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EAST PENNSBORO AREA SCHOOL DISTRICT
FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2012
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TABLE OF CONTENTS
Page
Number
INDEPENDENT AUDITOR'S REPORT IAR - 1 to IAR - 2
MANAGEMENT'S DISCUSSION AND ANALYSIS MDA - 1 to MDA - 9
BASIC FINANCIAL STATEMENTS
District-wide financial statements
Statement of net assets FS - 1
Statement of activities FS - 2
Fund financial statements
B`elance sheet -governmental funds FS - 3
Reconciliation of the governmental funds balance sheet
to the statement of net assets FS - 4
Statement of revenues, expenditures, and changes
in fund balances -governmental funds FS - 5
Reconciliation of the governmental funds statement of revenues, expenditures,
and changes in fund balances to the statement of activities FS - 6
Statement of net assets -proprietary funds FS - 7
Statement of revenues, expenses, and changes in net assets -proprietary funds FS - 8
Statement of cash flows -proprietary funds FS - 9
Statement of net assets -fiduciary funds FS - 10
Statement of changes in net assets -fiduciary funds FS - 11
NOTES TO FINANCIAL STATEMENTS FS - 12 to FS - 31
OTHER REQUIRED SUPPLEMENTARY INFORMATION
Budgetary comparison information -general fund ORSI - 1
Other post employment benefit plans ORSI - 2
~~0.
Greenawalt & Company, P.C.
James E. Lyons
CERTIFIED PUBLIC ACCOUNTANTS Deborah J. Kelly
Since l 955 Scott J. Christ
Ronald S. Morgan
INDEPENDENT AUDITOR'S REPORT
Board of School Directors
East Pennsboro Area School District
Enola, Pennsylvania
Howard R. Greenawalt
Creedon R. Hoffman
We have audited the accompanying financial statements of the governmental activities, the business-type activities,
each major fund, and the fiduciary funds of East Pennsboro Area School District as of and for the year ended June
30, 2012, which collectively comprise the District's basic financial statements as listed in the table of contents. These
financial statements are the responsibility of the District's management. Our responsibility is to express opinions on
these financial statements based on our audit. The prior year summarized comparative information has been derived
from the District's June 30, 2011 financial statements and, in our report dated January 6, 2012 we expressed
unqualified opinions on the respective financial statements of the governmental activities, the business-type activities,
each major fund, and the fiduciary funds.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and pertorm the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and the significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for
our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, the business-type activities, each major fund, and the fiduciary funds
of East Pennsboro Area School District, as of June 30, 2012, and the respective changes in financial position, and
cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated January 4, 2013 on our
consideration of East Pennsboro Area School District's internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The
purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance
and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Govemment Auditing Standards
and should be considered in assessing the results of our audit.
IAR - 1
400 West Main Street • Mechanicsburg, PA 17055.717.766.4763 • Fax 717.766.2731
62 West Pomfret Street • Carlisle, PA 17013. 717.243.4822 • Fax 717.258.9372
www.greenawalt.cc
Board of Directors
East Pennsboro Area School District
Accounting principles generally accepted in the United States of America require that the management's discussion
and analysis on pages MDA-1 through MDA-9 and the other required supplementary information on pages ORSI-1
and ORSI-2 be presented to supplement the basic financial statements. Such information, although not a part of the
basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic,
or historical context. We have applied certain limited procedures to the required supplementary information in
accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries
of management about the methods of preparing the information and comparing the information for consistency with
management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during
our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information
because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
GREENAWALT & COMPANY, .C.
January 4, 2013
Mechanicsburg, Pennsylvania
IAR - 2
EAST PENNSBORO AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2012
Our discussion and analysis compares our financial position at June 30 of 2012, 201 l and 2010. It also
provides an overview of our financial performance for the two years between these periods, fiscal years
ended June 30, 2012 and 2011, in accordance with governmental reporting requirements. Please read our
discussion and analysis in conjunction with the District's financial statements, which begin on page FS-1.
FINANCIAL HIGHLIGHTS
• Our financial position remained viable at the end of 2012. We have maintained sufficient net assets
and fund balances, and established a budget that should result in a stable financial position through
2013-2014
• In 2010, 2011 and 2012 we used available capital funds to complete additional renovation projects at
the Middle School. At the end of 2012, there was a balance of about $52,793 remaining in our
General Obligation Bond Fund of 2004.
• For 2012, we paid down $2.88 million of our General Obligation Debt. No additional debt has been
incurred.. We again expect to have adequate financial resources to meet all of our debt service
obligations.
• The District has provided operating revenues within the constraints of ACT 1 of 2006. Since the
implementation of ACT 1, the district has significantly reduced and eliminated critical areas of the
budget. These reductions and eliminations did not directly impact educational services; however,
with the impact of economic conditions on local revenue and reductions in state and federal revenue,
it is becoming extremely difficult to balance the budget without tax increases and/or program
reductions.
• The District provides medical coverage through the South Central Trust (SCT). Over the last four
years the District has accumulated a surplus within the risk sharing pool. This has enabled the
District to contain costs and provide stability for future years as the cost of medical coverage
fluctuates from year to year based on utilization. The reserved fund balances for the District's
reserve at South Central Trust were $1,634,5]8, $1,933,325 and $2,055,000 at December 31, 2010,
2011 and 2012 respectively.
USING THESE FINANCIAL STATEMENTS
This report consists of a series of financial statements. The Statement of Net Assets and the Statement of
Activities (on pages FS-1 and FS-2) provide information about the activities of the District as a whole, and
present alonger-term view of the District's finances than Fund statements. Fund financial statements are on
pages FS-3, FS-5 and FS-7 through FS-l 1. For governmental activities, these statements tell how District
services have been financed in the short run, as well as show the amount remaining for future spending.
Proprietary fund statements provide information about non-governmental operations, in this case food
services. Fiduciary funds statements report funds held in trust by the District for such things as scholarship
grants and student activity funds.
MDA - 1
EAST PENNSBORO AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS (Cont'd.)
JUNE 30, 2012
The .Reconciliation of the Governmental Funds Balance Sheet on page FS-4 connects governmental fund
balance to the total net assets balance from the Statement of Net Assets. The reconciliation. on page FS-6
does the same for the components of the changes in fund balances.
Reporting the District as a Whole
The statements present financial activities and the results of those activities in two categories, Governmental
and Business-type. Capital assets (land, buildings, improvements, furniture and equipment) are presented
with all other assets. Long-term debt is presented with all other liabilities. This is distinctly different from
the fund statements in which assets and liabilities are separated into various funds such as General and
Capital Projects.
The approach to measurement of revenue and expense is similar to that used in the private sector and is
referred to as following the accrual basis of accounting. This is discussed further in the notes to the financial
statements.
Reporting the District's Most Significant Funds
The funds statements provide financial information about the District's significant funds rather than the
District as a whole. There are three fund types, Governmental, Proprietary and Fiduciary. The use of each
type of fund is described in the notes to the financial statements. Unlike the entity-wide financial statements
that measure revenues on the accrual basis, the funds statements report revenues only to the extent cash has
been received, or is expected to be received in the near future.
The District as Trustee
The District acts as fiduciary for the Students Activities and Agency Funds. In comparison to the
Governmental. Funds, the amount held in the fiduciary fund is small. The fiduciary fund net assets are
presented on page FS-10 and the changes in net assets on page FS-11.
THE DISTRICT AS A WHOLE
Table A-1 summarizes and compares the Statement of Net Assets from page FS-1 of the financial
statements for each of the past three years. We have brought forward the 2010 balances from our 2011
MD&A. These balances are otherwise not a part of the 2012 financial statement package. Within this and
certain other schedules in our discussion, we have presented the dollar figures in thousands, unless
otherwise indicated, to make them easier to read. This has resulted in rounding differences, and some
columns may not add within a schedule.
MDA-2
EAST PENNSBORO AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS (Cont'd.)
• JUNE 30, 2012
Table A-1
Statement of Net Assets
Governmental Activities
2012 2011 2010
Business-type Activities
2012 2011 2010
Current and other assets $ 12,767 $ 12,086 $ 11,088 $ 347 $ 256 $ 211
Capital assets 33,578 35,009 35,947 151 181 223
Total assets $ 46,345 $ 47,095 $ 47,035 $ 498 $ 437 $ 434
Current and other liabilities $ 3,094 $ 3,569 $ 3,088 $ 71 $ 59 $ 69
Long-term liabilities 24,722 27,532 30,244 - - -
Totalliabilities 27,816 31,101 33,332 71 59 69
Capital assets (net of related debt) 10,217 8,926 7,168 151 182 223
Restricted for capital projects 53 l 16 315 - - -
Unrestricted 8,259 6,952 6,220 276 196 142
Total net assets 18,529 15,994 13,703 427 378 365
Total liabilities and net assets $ 46,345 $ 47,095 $ 47,035 $ 498 $ 437 $ 434
Total net assets are the difference between total assets and total liabilities, and represent resources that can
be used to pay for future operations and capital improvements. The bulk of our assets are capital assets.
These have been paid for using borrowed money and do not add significantly to our net asset value. The
restricted portion of net assets represents cash and investments that can only be used for buildings and
improvements. The remaining restricted fund balance will be used to fund future capital maintenance
projects such as new roofing.
Table A-2 summarizes and compares activity presented in the Statement of Activities (page FS-2). it shows
the activity behind the increase in total net assets over the year ending June 30, 2012.
MDA-3
EAST PENNSBORO AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS (Cont'd.)
• JUNE 30, 2012
Table A-2
Changes in Net Assets
Revenues
Program revenues
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues
Taxes
State general subsidies
Other
Total revenues
Direct expenses
Excess (deficiency before transfers)
Transfers
Change in net assets
Governmental Business-type
Activities Activities Total
2012 2011 2012 2011 2012 20]]
$ 370 $ 240 $ 804 $ 773 $ 1,174 $ 1,013
4,215 6,031 462 470 4,677 6,501
412 432 - - 412 432
22,688 23,062 - - 22,688 23,062
6,206 5,659 - - 6,206 5,659
32 35 - 1 32 36
33,923 35,459 1,266 1,244 35,189 36,703
31,388 33,168 1,218 1,232 32,606 34,400
2,535 2,291 48 12 2,583 2,303
- (1) - 1 - -
$ 2,535 $ 2,290 $ 48 $ 13 $ 2,583 $ 2,303
The growth in Total Revenues from our Total Primary Governmental activities was in line with the increase
in our direct expenses.
Governmental Activities
Table A-3, shown on the next page, presents expense information from the Statement of Activities for
governmental activities. The total cost of services represents the actual cost of providing the services while
the net cost represents the amount of cost that is not recovered through program revenues, meaning user
charges, grants and contributions. The total net cost of services of $26,391,158 must be recovered through
general revenue, primarily taxes and state subsidies. Amounts not recovered will reduce funds available for
future years.
MDA-4
EAST PENNSBORO AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS (Cont'd.)
' JUNE 30, 2012
Table A-3
Governmental Activities
Classroom instruction
Instructional student support
Administrative and financial support
Operation and maintenance of buildings
Student transportation
Student activities
Community services
Interest on long-term debt
Total governmental activities
State general subsidies revenues
Direct Expenses Program Revenues Net Expense
2012 2011 2012 2011 2012 20]1
$ 20,274 $ 21,670 $ 2,987 $ 5,261 $ 17,287 $ 16,409
2,439 2,644 710 202 1,729 2,442
3,526 3,335 129 88 3,397 3,247
2,420 2,581 85 84 2,335 2,497
1,443 1,404 598 547 845 857
627 710 75 89 552 621
13 19 - - 13 19
645 804 412 432 233 372
$ 31,387 $ 33,167 $ 4,996 $ 6,703 26,391 26,464
Total needs from taxes and other local sources
Business-Type Activities
(6,206) (5,465)
$ 20,185 $ 20,999
Table A-4, is similar to the previous table, except it presents business-type service costs. Note that
almost all of the cost of food services is paid by program revenues.
Table A-4
Business-Type Activities
Direct Expenses Program Revenues Net Expense
2012 2011 2012 2011 2012 2011
Food services $ 1,218 $ 1,232 $ 1,266 $ 1,244 (48) (12)
Investment earnings (1) (1)
Total net expense $ (49) $ (13)
There were no other significant changes during the year with the net cost of services remaining about
the same in 2012 as in 2011.
MDA-5
EAST PENNSBORO AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS (Cont'd.)
JUNE 30, 2012
DISTRICT'S FUNDS
The information in Table A-5 summarizes and compares the Governmental Funds' Balance Sheet for
June 30, 2012, 2011 and 2010. Note that we again brought forward 2011 and 2010 balances from our
2011 MD&A. This information is not otherwise a part of the 2011 financial statement package. The
groupings are the same as those used in the Statement of Net Assets.
Table A-5
Governmental Fund Balances
General Fund -nonspendable
General Fund -committed
General Fund -unassigned
Capital Projects Fund -restricted
Capital Projects Fund -committed
Special Revenue Fund -restricted
Total governmental funds
Total nonspendable
Total restricted
Total committed
Total unassigned
Total governmental funds
2011-2012 2010-2011
2012 2011 2010 Chance %Chan~e Chance %Chanee
$ 2,055 $ 1,933 $ 1,634 $ 122 $ 299
2,175 2,175. 425 - 1,750
2,718 2,023 4,740 695 (2,717)
53 116 315 (63) (199)
1,067 675 286 392 389
9 9 8 - 1
$ 8,077 $ 6,931 $ 7,408 $ 1,146 16.5% $ (477) -6.5%
$ 2,055 $ 1,933 $ 1,634 $ 122 $ 299
62 125 315 (63) (190)
3,242 2,850 719 392 2.131
2,718 2,023 4,740 695 {2,717)
$ 8,077 $ 6,931 $ 7,408 $ 1,146 16.5% $ (477) -6.5%
As previously mentioned, the basis of measurement for fund assets and liabilities is different than that used
in the Statement of Net Assets. The differences between the total governmental fund balance of $8,077,117
and the total net assets of $18,529,541 are itemized in the reconciliation presented within the financial
statements on page FS-4.
The items that caused the change in fund balance during the year are presented in the Statement of
Revenues, Expenditures and Changes in Fund Balances within the financial statements on page FS-5. The
fund balance increased by $1,146,317 because the total fund expenditures, including transfers, were less
than the total fund revenues.
MDA-6
EAST PENNSBORO AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS (Cont'd.)
JUNE 30, 2012
General Fund Budgetary Highlights
Table A-6 has been summarized from the comparative budget information presented on page ORSI-1
of the other required supplemental information. The total variance was favorable in that we budgeted
our total expenditures would be higher than total revenues by $745,817 when in fact our total
expenditures were less than our revenues by $816,526.
Table A-6
Budget to Actual Comparisons
Budget Actual Variance
2012 2011 2012 2011 2012 2011
Total revenues $ 33,471 $ 34,535 $ 33,796 $ 34,422 $ 325 $ (113)
Total expenditures 33,808 35,638 32,571 34,546 1,237 1,092
Excess revenues (expenditures) (337) (1,103) 1,225 (124) 1,562 979
Other financing sources (uses) (408) (1,772) (408) (544) # - 1,228
Net change in fund balance $ (745) $ (2,875) $ 817 $ (668) # $ 1,562 $ 2,207
CAPITAL ASSETS
Table A-7 summarizes the changes in Capital Assets note to the financial statements on pages FS-22.
The original cost of the capital assets on the books at June 30, 2012 was $64,963,585. Each year, for
capital assets other than land and construction in progress, this amount is depreciated (reduced in
value) to reflect usage. The net balance of 33,578,467 is the amount remaining after this reduction.
As construction projects are completed, related construction in progress balances are moved into the
buildings and improvements category, and depreciated over the estimated useful life of the
improvement.
During the year our capital projects activity was limited to carrying renovations to existing buildings.
MDA-7
EAST PENNSBORO AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS (Cont'd.)
JUNE 30, 2012
Table A-7
Capital Assets
Governmental activities
Land
Construction in progress
Buildings and improvements
Furniture, equipment and library books
Total governmental capital assets
2012 .2011 2010
$ 326 $
326 $ 326
32,062 33,526 34,446
1,190 1,157 1,175
$ 33,578 $ 35,009 $ 35,947
Business-type activities
Furniture and equipment
LONG-TERM LIABILITIES
$ 151 $ 182 $ 223
Table A-8 summarizes the Long-Term Liabilities note to the financial statements on pages FS-23 to FS-28.
Most of the debt relates to general obligation bonds issued by the District to pay for capital improvements.
vur aviiit'y' tv raise future funds througl-i the issuance of debt depends oil flow weii uur existing bonds are
rated by the investment community. Currently, the District is rated by Standard and Poor's as AAA. ACT 1
of 2006 impacts a school district's ability to incur debt without voter approval. The District does not
anticipate incurring additional debt in the near future.
Table A-8
Long-term Liabilities
Governmental activities
2012 2011 2010
General obligation debt $ 23,562 $ 26,450 $ 29,210
Compensated absences 626 593 626
Other Post Employment Benefits 433 353 263
Unamortized bond costs 102 137 l45
$ 24,723 $ 27,533 $ 30,244
Each year, the District pays interest to bond holders and pays down a portion of the outstanding debt,
referred to as redemption. During 2012, our redemptions totaled $2,888,000, net of refunding.
Compensated absences increased during the year from an entity-wide perspective from $593,078 to
$625,b19 at June 30, 2012. Compensated absences decreased from June 30, 2010 to June 30, 2011 from an
entity-wide perspective from $625,619 to $593,078.
MDA-8
EAST PENNSBORO AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS (Cont'd.)
JUNE 30, 2012
Recording for other post employment benefits began in 2008-2009. The liability at June 30, 2012 from an
entity-wide perspective was $433,159, which was a net increase of $80,182 from the previous year of
$352,977.
Next Year's Budget
Table A-9 compares the original budget for 2012 to the 2013 budget that was approved June, 2012.
Table A-9
Budget Comparsions
Total revenues
Total expenditures
Excess revenues (expenditures)
Other financing sources (uses)
Net change in fund balance
2012-2013 2011-2012 Change
$ 34,276 $ 33,471 $ 805
34,488 34,217 271
(212) (746) 534
$ (212) $ (746) $ 534
Similar to our 2012 budget, our budgeted expenditures for 2013 exceed budgeted. revenues.
CONTACTING THE DISTRICT FINANCIAL MANAGEMENT
The District's financial report is intended to provide the readers with a general overview of the District's
finances and to show the Board's accountability for the funds it receives. If you have questions about this
report or wish to request additional financial information, please contact the district ofFce of East Pennsboro
Area School District, 890 Valley Street, Enola, PA 17025, (717) 732-3601.
MDA-9
EAST PENNSBORO AREA SCHOOL DISTRICT
STATEMENT OF NET ASSETS
JUNE 30, 2012
(With Summarized Financial Information for June 30, 2011)
Assets
Cash and cash equivalents
Taxes receivable (net of allowance for uncollectibles)
Internal balances
Due from other governments
Other receivables
Prepaid expenses
Inventories
Restricted cash and investments for construction
Unamortized bond issuance costs
Capital assets not being depreciated
Capital assets being depreciated (net of accumulated depreciation)
Total assets
Governmental
Activities
$ 7,017,872
2,227,152
(52,433)
1,005,665
68, 939
2,055,000
52,793
392,932
325, 826
33,252,641
$ 46,346,387
Business-type
Activities
$ 266,509
52,433
7,512
20,903
151, 067
$ 498,424
Liabilities
Accounts payable
Payroll and benefits payable
Deferred revenues
Accrued interest on bonds payable
Long-term liabilities
Due within one year
Due in more than one year
Unamortized bond premiums, discounts and refunding costs
Total liabilities
Net assets
Invested in capital assets (net of related debt)
Restricted for capital projects
Unrestricted
Total net assets
Total liabilities and net assets
The accompanying notes are an integral part of these financial statements.
$ 633,449
2,067,347
196,609
196, 910
3,735,000
20,885,778
101, 753
27,816,846
10,217,646
52, 793
8,259,102
18, 529, 541
$ 46,346,387
FS-1
$ 45,591
25,273
70,864
151,067
276,493
427,560
$ 498,424
Totals
2012
$ 7,284,381
2,227,152
1,013,177
68,939
2,055,000
20,903
52,793
392,932
325,826
33,403,708
$ 46,844,811
$ 679,040
2,067,347
221,882
196,910
3,735,000
20,885,778
101, 753
27,887,710
10, 368, 713
52,793
8,535,595
18, 957,101
$ 46,844,811
2011
$ 5,494,582
2,584,198
1,645,755
27,633
1,933,325
16,171
137,313
503, 370
325, 826
34,864,957
$ 47,533,130
$ 1,190,692
1,806,936
421,478
208,609
3,173,000
24,223,055
136,803
31,160, 573
9,107,350
115, 862
7,149, 345
16,372,557
$ 47,533,130
Functions/Programs
Governmental activities
Instruction
Instructional student support
Administrative and financial support
Operation and maintenance of plant
Pupil transportation
Student activities
Community services
Interest on long-term debt
Total governmental activities
Business-type activities
Food service
EAST PENNSBORO AREA SCHOOL DISTRICT
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE: 30, 2012
(With Summarized Financial Information for the Year Ended June 30, 2011)
Program Revenues Net (Expense), Revenue and Changes in Net Assets
Direct Charges for Grants and Contributions Governmental Business-type Totals
Expenses Services Operating Capital Activities Activities 2012 2011
$ 20,274,099
2,438,925
3,526,389
2,419,944
1,443,334
627,028
12,834
!_~AL ~1A~1
$ (16,744,363) $ (16,409,299)
- (2,271,209) (2,441,718)
- (3,397,713) (3,247,304)
- (2,334,630) (2,497,624)
- (845,117) (857,110)
- (552,200) (621,531)
- (12,834) (18,892)
- (233,092) (371,640)
(26,391,158) (26,465,118)
48,169 48,169 11,629
48,169 (26,342,989) (26,453,489)
$ 284,027 $ 3,245,709 $ - $ (16,744,363) $
- 167,716 - (2,271,209)
- 128,676 - (3,397,713)
39,751 45,563 - (2,334,630)
- 598,217 - (845,117)
46,008 28,820 - (552,200)
- - - (12,834)
- - _ 412,190 (233,092) _
369,786 4,214,701 412,190 (26,391,158)
804,138 462,594 - -
Total school district $ 32,606,398 $ 1,173,924 $ 4,677,295 $ 412,190 (26,391,158)
General revenues
Taxes
Real estate taxes 17,231,254 - 17,231,254 17,289,775
Earned income taxes 5,118,116 - 5,118,116 5,426,382
Other taxes 339,176 - 339,176 345,466
Investment earnings 32,456 719 33,175 36,199
State general subsidies 6,205,812 - 6,205,812 5,659,472
Transfers - - - -
Total general revenues and transfers 28,926,814 719 28,927,533 28,757,294
Change in net assets 2,535,656 48,888 2,584,544 2,303,805
Net assets -beginning
Net assets -ending
15,993,885 378,672 16,372,557 14,068,752
$ 18,529,541 $ 427,560 $ 18,957,101 $ 16,372,557
The accompanying notes are an integral part of these financial statements.
FS-2
EAST PENNSBORO AREA SCHOOL DISTRICT
BALANCE SHEET _ GOVERNMENTAL FUNDS
JUNE 30, 2012
(With Summarized Financial Information for June 30, 2011)
Capital Capital Special Totals
General Projects Reserve Revenue 2012 2011
Assets
Cash and cash equivalents $ 5,751,178 $ 52,793 $ 1,067,280 $ 199,414 $ 7,070,665 $ 5,431,236
Taxes receivable (net) 2,227,152 - - - 2,227,152 2,584,198
Due from other funds - - - - - -
Due from other governments 1,005,665 - - - 1,005,665 1,644,018
Other receivables 68,939 - - - 68,939 27,633
Prepaid expenses 2,055,000 - - - 2,055,000 1,933,325
Total assets $ 11,107,934 $ 52,793 $ 1,067,280 $ 199,414 $ 12,427,421 $ 11,620,410
Liabilities and fund balances
Accounts payable $ 633,449 $ - $ - $ - $ 633,449 $ 1,153,296
Payroll and benefits payable 2,067,347 - - - 2,067,347 1,806,936
Due to other funds 52,433 - - - 52,433 37,118
Deferred revenues 1,407,292 - - 189,783 1,597,075 1,692,260
Total liabilities 4,160,521 - - 189,783 4,350,304 4,689,610
Fund balances
Nonspendable
Wealth care costs prepaid 2,055,000 - - - 2,055,000 1,933,325
Restricted
Capital and other projects - 52,793 - 9,631 62,424 125,084
Committed
Future pension costs 2,174,588 - - - 2,174,588 2,174,588
Capital outlays - - 1,067,280 - 1,067,280 674,829
Unassigned 2,717,825 - - - 2,717,825 2,022,974
Total fund balances 6,947,413 52,793 1,067,280 9,631 8,077,117 6,930,800
Total liabilities and fund balances $ 11,107,934 $ 52,793 $ 1,067,280 $ 199,414 $ 12,427,421 $ 11,620,410
The accompanying notes are an integral part of these financial statements.
FS-3
EAST PENNSBORO AREA SCHOOL DISTRICT
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
JUNE 30, 2012
Total fund balances -Governmental funds $ 8,077,117
Amounts reported for governmental activities in the statement
of net assets are different because:
Capital assets are not financial resources and therefore are not reported
as assets in the governmental funds. At year end, the cost of capital
assets is $ 64,963,585 and the accumulated depreciation
is $ 31,385,118 33,578,467
Taxes receivable will be collected, but are not available soon enough to
pay for the current year's expenditures, and therefore are deferred in the
governmental funds. At year end, these taxes receivable consist of:
Real estate taxes $ 325,466
Earned income taxes 1,075,000 1,400,466
Certain liabilities are not due and payable in the current year, and therefore
are not reported as liabilities in the governmental funds. At the year end,
these liabilities consist of:
Bonds payable (23,562,^00)
Compensated absences (625,619)
Other post-employment benefit accrual (433,159)
Long-term liabilities (24,620,778)
Accrued interest on bonds payable (196,910) (24,817,688)
Costs related to the issuance of bonds are reported as expenditures
in the governmental funds. At year end, the remaining unamortized
bond related costs consist of:
Bond issuance costs 392,932
Bond discounts (premiums) (388,g7Q)
Refunding costs 287,117 291,179
Total net assets -Governmental activities $ 18,529,541
The accompanying notes are an integral part of these financial statements.
FS - 4
EAST PENNSBORO AREA SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2012
(With Summarized Financial Information for the Year Ended June 30, 2011)
Revenues
Local sources -taxes
Local sources -other
State sources
Federal sources
Total revenues
Expenditures
Instruction
Support services
Noninstructional services
Capital outlay
Debt service (principal and interest)
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses)
Refunding bond proceeds
Transfers from other funds
Debt service (refunded bond issues)
Transfers to other funds
Net change in fund balances
Fund balances -beginning
Fund balances -ending
Capital Capital Special Totals
General Projects Reserve Revenue 2012 2011
$ 22,580,158 $ - $ - $ - $ 22,580,158 $ 22,043,950
925,217 14 2,135 17,286 944,652 1,368,063
9,910,964 - - - 9,910,964 9,468,995
379,329 - - - 379,329 1,560,349
33,795,668 14 2,135 17,286 33,815,103 34,441,357
19,394,381 - - 16,877 19,411,258 20,801,560
8,750,347 - - - 8,750,347 9,189,364
631,070 - - - 631,070 692,720
214,940 63,083 18,055 - 296,078 610,899
3,580,033 - - - 3,580,033 3,674,851
32,570,771 63,083 18,055 16,877 32,668,786 34,969,394
1,224,897 (63,069) (15,920) 409 1,146,317 (528,037)
- - - - - 4,175,000
- - 408,371 - 408,371 542,610
- - - - - (4,123,522)
(408,371) - - - (408,371) (543,653)
816,526 (63,069) 392,451 409 1,146,317 (477,602)
6,130,887 115,862 674,829 9,222 6,930,800 7,408,402
$ 6,947,413 $ 52,793 $ 1,067,280 $ 9,631 $ 8,077,117 $ 6,930,800
The accompanying notes are an integral part of these financial statements.
FS-5
EAST PENNSBORO 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. 2012
Total net change in fund balances -Governmental funds $ 1,146,317
Amounts reported for governmental activities in the statement of activities are different because:
Capital outlays are reported as expenditures in the governmental funds. However, in the statement of activities, the cost of those assets is allocated
over their estimated useful lives as depreciation expense. During the year, the amount by which capital outlays exceed depreciation expense is as follows:
Capital outlays $ 245,928
Depreciation expense (1,676,565) (1,430,637)
Because some taxes will not be collected until several months after the end of the fiscal year, they are not considered as available revenues in the
governmental funds. Deferred tax revenues increased (decreased) during the year as follows:
Real estate taxes 60,388
Earned income taxes 48,000 108,388
Bond proceeds are reported as other financing sources in the governmental funds, but are shown as liabilities in the statement of net assets.
During the year, no bonds or notes payable were issued. -
Bond issuance costs, bond discounts and premiums, and the difference between new bonds and any related refunded bonds are reported
as expenditures in the governmental funds. These costs are amortized over the life of the bonds
Costs incurred during the year -
Amortization expense (75,388) (75,388)
Payments of bond principal are reported as expenditures in the governmental funds. The principal repayment reduces the liability for
bonds payable in the statement of net assets. 2,888,000
Payments of interest are reported as expenditures in the governmental funds when the payment is clue. However, in the statement of activities, the
expense is measured by the amount accrued during the year. The liability for accrued interest decreased during the year. 11,699
Payments of compensated absences are reported as expenditures in the governmental funds. In ttie statement of activities, the expense is
measured by the amount earned by employees during the year. The liability for compensated absences increased during the year. (32,541)
Payments of other post-employment benefits are reported as expenditures in the governmental funds. In the statement of activities, the expense
includes actuarial estimates, primarily for amortization of prior costs The liability for other post-employment benefits increased during the year. (80,182)
Change in net assets -Governmental activities $ 2,535,656
The accompanying notes are an integral part of these financial statements.
FS-6
EAST PENNSBORO AREA SCHOOL DISTRICT
STATEMENT OF NET ASSETS -PROPRIETARY FUNDS
JUNE 30, 2012
(With Summarized Financial Information for June 30, 2011)
Food Service
Assets
Cash and cash equivalents
Due from other governments
Due from general fund
Inventories
Total current assets
Furniture and equipment (net of accumulated depreciation)
Total assets
2012
$ 266,509
7,512
52,433
20, 903
347, 357
151, 067
$ 498,424
2011
$ 200,659
1, 737
37,118
16,171
255,685
181,679
$ 437,364
Liabilities
Accounts payable
Deferred revenues
Total curre~ t liabilities
Net assets
Invested in capital assets (net of related debt)
Unrestricted
Total net assets
Total liabilities and net assets
$ 45, 591
25,273
70, 864
151, 067
276,493
427, 560
$ 498,424
$ 37,396
21,296
58,692
181,679
196, 993
378,672
$ 437, 364
The accompanying notes are an integral part of these financial statements.
FS-7
EAST PENNSBORO AREA SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET ASSETS -PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2012
(With Summarized Financial Information for the Year Ended June 30, 2011)
Food Service
2012 2011
Operating revenues -Food service revenue $ 804,138 $ 773,762
Operating expenses
Other purchased service 1,098,902 1,099,409
Food and milk 46,042 55,992
Other supplies 34,897 35,302
Depreciation 38,722 41,116
Total operating expenses 1,218,563 1,231,819
Operating income (loss) (414,425) (458,057)
Nonoperating revenues (expenses)
Investment earnings 719 786
State sources -meal subsidies 39,944 41,580
Federal sources -commodities 46,042 55,992
Federa! sources -meal subsidies 376,608 372,114
Total nonoperating revenues (expenses) 463,313 470,472
Income (loss) before transfers 48,888 12,415
Transfers from other funds - 1,043
Change in net assets 48,888 13,458
Net assets -beginning 378,672 365,214
Net assets -ending $ 427,560 $ 378,672
The accompanying notes are an integral part of these financial statements.
FS-8
EAST PENNSBORO AREA SCHOOL DISTRICT
STATEMENT OF CASH FLOWS -PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2012
(With Summarized Financial Information for the Year Ended June 30, 2011)
Food Service
2012 2011
Operating activities
Cash received from users $ 808,487 $ 776,826
Cash payments to suppliers for goods and services (1,101,893) (1,112,956)
Cash payments for other operating expenses (28,816) (32,222)
Net cash provided by (used for) operating activities (322,222) (368,352)
Non-capital financing activities
State sources 38,254 44,320
Federal sources 357,208 394,584
General fund contributed services - 1,043
Net cash provided by (used for) non-capital financing activities 395,462 439,947
Capital and related financing activities
Cash payments for equipment (8,109) -
Net cash provided by (used for) capital and related financing activities (8,109) -
Investing activities
Investment earnings 719 787
Ne± cash provided by (used for) :nvesting act;Vltles 71 g 787
Net change in cash and cash equivalents
Cash and cash equivalents -beginning
Cash and cash equivalents -ending
Reconciliation of operating income (loss) to net cash
provided by (used for) operating activities
Operating income (loss)
Adjustments to reconcile operating income (loss) to net cash
provided by (used for) operating activities
Depreciation
Donated commodities
Net change in other assets and other liabilities
Inventories
Accounts payable
Deferred revenue
Total adjustments
Net cash provided by (used for) operating activities
65,850 72,382
200,659 128,277
$ 266,509 $ 200,659
$ (414,425) $ (458,057)
38, 722
46, 042
41,116
55, 992
(4,732)
8,195
3, 976
92,203
3,079
(13, 547)
3, 065
89,705
$ (322,222) $ (368,352)
The accompanying notes are an integral part of these financial statements.
FS-9
EAST PENNSBORO AREA SCHOOL DISTRICT
STATEMENT OF NET ASSETS -FIDUCIARY FUNDS
JUNE 30, 2012
(With Summarized Financial Information for June 30, 2011)
Assets
Cash and cash equivalents
Investments
Total assets
Private
Purpose
Trusts
$ 19,358
924, 294
$ 943,652
$ -
Student
Activities
$ 91,419
$ 91,419
$ 91,419
91,419
Liabilities
Due to student groups
Total liabilities
Net assets
Restricted
Total liabilities and net assets
Totals
2012
$ 110,777
924,294
$ 1,035,071
$ 91,419
91,419
2011
$ 105,494
924,291
$ 1,029,785
$ 93,617
93,617
943,652 - 943,652 936,168
$ 943,652 $ 91,419 $ 1,035,071 $ 1,029,785
The accompanying notes are an integral part of these financial statements.
FS - 10
EAST PENNSBORO AREA SCHOOL DISTRICT
STATEMENT OF CHANGES IN NET ASSETS -FIDUCIARY FUNDS
YEAR ENDED JUNE 30, 2012
(With Summarized Financial Information for June 30, 2011)
Additions
Investment earnings
Gifts and contributions
Total additions
Deductions
Scholarships awarded
Change in net assets
Net assets, beginning
Net assets, ending
Private Purpose Trust
2012 2011
$ 7,484
10, 000
17,484
$ 10,834
10, 834
10, 000 5, 000
7,484 5,834
936,168 930, 334
$ 943,652 $ 936,168
The accompanying notes are an integral part of these financial statements.
FS-11
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2012
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
East Pennsboro Area School District is the level of government which has oversight responsibility and control
over activities related to public school education. The report includes services provided by the District to residents
within the boundaries of the Cumberland County Municipality of East Pennsboro Township. Services provided
include a comprehensive curriculum for primary and secondary education as well as special education and
vocational education programs. The District receives revenue from local, state and federal sources and must
comply with the requirements of these funding sources.
The financial statements of East Pennsboro Area School District have been prepared in accordance with
generally accepted accounting principles as applied to governmental units. The Governmental Accounting
Standards Board (GASB) is the authoritative standard-setting body for the establishment of governmental
accounting and financial reporting principles. Accounting guidance is also provided through the Comptroller's
office for Pennsylvania Department of Education. The more significant of these accounting policies are as follows:
Reporting entity
GASB establishes criteria for determining the activities, organizations and functions of government to be included
in the financial statement of the reporting entity. In evaluating the District as a reporting entity, management has
addressed a!! potential component units which may or may not fall Y1r'ii iin the SchCoi'S flnaiiClai aii,Clii ~tablllty. The
criteria used to evaluate component units for possible inclusion as part of the District's reporting entity are:
The economic resources received or held by the separate organization are entirely for the direct benefit of the
District or its constituents.
The District is entitled to (or has the ability to} access a majority of the economic resources received or held
by the separate organization.
The economic resources received or held by an individual organization that the District is entitled to (or has
the ability to) access is significant to the District.
There are no component units that the District feels meet all the above criteria for inclusion in this reporting entity.
Jointly-governed organizations
The District is a participant in four jointly-governed organizations, each of which is a separate legal entity that
offers services to the District and its residents. Each of these entities serves several school districts and/or
municipalities and therefore are not included in this reporting entity. These entities do not have taxing power, but
are required to adopt an annual budget, which is funded primarily by its member Districts or others that use its
services. Complete financial statements for these entities can be obtained from the respective entity's
administrative office.
FS-12
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Jointly-governed organizations (Cont'd.)
Capital Area Intermediate Unit provides special education services and programs.
Cumberland Perry Area Vocational Technical School provides vocational and technical education services
and programs.
Harrisburg Area Community College provides community college education services and programs.
Cumberland County Tax Bureau provides earned income tax collection services.
Basis of presentation -District-wide financial statements
District-wide financial statements (i.e., the statement of net assets and the statement of activities) report
information on all of the nonfiduciary activities of the District. As a general rule the effect of interfund activity has
been eliminated from these statements. Governmental activities, which normally are supported by taxes and
intergovernmental revenues, are presented separately from business-type activities which rely to a significant
extent, on fees and charges for support.
District-wide financial statements are presented using the economic resources measurement focus and the
accrual basis of accounting as are the proprietary fund and the fiduciary fund financial statements. Revenues are
recognized when earned and expenses are recognized when a liability is incurred, regardless of the timing of
related cash flows. Real estate and personal taxes are recognized as revenues in the year for which they are
levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the
provider have been met. Net assets (total assets less total liabilities) are used as a practical measure of economic
resources and the operating statement includes all transactions and events that increased or decreased net
assets. Depreciation and amortization are charged as an expense against current operations. Capital assets (net
of accumulated depreciation) and bonds payable (net of unamortized costs) are presented in the statement of net
assets.
The statement of activities demonstrates the degree to which the direct expenses of given functions or programs
are offset by program revenues. Direct expenses are those that are clearly identifiable within a specific function or
program. Program revenues include charges to customers who purchase, use, or directly benefit from goods,
services, or privileges provided by a given function or program. In addition, program revenues include grants and
contributions that are restricted to meeting the operational or capital requirements of a particular function or
program. Taxes and other items not properly included among program revenues are presented as general
revenues.
Basis of presentation -Fund financial statements
Fund financial statements are also provided for all governmental funds, proprietary funds, and fiduciary funds of
the District. Major individual governmental funds and major individual proprietary funds are presented as separate
columns in the fund financial statements. Nonmajor funds, if any, are aggregated and presented in a single
column. Fiduciary funds are presented by fund.
FS-13
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
SUMMARY OF SIGNIFICANT ACCOUNTING POt_ICIES (Cont'd.)
Basis of presentation -Fund financial statements (Cont'd.)
Governmental funds are presented using the current financial resources measurement focus and the modified
accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are received within the current period or soon enough
thereafter to pay liabilities of the current period. For this purpose, the District considers tax revenue to be
available if received within 90 days of the end of the fiscal period. Revenue from federal, state and other grants
designated for payment of specific expenditures is recognized when the related expenditures are incurred;
accordingly, when such funds are received, they are recognized as deferred revenues until earned. Expenditures
generally are recognized when a liability is incurred, as under accrual accounting. However, debt service
expenditures, as well as expenditures related to compensated absences and claims and judgments, are
recognized only when payment is due.
Proprietary funds generally follow standards for accounting and financial presentation for private business
enterprises to the extent that those standards do not conflict with or contradict guidance of the GASB. Proprietary
funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses
generally result from providing services and producing and delivering goods in connection with the fund's principal
ongoing operations. Operating expenses for the District's proprietary fund include food production costs, supplies,
administrative costs, and depreciation on capital assets. All revenues or expenses not meeting this definition are
reported as nonoperating revenues and expenses.
Fund accounting
The accounts of the District are organized on the basis of funds, each of which is considered a separate
accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing
accounts which comprise its assets, liabilities; fund equity, revenues, and expenditures, or expenses, as
appropriate. Resources are allocated to and accounted for in individual funds based upon the purposes for which
they are to be spent.
When both restricted and unrestricted resources are available for use, it is the District's general policy to use the
restricted (primarily operating grants) resources first, then unrestricted resources as they are needed.
The District has the following major types of funds:
Governmental Funds -These funds account for the activities through which most of the District's operations
are provided.
Proprietary Funds -These funds account for the operations of the District that are financed and operated in a
manner similar to private business enterprises.
FS - 14
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Basis of presentation -Fund financial statements (Cont'd.)
Fund accounting (Cont'd.)
Fiduciary Funds -These funds account for the assets held by the District as a trustee or agent for individuals,
private organizations and/or governmental units and are therefore not available to support the District's own
programs.
The District presents the following major governmental funds:
The General Fund is the primary operating fund. It accounts for all financial resources except those required
to be accounted for in another fund.
An operating budget is adopted prior to the beginning of each year on a modified accrual basis of
accounting. The General Fund is the only fund for which a budget is legally required.
The Pennsylvania School Code dictates specific procedures relative to budget adoption and financial
statement presentations. The District; before levying annual school taxes; is required to prepare an
operating budget for the succeeding fiscal year. This process includes the publishing of notices by
advertisement, that the proposed budget has been prepared and is available for public inspection at the
administrative office of the District, and that public hearings are held on the proposed operating budget
which are required to be scheduled at least ten days prior to when final action on adoption is taken by the
Board.
Legal budgetary control is maintained at the sub-function/major object level. The Board may approve
transfers of funds appropriated to any particular item of expenditure in accordance with the Pennsylvania
School Code. Management may amend the budget at the sub-function/sub-object level without Board
approval, provided it is not at a higher level than the Board adopted budget.
In order to presence a portion of an appropriation for which an expenditure has been committed by a
purchase order, contract or other form of commitment, an encumbrance is recognized. Unused
encumbrances expire at the end of each year.
Included in the budget are program budgets as prescribed by the federal and state agencies funding the
program. These budgets are approved on a program by program basis by the federal and state funding
agencies.
Capital Projects Funds can consist of more than one project to separately account for each project. Each
issuance of new debt (primarily bonds) is a project to account for the debt proceeds and the expenditure of
those proceeds. The District also maintains a capital reserve account for funds transferred from the General
Fund and the expenditure of those funds for capital outlays.
FS - 15
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Basis of presentation -Fund financial statements (Cont'd.)
Fund accounting (Cont'd.)
The Special Revenue Fund accounts for proceeds of other specific revenue sources that are restricted to
expenditures of those funds for other specified purposes.
The District reports the following proprietary fund:
The Food Service Fund accounts for the operations of the cafeterias.
The District reports the following fiduciary funds:
The Activities Fund accounts for programs operated and sponsored by various clubs and organizations within
the schools.
The Private Purpose Trusts account for contributions to and interest earnings on scholarship funds donated to
the District and for payments of scholarship funds to selected students.
Cash and cash equivalents and investments
Cash and cash equivalents are considered to be cash on hand, demand deposits (including pooled investments),
and short-term investments with original maturities of three months or less from the date of acquisition.
The types of authorized investments are limited by State regulations. Pooled investment funds are required to be
operated in accordance with State regulations.
Investments, including pooled investments, are presented at fair value.
Taxes and taxes receivable
Real estate taxes are levied as of July 1 with a legal, enforceable claim against the property andlor taxpayer.
Amounts not collected within six months (December 31) are considered delinquent and submitted to outside
agencies/entities for collection actions.
Receivables and payables between funds
Activity between funds that represent lending/borrowing arrangements outstanding at the end of the fiscal year
are referred to as "due to/from other funds". Any residual balances outstanding between the governmental
activities and business-type activities are reported in the district-wide financial statements as "internal balances".
Balances between funds are considered to be short-term items pending periodic repayments.
FS-16
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Inventories and prepaid items
Inventories are presented at the lower of cost or market on a first-in, first-out basis, and are expended when
consumed. Donated commodities are recognized as revenue and are inventoried at an estimated cost value.
Certain payments, if any, to vendors reflect expenses applicable to future periods and are presented as prepaid
items in both district-wide and fund financial statements.
Capital assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, sidewalks, and
similar items), are presented in the applicable governmental or business-type activities columns in the district-
wide financial statements. Capital assets are defined by the District as assets with an initial, individual cost of
more than $ 1,000 and an estimated useful life in excess of one year. Management has elected to include certain
homogeneous groups with individual costs of less than $ 1,000 as capital assets for financial presentation
purposes. In addition, capital assets purchased with long-term debt may be capitalized regardless of the
thresholds established. Such assets are presented at historical cost or estimated historical cost if purchased or
%uns trii%ted .
Major outlays for capital assets and improvements are capitalized as projects are constructed. The costs of
normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not
capitalized.
Capital assets are depreciated using the straight-line method over the following estimated useful lives:
Assets
Government Business-type
Activities Activities
Buildings
Building and site improvements
Furniture and equipment
Library books
Long-term liabilities
40 -
15to40 -
5to15 5to12
7 -
In the district-wide financial statement, and proprietary fund types in the fund financial statements, bonds and
notes payable and other long-term obligations are presented as liabilities in the applicable governmental activities
or proprietary fund statement of net assets. Refunding costs and bond premiums and discounts are amortized
over the life of the bonds using the effective interest method. Bond issuance costs are presented as deferred
charges and amortized over the term of the related debt.
FS - 17
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Long-term liabilities (Cont'd.)
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as
bond issuance and refunding costs, as current period expenditures. The face amount of debt issued is presented
as other financing sources while discounts and refunding costs on debt issuances are presented as debt service
expenditures. Issuance costs, whether or not withheld from the actual debt proceeds received, are presented as
support service expenditures.
Net assets
Net assets represent the difference between assets and liabilities. In the district-wide financial statements and
proprietary fund financial statements, net assets are classified in the following categories:
Invested in capital assets (net of related debt) -This category groups all capital assets into one component
of net assets. Accumulated depreciation and outstanding debt that are attributable to the acquisition,
construction or improvement of these assets reduce this category.
Restricted -Amounts constrained to be used for a specific purpose as per: External parties, contributors or
enabiing iegisiation.
Unrestricted -This category presents the net assets of the District, which are not restricted for any project or
other purpose. However, these funds may be committed or assigned for specific projects or purposes in the
fund financial statements.
Governmental fund balances
GASB has established criteria for classifying fund balances into specifically defined classifications based on a
hierarchy that reflects the extent to which the District is bound to honor constraints on how those funds can be
spent. Classifications of fund balances are:
Nonspendable -Amounts that cannot be spent because they are either in a (a) non-spendable form (i.e.
inventories) or (b) legally or contractually required to be maintained intact (i.e. the principal of a permanent
fund).
Restricted -Amounts constrained to be used for a specific purpose as per: External parties, contributors or
enabling legislation.
Committed -Amounts constrained to be used for a specific purpose as per: The District's highest level of
decision making authority which is the Board of School Directors.
Assigned -Amounts intended to be used for a specific purpose as per: Committee or individual authorized by
the Board of School Directors (for example a budget or finance committee, or business manager/financial
officer).
FS - 18
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Governmental fund balances (Cont'd.)
Unassigned -Amounts available for any purpose (amounts that are not Nonspendable, Restricted,
Committed or Assigned) in the General Fund.
Estimates
The preparation of financial statements in conformity with .generally accepted accounting principles requires
management to make estimates and assumptions that affect certain presented amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Recent accounting standards
There are several GASB pronouncements that will become effective for future reporting periods. Of the
pronouncements effective for the year ending June 2013, the District does not currently anticipate any significant
impact on the District's financial statements.
GASB Statement No. 63, effective for the year ending June 2013, is to improve financial reporting by
standardizing the presentation of deferred outflows of resources, deferred inflows of resources, and their effects
on the District's net position, rather than net assets. This pronouncement will impact terminology and presentation
of the Statement of Net Assets (page FS-1 ).
GASB Statement No. 68, effective for the year ending June 2015, is to improve accounting and financial reporting
for pensions. This pronouncement will impact the Statement of Net Assets (page FS-1), the Statement of
Activities (page FS-2), and the Pension Plan disclosures in the Notes to Financial Statements. The District has
not yet determined what effect GASB 68 will have on the District's financial statements.
Comparative information
Comparative totals for the prior year have been presented in the accompanying financial statements in order to
provide an understanding of changes in the District's financial position and operations. Certain amounts
presented in the prior year have been reclassified in order to be consistent with current year's presentation.
However, presentations of prior year totals by fund and activity type have not been presented in each of the
statements since their inclusion would make the statements unduly complex and difficult to read. Summarized
comparative information should be read in conjunction with the District's financial statements for the year ended
June 30, 2011, from which the summarized information was derived.
Subsequent events
In preparing these financial statements, the District has evaluated events and transactions for potential
recognition or disclosure through January 4, 2013, the date the financial statements were available to be issued.
FS-19
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
CASH, CASH EQUIVALENTS AND INVESTMENTS
Pennsylvania statutes provide for investment of District funds into authorized investment types including U.S.
Treasury bills, other short-term U.S. and Pennsylvania government obligations, and insured or collateralized time
deposits and certificates of deposit. The statutes do not prescribe regulations related to demand deposits;
however, they do allow the pooling of funds for investment purposes.
Custodial credit risk is the risk that in the event of a depository institution failure, the District's deposits may not be
returned to it. The District policy requires that all deposits in excess of federal deposit insurance coverage be
collateralized by the depository institution with approved collateral as provided by law.
At June 30, 2012, the District's deposits totaled $ 1,886,868 and the depository institution balances totaled
$ 2,364,903. Of the depository institution balances, $ 368,735 was covered by federal depository insurance
and $ 1,996,168 was collateralized under Act No. 72 of the 1971 Session of the Pennsylvania General
Assembly, in which financial institutions were granted the authority to secure deposits of public bodies by
pledging a pool of assets, as defined in the Act, to cover all public funds deposited in excess of Federal
Depository Insurance limits. The pledged collateral is held by the Federal Reserve Bank, but is not titled in the
District's name.
The rlictriCt also has Cash equivalents :^.~itf'. tho PennSyl:~anla L.^.^.al G^:~ernment In:~eStment Tr~c~t (DI GIT)
and the Pennsylvania School District Liquid Asset fund (PSDLAF) that operate a common law trusts
established pursuant to the Intergovernmental Cooperation Act and related statutes for the purpose of pooling
investments. It is a fundamental policy of these trusts to maintain a net asset value of $ 1 per share, but there
can be no assurance that the net asset value will not vary from $ 1 per share. They may only purchase
securities which are permitted under PA law. At June 30, 2012, the District's deposits in PLGIT and PSDLAF
totaled $ 5,064,619 and $ 496,464, respectively.
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The
District does not have a formal investment policy for interest rate risk. The weighted average maturity of the
securities held by PLGIT is generally less than 90 days.
Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The District
does not have a formal investment policy for credit risk. The District's deposits in PLGIT were rated "AAAm" by
Standard & Poor's.
Cash and cash equivalents at June 30, 2012 are as follows:
Governmental activities
Business-type activities
Fiduciary funds
Cash and Cash
Equivalents Investments
$ 7,070,665 $ -
266, 509 -
110, 777 924, 294
$ 7.447.951 $ 924 294
FS - 20
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
• JUNE 30, 2012
CASH, CASH EQUIVALENTS AND INVESTMENTS (Cont'd.)
Investments consist of certificates of deposits with original maturities of more than three months from the date of
acquisition.
TAXES RECEIVABLE
Taxes receivable are as follows:
Taxes Taxes
Receivable Allowance for Receivable Deferred
(Gross) Uncollectibles (Net) Tax Revenue
Real estate taxes $ 445,245 $ (13,500) $ 431,745 $ 325,466
Earned income taxes 1,795,407 - 1,795.407 1.075.000
General Fund 2,240,652 (13,500) 2,227,152 1,400,446
Full accrual adjustment - - - (1,400.446)
Governmental activities $ 2.240 652 $ (13.500) $ 2 227 ~ 52 ~ -
DUE FROMITO OTHER FUNDS AND INTERFUND TRANSFERS
Interfund balances are as follows:
Assets Liabilities
Food Service Fund $ 52,433 $ 52,433 General Fund
Interfund transfers were as follows:
Other financing sources Other financing uses
Capital Reserve Fund $ 408,371 $ 408,371 General Fund
DUE FROM OTHER GOVERNMENTS
Due from other governments are as follows:
Local sources -other taxes
State sources
Federal sources
Governmental Business-type
Activities Activities
$ 28,655 $ -
713, 330 670
263.680 6.842
$ 7 512
FS-21
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
CAPITAL ASSETS
Changes in capital assets were as follows:
Governmental activities
Capital assets not being depreciated
Land
Beginning Ending
Balance Increases Decreases Balance
$ 325, 826 $ - $ - ~ $ 325, 826
Capital assets being depreciated
Buildings and improvements
Furniture and equipment
Library books
Accumulated depreciation
Buildings and improvements
Furniture and equipment
Library books
Capital assets being depreciated, net
Governmental activities capital assets, net
Business-type activities
Capital assets being depreciated
Furniture and equipment
Accumulated depreciation
Furniture and equipment
Capital assets being depreciated, net
57,398,735 - - 57,398,735
5,934,663 226,497 - 6,161,160
1.058,433 19,431 - 1,077.864
64,391,831 245.928 - 64,637,759
(23,872,657) (1,463,782) - (25,336,439)
(4,878,233) (184,464) - (5,062,697)
(957,663) (28,319) - (985.982)
(29,708,553) (1,676,565) - (31.385,118)
34,683,278 (1,430,637) - 33,252,641
35.009.104 (1.430.637) ~ - $ 33 578 467
$ 638,201 $ 8,110 $ 13,293 $ 633,018
(456,522) (38.722) (13,293) (481,951)
181,679 (30,612) - 151..067
Business-type activities capital assets, net $ 181,679 $ (30 612) $ - $ 151967
FS-22
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
CAPITAL ASSETS (Cont'd.)
Depreciation expense was charged to functions/programs as follows:
Governmental activities
Instruction $ 936,784
Instructional student support 389,935
Administrative and financial support 196,012
Operation and maintenance of plant 132,631
Transportation 7,399
Student activities 13,804
Business-type activities -Food service $ 38 722
DEFERRED REVENUES
Governmental funds present deferred revenue in connection with receivables for revenues that are not
considered to be available to pay !labilitles of the current period. Governmenta! f~.:nds also defer revenue
recognition with resources that have been received, but not yet earned. Deferred revenues in the General fund of
$ 1,597,075 consist of $ 1,400,466 taxes receivable not received within 90 days of the end of the fiscal period,
and $ 196,609 of resources that have been received but not yet earned.
Deferred revenue in the proprietary funds and the district-wide financial statements represents resources that
have been received but not yet earned.
LONG-TERM LIABILITIES
Changes in all long-term liabilities were as follows:
Beginning Ending Due Within
Balance Increases Decreases Balance One Year
Governmental Activities:
Bonds and notes payable $ 26,450,000 $ - $ (2,888,000) $ 23,562,000 $ 3,435,000
Compensated absences 593,078 282,541 (250,000) 625,619 160,000
Other post employment benefits 352.977 215,916 (135,734) 433.159 140.000
$ 27,396.055 $ 498 457 $ (3,27,734) $ 24,620,778 ~ 3.735.000
FS-23
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
LONG-TERM LIABILITIES (Cont'd.)
General obligation bonds and notes payable
Changes in bonds and notes payable were as follows:
Beginning Scheduled Ending
Balance New Issue Refunding Redemptions Balance
Series of 2009 $ 6,325,000 $ - $ - $ 1,930,000 $ 4,395,000
Series A of 2009 13,625,000 - - 75,000 13,550,000
Series of 1999 note 2,325,000 - - 290,000 2,035,000
Series of 2011 note 4,175.000 - - 593.000 3,582,000
Amounts
Due Within
Interest Rates Maturity Date Callable Date One Year
Series of 2009 2.lJU% to 2.50% October 2014 Not caiiabie $ 1,955,000
Series A of 2009 3.00% August 2020 February 2015 475,000
Series of 1999 note Variable February 2018 Not callable 305,000
Series of 2011 note 2.68% August 2021 Not callable 700,000
Scheduled debt service requirements, payable by the General Fund, are as follows:
Year Ending June 30
Principal Interest Total
2013 $ 3,435,000 $ 589,081 $ 4,024,081
2014 3,581,000 508,978 4,089,978
2015 3,497,000 419,586 3,916,586
2016 3,094,000 328,325 3,422,325
2017 3,192,000 237,751 3,429,751
2018-2022 6,763,000 273,540 7.036.540
$ 23 562,000 $ 2,357,261 $ 25,19 261
FS-24
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
LONG-TERM LIABILITIES (Cont'd.)
Compensated absences
Compensated absences (those for which employees received pay) are presented using the termination payment
method. A liability is computed using estimates which apply historical data to current factors. The District
maintains records of unused leave and applies the contracted rate for employees eligible for termination
payments. The District allows only restricted sabbatical leave and therefore does not present any liability in
advance of the sabbatical. Payments for compensated absences are made in the year the absence is taken or the
employee retires. When an employee retires, the payout is as follows:
Vacation (administrative personnel only) -unused vacation days (not to exceed 5 days) are paid at the time of
separation.
Sickness - no payout required except to retirees who meet the requirements below for severance payments
Personal days -unused personal days (not to exceed 5 days) may be carried over but no payment is required
upon termination
Retirement severance payments -retiring employees with at least seven consecutive years of District
employment immediately prior to retirement, at least twenty years of service to the District, and at least thirty
years of total school service credited under the State Retirement System are eligible for severance payments
based on years of service and accumulated sick leave days. The retirement payment amount is equal to
$ 300 times the number of years of continuous District service to a maximum of $ 9,000 for thirty years. In
addition, eligible retirees are reimbursed for accumulated unused sick leave in excess of one hundred days to
a maximum of three hundred days at a rate of $ 50 per day for a maximum payment of $ 10,000 for
accumulated sick leave. Additional severance is payable to retirees with a minimum of twenty years of service
to the District of $ 20,000 payable over five years. This new severance benefit replaces post-employment
health benefits provided under the prior contract. Total maximum severance payments to each eligible retiree
under the new collective bargaining agreement in effect through August 31, 2013 are $ 39,000.
Other post employment benefits (OPEBs)
OPEBs are presented in accordance with GASB Statement No. 45 (GASB 45), which requires their recognition of
OPEBs as part of the compensation package of active employees for services rendered. The cost and obligation
for OPEBs are required to be measured by an actuarial valuation.
Plan description
All eligible retirees (see pension plan) including teachers, administrators, and support staff are allowed to
continue coverage for themselves and their dependents until the retiree attains the Medicare eligible age.
FS - 25
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
LONG-TERM LIABILITIES (Cont'd.)
Other post employment benefits (OPEBs) (Cont'd.)
Retiree's premiums are less than the District's actual cost to provide health care coverage to retirees. The
premium amount retirees pay is a blended rate for. covering both active and retired Plan members. The fact
that the blended rate that. retirees pay is less than the cost of covering retired members and their beneficiaries
results in what is known as an "implicit rate subsidy," which creates an additional cost to the District.
Participant information
Active participants 298
Vested former members -
Retired participants 46
Funding Policy
344
The District funds Plan liabilities on a "pay-as-you-go" basis, and has not established an OPEB trust fund to
accumulate assets to fund Plan obligations. 1 he District has no statutory or contractual obligation to fund the
Plan and would only do so at the District's discretion.
Annual OPEB cost and net OPEB obligation
The District's annual OPEB cost (expense) is calculated based on the actuarially determined annual required
contribution (ARC} of the employer. The ARC represents the amount needed to fund the cost of benefits
attributed to the current year, plus an amortized portion of the unfunded actuarial accrued liability (UAAL). The
District has selected a blended amortization method, which results in the UAAL being amortized over a
remaining period of 4 years.
Components of the District's annual OPEB cost, the amount actually contributed to the Plan, and changes in
the net OPEB obligation are as follows:
Employer normal cost
Amortization of unfunded actuarial accrued liability
Annual required contribution
Interest on the net OPEB obligation
Adjustment to the ARC
Annual OPEB cost
Contributed to the plan
Increase in net OPEB obligation
Net OPEB obligation -beginning
Net OPEB obligation -ending
$ 58,635
201.298
259, 933
15,884
(59,901)
215,916
(135, 734)
80,182
352.977
FS - 26
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
LONG-TERM LIABILITIES (Cont'd.)
Other post employment benefits (OPEBs) (Cont'd.)
Annual OPEB cost and net OPEB obligation (Cont'd.)
The percentage of annual OPEB cost contributed was as follows:
Year ended
Percentage of
Annual Annual OPEB Net OPEB
OPEB Cost Cost Contributed Obligation
June 2012
Funding status and funding progress
$ 215,916
62.86% $ 433,159
The District's actuarial accrued liability (AAL) for OPEBs as of July 2010 was $ 1,186,187. There are no Plan
assets, thus, the entire amount is unfunded. The District does not have any current plans to fund the AAL.
Actuarial UAAL as
Actuarial Actuarial Accrued a % of
'valuation 'value of Liability Unfunded Funded Covered Covered
Date Assets (AAL) AAL Ratio Payroll Payroll
July 2010 $ - $ 1,186,187 $ 1,186,187 0.00% $14,148,249 8.38%
Actuarial assumptions and methods
Actuarial assumptions and methods used in the July 2010 actuarial valuation include the following:
Interest rate 4.50%
General inflation rate 3.00%
Health care cost trend rate 6.50% in 2012 decreasing by 0.5% per year to 5.50% in
2014. Rates gradually decrease from 5.30% in 2015 to
4.20% in 2019 and later.
Actuarial cost method Benefits are allocated on a level basis over the earnings of
an individual from date of hire to assumed retirement date
Amortization (blended) Active employees over expected future service period, and
retirees over expected future payment period
Actuarial evaluations on an ongoing basis involve estimates of the reported amounts and assumptions about
the probability of events far into the future. Examples include assumptions about future employment,
mortality, and the healthcare cost trend. Actuarially determined amounts are subject to continual revision as
actual results are compared to past expectations and new estimates are made about the future.
FS-27
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
LONG-TERM LIABILITIES (Cont'd.)
Other post employment benefits (OPEBs) (Cont'd.)
Actuarial assumptions and methods (Cont'd.)
Projections of benefits are based on the types of benefits provided under the plan at the time of each
valuation and on the pattern of sharing of benefit costs between the employer and plan members to that point
in time.
Actuarial calculations reflect along-term perspective, and consistent with that perspective, actuarial methods
and assumptions used include techniques that are designed to reduce short-term volatility in accrued
liabilities.
The required schedule of funding progress in the other required supplementary information (ORSI)
immediately following the notes to financial statements, is to present multi-year trend information about
whether the actuarial value of Plan assets is increasing or decreasing over time relative to the actuarial
accrued liability for benefits. However, because the District maintains no Plan assets, information relative to
Plan asset disclosures is not applicable. Additionally, because the June 2009 year was the implementation
year of GASB 45; the OPEB disclosure standards were implemented prngpeGtjvely; therefore, the C)R$I does
not reflect similar information for three consecutive valuations.
OPERATING LEASES
The District leases photocopying machines and modular office buildings pursuant to various lease agreements
which are being accounted for as operating leases. Total operating lease payments included in General Fund
expenditures for the year ended June 30, 2012 amounted to approximately $ 155,000. Minimum net lease rental
payments for future periods are expected to be as follows:
2012-2013 $ 150,086
2013-2014 150, 086
2014-2015 150, 086
2015-2016 100.058
Total minimum payments required $ 550,316
MANAGEMENT SERVICES
The cafeteria facilities of the District are operated by a third party vendor. Under the terms of the contract, the
vendor provides for the operation and maintenance of food services as required by law, with the policies subject
to the approval of the District. Operating costs, management fees and administrative costs are billed monthly to
the District.
FS - 28
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
PENSION PLAN
Substantially all full-time and part-time employees of the District participate in the plan. The District recognizes
expenditures or expenses equal to its contractually-required contributions, subject to the modified accrual basis of
accounting in governmental funds.
The District contributes to Public School Employees' Retirement System (the System), a governmental cost
sharing multiple-employer defined benefit plan. The plan is under the authority of The Public School Employees'
Retirement Code (the Code), as amended. The plan provides retirement and disability, legislatively mandated ad
hoc cost-of-living adjustments, and healthcare insurance premium assistance to qualifying annuitants. The
System issues a comprehensive annual financial report that includes financial statements and required
supplementary information for the plan. A copy of the report may be obtained by writing to the System at PO Box
125, Harrisburg, PA 17108-0125, or on the System's website.
The contribution policy. is established in the Code and requires contributions by active members, employers and
the Commonwealth. Contribution rates for active members are set by law and are dependent upon members'
class. In most cases, the member contribution rates based on qualified compensation are as follows:
Membership Class T-C Active members hired before July 22, 1983 5.25%
A,Membersh,p Class T-C "Members hared on or after J;.'ly 2', 1983 6.25°~
and who were active or inactive as of July 1, 2001
Membership Class T-D Active members hired before July 22, 1983 6.50%
Membership Class T-D Members hired on or after July 22, 1983 7.50%
and who were active or inactive as of July 1, 2001
Membership Class T-D Members hired from July 1, 2001 thru June 30, 2011 7.50%
Members hired after June 30, 2011 are automatically Membership Class T-E and have a member contribution
rate of 7.50% (base rate). Members hired after June 30, 2011 who elect Membership Class T-F have a member
contribution rate of 10.30% (base rate). Membership Class T-E and T-F are affected by a `shared risk' provision in
Act 120 of 2010 that in fiscal years could cause the Membership Class T-E contribution rate to fluctuate between
7.50% and 9.50% and Membership Class T-F contribution rate to fluctuate between 10.30% and 12.30%.
Contributions required of employers are based upon an actuarial valuation. For the fiscal year ended June 2012
the employer contribution rate was 8.65 percent of covered payroll, composed of 8.00 percent for pension
benefits and 0.65 percent for healthcare insurance premium assistance. District contributions to the System for
years ended June 2012, 2011, and 2010 were $ 1,252,992, $ 843,833 and $ 823,161, respectively. Those
amounts are equal to the required contributions for each year.
FS - 29
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
RISK MANAGEMENT
Health insurance
The District is a member of South Central Trust for processing claims and obtaining reinsurance through
commercial insurance carriers. The District has joined three other school districts and two other educational
institutions in a risk sharing pool. The pool has reinsurance for claims in excess of $ 150,000 specific (per
person). The District has a maximum lifetime benefit of $ 5,000,000 per person. Financial statements of the trust
are provided to member districts. District transactions within the trust were as follows:
Cash balance in the trust -beginning
Payments from the District and its retirees
Benefit claims paid by the trust
Stop loss premiums and commissions
Administrative and other fees, net of interest earned
$ 2,939,180
2,929,487
$ (2,690,051)
(101, 928)
(148,304)
(2,940.283)
Cash balance in the trust -ending
Prepaid health insurance
Amount available for accrued benefit claims
The amount available for benefit claims was as follows:
Accrual for benefit claims incurred
Accrual for health insurance coverage on payroll payable
Amount available for accrued benefit claims
2,928,384
2.055, 000
$ 573, 844
299,540
There are various methodologies for estimating a reasonable level for claims that have been incurred but not
reported (IBNR). District management has selected the methodology of approximately '60 days of paid claims'.
District management believes this methodology provides an adequate amount for accrued claims.
Other insurance
The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets;
errors and omissions; injuries to employees and natural disasters. The District maintains commercial insurance
coverage covering each of those risks of loss. Management believes such coverage is sufficient to preclude any
significant uninsured losses to the District. Settled claims have not exceeded this commercial coverage in any of
the past three fiscal years.
FS-30
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2012
RISK MANAGEMENT (Cont'd.)
Other insurance (Cont'd.)
For State unemployment compensation laws, the District is self-insured, which is a common practice for local
governmental units. Any unemployment claims are paid by the District on a quarterly basis as incurred.
For workers' compensation insurance, approximately 80 Districts participate in a public entity risk sharing pool
(School Districts Insurance Consortium) for processing claims and obtaining reinsurance through commercial
insurance carriers. Under this plan, the District's annual cost should not exceed standard commercial insurance
rates.
COMMITMENTS AND CONTINGENCIES
The District's collective bargaining agreement with its teaching staff expires August 2013.
In the normal course of business, the District is subject to legal disputes and claims. The District does not
anticipate any material losses from any pending or threatened litigation.
In the normal course of preparing for the subsequent school year, the District has awarded bids for various
supplies, fuel contracts, etc. ivo major commitments in excess of routine requirements have been made by the
District.
The District participates in state and federal grant programs which are governed by various rules and regulations.
Expenditures charged to these grant programs are subject to program compliance audits and reviews by the
grantor agencies. The District is potentially liable for any expenditures which may be disallowed by the rules of
these grant programs. The District does not anticipate any material disallowance of program expenditures. The
District is also audited by the State's Department of the Auditor General. Findings, if any, from these audits could
result in the repayment of funds, or receipt of additional funds.
COMMITTED FUND BALANCE
Committed amounts of fund balance of the General Fund are as follows:
Pension plan rate increases
FS-31
EAST PENNSBORO AREA SCHOOL DISTRICT
STATEMENT OF REVENUES, EXPENDITURE:i AND CHANGES IN FUND BALANCE,
BUDGET AND ACTUAL -GENERAL FUND
YEAR ENDED JUNE 30, 2012
Favorable (Unfavorable) Variance
Original Budget Final Budget
Original Budget Final Budget Actual Amount to Actual Amount to Actual Amount
Revenues
Local sources -taxes
$ 22,596,669 $ 22,596,669 $
22,580,158
217
$ (16,511)
296
204
$ (16,511)
204
296
Local sources -other 720,921 720,921
551 9,817,551
817
9 925,
9,910,964 ,
93,413 ,
93,413
State sources ,
,
863 335,863
335 379,329 43,466 43,466
Federal sources ,
471,004
004 33
471
33 33,795,668 324,664 324,664
Total revenues ,
,
,
Expenditures
Regular programs
Special programs
Vocational programs
Other instructional programs
Community college programs
Pupil personnel
Instructional staff
Administration
Pupil health
Business
Operation and maintenance of plant
Student transportation
Central services
Other support services
Student activities
Community services
Capital outlay
Debt service (principal and interest)
Total expenditures
14,424,962 14,424,962 14,031,144
4,637,853 4,637,853 4,607,615
394,538 394,538 394,538
146,878 146,878 58,511
340,303 340,303 302,573
1,297,452 1, 297,452 1,189,040
675,115 675,115 550,833
2,049,882 2,049,882 2,014,270
292,209 292,209 269,517
590, 851 590, 851 524, 455
2,555,930 2,507,620 2,318,958
1,417,706 1,436,006 1,435,935
414,614 417,494 417,491
31, 350 31, 350 29, 848
592,724 618,239 618,236
11, 220 12, 835 12, 834
300,000 300,000 214,940
3,634,863 3,634,863 3,580,033
33,808,450 33,808,450 32,570,771
393, 818
30,238
88, 367
37,730
108,412
124,282
35,612
22,692
66, 396
236,972
(18,229)
(2,877)
1, 502
(25,512)
(1,614)
85, 060
54, 830
1,237,679
393, 818
30, 238
88, 367
37,730
108,412
124, 282
35,612
22,692
66, 396
188,662
71
3
1, 502
3
1
85,060
54,830
1,237,679
Excess (deficiency) of revenues over expenditures
Other financing sources (uses)
Transfers to other funds
Budgetary reserve
Net change in fund balances
Fund balance -beginning
Fund balance -ending
(337,446) (337,446) 1,224,897 1,562,343
(408, 371) (408, 371) (408, 371)
(745,817) (745,817) 816,526
6,436,822 6,436,822 6,130,887
$ 5,691,005 $ 5,691,005 $ 6,947,413
ORSI - 1
1, 562, 343
(305,935)
$ 1,256,408
1, 562, 343
1, 562, 343
(305,935)
$ 1,256,408
EAST PENNSBORO AREA SCHOOL DISTRICT
• OTHER POST EMPLOYMENT BENEFIT PLANS
JUNE 30, 2012
HEALTH CARE BENEFITS
SCHEDULE OF FUNDING PROGRESS
Actuarial UAAL as
Actuarial Actuarial Accrued a % of
Valuation Value of Liability Unfunded Funded Covered Covered
Date Assets (AAL~ AAL Ratio Payroll Payroll
July 2010 $ - $ 1,186,187 $ 1,186,187 0.00% $ 14,148,249 8.38%
July 2008 - 1,495,092 1,495,092 0.00% 13,876,545 10.77%
The District is required to have an actuarial valuation at least biennially (every 2 years). If the plan experiences
significant changes, a new actuarial valuation should be performed rather than waiting for the next scheduled
valuation date.
Because June 2009 year was the implementation year for GASB 45, and the District chose to implement
prospectively, the above illustration does not reflect similar information for three consecutive valuations.
ORSI - 2