Capital assets, being depreciated
Site improvements 980,310 15,511 - 995,821
Buildings and improvements 50,851,679 5,508,108 - 56,359,787
Furniture and equipment 8,090,902 237,399 114,281 8,214,020
Total capital assets, being depreciated 59,922,891 5,761,018 114,281 65,569,628
Less accumulated depreciation
Site improvements
Buildings and improvements
Furniture and equipment
Total accumulated depreciation
481,304 31,083 - 512,387
13,844,048 870,126 - 14,714,174
4,594,578 234,521 75,143 4,753,956
18,919,930 1,135,730 75,143 19,980,517
Total capital assets, being
depreciated, net
Governmental Activities, Capital
Assets -Net
Business-Type Activity
Machinery and equipment
Accumulated depreciation
Business-Type Activity, Capital
Assets -Net
41,002,961 4,625,288 39,138 45,589,111
$ 45,278,718 $ 622,351 $ 39,138 $45,861,931
$ 696,353 $ 6,862 $ - $ 703,215
(590,882) (24,693) - (615,575)
$ 105,471 $ (17,831) $ - $ 87,640
Depreciation expense was charged to the functions/programs of the District as follows:
Amount
Governmental Activities
Instructional $ 847,373
Instructional student support 102,034
Administration and fmancial support 102,237
Operation and maintenance of plant services 49,013
Student activities 34,660
Community services 413
Total governmental activities 1,135,730
Business-Type Activity
Food Service 24,693
Total School District $ 1.160.423
36
SHIPPEN5BURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 8. Accrued Salaries and Benefits
Accrued salaries and benefits at June 30, 2010, consist of the following:
Amount
Accrued salaries
Retirement
Social security
Workers' compensation
$ 1,641,659
376,215
123,115
13,133
$ 2,154,122
Accrued salaries represent teachers' salaries earned during the 2009-10 school year which will be paid
subsequent to June 30, 2010. Accrued retirement represents the public school employees' retirement
board-contribution for the second quarter of calendar year 2010, including the portion pertaining to
accrued salaries at June 30, 2010. Accrued social security represents the District's liability arising from
accrued salaries at June 30, 2010.
Note 9. Long-Term Obligations
During the fiscal year ended June 30, 2010, long-term obligations changed as follows:
July 1, 2009 Increase Decrease June 30, 2010
Governmental Activities
General Obligation Bonds -
Series of 2004 $ 15,405,000 $ - $ 5,000 $ 15,400,000
General Obligation Bonds -
Series of 2007 4,600,000 - 155,000 4,445,000
General Obligation Bonds -
Series of 2008 9,275,000 - 310,000 8,965,000
General Obligation Bonds -
Series A of 2008 2,185,000 - 70,000 2,115,000
General Obligation Bonds -
Series AA of 2008 5,560,000 - 1,600,000 3,960,000
37,025,000 - 2,140,000 34,885,000
Compensated absences 1,226,937 - 171,450 1,055,487
Other post-employment benefits 110,705 93,380 - 204,085
Total Long-Term Obligations $ 38,362,642 $ 93,380 $ 2,311,450 $ 36,144,572
37
^ SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 9. Long-Term Debt (Continued)
~ General Oblation Bonds -Series of 2004 - On October 1, 2004, the District issued General Obligation
Bonds in the principal amount of $15,420,000. The proceeds were used to finance the cost of planning,
designing, acquiring, constructing, furnishing and equipping (1) a new elementary school building for
fourth and fifth grades; (2) additions and improvements to James Burd Elementary School and Nancy
Grayson Elementary School; and (3) to the extent of remaining funds, other buildings and facilities of
the School District, and paying the costs of issuing and insuring the Bonds. The bonds bear annual
interest rates ranging from 2.05% to 4.45%. Interest is payable semi-annually on November 15 and
May 15, and the bonds mature serially in amounts ranging from $5,000 to $2,035,000 through
November 15, 2020. Total interest expense paid on the Series of 2004 Bonds during the year ended
^ June 30, 2010, was $633,248.
^ General Obligation Bonds -Series of 2007 - On May 1, 2007, the District issued General Obligation
Bonds in the principal amount of $4,750,000. The proceeds were used to fmance the cost of planning,
. designing, acquiring, constructing, furnishing and equipping additions and improvements to the James
Burd and Nancy Grayson Elementary Schools; and to the extent of remaining funds, other buildings and
i facilities of the School District, and paying the costs of issuing and insuring the Bonds. The bonds bear
annual interest rates ranging from 3.60% to 4.15%. Interest is payable semi-annually on November 15
^ and May 15, and the bonds mature serially in amounts ranging from $150,000 to $330,000 through
November 15, 2028. Total interest expense paid on the Series of 2007 Bonds during the year ended
~ June 30, 2010, was $179,642.
General Obligation Bonds -Series of 2008 - On April 1, 2008, the District issued General Obligation
Bonds in the principal amount of $9,545,000. The proceeds were used to refund the District's General
Obligation Note, Series of 2003 and to pay the costs of issuing and insuring the Bonds. The bonds bear
annual interest rates ranging from 2.60% to 4.10%. Interest is payable semi-annually on November 1
and May 1, and the bonds mature serially in amounts ranging from $270,000 to $630,000 through
November 1, 2029. Total interest expense paid on the Series of 2008 Bonds during the year ended June
~ 30, 2010, was $334,393.
General Obligation Bonds - Series A of 2008 - On June 1, 2008, the District issued General Obligation
Bonds in the principal amount of $2,250,000. The proceeds were used to finance the cost of planning,
designing, acquiring, constructing, furnishing and equipping additions and improvements to
. Shippensburg Area High School; and to the extent of remaining funds, other buildings and facilities of
the School District, and paying the costs of issuing and insuring the Bonds. The bonds bear annual
interest rates ranging from 2.40% to 4.00%. Interest is payable semi-annually on November 15 and
May 15, and the bonds mature serially in amounts ranging from $65,000 to $170,000 through November
15, 2028. Total interest expense paid on the Series A of 2008 Bonds during the year ended June 30,
2010, was $78,042.
^ General Obligation Bonds -Series AA of 2008 - On June 1, 2008, the District issued General Obligation
Bonds in the principal amount of $6,990,000. The proceeds were used to refund the District's General
Obligation Bonds, Series A of 2001 and to pay the costs of issuing and insuring the Bonds. The
economic gain on the refunding of the bonds was $122,876. The bonds bear annual interest rates
ranging from 2.40% to 3.00%. Interest is payable semi-annually on November 15 and May 15, and the
bonds mature serially in amounts ranging from $645,000 to $1,680,000 through November 15, 2012.
~ 38
SHIPPENSBURG AREA SCHOOL DISTRICT
~ s NOTES TO FINANCIAL STATEMENTS
Note 9. Long-Term Debt (Continued)
Total interest expense paid on the Series AA of 2008 Bonds during the year ended June 30, 2010, was
$124,980.
^ The District is in compliance with all debt covenants of the outstanding bond issues. Those covenants
include the following: the District shall include the annual debt service in its budget for the fiscal year,
shall appropriate said debt service from its general revenues, and shall punctually cause the payment of
the principal and interest of each of the bonds.
Maturities of the long-term debt issues are as follows:
Governmental Activities
e Year Ending June 30, Principal Interest Total
2011 $ 2,190,000 $ 1,290,369 $ 3,480,369
S 2012 2,255,000 1,232,316 3,487,316
2013 2,145,000 1,168,800 3,313,800
2014 2,195,000 1,098,368 3,293,368
2015 2,275,000 1,017,686 3,292,686
2016-2020 12,880,000 3,643,755 16,523,755
^ 2021-2025 6,165,000 1,458,986 7,623,986
2026-2030 4,780,000 462,793 5,242,793
$ 34,885,000 $ 11,373,073 $ 46,258,073
_~
Compensated Absences -Under the terms of the 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 District, employees are reimbursed for
accumulated sick days equal to the number of unused days multiplied by an amount per the employment
contract. The employees are also offered options regarding retirement payouts as prescribed in the
contract if certain conditions are met. For the year ended June 30, 2010, benefits attributed to ten
employees retiring during the 2009-10 year amounted to $57,962. The total liability for accrued
vacation, sick leave and retirement bonuses has been reflected in the Statement of Net Assets.
Note 10. Post-Employment Benefits
Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), the District provides healthcare
benefits to eligible former employees and their dependents. Requirements are outlined by the Federal
Government for this coverage. The premium plus a 2.00% administrative fee is paid in full by the
eligible participant. This program is offered for 18 months or 36 months after an employee's
termination date. At June 30, 2010, there were 4 participants covered under COBRA.
39
^ SHIPPENSBURG AREA SCHOOL DISTRICT
~ NOTES TO FINANCIAL STATEMENTS
Note 11. Defined-Benefit Pension Plan
^ Plan Description
. Name of Plan: Public School Employees' Retirement System (the System)
Type of Plan: Governmental, cost-sharing, multiple-employer, defined-benefit plan
~ Benefits: Retirement and disability; legislatively-mandated, ad hoc cost-of-living adjustments;
healthcare insurance-premium assistance to qualifying annuitants
Authority: The Public School Employees' Retirement Code (Act No. 96 of October 2, 1975, as
amended) (24 Pa. C.S. 8101-8535)
Annual Financial Report: 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 Diane J. Wert, Office of Financial Management, Public School Employees'
Retirement System, P.O. Box 125, Harrisburg, PA, 17108-0125. This publication is also available on
the PSERS website at www.psers.state.pa.us/publications/cafr/index.htm.
Funding Policy
Authority: The contribution policy is established by the Public School Employees' Retirement Code
and requires contributions by the active members, employers, and the Commonwealth.
Contribution Rates
~ Member Contributions: Active members who joined the System prior to July 22, 1983, and who have
had no break in their public-school service contribute at 5.25% (Membership Class T-C) or at 6.50%
(Membership Class T-D) of the members' qualifying compensation. Members who returned to public-
school service or joined the System on or after July 22, 1983, and who were active or inactive as of
~ July 1, 2001, contribute at 6.25% (Membership Class T-C) or at 7.50% (Membership Class T-D) of
their qualifying compensation. Members who joined the System after June 30, 2001, contribute at
7.50% (automatic Membership Class T-D). For all new hires and for members who elected Class T-D
Membership, the higher contribution rates began with service rendered on or after January 1, 2002.
Employer Contributions: Contributions required of employers are based upon an actuarial valuation.
For fiscal year ended June 30, 2010, the employers' contribution was 4.78% of covered payroll. The
^ 4.78% rate is composed of a 4.00% rate for pension benefits and a 0.78% rate for healthcare
insurance-premium assistance.
~ The 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 District's total rate. The District's contributions to
~ the Plan for the years ended June 30, 2010, 2009 and 2008, were $907,883, $892,347, and $1,205,343,
respectively, and are equal to the required contributions for each year.
40
SHIPPENSBURG AREA SCHOOL DISTRICT
~ NOTES TO FINANCIAL STATEMENTS
Note 12. Post-Employment Benefits Other Than Pensions
^ Plan Description - Shippensburg Area School District administers asingle-employer, defined-benefit
healthcare plan. The plan provides medical, vision, and dental benefits to eligible retirees and their
i spouses through the District's group health insurance plan, which covers both active and retired
members. Benefit provisions are established through negotiations between the District and the various
unions representing District employees and are renegotiated each bargaining period. All employees
are eligible upon retirement with 30 years of PSERS service or upon superannuation retirement (age
~ 60 with 30 years of service, age 62 with 1 year of service, or 35 years of service regardless of age).
Retired employees are allowed to continue coverage for themselves and their dependents in the
employer's group health insurance plan until the retired employees reach Medicare age. The plan does
not issue apublicly-available financial report.
^ Funding PolicX -Contribution requirements also are negotiated between the District and the various
unions. Retired employees are responsible for payments equal to the premium determined by the
District's plan. The District funds the plan on apay-as-you-go basis, and there is no obligation to
~ make contributions in advance of when the insurance premiums or claims are due for payment.
Annual OPEB Cost and Net OPEB Obli ag tion -The District's annual other postemployment-benefit
(OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC),
an amount actuarially determined in accordance with GASB Statement 45. The ARC represents the
level of funding that, if paid on an on-going basis, is projected to cover normal cost each year and to
amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.
^ GASB Statement 45 was implemented prospectively; therefore, the net OPEB obligation at transition
is $-0-. The following table shows the components of the District's annual OPEB cost for the year, the
^ amount actually contributed to the plan, and changes in the District's net OPEB obligation to the plan.
^ Amount
Annual required contribution (ARC) $ 231,469
. Interest on net OPEB obligation 4,981
Adjustment to annual required contribution (6,796)
Annual OPEB cost (expense) 229,654
Contributions made (estimated) (136,274)
^ Estimated increase in net OPEB obligation 93,380
Net OPEB obligation -beginning of year 110,705
. Estimated net OPEB obligation -end of year 204,085
^
The District's annual OPEB costs, the percentage of annual OPEB co st contributed to the plan, and the
net OPEB obligation for the fiscal year 2010 were as follows:
Annual Percentage of Net
OPEB AnnuaIOPEB OPEB
S Fiscal Year Ended Cost Cost Contributed Obligation
6/30/2009 $ 231,469 52.17% $ 110,705
6/30/2010 $ 229,654 59.34% $ 204,085
41
SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 12. Post-Employment Benefits Other Than Pensions (Continued)
^ Funded Status and Funding Progress - As of July 1, 2008, the most recent actuarial valuation date, the
actuarial accrued liability for benefits was $1,658,596, all of which was unfunded. The covered
payroll (annual payroll of active employees covered by the plan) was $17,294,275, and the ratio of the
unfunded actuarial accrued liability to the covered payroll was 9.59%.
• Actuarial valuations of an on-going plan involve estimates of the value of the reported amounts and
~ assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare-cost trend. Amounts determined
regarding the funded status of the plan and the annual required contributions of the employer are
^ subject to continual revision as actual results are compared with past expectations, and new estimates
are made about the future. The schedule of funding progress, presented as required supplementary
^ information following the notes to the fmancial statements, presents multi-year trend information that
shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the
^ actuarial accrued liabilities for benefits.
^ Actuarial Method and Assumptions -Projections of benefits for financial-reporting purposes are based
on the substantive plan (the plan as understood by the employer and plan members) and include the
. types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit
costs between the employer and plan members to that point. The actuarial methods and assumptions
~ used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities
and the actuarial value of assets, consistent with the long-term perspective of the calculations.
Actuarial valuation date 7/1/2008
Actuarial cost method
Amortization method
Remaining amortization period
Asset valuation method
Actuarial assumptions
Investment rate of return
Projected salary increases
Healthcare inflation rate
Entry Age Normal
Level Dollar
30-year Open
Equal to Market Values of Assets
4.50%
3.00% COLA, 1.00% real wage growth,
0.25%-3.00% merit increase for
teachers and administrators
8.00% initial
5.00% ultimate
42
SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
Note 13. Affiliates
^ Shippensburg Area School District is a member of the Capital Intermediate Unit. Through
membership, the District is able to secure various special services, including special education,
curriculum development, and certain internal service functions. The District paid approximately
$455,656 as its share to the Capital Intermediate Unit during 2009-2010.
^ Shippensburg Area School District is a member of the Franklin County Career and Technology
Center. Students of the District are offered courses and curriculums at the Center that are related to
various technical training fields. Costs of the Center are shared with other local school districts. The
District paid approximately $738,143 as its share to the Franklin County Career and Technology
^ Center during 2009-2010.
Shippensburg Area School District is affiliated with Shippensburg University through the Grace B.
Luhrs University Elementary School. The University provides teachers for the kindergarten through
^ second grade, and the District provides teachers for the third through fifth grade and support services.
The District reimburses the University based on a basic education subsidy divided by the average daily
^ membership. The District paid approximately $94,370 as its share to Shippensburg University during
2009-2010.
Note 14. Participation in Risk Sharing Pool
The District is a participant in arisk-sharing pool to provide workers' compensation coverage. The
expense for this coverage for the 2009-10 year was $58,101, comprised of aself-insured retention of
$29,490 and a contribution to the Central Fund of $28,611. Actual claims during the year are first
paid out of the self-insured retention. Claims that exceed the self-insured retention are satisfied by the
Central Fund. The Central Fund maintains excess insurance to cover any claims that exceed $400,000
per accident. There are approximately 80 districts participating in the pool. If there is a deficiency in
the pooled funds, each member is assessed a proportionate share of the deficiency. Upon withdrawal
by a member from the pool, the terminating member has no rights to funds in the pool.
Note 15. Risk Management
The 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, there have been no significant reductions in settlement coverage.
Settlement amounts have not exceeded insurance coverage for the current year or the three prior years.
43
REQUIRED SUPPLEMENTARY INFORMATION
SHIPPENSBURG AREA SCHOOL DISTRICT
POST-EMPLOYMENT BENEFITS PLAN
SCHEDULE OF FUNDING PROGRESS
REQUIRED SUPPLEMENTARY INFORMATION
Actuarial
Accrued UAAL as a
Actuarial Liability Unfunded Percentage
Actuarial Value of (AAL) - AAL Funded Covered of Covered
Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll
Date (a) (b) (b - a) (a / b) (c) ((b - a) / c)
7/1/2008 $ - $ 1,658,596 $ 1,658,596 0.00% $ 17,294,275 9.59%
7/ 1 /2009 n/a n/a n/a n/a n/a n/a
For financial reporting purposes, an actuarial valuation is required at least biennially for OPEB plans
with a total membership (including employees in active service, terminated employees who have
accumulated benefits but are not yet receiving them, and retired employees and beneficiaries currently
receiving benefits) of 200 or more, or at least triennially for plans with a total membership of fewer
than 200.
Trend information is presented only for years in which information is available.
44
SUPPLEMENTARY INFORMATION
SHIPPENSBURG AREA SCHOOL DISTRICT
SCHEDULE OF REVENUES -GENERAL FUND
Year Ended June 30, 2010
Revenue from Local Sources
Real estate taxes
Current $ 15,716,968
Interim 72,406
Public utility tax 28 889
Payments in lieu of taxes 18 528
Current per capita taxes
Section 679 53,991
Act 511 53,991
Local services tax 48,984
Earned income tax 3,457,291
Real estate transfer taxes 449,813
Delinquent real estate taxes 1,184,324
Delinquent per capita taxes
Section 679 5,731
Act 511 5,731
Interest 64,300
IDEA 631,365
Rentals 24,162
Tuition 24,597
Refunds and other miscellaneous revenue 409,287
Total revenue from local sources 22,250,358
Revenue from State Sources
Basic education 7,800,151
Charter schools 84,831
Tuition for children placed in private homes 47,481
Migratory children 70
Special education for school-aged pupils 1,767,722
Transportation 970,837
(Continued)
45
SHIPPENSBURG AREA SCHOOL DISTRICT
SCHEDULE OF REVENUES -GENERAL FUND (Continued)
Year Ended June 30, 2010
Revenue from State Sources (Continued)
Building reimbursement 1,145,763
Health services 67,019
State property tax reduction 927,702
PA accountability 591,443
Social security reimbursement 735,461
Retirement reimbursement 481,365
Total revenue from state sources 14,619,845
Revenue from Federal Sources
Title I -Grants to Local Educational Agencies 568,208
Title II -Improving Teacher Quality 170,311
FEMA 5,297
H1N1 5,708
ARRA -IDEA, Part B 461,956
ARRA -Title I, Part A 194,016
ARRA -State Fiscal Stabilization Fund 1,048,450
Medical Assistance Program 45,030
Total revenue from Federal sources 2,498,976
Total revenues $ 39,369,179
46
SHIPPENSBURG AREA SCHOOL DISTRICT
SCHEDULE OF EXPENDITURES -GENERAL FUND
Year Ended June 30, 2010
Instruction
Regulaz programs
Salaries $ 11,041,632
Employee benefits 3 737 550
Purchased services
Professional and technical 48,374
Property 129,569
Other 1,121,477
Supplies 564 255
Property 84,640
Other objects 14 200
Total regulaz programs 16,741,697
Special programs
Salaries 2,774,616
Employee benefits 1,063,023
Purchased services
Professional and technical 1,464,231
Other 947,305
Supplies 44,425
Property 17,213
Other objects 560
Total special programs 6,311,373
Vocational education programs
Salaries 454,092
Employee benefits 122,814
Purchased services
Property 420
Other 738,888
Supplies 19,503
Other objects 160
Total vocational education programs 1,335,877
(Continued)
47
SHIPPENSBURG AREA SCHOOL DISTRICT
SCHEDULE OF EXPENDITURES -GENERAL FUND (Continued)
Year Ended June 30, 2010
Instruction (Continued)
Other instructional programs
Salaries 130,761
Employee benefits 30,639
Purchased services
Professional and technical 139,294
Property 189
Other 7,313
Supplies 799
Total other instructional programs
Adult education programs
Salaries
Employee benefits
Supplies
Total adult education programs
Higher-education programs
Total instruction
Support Services
Pupil personnel
Salaries
Employee benefits
Purchased services
Professional and technical
Property
Other
Supplies
Other objects
Total pupil personnel
(Continued)
308,995
3,641
479
4,572
8,692
10,250
24,716,884
873,529
265,325
33,670
55
6,605
20,614
2,180
1,201,978
48
SHIPPENSBURG AREA SCHOOL DISTRICT
SCHEDULE OF EXPENDITURES -GENERAL FUND (Continued)
Year Ended June 30, 2010
Support Services (Continued)
Instructional staff
Salaries 564,060
Employee benefits 198,371
Purchased services
Professional and technical 10,841
Property 118,805
Other 12,035
Supplies 289,168
Property 114,011
Other objects 27,627
Total instructional staff 1,334,918
Administration
Salaries 1,492,359
Employee benefits 496,795
Purchased services
Professional and technical 213,748
Property 2,886
Other 68,888
Supplies 23,101
Property 2,541
Other objects 17,652
Total administration 2,317,970
Pupil health
Salaries 296,911
Employee benefits 104,742
Purchased services
Professional and technical 19,212
Property 100
Supplies 9,263
Total pupil health 430,228
(Continued)
49
SHIPPENSBURG AREA SCHOOL DISTRICT
SCHEDULE OF EXPENDITURES -GENERAL FUND (Continued)
Year Ended June 30, 2010
Support Services (Continued)
Business
Salaries 239,968
Employee benefits 130,835
Purchased services
Professional and technical 2,545
Property 210
Other 24,054
Supplies 5,834
Other objects 3,445
Total business 406,891
Operation and maintenance of plant services
Salaries 833,179
Employee benefits 402,810
Purchased services
Property 798,427
Other 131,369
Supplies 260,831
Property 178,985
Other objects 279
Total operation and maintenance of plant services 2,605,880
Student transportation services
Purchased services
Professional and technical 5,102
Other 2,525,672
Supplies 548
Other objects 20
Total student transportation services 2,531,342
(Continued)
50
SHIPPENSBURG AREA SCHOOL DISTRICT
SCHEDULE OF EXPENDITURES -GENERAL FUND (Continued)
Year Ended June 30, 2010
Support Services (Continued)
Central service
Salaries 5,638
Employee benefits 786
Purchased services
Professional and technical 42,905
ProPertY 25,564
Supplies 32,933
Property 10,397
Other objects 250
Total central service 118,473
Other support services 30,551
Total support services 10,978,231
Operation ofNon-Instructional Services
Student activities
Salaries 364,684
Employee benefits 76,506
Purchased services
Property 21,340
Other 10,564
Supplies 28,016
Total student activities 501,110
(Continued)
51
SHIPPENSBURG AREA SCHOOL DISTRICT
SCHEDULE OF EXPENDITURES -GENERAL FUND (Continued)
Year Ended June 30, 2010
Operation ofNon-Instructional Services (Continued)
Community services
Salaries 7,013
Employee benefits 945
Supplies 8,965
Other objects 7,000
Total community services 23,923
Total operation of non-instructional services 525,033
Debt Service
Principal 2,140,000
Interest 1,350,307
Total debt service 3,490,307
Other financing Uses
Refund of prior years' receipts 20
Interfund transfers out 215,161
Total other financing uses 215,181
Total expenditures and other financing uses $ 39,925,636
52
SHIPPENSBURG AREA SCHOOL DISTRICT
COMBINING BALANCE SHEET -NON-MAJOR GOVERNMENTAL FUNDS
June 30, 2010
Capital
Projects
Construction
ASSETS
Cash $ 56,985
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable $ 7 749
Fund Balances
Reserved for
Capital projects 49,236
Capital reserve -
Athletic -
Total fund balances 49,236
Total liabilities and fund balances $ 56,985
53
Special Revenue Total Non-Major
Middle School Senior High Capital Governmental
Athletic Athletic Reserve Funds
$ 22,428 $ 14,721 $ 73,804 $ 167,938
$ - $ - $ - $ 7,749
- - - 49,236
- - 73,804 73,804
22,428 14,721 - 37,149
22,428 14,721 73,804 160,189
$ 22,428 $ 14,721 $ 73,804 $ 167,938
54
SHIPPENSBURG AREA SCHOOL DISTRICT --
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -NON-MAJOR GOVERNMENTAL FUNDS
Year Ended June 30, 2010
Capital
Projects
Construction
Revenues
Local sources
Expenditures
Instruction
Support services
Operation ofnon-instructional services
Facilities acquisition, construction
and improvement
Total expenditures
Deficiency of revenues
over expenditures
Other Financing Sources
Interfund transfers in
Net changes in fend balances
Fund Balances -July 1, 2009
Fund Balances -June 30, 2010
$ 2,080
55,707
119,037
9,703
1,489,331
1,673,778
(1,671,698)
(1,671,698)
1,720,934
$ 49,236
55
Special Revenue Total Non-Major
Middle School Senior High Capital Governmental
Athletic Athletic Reserve Funds
$ 13,205 $ 49,993 $ 25 $ 65,303
40,194 148,93 8
- 55,707
- 119,037
80,854 279,689
- - - 1,489,331
40,194 148,938 80,854 1,943,764
(26,989) (98,945) (80,829) (1,878,461)
36,000 97,299 75,000 208,299
9,011 (1,646) (5,829) (1,670,162)
13,417 16,367 79,633 1,830,351
56
^ Boyer&Ritter Web site: www.cpabr.com
Certified Puk~lic Accountants and Consultants
~ INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND
OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS
~~
~ Board of School Directors
^ Shippensburg Area School District
Shippensburg, Pennsylvania
~ We have audited the financial statements of Shippensburg Area School District as of and for the year
~ ended June 30, 2010, and have issued our report thereon dated November 9, 2010. 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.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered Shippensburg Area School District's internal control
~ over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our
^ opinion on the fmancial statements, but not for the purpose of expressing an opinion on the effectiveness
of the District's internal control over financial reporting. Accordingly, we do not express an opinion on
^ the effectiveness of the District's internal control over financial reporting.
^ A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination
of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement
S of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.
~ Our consideration of internal control over financial reporting was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control over
financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not
identify any deficiencies in internal control over financial reporting that we consider to be material
~' weaknesses, as defined above.
^
^
^
^
CAMP HILL CARLISLE CHAMBERSBURG LEWISTOWN STATE COLLEGE
An Independently Owned Member of the RSM McGladrey Network
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Shippensburg Area School District's financial
statements are free of material misstatement, we performed tests of its compliance with certain provisions
of laws, regulations, contracts, and grant agreements, 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 instances of noncompliance or other matters that are
required to be reported under Government Auditing Standards and which are described in the
accompanying Schedule of Findings and Questioned Costs as item CF 2010-1.
Shippensburg Area School District's response to the finding identified in our audit is described in the
accompanying Schedule of Findings and Questioned Costs. We did not audit the District's response, and
accordingly, we express no opinion on the response.
This report is intended solely for the information and use of management, the Board of School Directors,
Federal-awarding agencies and pass-through entities, and is not intended to be, and should not be, used by
anyone other than those specified parties.
/,~ ,~~
~~
Chambersburg, Pennsylvania
November 9, 2010
58
~ Boyer&Ritter
Certified Public Accountants and Consultants
Web Site: www.cpabr.com
INDEPENDENT AUDITOR'S REPORT ON COMPLLANCE WITH
REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT
ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER
COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Board of School Directors
Shippensburg Area School District
Shippensburg, Pennsylvania
Compliance
We have audited the compliance of Shippensburg Area School District with the types of compliance
requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133,
Compliance Supplement, which could have a direct and material effect on each of its major Federal
programs for the year ended June 30, 2010. Shippensburg Area School District's major Federal
programs are identified in the summary of auditor's results section of 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 District's
management. Our responsibility is to express an opinion on the 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 fmancial 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
District's compliance with those requirements and performing such other procedures as we considered
necessary in the circumstances. We believe our audit provides a reasonable basis for our opinion. Our
audit does not provide a legal determination on the District's compliance with those requirements.
In our opinion, Shippensburg Area School District complied, in all material respects, with the
compliance requirements referred to above that could have a direct and material effect on each of its
major Federal programs for the year ended June 30, 2010. However, the results of our auditing
procedures disclosed an instance of noncompliance with those requirements which are required to be
reported in accordance with OMB Circular A-133 and which is described in the accompanying Schedule
of Findings and Questioned costs as Item CF 2010-1.
~~
CAMP HILL CARLISLE CI-IAMBERSBURG LEN'ISTOWN STATE ~~OLLEGE
' ^ An independently Owned Member of the RSM McGladrey Network
^ Internal Control Over Compliance
. Management of Shippensburg Area School District is responsible for establishing and maintaining
effective internal control over compliance with requirements of laws, regulations, contracts, and grants
j ~ applicable to Federal programs. In planning and performing our audit, we considered the 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, but not for the purpose of expressing an opinion on the effectiveness of internal
control over compliance. Accordingly, we do not express an opinion on the effectiveness of the
District's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over
^ compliance does not allow management or employees, in the normal course of performing their
assigned functions, to prevent, or detect and correct noncompliance with a type of compliance
^ requirement of a Federal program on a timely basis. A material weakness in internal control over
compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such
^ that there is a reasonable possibility that material noncompliance with a type of compliance requirement
of a Federal program will not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not
identify any deficiencies in internal control over compliance that we consider to be material weaknesses,
as defined above.
Shippensburg Area School District's response to the finding identified in our audit is described in the
accompanying Schedule of Findings and Questioned Costs. We did not audit the District's response,
and accordingly, we express no opinion on the response.
This report is intended solely for the information and use of management, the Board of School
Directors, Federal-awarding agencies and pass-through entities, and is not intended to be, and should
not be, used by anyone other than those specified parties.
/~ ,~~.
~W
Chambersburg, Pennsylvania
November 9, 2010
60
SHIPPENSBURG AREA SCHOOL DISTRICT
Schedule of Findings and Questioned Costs
Year Ended June 30, 2010
Section I -Summary of Independent Auditor's Results
Financial Statements
Type of auditor's report issued: Unqualified
Internal control over financial reporting:
• Material weaknesses identified?
• Significant deficiencies identified that are
not considered to be material weaknesses?
Yes X No
Yes X None Reported
Noncompliance material to financial statements
noted?
Federal Awards
Internal control over major programs:
• Material weaknesses identified?
• Significant deficiencies identified that are
not considered to be material weaknesses?
Yes X No
Yes X No
Yes X None Reported
Type of auditor's report issued on compliance for major programs: Unqualified
• Any audit findings disclosed that are
required to be reported in accordance
with Section .510(a) of OMB Circular A-133? X Yes No
Identification of major programs:
^ CFDA Numbers
84.010
84.389
84.394
84.027
~ 84.391
~ Dollar threshold used to distinguish between
type A and type B programs
Auditee qualified as low-risk auditee?
~~
Name of Federal Program or Cluster
Title I -Improving Basic Programs
ARRA - Title I Part A Grants to LEAs
ARRA -State Fiscal Stabilization Fund
Special Education -Grants to States
ARRA -Special Education -Grants to States
$300,000
X Yes No
61
SHIPPENSBURG AREA SCHOOL DISTRICT
Schedule of Findings and Questioned Costs
Year Ended June 30, 2010
Section II -Financial Statement Findings
A. Significant Deficiencies in Internal Control
There were no findings relating to the financial statement audit required to be reported.
B. Compliance Findings
There were no findings relating to the financial statement audit required to be reported.
Section III -Findings and Questioned Costs for Federal Awards
A. Significant Deficiencies in Internal Control
There were no findings relating to the Federal awards required to be reported in accordance
with Section .510(a) of OMB Circular A-133.
B. Compliance Findings
CF 2010-1 - Activities Allowed for the Special Education -Grants to States (IDEA, Part B)
Condition: The guidelines of the Special Education -Grants to States (IDEA, Part B) require the
District to use the funds for the excess costs of providing special education and related services to
elementary-school or secondary-school children with disabilities. The results of testing invoices
paid by the District for IDEA costs revealed several payments made for occupational services
^ provided to an individual who is no longer a student in the District, and is therefore, ineligible for
payments made by the District for occupational services.
Cause: The Program Manager incorrectly approved payments for invoices related to occupational
. services provided to an individual no longer eligible for said services.
^ Effect: The invoice-approval process is ineffective when careful attention is not given to relevant
details, such as the eligibility or ineligibility of the individual to whom services are provided.
~ Consequently, services may be provided to and paid for ineligible individuals in violation of
program guidelines.
Questioned Costs: $1,389.52 (Amount paid by the District for ineligible individual). This cost
has been recovered during the 2010/11 school year.
Recommendation: Responsible District personnel must be attentive in reviewing the details of
invoices to ensure that only services for eligible students are paid for by the District.
Auditee's Response: Management understands and concurs with the aforementioned finding.
Management has communicated with the appropriate District personnel the importance of
^ reviewing all documentation including verification of eligibility. The District has additional
allowable costs to replace the questioned costs since special-education costs currently far exceed
^ Federal revenue.
62
SHIPPENSBURG AREA SCHOOL DISTRICT
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Year Ended June 30, 2010
Pass- !'
Federal Through
Source C.F.D.A. Grantor's Grant
Code Number Number Period
U. S. Department of Homeland Security
Federal Emergency Mangement Agency
Passed through the Pennsylvania
Emergency Management Agency
Public Assistance Grants I 97.036 N/A 09-10
U. S. Department of Health and Human Services
Passed through the Pennsylvania ,._,
Department of Health
Public Health Emergency Response I 93.069 N/A 09-10 ,._„
U. S. Department of Education r.,
Passed through the Pennsylvania
Department of Education
Title I -Improving Basic Programs I 84.010 013-090387 08-09
Title I -Improving Basic Programs I 84.010 013-100387 09-10
Title I -Academic Achievement Awards I 84.010 013-100387 09-10
ARRA - Title I Part A Grants to LEAs I 84.389 127-100387 09-10 --
Title II -Improving Teacher Quality I 84.367 020-090387 08-09
Title II -Improving Teacher Quality I 84.367 020-100387 09-10
ARRA -Fiscal Stabilization -Basic Ed I 84.394 126-100387 09-10
Passed through the Capital Area
Intermediate Unit Consortium
Special Education -Grants to States I 84.027 N/A 08-09
Special Education -Grants to States I 84.027 N/A 09-10 '-"
ARRA -Special Education -Grants to States I 84.391 N/A 09-10
Total U. S. Department of Education
(Continued)
63
Total Accrued Accrued
Program Received (Deferred) (Deferred)
or Annual (Refunded) in Revenue at Revenue Revenue at
Award Fiscal Year 7/1/2009 Recognized Expenditures 6/30/2010
$ 5,297 $ - $ - $ 5,297 $ 5,297 $ 5,297
$ 5,708 - - 5,708 5,708 5,708
$ 591,916 196,533 76,444 120,089 120,089 -
$ 532,748 357,289 - 444,519 444,519 87,230
$ 3,600 - - 3,600 3,600 3,600
$ 284,481 184,556 - 194,016 194,016 9,460
$ 159,531 63,812 30,738 33,074 33,074 -
$ 156,077 114,457 - 137,237 137,237 22,780
$ 1,048,450 611,596 - 1,048,450 1,048,450 436,854
$ 627,982 627,982 627,982 - - -
$ 631,365 - - 631,365 631,365 631,365
$ 708,633 242,958 - 461,956 461,956 218,998
2,399,183 735,164 3,085,311 3,085,311 1,421,292
64
SHIPPENSBURG AREA SCHOOL DISTRICT -'
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
Year Ended June 30, 2010 "-"
Pass-
Federal Through
Source C.F.D.A. Grantor's Grant
Code Number Number Period
U. S. Department of Agriculture
Passed through the Pennsylvania
Department of Education:
National School Lunch Program I 10.555 N/A 08-09
-..
National School Lunch Program I 10.555 N/A 09-10
Passed through the Pennsylvania
Department of Agriculture:
Food Donation (a) I 10.555 N/A 09-10
Total U. S. Department of Agriculture --•,
Total Expenditures of Federal Awards
Source Codes: Legends:
D -Direct Funding (a) Donated commodities valued at local market values
I -Indirect Funding (b) Total amount of commodities received from
Department of Agriculture
(c) Inventories at July 1, 2009
(d) Total amount of commodities used
(e) Inventories at June 30, 2010
See Notes to Schedule of Expenditures of Federal Awards.
65
Total Accrued Accrued
Program Received (Deferred) (Deferred)
or Annual (Refunded) Revenue at Revenue Revenue at
Award Fiscal Year 7/1/2099 Recognized Expenditures 6/30/2010
N/A
N/A
13,673 13,673 -
379,475 - 391,357
391,357 11,882
N/A
Test of 25% Rule:
Programs selected for testing as major programs:
Title I -Improving Basic Programs
ARRA - Title I Part A Grants to LEAs
ARRA -Fiscal Stabilization -Basic Ed
Special Education -Grants to States
ARRA -Special Education -Grants to States
(b) 73,519 (c) (9,967) 74,198 (d) 74,198 (e) (9,288)
466,667 3,706 465,555 465,555 2,594
$ 2,865,850 $ 738,870 $ 3,550,866 $ 3,550,866 $ 1,423,886
$ 568,208
194,016
1,048,450
631,365
461,956
$ 2,903,995 / $ 3,550,866 = 81.78%
66
^ SHIPPENSBURG AREA SCHOOL DISTRICT
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
^ Note 1. Basis of Presentation
The accompanying Schedule of Expenditures of Federal Awards (Schedule) includes the Federal-grant
activity of Shippensburg Area School District under programs of the Federal government for the year
ended June 30, 2010. The information in this Schedule is presented in accordance with the requirements
of the Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments,
and Non-Profrt Organizations. Because the Schedule presents only a selected portion of the operations of
the District, it is not intended to and does not present the financial position, changes in net assets or cash
flows of the District.
Note 2. Significant Accounting Policies
Expenditures reported in the Schedule are reported in accordance with accounting principles generally
~ accepted in the United States of America. Such expenditures are recognized in accordance with the cost
principles contained in OMB Circular A-122, Cost Principles for Non profit Organizations, wherein
certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts
shown on the Schedule represent adjustments or credits made in the normal course of business to amounts
reported as expenditures in prior years. Pass-through entity identifying numbers are presented where
available.
I ~ Note 3. Sub-recipients
With respect to the Federal expenditures presented in the Schedule, Shippensburg Area School District
did not provide any Federal awards to sub-recipients.
e
67
SHIPPENSBURG AREA SCHOOL DISTRICT
SUMMARY SCHEDULE OF PRIOR YEAR'S AUDIT FINDINGS
Year Ended June 30, 2010
There were no audit findings for the year ended June 30, 2009.
68