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7
EAST PENNSBORO AREA SCHOOL DISTRICT
FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2013
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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 position FS - 1
Statement of activities FS - 2
Fund financial statements
Balance sheet — governmental funds FS - 3
Reconciliation of the governmental funds balance sheet
to the statement of net position 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 position — proprietary funds FS - 7
Statement of revenues, expenses, and changes in net.position — proprietary funds FS - 8
Statement of cash flows — proprietary funds FS - 9
Statement of fiduciary net position — fiduciary funds FS - 10
Statement of changes in fiduciary net position — fiduciary funds FS - 11
NOTES TO FINANCIAL STATEMENTS FS - 12 to FS - 32
OTHER REQUIRED SUPPLEMENTARY INFORMATION
Budgetary comparison information — general fund ORSI - 1
Other post employment benefit plans ORSI - 2
Greenawalt & Company, P.C.
James E. Lyons
CERTIFIED PUBLIC ACCOUNTANTS Deborah J. Kelly
Since 1955 Scott J. Christ
v� Ronald S. Morgan
Howard R. Greenawalt
INDEPENDENT AUDITOR'S REPORT Creedon R. Hoffman
Board of School Directors
East Pennsboro Area School District
Enola, Pennsylvania
Report on the Financial Statements
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, 2013, and the related notes to the financial statements, which collectively comprise the District's basic financial
statements as listed in the table of contents. The prior year summarized comparative information has been derived
from the District's June 30, 2012 financial statements and, in our report dated January 4, 2013 we expressed
unqualified opinions on the respective financial statements of the governmental activities, the business -type activities,
each major fund, and the fiduciary funds.
Management's Responsibility for the Financial Statements
Management is responsible. for the preparation and fair presentation of these financial statements in accordance with
accounting principles generally accepted in the United States of America; this includes the design, implementation,
and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are
free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation of the financial
,statements.
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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
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, 2013, and the respective changes in financial position, and,
where applicable, cash flows thereof. for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
Other Matters
Required Supplementary Information
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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated December 17, 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 internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards
in considering East Pennsboro Area School District's internal control over financial reporting and compliance.
GREENAWALT & COMPANY, P.C.
December 17, 2013
Mechanicsburg, Pennsylvania
IAR - 2
EAST PENNSBORO AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS (Cont'd.)
JUNE 30, 2013
Y
Our discussion and analysis compares our financial position at June 30 of 2013, 2012 and 2011. It also
provides an overview, of our financial performance for the two years between these periods, fiscal years
ended June 30, 2013 and 2012, 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 2013. We have maintained sufficient net assets
and fund balances, and established a budget that should result in a stable financial position through
2014 -2015.
• In 2011, 2012 and 2013 we used available capital funds to complete additional renovation projects at
the Middle School. At the end of 2013, there was a balance of about $1,869 remaining in our
General Obligation Bond Fund of 2004.
• For 2013, we paid down $3.43 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.
0 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 year the fund balance
for the SCT was adjusted from the beginning of the trust until present which resulted in a decrease to
our fund balance. Additionally, in order to stabilize a rather large rate increase some of the reserved
funds were used to buy down the rate. This same procedure is anticipated for the 2013 -2014 school
year which will result in a decrease in fund balance. The reserved fund balances for the District's
reserve at South Central Trust were $1,933,325, $2,055,000 and $1,215,000 at December 31, 2011,
2012 and 2013, respectively.
USING THESE FINANCIAL STATEMENTS
This report consists of a series of financial statements. The Statement of Net Position 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 a longer -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 -11. 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.
MDA -1
EAST PENNSBORO AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS (Cont'd.)
JUNE 30, 2013
Y
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.
The Reconciliation of the Governmental Funds Balance Sheet on page FS -4 connects governmental fund
balance to the total net position balance — governmental activities from the Statement of Net Position. 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. Fiduciary fund net position is presented
on page FS -10 and the changes in net position on page FS -11.
MDA -2
EAST PENNSBORO AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS (Cont'd.)
JUNE 30, 2013
THE DISTRICT AS A WHOLE
Table A -1 summarizes and compares the Statement of Net Position from page FS -1 of the financial
statements for each of the past three years. We have brought forward the 2011 balances from our 2012
MD &A. These balances are otherwise not a part of the 2013 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.
Table A -1
Statement of Net Position
Governmental Activities Business -type Activities.
2013 2012 2011 2013 2012 2011
Current and other assets $ 13,887 $ 12,767 $ 12,086 $ 298 $ 347 $ 256
Capital assets 32,202 33,578 35,009 138 151 181
Total assets 46,089 46,345 47,095 436 498 437
Current and other liabilities 3,707 3,094 3,569 44 71 59
Long -term liabilities 21,166 24,722 27,532 - - Total liabilities 24,873 27,816 31,101 44 71 59
Capital assets (net of related debt) 11,824 10,217 8,926 138 151 182
Restricted for capital projects 2 53 116 - - -
Unrestricted 9,390 8,259 6,952 254 276 196
Total net position $ 21,216 $ 18,529 $ 15,994 $ 392 $ 427 $ 378
Total net position is 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 position value. The
restricted portion of net position represents cash and investments that can only be used for buildings and
improvements. The remaining restricted net position will be used to fund future capital maintenance projects
such as new roofing.
MDA -3
EAST PENNSBORO AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS (Cont'd.) .
JUNE 30, 2013.
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 position for the year ending June 30, 2013.
Table A-2
Changes in Net Position
Governmental Business -type
Activities Activities Total
2013 2012 2013 2012 2013 2012
Revenues
Program revenues
Charges for services $ 529 $ 370 $ 659 $ 804 $: 1,188 $ 1,174
Operating grants and contributions 4,448 i4215 490 462 4,938 4,677
Capital grants and contributions 367 412 - - 367 412
General revenues
Taxes 23,462 22,688 - - 23,462 22,688
State general subsidies 6,206 6,206 - - 6,206 6,206
Other 12 32 - - 12 32
Total revenues 35,024 33,923 1,149 1,266 36,173 35,189
Direct expenses 31,945 31,388 1,185 1,218 33,130 32,606
Excess (deficiency before transfers) 3,079 2,535 (36) 48 3,043 2,583
Transfers - - - - - -
Change in net position $ 3,079 $ 2,535 $ (36) $ 48 $ 3,043 $ 2,583
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 $26,601,407 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, 2013
Table A-3
Governmental Activities
Direct Expenses Program Revenues Net Expense
2013 2012 2013 2012 2013 2012
Classroom instruction $ 21,192 $ 20,274 $ 3,838 $ 2,987 $ 17,354 $ 17,287
Instructional student support 2,193 2,439 180 710 2,013 1,729
Administrative and financial support 3,337 3,526 163 129 3,174 3,397
Operation and maintenance of buildings 2,469 2,420 99 85 2,370 2,335
Student transportation 1,556 1,443 577 598 979 845
Student activities 652 627 118 75 534 552
Community services 1 13 - - 1 13
Interest on long -term debt 545 645 367 412 178 233
Total governmental activities $ 31,945 $ 31,387 $ 5,342 $ 4,996 26,602 26,391
State general subsidies revenues (6,206) (6,206)
Total needs from taxes and other local sources $ 20,396 $ 20,185
Business -Type Activities
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
2013 2012 2013 2012 2013 2012
Food services $ IJ85 $ 1,218 $ 1,148 $ 1,266 $ 37 $ (48)
Investment earnings (1) (1)
Total net expense $ 36 $ (49)
There were no other significant changes during the year with the net cost of services remaining about the
same in 2013 as in 2012.
MDA -5
EAST PENNSBORO AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS (Cont'd.)
JUNE 30,2013
DISTRICT'S FUNDS
The information in Table A -5 summarizes and compares the Governmental Funds' Balance Sheet for June
30, 2013, 2012 and 2011. Note that we again brought forward 2012 and 2011 balances from our 2012
MD &A. This information is not otherwise a part of the 2013 financial statement package.
Table A-5
Governmental Fund.Balances
2012 -2013. 2011 -2012
2013 2012 2011 Change %Chan ge Chan ge %Chan ge
General Fund - nonspendable $ 1,215 $ 2,055 $ 1,933 $ (840) $ 122
General Fund - committed 2,175 2,175 2,175 - -
General Fund - unassigned 5,309 2,718 2,023 2,591 695
Capital Projects Fund - restricted 1 53 116 (52) (63)
Capital Projects Fund - committed 1,005 1,067 675 (62) 392
Special Revenue Fund - restricted 10 9 9 1 -
Total governmental funds $ 9,715 $ 8,077 $ 6,931 $ 1 20.3% $ 1,146 16.5%
Total nonspendable $ 1,215 $ 2,055 $ 1,933 $ (840) $ 122
Total restricted 11 62 125 .(51) (63)
Total committed 3,180 3,242 2,850 (62) 392
Total unassigned 5;309 2,718 2,023" 2,591 695
Total governmental funds $ 9,715 $ 8,077 $ 6,931 $ 1,638 20.3% $ 1,14 16.5%
As previously mentioned, the basis of measurement for fund assets and liabilities is different than that used
in the Statement of Net Position. The differences between the total governmental fund balance of
$9,714,942 and the total net position of $21,215,707 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 $1,637,825 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, 2013
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 $186,744 when in fact our total expenditures were less
than our revenues by $1,751,147.
Table A -6
Budget to Actual Comparisons
Budget Actual Variance
2013 2012 2013 2012 2013 2012
Total revenues $ 34,276 $ 33,471 $ 35,641 $ 33,796 $ 1,365 $ 325
Total expenditures 34,463 33,808 33,890 32,571 573 1,237
Excess revenues (expenditures) (187) (337) 1,751 1,225 1,938 1,562
Other financing sources (uses) (25) (408) - (408) 25 -
Net change in fund balance $ (212) $ (745) $ 1,751 $ 817 $ 1,963 $ 1,562
CAPITAL ASSETS
Table A -7 summarizes the Changes in Capital Assets note to the financial statements on pages FS -22 and
FS -23. The original cost of the capital assets on the books at June 30, 2013 was $65,272,559. 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 $32,201,741 is the amount remaining after this reduction for all
governmental activities.
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.
Table A -7
Capital Assets
2013 2012 2011
Governmental activities
Land $ 326 $ 326 $ 326
Construction in progress - - -
Buildings and improvements 30,819 32,062 33,526
Furniture, equipment and library books 1,057 1,190 1,157
Total governmental capital assets $ 32,202 $ 33,578 $ 35,009
Business -type activities
Furniture and equipment $ 138 $ 151 $ 182
MDA -7
EAST PENNSBORO AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS (Cont'd.)
JUNE 30, 2013
i
LONG -TERM LIABILITIES.
Table A -8 summarizes the Long -Term Liabilities note to the financial statements on pages FS -24 to FS -29.
Most of the debt relates to general obligation bonds issued.by the-District to pay for capital improvements.
Our ability to raise future funds through the issuance of debt depends on how well our existing bonds are
rated by the investment,community. Currently, the District is rated by Standard and Poor's as A +. 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
2013 2012 2011.
Governmental activities
General obligation debt $ 20,127 $ 23,562 $ 26,450
Compensated absences 469 626 593
Other Post Employment Benefits 497 433 .353
Unamortized bond premiums and refunding costs '73 102 137
$ 21,166 $ 24,723 $ 27,533
Each year, the District pays interest to bond holders and pays down a portion of the outstanding debt,
referred to as redemption. During 2013, our redemptions totaled $3,435,000.
Compensated absences decreased during the year from ' an entity -wide perspective from $625,619 to
$468,849 at June 30, 2013. Compensated absences increased from June 30, 2011 to June 30, 2012 from an
entity -wide perspective from $593,078 to $625,619.
Recording for other post employment benefits began in 2008, -2009. The liability at June 30, 2013 from an
entity -wide perspective -was $497,113, which was a net increase of $63,954 from the previous year of
$433,159.
MDA -8
EAST PENNSBORO AREA SCHOOL DISTRICT
MANAGEMENT'S DISCUSSION AND ANALYSIS (Cont'd.)
JUNE 30, 2013
Next Year's Budget
Table A -9 compares the original budget for 2013 to the 2014 budget that,was approved June, 2013.
Table A -9
Budget Comparsions
2013 -2014 2012 -2013 Change
Total revenues $ 35,588 $ 34,276 $ 1,312
Total expenditures 35,927 34,488 1,439
Excess revenues (expenditures) (339) (212) (127)
Other financing sources (uses) - - Net,-change in fund balance $ (339) $ (212) $ (127)
Similar to our 2013 budget, our budgeted expenditures for 2014 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 office 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 POSITION
JUNE 30, 2013
(With Summarized Financial Information for June 30, 2012)
Governmental Business -type Totals
Activities Activities 2013 2012
Assets
Cash and cash equivalents $ 9,183,447 $ 262,295 $ 9,445,742 $ 7,284,381
Taxes receivable (net of allowance for uncollectibles) 2,145,254 - 2,145,254 2,227,152
Due from fiduciary funds 201,589' - 201,589 -
u ry
Due from-other governments 1,123,722 8,781 .1,132,503 1,013,177
Other receivables 16,037 - 16,037 68,939
Prepaid expenses 1,215,000 - 1,215,000 2,055,000
Inventories - 26,741 26,741 20,903
Restricted cash and investments for construction 1,869 - 1,869 52,793
Capital assets not being depreciated 325,826 - 325,826 325,826
Capital assets being depreciated, net 31,875,915 138,208 32,014,123 33,403,708
I
Total assets 46,088,659 436,025 46,524,684 46,451,879
Liabilities
Accounts payable . 1,004,677 19,223 1,023,900 679,040
Payroll and benefits payable 2,412,046 - 2,412,046 2,067,347
Unearned revenues 112,691 25,152 137,843 221,882
Accrued interest on bonds and notes payable 177,734 - 177,734 196,910
Long -term liabilities
Due within one year 3,893,000 - 3,893,000 3,735,000
Due in more than one year 17,199,962 - 17,199,962 20,885,778
Unamortized bond premiums and refunding costs 72,842 - 72,842_ 101,753
Total liabilities 24,872,952 44,375 24,917,327 27,887,710
Net position
Invested in capital assets (net of related debt) 11,824,165 138,208 11,962,373 9,975,781
Restricted for capital projects 1,869 - 1,869 52,793
Unrestricted 9,389,673 253,442 9,643,115 8,535,595
Total net position $ 21,215,707 $ 391,650 $ 21,607,357 $ 18,564,169
The accompanying notes are an integral part of these financial statements.
FS - 1
EAST PENNSBORO AREA SCHOOL DISTRICT
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2013
(With Summarized Financial Information for the Year Ended June 30, 2012)
Program Revenues Net (Expense) Revenue and Changes in Net Position
Direct Charges for Grants and Contributions Governmental . Business -type Totals
Functions /Programs Expenses Services Operating Capital Activities Activities 2013 2012
Governmental activities
Instruction $ 21,192,027 $ 410,236 $ .3,428,140 $ - $ (17,353,651) $ - $ (17,353,651) $ (16,744,363)
Instructional student support 2,193,605 - 180,471 - (2,013,134) - (2,013,134) (2,271,209)
Administrative and financial support 3,337,182 - 163,551 - (3,173,631) - (3,173,631) (3,287,275)
Operation and maintenance of plant 2,469,589 37,473 61,921 - (2,370,195) - (2,370,195) (2,334,630)
Pupil transportation 1,555,796 - 577,107 - (978,689) - (978,689) (845,117)
Student activities 652,310 81,412 36,571 - (534,327) - (534,327) (552,200)
Community services 471 - - - (471) - (471) (12,834)
Interest on long -term debt 544,542 - - 367,233 (177,309) - (177,309) (233,092)
Total governmental activities 31,945,522 529,121 4,447,761 367,233 (26,601,407) - (26,601,407) (26,280,720)
Business -type activities
Food service 1,184,670 658,654 489,539 - - (36,477) (36,477) 48,169
Total school district $ 33,130,192 . $ 1,187,775 $ 4,937,300 $ 367,233 (26,601,407) (36,477) (26,637,884) (26,232,551)
General revenues
Taxes
Real estate taxes 17,614,557 - 17,614,557 17,231
Earned income taxes 5,414,318 - 5,414,318 5,118,116
Othertaxes 433,282 - 433,282 339,176
Investment earnings 12,111 567 12,678 33,175
State general subsidies 6,206,237 - 6,206,237 6,205,812
Transfers - - - -
Total general revenues and transfers 29,680,505 567 29,681,072 28,927,533
Change in net position 3,079,098 (35,910) 3,043,188 2,694,982
Net position (restated) - beginning 18,136,609 427,560 18,564,169 15,869,187
Net position - ending $ 21,215,707 $ 391,650 $ 21,607,357 $ 18,564,169
The accompanying notes are an integral part of these financial statements.
- FS -2
EAST PENNSBORO AREA SCHOOL DISTRICT
BALANCE SHEET - GOVERNMENTAL FUNDS
JUNE 30, 2013
(With Summarized Financial Information for June 30, 2012)
Capital Special Totals
General Projects Revenue 2013 2012
Assets
Cash and cash equivalents $ 8,072,286 $ 1,006,482 $ 106,548 $ 9,185,316 $ 6,860,385
Taxes receivable (net'of allowance for uncollectibles) 2,145,254 - - 2,145,254 2,227,152
Due from other funds 201,589 - 6,580 208,169 206,914
Due from other governments 1,123,722 - - 1,123,722 1,005,665
Other receivables 16,037 - - 16,037 68,939
Prepaid expenses 1,215,000 - - 1,215,000 2,055,000
Total assets $ 12,773,888 $ 1,006,482 $ 113,128 $ 13,893,498 $ 12,424,055
Liabilities and fund balances
Accounts payable $ 1,004,677 $ - $ - $ 1,004,677 $ 633,449
Payroll and benefits payable 2,412,046 - - 2,412,046 2,063,981
Due to other funds 6,580 - - 6,580 52,433
Unearned revenues 652,025 - 103,228 755 1,597,075
Total liabilities J 4,075,328 - 103,228 4,178,556 4,346,938
Fund balances
Nonspendable
Health care costs prepaid 1,215,000 - - 1,215,000 2,055,000
Restricted -
Capital and other projects - 1,869 9,900 11,769 62,424
Committed -
Future pension costs 2,174,588 - - 2,174,588 2,174,588
Capital outlays - 1,004,613 - 1,004,613 1,067,280
Unassigned 5,308,972 - - 5,308,972 2,717,825
Total fund balances 8,698,560 1,006,482 9,900 9,714,942 8,077,117
Total liabilities and fund balances $ 12,773,888 $ 1,006,482 $ 113,128 $13,893,498 $ 12,424,055
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 POSITION
JUNE 30, 2013
Total fund balances - Governmental funds $ 9,714,942
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 yearend, the cost of capital
assets is $ 65,272,559 and the accumulated depreciation
is $ 33,070,818 32,201,741
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 and notes payable $ (20,127,000)
Compensated absences (468,849)
Other post - employment benefit accrual (497,113)
Long -term liabilities (21,092,962)
Accrued interest on bonds payable (177,734) (21,270,696)
Bond discounts (premiums) and refunding costs are reported as expenditures
in the governmental funds. At year end, the remaining unamortized
bond related costs consist of:
Bond discounts (premiums) (298,312)
Refunding costs 225,470 (72,842)
Taxes receivable will' be collected, but are not available soon enough to
pay for the current year's expenditures, and therefore are unearned in the
governmental funds. At year end, these taxes receivable consist of:
Real estate taxes 327,562
Earned income taxes 315,000 642,562
Net position - Governmental activities $ 21,215,707
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, 2013
(With Summarized Financial Information for the Year Ended June 30, 2012)
Capital Special Totals
General Projects Revenue 2013 2012
Revenues
Local sources - taxes $ 24,220,061 $ - $ - $ 24,220,061 $ 22,580,158
Local sources - other 906,353 2,153 139,243 1,047,749 944,652
State sources 10,137,565 - - 10,137,565 9,910,964
Federal sources 377,149 - - 377,149 379,329
Total revenues 35,641,128 2,153 139,243 35,782,524 33,815,103
Expenditures
Instruction 20,087,107 - 138,974 20,226,081 19,411,258
Support services 9,035,236 - - 9,035,236 8,750,347
.Noninstructional services 649,175 - - 649,175 631,070
Capital outlay 90,834 115,744 - 206,578 296,078
Debt service (principal and interest) 4,027,629 - - 4,027,629 3,580,033
Total expenditures 33,889,981 115,744 138,974 34,144,699 32,668,786
Excess (deficiency) of revenues over expenditures 1,751,147 (113,591) 269 1,637,825 1,146,317
Other financing sources (uses)
Transfers from other funds - - - - 408,371
Transfers to other funds - - - - (408,371)
Net changes in fund balances 1,751,147 (113,591) 269 1,637,825 1,146,317
Fund balances - beginning 6,947,413 1,120,073 9,631 8,077,117 6,930,800
Fund balances - ending $ 8,698,560 $ 1,006,482 $ 9,900 $ 9,714,942 $ 8,077,117
The accompanying notes are an integral part of these financial statements.
FS -5
SCHoQ` piSTRICT NIENT OF ACTIVITIES
P � NN SBQR(? AR G pvERNME" LNG ST p THE S�
EAST CILIATION OF TH FU ND BA
RECON S AND CHAN GES IN 2p13
J UNE 3D, 1,63 ,8
STATEMENT OF REVEN
UES, EXPENDITURE YEAR ENDED
entai funds use. sets s is allocate 382,3`l (1376,
Govemm different beta the cost of those a follow
fund balances - of activities are ense are as (1759
es in stateme ent of activities,
Total net chan9 in the statem de reciat1On exp
en activities entaI funds, In the �pital outlays and P
ded for governm overnm ear, the bonds)
Amounts rep o the 9 porng the Y
oded as Expenditures in i
ense. sing uses if refund
s are rep de reciation eXp other finan - 3,435,000
Capital outlay eful lives as p and expenditures
over their estimated us sources a osition. 3
capital outlays expense no t effect net p
Depfeciatided as other financ
on exp e gs do 156,770
'
ents are repo proceeds and rep aYm
rincipal repaYf act nr ivties p
roceeds and p tem nt o follows.. ense is
Bond and note p In the sta re as ents a the exp
ntal funds• rincipal repaYn' w ere issued) ent of activities, . (63 54)
in the g overnme ntal and fno bonds or notes In the statem Borin the
During the year P P ro ( e nta s de _
Bond and note P the govern funds m the exp ense
pa ym en ts enditures in f compensated ab sences ent of activities, the Yea
principal repaYrn oded as eX P The liability In the stateme during 18,17
are rep the year. ental funds.
ensated a bsence e mployees during overnm loyrnent benefits increased
Paymen ea rned by ex penditure
as s in the g ost emp
the amount ea re porte d liability for other P statement of activitie {hthe
ts of comp ear.
measure d by Prior costs The ent the during
ost employment be are rep the paYm is due. In bonds payable decreased reported
of other p _ - Primarily of p when are rep
p ate s, P rily for a governmental funds interest on aYoff anr e nse. 2g 911
the gove for a ccrued its P amortization exp 1
• includes actuarial estim enditures in The liability debt and
as exp the year. ded , life of the debt as
reported during ense be tween the carrying amount of refun o ver the
amount accrued (located
payments of interest are P amounts are a
measured by the differ these
expense is refunding costs (any ent of activities,
(prem and In the statem as follows'. in the
discounts tat funds ense are re venues 2,096 (757 g p4)
Bond t h e govem amortization exp bonds as available
as exp costs enditures in incurred and d refunding 098
D costs on new are not considered (�
the Yea iumsl an they 3079
end of the fiscal Year, $
Bond discoun ( en s a lter the
veral months a follows'
Am collected until s eased)
odization expen duri the year as
ng
will not be ce
Because some taxes
taxes increased (decr
ental funds• Unearned
governm taxes
Real estate a taxes
Earned incom
Governmental activities
C h a nge in net P
o sition - financial statements FS 6
ing notes are an integral part °f these
EAST PENNSBORO AREA SCHOOL DISTRICT
STATEMENT OF NET POSITION - PROPRIETARY FUNDS
JUNE 30, 2013
(With Summarized Financial Information for June 30, 2012)
Food Service
2013 2012
Assets
Cash and cash equivalents $ 262,295 $ 266,509
Due from other governments 8,781 7,512
Due from general fund - 52,433
Inventories 26,741 20,903
Total current assets 297,817 347,357
Capital assets being depreciated, net 138,208 151,067
Total assets 436,025 498,424.
Liabilities
Accounts payable 19,223 45,591
Unearned revenues 25,152 25,273
Total current liabilities 44,375 70,864
Net position
Invested in capital assets (net of related debt) 138,208 151,067
Unrestricted 253,442 276,493
Total net position $ .391,650 $ 427,560
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 POSITION - PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2013
(With Summarized Financial Information for the Year Ended June 30, 2012)
Food Service
2013 2012
Operating revenues - Food service revenue $ 658,654 $ 804,138
Operating expenses
Other purchased service 1,057,305 1,098,902
Food and milk 63,300 46,042
Other supplies 31,969 34,897
Depreciation 32,096 38,722
Total operating expenses 1,184,670 1,218,563
Operating income (loss) (526,016) (414,425)
Nonoperating revenues
Investment earnings 567 719
State sources -meal subsidies 38,698 39,944
Federal sources - commodities 63,300 46,042
Federal sources - meal subsidies 387,541 376,608
Total nonoperating revenues 490,106 463,313
Income (loss) before transfers (35,910) 48,888
Transfers from other funds - -
Change in net position (35,910) 48,888
Net position - beginning 427,560 378,672
Net position - ending $ 391,650 $ 427,560
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, 2013
(With Summarized Financial Information for the Year Ended June 30, 2012)
Food Service
2013 2012
Operating activities
Cash received from users $ 658,533 $ 808,487
Cash payments to suppliers for goods and services (1,083,672) (1,101,893)
Cash payments for other operating expenses (37,808) (28,816)
Net cash provided by (used for) operating activities (462,947) (322,222)
Non - capital financing activities
State sources 43,565 38,254
Federal sources 433,838 357,208
Net cash provided by (used for) non - capital financing activities 477,403 395,462
Capital and related financing activities
Cash payments for equipment (19,237) (8,109)
Net cash provided by (used for) capital and related financing activities (19,237) (8,109)
Investing activities
Investment earnings 567 719
Net cash provided by (used for) investing activities 567 719
Net change in cash and cash equivalents (4,214) l 65,850
Cash and cash equivalents - beginning 266,509 200,659
Cash and cash equivalents - ending $ 262,295 $ 266,509
Reconciliation of operating income (loss) to net cash
provided by (used for) operating activities
Operating income (loss) $ (526,016) $ (414,425)
Adjustments to reconcile operating income (loss) to net cash
provided by (used for) operating activities
Depreciation 32,096 38,722
Donated commodities 63,300 46,042
Net change in other assets and other liabilities
Inventories (5,839) (4,732)
Accounts payable (26,368) 8,195
Unearned revenue (120) 3,976
Total adjustments 63,069 92,203
Net cash provided by (used for) operating activities $ (462,947) $ (322,222)
The accompanying notes are an integral part of these financial statements.
FS -9
I
EAST PENNSBORO AREA SCHOOL DISTRICT
STATEMENT OF FIDUCIARY NET POSITION - FIDUCIARY FUNDS
JUNE 30, 2013
(With Summarized Financial Information for June 30, 2012)
Private
Purpose Student Totals
Trusts Payroll Activities 2013 2012
I
Assets
Cash and cash equivalents $ 22,320 $ 245,329 $ 80,756 $ 348,405 $ 321,057
Investments 924,291 - - 924,291 924,294
Total assets 946,611 245,329 80,756 1,272,696 1,245,351
Liabilities
Due to governmental funds - 20'1,589 - 201,589 206,914
Other liabilities ; - 43,740 80,756 124,496 94,785
Total liabilities - 245,329 80,756 326,085 301,699
Net position $ 946,611 $ - $ - $ 946,611 $ 943,652
I
i
The accompanying notes are an integral part of these financial statements.
FS -10
I
EAST PENNSBORO AREA SCHOOL DISTRICT
• STATEMENT OF CHANGES IN FIDUCIARY NET POSITION - FIDUCIARY FUNDS
YEAR ENDED JUNE 30, 2013
(With Summarized Financial Information for June 30, 2012)
Private Purpose Trusts
2013 2012
Additions
Investment earnings $ 5,959 $ 7,484
Gifts and contributions 5,000 10,000
Total additions 10,959 17,484
Deductions
Scholarships awarded 8,000 10,000
Change in net position 2,959 .7,484
Net position - beginning 943,652 936,168
Net position - ending $ 946,611 $ 943,652
The accompanying notes are an integral part of these financial statements.
FS -11
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2013
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 the 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 all potential component units which may or may not fall within the established criteria. The criteria used
to evaluate component units for possible inclusion as part of the District's reporting entity are:
The economic resources received or held by the separate organization are entirely for the direct benefit of the
District or its constituents.
The District is entitled to (or has the ability to) access a majority of the economic resources received or held
by the separate organization.
The economic resources received or held by 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, 2013
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 Position 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 position (total assets less total liabilities) is used as a practical measure of economic
resources and the operating statement includes all transactions and events that increased or decreased net
position. Depreciation and amortization are charged as an expense against current operations. Capital assets (net
of accumulated depreciation) and bonds payable (net of unamortized discounts or premiums) are presented in the
statement of net position.
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, 2013
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (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 unearned 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, 2013
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 preserve a portion of an appropriation for which an expenditure has been committed by a
purchase order, contract or other form of commitment, an encumbrance is recognized. Unused
encumbrances expire at the end of each year.
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, if
required. 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, 2013
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Basis of presentation - Fund financial statements (Cont'd.)
Fund accounting (Cont'd.)
The Debt Service Fund, when applicable, accounts for the refinancing of existing debt.
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 Payroll Fund accounts for salaries paid to District employees.
The Student 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 and /or taxpayer.
Amounts not collected within six months (December 31) are considered delinquent and submitted to outside
agencies /entities for collection actions.
FS -16
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2013
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Contd.)
Receivables and payables between funds
Activity between funds that represent lending /borrowing arrangements outstanding at the end of the fiscal year
are referred to as "due to /from other funds ". Any residual balances outstanding between the governmental
activities and business -type activities are reported in the district -wide financial statements as "internal balances ".
Any balances between funds are short-term items pending periodic repayments.
Inventories and prepaid items
Inventories are presented at the lower of cost or market on a first -in, first -out basis, and are 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 historical cost if purchased or
constructed.
Major outlays for capital assets and improvements are capitalized as projects are constructed. The costs of
normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not
capitalized.
Capital assets are depreciated using the straight -line method over the following estimated useful lives:
Government Business -type
Assets Activities Activities
Buildings 40 -
Building and site improvements 15 to 40 -
Furniture and equipment 5 to 15 5 to 12
Library books 7 -
FS -17
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2013
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Long -term liabilities
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. Bond discounts (premiums) and any
refunding costs are amortized over the life of the bonds using the effective interest method.
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 position
Net position represents the difference between assets and liabilities. In the district -wide financial statements and r
proprietary fund financial statements, categories of net position are:
Invested in capital assets (net of related debt) - This category groups all capital assets into one component
of net position. Accumulated depreciation and outstanding debt that are attributable to the acquisition,
construction or improvement of these assets reduce this category.
Restricted — This category presents funds constrained to be used for a specific purpose as per: external
parties, contributors or enabling legislation.
Unrestricted - This category presents the net position 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. The District's general policy is to first use restricted funds, if any, prior to using unassigned funds.
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).
FS -18
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2013
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Governmental fund balances (Cont'd.)
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).
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
GASB Statement No. 63 improves 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.
The District has implemented this pronouncement. This pronouncement does not impact any amounts, but does
impact terminology and presentation.
GASB Statement No. 65 impacts certain items that were previously reported as assets and liabilities in the
district -wide financial statements. The District has implemented this pronouncement. Prior to this pronouncement,
bond issuance costs were required to be amortized over the life on the bonds. GASB 65 determined that bond
issuance costs do not meet the definition of an asset, and should be expensed during the year in which those
costs are incurred.
FS -19
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2013
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd.)
Recent accounting standards (Cont'd.)
Implementation required restating financial statements for all periods presented, which is summarized as follows:
Original Restated
Amount Change Amount
Net position of governmental activities as of June 30, 2011 $ 15,993,885 $ (503,370) $ 15,490,515
Change in net position for the year ended June 30, 2012 2,535,656 110.438 2,646,094
Net position of governmental activities as of June 30, 2012 S ,529,541 $ (392,932) 18.136.609
There are several GASB pronouncements that will become effective for future report ing periods. Other than the
impact of GASB 68, the District does not currently anticipate any significant impact on the District's financial
statements.
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 Position (page FS -1), the Statement of
Activities (page FS -2), and the Pension Plan disclosures in the Notes to Financial Statements. The District
currently expects GASB 68 will have a very large negative impact to the district -wide 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, 2012, 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 December 17, 2013, the date the financial statements were available to be
issued and there are no items requiring disclosure.
FS - 20
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30,2013
CASH AND CASH EQUIVALENTS AND INVESTMENTS
Pennsylvania statutes provide for investment of District funds into authorized investment types including U.S.
Treasury bills, other short-term U.S. and Pennsylvania government obligations, and insured or collateralized time
deposits and certificates of deposit. The statutes do not prescribe regulations related to demand deposits;
however, they do allow the pooling of funds for investment purposes.
Custodial credit risk is the risk that in the event of a depository institution failure, the District's deposits may riot 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, 2013, the District's deposits totaled $ 6,073,654 and the depository institution balances totaled
$ 6,228,531. Of the depository institution balances, $ 352,817 was covered by federal depository insurance
and $ 5,875,714 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, consisting of pooled assets and irrevocable standby letter
of credit, is held by the Federal Home Loan Bank, but i's not titled in the District's name.
The District also has cash equivalents with the Pennsylvania Local Government Investment _Trust (PLGIT)
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, 2013, the District's deposits in PLGIT and PSDLAF
totaled $ 4,051,485 and $ 595,168, 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 and investments at June 30, 2013 are as follows:
Cash and Cash
Equivalents Investments
Governmental activities $ 9,185,316 $ -
Business -type activities 262,295 -
Fiduciary funds 348.405 924.291
$ 9,796.016 $ 924,291
FS - 21
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30,20 13
CASH AND 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 Unearned
(Gross) Uncollectibles (Net) Taxes
Real estate taxes $ 431,699 $ (13,000) $ 418,699 $ 327,562
Earned income taxes 1,726.555 - 1,726,555 315.000
General Fund 2,158,254. (13,000) 2,145,254 642,562
Full accrual adjustment - - - (642,562
Governmental activities $ 2,158.254 - 0 (1300 2.145.254 $ -
DUE FROM/TO OTHER FUNDS AND INTERFUND TRANSFERS
Interfund balances are as follows:
Assets Liabilities
Special Revenue Fund- $ 6,580 $ 6,580 General Fund
General Fund 201,589 201,589 Payroll Fund
There were no interfund transfers.
DUE FROM OTHER GOVERNMENTS
Due from other governments are as follows:
Governmental Business -type
J
Activities Activities
Local sources — other taxes $ 45,190 $ -
State sources 811,910 750
Federal sources 266.622 8,031
$ 1123.722 $ 8,781
FS - 22
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2013
CAPITAL ASSETS
Changes in capital assets were as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental activities
Capital assets not being depreciated
Land $ 325,826 $ - $ - $ 325,826
Capital assets being depreciated
.Buildings and improvements 57,421,008 236,500 (45,672) 57,611,836
Furniture and equipment 6,138,887 119,462 (27,696) 6,230,653
Library books 1,077,864 26,380 - 1,104,244
64,637,759 382,342 (73,368 64,946,733
Accumulated depreciation
Buildings and improvements (25,336,439) (1,501,668) 45,672 (26,792,435)
Furniture and equipment (5,062,697) (229,505) 27,696 (5,264,506)
Library books (985,982 (27,895 - (1,013,877
(31,385,118 (1,759,068 73.368 (33,070,818
Capital assets being depreciated, net 33,252,641 (1,376.726 - 31,875,915
Governmental activities capital assets, net 33.578.467 (1.376.726 $ - $ 32.201.741
Business -type activities
Capital assets being depreciated
Furniture and equipment $ 633,018 $ 19,237 $ - $ 652,255
Accumulated depreciation
Furniture and equipment (481,951 (32,096 - (514,047
Capital assets being depreciated, net 151,067 (12,859 - 138.208
Business -type activities capital assets, net $ 151.067 $ (12.859 $ - $ 138,208
FS - 23
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2013
CAPITAL ASSETS (Cont'd.)
Depreciation expense was charged to functions /programs as follows:
Governmental activities
Instruction $ 1,065,138
Instructional student support 344,494
Administrative and financial support 210,248
Operation and maintenance of plant 126,921
Transportation 6,417
Student activities 5.850
$ 1.759.068
Business -type activities — Food service $ 32,096
LONG -TERM LIABILITIES
Changes in all long -term liabilities were as follows:
Beginning Ending Due Within
Balance I ncreases Decreases Balance One Year
Governmental Activities
Bonds and notes payable $ 23,562,000 $ $ (3,435,000) $ 20,127,000 $ 3,581,000
Compensated absences 625,619 143,230 (300,000) 468,849 200,000
Other post employment benefits 433,159 207.241 (143,287 497.113 112,000
$ 24.620.778 $ 350.471 (3.878.287) _$ $ 3,893,000
General obligation bonds and notes payable
Changes in bonds and notes payable were as follows:
Beginning Scheduled Ending
Balance New Issue Redemptions Balance
Series of 2009 $ 4,395,000 $ - $ 1,955,000 $ 2,440,000,
Series A of 2009 13,550,000 - 475,000 13,075,000
Series of 1999 note 2,035,000 - 305,000 1,730,000
Series of 2011 note 3.582,000 - 700.000 2,882,000
$ 23.562,00Q $ - $ 3,435,000 $ 20.127 000
FS - 24
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2013
LONG -TERM LIABILITIES (Cont'd.)
General obligation bonds and notes payable (Cont'd.)
Amounts
Due Within
Interest Rates Maturity Date Callable Date One Year
Series of 2009 2.00% to 2.50% October 2014 Not callable $ 1,990,000
Series A of 2009 3.00% August 2020 February 2015 545,000
Series of 1999 note Variable February 2018 Not callable 320,000
Series of 2011 note 2.68% August 2021 Not callable 726,000
$ 3,581,000
Scheduled debt service requirements, payable by the General Fund, are as follows:
Year Ending June 30 Principal Interest Total
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 3,295,000 149,630 3,444,630
2019 -2023 3,468,000 123,910 3.591,910
20.127.000 $ 1.768.180 $ 21.895.180
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
FS - 25
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2013
LONG -TERM LIABILITIES (Cont'd.)
Compensated absences (Cont'd.)
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, 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. In
order to obtain coverage, retired employees must provide payment equal to the premium determined for the
purpose of COBRA.
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 dependents
results in what is known as an "implicit rate subsidy," which creates an additional cost to the District.
Participant information
Active participants 293
Vested former members 10
Retired participants 40
343
FS - 26
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2013
LONG -TERM LIABILITIES (Cont'd.)
Funding policy
The District funds Plan liabilities on a "pay -as- you -go" basis, and has not established an OPEB trust fund to
accumulate assets to fund Plan obligations. The District has no statutory or contractual obligation to fund the
Plan and would only do so at the District's discretion.
Annual OPEB cost and net OPEB obligation
The annual OPEB cost (expense) is calculated based on the actuarially determined annual. required
contribution (ARC) of the District. The ARC represents a funding level that if paid on an ongoing basis is
projected to cover normal cost each year and amortize any unfunded actuarial accrued liability (UAAL) over 7
years (2 years remaining).
Components of the annual OPEB cost, the amount contributed to the Plan, and changes in the net OPEB
obligation are as follows:
District normal cost $ 65,780
Amortization of unfunded actuarial accrued liability 195,477
Annual required contribution 261,257
Interest on the net OPEB obligation 19,492
Adjustment to the ARC (73,508
Annual OPEB cost 207;241
Contributions made to the plan (143.287
Increase in net OPEB obligation 63,954
Net OPEB obligation - beginning 433.159
Net OPEB obligation - ending $ 497.113
The percentage of annual OPEB cost contributed was as follows:
Percentage of
Annual Annual OPEB Net OPEB
Year ended OPEB Cost Cost Contributed Obligation
June 2013 $ 207,241 69.14% $ 497,113
FS - 27
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2013
LONG -TERM LIABILITIES (Cont'd.)
Other post employment benefits (OPEBs) (Cont'd.)
Funding status and funding progress
The District's actuarial accrued liability (AAL) for OPEBs as of July 2012 was $ 1,151,886. 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 2012 $ - $ 1,151,886 $ 1,151,886 0.00% $ 14,176,212 8.13%
Actuarial assumptions and methods
Actuarial assumptions and methods used in the July 2012 actuarial valuation include the following:
Interest rate 4.50%
General inflation rate 3.00%
Health care cost trend rate 7.5% in 2012 decreasing by 0.5% per year to 5.50% in
2016. Rates gradually decrease from 5.30% in 2017 to
4.20% in 2089 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.
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 District and plan members to that point in
time.
Actuarial calculations reflect a long -term perspective, and consistent with that perspective, actuarial methods
and assumptions used include techniques that are designed to reduce short-term volatility in accrued
liabilities.
FS - 28
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2013
LONG -TERM LIABILITIES (Cont'd.)
Other post employment benefits (OPEBs) (Cont'd.)
Actuarial assumptions and methods (Cont'd.)
The required schedule of funding progress in the other required supplementary information (ORSI)
immediately following the notes to financial statements, presents 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.
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
expend itures.for the year ended June 30, 2013 amounted to, approximately $ 155,000. Minimum net lease rental
payments for future periods are expected to be as follows:
2013 -2014 $ 150,086
2014 -2015 150,086
2015 -2016 100, 058
Total minimum payments required $ 400,230
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 - 29
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2013
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 401(a) 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
5 N 5 th Street, Harrisburg, PA 17101 -1905, 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 qualifying compensation are as follows:
Membership Class T -C Active members hired before July 22, 1983 5.25%
Membership Class T -C Members hired on or after July 22, 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 future 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 2013
the employer contribution rate was 12.36 percent of covered payroll, composed of 11.50 percent for pension
benefits and 0.86 percent for healthcare insurance premium assistance. District contributions to the System for
years ended June 2013, 2012, and 2011 were $ 1,763,807, $ 1,252,992 and $ 843,833, respectively. Those
amounts are equal to the required contributions for each year.
FS -30
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2013
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 $ 2,928,384
Payments from the District and its retirees $ 2,728,050
Reallocations with other Districts (333,804
2,394,246
Benefit claims paid by the trust (3,044,120)
Stop loss premiums and commissions (88,907)
Administrative and otheffees, net of interest earned (145,670
(3,278,697
Cash balance in the trust - ending 2,043,933
Prepaid health insurance 1,215,000
Amount available for benefit claims $ 828,933
The amount available for benefit claims was as follows:
Accrual for benefit claims $ 528,933
Accrual for health insurance coverage on payroll payable 300,000
Amount available for benefit claims $ 82B-9-33
There are various methodologies for estimating a reasonable accrual for benefit claims. 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 31
EAST PENNSBORO AREA SCHOOL DISTRICT
NOTES TO FINANCIAL STATEMENTS (Cont'd.)
JUNE 30, 2013
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 expired 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. No major commitments in excess of routine requirements have been made by the
District.
The District participates in state and federal grant programs which are governed by various rules and regulations.
Expenditures charged to these grant programs are subject to program compliance audits and reviews by the
grantor agencies. The District is potentially liable for any expenditures which may be disallowed by the rules of
these grant programs. The District does not anticipate any material disallowance of program expenditures. The
District is 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 2.174.588
FS -32
!, I
EAST PENNSBORO AREA SCHOOL DISTRICT
BUDGETARY COMPARISON INFORMATION - GENERAL FUND
YEAR ENDED JUNE 30, 2013
Favorable (Unfavorable) Variance
Original Budget Final Budget
Original Budget Final Budget Actual Amount to Actual Amount to Actual Amount
Revenues
Local sources - taxes $ 23,065,543 $ 23,065,543 $ 24,220,061 $ 1,15,4;518 $ 1,154,518
Local sources - other 731,998 731,998 906,353 174,355 174,355
State sources 10,146,890 10,146,890 10,137,565 (9,325) (9,325)
Federal sources 331,850 331,850 377,149 45,299 45,299
Total revenues 34,276,281 34,276,281 35,641,128 1,364,847 1,364,847
Expenditures
Regular programs 14,671,422 14,528,265 14,501,410 170,012 26,855
Special programs 4,795,278 4,795,278 4,755,819 39,459 39,459
Vocational programs 391,388 391,388 391,388 - -
Other instructional programs 142,215 142,215 49,328 92,887 92,887
Community college programs 340,326 389,162 389,162 (48,836) -
Pupil personnel 1,105,030 1,109,609 1,109,609 (4,579) -
Instructional staff 528,347 528,347 527,895 452 452
Administration 2,140,826 2,210,636 2,210,534 (69,708) 102
Pupil health 304,389 304,389 296,622 7,767 7,767
Business 546,076- 560,641 560,285 (14,209) 356
Operation and maintenance of plant 2,561,836 2,397,534 2,379,766 182,070 17,768
Student transportation 1,391,247 1,551,648 1,549,379 (158,132) 2,269
Central services 439,092 439,092 371,530 67,562 67,562
Other support services 29,848 29,848 29,616 232 232
Student activities 639,436 648,704 648,704 (9,268) -
Community services 12,000 12,000 471 11,529 11,529
Capital outlay 300,000 300,000 90,834. 209,166 209,166
Debt service (principal and interest) 4,124,269 4,124,269 4,027,629 96,640 96,640
Total expenditures 34,463,025 34,463,025 33,889,981 573,044 573,044
Excess (deficiency) of revenues over expenditures -(186,744) (186,744) 1,751,147 1,937,891 1,937,891
Other financing sources (uses)
Transfers to other funds (25,000) (25,000) - 25,000 25,000
Budgetary reserve - -
Net change in fund balances (211,744) (211,744) 1,751,147 1,962,891 1,962,891
Fund balance - beginning 5,385,068 5,385,068 6,947,413 1,562,345 1,562,345
i
Fund balance - ending $ 5,173,324 $ 5,173,324 $ 8,698,560 $ 3,525,236 $ 3,525,236
ORSI - 1
EAST PENNSBORO AREA SCHOOL DISTRICT
OTHER POST EMPLOYMENT BENEFIT PLANS
JUNE 30, 2013
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 2012 $ $ 1,151,886 $ 1,151,886 0.00% $14,176,212 8.13%
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.
ORSI - 2